As filed with the Securities and Exchange Commission on April 14, 1999
Registration No. 33-
811-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
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Pre-Effective Amendment No. / /
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Post-Effective Amendment No. / /
and ----
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X /
ACT OF 1940 ----
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Amendment No. / /
(Check appropriate box or boxes) ----
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PUTNAM TAX MANAGED FUNDS TRUST
(Exact name of registrant as specified in charter)
One Post Office Square, Boston, Massachusetts 02109
(Address of principal executive offices)
Registrant's Telephone Number, including Area Code
(617) 292-1000
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Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this
Registration Statement.
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date
until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
hereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
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JOHN R. VERANI, Vice President
PUTNAM FUNDS TRUST
One Post Office Square
Boston, Massachusetts 02109
(Name and address of agent for service)
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Copy to:
JOHN W. GERSTMAYR, Esquire
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
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Prospectus
______. 1999
PUTNAM U.S. CORE TAX MANAGED FUND
CLASS A 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
2FUND SUMMARY
2Goal
2Main investment
strategies
2Main risks
3Fees and expenses
3WHAT ARE THE FUND'S MAIN
INVESTMENT
STRATEGIES AND RELATED
RISKS?
5WHO MANAGES THE FUND?
5HOW DOES THE FUND PRICE
ITS SHARES?
6HOW DO I BUY FUND SHARES?
7HOW DO I SELL FUND
SHARES?
7HOW DO I EXCHANGE FUND
SHARES?
8FUND DISTRIBUTIONS AND
TAXES
BOSTON LONDON TOKYO
Fund summary
GOAL
The fund seeks long-term growth of capital on an after-tax basis.
MAIN INVESTMENT STRATEGIES
The fund invests mainly in common stocks of U.S. companies that
Putnam Management believes have the potential for long-term
growth greater than market averages or believes are undervalued
compared to underlying asset values or earnings potential and
have the potential for long-term growth.
The fund expects to invest mainly in large or mid-sized companies
(those with an equity market capitalization of $2 billion or
more) although it may also invest in smaller companies.
Unlike most mutual funds, the fund takes federal income tax
considerations into account in managing its investments. In so
doing, the fund uses a variety of techniques in seeking its goal
including:
* The fund uses a long-term horizon rather than seeking
shorter-term profits.
* The fund does not emphasize dividend income.
* The fund's portfolio is monitored and analyzed on a tax
basis and Putnam Management considers tax consequences when
determining whether to buy or sell stocks. For example, the
fund
may sell stocks at a loss at the same time it is selling stocks
at a gain to limit realized capital gains.
* The fund may use options, swaps and other derivatives to
structure the portfolio in a tax efficient fashion. Derivatives
are not, however, used to leverage the fund's investments.
MAIN RISKS
The main risks that could adversely affect the value of this
fund's shares and the total return on your investment include
O The risk of lower returns compared to similar funds that are
not managed for after-tax returns. Because Putnam Management
considers tax consequences in making investment decisions, the
investment decisions for the fund are likely to vary from those
for a similar portfolio that is not tax-managed. The fund is
therefore not a suitable investment for IRAs, other tax-exempt or
tax deferred accounts or for other investors who are not
sensitive to the federal income tax consequences of their
investments.
O The risk that the stock price of one or more of the
companies in the fund's portfolio will fall, or will fail to
appreciate as anticipated by Putnam Management. Many factors can
adversely affect a stock's performance, including factors related
to a specific company or industry or general market conditions.
This risk is greater for small and medium-sized companies, which
tend to be more vulnerable to adverse developments.
O The risk that movements in the securities markets will
adversely affect the price of the fund's investments, regardless
of how well the companies in the fund's portfolio perform.
You can lose money by investing in the fund. The fund may not
achieve its goal, and is not intended as a complete investment
program. An investment in the fund is NOT a deposit of the bank
and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
FEES AND EXPENSES
This table summarizes the fees and expenses you may pay if you
invest in the fund. The expenses shown are estimated for the
fund's first fiscal year.
SHAREHOLDER FEES (fees paid directly from your investment)
CLASS A
Maximum Sales Charge (Load) Imposed
on Purchases (as a percentage of
the offering price) 5.75%
Maximum Deferred Sales Charge (Load)
(as a percentage of the original
purchase price or redemption
proceeds, whichever is lower) NONE*
<TABLE><CAPTION>
ANNUAL FUND OPERATING EXPENSES**
(expenses that are deducted from fund assets)
<S> <C> <C> <C> <C> <C> <C>
TOTAL
ANNUAL FUND
MANAGEMENT DISTRIBUTION OTHER OPERATING EXPENSE NET
FEES (12B-1) FEES EXPENSES EXPENSES REIMBURSEMENT EXPENSES
CLASS A 0.70% [ ]% [ ]% [ ]% [ ]% [ ]%
</TABLE>
* 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
the fund's expenses through March 31, 2000.
EXAMPLE
This example translates the "Net Expenses" shown in the preceding
table into dollar amounts. By doing this, you can more easily
compare the cost of investing in the fund to the cost of
investing in other mutual funds. The example makes certain
assumptions. It assumes that you invest $10,000 in the fund for
the time periods shown and then redeem all your shares at the end
of those periods. It also assumes a 5% return on your investment
each year and that the fund's operating expenses remain the same.
The example is hypothetical; your actual costs and returns may be
higher or lower.
1 YEAR 3 YEARS
CLASS A $[ ] $[ ]
What are the fund's main investment strategies and related risks?
Any investment carries with it some level of risk that generally
reflects its potential for reward. The fund pursues its goal by
investing mainly in common stocks. In addition to tax
consequences, Putnam Management will consider, among other
things, a company's financial strength, competitive position in
its industry and projected future earnings 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 which directly relate 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 companies in a number of
different industries, such as increases in production costs. The
value of a company's stock may also be affected by changes in
financial market conditions that are relatively unrelated to the
company or its industry, such as changes in interest rates or
currency exchange rates. In addition, a company's stock generally
pays dividends only after the company makes required payments to
holders of its bonds and other debt. For this reason, the value
of the stock will usually react more strongly than the bonds and
other debt to actual or perceived changes in the company's
financial condition or prospects.
O VALUE STOCKS. The fund will invest in part in companies that
are not expected to experience significant earnings growth, but
whose stock Putnam Management believes is undervalued compared to
its true worth. These companies may have experienced adverse
business developments or may be subject to special risks that
have caused their stocks to be out of favor. If Putnam
Management's assessment of a company's prospects is wrong, or if
other investors do not eventually recognize the value of the
company, then the price of the company's stock may fall or may
not approach the value that Putnam Management has placed on it.
O GROWTH STOCKS. The fund may invest in stocks of companies
that Putnam Management believes have earnings that will grow
faster than the economy as a whole. These growth stocks typically
trade at higher multiples of current earnings than other stocks.
Therefore, the values of growth stocks may be more sensitive to
changes in current or expected earnings than the values of other
stocks. If Putnam Management's assessment of the prospects for
the company's earnings growth is wrong, or if its 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 that Putnam Management has placed on it.
O FOREIGN INVESTMENTS. The fund may invest in securities of
foreign issuers. 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 domestic investments,
which means the fund may at times be unable to sell them at
desirable prices. Foreign settlement procedures may also involve
additional risks. These risks are generally greater in the case
of developing (also known as emerging) markets that typically
have less developed legal and financial systems.
Certain of these risks may also apply to some extent to domestic
investments that are denominated in foreign currencies or that
are traded in foreign markets, or to securities of U.S. companies
that have significant foreign operations.
DERIVATIVES. The fund 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. The fund's return of a derivative
typically depends on the change in the value of the investment,
pool of investments, index or currency specified in the
derivative instrument.
The fund may use derivatives both for hedging and non-hedging
purposes, including seeking to manage the fund in a tax efficient
manner. The decision as to whether and to what extent the fund
will use derivatives will depend upon a number of factors,
including market conditions, the fund's investments and the
availability of suitable derivatives. Thus, the fund may not use
derivatives for these purposes from time to time or at any time.
Derivatives involve special risks and may result in losses. The
fund will be dependent on Putnam Management's ability to analyze
and manage these sophisticated instruments. 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 to the fund.
The fund's use of derivatives may also increase the amount of
taxes payable by shareholders.
Other risks arise from the 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 will not meet its
obligations to the fund. For further information about the risks
of derivatives, see the statement of additional information
(SAI).
O OTHER INVESTMENTS. In addition to the main investment
strategies described above, the fund may also make other types of
investments, such as investments in preferred stocks, convertible
securities or fixed income securities, and therefore may be
subject to other risks, as described in the fund's SAI.
O ALTERNATIVE STRATEGIES. At times Putnam Management may judge
that market conditions make pursuing the fund's investment
strategies inconsistent with the best interests of its
shareholders. Putnam Management then may temporarily use
alternative strategies that are mainly designed to limit the
fund's losses. Although Putnam Management has the flexibility to
use these strategies, it may choose not to 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.
O 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 at the annual rate of 0.70% of the first
$500 million of the average net asset value of the fund; 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% of any
excess thereafter. 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.
MANAGER SINCE EXPERIENCE
_____________________________________________
ROBERT R. BECK 1999 Employed by Putnam Management since December 1989.
Managing Director
MICHAEL P. STACK 1999 Employed by Putnam Management since 1997. Prior to
Senior Vice President November 1997, Mr. Stack was employed by
Independence Investment Associates Inc.
MICHAEL E. NANCE 1999 Employed by Putnam Management since 1994.
YEAR 2000 ISSUES. The fund could be adversely affected if the
computer systems used by Putnam Management and the fund's other
service providers do not properly process and calculate date-
related information relating to the end of this century and the
beginning of the next. While year 2000-related computer problems
could have a negative effect on the fund, both in its operations
and in its investments, Putnam Management is working to avoid
such problems and to obtain assurances from service providers
that they are taking similar steps. No assurances, though, can
be provided that the fund will not be adversely impacted by these
matters.
How does the fund price its shares?
The price of the funds 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. 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
O THROUGH A FINANCIAL ADVISOR Your advisor will be responsible
for furnishing all necessary documents to Putnam Investor
Services, and may charge you for his or her services.
O THROUGH SYSTEMATIC INVESTING You can make regular
investments of $25 or more per month through automatic deductions
from your bank checking or savings account. Application forms are
available through your advisor or Putnam Investor Services at 1-
800-225-1581.
You may also complete an order form and write a check for the
amount you wish to invest, payable to the fund. Return the check
and completed form to Putnam Mutual Funds.
The fund may periodically close to new purchases of shares or
refuse any order to buy shares if the fund determines that doing
so would be in the best interests of the fund and its
shareholders.
INITIAL SALES CHARGES FOR CLASS A SHARES
CLASS A SALES CHARGE
AS A PERCENTAGE OF:
-------------------------
AMOUNT OF PURCHASE NET AMOUNT OFFERING
AT OFFERING PRICE ($) INVESTED PRICE*
- ------------------------------------------------------------------
Under 50,000 6.10% 5.75%
50,000 but under 100,000 4.71 4.50
100,000 but under 250,000 3.63 3.50
250,000 but under 500,000 2.56 2.50
500,000 but under 1,000,000 2.04 2.00
1,000,000 and above NONE NONE
* Offering price includes sales charge.
DEFERRED SALES CHARGES FOR CERTAIN CLASS A SHARES
A deferred sales charge of up to 1% may apply to class A shares
purchased without an initial sales charge, if redeemed within two
years after purchase.
O YOU MAY BE ELIGIBLE FOR REDUCTIONS AND WAIVERS OF SALES
CHARGES. Sales charges may be reduced or waived under certain
circumstances and for certain groups. Information about
reductions and waivers of sales charges is included in the SAI.
You may consult your financial advisor of Putnam Mutual Funds for
assistance.
O DISTRIBUTION (12B-1) PLAN. The fund has adopted a
distribution plan 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 plan
provides for payments at annual rates (based on average net
assets) of up to 0.35%. Should the Trustees decide in the future
to approve payments under the plan, shareholders will be notified
and this prospectus will be revised.
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 take up
to 15 calendar days after the purchase date.
O SELLING SHARES THROUGH YOUR FINANCIAL ADVISOR. Your advisor
must receive your request in proper form before the close of
regular trading on the New York Stock Exchange to receive that
day's NAV, less any applicable deferred sales charge. Your
advisor will be responsible for furnishing all necessary
documents to Putnam Investor Services on a timely basis and may
charge you for his or her services.
O SELLING SHARES DIRECTLY TO THE FUND. Putnam Investor
Services must receive your request in proper form before the
close of regular trading on the New York Stock Exchange in order
to receive that day's NAV, less any applicable sales charge.
BY MAIL. Send a signed letter of instruction to Putnam Investor
Services.
BY TELEPHONE. You may use Putnam's Telephone Redemption Privilege
to redeem shares valued at less than $100,000 unless you have
notified Putnam Investor Services of an address change within the
preceding 15 days. Unless you indicate otherwise on the account
application, Putnam Investor Services will be authorized to
accept redemption and transfer instructions received by
telephone.
O ADDITIONAL DOCUMENTS. IF YOU
* sell shares with a value of $100,000 or more,
* want your redemption proceeds sent to an address other than
your address as it appears on Putnam's records, or
* have notified Putnam of a change in address within the
preceding 15 days,
the signatures of registered owners or their legal
representatives must be guaranteed by a bank, broker-dealer or
certain other financial institutions. Stock power forms are
available from your financial advisor, Putnam Investor Services
and many commercial banks.
Putnam Investor Services usually requires additional documents
for the sale of shares by a corporation, partnership, agent or
fiduciary, or a surviving joint owner. Contact Putnam Investor
Services for details.
O WHEN WILL THE FUND PAY ME? The fund generally sends you
payment for your shares the business day after your request is
received. Under unusual circumstances, the fund may suspend
redemptions, or postpone payment for more than seven days, as
permitted by federal securities laws.
O HOW WILL THE FUND PAY ME? The fund may pay you for shares
redeemed by giving you cash, portfolio securities or a
combination of both. If the fund gives you portfolio securities,
you will incur costs when you sell the securities.
O REDEMPTION BY THE FUND. If you own fewer shares than the
minimum set by the Trustees (presently 20 shares), the fund may
redeem your shares without your permission and send you the
proceeds. The fund may also redeem shares if you own shares more
than a maximum amount set by the Trustees. There is presently no
maximum, but the Trustees could set a maximum that 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 exchange.
To exchange your shares, complete an Exchange Authorization Form
and send it to Putnam Investor Services. The form is available
from Putnam Investor Services. A Telephone Exchange Privilege is
currently available for amounts up to $500,000. Ask your
financial advisor or Putnam Investor Services for prospectuses of
other Putnam funds. Some Putnam funds are not available in all
states.
The exchange privilege is not intended as a vehicle for short-
term trading. Excessive exchange activity may interfere with
portfolio management and have an adverse effect on all
shareholders. In order to limit excessive exchange activity and
otherwise promote the best interests of the fund, the fund
reserves the right to revise or terminate the exchange privilege,
limit the amount or number of exchanges or reject any exchange.
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 distributes any net investment income and any net
realized capital gains at least once a year. You may choose to
O reinvest all distributions in additional shares;
O receive any distributions from net investment income in cash
while reinvesting capital gains distributions in additional
shares; or
O receive all distributions in cash.
If you do not select an option when you open your account, all
distributions will be reinvested. If you do not cash a
distribution check within a specified period or notify Putnam
Investor Services to issue a new check, the distribution will be
reinvested in the fund. You will not receive any interest on
uncashed 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 will be taxable as capital gains.
Distributions of gains from investments that the fund owned for
one year or less will be taxable as ordinary income.
Distributions are taxable whether you received them in cash or
reinvested them in additional shares.
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.
FOR MORE INFORMATION ABOUT PUTNAM U.S. CORE TAX MANAGED FUND
The fund's statement of additional information (SAI) and annual
and semi-annual reports to shareholders include additional
information about the fund. The SAI, and the auditor's report and
financial statements included in the fund's most recent annual
report to its shareholders, are incorporated by reference into
this prospectus, which means they are part of this prospectus for
legal purposes. The fund's annual report discusses the market
conditions and investment strategies that significantly affected
the fund's performance during its last fiscal year. You may get
free copies of these materials, request other information about
the fund and other Putnam funds, or make shareholder inquiries,
by contacting your financial advisor or Putnam's Web site, or by
calling Putnam toll-free at 1-800-225-1581.
You may review and copy information about the fund, including its
SAI, at the Securities and Exchange Commission's public reference
room in Washington, D.C. You may call the Commission at 1-800-SEC-
0330 for information about the operation of the public reference
room. You may also access reports and other information about the
fund on the Commission's Internet site at http://www.sec.gov. You
may get copies of this information, with payment of a duplication
fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may need to refer to the fund's
file number.
PUTNAM INVESTMENTS
One Post Office Square
Boston, Massachusetts 02109
1-800-225-1581
ADDRESS CORRESPONDENCE TO
PUTNAM INVESTOR SERVICES
P.O. BOX 989
Boston MA 02103
File No. 811-7513
www.putnaminv.com [code] [ ]/99
PUTNAM U.S. CORE TAX MANAGED FUND
A SERIES OF PUTNAM TAX MANAGED FUNDS TRUST
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
, 1999
This SAI is not a prospectus and is only authorized for
distribution when accompanied or preceded by the prospectus of
the fund dated , 1999, as revised from time to time.
This SAI contains information that may be useful to investors but
that is not included in the prospectus. If the fund has more
than one form of current prospectus, each reference to the
prospectus in this SAI includes all of the fund's prospectuses,
unless otherwise noted. The SAI should be read together with the
applicable prospectus. For a free copy of the fund's prospectus,
call Putnam Investor Services at 1-800-225-1581 or write to
Putnam Investor Services, P.O. Box 41203, Providence, RI 02940-
1203.
Part I of this SAI contains specific information about the fund.
Part II includes information about the fund and the other Putnam
funds.
TABLE OF CONTENTS
FUND ORGANIZATION AND CLASSIFICATION I-3
INVESTMENT RESTRICTIONS I-3
CHARGES AND EXPENSES I-5
ADDITIONAL OFFICERS I-7
INDEPENDENT ACCOUNTANTS I-7
PART II
MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS II-1
TAXES II-25
MANAGEMENT II-28
DETERMINATION OF NET ASSET VALUE II-36
HOW TO BUY SHARES II-37
DISTRIBUTION PLANS II-48
INVESTOR SERVICES II-49
SIGNATURE GUARANTEES II-52
SUSPENSION OF REDEMPTIONS II-53
SHAREHOLDER LIABILITY II-53
STANDARD PERFORMANCE MEASURES II-53
COMPARISON OF PORTFOLIO PERFORMANCE II-54
SECURITIES RATINGS II-58
DEFINITIONS II-62
SAI
PART I
FUND ORGANIZATION AND CLASSIFICATION
Putnam U.S. Core Tax Managed Fund is a series of Putnam Tax
Managed Funds Trust (the "Trust"), a Massachusetts business trust
organized on April 6, 1999. A copy of the Agreement and
Declaration of Trust, which is governed by Massachusetts law, is
on file with the Secretary of State of The Commonwealth of
Massachusetts.
The Trust is an open-end 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. The fund may offer classes of shares with
different sales charges and expenses. Because of these different
sales charges and expenses, the investment performance of the
classes will vary. For more information, including your
eligibility to purchase certain classes of shares, contact your
investment dealer or Putnam Mutual Funds (at 1-800-225-1581).
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.
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.
INVESTMENT RESTRICTIONS
AS FUNDAMENTAL INVESTMENT RESTRICTIONS, WHICH MAY NOT BE CHANGED
WITHOUT A VOTE OF A MAJORITY OF THE OUTSTANDING VOTING
SECURITIES, THE FUND MAY NOT AND WILL NOT:
(1) Borrow money in excess of 33 1/3% of the value of its total
assets (not including the amount borrowed) at the time the
borrowing is made.
(2) Underwrite securities issued by other persons except to the
extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under certain
federal securities laws.
(3) Purchase or sell real estate, although it may purchase
securities of issuers which deal in real estate, securities which
are secured by interests in real estate, and securities which
represent interests in real estate, and it may acquire and
dispose of real estate or interests in real estate acquired
through the exercise of its rights as a holder of debt
obligations secured by real estate or interests therein.
(4) Purchase or sell commodities or commodity contracts, except
that the fund may purchase and sell financial futures contracts
and options and may enter into foreign exchange contracts and
other financial transactions not involving physical commodities.
(5) Make loans, except by purchase of debt obligations in which
the fund may invest consistent with its investment policies
(including without limitation debt obligations issued by other
Putnam funds), by entering into repurchase agreements or by
lending its portfolio securities.
(6) With respect to 75% of its total assets, invest in
securities of any issuer if, immediately after such investment,
more than 5% of the total assets of the fund (taken at current
value) would be invested in the securities of such issuer;
provided that this limitation does not apply to obligations
issued or guaranteed as to interest or principal by the U.S.
government or its political subdivisions.
(7) With respect to 75% of its total assets, acquire more than
10% of the voting securities of any issuer.
(8) Purchase securities (other than securities of the U.S.
government, its agencies or instrumentalities) if, as a result of
such purchase, more than 25% of the fund's total assets would be
invested in any one industry.
(9) Issue any class of securities which is senior to the fund's
shares of beneficial interest.
Although certain of the fund's fundamental investment
restrictions permit them to borrow money to a limited extent, the
fund does not currently intend to do so.
The Investment Company Act of 1940 provides that a "vote of a
majority of the outstanding voting securities" of a fund means
the affirmative vote of the lesser of (1) more than 50% of the
outstanding fund shares, or (2) 67% or more of the shares present
at a meeting if more than 50% of the outstanding fund shares are
represented at the meeting in person or by proxy.
IT IS CONTRARY TO THE FUND'S PRESENT POLICY, WHICH MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL, TO:
Invest in (a) securities which are not readily marketable, (b)
securities restricted as to resale (excluding securities
determined by the Trustees of the Trust (or the person designated
by the Trustees of the Trust to make such determinations) to be
readily marketable), and (c) repurchase agreements maturing in
more than seven days, if, as a result, more than 15% of the
fund's net assets (taken at current value) would be invested in
securities described in (a), (b) and (c) above.
------------------------
All percentage limitations on investments (other than pursuant to
the non-fundamental restriction listed above) will apply at the
time of the making of an investment and shall not be considered
violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment.
----------------------------------
CHARGES AND EXPENSES
MANAGEMENT FEES
Under a Management Contract dated April 13, 1999 the fund pays a
quarterly fee to Putnam Investment Management, Inc., the fund's
investment manager ("Putnam Management"), based on the average
net assets of the fund, as determined at the close of each
business day during the quarter, at the annual rate of 0.70% of
the first $500 million, 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.
TRUSTEE RESPONSIBILITIES AND FEES
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.
Each Trustee receives a fee for his or her services. Each
Trustee also receives fees for serving as Trustee of other Putnam
funds. The Trustees periodically review their fees to assure
that such fees continue to be appropriate in light of their
responsibilities as well as in relation to fees paid to trustees
of other mutual fund complexes. The Trustees meet monthly over a
two-day period, except in August. The Board Policy Committee,
which consists solely of Trustees not affiliated with Putnam
Management and is responsible for recommending Trustee
compensation, estimates that Committee and Trustee meeting time
together with the appropriate preparation requires the equivalent
of at least three business days per Trustee meeting. The
following table shows the year each Trustee was first elected a
Trustee of the Putnam funds, the estimated fees to be paid to
each Trustee by the fund for fiscal 1999 and the fees paid to
each Trustee by all of the Putnam funds during calendar year
1998:
<TABLE><CAPTION>
COMPENSATION TABLE
<S> <C> <C> <C> <C>
Estimated Estimated pension or Estimated Total
aggregate retirement annual benefits compensation
compensation benefits accrued from all from all
from the as part of Putnam funds Putnam
Trustees/Year fund(1) fund expenses upon retirement(2) funds(3)
Jameson A. Baxter/1994 $ $95,000 $207,000(4)
Hans H. Estin/1972 95,000 182,000
John A. Hill/1985 (5) 115,000 200,500(4)
Ronald J. Jackson/1996 95,000 200,500(4)
Paul L. Joskow/1997 95,000 180,500(4)
Elizabeth T. Kennan/1992 95,000 200,500
Lawrence J. Lasser/1992 95,000 178,500
John H. Mullin, III/1997 95,000 180,500(4)
Robert E. Patterson/1984 95,000 181,500
Donald S. Perkins/1982 95,000 182,500
William F. Pounds/1971(5) 115,000 215,000
George Putnam/1957 95,000 179,500
George Putnam, III/1984 95,000 181,500
A.J.C. Smith/1986 95,000 176,500
W. Thomas Stephens/1997 95,000 181,500(4)
W. Nicholas Thorndike/1992 95,000 182,500
(1) Includes an annual retainer and an attendance fee for each meeting attended.
(2) Assumes that each Trustee retires at the normal retirement date. Estimated
benefits for each Trustee are based on Trustee fee rates in effect during
calendar 1998.
(3) As of December 31, 1998, there were 113 funds in the Putnam family.
(4) Includes compensation deferred pursuant to a Trustee Compensation Deferral
Plan.
(5) Includes additional compensation for service as Vice Chairman of the Putnam
funds.
</TABLE>
Under a Retirement Plan for Trustees of the Putnam funds (the
"Plan"), each Trustee who retires with at least five years of
service as a Trustee of the funds is entitled to receive an annual
retirement benefit equal to one-half of the average annual
compensation paid to such Trustee for the last three years of
service prior to retirement. This retirement benefit is payable
during a Trustee's lifetime, beginning the year following
retirement, for a number of years equal to such Trustee's years of
service. A death benefit is also available under the Plan which
assures that the Trustee and his or her beneficiaries will receive
benefit payments for the lesser of an aggregate period of (i) ten
years or (ii) such Trustee's total years of service.
The Plan Administrator (a committee comprised of Trustees that
are not "interested persons" of the fund, as defined in the
Investment Company Act of 1940) may terminate or amend the Plan
at any time, but no termination or amendment will result in a
reduction in the amount of benefits (i) currently being paid to
a Trustee at the time of such termination or amendment, or (ii)
to which a current Trustee would have been entitled had he or
she retired immediately prior to such termination or amendment.
For additional information concerning the Trustees, see
"Management" in Part II of this SAI.
SHARE OWNERSHIP
At April 14, 1999, Putnam Investments, Inc. owned 100% of the
outstanding shares of each class of the fund. Putnam
Investments, Inc. is incorporated in Massachusetts, and its
parent corporation, Marsh & McLennan Companies, Inc., is
incorporated in Delaware. The address of Putnam Investments,
Inc. is One Post Office Square, Boston MA 02109.
ADDITIONAL OFFICERS
In addition to the persons listed as fund officers in Part II
of this SAI, each of the following persons is also a Vice
President of the fund and certain of the other Putnam funds,
the total number of which is noted parenthetically. Officers
of Putnam Management hold the same offices in Putnam
Management's parent company, Putnam Investments, Inc.
OFFICER NAME (AGE) (NUMBER OF FUNDS)
Robert R. Beck (58) (5 funds). Managing Director of Putnam
Management.
Michael P. Stack (40) (5 funds). Senior Vice President of
Putnam Management. Prior to November, 1997, Mr. Stack was a
Senior Vice President and Portfolio Manager at Independence
Investment Associates Inc.
Michael E. Nance (30) (5 funds). Vice President of Putnam
Management.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 160 Federal Street, Boston,
Massachusetts 02110, are the fund's independent accountants,
providing audit services, tax return review and other tax
consulting services and assistance and consultation in
connection with the review of various Securities and Exchange
Commission filings.
<PAGE>
II-98
4/1/99
TABLE OF CONTENTS
MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS II-1
TAXES.. II-25
MANAGEMENT II-28
DETERMINATION OF NET ASSET VALUE II-36
HOW TO BUY SHARES II-37
DISTRIBUTION PLANS II-48
INVESTOR SERVICES II-49
SIGNATURE GUARANTEES II-52
SUSPENSION OF REDEMPTIONS II-53
SHAREHOLDER LIABILITY II-53
STANDARD PERFORMANCE MEASURES II-53
COMPARISON OF PORTFOLIO PERFORMANCE II-54
SECURITIES RATINGS II-58
DEFINITIONS II-62
THE PUTNAM FUNDS
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
PART II
As noted in the prospectus, in addition to the principal
investment strategies and the principal risks described in the
prospectus, the fund may employ other investment practices and
may be subject to other risks, which are described below.
Because the following is a combined description of investment
strategies of all of the Putnam funds, certain matters described
herein may not apply to your fund. Unless a strategy or policy
described below is specifically prohibited by the investment
restrictions explained in a fund's prospectus or part I of this
SAI, or by applicable law, the fund may engage in each of the
practices described below. Shareholders who purchase shares at
net asset value through employer-sponsored defined contribution
plans should also consult their employer for information about
the extent to which the matters described below apply to them.
MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS
FOREIGN INVESTMENTS
The fund may invest in securities of foreign issuers. These
foreign investments involve certain special risks described
below.
Foreign securities are normally denominated and traded in foreign
currencies. As a result, the value of the fund's foreign
investments and the value of its shares may be affected favorably
or unfavorably by changes in currency exchange rates relative to
the U.S. dollar. There may be less information publicly
available about a foreign issuer than about a U.S. issuer, and
foreign issuers are not generally subject to accounting, auditing
and financial reporting standards and practices comparable to
those in the United States. The securities of some foreign
issuers are less liquid and at times more volatile than
securities of comparable U.S. issuers. Foreign brokerage
commissions and other fees are also generally higher than in the
United States. Foreign settlement procedures and trade
regulations may involve certain risks (such as delay in payment
or delivery of securities or in the recovery of the fund's assets
held abroad) and expenses not present in the settlement of
investments in U.S. markets.
In addition, the fund's investments in foreign securities may be
subject to the risk of nationalization or expropriation of
assets, imposition of currency exchange controls, foreign
withholding taxes or restrictions on the repatriation of foreign
currency, confiscatory taxation, political or financial
instability and diplomatic developments which could affect the
value of the fund's investments in certain foreign countries.
Dividends or interest on, or proceeds from the sale of, foreign
securities may be subject to foreign withholding taxes, and
special U.S. tax considerations may apply.
Legal remedies available to investors in certain foreign
countries may be more limited than those available with respect
to investments in the United States or in other foreign
countries. The laws of some foreign countries may limit the
fund's ability to invest in securities of certain issuers
organized under the laws of those foreign countries.
The risks described above, including the risks of nationalization
or expropriation of assets, are typically increased in connection
with investments in "emerging markets." For example, political
and economic structures in these countries may be in their
infancy and developing rapidly, and such countries may lack the
social, political and economic stability characteristic of more
developed countries. Certain of these countries have in the past
failed to recognize private property rights and have at times
nationalized and expropriated the assets of private companies.
High rates of inflation or currency devaluations may adversely
affect the economies and securities markets of such countries.
Investments in emerging markets may be considered speculative.
The currencies of certain emerging market countries have
experienced a steady devaluation relative to the U.S. dollar, and
continued devaluations may adversely affect the value of a fund's
assets denominated in such currencies. Many emerging market
companies have experienced substantial, and in some periods
extremely high, rates of inflation or deflation for many years,
and continued inflation may adversely affect the economies and
securities markets of such countries.
In addition, unanticipated political or social developments may
affect the value of the fund's investments in emerging markets
and the availability to the fund of additional investments in
these markets. The small size, limited trading volume and
relative inexperience of the securities markets in these
countries may make the fund's investments in securities traded in
emerging markets illiquid and more volatile than investments in
securities traded in more developed countries, and the fund may
be required to establish special custodial or other arrangements
before making investments in securities traded in emerging
markets. There may be little financial or accounting information
available with respect to issuers of emerging market securities,
and it may be difficult as a result to assess the value of
prospects of an investment in such securities.
Certain of the foregoing risks may also apply to some extent to
securities of U.S. issuers that are denominated in foreign
currencies or that are traded in foreign markets, or securities
of U.S. issuers having significant foreign operations.
FOREIGN CURRENCY TRANSACTIONS
The fund may engage without limit in currency exchange
transactions, including purchasing and selling foreign currency,
foreign currency options, foreign currency forward contracts and
foreign currency futures contracts and related options, to manage
its exposure to foreign currencies. In addition, the fund may
write covered call and put options on foreign currencies for the
purpose of increasing its current return.
Generally, the fund may engage in both "transaction hedging" and
"position hedging." The fund may also engage in foreign currency
transactions for non-hedging purposes, subject to applicable law.
When it engages in transaction hedging, the fund enters into
foreign currency transactions with respect to specific
receivables or payables, generally arising in connection with the
purchase or sale of portfolio securities. The fund will engage
in transaction hedging when it desires to "lock in" the U.S.
dollar price of a security it has agreed to purchase or sell, or
the U.S. dollar equivalent of a dividend or interest payment in a
foreign currency. By transaction hedging the fund will attempt
to protect itself against a possible loss resulting from an
adverse change in the relationship between the U.S. dollar and
the applicable foreign currency during the period between the
date on which the security is purchased or sold, or on which the
dividend or interest payment is earned, and the date on which
such payments are made or received.
The fund may purchase or sell a foreign currency on a spot (or
cash) basis at the prevailing spot rate in connection with the
settlement of transactions in portfolio securities denominated in
that foreign currency. If conditions warrant, for transaction
hedging purposes the fund may also enter into contracts to
purchase or sell foreign currencies at a future date ("forward
contracts") and purchase and sell foreign currency futures
contracts. A foreign currency forward contract is a negotiated
agreement to exchange currency at a future time at a rate or
rates that may be higher or lower than the spot rate. Foreign
currency futures contracts are standardized exchange-traded
contracts and have margin requirements. In addition, for
transaction hedging purposes the fund may also purchase or sell
exchange-listed and over-the-counter call and put options on
foreign currency futures contracts and on foreign currencies.
The fund may also enter into contracts to purchase or sell
foreign currencies at a future date ("forward contracts") and
purchase and sell foreign currency futures contracts.
For transaction hedging purposes the fund may also purchase
exchange-listed and over-the-counter call and put options on
foreign currency futures contracts and on foreign currencies. A
put option on a futures contract gives the fund the right to
assume a short position in the futures contract until the
expiration of the option. A put option on a currency gives the
fund the right to sell the currency at an exercise price until
the expiration of the option. A call option on a futures
contract gives the fund the right to assume a long position in
the futures contract until the expiration of the option. A call
option on a currency gives the fund the right to purchase the
currency at the exercise price until the expiration of the
option.
The fund may engage in position hedging to protect against a
decline in the value relative to the U.S. dollar of the
currencies in which its portfolio securities are denominated or
quoted (or an increase in the value of the currency in which the
securities the fund intends to buy are denominated, when the fund
holds cash or short-term investments). For position hedging
purposes, the fund may purchase or sell, on exchanges or in over-
the-counter markets, foreign currency futures contracts, foreign
currency forward contracts and options on foreign currency
futures contracts and on foreign currencies. In connection with
position hedging, the fund may also purchase or sell foreign
currency on a spot basis.
It is impossible to forecast with precision the market value of
portfolio securities at the expiration or maturity of a forward
or futures contract. Accordingly, it may be necessary for the
fund to purchase additional foreign currency on the spot market
(and bear the expense of such purchase) if the market value of
the security or securities being hedged is less than the amount
of foreign currency the fund is obligated to deliver and a
decision is made to sell the security or securities and make
delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency
received upon the sale of the portfolio security or securities if
the market value of such security or securities exceeds the
amount of foreign currency the fund is obligated to deliver.
Transaction and position hedging do not eliminate fluctuations in
the underlying prices of the securities which the fund owns or
intends to purchase or sell. They simply establish a rate of
exchange which one can achieve at some future point in time.
Additionally, although these techniques tend to minimize the risk
of loss due to a decline in the value of the hedged currency,
they tend to limit any potential gain which might result from the
increase in value of such currency. See "Risk factors in options
transactions."
The fund may seek to increase its current return or to offset
some of the costs of hedging against fluctuations in current
exchange rates by writing covered call options and covered put
options on foreign currencies. The fund receives a premium from
writing a call or put option, which increases the fund's current
return if the option expires unexercised or is closed out at a
net profit. The fund may terminate an option that it has written
prior to its expiration by entering into a closing purchase
transaction in which it purchases an option having the same terms
as the option written.
The fund's currency hedging transactions may call for the
delivery of one foreign currency in exchange for another foreign
currency and may at times not involve currencies in which its
portfolio securities are then denominated. Putnam Management
will engage in such "cross hedging" activities when it believes
that such transactions provide significant hedging opportunities
for the fund. Cross hedging transactions by the fund involve the
risk of imperfect correlation between changes in the values of
the currencies to which such transactions relate and changes in
the value of the currency or other asset or liability which is
the subject of the hedge.
The fund may also engage in non-hedging currency transactions.
For example, Putnam Management may believe that exposure to a
currency is in the fund's best interest but that securities
denominated in that currency are unattractive. In that case the
fund may purchase a currency forward contract or option in order
to increase its exposure to the currency. In accordance with SEC
regulations, the fund will segregate liquid assets in its
portfolio to cover forward contracts used for non-hedging
purposes.
The value of any currency, including U.S. dollars and foreign
currencies, may be affected by complex political and economic
factors applicable to the issuing country. In addition, the
exchange rates of foreign currencies (and therefore the values of
foreign currency options, forward contracts and futures
contracts) may be affected significantly, fixed, or supported
directly or indirectly by U.S. and foreign government actions.
Government intervention may increase risks involved in purchasing
or selling foreign currency options, forward contracts and
futures contracts, since exchange rates may not be free to
fluctuate in response to other market forces.
The value of a foreign currency option, forward contract or
futures contract reflects the value of an exchange rate, which in
turn reflects relative values of two currencies, the U.S. dollar
and the foreign currency in question. Because foreign currency
transactions occurring in the interbank market involve
substantially larger amounts than those that may be involved in
the exercise of foreign currency options, forward contracts and
futures contracts, investors may be disadvantaged by having to
deal in an odd-lot market for the underlying foreign currencies
in connection with options at prices that are less favorable than
for round lots. Foreign governmental restrictions or taxes could
result in adverse changes in the cost of acquiring or disposing
of foreign currencies.
There is no systematic reporting of last sale information for
foreign currencies and there is no regulatory requirement that
quotations available through dealers or other market sources be
firm or revised on a timely basis. Available quotation
information is generally representative of very large round-lot
transactions in the interbank market and thus may not reflect
exchange rates for smaller odd-lot transactions (less than $1
million) where rates may be less favorable. The interbank market
in foreign currencies is a global, around-the-clock market. To
the extent that options markets are closed while the markets for
the underlying currencies remain open, significant price and rate
movements may take place in the underlying markets that cannot be
reflected in the options markets.
The decision as to whether and to what extent the fund will
engage in foreign currency exchange transactions will depend on a
number of factors, including prevailing market conditions, the
composition of the fund's portfolio and the availability of
suitable transactions. Accordingly, there can be no assurance
that the fund will engage in foreign currency exchange
transactions at any given time or from time to time.
CURRENCY FORWARD AND FUTURES CONTRACTS. A forward foreign
currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number
of days from the date of the contract as agreed by the parties,
at a price set at the time of the contract. In the case of a
cancelable forward contract, the holder has the unilateral right
to cancel the contract at maturity by paying a specified fee.
The contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial
banks) and their customers. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage
for trades. A foreign currency futures contract is a
standardized contract for the future delivery of a specified
amount of a foreign currency at a price set at the time of the
contract. Foreign currency futures contracts traded in the
United States are designed by and traded on exchanges regulated
by the CFTC, such as the New York Mercantile Exchange.
Forward foreign currency exchange contracts differ from foreign
currency futures contracts in certain respects. For example, the
maturity date of a forward contract may be any fixed number of
days from the date of the contract agreed upon by the parties,
rather than a predetermined date in a given month. Forward
contracts may be in any amount agreed upon by the parties rather
than predetermined amounts. Also, forward foreign exchange
contracts are traded directly between currency traders so that no
intermediary is required. A forward contract generally requires
no margin or other deposit.
At the maturity of a forward or futures contract, the fund either
may accept or make delivery of the currency specified in the
contract, or at or prior to maturity enter into a closing
transaction involving the purchase or sale of an offsetting
contract. Closing transactions with respect to forward contracts
are usually effected with the currency trader who is a party to
the original forward contract. Closing transactions with respect
to futures contracts are effected on a commodities exchange; a
clearing corporation associated with the exchange assumes
responsibility for closing out such contracts.
Positions in the foreign currency futures contracts may be closed
out only on an exchange or board of trade which provides a
secondary market in such contracts. Although the fund intends to
purchase or sell foreign currency futures contracts only on
exchanges or boards of trade where there appears to be an active
secondary market, there is no assurance that a secondary market
on an exchange or board of trade will exist for any particular
contract or at any particular time. In such event, it may not be
possible to close a futures position and, in the event of adverse
price movements, the fund would continue to be required to make
daily cash payments of variation margin.
FOREIGN CURRENCY OPTIONS. In general, options on foreign
currencies operate similarly to options on securities and are
subject to many of the risks described above. Foreign currency
options are traded primarily in the over-the-counter market,
although options on foreign currencies are also listed on several
exchanges. Options are traded not only on the currencies of
individual nations, but also on the European Monetary Unit
("EMU"). The EMU is composed of amounts of a number of
currencies, and is the official medium of exchange of the
European Community's European Monetary System.
The fund will only purchase or write foreign currency options
when Putnam Management believes that a liquid secondary market
exists for such options. There can be no assurance that a liquid
secondary market will exist for a particular option at any
specific time. Options on foreign currencies are affected by all
of those factors which influence foreign exchange rates and
investments generally.
SETTLEMENT PROCEDURES. Settlement procedures relating to the
fund's investments in foreign securities and to the fund's
foreign currency exchange transactions may be more complex than
settlements with respect to investments in debt or equity
securities of U.S. issuers, and may involve certain risks not
present in the fund's domestic investments. For example,
settlement of transactions involving foreign securities or
foreign currencies may occur within a foreign country, and the
fund may be required to accept or make delivery of the underlying
securities or currency in conformity with any applicable U.S. or
foreign restrictions or regulations, and may be required to pay
any fees, taxes or charges associated with such delivery. Such
investments may also involve the risk that an entity involved in
the settlement may not meet its obligations.
FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers
do not charge a fee for currency conversion, they do realize a
profit based on the difference (the "spread") between prices at
which they are buying and selling various currencies. Thus, a
dealer may offer to sell a foreign currency to the fund at one
rate, while offering a lesser rate of exchange should the fund
desire to resell that currency to the dealer.
OPTIONS ON SECURITIES
WRITING COVERED OPTIONS. The fund may write covered call options
and covered put options on optionable securities held in its
portfolio, when in the opinion of Putnam Management such
transactions are consistent with the fund's investment
objective(s) and policies. Call options written by the fund give
the purchaser the right to buy the underlying securities from the
fund at a stated exercise price; put options give the purchaser
the right to sell the underlying securities to the fund at a
stated price.
The fund may write only covered options, which means that, so
long as the fund is obligated as the writer of a call option, it
will own the underlying securities subject to the option (or
comparable securities satisfying the cover requirements of
securities exchanges). In the case of put options, the fund will
hold cash and/or high-grade short-term debt obligations equal to
the price to be paid if the option is exercised. In addition,
the fund will be considered to have covered a put or call option
if and to the extent that it holds an option that offsets some or
all of the risk of the option it has written. The fund may write
combinations of covered puts and calls on the same underlying
security.
The fund will receive a premium from writing a put or call
option, which increases the fund's return on the underlying
security in the event the option expires unexercised or is closed
out at a profit. The amount of the premium reflects, among other
things, the relationship between the exercise price and the
current market value of the underlying security, the volatility
of the underlying security, the amount of time remaining until
expiration, current interest rates, and the effect of supply and
demand in the options market and in the market for the underlying
security. By writing a call option, the fund limits its
opportunity to profit from any increase in the market value of
the underlying security above the exercise price of the option
but continues to bear the risk of a decline in the value of the
underlying security. By writing a put option, the fund assumes
the risk that it may be required to purchase the underlying
security for an exercise price higher than its then-current
market value, resulting in a potential capital loss unless the
security subsequently appreciates in value.
The fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction, in
which it purchases an offsetting option. The fund realizes a
profit or loss from a closing transaction if the cost of the
transaction (option premium plus transaction costs) is less or
more than the premium received from writing the option. If the
fund writes a call option but does not own the underlying
security, and when it writes a put option, the fund may be
required to deposit cash or securities with its broker as
"margin," or collateral, for its obligation to buy or sell the
underlying security. As the value of the underlying security
varies, the fund may have to deposit additional margin with the
broker. Margin requirements are complex and are fixed by
individual brokers, subject to minimum requirements currently
imposed by the Federal Reserve Board and by stock exchanges and
other self-regulatory organizations.
PURCHASING PUT OPTIONS. The fund may purchase put options to
protect its portfolio holdings in an underlying security against
a decline in market value. Such protection is provided during
the life of the put option since the fund, as holder of the
option, is able to sell the underlying security at the put
exercise price regardless of any decline in the underlying
security's market price. In order for a put option to be
profitable, the market price of the underlying security must
decline sufficiently below the exercise price to cover the
premium and transaction costs. By using put options in this
manner, the fund will reduce any profit it might otherwise have
realized from appreciation of the underlying security by the
premium paid for the put option and by transaction costs.
PURCHASING CALL OPTIONS. The fund may purchase call options to
hedge against an increase in the price of securities that the
fund wants ultimately to buy. Such hedge protection is provided
during the life of the call option since the fund, as holder of
the call option, is able to buy the underlying security at the
exercise price regardless of any increase in the underlying
security's market price. In order for a call option to be
profitable, the market price of the underlying security must rise
sufficiently above the exercise price to cover the premium and
transaction costs.
RISK FACTORS IN OPTIONS TRANSACTIONS
The successful use of the fund's options strategies depends on
the ability of Putnam Management to forecast correctly interest
rate and market movements. For example, if the fund were to
write a call option based on Putnam Management's expectation that
the price of the underlying security would fall, but the price
were to rise instead, the fund could be required to sell the
security upon exercise at a price below the current market price.
Similarly, if the fund were to write a put option based on Putnam
Management's expectation that the price of the underlying
security would rise, but the price were to fall instead, the fund
could be required to purchase the security upon exercise at a
price higher than the current market price.
When the fund purchases an option, it runs the risk that it will
lose its entire investment in the option in a relatively short
period of time, unless the fund exercises the option or enters
into a closing sale transaction before the option's expiration.
If the price of the underlying security does not rise (in the
case of a call) or fall (in the case of a put) to an extent
sufficient to cover the option premium and transaction costs, the
fund will lose part or all of its investment in the option. This
contrasts with an investment by the fund in the underlying
security, since the fund will not realize a loss if the
security's price does not change.
The effective use of options also depends on the fund's ability
to terminate option positions at times when Putnam Management
deems it desirable to do so. There is no assurance that the fund
will be able to effect closing transactions at any particular
time or at an acceptable price.
If a secondary market in options were to become unavailable, the
fund could no longer engage in closing transactions. Lack of
investor interest might adversely affect the liquidity of the
market for particular options or series of options. A market may
discontinue trading of a particular option or options generally.
In addition, a market could become temporarily unavailable if
unusual events -- such as volume in excess of trading or clearing
capability -- were to interrupt its normal operations.
A market may at times find it necessary to impose restrictions on
particular types of options transactions, such as opening
transactions. For example, if an underlying security ceases to
meet qualifications imposed by the market or the Options Clearing
Corporation, new series of options on that security will no
longer be opened to replace expiring series, and opening
transactions in existing series may be prohibited. If an options
market were to become unavailable, the fund as a holder of an
option would be able to realize profits or limit losses only by
exercising the option, and the fund, as option writer, would
remain obligated under the option until expiration or exercise.
Disruptions in the markets for the securities underlying options
purchased or sold by the fund could result in losses on the
options. If trading is interrupted in an underlying security,
the trading of options on that security is normally halted as
well. As a result, the fund as purchaser or writer of an option
will be unable to close out its positions until options trading
resumes, and it may be faced with considerable losses if trading
in the security reopens at a substantially different price. In
addition, the Options Clearing Corporation or other options
markets may impose exercise restrictions. If a prohibition on
exercise is imposed at the time when trading in the option has
also been halted, the fund as purchaser or writer of an option
will be locked into its position until one of the two
restrictions has been lifted. If the Options Clearing
Corporation were to determine that the available supply of an
underlying security appears insufficient to permit delivery by
the writers of all outstanding calls in the event of exercise, it
may prohibit indefinitely the exercise of put options. The fund,
as holder of such a put option, could lose its entire investment
if the prohibition remained in effect until the put option's
expiration.
Foreign-traded options are subject to many of the same risks
presented by internationally-traded securities. In addition,
because of time differences between the United States and various
foreign countries, and because different holidays are observed in
different countries, foreign options markets may be open for
trading during hours or on days when U.S. markets are closed. As
a result, option premiums may not reflect the current prices of
the underlying interest in the United States.
Over-the-counter ("OTC") options purchased by the fund and assets
held to cover OTC options written by the fund may, under certain
circumstances, be considered illiquid securities for purposes of
any limitation on the fund's ability to invest in illiquid
securities.
INVESTMENTS IN MISCELLANEOUS FIXED-INCOME SECURITIES
If the fund may invest in inverse floating obligations, premium
securities, or interest-only or principal-only classes of
mortgage-backed securities (IOs and POs), it may do so without
limit. The fund, however, currently does not intend to invest
more than 15% of its assets in inverse floating obligations or
more than 35% of its assets in IOs and POs under normal market
conditions.
LOWER-RATED SECURITIES
The fund may invest in lower-rated fixed-income securities
(commonly known as "junk bonds"). The lower ratings of certain
securities held by the fund reflect a greater possibility that
adverse changes in the financial condition of the issuer or in
general economic conditions, or both, or an unanticipated rise in
interest rates, may impair the ability of the issuer to make
payments of interest and principal. The inability (or perceived
inability) of issuers to make timely payment of interest and
principal would likely make the values of securities held by the
fund more volatile and could limit the fund's ability to sell its
securities at prices approximating the values the fund had placed
on such securities. In the absence of a liquid trading market
for securities held by it, the fund at times may be unable to
establish the fair value of such securities.
Securities ratings are based largely on the issuer's historical
financial condition and the rating agencies' analysis at the time
of rating. Consequently, the rating assigned to any particular
security is not necessarily a reflection of the issuer's current
financial condition, which may be better or worse than the rating
would indicate. In addition, the rating assigned to a security
by Moody's Investors Service, Inc. or Standard & Poor's (or by
any other nationally recognized securities rating agency) does
not reflect an assessment of the volatility of the security's
market value or the liquidity of an investment in the security.
See "Securities ratings."
Like those of other fixed-income securities, the values of lower-
rated securities fluctuate in response to changes in interest
rates. A decrease in interest rates will generally result in an
increase in the value of the fund's assets. Conversely, during
periods of rising interest rates, the value of the fund's assets
will generally decline. The values of lower-rated securities may
often be affected to a greater extent by changes in general
economic conditions and business conditions affecting the issuers
of such securities and their industries. Negative publicity or
investor perceptions may also adversely affect the values of
lower-rated securities. Changes by nationally recognized
securities rating agencies in their ratings of any fixed-income
security and changes in the ability of an issuer to make payments
of interest and principal may also affect the value of these
investments. Changes in the value of portfolio securities
generally will not affect income derived from these securities,
but will affect the fund's net asset value. The fund will not
necessarily dispose of a security when its rating is reduced
below its rating at the time of purchase. However, Putnam
Management will monitor the investment to determine whether its
retention will assist in meeting the fund's investment
objective(s).
Issuers of lower-rated securities are often highly leveraged, so
that their ability to service their debt obligations during an
economic downturn or during sustained periods of rising interest
rates may be impaired. Such issuers may not have more
traditional methods of financing available to them and may be
unable to repay outstanding obligations at maturity by
refinancing. The risk of loss due to default in payment of
interest or repayment of principal by such issuers is
significantly greater because such securities frequently are
unsecured and subordinated to the prior payment of senior
indebtedness.
At times, a substantial portion of the fund's assets may be
invested in securities of which the fund, by itself or together
with other funds and accounts managed by Putnam Management or its
affiliates, holds all or a major portion. Although Putnam
Management generally considers such securities to be liquid
because of the availability of an institutional market for such
securities, it is possible that, under adverse market or economic
conditions or in the event of adverse changes in the financial
condition of the issuer, the fund could find it more difficult to
sell these securities when Putnam Management believes it
advisable to do so or may be able to sell the securities only at
prices lower than if they were more widely held. Under these
circumstances, it may also be more difficult to determine the
fair value of such securities for purposes of computing the
fund's net asset value. In order to enforce its rights in the
event of a default of such securities, the fund may be required
to participate in various legal proceedings or take possession of
and manage assets securing the issuer's obligations on such
securities. This could increase the fund's operating expenses
and adversely affect the fund's net asset value. In the case of
tax-exempt funds, any income derived from the fund's ownership or
operation of such assets would not be tax-exempt. The ability of
a holder of a tax-exempt security to enforce the terms of that
security in a bankruptcy proceeding may be more limited than
would be the case with respect to securities of private issuers.
In addition, the fund's intention to qualify as a "regulated
investment company" under the Internal Revenue Code may limit the
extent to which the fund may exercise its rights by taking
possession of such assets.
Certain securities held by the fund may permit the issuer at its
option to "call," or redeem, its securities. If an issuer were
to redeem securities held by the fund during a time of declining
interest rates, the fund may not be able to reinvest the proceeds
in securities providing the same investment return as the
securities redeemed.
The fund may invest without limit in so-called "zero-coupon"
bonds and "payment-in-kind" bonds. Zero-coupon bonds are issued
at a significant discount from their principal amount in lieu of
paying interest periodically. Payment-in-kind bonds allow the
issuer, at its option, to make current interest payments on the
bonds either in cash or in additional bonds. Because zero-coupon
and payment-in-kind bonds do not pay current interest in cash,
their value is subject to greater fluctuation in response to
changes in market interest rates than bonds that pay interest
currently. Both zero-coupon and payment-in-kind bonds allow an
issuer to avoid the need to generate cash to meet current
interest payments. Accordingly, such bonds may involve greater
credit risks than bonds paying interest currently in cash. The
fund is required to accrue interest income on such investments
and to distribute such amounts at least annually to shareholders
even though such bonds do not pay current interest in cash.
Thus, it may be necessary at times for the fund to liquidate
investments in order to satisfy its dividend requirements.
To the extent the fund invests in securities in the lower rating
categories, the achievement of the fund's goals is more dependent
on Putnam Management's investment analysis than would be the case
if the fund were investing in securities in the higher rating
categories. This may be particularly true with respect to tax-
exempt securities, as the amount of information about the
financial condition of an issuer of tax-exempt securities may not
be as extensive as that which is made available by corporations
whose securities are publicly traded.
LOAN PARTICIPATIONS
The fund may invest in "loan participations." By purchasing a
loan participation, the fund acquires some or all of the interest
of a bank or other lending institution in a loan to a particular
borrower. Many such loans are secured, and most impose
restrictive covenants which must be met by the borrower.
The loans in which the fund may invest are typically made by a
syndicate of banks, represented by an agent bank which has
negotiated and structured the loan and which is responsible
generally for collecting interest, principal, and other amounts
from the borrower on its own behalf and on behalf of the other
lending institutions in the syndicate and for enforcing its and
their other rights against the borrower. Each of the lending
institutions, including the agent bank, lends to the borrower a
portion of the total amount of the loan, and retains the
corresponding interest in the loan.
The fund's ability to receive payments of principal and interest
and other amounts in connection with loan participations held by
it will depend primarily on the financial condition of the
borrower. The failure by the fund to receive scheduled interest
or principal payments on a loan participation would adversely
affect the income of the fund and would likely reduce the value
of its assets, which would be reflected in a reduction in the
fund's net asset value. Banks and other lending institutions
generally perform a credit analysis of the borrower before
originating a loan or participating in a lending syndicate. In
selecting the loan participations in which the fund will invest,
however, Putnam Management will not rely solely on that credit
analysis, but will perform its own investment analysis of the
borrowers. Putnam Management's analysis may include
consideration of the borrower's financial strength and managerial
experience, debt coverage, additional borrowing requirements or
debt maturity schedules, changing financial conditions, and
responsiveness to changes in business conditions and interest
rates. Because loan participations in which the fund may invest
are not generally rated by independent credit rating agencies, a
decision by the fund to invest in a particular loan participation
will depend almost exclusively on Putnam Management's, and the
original lending institution's, credit analysis of the borrower.
Loan participations may be structured in different forms,
including novations, assignments, and participating interests.
In a novation, the fund assumes all of the rights of a lending
institution in a loan, including the right to receive payments of
principal and interest and other amounts directly from the
borrower and to enforce its rights as a lender directly against
the borrower. The fund assumes the position of a co-lender with
other syndicate members. As an alternative, the fund may
purchase an assignment of a portion of a lender's interest in a
loan. In this case, the fund may be required generally to rely
upon the assigning bank to demand payment and enforce its rights
against the borrower, but would otherwise be entitled to all of
such bank's rights in the loan. The fund may also purchase a
participating interest in a portion of the rights of a lending
institution in a loan. In such case, it will be entitled to
receive payments of principal, interest, and premium, if any, but
will not generally be entitled to enforce its rights directly
against the agent bank or the borrower, but must rely for that
purpose on the lending institution. The fund may also acquire a
loan participation directly by acting as a member of the original
lending syndicate.
The fund will in many cases be required to rely upon the lending
institution from which it purchases the loan participation to
collect and pass on to the fund such payments and to enforce the
fund's rights under the loan. As a result, an insolvency,
bankruptcy, or reorganization of the lending institution may
delay or prevent the fund from receiving principal, interest, and
other amounts with respect to the underlying loan. When the fund
is required to rely upon a lending institution to pay to the fund
principal, interest, and other amounts received by it, Putnam
Management will also evaluate the creditworthiness of the lending
institution.
The borrower of a loan in which the fund holds a participation
interest may, either at its own election or pursuant to terms of
the loan documentation, prepay amounts of the loan from time to
time. There is no assurance that the fund will be able to
reinvest the proceeds of any loan prepayment at the same interest
rate or on the same terms as those of the original loan
participation.
Corporate loans in which the fund may purchase a loan
participation are made generally to finance internal growth,
mergers, acquisitions, stock repurchases, leveraged buy-outs, and
other corporate activities. Under current market conditions,
most of the corporate loan participations purchased by the fund
will represent interests in loans made to finance highly
leveraged corporate acquisitions, known as "leveraged buy-out"
transactions. The highly leveraged capital structure of the
borrowers in such transactions may make such loans especially
vulnerable to adverse changes in economic or market conditions.
In addition, loan participations generally are subject to
restrictions on transfer, and only limited opportunities may
exist to sell such participations in secondary markets. As a
result, the fund may be unable to sell loan participations at a
time when it may otherwise be desirable to do so or may be able
to sell them only at a price that is less than their fair market
value.
Certain of the loan participations acquired by the fund may
involve revolving credit facilities under which a borrower may
from time to time borrow and repay amounts up to the maximum
amount of the facility. In such cases, the fund would have an
obligation to advance its portion of such additional borrowings
upon the terms specified in the loan participation. To the
extent that the fund is committed to make additional loans under
such a participation, it will at all times hold and maintain in a
segregated account liquid assets in an amount sufficient to meet
such commitments. Certain of the loan participations acquired by
the fund may also involve loans made in foreign currencies. The
fund's investment in such participations would involve the risks
of currency fluctuations described above with respect to
investments in the foreign securities.
FLOATING RATE AND VARIABLE RATE DEMAND NOTES
Certain funds may purchase floating rate and variable rate demand
notes and bonds. These securities may have a stated maturity in
excess of one year, but permit a holder to demand payment of
principal plus accrued interest upon a specified number of days
notice. Frequently, such obligations are secured by letters of
credit or other credit support arrangements provided by banks.
The issuer has a corresponding right, after a given period, to
prepay in its discretion the outstanding principal of the
obligation plus accrued interest upon a specific number of days
notice to the holders. The interest rate of a floating rate
instrument may be based on a known lending rate, such as a bank's
prime rate, and is reset whenever such rate is adjusted. The
interest rate on a variable rate demand note is reset at
specified intervals at a market rate.
MORTGAGE RELATED AND ASSET-BACKED SECURITIES
The fund may invest in mortgage-backed securities, including
collateralized mortgage obligations ("CMOs") and certain stripped
mortgage-backed securities. CMOs and other mortgage-backed
securities represent a participation in, or are secured by,
mortgage loans.
The fund may also invest in asset-backed securities. Asset-backed
securities are structured like mortgage-backed securities, but
instead of mortgage loans or interests in mortgage loans, the
underlying assets may include such items as motor vehicle
installment sales or installment loan contracts, leases of
various types of real and personal property, and receivables from
credit card agreements. The ability of an issuer of asset-backed
securities to enforce its security interest in the underlying
assets may be limited.
Mortgage-backed securities have yield and maturity
characteristics corresponding to the underlying assets. Unlike
traditional debt securities, which may pay a fixed rate of
interest until maturity, when the entire principal amount comes
due, payments on certain mortgage-backed securities include both
interest and a partial repayment of principal. Besides the
scheduled repayment of principal, repayments of principal may
result from the voluntary prepayment, refinancing, or foreclosure
of the underlying mortgage loans. If property owners make
unscheduled prepayments of their mortgage loans, these
prepayments will result in early payment of the applicable
mortgage-related securities. In that event the fund may be
unable to invest the proceeds from the early payment of the
mortgage-related securities in an investment that provides as
high a yield as the mortgage-related securities. Consequently,
early payment associated with mortgage-related securities may
cause these securities to experience significantly greater price
and yield volatility than that experienced by traditional fixed-
income securities. The occurrence of mortgage prepayments is
affected by factors including the level of interest rates,
general economic conditions, the location and age of the mortgage
and other social and demographic conditions. During periods of
falling interest rates, the rate of mortgage prepayments tends to
increase, thereby tending to decrease the life of mortgage-
related securities. During periods of rising interest rates, the
rate of mortgage prepayments usually decreases, thereby tending
to increase the life of mortgage-related securities. If the life
of a mortgage-related security is inaccurately predicted, the
fund may not be able to realize the rate of return it expected.
Mortgage-backed and asset-backed securities are less effective
than other types of securities as a means of "locking in"
attractive long-term interest rates. One reason is the need to
reinvest prepayments of principal; another is the possibility of
significant unscheduled prepayments resulting from declines in
interest rates. These prepayments would have to be reinvested at
lower rates. As a result, these securities may have less
potential for capital appreciation during periods of declining
interest rates than other securities of comparable maturities,
although they may have a similar risk of decline in market value
during periods of rising interest rates. Prepayments may also
significantly shorten the effective maturities of these
securities, especially during periods of declining interest
rates. Conversely, during periods of rising interest rates, a
reduction in prepayments may increase the effective maturities of
these securities, subjecting them to a greater risk of decline in
market value in response to rising interest rates than
traditional debt securities, and, therefore, potentially
increasing the volatility of the fund.
Prepayments may cause losses on securities purchased at a
premium. At times, some of the mortgage-backed and asset-backed
securities in which the fund may invest will have higher than
market interest rates and therefore will be purchased at a
premium above their par value. Unscheduled prepayments, which are
made at par, will cause the fund to experience a loss equal to
any unamortized premium.
CMOs may be issued by a U.S. government agency or instrumentality
or by a private issuer. Although payment of the principal of,
and interest on, the underlying collateral securing privately
issued CMOs may be guaranteed by the U.S. government or its
agencies or instrumentalities, these CMOs represent obligations
solely of the private issuer and are not insured or guaranteed by
the U.S. government, its agencies or instrumentalities or any
other person or entity.
Prepayments could cause early retirement of CMOs. CMOs are
designed to reduce the risk of prepayment for investors by
issuing multiple classes of securities, each having different
maturities, interest rates and payment schedules, and with the
principal and interest on the underlying mortgages allocated
among the several classes in various ways. Payment of interest
or principal on some classes or series of CMOs may be subject to
contingencies or some classes or series may bear some or all of
the risk of default on the underlying mortgages. CMOS of
different classes or series are generally retired in sequence as
the underlying mortgage loans in the mortgage pool are repaid.
If enough mortgages are repaid ahead of schedule, the classes or
series of a CMO with the earliest maturities generally will be
retired prior to their maturities. Thus, the early retirement of
particular classes or series of a CMO held by the fund would have
the same effect as the prepayment of mortgages underlying other
mortgage-backed securities. Conversely, slower than anticipated
prepayments can extend the effective maturities of CMOs,
subjecting them to a greater risk of decline in market value in
response to rising interest rates than traditional debt
securities, and, therefore, potentially increasing the volatility
of the fund.
Prepayments could result in losses on stripped mortgage-backed
securities. Stripped mortgage-backed securities are usually
structured with two classes that receive different portions of
the interest and principal distributions on a pool of mortgage
loans. The fund may invest in both the interest-only or "IO"
class and the principal-only or "PO" class. The yield to
maturity on an IO class of stripped mortgage-backed securities is
extremely sensitive not only to changes in prevailing interest
rates but also to the rate of principal payments (including
prepayments) on the underlying assets. A rapid rate of principal
prepayments may have a measurable adverse effect on the fund's
yield to maturity to the extent it invests in IOs. If the assets
underlying the IO experience greater than anticipated prepayments
of principal, the fund may fail to recoup fully its initial
investment in these securities. Conversely, POs tend to increase
in value if prepayments are greater than anticipated and decline
if prepayments are slower than anticipated.
The secondary market for stripped mortgage-backed securities may
be more volatile and less liquid than that for other mortgage-
backed securities, potentially limiting the fund's ability to buy
or sell those securities at any particular time.
STRUCTURED NOTES
A fund may be able to invest in so-called structured notes. These
securities are generally derivative instruments whose value is
tied to an underlying index or other security or asset class.
Such structured notes may include, for example, notes that allow
a fund to invest indirectly in certain foreign investments which
the fund would otherwise would not be able to directly invest
often because of restrictions imposed by local laws.
TAX-EXEMPT SECURITIES
GENERAL DESCRIPTION. As used in this SAI, the term "Tax-exempt
securities" includes debt obligations issued by a state, its
political subdivisions (for example, counties, cities, towns,
villages, districts and authorities) and their agencies,
instrumentalities or other governmental units, the interest from
which is, in the opinion of bond counsel, exempt from federal
income tax and the appropriate state's personal income tax. Such
obligations are issued to obtain funds for various public
purposes, including the construction of a wide range of public
facilities, such as airports, bridges, highways, housing,
hospitals, mass transportation, schools, streets and water and
sewer works. Other public purposes for which Tax-exempt
securities may be issued include the refunding of outstanding
obligations or the payment of general operating expenses.
Short-term Tax-exempt securities are generally issued by state
and local governments and public authorities as interim financing
in anticipation of tax collections, revenue receipts, or bond
sales to finance such public purposes.
In addition, certain types of "private activity" bonds may be
issued by public authorities to finance projects such as
privately operated housing facilities; certain local facilities
for supplying water, gas or electricity; sewage or solid waste
disposal facilities; student loans; or public or private
institutions for the construction of educational, hospital,
housing and other facilities. Such obligations are included
within the term Tax-exempt securities if the interest paid
thereon is, in the opinion of bond counsel, exempt from federal
income tax and state personal income tax (such interest may,
however, be subject to federal alternative minimum tax). Other
types of private activity bonds, the proceeds of which are used
for the construction, repair or improvement of, or to obtain
equipment for, privately operated industrial or commercial
facilities, may also constitute Tax-exempt securities, although
the current federal tax laws place substantial limitations on the
size of such issues.
PARTICIPATION INTERESTS (MONEY MARKET FUNDS ONLY). The Money
Market Fund may invest in Tax-exempt securities either by
purchasing them directly or by purchasing certificates of accrual
or similar instruments evidencing direct ownership of interest
payments or principal payments, or both, on Tax-exempt
securities, provided that, in the opinion of counsel to the
initial seller of each such certificate or instrument, any
discount accruing on a certificate or instrument that is
purchased at a yield not greater than the coupon rate of interest
on the related Tax-exempt securities will be exempt from federal
income tax to the same extent as interest on the Tax-exempt
securities. The Money Market Fund may also invest in Tax-exempt
securities by purchasing from banks participation interests in
all or part of specific holdings of Tax-exempt securities. These
participations may be backed in whole or in part by an
irrevocable letter of credit or guarantee of the selling bank.
The selling bank may receive a fee from the Money Market Fund in
connection with the arrangement. The Money Market Fund will not
purchase such participation interests unless it receives an
opinion of counsel or a ruling of the Internal Revenue Service
that interest earned by it on Tax-exempt securities in which it
holds such participation interests is exempt from federal income
tax. The Money Market Fund does not expect to invest more than
5% of its assets in participation interests.
STAND-BY COMMITMENTS. When the fund purchases Tax-exempt
securities, it has the authority to acquire stand-by commitments
from banks and broker-dealers with respect to those Tax-exempt
securities. A stand-by commitment may be considered a security
independent of the Tax-exempt security to which it relates. The
amount payable by a bank or dealer during the time a stand-by
commitment is exercisable, absent unusual circumstances, would be
substantially the same as the market value of the underlying Tax-
exempt security to a third party at any time. The fund expects
that stand-by commitments generally will be available without the
payment of direct or indirect consideration. The fund does not
expect to assign any value to stand-by commitments.
YIELDS. The yields on Tax-exempt securities depend on a variety
of factors, including general money market conditions, effective
marginal tax rates, the financial condition of the issuer,
general conditions of the Tax-exempt security market, the size of
a particular offering, the maturity of the obligation and the
rating of the issue. The ratings of nationally recognized
securities rating agencies represent their opinions as to the
credit quality of the Tax-exempt securities which they undertake
to rate. It should be emphasized, however, that ratings are
general and are not absolute standards of quality. Consequently,
Tax-exempt securities with the same maturity and interest rate
but with different ratings may have the same yield. Yield
disparities may occur for reasons not directly related to the
investment quality of particular issues or the general movement
of interest rates and may be due to such factors as changes in
the overall demand or supply of various types of Tax-exempt
securities or changes in the investment objectives of investors.
Subsequent to purchase by the fund, an issue of Tax-exempt
securities or other investments may cease to be rated, or its
rating may be reduced below the minimum rating required for
purchase by the fund. Neither event will require the elimination
of an investment from the fund's portfolio, but Putnam Management
will consider such an event in its determination of whether the
fund should continue to hold an investment in its portfolio.
"MORAL OBLIGATION" BONDS. The fund does not currently intend to
invest in so-called "moral obligation" bonds, where repayment is
backed by a moral commitment of an entity other than the issuer,
unless the credit of the issuer itself, without regard to the
"moral obligation," meets the investment criteria established for
investments by the fund.
MUNICIPAL LEASES. The fund may acquire participations in lease
obligations or installment purchase contract obligations
(collectively, "lease obligations") of municipal authorities or
entities. Lease obligations do not constitute general obligations
of the municipality for which the municipality's taxing power is
pledged. Certain of these lease obligations contain "non-
appropriation" clauses, which provide that the municipality has
no obligation to make lease or installment purchase payments in
future years unless money is appropriated for such purpose on a
yearly basis. In addition to the "non-appropriation" risk, these
securities represent a relatively new type of financing that has
not yet developed the depth of marketability associated with more
conventional bonds. In the case of a "non-appropriation" lease,
the fund's ability to recover under the lease in the event of non-
appropriation or default will be limited solely to the
repossession of the leased property, and in any event,
foreclosure of that property might prove difficult.
ADDITIONAL RISKS. Securities in which the fund may invest,
including Tax-exempt securities, are subject to the provisions of
bankruptcy, insolvency and other laws affecting the rights and
remedies of creditors, such as the federal Bankruptcy Code
(including special provisions related to municipalities and other
public entities), and laws, if any, that may be enacted by
Congress or state legislatures extending the time for payment of
principal or interest, or both, or imposing other constraints
upon enforcement of such obligations. There is also the
possibility that, as a result of litigation or other conditions,
the power, ability or willingness of issuers to meet their
obligations for the payment of interest and principal on their
Tax-exempt securities may be materially affected.
From time to time, proposals have been introduced before Congress
for the purpose of restricting or eliminating the federal income
tax exemption for interest on debt obligations issued by states
and their political subdivisions. Federal tax laws limit the
types and amounts of tax-exempt bonds issuable for certain
purposes, especially industrial development bonds and private
activity bonds. Such limits may affect the future supply and
yields of these types of Tax-exempt securities. Further
proposals limiting the issuance of tax-exempt bonds may well be
introduced in the future. If it appeared that the availability
of Tax-exempt securities for investment by the fund and the value
of the fund's portfolio could be materially affected by such
changes in law, the Trustees of the fund would reevaluate its
investment objective and policies and consider changes in the
structure of the fund or its dissolution.
CONVERTIBLE SECURITIES
Convertible securities include bonds, debentures, notes,
preferred stocks and other securities that may be converted into
or exchanged for, at a specific price or formula within a
particular period of time, a prescribed amount of common stock or
other equity securities of the same or a different issuer.
Convertible securities entitle the holder to receive interest
paid or accrued on debt or dividends paid or accrued on preferred
stock until the security matures or is redeemed, converted or
exchanged.
The market value of a convertible security is a function of its
"investment value" and its "conversion value." A security's
"investment value" represents the value of the security without
its conversion feature (i.e., a nonconvertible fixed income
security). The investment value may be determined by reference
to its credit quality and the current value of its yield to
maturity or probable call date. At any given time, investment
value is dependent upon such factors as the general level of
interest rates, the yield of similar nonconvertible securities,
the financial strength of the issuer and the seniority of the
security in the issuer's capital structure. A security's
"conversion value" is determined by multiplying the number of
shares the holder is entitled to receive upon conversion or
exchange by the current price of the underlying security.
If the conversion value of a convertible security is
significantly below its investment value, the convertible
security will trade like nonconvertible debt or preferred stock
and its market value will not be influenced greatly by
fluctuations in the market price of the underlying security.
Conversely, if the conversion value of a convertible security is
near or above its investment value, the market value of the
convertible security will be more heavily influenced by
fluctuations in the market price of the underlying security.
The fund's investments in convertible securities may at times
include securities that have a mandatory conversion feature,
pursuant to which the securities convert automatically into
common stock or other equity securities at a specified date and a
specified conversion ratio, or that are convertible at the option
of the issuer. Because conversion of the security is not at the
option of the holder, the fund may be required to convert the
security into the underlying common stock even at times when the
value of the underlying common stock or other equity security has
declined substantially.
The fund's investments in convertible securities, particularly
securities that are convertible into securities of an issuer
other than the issuer of the convertible security, may be
illiquid. The fund may not be able to dispose of such securities
in a timely fashion or for a fair price, which could result in
losses to the fund.
PRIVATE PLACEMENTS
The fund may invest in securities that are purchased in private
placements and, accordingly, are subject to restrictions on
resale as a matter of contract or under federal securities laws.
Because there may be relatively few potential purchasers for such
investments, especially under adverse market or economic
conditions or in the event of adverse changes in the financial
condition of the issuer, the fund could find it more difficult to
sell such securities when Putnam Management believes it advisable
to do so or may be able to sell such securities only at prices
lower than if such securities were more widely held. At times,
it may also be more difficult to determine the fair value of such
securities for purposes of computing the fund's net asset value.
While such private placements may often offer attractive
opportunities for investment not otherwise available on the open
market, the securities so purchased are often "restricted
securities," i.e., securities which cannot be sold to the
public without registration under the Securities Act of 1933 or
the availability of an exemption from registration (such as
Rules 144 or 144A), or which are "not readily marketable" because
they are subject to other legal or contractual delays in or
restrictions on resale.
The absence of a trading market can make it difficult to
ascertain a market value for illiquid investments. Disposing of
illiquid investments may involve time-consuming negotiation and
legal expenses, and it may be difficult or impossible for the
fund to sell them promptly at an acceptable price. The fund may
have to bear the extra expense of registering such securities for
resale and the risk of substantial delay in effecting such
registration. Also market quotations are less readily available.
The judgment of Putnam Management may at times play a greater
role in valuing these securities than in the case of unrestricted
securities.
Generally speaking, restricted securities may be sold only to
qualified institutional buyers, or in a privately negotiated
transaction to a limited number of purchasers, or in limited
quantities after they have been held for a specified period of
time and other conditions are met pursuant to an exemption from
registration, or in a public offering for which a registration
statement is in effect under the Securities Act of 1933. The
funds may be deemed to be an "underwriter" for purposes of the
Securities Act of 1933 when selling restricted securities to the
public, and in such event the fund may be liable to purchasers of
such securities if the registration statement prepared by the
issuer, or the prospectus forming a part of it, is materially
inaccurate or misleading.
FUTURES CONTRACTS AND RELATED OPTIONS
Subject to applicable law the fund may invest without limit in
futures contracts and related options for hedging and non-hedging
purposes, such as to manage the effective duration of the fund's
portfolio or as a substitute for direct investment. A financial
futures contract sale creates an obligation by the seller to
deliver the type of financial instrument called for in the
contract in a specified delivery month for a stated price. A
financial futures contract purchase creates an obligation by the
purchaser to take delivery of the type of financial instrument
called for in the contract in a specified delivery month at a
stated price. The specific instruments delivered or taken,
respectively, at settlement date are not determined until on or
near that date. The determination is made in accordance with the
rules of the exchange on which the futures contract sale or
purchase was made. Futures contracts are traded in the United
States only on commodity exchanges or boards of trade -- known as
"contract markets" -- approved for such trading by the Commodity
Futures Trading Commission (the "CFTC"), and must be executed
through a futures commission merchant or brokerage firm which is
a member of the relevant contract market.
Although futures contracts (other than index futures) by their
terms call for actual delivery or acceptance of commodities or
securities, in most cases the contracts are closed out before the
settlement date without the making or taking of delivery.
Closing out a futures contract sale is effected by purchasing a
futures contract for the same aggregate amount of the specific
type of financial instrument or commodity with the same delivery
date. If the price of the initial sale of the futures contract
exceeds the price of the offsetting purchase, the seller is paid
the difference and realizes a gain. Conversely, if the price of
the offsetting purchase exceeds the price of the initial sale,
the seller realizes a loss. If the fund is unable to enter into
a closing transaction, the amount of the fund's potential loss is
unlimited. The closing out of a futures contract purchase is
effected by the purchaser's entering into a futures contract
sale. If the offsetting sale price exceeds the purchase price,
the purchaser realizes a gain, and if the purchase price exceeds
the offsetting sale price, he realizes a loss. In general, 40%
of the gain or loss arising from the closing out of a futures
contract traded on an exchange approved by the CFTC is treated as
short-term gain or loss, and 60% is treated as long-term gain or
loss.
Unlike when the fund purchases or sells a security, no price is
paid or received by the fund upon the purchase or sale of a
futures contract. Upon entering into a contract, the fund is
required to deposit with its custodian in a segregated account in
the name of the futures broker an amount of liquid assets. This
amount is known as "initial margin." The nature of initial
margin in futures transactions is different from that of margin
in security transactions in that futures contract margin does not
involve the borrowing of funds to finance the transactions.
Rather, initial margin is similar to a performance bond or good
faith deposit which is returned to the fund upon termination of
the futures contract, assuming all contractual obligations have
been satisfied. Futures contracts also involve brokerage costs.
Subsequent payments, called "variation margin" or "maintenance
margin," to and from the broker (or the custodian) are made on a
daily basis as the price of the underlying security or commodity
fluctuates, making the long and short positions in the futures
contract more or less valuable, a process known as "marking to
the market." For example, when the fund has purchased a futures
contract on a security and the price of the underlying security
has risen, that position will have increased in value and the
fund will receive from the broker a variation margin payment
based on that increase in value. Conversely, when the fund has
purchased a security futures contract and the price of the
underlying security has declined, the position would be less
valuable and the fund would be required to make a variation
margin payment to the broker.
The fund may elect to close some or all of its futures positions
at any time prior to their expiration in order to reduce or
eliminate a hedge position then currently held by the fund. The
fund may close its positions by taking opposite positions which
will operate to terminate the fund's position in the futures
contracts. Final determinations of variation margin are then
made, additional cash is required to be paid by or released to
the fund, and the fund realizes a loss or a gain. Such closing
transactions involve additional commission costs.
The fund does not intend to purchase or sell futures or related
options for other than hedging purposes, if, as a result, the sum
of the initial margin deposits on the fund's existing futures and
related options positions and premiums paid for outstanding
options on futures contracts would exceed 5% of the fund's net
assets.
OPTIONS ON FUTURES CONTRACTS. The fund may purchase and write
call and put options on futures contracts it may buy or sell and
enter into closing transactions with respect to such options to
terminate existing positions. In return for the premium paid,
options on futures contracts give the purchaser the right to
assume a position in a futures contract at the specified option
exercise price at any time during the period of the option. The
fund may use options on futures contracts in lieu of writing or
buying options directly on the underlying securities or
purchasing and selling the underlying futures contracts. For
example, to hedge against a possible decrease in the value of its
portfolio securities, the fund may purchase put options or write
call options on futures contracts rather than selling futures
contracts. Similarly, the fund may purchase call options or
write put options on futures contracts as a substitute for the
purchase of futures contracts to hedge against a possible
increase in the price of securities which the fund expects to
purchase. Such options generally operate in the same manner as
options purchased or written directly on the underlying
investments.
As with options on securities, the holder or writer of an option
may terminate his position by selling or purchasing an offsetting
option. There is no guarantee that such closing transactions can
be effected.
The fund will be required to deposit initial margin and
maintenance margin with respect to put and call options on
futures contracts written by it pursuant to brokers' requirements
similar to those described above in connection with the
discussion of futures contracts.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS.
Successful use of futures contracts by the fund is subject to
Putnam Management's ability to predict movements in various
factors affecting securities markets, including interest rates.
Compared to the purchase or sale of futures contracts, the
purchase of call or put options on futures contracts involves
less potential risk to the fund because the maximum amount at
risk is the premium paid for the options (plus transaction
costs). However, there may be circumstances when the purchase of
a call or put option on a futures contract would result in a loss
to the fund when the purchase or sale of a futures contract would
not, such as when there is no movement in the prices of the
hedged investments. The writing of an option on a futures
contract involves risks similar to those risks relating to the
sale of futures contracts.
The use of options and futures strategies also involves the risk
of imperfect correlation among movements in the prices of the
securities underlying the futures and options purchased and sold
by the fund, of the options and futures contracts themselves,
and, in the case of hedging transactions, of the securities which
are the subject of a hedge. The successful use of these
strategies further depends on the ability of Putnam Management to
forecast interest rates and market movements correctly.
There is no assurance that higher than anticipated trading
activity or other unforeseen events might not, at times, render
certain market clearing facilities inadequate, and thereby result
in the institution by exchanges of special procedures which may
interfere with the timely execution of customer orders.
To reduce or eliminate a position held by the fund, the fund may
seek to close out such position. The ability to establish and
close out positions will be subject to the development and
maintenance of a liquid secondary market. It is not certain that
this market will develop or continue to exist for a particular
futures contract or option. Reasons for the absence of a liquid
secondary market on an exchange include the following: (i) there
may be insufficient trading interest in certain contracts or
options; (ii) restrictions may be imposed by an exchange on
opening transactions or closing transactions or both; (iii)
trading halts, suspensions or other restrictions may be imposed
with respect to particular classes or series of contracts or
options, or underlying securities; (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v)
the facilities of an exchange or a clearing corporation may not
at all times be adequate to handle current trading volume; or
(vi) one or more exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the
trading of contracts or options (or a particular class or series
of contracts or options), in which event the secondary market on
that exchange for such contracts or options (or in the class or
series of contracts or options) would cease to exist, although
outstanding contracts or options on the exchange that had been
issued by a clearing corporation as a result of trades on that
exchange would continue to be exercisable in accordance with
their terms.
U.S. TREASURY SECURITY FUTURES CONTRACTS AND OPTIONS. U.S.
Treasury security futures contracts require the seller to
deliver, or the purchaser to take delivery of, the type of U.S.
Treasury security called for in the contract at a specified date
and price. Options on U.S. Treasury security futures contracts
give the purchaser the right in return for the premium paid to
assume a position in a U.S. Treasury security futures contract at
the specified option exercise price at any time during the period
of the option.
Successful use of U.S. Treasury security futures contracts by the
fund is subject to Putnam Management's ability to predict
movements in the direction of interest rates and other factors
affecting markets for debt securities. For example, if the fund
has sold U.S. Treasury security futures contracts in order to
hedge against the possibility of an increase in interest rates
which would adversely affect securities held in its portfolio,
and the prices of the fund's securities increase instead as a
result of a decline in interest rates, the fund will lose part or
all of the benefit of the increased value of its securities which
it has hedged because it will have offsetting losses in its
futures positions. In addition, in such situations, if the fund
has insufficient cash, it may have to sell securities to meet
daily maintenance margin requirements at a time when it may be
disadvantageous to do so.
There is also a risk that price movements in U.S. Treasury
security futures contracts and related options will not correlate
closely with price movements in markets for particular
securities. For example, if the fund has hedged against a
decline in the values of tax-exempt securities held by it by
selling Treasury security futures and the values of Treasury
securities subsequently increase while the values of its tax-
exempt securities decrease, the fund would incur losses on both
the Treasury security futures contracts written by it and the tax-
exempt securities held in its portfolio.
INDEX FUTURES CONTRACTS. An index futures contract is a contract
to buy or sell units of an index at a specified future date at a
price agreed upon when the contract is made. Entering into a
contract to buy units of an index is commonly referred to as
buying or purchasing a contract or holding a long position in the
index. Entering into a contract to sell units of an index is
commonly referred to as selling a contract or holding a short
position. A unit is the current value of the index. The fund
may enter into stock index futures contracts, debt index futures
contracts, or other index futures contracts appropriate to its
objective(s). The fund may also purchase and sell options on
index futures contracts.
For example, the Standard & Poor's 500 Composite Stock Price
Index ("S&P 500") is composed of 500 selected common stocks, most
of which are listed on the New York Stock Exchange. The S&P 500
assigns relative weightings to the common stocks included in the
Index, and the value fluctuates with changes in the market values
of those common stocks. In the case of the S&P 500, contracts
are to buy or sell 500 units. Thus, if the value of the S&P 500
were $150, one contract would be worth $75,000 (500 units x
$150). The stock index futures contract specifies that no
delivery of the actual stocks making up the index will take
place. Instead, settlement in cash must occur upon the
termination of the contract, with the settlement being the
difference between the contract price and the actual level of the
stock index at the expiration of the contract. For example, if
the fund enters into a futures contract to buy 500 units of the
S&P 500 at a specified future date at a contract price of $150
and the S&P 500 is at $154 on that future date, the fund will
gain $2,000 (500 units x gain of $4). If the fund enters into a
futures contract to sell 500 units of the stock index at a
specified future date at a contract price of $150 and the S&P 500
is at $152 on that future date, the fund will lose $1,000 (500
units x loss of $2).
There are several risks in connection with the use by the fund of
index futures. One risk arises because of the imperfect
correlation between movements in the prices of the index futures
and movements in the prices of securities which are the subject
of the hedge. Putnam Management will, however, attempt to reduce
this risk by buying or selling, to the extent possible, futures
on indices the movements of which will, in its judgment, have a
significant correlation with movements in the prices of the
securities sought to be hedged.
Successful use of index futures by the fund is also subject to
Putnam Management's ability to predict movements in the direction
of the market. For example, it is possible that, where the fund
has sold futures to hedge its portfolio against a decline in the
market, the index on which the futures are written may advance
and the value of securities held in the fund's portfolio may
decline. If this occurred, the fund would lose money on the
futures and also experience a decline in value in its portfolio
securities. It is also possible that, if the fund has hedged
against the possibility of a decline in the market adversely
affecting securities held in its portfolio and securities prices
increase instead, the fund will lose part or all of the benefit
of the increased value of those securities it has hedged because
it will have offsetting losses in its futures positions. In
addition, in such situations, if the fund has insufficient cash,
it may have to sell securities to meet daily variation margin
requirements at a time when it is disadvantageous to do so.
In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the
index futures and the portion of the portfolio being hedged, the
prices of index futures may not correlate perfectly with
movements in the underlying index due to certain market
distortions. First, all participants in the futures market are
subject to margin deposit and maintenance requirements. Rather
than meeting additional margin deposit requirements, investors
may close futures contracts through offsetting transactions which
could distort the normal relationship between the index and
futures markets. Second, margin requirements in the futures
market are less onerous than margin requirements in the
securities market, and as a result the futures market may attract
more speculators than the securities market does. Increased
participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price
distortions in the futures market and also because of the
imperfect correlation between movements in the index and
movements in the prices of index futures, even a correct forecast
of general market trends by Putnam Management may still not
result in a profitable position over a short time period.
OPTIONS ON STOCK INDEX FUTURES. Options on index futures are
similar to options on securities except that options on index
futures give the purchaser the right, in return for the premium
paid, to assume a position in an index futures contract (a long
position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during
the period of the option. Upon exercise of the option, the
delivery of the futures position by the writer of the option to
the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account which
represents the amount by which the market price of the index
futures contract, at exercise, exceeds (in the case of a call) or
is less than (in the case of a put) the exercise price of the
option on the index future. If an option is exercised on the
last trading day prior to its expiration date, the settlement
will be made entirely in cash equal to the difference between the
exercise price of the option and the closing level of the index
on which the future is based on the expiration date. Purchasers
of options who fail to exercise their options prior to the
exercise date suffer a loss of the premium paid.
OPTIONS ON INDICES
As an alternative to purchasing call and put options on index
futures, the fund may purchase and sell call and put options on
the underlying indices themselves. Such options would be used in
a manner identical to the use of options on index futures.
INDEX WARRANTS
The fund may purchase put warrants and call warrants whose values
vary depending on the change in the value of one or more
specified securities indices ("index warrants"). Index warrants
are generally issued by banks or other financial institutions and
give the holder the right, at any time during the term of the
warrant, to receive upon exercise of the warrant a cash payment
from the issuer based on the value of the underlying index at the
time of exercise. In general, if the value of the underlying
index rises above the exercise price of the index warrant, the
holder of a call warrant will be entitled to receive a cash
payment from the issuer upon exercise based on the difference
between the value of the index and the exercise price of the
warrant; if the value of the underlying index falls, the holder
of a put warrant will be entitled to receive a cash payment from
the issuer upon exercise based on the difference between the
exercise price of the warrant and the value of the index. The
holder of a warrant would not be entitled to any payments from
the issuer at any time when, in the case of a call warrant, the
exercise price is greater than the value of the underlying index,
or, in the case of a put warrant, the exercise price is less than
the value of the underlying index. If the fund were not to
exercise an index warrant prior to its expiration, then the fund
would lose the amount of the purchase price paid by it for the
warrant.
The fund will normally use index warrants in a manner similar to
its use of options on securities indices. The risks of the
fund's use of index warrants are generally similar to those
relating to its use of index options. Unlike most index options,
however, index warrants are issued in limited amounts and are not
obligations of a regulated clearing agency, but are backed only
by the credit of the bank or other institution which issues the
warrant. Also, index warrants generally have longer terms than
index options. Although the fund will normally invest only in
exchange-listed warrants, index warrants are not likely to be as
liquid as certain index options backed by a recognized clearing
agency. In addition, the terms of index warrants may limit the
fund's ability to exercise the warrants at such time, or in such
quantities, as the fund would otherwise wish to do.
SHORT-TERM TRADING
In seeking the fund's objective(s), Putnam Management will buy or
sell portfolio securities whenever Putnam Management believes it
appropriate to do so. In deciding whether to sell a portfolio
security, Putnam Management does not consider how long the fund
has owned the security. From time to time the fund will buy
securities intending to seek short-term trading profits. A
change in the securities held by the fund is known as "portfolio
turnover" and generally involves some expense to the fund. This
expense may include brokerage commissions or dealer markups and
other transaction costs on both the sale of securities and the
reinvestment of the proceeds in other securities. If sales of
portfolio securities cause the fund to realize net short-term
capital gains, such gains will be taxable as ordinary income. As
a result of the fund's investment policies, under certain market
conditions the fund's portfolio turnover rate may be higher than
that of other mutual funds. Portfolio turnover rate for a fiscal
year is the ratio of the lesser of purchases or sales of
portfolio securities to the monthly average of the value of
portfolio securities -- excluding securities whose maturities at
acquisition were one year or less. The fund's portfolio turnover
rate is not a limiting factor when Putnam Management considers a
change in the fund's portfolio.
SECURITIES LOANS
The fund may make secured loans of its portfolio securities, on
either a short-term or long-term basis, amounting to not more
than 25% of its total assets, thereby realizing additional
income. The risks in lending portfolio securities, as with other
extensions of credit, consist of possible delay in recovery of
the securities or possible loss of rights in the collateral
should the borrower fail financially. As a matter of policy,
securities loans are made to broker-dealers pursuant to
agreements requiring that the loans be continuously secured by
collateral consisting of cash or short-term debt obligations at
least equal at all times to the value of the securities on loan,
"marked-to-market" daily. The borrower pays to the fund an
amount equal to any dividends or interest received on securities
lent. The fund retains all or a portion of the interest received
on investment of the cash collateral or receives a fee from the
borrower. Although voting rights, or rights to consent, with
respect to the loaned securities may pass to the borrower, the
fund retains the right to call the loans at any time on
reasonable notice, and it will do so to enable the fund to
exercise voting rights on any matters materially affecting the
investment. The fund may also call such loans in order to sell
the securities.
REPURCHASE AGREEMENTS
The fund (except for Putnam Money Market Fund) may enter into
repurchase agreements, amounting to not more than 25% of its
total assets. A repurchase agreement is a contract under which
the fund acquires a security for a relatively short period
(usually not more than one week) subject to the obligation of the
seller to repurchase and the fund to resell such security at a
fixed time and price (representing the fund's cost plus
interest). It is the fund's present intention to enter into
repurchase agreements only with commercial banks and registered
broker-dealers and only with respect to obligations of the U.S.
government or its agencies or instrumentalities. Repurchase
agreements may also be viewed as loans made by the fund which are
collateralized by the securities subject to repurchase. Putnam
Management will monitor such transactions to ensure that the
value of the underlying securities will be at least equal at all
times to the total amount of the repurchase obligation, including
the interest factor. If the seller defaults, the fund could
realize a loss on the sale of the underlying security to the
extent that the proceeds of the sale including accrued interest
are less than the resale price provided in the agreement
including interest. In addition, if the seller should be
involved in bankruptcy or insolvency proceedings, the fund may
incur delay and costs in selling the underlying security or may
suffer a loss of principal and interest if the fund is treated as
an unsecured creditor and required to return the underlying
collateral to the seller's estate.
Pursuant to an exemptive order issued by the Securities and
Exchange Commission, the fund may transfer uninvested cash
balances into a joint account, along with cash of other Putnam
funds and certain other accounts. These balances may be invested
in one or more repurchase agreements and/or short-term money
market instruments.
RESTRICTED SECURITIES
The SEC Staff currently takes the view that any delegation by the
Trustees of the authority to determine that a restricted security
is readily marketable (as described in the investment
restrictions of the funds) must be pursuant to written procedures
established by the Trustees. It is the present intention of the
funds' Trustees that, if the Trustees decide to delegate such
determinations to Putnam Management or another person, they would
do so pursuant to written procedures, consistent with the Staff's
position. Should the Staff modify its position in the future,
the Trustees would consider what action would be appropriate in
light of the Staff's position at that time.
FORWARD COMMITMENTS
The fund may enter into contracts to purchase securities for a
fixed price at a future date beyond customary settlement time
("forward commitments") if the fund sets aside, on the books and
records of its custodian, liquid assets in an amount sufficient
to meet the purchase price, or if the fund enters into offsetting
contracts for the forward sale of other securities it owns. In
the case of to-be-announced ("TBA") purchase commitments, the
unit price and the estimated principal amount are established
when the fund enters into a contract, with the actual principal
amount being within a specified range of the estimate. Forward
commitments may be considered securities in themselves, and
involve a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in
addition to the risk of decline in the value of the fund's other
assets. Where such purchases are made through dealers, the fund
relies on the dealer to consummate the sale. The dealer's
failure to do so may result in the loss to the fund of an
advantageous yield or price. Although the fund will generally
enter into forward commitments with the intention of acquiring
securities for its portfolio or for delivery pursuant to options
contracts it has entered into, the fund may dispose of a
commitment prior to settlement if Putnam Management deems it
appropriate to do so. The fund may realize short-term profits or
losses upon the sale of forward commitments.
The fund may enter into TBA sale commitments to hedge its
portfolio positions or to sell securities it owns under delayed
delivery arrangements. Proceeds of TBA sale commitments are not
received until the contractual settlement date. During the time
a TBA sale commitment is outstanding, equivalent deliverable
securities, or an offsetting TBA purchase commitment deliverable
on or before the sale commitment date, are held as "cover" for
the transaction. Unsettled TBA sale commitments are valued at
current market value of the underlying securities. If the TBA
sale commitment is closed through the acquisition of an
offsetting purchase commitment, the fund realizes a gain or loss
on the commitment without regard to any unrealized gain or loss
on the underlying security. If the fund delivers securities
under the commitment, the fund realizes a gain or loss from the
sale of the securities based upon the unit price established at
the date the commitment was entered into.
SWAP AGREEMENTS
The fund may enter into swap agreements and other types of over-
the-counter transactions with broker-dealers or other financial
institutions, in which its investment return will depend on the
change in value of a specified security or index. The fund would
typically receive from the counterparty the amount of any
increase, and pay to the counterparty the amount of any decrease,
in the value of the underlying security or index. The contracts
would thus, absent the failure of the counterparty to complete
its obligations, provide to the fund approximately the same
return as it would have realized if it had owned the security or
index directly.
The fund's ability to realize a profit from such transactions
will depend on the ability of the financial institutions with
which it enters into the transactions to meet their obligations
to the fund. Under certain circumstances, suitable transactions
may not be available to the fund, or the fund may be unable to
close out its position under such transactions at the same time,
or at the same price, as if it had purchased comparable publicly
traded securities.
DERIVATIVES
Certain of the instruments in which the fund may invest, such as
futures contracts, options and forward contracts, are considered
to be "derivatives." Derivatives are financial instruments whose
value depends upon, or is derived from, the value of an
underlying asset, such as a security or an index. Further
information about these instruments and the risks involved in
their use is included elsewhere in the prospectus or in this SAI.
The fund's use of derivatives may cause the fund to recognize
higher amounts of short-term capital gains, generally taxed to
shareholders at ordinary income tax rates.
YEAR 2000
Like other financial and business organizations, the funds depend
on the proper function of their service providers' computer
systems. To the extent that the systems used by the funds or
their service providers cannot distinguish between the year 1900
and the year 2000 or have other operating difficulties as a
result of the year 2000, the operations of and services provided
to the funds and their shareholders could be adversely impacted.
Putnam Management and its affiliates have reported that each
expects to modify its systems, as necessary, to address this so-
called "year 2000 problem," and will, on behalf of the funds,
inquire as to the year 2000 compliance of the funds' other major
service providers. However, there can be no assurance that the
operations of and services provided to the funds and their
shareholders will not be adversely affected. Similarly,
companies in which the funds invest may also experience "year
2000 problems," which could ultimately result in losses to a fund
to the extent that the securities of any such company decline in
value as a result of a "year 2000 problem."
EURO CONVERSION
Eleven member countries of the European Economic and Monetary
Union (the "EMU") have qualified for conversion of their national
currencies to the euro on January 1, 1999. The euro is a common
currency that is expected to eventually be used as the sole
currency for these countries and other EMU members that wish to
convert to the euro. National currencies will remain for the
converting countries through at least July of 2002 while the full
transition to the euro in the countries involved in the
conversion occurs. Possible consequences to funds that invest in
securities denominated in any of the national currencies affected
include the risks that: (i) the unification of economic and
monetary policies underpinning the currency unification may
increase the potential for similarities in the movements of
markets in the European countries converting to the euro, (ii)
contracts (including contracts regarding currency transactions)
denominated in (or tied to) those currencies may become more
difficult to enforce, and that (iii) companies in which the funds
invest may be adversely affected by their failure (or the failure
of other companies with which they do business) to adequately
address the operational aspects of the conversion.
Like other financial and business organizations, the funds depend
on the proper function of their service providers' computer and
other systems. The funds could be adversely affected if the
computer or other systems used by Putnam Management and the
funds' other service providers cannot appropriately account for
the conversion to the euro. Putnam Management and its affiliates
expect that their systems will be able to address this issue
without any material interruption of service. However, there can
be no assurance that the operations of and services provided to
the funds and their shareholders will not be adversely affected.
Similarly, companies in which the funds invest may also
experience similar problems in dealing with the conversion to the
euro, which could result in losses to the funds.
TAXESTAXES
TAXATION OF THE FUND. The fund intends to qualify each year as a
regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). In order to
qualify for the special tax treatment accorded regulated
investment companies and their shareholders, the fund must, among
other things:
(a) Derive at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, and
gains from the sale of stock, securities and foreign currencies,
or other income (including but not limited to gains from options,
futures, or forward contracts) derived with respect to its
business of investing in such stock, securities, or currencies;
(b) distribute with respect to each taxable year at least 90% of
the sum of its taxable net investment income, its net tax-exempt
income, and the excess, if any, of net short-term capital gains
over net long-term capital losses for such year; and
(c) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the market value of the fund's
assets is represented by cash and cash items, U.S. government
securities, securities of other regulated investment companies,
and other securities limited in respect of any one issuer to a
value not greater than 5% of the value of the fund's total assets
and to not more than 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities (other than those of the
U.S. Government or other regulated investment companies) of any
one issuer or of two or more issuers which the fund controls and
which are engaged in the same, similar, or related trades or
businesses.
If the fund qualifies as a regulated investment company that is
accorded special tax treatment, the fund will not be subject to
federal income tax on income paid to its shareholders in the form
of dividends (including capital gain dividends).
If the fund failed to qualify as a regulated investment company
accorded special tax treatment in any taxable year, the fund
would be subject to tax on its taxable income at corporate rates,
and all distributions from earnings and profits, including any
distributions of net tax-exempt income and net long-term capital
gains, would be taxable to shareholders as ordinary income. In
addition, the fund could be required to recognize unrealized
gains, pay substantial taxes and interest and make substantial
distributions before requalifying as a regulated investment
company that is accorded special tax treatment.
If the fund fails to distribute in a calendar year substantially
all of its ordinary income for such year and substantially all of
its capital gain net income for the one-year period ending
October 31 (or later if the fund is permitted so to elect and so
elects), plus any retained amount from the prior year, the fund
will be subject to a 4% excise tax on the undistributed amounts.
A dividend paid to shareholders by the fund in January of a year
generally is deemed to have been paid by the fund on December 31
of the preceding year, if the dividend was declared and payable
to shareholders of record on a date in October, November or
December of that preceding year. The fund intends generally to
make distributions sufficient to avoid imposition of the 4%
excise tax.
FUND DISTRIBUTIONS. Distributions from the fund (other than
exempt-interest dividends, as discussed below) will be taxable to
shareholders as ordinary income to the extent derived from the
fund's investment income and net short-term gains. Distributions
of net capital gains (that is, the excess of net gains from
capital assets held more than one year over net losses from
capital assets held for not more than one year) will be taxable
to shareholders as such, regardless of how long a shareholder has
held the shares in the fund.
EXEMPT-INTEREST DIVIDENDS. The fund will be qualified to pay
exempt-interest dividends to its shareholders only if, at the
close of each quarter of the fund's taxable year, at least 50% of
the total value of the fund's assets consists of obligations the
interest on which is exempt from federal income tax.
Distributions that the fund properly designates as exempt-
interest dividends are treated as interest excludable from
shareholders' gross income for federal income tax purposes but
may be taxable for federal alternative minimum tax purposes and
for state and local purposes. If the fund intends to be
qualified to pay exempt-interest dividends, the fund may be
limited in its ability to enter into taxable transactions
involving forward commitments, repurchase agreements, financial
futures and options contracts on financial futures, tax-exempt
bond indices and other assets.
Part or all of the interest on indebtedness, if any, incurred or
continued by a shareholder to purchase or carry shares of a fund
paying exempt-interest dividends is not deductible. The portion
of interest that is not deductible is equal to the total interest
paid or accrued on the indebtedness, multiplied by the percentage
of the fund's total distributions (not including distributions
from net long-term capital gains) paid to the shareholder that
are exempt-interest dividends. Under rules used by the Internal
Revenue Service for determining when borrowed funds are
considered used for the purpose of purchasing or carrying
particular assets, the purchase of shares may be considered to
have been made with borrowed funds even though such funds are not
directly traceable to the purchase of shares.
In general, exempt-interest dividends, if any, attributable to
interest received on certain private activity obligations and
certain industrial development bonds will not be tax-exempt to
any shareholders who are "substantial users" of the facilities
financed by such obligations or bonds or who are "related
persons" of such substantial users.
A fund which is qualified to pay exempt-interest dividends will
inform investors within 60 days of the fund's fiscal year-end of
the percentage of its income distributions designated as tax-
exempt. The percentage is applied uniformly to all distributions
made during the year. The percentage of income designated as tax-
exempt for any particular distribution may be substantially
different from the percentage of the fund's income that was tax-
exempt during the period covered by the distribution.
HEDGING TRANSACTIONS. If the fund engages in hedging
transactions, including hedging transactions in options, futures
contracts, and straddles, or other similar transactions, it will
be subject to special tax rules (including constructive sale,
mark-to-market, straddle, wash sale, and short sale rules), the
effect of which may be to accelerate income to the fund, defer
losses to the fund, cause adjustments in the holding periods of
the fund's securities, convert long-term capital gains into short-
term capital gains or convert short-term capital losses into long-
term capital losses. These rules could therefore affect the
amount, timing and character of distributions to shareholders.
The fund will endeavor to make any available elections pertaining
to such transactions in a manner believed to be in the best
interests of the fund.
Certain of the fund's hedging activities (including its
transactions, if any, in foreign currencies or foreign currency-
denominated instruments) are likely to produce a difference
between its book income and its taxable income. If the fund's
book income exceeds its taxable income, the distribution (if any)
of such excess will be treated as (i) a dividend to the extent of
the fund's remaining earnings and profits (including earnings and
profits arising from tax-exempt income), (ii) thereafter as a
return of capital to the extent of the recipient's basis in the
shares, and (iii) thereafter as gain from the sale or exchange of
a capital asset. If the fund's book income is less than its
taxable income, the fund could be required to make distributions
exceeding book income to qualify as a regulated investment
company that is accorded special tax treatment.
RETURN OF CAPITAL DISTRIBUTIONS. If the fund makes a
distribution to you in excess of its current and accumulated
"earnings and profits" in any taxable year, the excess
distribution will be treated as a return of capital to the extent
of your tax basis in your shares, and thereafter as capital gain.
A return of capital is not taxable, but it reduces your tax basis
in your shares, thus reducing any loss or increasing any gain on
a subsequent taxable disposition by you of your shares.
Dividends and distributions on a fund's shares are generally
subject to federal income tax as described herein to the extent
they do not exceed the fund's realized income and gains, even
though such dividends and distributions may economically
represent a return of a particular shareholder's investment.
Such distributions are likely to occur in respect of shares
purchased at a time when the fund's net asset value reflects
gains that are either unrealized, or realized but not
distributed.
SECURITIES ISSUED OR PURCHASED AT A DISCOUNT. The fund's
investment in securities issued at a discount and certain other
obligations will (and investments in securities purchased at a
discount may) require the fund to accrue and distribute income
not yet received. In order to generate sufficient cash to make
the requisite distributions, the fund may be required to sell
securities in its portfolio that it otherwise would have
continued to hold.
CAPITAL LOSS CARRYOVER. Distributions from capital gains are
generally made after applying any available capital loss
carryovers. The amounts and expiration dates of any capital loss
carryovers available to the fund are shown in Note 1 (Federal
income taxes) to the financial statements included in Part I of
this SAI or incorporated by reference into this SAI.
FOREIGN CURRENCY-DENOMINATED SECURITIES AND RELATED HEDGING
TRANSACTIONS. The fund's transactions in foreign currencies,
foreign currency-denominated debt securities and certain foreign
currency options, futures contracts and forward contracts (and
similar instruments) may give rise to ordinary income or loss to
the extent such income or loss results from fluctuations in the
value of the foreign currency concerned.
If more than 50% of the fund's assets at year end consists of the
securities of foreign corporations, the fund may elect to permit
shareholders to claim a credit or deduction on their income tax
returns for their pro rata portion of qualified taxes paid by the
fund to foreign countries in respect of foreign securities the
fund has held for at least the minimum period specified in the
Code. In such a case, shareholders will include in gross income
from foreign sources their pro rata shares of such taxes. A
shareholder's ability to claim a foreign tax credit or deduction
in respect of foreign taxes paid by the fund may be subject to
certain limitations imposed by the Code, as a result of which a
shareholder may not get a full credit or deduction for the amount
of such taxes. In particular, shareholders must hold their fund
shares (without protection from risk of loss) on the ex-dividend
date and for at least 15 additional days during the 30-day period
surrounding the ex-dividend date to be eligible to claim a
foreign tax credit with respect to a given dividend.
Shareholders who do not itemize on their federal income tax
returns may claim a credit (but no deduction) for such foreign
taxes.
Investment by the fund in "passive foreign investment companies"
could subject the fund to a U.S. federal income tax or other
charge on the proceeds from the sale of its investment in such a
company; however, this tax can be avoided by making an election
to mark such investments to market annually or to treat the
passive foreign investment company as a "qualified electing
fund."
A "passive foreign investment company" is any foreign
corporation: (i) 75 percent or more of the income of which for
the taxable year is passive income, or (ii) the average
percentage of the assets of which (generally by value, but by
adjusted tax basis in certain cases) that produce or are held for
the production of passive income is at least 50 percent.
Generally, passive income for this purpose means dividends,
interest (including income equivalent to interest), royalties,
rents, annuities, the excess of gains over losses from certain
property transactions and commodities transactions, and foreign
currency gains. Passive income for this purpose does not include
rents and royalties received by the foreign corporation from
active business and certain income received from related persons.
SALE OR REDEMPTION OF SHARES. The sale, exchange or redemption
of fund shares may give rise to a gain or loss. In general, any
gain or loss realized upon a taxable disposition of shares will
be treated as long-term capital gain or loss if the shares have
been held for more than 12 months. Otherwise the gain or loss on
the sale, exchange or redemption of fund shares will be treated
as short-term capital gain or loss. However, if a shareholder
sells shares at a loss within six months of purchase, any loss
will be disallowed for Federal income tax purposes to the extent
of any exempt-interest dividends received on such shares. In
addition, any loss (not already disallowed as provided in the
preceding sentence) realized upon a taxable disposition of shares
held for six months or less will be treated as long-term, rather
than short-term, to the extent of any long-term capital gain
distributions received by the shareholder with respect to the
shares. All or a portion of any loss realized upon a taxable
disposition of fund shares will be disallowed if other shares of
the same fund are purchased within 30 days before or after the
disposition. In such a case, the basis of the newly purchased
shares will be adjusted to reflect the disallowed loss.
SHARES PURCHASED THROUGH TAX-QUALIFIED PLANS. Special tax rules
apply to investments though defined contribution plans and other
tax-qualified plans. Shareholders should consult their tax
adviser to determine the suitability of shares of a fund as an
investment through such plans and the precise effect of an
investment on their particular tax situation.
BACKUP WITHHOLDING. The fund generally is required to withhold
and remit to the U.S. Treasury 31% of the taxable dividends and
other distributions paid to any individual shareholder who fails
to furnish the fund with a correct taxpayer identification number
(TIN), who has under-reported dividends or interest income, or
who fails to certify to the fund that he or she is not subject to
such withholding.
The Internal Revenue Service recently revised its regulations
affecting the application to foreign investors of the back-up
withholding and withholding tax rules described above. The new
regulations will generally be effective for payments made after
December 31, 1999 (although transition rules will apply). In
some circumstances, the new rules will increase the certification
and filing requirements imposed on foreign investors in order to
qualify for exemption from the 31% back-up withholding tax rates
under income tax treaties. Foreign investors in a fund should
consult their tax advisors with respect to the potential
application of these new regulations.
MANAGEMENTMANAGEMENT
TRUSTEES NAME (AGE)
*+GEORGE PUTNAM (72), Chairman and President. Chairman and
Director of Putnam Management and Putnam Mutual Funds. Director,
Freeport Copper and Gold, Inc. (a mining and natural resource
company), Houghton Mifflin Company (a major publishing company)
and Marsh & McLennan Companies, Inc.
JOHN A. HILL (57), Vice Chairman. Chairman and Managing
Director, First Reserve Corporation (a registered investment
adviser investing in companies in the world-wide energy industry
on behalf of institutional investors). Director of Snyder Oil
Corporation, TransMontaigne Oil Company and various
private companies owned by First Reserve Corporation, such as
James River Coal and Anker Coal Corporation .
+WILLIAM F. POUNDS (70), Vice Chairman. Professor Emeritus of
Management, Alfred P. Sloan School of Management, Massachusetts
Institute of Technology. Director of IDEXX Laboratories, Inc. (a
provider of diagnostic products and services for the animal
health and food and environmental industries), Management
Sciences for Health, Inc. (a non-profit organization), and Sun
Company, Inc. (a petroleum refining and marketing company).
JAMESON A. BAXTER (55), Trustee. President, Baxter Associates,
Inc. (a management consulting and private
investments firm). Director of MB Financial, Inc. ,
ASHTA Chemicals, Inc. , Banta Corporation (printing and
digital imaging) , and Ryerson Tull, Inc. (America's largest
steel service corporation) . Chairman Emeritus of the Board
of Trustees, Mount Holyoke College.
+HANS H. ESTIN (70), Trustee. Chartered Financial Analyst and
Vice Chairman, North American Management Corp. (a registered
investment adviser).
RONALD J. JACKSON (55), Trustee. Former Chairman, President and
Chief Executive Officer of Fisher-Price, Inc. (a major toy
manufacturer).
*PAUL L. JOSKOW (51), Trustee. Professor Emeritus of Economics
and Management and former Chairman of the Department of
Economics, Massachusetts Institute of Technology. Director, New
England Electric System (a public utility holding company), State
Farm Indemnity Company (an automobile insurance company) and
Whitehead Institute for Biomedical Research (a non-profit
research institution).
ELIZABETH T. KENNAN (61), Trustee. President Emeritus and
Professor, Mount Holyoke College. Director, Bell Atlantic (a
telecommunications company), the Kentucky Home Life Insurance
Companies, Bell Atlantic , Northeast Utilities and Talbots
(a distributor of women's apparel).
*LAWRENCE J. LASSER (56), Trustee and Vice President. President,
Chief Executive Officer and Director of Putnam Investments, Inc.
and Putnam Investment Management, Inc. Director of Marsh &
McLennan Companies, Inc. and the United Way of Massachusetts Bay.
JOHN H. MULLIN, III (57), Trustee. Chairman and CEO of Ridgeway
Farm, Director of ACX Technologies, Inc. (a company engaged in
the manufacture of industrial ceramics and packaging products),
Alex. Brown Realty, Inc. and The Liberty Corporation (a company
engaged in the life insurance and broadcasting industries).
+ROBERT E. PATTERSON (53), Trustee. President and Trustee of
Cabot Industrial Trust (a publicly traded real estate investment
trust). Director of Brandywine Trust Company.
*DONALD S. PERKINS (71), Trustee. Director of various
corporations, including AON Corp. (an insurance company), Cummins
Engine Company, Inc. (an engine and power generator manufacturer
and assembler), Parsons Group L.L.C. (a corporation providing
financial staffing services), LaSalle Hotel Properties,
LaSalle Street Fund, Inc. and LaSalle U.S. Realty Income and
Growth Fund, Inc. (real estate investment trusts), Lucent
Technologies Inc. (a global provider of telecommunications
equipment), Nanophase Technologies Inc. (a producer of nano
crystalline materials), Neodesic Corp. (a software
company), Ryerson Tull, Inc. (America's largest steel service
corporation) and Springs Industries, Inc. (a textile
manufacturer).
*GEORGE PUTNAM III (47), Trustee. President, New Generation
Research, Inc. (a publisher of financial advisory and other
research services relating to bankrupt and distressed companies)
and New Generation Advisers, Inc. (a registered investment
adviser). Director, Massachusetts Audubon Society and The Boston
Family Office, L.L.C. (a registered investment advisor).
*A.J.C. SMITH (64), Trustee. Chairman and Chief Executive
Officer, Marsh & McLennan Companies, Inc. Director, Trident
Partnership (a $667 million 10-year limited partnership with over
30 institutional investors).
W. THOMAS STEPHENS (56), Trustee. President and Chief Executive
Officer of MacMillan Bloedel Ltd. (a major forest products
company). Director, Qwest Communications (a fiber optics
manufacturer) and New Century Energies (a public utility
company).
W. NICHOLAS THORNDIKE (65), Trustee. Director of various
corporations and charitable organizations, including Courier
Corporation (a book manufacturer), Data General Corporation (a
provider of customized computer solutions), Bradley Real Estate,
Inc., and Providence Journal Co.
OFFICERS NAME (AGE)
CHARLES E. PORTER (60), Executive Vice President. Managing
Director of Putnam Investments, Inc. and Putnam Management.
PATRICIA C. FLAHERTY (52), Vice President. Senior Vice President
of Putnam Investments, Inc. and Putnam Management.
GORDON H. SILVER (51), Vice President. Director and Senior
Managing Director of Putnam Investments, Inc. and Putnam
Management.
BRETT C. BROWCHUK (36), Vice President. Managing Director of
Putnam Management.
IAN C. FERGUSON (41), Vice President. Senior Managing Director
of Putnam Investments, Inc. and Putnam Management.
RICHARD A. MONAGHAN (44), Vice President. Managing Director of
Putnam Investments, Inc., Putnam Management and Putnam Mutual
Funds.
JOHN R. VERANI (59), Vice President. Senior Vice President of
Putnam Investments, Inc. and Putnam Management.
JOHN D. HUGHES (64), Senior Vice President and Treasurer.
BEVERLY MARCUS (54), Clerk and Assistant Treasurer.
*Trustees who are or may be deemed to be "interested persons" (as
defined in the Investment Company Act of 1940) of the fund,
Putnam Management or Putnam Mutual Funds.
Messrs. Putnam, Lasser and Smith are deemed "interested persons"
by virtue of their positions as officers or shareholders of the
fund, or directors of Putnam Management, Putnam Mutual Funds, or
Marsh & McLennan Companies, Inc., the parent company of Putnam
Management and Putnam Mutual Funds.
Mr. George Putnam, III, Mr. Putnam's son, is also an "interested
person" of the fund, Putnam Management, and Putnam Mutual Funds.
Mr. Perkins may be deemed to be an "interested person" of the
fund because of his service as a director of a certain publicly
held company that includes registered broker-dealer firms among
its subsidiaries. Neither the fund nor any of the other Putnam
funds currently engages in any transactions with such firms
except that certain of such firms act as dealers in the retail
sale of shares of certain Putnam funds in the ordinary course of
their business. Mr. Joskow is not currently an "interested
person" of the fund but could be deemed by the Securities and
Exchange Commission to be an "interested person" on account of
his prior consulting relationship with National Economic Research
Associates, Inc., a wholly-owned subsidiary of Marsh & McLennan
Companies, Inc., which was terminated as of August 31, 1998. The
balance of the Trustees are not "interested persons."
+Members of the Executive Committee of the Trustees. The
Executive Committee meets between regular meetings of the
Trustees as may be required to review investment matters and
other affairs of the fund and may exercise all of the powers of
the Trustees.
----------------
Certain other officers of Putnam Management are officers of the
fund. SEE "ADDITIONAL OFFICERS" IN PART I OF THIS SAI. The
mailing address of each of the officers and Trustees is One Post
Office Square, Boston, Massachusetts 02109.
Except as stated below, the principal occupations of the officers
and Trustees for the last five years have been with the employers
as shown above, although in some cases they have held different
positions with such employers. Prior to July, 1998, Mr. Joskow
was Chairman of the Department of Economics, Massachusetts
Institute of Technology, and, prior to September, 1998, he was a
consultant to National Economic Research Associates. Prior to
June, 1995, Dr . Kennan was President of Mount Holyoke
College. Prior to 1996, Mr. Stephens was Chairman of the Board
of Directors, President and Chief Executive Officer of Johns
Manville Corporation. Prior to April, 1996, Mr. Ferguson was CEO
at Hong Kong Shanghai Banking Corporation. Prior to February,
1998, Mr. Patterson was Executive Vice President and Director of
Acquisitions of Cabot Partners Limited Partnership. Prior to
November 1998, Mr. Monaghan was Managing Director at Merrill
Lynch.
Each Trustee of the fund receives an annual fee and an additional
fee for each Trustees' meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on
committees of the Trustees receive additional fees for attendance
at certain committee meetings and for special services rendered
in that connection. All of the Trustees are Trustees of all the
Putnam funds and each receives fees for his or her services. FOR
DETAILS OF TRUSTEES' FEES PAID BY THE FUND AND INFORMATION
CONCERNING RETIREMENT GUIDELINES FOR THE TRUSTEES, SEE "CHARGES
AND EXPENSES" IN PART I OF THIS SAI.
The Agreement and Declaration of Trust of the fund provides that
the fund will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with the
fund, except if it is determined in the manner specified in the
Agreement and Declaration of Trust that they have not acted in
good faith in the reasonable belief that their actions were in
the best interests of the fund or that such indemnification would
relieve any officer or Trustee of any liability to the fund or
its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of his or her duties. The
fund, at its expense, provides liability insurance for the
benefit of its Trustees and officers.
PUTNAM MANAGEMENT AND ITS AFFILIATES
Putnam Management is one of America's oldest and largest money
management firms. Putnam Management's staff of experienced
portfolio managers and research analysts selects securities and
constantly supervises the fund's portfolio. By pooling an
investor's money with that of other investors, a greater variety
of securities can be purchased than would be the case
individually; the resulting diversification helps reduce
investment risk. Putnam Management has been managing mutual funds
since 1937. Today, the firm serves as the investment manager for
the funds in the Putnam Family, with over $294 billion in assets
in nearly 11 million shareholder accounts at December 31, 1998.
An affiliate, The Putnam Advisory Company, Inc., manages domestic
and foreign institutional accounts and mutual funds, including
the accounts of many Fortune 500 companies. Another affiliate,
Putnam Fiduciary Trust Company, provides investment advice to
institutional clients under its banking and fiduciary powers. At
December 31, 1998, Putnam Management and its affiliates managed
nearly $222 billion in assets, including over $20 billion in tax-
exempt securities and over $71 billion in retirement plan assets.
Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust
Company are, except for a minority stake owned by employees,
owned by Marsh & McLennan Companies, Inc., a publicly-owned
holding company whose principal businesses are international
insurance and reinsurance brokerage, employee benefit consulting
and investment management.
Trustees and officers of the fund who are also officers of Putnam
Management or its affiliates or who are stockholders of Marsh &
McLennan Companies, Inc. will benefit from the advisory fees,
sales commissions, distribution fees, custodian fees and transfer
agency fees paid or allowed by the fund.
THE MANAGEMENT CONTRACT
Under a Management Contract between the fund and Putnam
Management, subject to such policies as the Trustees may
determine, Putnam Management, at its expense, furnishes
continuously an investment program for the fund and makes
investment decisions on behalf of the fund. Subject to the
control of the Trustees, Putnam Management also manages,
supervises and conducts the other affairs and business of the
fund, furnishes office space and equipment, provides bookkeeping
and clerical services (including determination of the fund's net
asset value, but excluding shareholder accounting services) and
places all orders for the purchase and sale of the fund's
portfolio securities. Putnam Management may place fund portfolio
transactions with broker-dealers which furnish Putnam Management,
without cost to it, certain research, statistical and quotation
services of value to Putnam Management and its affiliates in
advising the fund and other clients. In so doing, Putnam
Management may cause the fund to pay greater brokerage
commissions than it might otherwise pay.
FOR DETAILS OF PUTNAM MANAGEMENT'S COMPENSATION UNDER THE
MANAGEMENT CONTRACT, SEE "CHARGES AND EXPENSES" IN PART I OF THIS
SAI. Putnam Management's compensation under the Management
Contract may be reduced in any year if the fund's expenses exceed
the limits on investment company expenses imposed by any statute
or regulatory authority of any jurisdiction in which shares of
the fund are qualified for offer or sale. The term "expenses" is
defined in the statutes or regulations of such jurisdictions, and
generally excludes brokerage commissions, taxes, interest,
extraordinary expenses and, if the fund has a distribution plan,
payments made under such plan.
Under the Management Contract, Putnam Management may reduce its
compensation to the extent that the fund's expenses exceed such
lower expense limitation as Putnam Management may, by notice to
the fund, declare to be effective. The expenses subject to this
limitation are exclusive of brokerage commissions, interest,
taxes, deferred organizational and extraordinary expenses and, if
the fund has a distribution plan, payments required under such
plan. For the purpose of determining any such limitation on
Putnam Management's compensation, expenses of the fund shall not
reflect the application of commissions or cash management credits
that may reduce designated fund expenses. THE TERMS OF ANY
EXPENSE LIMITATION FROM TIME TO TIME IN EFFECT ARE DESCRIBED IN
THE PROSPECTUS AND/OR PART I OF THIS SAI.
In addition to the fee paid to Putnam Management, the fund
reimburses Putnam Management for the compensation and related
expenses of certain officers of the fund and their assistants who
provide certain administrative services for the fund and the
other Putnam funds, each of which bears an allocated share of the
foregoing costs. The aggregate amount of all such payments and
reimbursements is determined annually by the Trustees.
THE AMOUNT OF THIS REIMBURSEMENT FOR THE FUND'S MOST RECENT
FISCAL YEAR IS INCLUDED IN "CHARGES AND EXPENSES" IN PART I OF
THIS SAI. Putnam Management pays all other salaries of officers
of the fund. The fund pays all expenses not assumed by Putnam
Management including, without limitation, auditing, legal,
custodial, investor servicing and shareholder reporting expenses.
The fund pays the cost of typesetting for its prospectuses and
the cost of printing and mailing any prospectuses sent to its
shareholders. Putnam Mutual Funds pays the cost of printing and
distributing all other prospectuses.
The Management Contract provides that Putnam Management shall not
be subject to any liability to the fund or to any shareholder of
the fund for any act or omission in the course of or connected
with rendering services to the fund in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
its duties on the part of Putnam Management.
The Management Contract may be terminated without penalty by vote
of the Trustees or the shareholders of the fund, or by Putnam
Management, on 30 days' written notice. It may be amended only
by a vote of the shareholders of the fund. The Management
Contract also terminates without payment of any penalty in the
event of its assignment. The Management Contract provides that
it will continue in effect only so long as such continuance is
approved at least annually by vote of either the Trustees or the
shareholders, and, in either case, by a majority of the Trustees
who are not "interested persons" of Putnam Management or the
fund. In each of the foregoing cases, the vote of the
shareholders is the affirmative vote of a "majority of the
outstanding voting securities" as defined in the Investment
Company Act of 1940.
PERSONAL INVESTMENTS BY EMPLOYEES OF PUTNAM MANAGEMENT
Employees of Putnam Management are permitted to engage in
personal securities transactions, subject to requirements and
restrictions set forth in Putnam Management's Code of Ethics.
The Code of Ethics contains provisions and requirements designed
to identify and address certain conflicts of interest between
personal investment activities and the interests of investment
advisory clients such as the funds. Among other things, the Code
of Ethics, consistent with standards recommended by the
Investment Company Institute's Advisory Group on Personal
Investing, prohibits certain types of transactions absent prior
approval, imposes time periods during which personal transactions
may not be made in certain securities, and requires the
submission of duplicate broker confirmations and quarterly
reporting of securities transactions. Additional restrictions
apply to portfolio managers, traders, research analysts and
others involved in the investment advisory process. Exceptions
to these and other provisions of the Code of Ethics may be
granted in particular circumstances after review by appropriate
personnel.
PORTFOLIO TRANSACTIONS
INVESTMENT DECISIONS. Investment decisions for the fund and for
the other investment advisory clients of Putnam Management and
its affiliates are made with a view to achieving their respective
investment objectives. Investment decisions are the product of
many factors in addition to basic suitability for the particular
client involved. Thus, a particular security may be bought or
sold for certain clients even though it could have been bought or
sold for other clients at the same time. Likewise, a particular
security may be bought for one or more clients when one or more
other clients are selling the security. In some instances, one
client may sell a particular security to another client. It also
sometimes happens that two or more clients simultaneously
purchase or sell the same security, in which event each day's
transactions in such security are, insofar as possible, averaged
as to price and allocated between such clients in a manner which
in Putnam Management's opinion is equitable to each and in
accordance with the amount being purchased or sold by each.
There may be circumstances when purchases or sales of portfolio
securities for one or more clients will have an adverse effect on
other clients.
BROKERAGE AND RESEARCH SERVICES. Transactions on U.S. stock
exchanges, commodities markets and futures markets and other
agency transactions involve the payment by the fund of negotiated
brokerage commissions. Such commissions vary among different
brokers. A particular broker may charge different commissions
according to such factors as the difficulty and size of the
transaction. Transactions in foreign investments often involve
the payment of fixed brokerage commissions, which may be higher
than those in the United States. There is generally no stated
commission in the case of securities traded in the over-the-
counter markets, but the price paid by the fund usually includes
an undisclosed dealer commission or mark-up. In underwritten
offerings, the price paid by the fund includes a disclosed, fixed
commission or discount retained by the underwriter or dealer. It
is anticipated that most purchases and sales of securities by
funds investing primarily in tax-exempt securities and certain
other fixed-income securities will be with the issuer or with
underwriters of or dealers in those securities, acting as
principal. Accordingly, those funds would not ordinarily pay
significant brokerage commissions with respect to securities
transactions. SEE "CHARGES AND EXPENSES" IN PART I OF THIS SAI
FOR INFORMATION CONCERNING COMMISSIONS PAID BY THE FUND.
It has for many years been a common practice in the investment
advisory business for advisers of investment companies and other
institutional investors to receive brokerage and research
services (as defined in the Securities Exchange Act of 1934, as
amended (the "1934 Act")) from broker-dealers that execute
portfolio transactions for the clients of such advisers and from
third parties with which such broker-dealers have arrangements.
Consistent with this practice, Putnam Management receives
brokerage and research services and other similar services from
many broker-dealers with which Putnam Management places the
fund's portfolio transactions and from third parties with which
these broker-dealers have arrangements. These services include
such matters as general economic and market reviews, industry and
company reviews, evaluations of investments, recommendations as
to the purchase and sale of investments, newspapers, magazines,
pricing services, quotation services, news services and personal
computers utilized by Putnam Management's managers and analysts.
Where the services referred to above are not used exclusively by
Putnam Management for research purposes, Putnam Management, based
upon its own allocations of expected use, bears that portion of
the cost of these services which directly relates to their non-
research use. Some of these services are of value to Putnam
Management and its affiliates in advising various of their
clients (including the fund), although not all of these services
are necessarily useful and of value in managing the fund. The
management fee paid by the fund is not reduced because Putnam
Management and its affiliates receive these services even though
Putnam Management might otherwise be required to purchase some of
these services for cash.
Putnam Management places all orders for the purchase and sale of
portfolio investments for the fund and buys and sells investments
for the fund through a substantial number of brokers and dealers.
In so doing, Putnam Management uses its best efforts to obtain
for the fund the most favorable price and execution available,
except to the extent it may be permitted to pay higher brokerage
commissions as described below. In seeking the most favorable
price and execution, Putnam Management, having in mind the fund's
best interests, considers all factors it deems relevant,
including, by way of illustration, price, the size of the
transaction, the nature of the market for the security or other
investment, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker-
dealer involved and the quality of service rendered by the broker-
dealer in other transactions.
As permitted by Section 28(e) of the 1934 Act, and by the
Management Contract, Putnam Management may cause the fund to pay
a broker-dealer which provides "brokerage and research services"
(as defined in the 1934 Act) to Putnam Management an amount of
disclosed commission for effecting securities transactions on
stock exchanges and other transactions for the fund on an agency
basis in excess of the commission which another broker-dealer
would have charged for effecting that transaction. Putnam
Management's authority to cause the fund to pay any such greater
commissions is also subject to such policies as the Trustees may
adopt from time to time. Putnam Management does not currently
intend to cause the fund to make such payments. It is the
position of the staff of the Securities and Exchange Commission
that Section 28(e) does not apply to the payment of such greater
commissions in "principal" transactions. Accordingly Putnam
Management will use its best effort to obtain the most favorable
price and execution available with respect to such transactions,
as described above.
The Management Contract provides that commissions, fees,
brokerage or similar payments received by Putnam Management or an
affiliate in connection with the purchase and sale of portfolio
investments of the fund, less any direct expenses approved by the
Trustees, shall be recaptured by the fund through a reduction of
the fee payable by the fund under the Management Contract.
Putnam Management seeks to recapture for the fund soliciting
dealer fees on the tender of the fund's portfolio securities in
tender or exchange offers. Any such fees which may be recaptured
are likely to be minor in amount.
Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc. and subject to seeking the most
favorable price and execution available and such other policies
as the Trustees may determine, Putnam Management may consider
sales of shares of the fund (and, if permitted by law, of the
other Putnam funds) as a factor in the selection of broker-
dealers to execute portfolio transactions for the fund.
PRINCIPAL UNDERWRITER
Putnam Mutual Funds is the principal underwriter of shares of the
fund and the other continuously offered Putnam funds. Putnam
Mutual Funds is not obligated to sell any specific amount of
shares of the fund and will purchase shares for resale only
against orders for shares. SEE "CHARGES AND EXPENSES" IN PART I
OF THIS SAI FOR INFORMATION ON SALES CHARGES AND OTHER PAYMENTS
RECEIVED BY PUTNAM MUTUAL FUNDS.
INVESTOR SERVICING AGENT AND CUSTODIAN
Putnam Investor Services, a division of Putnam Fiduciary Trust
Company ("PFTC"), is the fund's investor servicing agent
(transfer, plan and dividend disbursing agent), for which it
receives fees which are paid monthly by the fund as an expense of
all its shareholders. The fee paid to Putnam Investor Services
is determined on the basis of the number of shareholder accounts,
the number of transactions and the assets of the fund. Putnam
Investor Services has won the DALBAR Service Award eight times
in the past nine years. In 1997 and 1998, Putnam was the only
company to win all three DALBAR Awards: for service to investors,
to financial advisors, and to variable annuity contract holders.
DALBAR, Inc. an independent research firm, presents the awards to
financial services firms that provide consistently excellent
service.
PFTC is the custodian of the fund's assets. In carrying out its
duties under its custodian contract, PFTC may employ one or more
subcustodians whose responsibilities include safeguarding and
controlling the fund's cash and securities, handling the receipt
and delivery of securities and collecting interest and dividends
on the fund's investments. PFTC and any subcustodians employed
by it have a lien on the securities of the fund (to the extent
permitted by the fund's investment restrictions) to secure
charges and any advances made by such subcustodians at the end of
any day for the purpose of paying for securities purchased by the
fund. The fund expects that such advances will exist only in
unusual circumstances. Neither PFTC nor any subcustodian
determines the investment policies of the fund or decides which
securities the fund will buy or sell. PFTC pays the fees and
other charges of any subcustodians employed by it. The fund may
from time to time pay custodial expenses in full or in part
through the placement by Putnam Management of the fund's
portfolio transactions with the subcustodians or with a third-
party broker having an agreement with the subcustodians. The
fund pays PFTC an annual fee based on the fund's assets,
securities transactions and securities holdings and reimburses
PFTC for certain out-of-pocket expenses incurred by it or any
subcustodian employed by it in performing custodial services.
SEE "CHARGES AND EXPENSES" IN PART I OF THIS SAI FOR INFORMATION
ON FEES AND REIMBURSEMENTS FOR INVESTOR SERVICING AND CUSTODY
RECEIVED BY PFTC. THE FEES MAY BE REDUCED BY CREDITS ALLOWED BY
PFTC.
DETERMINATION OF NET ASSET VALUE
The fund determines the net asset value per share of each class
of shares once each day the New York Stock Exchange (the
"Exchange") is open. Currently, the Exchange is closed
Saturdays, Sundays and the following holidays: New Year's Day,
Rev. Dr. Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, the Fourth of July, Labor Day, Thanksgiving
and Christmas. The fund determines net asset value as of the
close of regular trading on the Exchange, currently 4:00 p.m.
However, equity options held by the fund are priced as of the
close of trading at 4:10 p.m., and futures contracts on U.S.
government and other fixed-income securities and index options
held by the fund are priced as of their close of trading at 4:15
p.m.
Securities for which market quotations are readily available are
valued at prices which, in the opinion of Putnam Management, most
nearly represent the market values of such securities.
Currently, such prices are determined using the last reported
sale price or, if no sales are reported (as in the case of some
securities traded over-the-counter), the last reported bid price,
except that certain securities are valued at the mean between the
last reported bid and asked prices. Short-term investments
having remaining maturities of 60 days or less are valued at
amortized cost, which approximates market value. All other
securities and assets are valued at their fair value following
procedures approved by the Trustees. Liabilities are deducted
from the total, and the resulting amount is divided by the number
of shares of the class outstanding.
Reliable market quotations are not considered to be readily
available for long-term corporate bonds and notes, certain
preferred stocks, tax-exempt securities, and certain foreign
securities. These investments are valued at fair value on the
basis of valuations furnished by pricing services, which
determine valuations for normal, institutional-size trading units
of such securities using methods based on market transactions for
comparable securities and various relationships between
securities which are generally recognized by institutional
traders.
If any securities held by the fund are restricted as to resale,
Putnam Management determines their fair value following
procedures approved by the Trustees. The fair value of such
securities is generally determined as the amount which the fund
could reasonably expect to realize from an orderly disposition of
such securities over a reasonable period of time. The valuation
procedures applied in any specific instance are likely to vary
from case to case. However, consideration is generally given to
the financial position of the issuer and other fundamental
analytical data relating to the investment and to the nature of
the restrictions on disposition of the securities (including any
registration expenses that might be borne by the fund in
connection with such disposition). In addition, specific factors
are also generally considered, such as the cost of the
investment, the market value of any unrestricted securities of
the same class, the size of the holding, the prices of any recent
transactions or offers with respect to such securities and any
available analysts' reports regarding the issuer.
Generally, trading in certain securities (such as foreign
securities) is substantially completed each day at various times
prior to the close of the Exchange. The values of these
securities used in determining the net asset value of the fund's
shares are computed as of such times. Also, because of the
amount of time required to collect and process trading
information as to large numbers of securities issues, the values
of certain securities (such as convertible bonds, U.S. government
securities, and tax-exempt securities) are determined based on
market quotations collected earlier in the day at the latest
practicable time prior to the close of the Exchange.
Occasionally, events affecting the value of such securities may
occur between such times and the close of the Exchange which will
not be reflected in the computation of the fund's net asset
value. If events materially affecting the value of such
securities occur during such period, then these securities will
be valued at their fair value following procedures approved by
the Trustees. In addition, securities held by some of the funds
may be traded in foreign markets that are open for business on
days that a fund is not, and the trading of such securities on
those days may have an impact on the value of a shareholder's
investment at a time when the shareholder cannot buy and sell
shares of the fund.
Money market funds generally value their portfolio securities at
amortized cost according to Rule 2a-7 under the Investment
Company Act of 1940.
HOW TO BUY SHARES
GENERAL
The prospectus contains a general description of how investors
may buy shares of the fund and states whether the fund offers
more than one class of shares. This SAI contains additional
information which may be of interest to investors.
Class A shares and class M shares are generally sold with a sales
charge payable at the time of purchase (except for class A shares
and class M shares of money market funds). As used in this SAI
and unless the context requires otherwise, the term "class A
shares" includes shares of funds that offer only one class of
shares. The prospectus contains a table of applicable sales
charges. For information about how to purchase class A or class
M shares of a Putnam fund at net asset value through an employer-
sponsored retirement plan, please consult your employer. Certain
purchases of class A shares and class M shares may be exempt from
a sales charge or, in the case of class A shares, may be subject
to a contingent deferred sales charge ("CDSC"). See "General--
Sales without sales charges or contingent deferred sales
charges," "Additional Information About Class A and Class M
shares," and "Contingent Deferred Sales Charges--Class A shares."
Class B shares and class C shares are sold subject to a CDSC
payable upon redemption within a specified period after purchase.
The prospectus contains a table of applicable CDSCs.
Class B shares will automatically convert into class A shares no
later than the end of the month eight years after the purchase
date, and may, in the discretion of the Trustees, convert to
class A shares earlier. Class B shares acquired by exchanging
class B shares of another Putnam fund will convert into class A
shares based on the time of the initial purchase. Class B shares
acquired through reinvestment of distributions will convert into
Class A shares based on the date of the initial purchase to which
such shares relate. For this purpose, class B shares acquired
through reinvestment of distributions will be attributed to
particular purchases of class B shares in accordance with such
procedures as the Trustees may determine from time to time. The
conversion of class B shares to class A shares is subject to the
condition that such conversions will not constitute taxable
events for Federal tax purposes.
Class Y shares, which are not subject to sales charges or a CDSC,
are available only to certain defined contribution plans. See
the prospectus that offers class Y shares for more information.
Certain purchase programs described below are not available to
defined contribution plans. Consult your employer for
information on how to purchase shares through your plan.
The fund is currently making a continuous offering of its shares.
The fund receives the entire net asset value of shares sold. The
fund will accept unconditional orders for shares to be executed
at the public offering price based on the net asset value per
share next determined after the order is placed. In the case of
class A shares and class M shares, the public offering price is
the net asset value plus the applicable sales charge, if any. No
sales charge is included in the public offering price of other
classes of shares. In the case of orders for purchase of shares
placed through dealers, the public offering price will be based
on the net asset value determined on the day the order is placed,
but only if the dealer receives the order before the close of
regular trading on the Exchange. If the dealer receives the
order after the close of the Exchange, the price will be based on
the net asset value next determined. If funds for the purchase
of shares are sent directly to Putnam Investor Services, they
will be invested at the public offering price based on the net
asset value next determined after receipt. Payment for shares of
the fund must be in U.S. dollars; if made by check, the check
must be drawn on a U.S. bank.
Initial and subsequent purchases must satisfy the minimums stated
in the prospectus, except that (i) individual investments under
certain employee benefit plans or Tax Qualified Retirement Plans
may be lower, (ii) persons who are already shareholders may make
additional purchases of $50 or more by sending funds directly to
Putnam Investor Services (see "Your investing account" below),
and (iii) for investors participating in systematic investment
plans and military allotment plans, the initial and subsequent
purchases must be $25 or more. Information about these plans is
available from investment dealers or from Putnam Mutual Funds.
As a convenience to investors, shares may be purchased through a
systematic investment plan. Pre-authorized monthly bank drafts
for a fixed amount (at least $25) are used to purchase fund
shares at the applicable public offering price next determined
after Putnam Mutual Funds receives the proceeds from the draft.
A shareholder may choose any day of the month and, if a given
month (for example, February) does not contain that particular
date, or if the date falls on a weekend or holiday, the draft
will be processed on the next business day. Further information
and application forms are available from investment dealers or
from Putnam Mutual Funds.
Except for funds that declare a distribution daily, distributions
to be reinvested are reinvested without a sales charge in shares
of the same class as of the ex-dividend date using the net asset
value determined on that date, and are credited to a
shareholder's account on the payment date. Dividends for Putnam
money market funds are credited to a shareholder's account on the
payment date. Distributions for all other funds that declare a
distribution daily are reinvested without a sales charge as of
the last day of the period for which distributions are paid using
the net asset value determined on that date, and are credited to
a shareholder's account on the payment date.
PAYMENT IN SECURITIES. In addition to cash, the fund may accept
securities as payment for fund shares at the applicable net asset
value. Generally, the fund will only consider accepting
securities to increase its holdings in a portfolio security, or
if Putnam Management determines that the offered securities are a
suitable investment for the fund and in a sufficient amount for
efficient management.
While no minimum has been established, it is expected that the
fund would not accept securities with a value of less than
$100,000 per issue as payment for shares. The fund may reject in
whole or in part any or all offers to pay for purchases of fund
shares with securities, may require partial payment in cash for
such purchases to provide funds for applicable sales charges, and
may discontinue accepting securities as payment for fund shares
at any time without notice. The fund will value accepted
securities in the manner described in the section "Determination
of Net Asset Value" for valuing shares of the fund. The fund
will only accept securities which are delivered in proper form.
The fund will not accept options or restricted securities as
payment for shares. The acceptance of securities by certain
funds in exchange for fund shares is subject to additional
requirements. For federal income tax purposes, a purchase of
fund shares with securities will be treated as a sale or exchange
of such securities on which the investor will generally realize a
taxable gain or loss. The processing of a purchase of fund
shares with securities involves certain delays while the fund
considers the suitability of such securities and while other
requirements are satisfied. For information regarding procedures
for payment in securities, contact Putnam Mutual Funds.
Investors should not send securities to the fund except when
authorized to do so and in accordance with specific instructions
received from Putnam Mutual Funds.
SALES WITHOUT SALES CHARGES OR CONTINGENT DEFERRED SALES CHARGES.
The fund may sell shares without a sales charge or CDSC to:
(i) current and retired Trustees of the fund; officers of the
fund; directors and current and retired U.S. full-time
employees of Putnam Management, Putnam Mutual Funds, their
parent corporations and certain corporate affiliates; family
members of and employee benefit plans for the foregoing; and
partnerships, trusts or other entities in which any of the
foregoing has a substantial interest;
(ii) employer-sponsored retirement plans, for the repurchase
of shares in connection with repayment of plan loans made to
plan participants (if the sum loaned was obtained by
redeeming shares of a Putnam fund sold with a sales charge)
(not offered by tax-exempt funds);
(iii) clients of administrators of tax-qualified employer-
sponsored retirement plans which have entered into agreements
with Putnam Mutual Funds (not offered by tax-exempt funds);
(iv) registered representatives and other employees of broker-
dealers having sales agreements with Putnam Mutual Funds;
employees of financial institutions having sales agreements
with Putnam Mutual Funds or otherwise having an arrangement
with any such broker-dealer or financial institution with
respect to sales of fund shares; and their spouses and
children under age 21 (Putnam Mutual Funds is regarded as
the dealer of record for all such accounts);
(v) investors meeting certain requirements who sold shares of
certain Putnam closed-end funds pursuant to a tender offer by
such closed-end fund;
(vi) a trust department of any financial institution
purchasing shares of the fund in its capacity as trustee of
any trust (other than a tax-qualified retirement plan trust),
through an arrangement approved by Putnam Mutual Funds, if
the value of the shares of the fund and other Putnam funds
purchased or held by all such trusts exceeds $1 million in
the aggregate; and
(vii) "wrap accounts" maintained for clients of broker-
dealers, financial institutions or financial intermediaries
who have entered into agreements with Putnam Mutual Funds
with respect to such accounts, which in all cases shall be
subject to a wrap fee economically comparable to a sales
charge. Fund shares offered pursuant to this waiver may not
be advertised as "no load," or otherwise offered for sale at
NAV without a wrap fee.
In addition, each of the Putnam funds may issue its shares at net
asset value without an initial sales charge or a CDSC in
connection with the acquisition of substantially all of the
securities owned by other investment companies or personal
holding companies, and the CDSC will be waived on redemptions of
shares arising out of death or post-purchase disability 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 fund may sell class A or class M shares at
net asset value to members of qualified groups. See "Group
purchases of class A and class M shares" below. Class A and
class M shares are available without an initial sales charge to
"class A qualified benefit plans" and "class M qualified benefit
plans," respectively, as described below. See "Qualified benefit
plans; Individual account plans" below.
PAYMENTS TO DEALERS. Putnam Mutual Funds may, at its expense,
pay concessions in addition to the payments disclosed in the
prospectus to dealers which satisfy certain criteria established
from time to time by Putnam Mutual Funds relating to increasing
net sales of shares of the Putnam funds over prior periods, and
certain other factors.
ADDITIONAL INFORMATION ABOUT CLASS A AND CLASS M SHARES
The underwriter's commission is the sales charge shown in the
prospectus less any applicable dealer discount. Putnam Mutual
Funds will give dealers ten days' notice of any changes in the
dealer discount. Putnam Mutual Funds retains the entire sales
charge on any retail sales made by it.
Putnam Mutual Funds offers several plans by which an investor may
obtain reduced sales charges on purchases of class A shares and
class M shares. The variations in sales charges reflect the
varying efforts required to sell shares to separate categories of
purchasers. These plans may be altered or discontinued at any
time.
The public offering price of class A and class M shares is the
net asset value plus a sales charge that varies depending on the
size of your purchase. The fund receives the net asset value.
The sales charge is allocated between your investment dealer and
Putnam Mutual Funds as shown in the following table, except when
Putnam Mutual Funds, in its discretion, allocates the entire
amount to your investment dealer.
For Growth Funds, Growth and Income Funds and Asset Allocation
Funds only:
<TABLE><CAPTION>
CLASS A CLASS M
<S> <C> <C> <C> <C>
AMOUNT OF AMOUNT OF
SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE
AS A REALLOWED TO AS A REALLOWED TO
PERCENTAGE DEALERS AS A PERCENTAGE DEALERS AS A
AMOUNT OF TRANSACTION OF OFFERING PERCENTAGE OF OF OFFERING PERCENTAGE OF
AT OFFERING PRICE ($) PRICE OFFERING PRICE PRICE OFFERING PRICE
- ------------------------------------------------------------------------------------
Under 50,000 5.75% 5.00% 3.50% 3.00%
50,000 but under 100,000 4.50 3.75 2.50 2.00
100,000 but under 250,000 3.50 2.75 1.50 1.00
250,000 but under 500,000 2.50 2.00 1.00 1.00
500,000 but under 1,000,000 2.00 1.75 NONE NONE
1,000,000 and above NONE NONE NONE NONE
- -------------------------------------------------------------------------------------
For Income Funds only (except for Putnam Intermediate U.S.
Government Income Fund and Putnam Preferred Income Fund:
</TABLE>
<TABLE><CAPTION>
CLASS A CLASS M
<S> <C> <C> <C> <C>
AMOUNT OF AMOUNT OF
SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE
AS A REALLOWED TO AS A REALLOWED TO
PERCENTAGE DEALERS AS A PERCENTAGE DEALERS AS A
AMOUNT OF TRANSACTION OF OFFERING PERCENTAGE OF OF OFFERING PERCENTAGE OF
AT OFFERING PRICE ($) PRICE OFFERING PRICE PRICE OFFERING PRICE
- --------------------------------------------------------------------------------------
Under 50,000 4.75% 4.25% 3.25% 3.00%
50,000 but under 100,000 4.50 4.00 2.25 2.00
100,000 but under 250,000 3.50 3.00 1.50 1.25
250,000 but under 500,000 2.50 2.25 1.00 1.00
500,000 but under 1,000,000 2.00 1.75 NONE NONE
1,000,000 and above NONE NONE NONE NONE
- ---------------------------------------------------------------------------------------
</TABLE>
For Putnam Intermediate U.S. Government Income Fund and Putnam
Preferred Income Fund only:
<TABLE><CAPTION>
CLASS A CLASS M
<S> <C> <C> <C> <C>
AMOUNT OF AMOUNT OF
SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE
AS A REALLOWED TO AS A REALLOWED TO
PERCENTAGE DEALERS AS A PERCENTAGE DEALERS AS A
AMOUNT OF TRANSACTION OF OFFERING PERCENTAGE OF OF OFFERING PERCENTAGE OF
AT OFFERING PRICE ($) PRICE OFFERING PRICE PRICE OFFERING PRICE
- ------------------------------------------------------------------------------------
Under 100,000 3.25% 3.00% 2.00% 1.80%
100,000 but under 250,000 2.50 2.25 1.50 1.30
250,000 but under 500,000 2.00 1.75 1.00 1.00
500,000 but under 1,000,000 1.50 1.25 NONE NONE
1,000,000 and above NONE NONE NONE NONE
- -------------------------------------------------------------------------------------
</TABLE>
For Tax Free Funds only:
<TABLE><CAPTION>
CLASS A CLASS M
<S> <C> <C> <C> <C>
AMOUNT OF AMOUNT OF
SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE
AS A REALLOWED TO AS A REALLOWED TO
PERCENTAGE DEALERS AS A PERCENTAGE DEALERS AS A
AMOUNT OF TRANSACTION OF OFFERING PERCENTAGE OF OF OFFERING PERCENTAGE OF
AT OFFERING PRICE ($) PRICE OFFERING PRICE PRICE OFFERING PRICE
- ------------------------------------------------------------------------------------
Under 25,000 4.75% 4.50% 3.25% 3.00%
25,000 but under 50,000 4.50 4.25 3.25 3.00
50,000 but under 100,000 4.50 4.25 2.25 2.00
100,000 but under 250,000 3.75 3.50 1.50 1.25
250,000 but under 500,000 3.00 2.75 1.00 1.00
500,000 but under 1,000,000 2.00 1.85 NONE NONE
1,000,000 and above NONE NONE NONE NONE
- ------------------------------------------------------------------------------------------
</TABLE>
COMBINED PURCHASE PRIVILEGE. The following persons may qualify
for the sales charge reductions or eliminations shown in the
prospectus by combining into a single transaction the purchase of
class A shares or class M shares with other purchases of any
class of shares:
(i) an individual, or a "company" as defined in Section
2(a)(8) of the Investment Company Act of 1940 (which
includes corporations which are corporate affiliates of
each other);
(ii) an individual, his or her spouse and their children
under twenty-one, purchasing for his, her or their own
account;
(iii) a trustee or other fiduciary purchasing for a single
trust estate or single fiduciary account (including a
pension, profit-sharing, or other employee benefit trust
created pursuant to a plan qualified under Section 401 of
the Internal Revenue Code of 1986, as amended (the
"Code"));
(iv) tax-exempt organizations qualifying under Section
501(c)(3) of the Internal Revenue Code (not including tax-
exempt organizations qualifying under Section 403(b)(7) (a
"403(b) plan") of the Code; and
(v) employee benefit plans of a single employer or of
affiliated employers, other than 403(b) plans.
A combined purchase currently may also include shares of any
class of other continuously offered Putnam funds (other than
money market funds) purchased at the same time through a single
investment dealer, if the dealer places the order for such shares
directly with Putnam Mutual Funds.
CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION). A
purchaser of class A shares or class M shares may qualify for a
cumulative quantity discount by combining a current purchase (or
combined purchases as described above) with certain other shares
of any class of Putnam funds already owned. The applicable sales
charge is based on the total of:
(i) the investor's current purchase; and
(ii) the maximum public offering price (at the close of
business on the previous day) of:
(a) all shares held by the investor in all of the
Putnam funds (except money market funds); and
(b) any shares of money market funds acquired by
exchange from other Putnam funds; and
(iii) the maximum public offering price of all shares
described in paragraph (ii) owned by another shareholder
eligible to participate with the investor in a "combined
purchase" (see above).
To qualify for the combined purchase privilege or to obtain the
cumulative quantity discount on a purchase through an investment
dealer, when each purchase is made the investor or dealer must
provide Putnam Mutual Funds with sufficient information to verify
that the purchase qualifies for the privilege or discount. The
shareholder must furnish this information to Putnam Investor
Services when making direct cash investments.
STATEMENT OF INTENTION. Investors may also obtain the reduced
sales charges for class A shares or class M shares shown in the
prospectus for investments of a particular amount by means of a
written Statement of Intention, which expresses the investor's
intention to invest that amount (including certain "credits," as
described below) within a period of 13 months in shares of any
class of the fund or any other continuously offered Putnam fund
(excluding money market funds). Each purchase of class A shares
or class M shares under a Statement of Intention will be made at
the public offering price applicable at the time of such purchase
to a single transaction of the total dollar amount indicated in
the Statement of Intention. A Statement of Intention may include
purchases of shares made not more than 90 days prior to the date
that an investor signs a Statement; however, the 13-month period
during which the Statement of Intention is in effect will begin
on the date of the earliest purchase to be included.
An investor may receive a credit toward the amount indicated in
the Statement of Intention equal to the maximum public offering
price as of the close of business on the previous day of all
shares he or she owns on the date of the Statement of Intention
which are eligible for purchase under a Statement of Intention
(plus any shares of money market funds acquired by exchange of
such eligible shares). Investors do not receive credit for
shares purchased by the reinvestment of distributions. Investors
qualifying for the "combined purchase privilege" (see above) may
purchase shares under a single Statement of Intention.
The Statement of Intention is not a binding obligation upon the
investor to purchase the full amount indicated. The minimum
initial investment under a Statement of Intention is 5% of such
amount, and must be invested immediately. Class A shares or
class M shares purchased with the first 5% of such amount will be
held in escrow to secure payment of the higher sales charge
applicable to the shares actually purchased if the full amount
indicated is not purchased. When the full amount indicated has
been purchased, the escrow will be released. If an investor
desires to redeem escrowed shares before the full amount has been
purchased, the shares will be released from escrow only if the
investor pays the sales charge that, without regard to the
Statement of Intention, would apply to the total investment made
to date.
To the extent that an investor purchases more than the dollar
amount indicated on the Statement of Intention and qualifies for
a further reduced sales charge, the sales charge will be adjusted
for the entire amount purchased at the end of the 13-month
period, upon recovery from the investor's dealer of its portion
of the sales charge adjustment. Once received from the dealer,
which may take a period of time or may never occur, the sales
charge adjustment will be used to purchase additional shares at
the then current offering price applicable to the actual amount
of the aggregate purchases. These additional shares will not be
considered as part of the total investment for the purpose of
determining the applicable sales charge pursuant to the Statement
of Intention. No sales charge adjustment will be made unless and
until the investor's dealer returns any excess commissions
previously received.
To the extent that an investor purchases less than the dollar
amount indicated on the Statement of Intention within the 13-
month period, the sales charge will be adjusted upward for the
entire amount purchased at the end of the 13-month period. This
adjustment will be made by redeeming shares from the account to
cover the additional sales charge, the proceeds of which will be
paid to the investor's dealer and Putnam Mutual Funds in
accordance with the prospectus. If the account exceeds an amount
that would otherwise qualify for a reduced sales charge, that
reduced sales charge will be applied.
Statements of Intention are not available for certain employee
benefit plans.
Statement of Intention forms may be obtained from Putnam Mutual
Funds or from investment dealers. Interested investors should
read the Statement of Intention carefully.
GROUP PURCHASES OF CLASS A AND CLASS M SHARES. Members of
qualified groups may purchase class A shares of the fund at a
group sales charge rate of 4.50% of the public offering price
(4.71% of the net amount invested). The dealer discount on such
sales is 3.75% of the offering price. Members of qualified
groups may also purchase class M shares at net asset value.
To receive the class A or class M group rate, group members must
purchase shares through a single investment dealer designated by
the group. The designated dealer must transmit each member's
initial purchase to Putnam Mutual Funds, together with payment
and completed application forms. After the initial purchase, a
member may send funds for the purchase of shares directly to
Putnam Investor Services. Purchases of shares are made at the
public offering price based on the net asset value next
determined after Putnam Mutual Funds or Putnam Investor Services
receives payment for the shares. The minimum investment
requirements described above apply to purchases by any group
member. Only shares purchased under the class A group discount
are included in calculating the purchased amount for the purposes
of these requirements.
Qualified groups include the employees of a corporation or a sole
proprietorship, members and employees of a partnership or
association, or other organized groups of persons (the members of
which may include other qualified groups) provided that: (i) the
group has at least 25 members of which, with respect to the class
A discount only, at least 10 members participate in the initial
purchase; (ii) the group has been in existence for at least six
months; (iii) the group has some purpose in addition to the
purchase of investment company shares at a reduced sales charge;
(iv) the group's sole organizational nexus or connection is not
that the members are credit card holders of a company, policy
holders of an insurance company, customers of a bank or broker-
dealer, clients of an investment adviser or security holders of a
company; (v) with respect to the class A discount only, the group
agrees to provide its designated investment dealer access to the
group's membership by means of written communication or direct
presentation to the membership at a meeting on not less
frequently than an annual basis; (vi) the group or its investment
dealer will provide annual certification in form satisfactory to
Putnam Investor Services that the group then has at least 25
members and, with respect to the class A discount only, that at
least ten members participated in group purchases during the
immediately preceding 12 calendar months; and (vii) the group or
its investment dealer will provide periodic certification in form
satisfactory to Putnam Investor Services as to the eligibility of
the purchasing members of the group.
Members of a qualified group include: (i) any group which meets
the requirements stated above and which is a constituent member
of a qualified group; (ii) any individual purchasing for his or
her own account who is carried on the records of the group or on
the records of any constituent member of the group as being a
good standing employee, partner, member or person of like status
of the group or constituent member; or (iii) any fiduciary
purchasing shares for the account of a member of a qualified
group or a member's beneficiary. For example, a qualified group
could consist of a trade association which would have as its
members individuals, sole proprietors, partnerships and
corporations. The members of the group would then consist of the
individuals, the sole proprietors and their employees, the
members of the partnerships and their employees, and the
corporations and their employees, as well as the trustees of
employee benefit trusts acquiring class A shares for the benefit
of any of the foregoing.
A member of a qualified group may, depending upon the value of
class A shares of the fund owned or proposed to be purchased by
the member, be entitled to purchase class A shares of the fund at
non-group sales charge rates shown in the prospectus which may be
lower than the group sales charge rate, if the member qualifies
as a person entitled to reduced non-group sales charges. Such a
group member will be entitled to purchase at the lower rate if,
at the time of purchase, the member or his or her investment
dealer furnishes sufficient information for Putnam Mutual Funds
or Putnam Investor Services to verify that the purchase qualifies
for the lower rate.
Interested groups should contact their investment dealer or
Putnam Mutual Funds. The fund reserves the right to revise the
terms of or to suspend or discontinue group sales at any time.
QUALIFIED BENEFIT PLANS; INDIVIDUAL ACCOUNT PLANS. The terms
"class A qualified benefit plan" and "class M qualified benefit
plan" mean any employer-sponsored plan or arrangement, whether or
not tax-qualified, for which Putnam Fiduciary Trust Company or
its affiliates provide recordkeeping or other services in
connection with the purchase of class A shares or class M shares,
respectively. The term "affiliated employer" means employers who
are affiliated with each other within the meaning of Section
2(a)(3)(C) of the Investment Company Act of 1940. The term
"individual account plan" means any employee benefit plan whereby
(i) class A shares are purchased through payroll deductions or
otherwise by a fiduciary or other person for the account of
participants who are employees (or their spouses) of an employer,
or of affiliated employers, and (ii) a separate investing account
is maintained in the name of such fiduciary or other person for
the account of each participant in the plan.
The table of sales charges in the prospectus applies to sales to
employer-sponsored retirement plans that are not class A
qualified benefit plans, except that the fund may sell class A
shares at net asset value to employee benefit plans, including
individual account plans, of employers or of affiliated employers
which have at least 750 employees to whom such plan is made
available, in connection with a payroll deduction system of plan
funding (or other system acceptable to Putnam Investor Services)
by which contributions or account information for plan
participation are transmitted to Putnam Investor Services by
methods acceptable to Putnam Investor Services. The fund may
also sell class A shares at net asset value to employer-sponsored
retirement plans that initially invest at least $1 million in the
fund or that have at least 200 eligible employees. In addition,
the fund may sell class M shares at net asset value to class M
qualified benefit plans.
An employer-sponsored retirement plan participating in a "multi-
fund" program approved by Putnam Mutual Funds may include amounts
invested in the other mutual funds participating in such program
for purposes of determining whether the plan may purchase class A
shares at net asset value based on the size of the purchase.
These investments will also be included for purposes of the
discount privileges and programs described above.
Additional information about qualified benefit plans and
individual account plans is available from investment dealers or
from Putnam Mutual Funds.
CONTINGENT DEFERRED SALES CHARGES; COMMISSIONS
CLASS A SHARES. Except as described below, a CDSC of 0.75%
(1.00% in the case of plans for which Putnam Mutual Funds and its
affiliates do not act as trustee or record-keeper) of the total
amount redeemed is imposed on redemptions of shares purchased by
class A qualified benefit plans if, within two years of a plan's
initial purchase of class A shares, it redeems 90% or more of its
cumulative purchases. Thereafter, such plan is no longer liable
for any CDSC. The two-year CDSC applicable to class A qualified
benefit plans for which Putnam Mutual Funds or its affiliates
serve as trustee or recordkeeper ("full service plans") is 0.50%
of the total amount redeemed, for full service plans that
initially invest at least $5 million but less than $10 million in
Putnam funds and other investments managed by Putnam Management
or its affiliates ("Putnam Assets"), and is 0.25% of the total
amount redeemed for full service plans that initially invest at
least $10 million but less than $20 million in Putnam Assets.
Class A qualified benefit plans that initially invest at least
$20 million in Putnam Assets, or whose dealer of record has, with
Putnam Mutual Funds' approval, waived its commission or agreed to
refund its commission to Putnam Mutual Funds in the event a CDSC
would otherwise be applicable, are not subject to any CDSC.
Similarly, class A shares purchased at net asset value by any
investor other than a class A qualified benefit plan, including
purchases pursuant to any Combined Purchase Privilege, Right of
Accumulation or Statement of Intention, are subject to a CDSC of
1.00% or 0.50%, respectively, if redeemed within the first or
second year after purchase, unless the dealer of record waived
its commission with Putnam Mutual Funds' approval. The class A
CDSC is imposed on the lower of the cost and the current net
asset value of the shares redeemed.
Except as described below for sales to class A qualified benefit
plans, Putnam Mutual Funds pays investment dealers of record
commissions on sales of class A shares of $1 million or more and
sales to employer-sponsored benefit plans that have at least 200
eligible employees and that are not class A qualified benefit
plans based on cumulative purchases of such shares, including
purchases pursuant to any Combined Purchase Privilege, Right of
Accumulation or Statement of Intention, during the one-year
period beginning with the date of the initial purchase at net
asset value. Each subsequent one-year measuring period for these
purposes will begin with the first net asset value purchase
following the end of the prior period. Such commissions are paid
at the rate of 1.00% of the amount under $3 million, 0.50% of the
next $47 million and 0.25% thereafter.
On sales at net asset value to a class A qualified benefit plan,
Putnam Mutual Funds pays commissions to the dealer of record at
the time of the sale on net monthly purchases at the following
rates: 1.00% of the first $1 million, 0.75% of the next $1
million, 0.50% of the next $3 million, 0.20% of the next $5
million, 0.15% of the next $10 million, 0.10% of the next $10
million and 0.05% thereafter, except that commissions on sales to
class A qualified benefit plans initially investing less than $20
million in Putnam funds and other investments managed by Putnam
Management or its affiliates pursuant to a proposal made by
Putnam Mutual Funds on or before April 15, 1997 are based on
cumulative purchases over a one-year measuring period at the rate
of 1.00% of the first $2 million, 0.80% of the next $1 million,
and 0.50% thereafter. On sales at net asset value to all other
class A qualified benefit plans receiving proposals from Putnam
Mutual Funds on or before April 15, 1997, Putnam Mutual Funds
pays commissions on the initial investment and on subsequent net
quarterly sales (gross sales minus gross redemptions during the
quarter) at the rate of 0.15%. Money market fund shares are
excluded from all commission calculations, except for determining
the amount initially invested by a qualified benefit plan.
Commissions on sales at net asset value to such plans are subject
to Putnam Mutual Funds' right to reclaim such commissions if the
shares are redeemed within two years.
Different CDSC and commission rates may apply to shares purchased
prior to December 1, 1995.
ALL SHARES. Investors who set up an Automatic Cash Withdrawal
Plan ("ACWP") for a share account (see "Plans available to
shareholders -- Automatic Cash Withdrawal Plan") may withdraw
through the ACWP up to 12% of the net asset value of the account
(calculated as set forth below) each year without incurring any
CDSC. Shares not subject to a CDSC (such as shares representing
reinvestment of distributions) will be redeemed first and will
count toward the 12% limitation. If there are insufficient
shares not subject to a CDSC, shares subject to the lowest CDSC
liability will be redeemed next until the 12% limit is reached.
The 12% figure is calculated on a pro rata basis at the time of
the first payment made pursuant to an ACWP and recalculated
thereafter on a pro rata basis at the time of each ACWP payment.
Therefore, shareholders who have chosen an ACWP based on a
percentage of the net asset value of their account of up to 12%
will be able to receive ACWP payments without incurring a CDSC.
However, shareholders who have chosen a specific dollar amount
(for example, $100 per month from a fund that pays income
distributions monthly) for their periodic ACWP payment should be
aware that the amount of that payment not subject to a CDSC may
vary over time depending on the net asset value of their account.
For example, if the net asset value of the account is $10,000 at
the time of payment, the shareholder will receive $100 free of
the CDSC (12% of $10,000 divided by 12 monthly payments).
However, if at the time of the next payment the net asset value
of the account has fallen to $9,400, the shareholder will receive
$94 free of any CDSC (12% of $9,400 divided by 12 monthly
payments) and $6 subject to the lowest applicable CDSC. This
ACWP privilege may be revised or terminated at any time.
No CDSC is imposed on shares of any class subject to a CDSC
("CDSC Shares") to the extent that the CDSC Shares redeemed (i)
are no longer subject to the holding period therefor, (ii)
resulted from reinvestment of distributions on CDSC Shares, or
(iii) were exchanged for shares of another Putnam fund, provided
that the shares acquired in such exchange or subsequent exchanges
(including shares of a Putnam money market fund) will continue to
remain subject to the CDSC, if applicable, until the applicable
holding period expires. In determining whether the CDSC applies
to each redemption of CDSC Shares, CDSC Shares not subject to a
CDSC are redeemed first.
The fund will waive any CDSC on redemptions, in the case of
individual, joint or Uniform Transfers to Minors Act accounts, in
the event of death or post-purchase disability of a shareholder,
for the purpose of paying benefits pursuant to tax-qualified
retirement plans ("Benefit Payments"), or, in the case of living
trust accounts, in the event of the death or post-purchase
disability of the settlor of the trust). Benefit payments
currently include, without limitation, (1) distributions from an
IRA due to death or disability, (2) a return of excess
contributions to an IRA or 401(k) plan, and (3) distributions
from retirement plans qualified under Section 401(a) of the Code
or from a 403(b) plan due to death, disability, retirement or
separation from service. These waivers may be changed at any
time. Additional waivers may apply to IRA accounts opened prior
to February 1, 1994.
DISTRIBUTION PLANS
If the fund or a class of shares of the fund has adopted a
distribution plan, the prospectus describes the principal
features of the plan. This SAI contains additional information
which may be of interest to investors.
Continuance of a plan is subject to annual approval by a vote of
the Trustees, including a majority of the Trustees who are not
interested persons of the fund and who have no direct or indirect
interest in the plan or related arrangements (the "Qualified
Trustees"), cast in person at a meeting called for that purpose.
All material amendments to a plan must be likewise approved by
the Trustees and the Qualified Trustees. No plan may be amended
in order to increase materially the costs which the fund may bear
for distribution pursuant to such plan without also being
approved by a majority of the outstanding voting securities of
the fund or the relevant class of the fund, as the case may be.
A plan terminates automatically in the event of its assignment
and may be terminated without penalty, at any time, by a vote of
a majority of the Qualified Trustees or by a vote of a majority
of the outstanding voting securities of the fund or the relevant
class of the fund, as the case may be.
Putnam Mutual Funds compensates qualifying dealers (including,
for this purpose, certain financial institutions) for sales of
shares and the maintenance of shareholder accounts.
CLASS A SHARES:
Putnam Mutual Funds makes quarterly payments to dealers at the
annual rates set forth below ( as a percentage of the average
net asset value of class A shares for which such dealers are
designated the dealer of record) except that payments to dealers
for shares held by class A qualified benefit plans are made at
other rates, as described below. No payments are made during the
first year after purchase on shares purchased at net asset value
by shareholders investing at least $1 million 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.
Rate Fund
0.25% All funds except for those listed below
0.20% for shares purchased on Putnam High Yield Trust
or before 3/31/90; 0.25% for Putnam U.S. Government Income Trust
shares purchased after 3/31/90
0.20% for shares purchased on Putnam Municipal Income Fund
or before 5/7/92; 0.25% for
shares purchased after 5/7/92
0.20% for shares purchased on Putnam Income Fund
or before 3/31/91; 0.25% for
shares purchased after 3/31/91
0.15% for shares purchased on Putnam Tax Exempt Income Fund
or before 12/31/92; 0.20% for Putnam California Tax Exempt Income Fund
shares purchased after 12/31/92 Putnam New Jersey Tax Exempt Income Fund
Putnam New York Tax Exempt Income Fund
0.20% Putnam Tax-Free High Yield Fund
Putnam Tax-Free Insured Fund
0.15% for shares purchased on Putnam Arizona Tax Exempt Income Fund
or before 3/5/93; 0.20% for Putnam Florida Tax Exempt Income Fund
shares purchased after 3/5/93 Putnam Pennsylvania Tax Exempt Income Fund
0.15% for shares purchased on
or before 7/8/93; 0.20% for
shares purchased after 7/8/93
0.15% for shares purchased on Putnam Massachusetts Tax Exempt Income Fund
or before 5/11/92; 0.20% for
shares purchased after 5/11/92
0.15% for shares purchased on Putnam Michigan Tax Exempt Income Fund
or before 3/6/92; 0.20% for Putnam Minnesota Tax Exempt Income Fund
shares purchased after 3/6/92 Putnam Ohio Tax Exempt Income Fund
0.15% for shares purchased on Putnam New York Tax Exempt Opportunities Fund
or before 7/12/92; 0.20% for
shares purchased after 7/12/92
0.20% for shares purchased on Putnam Balanced Retirement Fund
or before 12/31/89; 0.25% for Putnam Convertible Income-Growth Trust
shares purchased after 12/31/89 The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Putnam Investors Fund
Putnam Vista Fund
Putnam Voyager Fund
Putnam Global Growth Fund
Putnam Global Natural Resources Fund
0.50% for shares purchased on Putnam Diversified Equity Trust
or before 7/1/95; 0.25% for
shares purchased after 7/1/95
Putnam Mutual Funds pays service fees to the dealer of record for
plans for which Putnam Fiduciary Trust or its affiliates serve as
trustee and recordkeeper at the following annual rates (expressed
as a percentage of the average net asset value of the plan's
class A shares): 0.25% of the first $5 million, 0.20% of the
next $5 million, 0.15% of the next $10 million, 0.10% of the next
$30 million, and 0.05% thereafter. For class A qualified benefit
plans for which Putnam Fiduciary Trust Company or its affiliates
provide some services but do not act as trustee and recordkeeper,
Putnam Mutual Funds will pay service fees to the dealer of record
of up to 0.25% of average net assets, depending on the level of
service provided by Putnam Fiduciary Trust Company or its
affiliates, by the dealer of record, and by third parties.
Service fees are paid quarterly to the dealer of record for that
quarter.
CLASS B SHARES:
Putnam Mutual Funds makes quarterly payments to dealers at the
annual rates set forth below (as a percentage of the average net
asset value of class B shares for which such dealers are
designated the dealer of record).
RateFund
0.25%All funds except for those listed below
0.20% for shares purchased on Putnam Tax-Free Insured Fund
or before 3/31/90; 0.25% for Putnam Tax-Free High Yield
shares purchased after 3/31/90
0.20% but prepaid in first year Putnam Arizona Tax Exempt Income Fund
Putnam California Tax Exempt Income Fund
Putnam Florida Tax Exempt Income Fund
Putnam Massachusetts Tax Exempt Income Fund
Putnam Michigan Tax Exempt Income Fund
Putnam Minnesota Tax Exempt Income Fund
Putnam New Jersey Tax Exempt Income Fund
Putnam New York Tax Exempt Income Fund
Putnam New York Tax Exempt Opportunities Fund
Putnam Ohio Tax Exempt Income Fund
Putnam Pennsylvania Tax Exempt Income Fund
CLASS C SHARES:
Putnam Mutual Funds makes quarterly payments to dealers at the
annual rates set forth below (as a percentage of the average net
asset value of class C shares for which such dealers are
designated the dealer of record).
Rate Fund
1.00% For all funds (except for Putnam Money Market Fund)
0.50%For Putnam Money Market Fund
CLASS M SHARES:
Putnam Mutual Funds makes quarterly payments to dealers at the
annual rates set forth below (as a percentage of the average net
asset value of class M shares for which such dealers are
designated the dealer of record).
RateFund
0.15% Putnam Money Market Fund
0.40% All income and money market
funds (except for Putnam Money Market
Fund)
0.65% All growth, growth and income
and international and global funds
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 the service
agreements between the dealers and Putnam Mutual Funds and any
applicable limits imposed by the National Association of
Securities Dealers, Inc.
Financial institutions receiving payments from Putnam Mutual
Funds as described above may be required to comply with various
state and federal regulatory requirements, including among others
those regulating the activities of securities brokers or dealers.
Except as otherwise agreed between Putnam Mutual Funds and a
dealer, for purposes of determining the amounts payable to
dealers for shareholder accounts for which such dealers are
designated as the dealer of record, "average net asset value"
means the product of (i) the average daily share balance in such
account(s) and (ii) the average daily net asset value of the
relevant class of shares over the quarter.
Financial institutions receiving payments from Putnam Mutual
Funds as described above may be required to comply with various
state and federal regulatory requirements, including among others
those regulating the activities of securities brokers or dealers.
INVESTOR SERVICES
SHAREHOLDER INFORMATION
Each time shareholders buy or sell shares, they will receive a
statement confirming the transaction and listing their current
share balance. (Under certain investment plans, a statement may
only be sent quarterly.) Shareholders will receive a statement
confirming reinvestment of distributions in additional fund
shares (or in shares of other Putnam funds for Dividends Plus
accounts) promptly following the quarter in which the
reinvestment occurs. To help shareholders take full advantage of
their Putnam investment, they will receive a Welcome Kit and a
periodic publication covering many topics of interest to
investors. The fund also sends annual and semiannual reports
that keep shareholders informed about its portfolio and
performance, and year-end tax information to simplify their
recordkeeping. Easy-to-read, free booklets on special subjects
such as the Exchange Privilege and IRAs are available from Putnam
Investor Services. Shareholders may call Putnam Investor
Services toll-free weekdays at 1-800-225-1581 between 8:30 a.m.
and 7:00 p.m. Boston time for more information, including account
balances.
YOUR INVESTING ACCOUNT
The following information provides more detail concerning the
operation of a Putnam Investing Account. For further information
or assistance, investors should consult Putnam Investor Services.
Shareholders who purchase shares through a defined contribution
plan should note that not all of the services or features
described below may be available to them, and they should contact
their employer for details.
A shareholder may reinvest a cash distribution without a front-
end sales charge or without the reinvested shares being subject
to a CDSC, as the case may be, by delivering to Putnam Investor
Services the uncashed distribution check, endorsed to the order
of the fund. Putnam Investor Services must receive the properly
endorsed check within 1 year after the date of the check.
The Investing Account also provides a way to accumulate shares of
the fund. In most cases, after an initial investment of $500, a
shareholder may send checks to Putnam Investor Services for $50
or more, made payable to the fund, to purchase additional shares
at the applicable public offering price next determined after
Putnam Investor Services receives the check. Checks must be
drawn on a U.S. bank and must be payable in U.S. dollars.
Putnam Investor Services acts as the shareholder's agent whenever
it receives instructions to carry out a transaction on the
shareholder's account. Upon receipt of instructions that shares
are to be purchased for a shareholder's account, shares will be
purchased through the investment dealer designated by the
shareholder. Shareholders may change investment dealers at any
time by written notice to Putnam Investor Services, provided the
new dealer has a sales agreement with Putnam Mutual Funds.
Shares credited to an account are transferable upon written
instructions in good order to Putnam Investor Services and may be
sold to the fund as described under "How do I sell fund shares?"
in the prospectus. Money market funds and certain other funds
will not issue share certificates. A shareholder may send to
Putnam Investor Services any certificates which have been
previously issued for safekeeping at no charge to the
shareholder.
Putnam Mutual Funds, at its expense, may provide certain
additional reports and administrative material to qualifying
institutional investors with fiduciary responsibilities to assist
these investors in discharging their responsibilities.
Institutions seeking further information about this service
should contact Putnam Mutual Funds, which may modify or terminate
this service at any time.
Putnam Investor Services may make special services available to
shareholders with investments exceeding $1,000,000. Contact
Putnam Investor Services for details.
The fund pays Putnam Investor Services' fees for maintaining
Investing Accounts.
REINSTATEMENT PRIVILEGE
An investor who has redeemed shares of the fund may reinvest
(within 1 year) the proceeds of such sale in shares of the same
class of the fund, or may be able to reinvest (within 1 year) the
proceeds in shares of the same class of one of the other
continuously offered Putnam funds (through the exchange privilege
described in the prospectus), including, in the case of shares
subject to a CDSC, the amount of CDSC charged on the redemption.
Any such reinvestment would be at the net asset value of the
shares of the fund(s) the investor selects, next determined after
Putnam Mutual Funds receives a Reinstatement Authorization. The
time that the previous investment was held will be included in
determining any applicable CDSC due upon redemptions and, in the
case of class B shares, the eight-year period for conversion to
class A shares. Shareholders will receive from Putnam Mutual
Funds the amount of any CDSC paid at the time of redemption as
part of the reinstated investment, which may be treated as
capital gains to the shareholder for tax purposes. Exercise of
the Reinstatement Privilege does not alter the federal income tax
treatment of any capital gains realized on a sale of fund shares,
but to the extent that any shares are sold at a loss and the
proceeds are reinvested in shares of the fund, some or all of the
loss may be disallowed as a deduction. Consult your tax adviser.
Investors who desire to exercise the Reinstatement Privilege
should contact their investment dealer or Putnam Investor
Services.
EXCHANGE PRIVILEGE
Except as otherwise set forth in this section, by calling Putnam
Investor Services, investors may exchange shares valued up to
$500,000 between accounts with identical registrations, provided
that no certificates are outstanding for such shares and no
address change has been made within the preceding 15 days.
During periods of unusual market changes and shareholder
activity, shareholders may experience delays in contacting Putnam
Investor Services by telephone to exercise the Telephone Exchange
Privilege.
Putnam Investor Services also makes exchanges promptly after
receiving a properly completed Exchange Authorization Form and,
if issued, share certificates. If the shareholder is a
corporation, partnership, agent, or surviving joint owner, Putnam
Investor Services will require additional documentation of a
customary nature. Because an exchange of shares involves the
redemption of fund shares and reinvestment of the proceeds in
shares of another Putnam fund, completion of an exchange may be
delayed under unusual circumstances if the fund were to suspend
redemptions or postpone payment for the fund shares being
exchanged, in accordance with federal securities laws. Exchange
Authorization Forms and prospectuses of the other Putnam funds
are available from Putnam Mutual Funds or investment dealers
having sales contracts with Putnam Mutual Funds. The prospectus
of each fund describes its investment objective(s) and policies,
and shareholders should obtain a prospectus and consider these
objectives and policies carefully before requesting an exchange.
Shares of certain Putnam funds are not available to residents of
all states. The fund reserves the right to change or suspend the
Exchange Privilege at any time. Shareholders would be notified
of any change or suspension. Additional information is available
from Putnam Investor Services.
Shareholders of other Putnam funds may also exchange their shares
at net asset value for shares of the fund, as set forth in the
current prospectus of each fund.
For federal income tax purposes, an exchange is a sale on which
the investor generally will realize a capital gain or loss
depending on whether the net asset value at the time of the
exchange is more or less than the investor's basis. The Exchange
Privilege may be revised or terminated at any time. Shareholders
would be notified of any such change or suspension.
DIVIDENDS PLUS
Shareholders may invest the fund's distributions of net
investment income or distributions combining net investment
income and short-term capital gains in shares of the same class
of another continuously offered Putnam fund (the "receiving
fund") using the net asset value per share of the receiving fund
determined on the date the fund's distribution is payable. No
sales charge or CDSC will apply to the purchased shares unless
the fund paying the distribution is a money market fund. The
prospectus of each fund describes its investment objective(s) and
policies, and shareholders should obtain a prospectus and
consider these objective(s) and policies carefully before
investing their distributions in the receiving fund. Shares of
certain Putnam funds are not available to residents of all
states.
The minimum account size requirement for the receiving fund will
not apply if the current value of your account in the fund paying
the distribution is more than $5,000.
Shareholders of other Putnam funds (except for money market
funds, whose shareholders must pay a sales charge or become
subject to a CDSC) may also use their distributions to purchase
shares of the fund at net asset value.
For federal tax purposes, distributions from the fund which are
reinvested in another fund are treated as paid by the fund to the
shareholder and invested by the shareholder in the receiving fund
and thus, to the extent comprised of taxable income and deemed
paid to a taxable shareholder, are taxable.
The Dividends PLUS program may be revised or terminated at any
time.
PLANS AVAILABLE TO SHAREHOLDERS
The plans described below are fully voluntary and may be
terminated at any time without the imposition by the fund or
Putnam Investor Services of any penalty. All plans provide for
automatic reinvestment of all distributions in additional shares
of the fund at net asset value. The fund, Putnam Mutual Funds or
Putnam Investor Services may modify or cease offering these plans
at any time.
AUTOMATIC CASH WITHDRAWAL PLAN ("ACWP"). An investor who owns or
buys shares of the fund valued at $10,000 or more at the current
public offering price may open an ACWP plan and have a designated
sum of money ($50 or more) paid monthly, quarterly, semi-annually
or annually to the investor or another person. (Payments from
the fund can be combined with payments from other Putnam funds
into a single check through a designated payment plan.) Shares
are deposited in a plan account, and all distributions are
reinvested in additional shares of the fund at net asset value
(except where the plan is utilized in connection with a
charitable remainder trust). Shares in a plan account are then
redeemed at net asset value to make each withdrawal payment.
Payment will be made to any person the investor designates;
however, if shares are registered in the name of a trustee or
other fiduciary, payment will be made only to the fiduciary,
except in the case of a profit-sharing or pension plan where
payment will be made to a designee. As withdrawal payments may
include a return of principal, they cannot be considered a
guaranteed annuity or actual yield of income to the investor.
The redemption of shares in connection with a plan generally will
result in a gain or loss for tax purposes. Some or all of the
losses realized upon redemption may be disallowed pursuant to the
so-called wash sale rules if shares of the same fund from which
shares were redeemed are purchased (including through the
reinvestment of fund distributions) within a period beginning 30
days before, and ending 30 days after, such redemption. In such
a case, the basis of the replacement shares will be increased to
reflect the disallowed loss. Continued withdrawals in excess of
income will reduce and possibly exhaust invested principal,
especially in the event of a market decline. The maintenance of
a plan concurrently with purchases of additional shares of the
fund would be disadvantageous to the investor because of the
sales charge payable on such purchases. For this reason, the
minimum investment accepted while a plan is in effect is $1,000,
and an investor may not maintain a plan for the accumulation of
shares of the fund (other than through reinvestment of
distributions) and a plan at the same time. The cost of
administering these plans for the benefit of those shareholders
participating in them is borne by the fund as an expense of all
shareholders. The fund, Putnam Mutual Funds or Putnam Investor
Services may terminate or change the terms of the plan at any
time. A plan will be terminated if communications mailed to the
shareholder are returned as undeliverable.
Investors should consider carefully with their own financial
advisers whether the plan and the specified amounts to be
withdrawn are appropriate in their circumstances. The fund and
Putnam Investor Services make no recommendations or
representations in this regard.
TAX QUALIFIED RETIREMENT PLANS; 403(B) AND SEP PLANS. (NOT
OFFERED BY FUNDS INVESTING PRIMARILY IN TAX-EXEMPT SECURITIES.)
Investors may purchase shares of the fund through the following
Tax Qualified Retirement Plans, available to qualified
individuals or organizations:
Standard and variable profit-sharing (including 401(k))
and money purchase pension plans; and
Individual Retirement Account Plans (IRAs).
Each of these Plans has been qualified as a prototype plan by the
Internal Revenue Service. Putnam Investor Services will furnish
services under each plan at a specified annual cost. Putnam
Fiduciary Trust Company serves as trustee under each of these
Plans.
Forms and further information on these Plans are available from
investment dealers or from Putnam Mutual Funds. In addition,
specialized professional plan administration services are
available on an optional basis; contact Putnam Defined
Contribution Plan Services at 1-800-225-2465, extension 8600.
A 403(b) Retirement Plan is available for employees of public
school systems and organizations which meet the requirements of
Section 501(c)(3) of the Internal Revenue Code. Forms and
further information on the 403(b) Plan are also available from
investment dealers or from Putnam Mutual Funds. Shares of the
fund may also be used in simplified employee pension (SEP) plans.
For further information on the Putnam prototype SEP plan, contact
an investment dealer or Putnam Mutual Funds.
Consultation with a competent financial and tax adviser regarding
these Plans and consideration of the suitability of fund shares
as an investment under the Employee Retirement Income Security
Act of 1974, or otherwise, is recommended.
SIGNATURE GUARANTEES
Redemption requests for shares having a net asset value of
$100,000 or more must be signed by the registered owners or their
legal representatives and must be guaranteed by a bank,
broker/dealer, municipal securities dealer or broker, government
securities dealer or broker, credit union, national securities
exchange, registered securities association, clearing agency,
savings association or trust company, provided such institution
is acceptable under and conforms with Putnam Fiduciary Trust
Company's signature guarantee procedures. A copy of such
procedures is available upon request. If you want your
redemption proceeds sent to an address other than your address as
it appears on Putnam's records, you must provide a signature
guarantee. Putnam Investor Services usually requires additional
documentation for the sale of shares by a corporation,
partnership, agent or fiduciary, or a surviving joint owner.
Contact Putnam Investor Services for details.
SUSPENSION OF REDEMPTIONS
The fund may not suspend shareholders' right of redemption, or
postpone payment for more than seven days, unless the Exchange is
closed for other than customary weekends or holidays, or if
permitted by the rules of the Securities and Exchange Commission
during periods when trading on the Exchange is restricted or
during any emergency which makes it impracticable for the fund to
dispose of its securities or to determine fairly the value of its
net assets, or during any other period permitted by order of the
Commission for protection of investors.
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of
the fund. However, the Agreement and Declaration of Trust
disclaims shareholder liability for acts or obligations of the
fund and requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by
the fund or the Trustees. The Agreement and Declaration of Trust
provides for indemnification out of fund property for all loss
and expense of any shareholder held personally liable for the
obligations of the fund. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which the fund would be unable to
meet its obligations. The likelihood of such circumstances is
remote.
STANDARD PERFORMANCE MEASURES
Yield and total return data for the fund may from time to time be
presented in Part I of this SAI and in advertisements. In the
case of funds with more than one class of shares, all performance
information is calculated separately for each class. The data is
calculated as follows.
Total return for one-, five- and ten-year periods (or for such
shorter periods as the fund has been in operation or shares of
the relevant class have been outstanding) is determined by
calculating the actual dollar amount of investment return on a
$1,000 investment in the fund made at the beginning of the
period, at the maximum public offering price for class A shares
and class M shares and net asset value for other classes of
shares, and then calculating the annual compounded rate of return
which would produce that amount. Total return for a period of
one year is equal to the actual return of the fund during that
period. Total return calculations assume deduction of the fund's
maximum sales charge or CDSC, if applicable, and reinvestment of
all fund distributions at net asset value on their respective
reinvestment dates.
The fund's yield is presented for a specified thirty-day period
(the "base period"). Yield is based on the amount determined by
(i) calculating the aggregate amount of dividends and interest
earned by the fund during the base period less expenses for that
period, and (ii) dividing that amount by the product of (A) the
average daily number of shares of the fund outstanding during the
base period and entitled to receive dividends and (B) the per
share maximum public offering price for class A shares or class M
shares, as appropriate, and net asset value for other classes of
shares on the last day of the base period. The result is
annualized on a compounding basis to determine the yield. For
this calculation, interest earned on debt obligations held by the
fund is generally calculated using the yield to maturity (or
first expected call date) of such obligations based on their
market values (or, in the case of receivables-backed securities
such as the Government National Mortgage Association ("GNMAs"),
based on cost). Dividends on equity securities are accrued daily
at their stated dividend rates. The amount of expenses used in
determining the fund's yield includes, in addition to expenses
actually accrued by the fund, an estimate of the amount of
expenses that the fund would have incurred if brokerage
commissions had not been used to reduce such expenses.
If the fund is a money market fund, yield is computed by
determining the percentage net change, excluding capital changes,
in the value of an investment in one share over the seven-day
period for which yield is presented (the "base period"), and
multiplying the net change by 365/7 (or approximately 52 weeks).
Effective yield represents a compounding of the yield by adding 1
to the number representing the percentage change in value of the
investment during the base period, raising that sum to a power
equal to 365/7, and subtracting 1 from the result.
If the fund is a tax-exempt fund, the tax-equivalent yield during
the base period may be presented for shareholders in one or more
stated tax brackets. Tax-equivalent yield is calculated by
adjusting the tax-exempt yield by a factor designed to show the
approximate yield that a taxable investment would have to earn to
produce an after-tax yield equal, for that shareholder, to the
tax-exempt yield. The tax-equivalent yield will differ for
shareholders in other tax brackets.
At times, Putnam Management may reduce its compensation or assume
expenses of the fund in order to reduce the fund's expenses. The
per share amount of any such fee reduction or assumption of
expenses during the fund's past five fiscal years (or for the
life of the fund, if shorter) is set forth in the footnotes to
the table in the section entitled "Financial highlights" in the
prospectus. Any such fee reduction or assumption of expenses
would increase the fund's yield and total return for periods
including the period of the fee reduction or assumption of
expenses.
All data are based on past performance and do not predict future
results.
COMPARISON OF PORTFOLIO PERFORMANCE
Independent statistical agencies measure the fund's investment
performance and publish comparative information showing how the
fund, and other investment companies, performed in specified time
periods. Three agencies whose reports are commonly used for such
comparisons are set forth below. From time to time, the fund may
distribute these comparisons to its shareholders or to potential
investors. THE AGENCIES LISTED BELOW MEASURE PERFORMANCE BASED
ON THEIR OWN CRITERIA RATHER THAN ON THE STANDARDIZED PERFORMANCE
MEASURES DESCRIBED IN THE PRECEDING SECTION.
LIPPER ANALYTICAL SERVICES, INC. distributes mutual fund
rankings monthly. The rankings are based on total return
performance calculated by Lipper, generally reflecting
changes in net asset value adjusted for reinvestment of
capital gains and income dividends. They do not reflect
deduction of any sales charges. Lipper rankings cover a
variety of performance periods, including year-to-date, 1-
year, 5-year, and 10-year performance. Lipper classifies
mutual funds by investment objective and asset category.
MORNINGSTAR, INC. distributes mutual fund ratings twice a
month. The ratings are divided into five groups:
highest, above average, neutral, below average and lowest.
They represent a fund's historical risk/reward ratio
relative to other funds in its broad investment class as
determined by Morningstar, Inc. Morningstar ratings cover
a variety of performance periods, including 1-year, 3-
year, 5-year, 10-year and overall performance. The
performance factor for the overall rating is a weighted-
average assessment of the fund's 1-year, 3-year, 5-year,
and 10-year total return performance (if available)
reflecting deduction of expenses and sales charges.
Performance is adjusted using quantitative techniques to
reflect the risk profile of the fund. The ratings are
derived from a purely quantitative system that does not
utilize the subjective criteria customarily employed by
rating agencies such as Standard & Poor's and Moody's
Investor Service, Inc.
CDA/WIESENBERGER'S MANAGEMENT RESULTS publishes mutual
fund rankings and is distributed monthly. The rankings
are based entirely on total return calculated by
Weisenberger for periods such as year-to-date, 1-year, 3-
year, 5-year and 10-year. Mutual funds are ranked in
general categories (e.g., international bond,
international equity, municipal bond, and maximum capital
gain). Weisenberger rankings do not reflect deduction of
sales charges or fees.
Independent publications may also evaluate the fund's
performance. The fund may from time to time refer to results
published in various periodicals, including Barrons, Financial
World, Forbes, Fortune, Investor's Business Daily, Kiplinger's
Personal Finance Magazine, Money, U.S. News and World Report and
The Wall Street Journal.
Independent, unmanaged indexes, such as those listed below, may
be used to present a comparative benchmark of fund performance.
The performance figures of an index reflect changes in market
prices, reinvestment of all dividend and interest payments and,
where applicable, deduction of foreign withholding taxes, and do
not take into account brokerage commissions or other costs.
Because the fund is a managed portfolio, the securities it owns
will not match those in an index. Securities in an index may
change from time to time.
THE CONSUMER PRICE INDEX, prepared by the U.S. Bureau of
Labor Statistics, is a commonly used measure of the rate
of inflation. The index shows the average change in the
cost of selected consumer goods and services and does not
represent a return on an investment vehicle.
THE DOW JONES INDUSTRIAL AVERAGE is an index of 30 common
stocks frequently used as a general measure of stock
market performance.
THE DOW JONES UTILITIES AVERAGE is an index of 15 utility
stocks frequently used as a general measure of stock
market performance.
CS FIRST BOSTON HIGH YIELD INDEX is a market-weighted
index including publicly traded bonds having a rating
below BBB by Standard & Poor's and Baa by Moody's.
THE LEHMAN BROTHERS AGGREGATE BOND INDEX is an index
composed of securities from The Lehman Brothers
Government/Corporate Bond Index, The Lehman Brothers
Mortgage-Backed Securities Index and The Lehman Brothers
Asset-Backed Securities Index and is frequently used as a
broad market measure for fixed-income securities.
THE LEHMAN BROTHERS ASSET-BACKED SECURITIES INDEX is an
index composed of credit card, auto, and home equity
loans. Included in the index are pass-through, bullet
(noncallable), and controlled amortization structured debt
securities; no subordinated debt is included. All
securities have an average life of at least one year.
THE LEHMAN BROTHERS CORPORATE BOND INDEX is an index of
publicly issued, fixed-rate, non-convertible investment-
grade domestic corporate debt securities frequently used
as a general measure of the performance of fixed-income
securities.
THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX is an
index of publicly issued U.S. Treasury obligations, debt
obligations of U.S. government agencies (excluding
mortgage-backed securities), fixed-rate, non-convertible,
investment-grade corporate debt securities and U.S. dollar-
denominated, SEC-registered non-convertible debt issued by
foreign governmental entities or international agencies
used as a general measure of the performance of fixed-
income securities.
THE LEHMAN BROTHERS INTERMEDIATE TREASURY BOND INDEX is an
index of publicly issued U.S. Treasury obligations with
maturities of up to ten years and is used as a general
gauge of the market for intermediate-term fixed-income
securities.
THE LEHMAN BROTHERS LONG-TERM TREASURY BOND INDEX is an
index of publicly issued U.S. Treasury obligations
(excluding flower bonds and foreign-targeted issues) that
are U.S. dollar-denominated and have maturities of 10
years or greater.
THE LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX
includes 15- and 30-year fixed rate securities backed by
mortgage pools of the Government National Mortgage
Association, Federal Home Loan Mortgage Corporation, and
Federal National Mortgage Association.
THE LEHMAN BROTHERS MUNICIPAL BOND INDEX is an index of
approximately 20,000 investment-grade, fixed-rate tax-
exempt bonds.
THE LEHMAN BROTHERS TREASURY BOND INDEX is an index of
publicly issued U.S. Treasury obligations (excluding
flower bonds and foreign-targeted issues) that are U.S.
dollar denominated, have a minimum of one year to
maturity, and are issued in amounts over $100 million.
THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX is an
index of approximately 1,482 equity securities listed on
the stock exchanges of the United States, Europe, Canada,
Australia, New Zealand and the Far East, with all values
expressed in U.S. dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS
INDEX is an index of approximately 1,100 securities
representing 20 emerging markets, with all values
expressed in U.S. dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS
FREE INDEX is an index of approximately 1,003 securities
available to non-domestic investors representing 26
emerging markets, with all values expressed in U.S.
dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX is an
index of approximately 1,045 equity securities issued by
companies located in 18 countries and listed on the stock
exchanges of Europe, Australia, and the Far East. All
values are expressed in U.S. dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE INDEX is
an index of approximately 627 equity securities issued by
companies located in one of 13 European countries, with
all values expressed in U.S. dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL PACIFIC INDEX is
an index of approximately 418 equity securities issued by
companies located in 5 countries and listed on the
exchanges of Australia, New Zealand, Japan, Hong Kong,
Singapore/Malaysia. All values are expressed in U.S.
dollars.
THE NASDAQ INDUSTRIAL AVERAGE is an index of stocks traded
in The Nasdaq Stock Market, Inc. National Market System.
THE RUSSELL 1000 INDEX is composed of the 1,000 largest
companies in the Russell 3000 Index, representing
approximately 89% of the Russell 3000 total market
capitalization. The Russell 3000 Index is composed of the
3,000 largest U.S. companies ranked by total market
capitalization, representing approximately 98% of the U.S.
investable equity market.
THE RUSSELL 2000 INDEX is composed of the 2,000 smallest
companies in the Russell 3000 Index, representing
approximately 11% of the Russell 3000 total market
capitalization.
THE RUSSELL 2000 GROWTH INDEX is composed of securities
with greater-than-average growth orientation within the
Russell 2000 Index. Each security's growth orientation is
determined by a composite score of the security's price-to-
book ratio and forecasted growth rate. Growth stocks tend
to have higher price-to-book ratios and forecasted growth
rates than value stocks. This index is composed of
approximately 1,310 companies from the Russell 2000 Index,
representing approximately 50% of the total market
capitalization of the Russell 2000 Index.
THE RUSSELL MIDCAP INDEX is composed of the 800 smallest
companies in the Russell 1000 Index, representing
approximately 35% of the Russell 1000 total market
capitalization.
THE RUSSELL MIDCAP GROWTH INDEX is composed of securities
with greater-than-average growth orientation within the
Russell Midcap Index. Each security's growth orientation
is determined by a composite score of the security's price-
to-book ratio and forecasted growth rate. Growth stocks
tend to have higher price-to-book ratios and forecasted
growth rates than value stocks. This index is composed of
approximately 450 companies from the Russell 1000 Growth
Index, representing 20% of the total market capitalization
of the Russell 1000 Growth Index.
THE SALOMON BROTHERS LONG-TERM HIGH-GRADE CORPORATE BOND
INDEX is an index of publicly traded corporate bonds
having a rating of at least AA by Standard & Poor's or Aa
by Moody's and is frequently used as a general measure of
the performance of fixed-income securities.
THE SALOMON BROTHERS LONG-TERM TREASURY INDEX is an index
of U.S. government securities with maturities greater than
10 years.
THE SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX is an
index that tracks the performance of the 14 government
bond markets of Australia, Austria, Belgium Canada,
Denmark, France, Germany, Italy, Japan, Netherlands,
Spain, Sweden, United Kingdom and the United States.
Country eligibility is determined by market capitalization
and investability criteria.
THE SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX (non
$U.S.) is an index of foreign government bonds calculated
to provide a measure of performance in the government bond
markets outside of the United States.
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX is an
index of common stocks frequently used as a general
measure of stock market performance.
STANDARD & POOR'S 40 UTILITIES INDEX is an index of 40
utility stocks.
STANDARD & POOR'S/BARRA VALUE INDEX is an index
constructed by ranking the securities in the Standard &
Poor's 500 Composite Stock Price Index by price-to-book
ratio and including the securities with the lowest price-
to-book ratios that represent approximately half of the
market capitalization of the Standard & Poor's 500
Composite Stock Price Index.
In addition, Putnam Mutual Funds may distribute to shareholders
or prospective investors illustrations of the benefits of
reinvesting tax-exempt or tax-deferred distributions over
specified time periods, which may include comparisons to fully
taxable distributions. These illustrations use hypothetical
rates of tax-advantaged and taxable returns and are not intended
to indicate the past or future performance of any fund.
SECURITIES RATINGS
THE FOLLOWING RATING SERVICES DESCRIBE RATED SECURITIES AS
FOLLOWS:
MOODY'S INVESTORS SERVICE, INC.
BONDS
AAA -- Bonds which are rated AAA are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edged." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
AA -- Bonds which are rated AA are judged to be of high quality
by all standards. Together with the AAA group they comprise what
are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as in AAA securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements
present which make the long-term risk appear somewhat larger than
the AAA securities.
A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and interest
are considered adequate, but elements may be present which
suggest a susceptibility to impairment sometime in the future.
BAA -- Bonds which are rated BAA are considered as medium grade
obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
BA -- Bonds which are rated BA are judged to have speculative
elements; their future cannot be considered as well-assured.
Often the protection of interest and principal payments may be
very moderate, and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of
the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over
any long period of time may be small.
CAA -- Bonds which are rated CAA are of poor standing. Such
issues may be in default or there may be present elements of
danger with respect to principal or interest.
CA -- Bonds which are rated CA represent obligations which are
speculative in a high degree. Such issues are often in default
or have other marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds,
and issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.
NOTES (FOR MONEY MARKET FUNDS ONLY)
MIG 1/VMIG 1 -- This designation denotes best quality. There is
present strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG 2/VMIG 2 -- This designation denotes high quality. Margins
of protection are ample although not so large as in the preceding
group.
COMMERCIAL PAPER (FOR MONEY MARKET FUNDS ONLY)
Issuers rated PRIME-1 (or supporting institutions) have a
superior ability for repayment of senior short-term debt
obligations. Prime-1 repayment ability will often be evidenced
by the following characteristics:
- - Leading market positions in well established industries.
- -- High rates of return on funds employed.
- -- Conservative capitalization structure with moderate
reliance on debt and ample asset protection.
- -- Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.
- -- Well established access to a range of financial markets
and assured sources of alternate liquidity.
Issuers rated PRIME-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations.
This will normally be evidenced by many of the characteristics
cited above to a lesser degree. Earnings trends and coverage
ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity
is maintained.
STANDARD & POOR'S
BONDS
AAA -- An obligation rated AAA has the highest rating assigned by
Standard & Poor's. The obligor's capacity to meet its financial
commitment on the obligation is extremely strong.
AA -- An obligation rated AA differs from the highest-rated
obligations only in small degree. The obligor's capacity to meet
its financial commitment on the obligation is very strong.
A -- An obligation rated A is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than obligations in higher-rated categories. However,
the obligor's capacity to meet its financial commitment on the
obligation is still strong.
BBB -- An obligation rated BBB exhibits adequate protection
parameters. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity of
the obligor to meet its financial commitment on the obligation.
Obligations rated BB, B, CCC, CC and C are regarded as having
significant speculative characteristics. BB indicates the lowest
degree of speculation and C the highest. While such obligations
will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major exposures to
adverse conditions.
BB -- An obligation rated BB is less vulnerable to nonpayment
than other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions which could lead to the obligor's inadequate
capacity to meet its financial commitment on the obligation.
B -- An obligation rated B is more vulnerable to nonpayment than
obligations rated BB, but the obligor currently has the capacity
to meet its financial commitment on the obligations. Adverse
business, financial, or economic conditions will likely impair
the obligor's capacity or willingness to meet its financial
commitment on the obligation.
CCC -- An obligation rated CCC is currently vulnerable to
nonpayment, and is dependent upon favorable business, financial,
and economic conditions for the obligor to meet its financial
commitment on the obligation. In the event of adverse business,
financial, or economic conditions, the obligor is not likely to
have the capacity to meet its financial commitment on the
obligation.
CC -- An obligation rated CC is currently highly vulnerable to
nonpayment.
C -- The C rating may be used to cover a situation where a
bankruptcy petition has been filed, or similar action has been
taken, but payments on this obligation are being continued.
D -- An obligation rated D is in payment default. The D rating
category is used when interest payments or principal payments are
not made on the date due even if the applicable grace period has
not expired, unless Standard & Poor's believes that such payments
will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition, or the taking of a
similar action if payments on an obligation are jeopardized.
NOTES (FOR MONEY MARKET FUNDS ONLY)
SP-1 -- Strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics
are given a plus (+) designation.
SP-2 -- Satisfactory capacity to pay principal and interest.
SP-3 -- Speculative capacity to pay principal and interest.
COMMERCIAL PAPER (FOR MONEY MARKET FUNDS ONLY)
A-1 -- This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics are denoted with
a plus sign (+) designation.
A-2 -- Capacity for timely payment on issues with this
designation is satisfactory. However, the relative degree of
safety is not as high as for issues designated `A-1'.
A-3 -- Issues carrying this designation have adequate capacity
for timely payment. They are, however, more vulnerable to the
adverse effects of changes in circumstances than obligations
carrying the higher designations.
DUFF & PHELPS CORPORATION
LONG-TERM DEBT
AAA -- Highest credit quality. The risk factors are negligible,
being only slightly more than for risk-free U.S. Treasury debt.
AA+, AA, AA- -- High credit quality. Protection factors are
strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
A+, A, A- -- Protection factors are average but adequate.
However, risk factors are more variable and greater in periods of
economic stress.
BBB+, BBB, BBB- -- Below-average protection factors but still
considered sufficient for prudent investment. Considerable
variability in risk during economic cycles.
BB+, BB, BB- -- Below investment grade but deemed likely to meet
obligations when due. Present or prospective financial
protection factors fluctuate according to industry conditions or
company fortunes. Overall quality may move up or down frequently
within this category.
B+, B, B- -- Below investment grade and possessing risk that
obligations will not be met when due. Financial protection
factors will fluctuate widely according to economic cycles,
industry conditions and/or company fortunes. Potential exists
for frequent changes in the rating within this category or into a
higher or lower rating grade.
CCC -- Well below investment-grade securities. Considerable
uncertainty exists as to timely payment of principal, interest or
preferred dividends. Protection factors are narrow and risk can
be substantial with unfavorable economic/industry conditions,
and/or with unfavorable company developments.
DD -- Defaulted debt obligations. Issuer failed to meet
scheduled principal and/or interest payments.
FITCH INVESTORS SERVICE, INC.
AAA -- Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability
to pay interest and repay principal, which is unlikely to be
affected by reasonably foreseeable events.
AA -- Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds
rated AAA.
A -- Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable
to adverse changes in economic conditions and circumstances than
bonds with higher ratings.
BBB -- Bonds considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay
interest and repay principal is considered to be adequate.
Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds,
and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.
BB -- Bonds considered to be speculative. The obligor's ability
to pay interest and repay principal may be affected over time by
adverse economic changes. However, business and financial
alternatives can be identified which could assist the obligor in
satisfying its debt service requirements.
B -- Bonds are considered highly speculative. Bonds in this class
are lightly protected as to the obligor's ability to pay interest
over the life of the issue and repay principal when due.
CCC -- Bonds have certain characteristics which, with passing of
time, could lead to the possibility of default on either
principal or interest payments.
CC -- Bonds are minimally protected. Default in payment of
interest and/or principal seems probable.
C -- Bonds are in actual or imminent default in payment of
interest or principal.
DDD -- Bonds are in default and in arrears in interest and/or
principal payments. Such bonds are extremely speculative and
should be valued only on the basis of their value in liquidation
or reorganization of the obligor.
DEFINITIONSDEFINITIONS
"Putnam Management" - Putnam Investment
Management, Inc., the fund's
investment manager.
"Putnam Mutual Funds" - Putnam Mutual Funds Corp.,
the fund's principal
underwriter.
"Putnam Fiduciary Trust - Putnam Fiduciary Trust
Company,
Company" the fund's custodian.
"Putnam Investor Services" - Putnam Investor Services, a
division of Putnam Fiduciary
Trust Company, the fund's
investor servicing agent.
PUTNAM TAX MANAGED FUNDS TRUST
PUTNAM U.S. CORE TAX MANAGED FUND
FORM N-1A
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
1. Agreement and Declaration of Trust dated
April 6, 1999 - Exhibit 1.
2. By-Laws, as amended through April 6, 1999 -
Exhibit 2.
3a. Portions of Agreement and Declaration of
Trust Relating to Shareholders' Rights -
Exhibit 3.
3b. Portions of By-Laws Relating to
Shareholders' Rights - Exhibit 4.
4. Management Contract dated April 12, 1999 -
Exhibit 5.
5a. Distributor's Contract dated April 8, 1999
- Exhibit 6.
5b. Form of Specimen Dealer Sales Contract - To
be filed by amendment.
5c. Form of Specimen Financial Institution
Sales Contract - To be filed by amendment.
6. Trustee Retirement Plan dated October 4,
1996 - To be filed by amendment.
7. Custodian Agreement with Putnam Fiduciary
Trust Company dated May 3, 1991, as amended
July 13, 1992 - Exhibit 7.
8. Investor Servicing Agreement dated June 3,
1991 with Putnam Fiduciary Trust Company -
Exhibit 8.
9. Opinion of Ropes & Gray, including consent
-To be filed by amendment.
10. Not applicable.
11. Not applicable.
12. Investment Letter from Putnam Investments,
Inc. to the Registrant - Exhibit 9.
13a. Class A Distribution Plan and Agreement
dated April 8, 1999 - Exhibit 10.
13b. Class B Distribution Plan and Agreement
dated April 8, 1999 - Exhibit 11.
13c. Class C Distribution Plan and Agreement
dated April 8, 1999 - Exhibit 12
13c. Class M Distribution Plan and Agreement dated
April 8,
1999 - Exhibit 13.
13d. Form of Specimen Dealer Service Agreement -
Exhibit 14.
13e. Form of Specimen Financial Institution
Service Agreement - Exhibit 15.
14. Financial Data Schedule for class A shares of
Putnam Tax
Managed Fund - Not applicable.
15. Rule 18f-3 (d) Plan - To be filed by
amendment.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
WITH
REGISTRANT
As of April 14, 1999, Putnam Investments, Inc. owned 100%
of the outstanding shares of the fund. Also, as of March 31,
1999, Putnam Investments, Inc. owned the indicated percentages
for the following funds and may be deemed to control such
funds:
Putnam Asia Pacific Fund II 95.10%
Putnam Balanced Fund 91.40%
Putnam Equity Fund 98 57.60%
Putnam Global Equity Fund 88.40%
Putnam Growth Fund 95.60%
Putnam International Fund 94.90%
Putnam Investment Fund 98 69.80%
Putnam Latin America Fund 88.80%
Putnam U.S. Core Fund 86.40%
Putnam Value Fund 96.20%
ITEM 25. INDEMNIFICATION
Article VIII of the Registrant's Agreement and
Declaration of Trust provides as follows.
Section 1. The Trust shall indemnify each of its
Trustees and officers (including persons who serve at the
Trust's request as directors, officers or trustees of another
organization in which the Trust has any interest as a
shareholder, creditor or otherwise) (hereinafter referred to as
a "Covered Person") against all liabilities and expenses,
including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and counsel
fees reasonably incurred by any Covered Person in connection
with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or
administrative or
legislative body, in which such Covered Person may be or may
have been involved as a party or otherwise or with which such
Covered Person may be or may have been threatened, while in
office or thereafter, by reason of being or having been such a
Covered Person except with respect to any matter as to which
such Covered Person shall have been finally adjudicated in any
such action, suit or other proceeding (a) not to have acted in
good faith in the reasonable belief that such Covered Person's
action was in the best interests of the Trust or (b) to be
liable to the Trust or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's
office. Expenses, including counsel fees so incurred by any
such Covered Person (but excluding amounts paid in satisfaction
of judgments, in compromise or as fines or penalties), shall be
paid from time to time by the Trust in advance of the final
disposition of any such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such Covered Person to
repay amounts so paid to the Trust if it is ultimately
determined that indemnification of such expenses is not
authorized under this Article, provided, however, that either
(a) such Covered Person shall have provided appropriate
security for such undertaking, (b) the Trust shall be insured
against losses arising from any such advance payments or (c)
either a majority of the disinterested Trustees acting on the
matter (provided that a majority of the disinterested Trustees
then in office act on the matter), or independent legal counsel
in a written opinion, shall have determined, based upon a
review of readily available facts (as opposed to a full trial
type inquiry) that there is reason to believe that such Covered
Person will be found entitled to indemnification under this
Article.
Section 2. As to any matter disposed of (whether by
a compromise payment, pursuant to a consent decree or
otherwise) without an adjudication by a court, or by any other
body before which the proceeding was brought, that such Covered
Person either (a) did not act in good faith in the reasonable
belief that his action was in the best interests of the Trust
or (b) is liable to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her
office, indemnification shall be provided if (a) approved as in
the best interests of the Trust, after notice that it involves
such indemnification, by at least a majority of the
disinterested Trustees acting on the matter (provided that a
majority of the disinterested Trustees then in office act on
the matter) upon a determination, based upon a review of
readily available facts (as opposed to a full trial type
inquiry) that such Covered Person acted in good faith in the
reasonable belief that his action was in the best interests of
the Trust and is not liable to the Trust or its Shareholders by
reasons of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his
or her office, or (b) there has been obtained an opinion in
writing of independent legal counsel, based upon a review of
readily available facts (as opposed to a full trial type
inquiry) to the effect that such Covered Person appears to have
acted in good faith in the reasonable belief that his action
was in the best interests of the Trust and that such
indemnification would not protect such Person against any
liability to the Trust to which he would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of
his office. Any approval pursuant to this Section shall not
prevent the recovery from any Covered Person of any amount paid
to such Covered Person in accordance with this Section as
indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have
acted in good faith in the reasonable belief that such Covered
Person's action was in the best interests of the Trust or to
have been liable to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered
Person's office.
Section 3. The right of indemnification hereby
provided shall not be exclusive of or affect any other rights
to which such Covered Person may be entitled. As used in this
Article VIII, the term "Covered Person" shall include such
person's heirs, executors and administrators and a
"disinterested Trustee" is a Trustee who is not an "interested
person" of the Trust as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended, (or who has been
exempted from being an "interested person" by any rule,
regulation or order of the Commission) and against whom none of
such actions, suits or other proceedings or another action,
suit or other proceeding on the same or similar grounds is then
or has been pending. Nothing contained in this Article shall
affect any rights to indemnification to which personnel of the
Trust, other than Trustees or officers, and other persons may
be entitled by contract or otherwise under law, nor the power
of the Trust to purchase and maintain liability insurance on
behalf of any such person.
----------------------
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to Trustees,
officers and controlling persons of the Trust pursuant to the
foregoing provisions or otherwise, the Trust has been advised
that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in
the Securities Act of 1933, and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Trust of expenses
incurred or paid by a Trustee, officer or controlling person of
the Trust in the successful defense of any action, suit or
proceeding) is asserted against the Trust by such Trustee,
officer or controlling person in connection with the securities
being registered, the Trust will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by
the final adjudication of such issue.
ITEMS 26 AND 27.
<PAGE>
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Except as set forth below, the directors and officers of the
Registrant's investment adviser have been engaged during the past
two fiscal years in no business, vocation or employment of a
substantial nature other than as directors or officers of the
investment adviser or certain of its corporate affiliates.
Certain officers of the investment adviser serve as officers of
some or all of the Putnam funds. The address of the investment
adviser, its corporate affiliates and the Putnam Funds is one Post
Office Square, Boston, Massachusetts 02109.
NAME
NON-PUTNAM BUSINESS AND OTHER CONNECTIONS
Michael J. Abata
Assistant Vice President
Prior to May, 1997, Assistant Vice President, Alliance Capital
Management Corp., 1345 Avenue of the Americas, New York, NY 10020
Pankaj Aggrawal
Vice President
Prior to April, 1998, Quantitative Analyst, Vestek Systems, 388
Market St., Suite 700, San Francsico, CA 94111
Blake Anderson
Managing Director
Trustee, Salem Female Charitable Society, Salem MA 01970
Barry R. Allen
Vice Present
Prior to December, 1997, Analyst/Director of Research, Harbor
Capital Management, 125 High St., Boston, MA 02110
Maria Alma R. Aragon
Assistant Vice President
Prior to July, 1998,
Michael Arends
Senior Vice President
Prior to May, 1997, Managing Director, Equities, Phoenix Duff &
Phelps, 56 Prospect St., Hartford, CT 06101; Board Member, Donald
L. Arends, Inc., 100 Jorie Blvd., OakBrook, ILL 60523
Nikesh Arora
Vice President
Prior to April, 1997, Chief Financial Officer, Fidelity
Investments, 82 Devonshire St., Boston, MA 02110
Michael J. Atkin
Senior Vice President
Prior to July, 1997, Director of Latin America Institute of
International Finance, 2000 Pennsylvania Avenue, Washington, D.C.
20006
Jeffrey B. Augustine
Senior Vice President
Prior to January, 1998, Vice President, Investment Consulting,
Investor Tools, Inc., 100 Bridge St. Plaza, Yorkville, IL
60560
Rowland T. Bankes
Vice President
Prior to July, 1997, Senior Fixed-Income Trader, Jennison,
Jennison Associates Capital Corp., One Financial Center, Boston,
MA 02110
Robert R. Beck
Senior Vice President
Director, Charles Bridge Publishing, 85 Main St., Watertown, MA
02172; Board of Overseers, Beth Israel Deaconess Medical Center,
330 Brookline Ave., Boston, MA 02215
Carl D. Bell
Vice President
Prior to January, 1998, Principal, Smith Breedon Association,
100 Europa Drive, Suite 200, Chapel Hill, NC 27514
Richard L. Block
Senior Vice President
Prior to June, 1998, Principal, head International Equity
Trader, Morgan Stanley Asset Management, 1221 Avenue of the
Americas, New York, NY 10036
Jeffrey M. Bray
Vice President
Prior to October, 1997, Analyst, Lehman Brothers, 3 World
Financial Center, New York, NY 10285
David J. Buckle
Vice President
Prior to March, 1998, Vice President, J.P. Morgan Investment
Management, 28 King St., London, England SWI YXA
Ronald J. Bukovac
Vice President
Prior to October, 1997, Senior Manager, Valuation, Price
Waterhouse, 200 E. Randolph Drive, Chicago, IL 60601
Robert W. Burke
Senior Managing Director
Member-Executive Committee, The Ridge Club, Country Club Road,
Sandwich, MA 02563; Member-Advisory Board, Cathedral High School,
74 Union Park St., So. Boston, MA 02118
Ivka Kalus-Bystricky
Vice President
Prior to March, 1998, Management Consultant, Manager, Arthur D.
Little, Acorn Park, Cambridge, MA 02140
Diana R.M. Carney
Assistant Vice President
Prior to January, 1997, Librarian, Lipper Analytical Services,
Inc., 1380 Lawrence St., Denver, CO 80202
Richard P. Cervone
Assistant Vice President
Prior to August, 1998, Equity Analyst, Loomis, Sayles & Co.,
One Financial Center, Boston, MA, 02216.
Jack P. Chang
Vice President
Prior to July, 1997, Vice President, Columbia Management Company,
1300 S.W. 6th Ave., Portland, OR 97207
Mary Claire Chase
Vice President
Prior to January, 1997, Director of Staff Development, Arthur D.
Little Co., 25 Acorn Park, Cambridge, MA 02140
C. Beth Cotner
Senior Vice President
Director, The Lyric Stage Theater, 140 Clarendon St., Boston, MA
02116
Stephen P. Cotto
Assistant Vice President
Prior to March, 1998, Facilities Supervisor, Unicco Service
Co., 4 Copley Place, Boston, MA 02116
Kevin M. Cronin
Managing Director
Prior to February, 1997, Vice President and Portfolio Manager, MFS
Investment Management, 500 Boylston St., Boston, MA 02117
Joseph F. Cushing
Assistant Vice President
Prior to June, 1998, Investment Analyst - Fixed Income,
Metropolitan Life Insurance Company, 334 Madison Avenue, Convent
Station, NJ 07961
John R.S. Cutler
Assistant Vice President
Member, Burst Media, L.L.C., 10 New England Executive Park,
Burlington, MA 01803
Kenneth Daly
Managing Director
President, Andover River Rd. TMA, River Road Transportation
Management Association, 7 Shattuck Rd., Andover, MA 01810
Michael W. Davis
Vice President
Prior to August, 1997,
Technical Finance Consultant, Bank of America Mortgage, 50
California St., San Francisco, CA 94111
Donna M. Daylor
Vice President
Prior to April, 1998, Director of Training, UniCare Life &
Health Ins. Co., 1350 Main St., Springfield, MA. Prior to
February, 1997, Director of Training, John Hancock Mutual Life
Insurance Company, 200 Clarendon St., Boston, MA 02117
John C. Delano
Assistant Vice President
Prior to July, 1998, Senior Foreign Exchange Trader, Nationsbank,
233 So. Wacker Drive, Chicago, IL 60606
Edwin M. Denson
Vice President
Prior to November, 1997, Vice President and Senior Economist
Primark Decision Economics, 260 Franklin St., Boston, MA 02110
Ralph C. Derbyshire
Senior Vice President
Prior to November, 1997, Partner, Palmer & Dodge, One Beacon
Street, Boston, MA 02108; Board Member, MSPCC, 399 Boylston St.,
Boston, MA; Board Member, Winchester After School Program,
Skillings Rd., Winchester, MA
Michael G. Dolan
Assistant Vice President
Chairman-Finance Council, St. Mary's Parish, 44 Myrtle St.,
Melrose, MA 02176; Member, School Advisory Board, St. Mary's
School, 44 Myrtle St., Melrose, MA 02176
Mark E. Dow
Vice President
Prior to November, 1997, Economist, International Monetary Fund,
Washington, DC
Emily Durbin
Vice President
Board of Directors, Family Service, Inc., Lawrence, MA 01840
Karnig H. Durgarian
Managing Director
Board Member, EBRI, Suite 600, 2121 K St., N.W., Washington, DC
20037-1896. Trustee, American Assembly, 122 C. St., N.W., Suite
350, Washington, DC 20001
Nathan Eigerman
Vice President
Trustee, Flower Hill Trust, 298 Marlborough St., #4, Boston, MA
02116
Lisa V. Emerick
Vice President
Prior to September, 1998, Asian Sales Trader, BWZ Securities
Asia, Inc., Citibank Tower, 3 Garden Road, Hong Kong
Irene M. Esteves
Managing Director
Prior to January, 1997, Vice President, Miller Brewing Co., 3939
West Highland Blvd., Milwaukee, WI 53210. Board of Director
Member, American Management Association Finance council, 1601
Broadway, New York, NY; Board of Director Member, First Night
Boston, 20 Park Plaza, Suite 927, Boston, MA; Board of Director
Member, SC Johnson Commercialmarkets, 8310 16th St., Stutevant, WI
53177; Board of Director Member, Massachusetts Taxpayers
Foundation, 24 Province St., Boston, MA; Board of Director Member,
Mrs. Bairds Bakeries, 515 Jones St., Suite 200, Fort Worth, Texas
76102
Deborah S. Farrell
Senior Vice President
Prior to May, 1997, Manager, Asian Investments, Emerging
Markets Investors Corporation, 1001 19th Street North, 16th Floor,
Arlington, VA 22209
Ian Ferguson
Senior Managing Director
Trustee, Park School, 171 Goddard Avenue, Brookline, MA 02146
John Ferry
Vice President
Prior to September, 1998, Vice President, Scudder Kemper
Investments, 101 California St., San Francisco, CA 94111.
Edward R. Finch
Vice President
Prior to December, 1997, Managing Director, M.A. Weatherbie & Co.,
265 Franklin St., Boston, MA 02110
Kate Fleisher
Vice President
Prior to January, 1998, Director of Human Resources, Laura Ashley,
6 St., James Ave. Suite 410, Boston, MA 02116
Karen T. Frost
Senior Vice President
Prior to February, 1998, Vice President, Morgan Stanley
Organization, 25 Cabot Square, London, England E14 4QA.
Stephen C. Gibbs
Vice President
Prior to June, 1998, Senior Financial Analyst, Fidelity
Investments, 82 Devonshire St., Boston, MA 02109
J. Peter Grant
Senior Vice President
Trustee, The Dover Church, Dover, MA 02030
Patrice Graviere
Senior Vice President
Prior to March, 1998, Regional Director for Latin America, MFS
International, LTD, Buenos Aires, Brazil
Paul E. Haagensen
Senior Vice President
Director, Haagensen Research Foundation, 630 West 168th St., New
York, NY 10032
James B. Haines
Assistant Vice President
Prior to February, 1997, Associate, Benefit Department, Ropes &
Gray, One International Place, Boston, MA 02110
Mary S. Hapij
Vice President
Prior to March, 1997, Research Liberty Manager, Pioneering
Management Corp., 60 State Street, Boston, MA 02109
Nigel P. Hart
Vice President
Prior to October, 1997, Senior Vice President and Portfolio
Manager, Investment Advisers, 3700 First Bank Place, Minneapolis,
MN 55402
Deborah R. Healey
Senior Vice President
Corporator, New England Baptist Hospital, 125 Parker Hill Ave.,
Boston, MA 02120; Director, NEB Enterprises, 125 Parket Hill Ave.,
Boston, MA 02120
Marianne P. Isgur
Assistant Vice President
Prior to March, 1998, Executive Recruiter, Professions, 2 Villa
Rd., So. Hamilton, MA 01982; President, Equine Ventures, LTD., 25
Fellows Rd., Ipswich, MA 01932
Jeffrey Kaufman
Senior Vice President
Prior to July, 1998, Vice President and Portfolio Manager, MFS
Investmnt Management, 500 Boylston St., Boston, MA 02116
Ira C. Kalus-Bystricky
Vice President
Prior to March, 1998, Consultant, Arthur D. Little, 25 Acorn Park,
Cambridge, MA 02114
Hiroshi Kato
Vice President
Prior to August, 1998, Manager, Senior Analyst, Daiwa Institute
of Research, 15-6 Fuyuki, Koutou-ku, Tokyo, 135-8460
Mary E. Kearney
Managing Director
Trustee, Massachusetts Eye and Ear Infirmary, 243 Charles St.,
Boston, MA 02114
Kevin J. Keleher
Assistant Vice President
Prior to August, 1998, Support Manager, Digital Equipment Co., 111
Powder Mill Rd., Maynard, MA 01754
Catherine Kennedy
Vice President
Prior to September, 1997, Principal, Morgan Stanley, 1585
Broadway, New York, NY 10036
Jeffrey K. Kerrigan
Assistant Vice President
Prior to June, 1997, Vice President, Fleet Investments, 75 State
St., Boston, MA 02109
David R. King
Vice President
Prior to June, 1997, Vice President, Fleet Investments, 75 State
St., Boston, MA 02109
William P. King
Vice President
Prior to November, 1997, Portfolio Manager, TSA Global Asset
Management, 700 South Flower St., Los Angeles, CA 90017
Deborah F. Kuenstner
Managing Director
Prior to March, 1997, Senior Portfolio Manager, DuPont Pension
Fund Investment, 1 Right Parkway, Wilmington, DE 19850; Director,
Board of Pensions, Presbyterian Church, 1001 Market St.,
Philadelphia, PA
Thomas J. Kurey
Vice President
Prior to August, 1997, Vice President, Evergreen Securities, 77 W.
Wacker, Chicago, IL 60601
Linda Lane
Assistant Vice President
Member, American Society for Training & Development, 27 Glen
Street, Suite 4, Stoughton, MA 02072
Kenneth W. Lang
Vice President
Prior to April, 1997, Vice President, Montgomery Securities, 600
Montgomery St., San Francisco, CA 94111
Coleman N. Lannum, III
Senior Vice President
Prior to June, 1997, Director-Investor Relations, Mallinckrodt,
Inc., 7733 Forsyth Blvd., St. Louis, MO 63105
Leonard LaPorta, Jr.
Vice President
Prior to March, 1998, Assistant Vice President, State Street
Global Advisors, Two International Place, Boston, MA 02110; Board
of Overseers', USS Constitution Museum, Charleston, MA
Lawrence J. Lasser
President, Director and Chief Executive
Director, Marsh & McLennan Companies, Inc., 1221 Avenue of the
Americas, New York, NY 10020; Board of Governors and Executive
Committee, Investment Company Institute, 1401 H. St., N.W. Suite
1200, Washington, DC 20005; Board of Overseers, Museum of Fine
Arts, 465 Huntington, Ave., Boston, MA 02115; Trustee, Beth Israel
Deaconess Medical Center, 330 Brookline Ave., Boston, MA; Member
of the Council on Foreign Relations, 58 East 68th St., New York,
NY 10021; Member of the Board of Directors of the United Way of
Massachusetts Bay, 245 Summer St., Suite 1401, Boston, MA 02110;
Trustee of the Vineyard Open Land Foundation, RFD Box 319X,
Vineyard Haven, MA 02568.
Joan M. Leary
Vice President
Prior to January, 1997, Senior Tax Manager, KMPG, 99 High Street,
Boston, MA 02110
Craig S. Lewis
Vice President
Prior to January, 1998, Analyst, Keystone Investments, 200
Berkeley Street, Boston, MA 02101
Geirulv Lode
Vice President
Prior to July, 1997, Vice President, Chancellor Lgt, Asset
Management, 1166 Avenue of the Americas, New York, NY 10036
Elizabeth M. MacElwee Jones
Senior Vice President
Prior to January, 1998, Principal, Morgan Stanley, 1155 Broadway,
New York, NY 10036
Saba S. Malak
Vice President
Prior to October, 1997, Consultant, The Boston Consultant,
Exchange Place, Boston, MA 02109
Bruce D. Martin
Vice President
Prior to April, 1997, Vice President, Eaton Vance, 29 Boston, MA
02110
Kevin Maloney
Managing Director
Institutional Director, Financial Management Association,
University of South Florida, College of Business Administration,
Suite 3331, Tampa, FL 33620
Jabaz Mathai
Assistant Vice President
Prior to December, 1997, Associate, Deutsche Morgan Grenfell,
31 West 52ndSt., New York, NY 10019
Scott M. Maxwell
Managing Director
Prior to March, 1997, Chief Financial Officer-Equity Division,
Lehman Brothers, 3 World Financial Center, New York, NY 10285
Bridget McCavoy
Assistant Vice President
Prior to October, 1997, Senior Recruiter, BankBoston, 100 Federal
St., Boston, MA 02110; Prior to October, 1996. Executive
Recruiter, HI Hunt & Co., 99 Summer St., Boston, MA 02110
William McGue
Managing Director
Board Member, Sacred Heart Elementary School, 75 Commercial
St.,Weymouth, MA 02188; Board of Directors Member and Treasurer,
Whittemore Shores Condominium Association, Bridgewater, NH 03222
Paul K. Michaud
Vice President
Prior to December, 1997, Assistant Vice President, Union Bank of
Switzerland, Bahnhofstrasse 45, 8021 Zurich, Switzerland
Carol H. Miller
Assistant Vice President
Board Member, The Robbins-de Beaumont Foundation, c/o Sullivan &
Worcester, One Post Office Square, Boston, MA 02109; Board Member,
Burke Mtn. Academy, East Burke, VT; Board Member, The Lyric Stage
Theater, 140 Clarendon St., Boston, MA 02116; Board Member, The
Boston Modern Orchestra Project, P.O. Box 39134, Cambridge, MA
02139
Christopher G. Miller
Vice President
Prior to January, 1998, Portfolio Manager, Analytic TSA Global
Asset Management, 700 So. Flower St., Los Angeles, CA 90017
William H. Miller
Senior Vice President
Prior to October, 1997, Vice President and Asset Portfolio
Manager, Delaware Management, One Commerce Square, Philadelphia,
PA
Jeanne L. Mockard
Senior Vice President
Trustee, The Bryn Mawr School, 109, W. Melrose Avenue, Baltimore,
MA 21210
Gerard I. Moore
Vice President
Prior To August, 1997, Vice President/Equity Research, Boston
Company Asset Management, One Boston Place, Boston, MA 02109
Donald E. Mullin
Senior Vice President
Corporate Representative and Board Member, Delta Dental Plan of
Massachusetts, 10 Presidents Landing, P.O. Box 94104, Medford, MA
02155
Kenneth W. Murphy, Jr.
Assistant Vice President
Prior to May, 1998, Senior Financial Analyst, Merck & Co.,
Inc., One Merck Drive, Whitehouse Station, NJ 08889
Kimberly A.M. Page Nauen
Assistant Vice President
Prior to February, 1998, Senior Consultant, Andersen
Consulting, 100 Williams St., Wellesley, MA 02181
Gayle M. O'Connell
Assistant Vice President
Prior To March, 1997, Assistant Director of Human Resources, ITT
Sheraton Corporation, 60 State St., Boston, MA 02109
Stephen S. Oler
Senior Vice President
Prior to June, 1997, Vice President, Templeton Investment Counsel,
500 E. Broward Blvd., Ft. Lauderdale, FL 33394
Kerry M. Owens
Assistant Vice President
Prior to July, 1998, Marketing Manager, ABN Amro, 199 Bishopsgate,
London, England, EC2M 3TY; Prior to April, 1997, Assistant
Manager, Citibank, 336 Strand, London, England, WC2
Margery C. Parker
Senior Vice President
Prior to December, 1997, Vice President and Portfolio Manager,
Keystone Investments 200 Berkeley Street, Boston, MA 02101
Carmel Peters
Senior Vice President
Prior to April, 1997, Managing Director/Chief Investment Asia
Pacific, Whellock NatWest Investment Management, Ltd, NatWest
Tower, Times Square, Causeway Bay, Hong Kong, China
William Perry
Vice President
Prior to September, 1997, Senior Trader, Fidelity Management &
Research, 82 Devonshire St., Boston, MA 02110
Keith Plapinger
Vice President
Chairman and Trustee, Advent School, 17 Brimmer St., Boston, MA
02108
Charles E. Porter
Executive Vice President
Trustee, Anatolia College, 130 Bowdoin St., Suite 1201, Boston, MA
02108; Governor, Handel & Hayden Society, Horticulture Hall, 300
Massachusetts Ave., Boston, MA 0215
George Putnam
Chairman and Director
Chairman and Director, Putnam Mutual Funds Corp.; Director, The
Boston Company, Inc., One Boston Place, Boston, MA 02108;
Director, Boston Safe Deposit and Trust Company, One Boston Place,
Boston, MA 02108; Director, Freeport-McMoRan, Inc., 200 Park
Avenue, New York, NY 10166; Director, General Mills, Inc., 9200
Wayzata Boulevard, Minneapolis, MN 55440; Director, Houghton
Mifflin Company, One Beacon Street, Boston, MA 02108; Director,
Marsh & McLennan Companies, Inc., 1221 Avenue of the Americas, New
York, NY 10020; Director, Rockefeller Group, Inc., 1230 Avenue of
the Americas, New York, NY 10020; Trustee, Massachusetts General
Hospital, Fruit Street, Boston, Ma 02114; McLean Hospital 115 Mill
St., Belmont,MA 02178; The Colonial Williamsburg Foundation, Post
Office Box 1776, Williamsburg, VA 23187; The Museum of Fine Arts,
465 Huntington Avenue, Boston, MA 02115; WGBH Foundation, 125
Western Avenue,Boston, MA 02134; The Nature Conservancy, Post
Office Square Building, 79 Milk St., Suite 300, Boston, MA 02109;
Trustee, The Jackson Laboratory, 600 Main St., Bar Harbor, ME 04
Robert A. Piepenburg
Vice President
Prior to December, 1997, Assistant Vice President, BankBoston
Corp./Boston Security, 100 Federal St., Boston, MA 02106
James A. Polk
Vice President
Prior to June, 1998, Investment Officer, Massachusetts
Financial Services, 500 Boylston St., Boston, MA 02116
Elizabeth Price
Assistant Vice President
Prior to January, 1998, Investment Analyst, Schroder Investment
Management Limited, 33 Gutter Lane, London, EC2V 8AS, England
Edward Qian
Vice President
Prior to February, 1998, Back Bay Advisors, 399 Boylston St.,
Boston, MA 02116; Pror to September, 1996, Post-Doctorate
Research, Massachusetts Institute of Technology, 77 Massachusetts
Avenue, Cambridge, MA 02109
Keith Quinton
Senior Vice President
Director, Eleazar, Inc., West Wheelock St., Hanover, NH 03755
Kevin J. Rogers
Senior Vice President
Prior to September, 1998, Managing Director- Portfolio Manager,
Invesco, NY Organization, 1066 Avenue of the Americas, New York,
NY 10036. Prior to June, 1997, Senior Analyst, Fidelity
Management & Research Co., 82 Devonshire St., Boston, MA 02109
Thomas V. Reilly
Managing Director
Trustee, Knox College, 2 East South St., Galesburg, IL
61401
Marc J. Ritenhouse
Vice President
Prior to January, 1998, Director of Finance, Fidelity Investments,
Inc., 82 Devonshire St., Boston, MA 02109
Oliver Rudigoz
Vice President
Prior to April, 1998, Portfolio Manager, Paribas Asset Management,
#3 Rue D'Antin, Paris, France, 75002
Michael V. Salm
Vice President
Prior to November, 1997, Mortgage Analyst, Blackrock Financial 345
Park Ave., New York, NY 10010
Saied Simozar
Senior Vice President
Prior to March, 1998, Manager, Portfolio Analytics, DuPont
Pension fund Investment, One Righter Parkway, Suite 3200,
Wilmington, DE 198903
Robert J. Schoen
Assistant Vice President
Prior to June, 1997, Sole Proprietor, Schoen Timing Strategies,
315 E. 21st , New York, NY 10010
Justin M. Scott
Managing Director
Director, DSI Proprieties (Neja) Ltd., Epping Rd., Reydon, Essex
CM19 5RD
Max S. Senter
Senior Vice President
General Partner, M.S. Senter & Sons Partnership, 4900 Fayetteville
Rd., Raleigh, NC 27611
Edward Shadek, Jr.
Vice President
Prior to March, 1997, Portfolio Manager, Newhold Asset Management,
950 Haverford Rd., Bryn Mawr, PA 19010
Raj Ken Sharma
Vice President
Prior to January, 1998, Vice President and Portfolio Manager,
Fleet Financial, 75 State Street, Boston, MA 02106
Jean I. Sievert
Senior Vice President
Prior to October, 1998, Vice President, Salomon Smith Barney,
Seven World Trade Center, New York, NY 10048.
Gordon H. Silver
Managing Director
Trustee, Wang Center for the Performing Arts, 270 Tremont St.,
Boston, MA 02116
David M. Silk
Senior Vice President
Member of Board of Directors, Jobs for Bay State Graduates, 451
Andover St., Suite 305, North Andover, MA 01845
Steven Spiegel
Senior Managing Director
Director, Ultra Diamond and Gold Outlet , 29 East Madison
St., Suite 1800, Chicago, IL 60602; Director, FACES New York
University Medical Center, 550 First Avenue, New York, NY 10016;
Trustee, Babson College, One College Drive, Wellesley, MA 02157;
Christopher A. Spurlock
Vice President
Prior to May, 1997, Sales Trader, J.P. Morgan, 60 Wall St., New
York, NY
James St. John
Assistant Vice President
Prior to July, 1998, Investment Analyst, University of
Rochester, Rochester, NY 14627
Loren Michael Starr
Managing Director
Prior to February, 1998, Senior Vice President, Lehman
Brothers, 3 World Financial Center, New York, NY 10285.
Michael P. Stack
Senior Vice President
Prior to November, 1997, Senior Vice President and Portfolio
Manager, Independence Investment Associates, 53 State St.,
Boston, MA 02109
Casey Strumpft
Senior Vice President
Prior to January, 1997, Director, Blue Cross and Blue Shireld, 100
Summer St., Boston, MA 02110
Toshifumi Sugimoto
Senior Vice President
Prior to October, 1998, Portfolio Manager, Deputy General
Manager, Nikko Securities Investment Trust & Management, Fixed
Income Department, 4-3 Nihonbashi, Hakozakicho, Chuou-ku, Tokyo,
Japan, 103-0015
Robert E. Sweeney
Vice President
Prior to February, 1998, Vice President, Corporate Research Smith
Barney, One New York Plaza, New York, NY 10004
Judith H. Swirbalus
Vice President
Prior to January, 1998, Alex, Brown & Sons, One South St.,
Baltimore, MD 21202
John C. Talanian
Managing Director
Member of Board of Directors, the Japan Society of Boston, One
Milk Street, Bosston, MA 02109
Robert J. Toner
Assistant Vice President
Prior to September, 1998, Associate, Goodwin Procter & Hoar, LLP,
Exchange Place, Boston, MA 02109
John R. Tonkin
Assistant Vice President
Prior to January, 1998, Analyst, Credit Suisse First Boston Celtic
Towers, The Terrace Wellington, New Zealand
Scott G. Vierra
Vice President
Prior to September, 1997, Staffing Lead, Cisco Systems, 250 Apolio
Drive, Chelmsford, MA 01824
David L. Waldman
Managing Director
Prior to June, 1997, Senior Portfolio Manager, Lazard Feres Asset
Management, 30 Rockefeller Center, New York, NY 10112
Paul C. Warren
Senior Vice President
Prior to May, 1997, Director, IDS Fund Management, LT, One
Pacific Place, Squensway, Hong Kong, China
Dierdre West-Smith
Assistant Vice President
Trustee, St. James Condo Association, 66 St. James St., Roxbury,
MA 02119
Toshifumi Sugimoto
Senior Vice President
Prior to October, 1998, Portfolio Manager, Deputy General
Manager, Nikko Securities Investment Trust & Management, Fixed
Income Department, 4-3 Nihonbashi, Hakozakicho, Chuo-ku, Tokyo,
Japan, 103-0015
Eric Wetlaufer
Managing Director
President and Member of Board of Directors, The Boston Security
Analysts Society, Inc., 100 Boylston St., Suite 1050, Boston, MA
02110
Edward F. Whalen
Senior Vice President
Member of the Board of Directors, Hockomock Area YMCA, 300 Elmwood
St., North Attleboro, MA 02760
Burton Wilson
Vice President
Prior to March, 1997, Associate Investments Banking, Robertson
Stephens & Co., 555 California St., Suite 2600, San Francisco, CA
94104
Richard P. Wyke
Senior Vice President
Director, Salem YMCA, One Sewall St., Salem, MA 01970
Michael R. Yogg
Senior Vice President
Prior to April, 1997, Senior Vice President, State Street
Research & Management, One Financial Center, Boston, MA 02111
Scott D. Zaleski
Assistant Vice President
Prior to May, 1997, Investment Officer, State Street Bank & Trust,
1776 Heritage Dr., Quincy, MA 02171; Prior to September, 1996,
Investment Associate Fidelity Investments, 82 Devonshire St.,
Boston, MA 02109
Michael P. Zeller
Vice President
Prior to July, 1997, Sales Manger, NYNEX Information Resources, 35
Village R., Middleton, MA 01949
ITEM 27. PRINCIPAL UNDERWRITER
(a) Putnam Mutual Funds Corp. is the principal underwriter for
each of the following investment companies, including the
Registrant:
Putnam American Government Income Fund, Putnam Arizona Tax Exempt
Income Fund, Putnam Asia Pacific Growth Fund, Putnam Asset
Allocation Funds, Putnam Balanced Retirement Fund, Putnam
California Tax Exempt Income Fund, Putnam California Tax Exempt
Money Market Fund, Putnam Capital Opportunitites Fund, Putnam
Convertible Income-Growth Trust, Putnam Diversified Equity Trust,
Putnam Diversified Income Trust, Putnam Equity Income Fund, Putnam
Europe Growth Fund, Putnam Florida Tax Exempt Income Fund, Putnam
Funds Trust, The George Putnam Fund of Boston, Putnam Global
Governmental Income Trust, Putnam Global Growth Fund, Putnam
Global Natural Resources Fund, The Putnam Fund for Growth and
Income, Putnam Growth and Income Fund II, Putnam Health Sciences
Trust, Putnam High Yield Trust, Putnam High Yield Advantage Fund,
Putnam High Quality Bond Fund, Putnam Income Fund, Putnam
Intermediate U.S. Government Income Fund, Putnam International
Growth Fund, Putnam Investment Funds, Putnam Investors Fund,
Putnam Massachusetts Tax Exempt Income Fund, Putnam Michigan Tax
Exempt Income Fund, Putnam Minnesota Tax Exempt Income Fund,
Putnam Money Market Fund, Putnam Municipal Income Fund, Putnam New
Jersey Tax Exempt Income Fund, Putnam New Opportunities Fund,
Putnam New York Tax Exempt Income Fund, Putnam New York Tax Exempt
Money Market Fund, Putnam New York Tax Exempt Opportunities Fund,
Putnam Ohio Tax Exempt Income Fund, Putnam OTC & Emerging Growth
Fund, Putnam Pennsylvania Tax Exempt Income Fund, Putnam Preferred
Income Fund, Putnam Strategic Income Fund, Putnam Tax Exempt
Income Fund, Putnam Tax Exempt Money Market Fund, Putnam Tax-Free
Income Trust, Putnam U.S. Government Income Trust, Putnam
Utilities Growth and Income Fund, Putnam Variable Trust, Putnam
Vista Fund, Putnam Voyager Fund, Putnam Voyager Fund II.
(b) The directors and officers of the Registrant's principal
underwriter are listed below. The principal business address of
each person is One Post Office Square, Boston, MA 02109:
Name
Positions and Offices
with Underwriter
Positions and Offices
with Registrant
Aaron, Jefferson F. III
Asst . Vice President
None
Adduci,John V.
Vice President
None
Alberts,Richard W.
Asst. Vice President
None
Alden,Donald F.
Vice President
None
Alders,Christopher A.
Senior Vice President
None
Alpaugh,Christopher S.
Vice President
None
Amisano,Paulette C.
Vice President
None
Andrews,Margaret
Vice President
None
Arends,Michael K.
Senior Vice President
None
Asher,Steven E.
Senior Vice President
None
Avery,Scott A.
Senior Vice President
None
Aymond,Christian E.
Senior Vice President
None
Aymond,Colin C.
Vice President
None
Barnett, William E.
Assistant Vice President
None
Barrett, Thomas
Vice President
None
Battit,Suzanne J
Vice President
None
Beatty,Steven M.
Senior Vice President
None
Bent,John J.
Vice President
None
Beringer,Thomas C.
Vice President
None
Berka,Sharon A.
Senior Vice President
None
Boneparth,John F.
Managing Director
None
Bonfilio Jr.,Peter J.
Asst. Vice President
None
Bouchard,Keith R.
Senior Vice President
None
Bradford Jr.,Linwood E.
Senior Vice President
None
Brennan,Mary Ann
Asst. Vice President
None
Bresnahan,Leslee R.
Senior Vice President
None
Brockelman,James D.
Senior Vice President
None
Brookman,Joel S.
Vice President
None
Brown,Timothy K.
Senior Vice President
None
Buckner,Gail D.
Senior Vice President
None
Burke,Robert W.
Sr Managing Director
None
Burrill, Gregory J.
Vice President
None
Cabana,Susan D.
Vice President
None
Capone,Robert G.
Senior Vice President
None
Cartwright,Patricia A.
Asst. Vice President
None
Casey,David M.
Vice President
None
Castle Jr.,James R.
Vice President
None
Chapman,Thomas E.
Vice President
None
Chase,Mary Claire
Vice President
None
Chrostowski,Louis F.
Senior Vice President
None
Church,Daniel J.
Vice President
None
Clark,Richard B.
Senior Vice President
None
Clermont,Mary
Asst. Vice President
None
Clinton,John C.
Asst. Vice President
None
Collman,Kathleen M.
Sr Managing Director
None
Commane,Karen L.
Asst. Vice President
None
Coneeny,Mark L.
Senior Vice President
None
Connelly,Donald A.
Senior Vice President
None
Connolly,Karen E.
Asst. Vice President
None
Conyers,Barry M.
Vice President
None
Corbett,Dennis
Vice President
None
Corvinus,F. Nicholas
Senior Vice President
None
Cosmer,Thomas A.
Senior Vice President
None
Cotto,Stephen P
Asst. Vice President
None
Cristo,Chad H.
Vice President
None
Crowley,Colleen J.
Asst. Vice President
None
Curran,Peter J.
Senior Vice President
None
Dahill,Jessica E.
Vice President
None
Daly,Kenneth L.
Managing Director
None
Dane,Edward H.
Senior Vice President
None
Daylor,Donna M.
Vice President
None
Days,Nancy M.
Asst. Vice President
None
De Oliveira-Smith,Pamela
Asst. Vice President
None
Deluse,Laura R.
Asst. Vice President
None
DeMont,Lisa M.
Vice President
None
Dennehy,Teresa F.
Vice President
None
Derbyshire,Ralph C
Senior Vice President
None
Devin,Renate S.
Senior Vice President
None
Diaz, Roger
Vice President
None
DiStasio,Karen E.
Vice President
None
Dolan,Michael G.
Vice President
None
Donaldson,Scott M.
Vice President
None
Doughtery, Thomas
Vice President
None
Duffy,Deirdre E.
Senior Vice President
None
Durbin,Emily J.
Vice President
None
Durkee,Christine
Asst. Vice President
None
Edlin,David B.
Managing Director
None
Eisenkraft,Gail A.
Managing Director
None
English,James M.
Senior Vice President
None
Esposito,Vincent
Managing Director
None
Farrell,Deborah S.
Senior Vice President
None
Favalaro, Beth
Vice President
None
Feldman,Susan H.
Senior Vice President
None
Fisher,C. Nancy
Managing Director
None
Fishman,Mitchell B.
Senior Vice President
None
Fiumara,Joseph C.
Vice President
None
Flaherty,Patricia C.
Senior Vice President
None
Fleisher,Kate
Vice President
None
Foley,Timothy P.
Vice President
None
Frost,Karen T.
Senior Vice President
None
Fullerton,Brian J.
Senior Vice President
None
Gates,Judy S.
Senior Vice President
None
Gennaco,Joseph P.
Senior Vice President
None
Gibbs,Stephen C.
Vice President
None
Gindel,Caroline E.
Asst. Vice President
None
Goodfellow,Mark D.
Vice President
None
Goodman,Robert
Managing Director
None
Gore, Gregory T.
Vice President
None
Gould ,Carol J.
Asst. Vice President
None
Grace ,Anthony J.
Asst. Vice President
None
Grace,Linda K.
Vice President
None
Grey, Eric M.
Vice President
None
Grossberg,Jill
Asst. Vice President
None
Grove,Denise
Vice President
None
Gubala,Jeffrey P.
Vice President
None
Guerin,Donnalee
Asst. Vice President
None
Guerra,Salvatore F.
Vice President
None
Haines,James B.
Asst. Vice President
None
Hall,Debra L.
Vice President
None
Halloran,James E.
Vice President
None
Halloran,Thomas W.
Senior Vice President
None
Hansen, Christine M.
Assistant Vice President
None
Harbeck,John D.
Vice President
None
Harrington,Bruce D.
Vice President
None
Harrington, Shannon W.
Vice President
None
Hartig, Robert
Vice President
None
Hartigan,Craig W.
Vice President
None
Hartley,Deborah M.
Asst. Vice President
None
Hawkins III,Howard W.
Vice President
None
Hayes-Castro,Deanna R.
Vice President
None
Hedstrom,Gayle A.
Asst. Vice President
None
Heffernan,Paul P.
Senior Vice President
None
Heimanson,Susan M.
Senior Vice President
None
Holly Sr.,Jeremiah K.
Vice President
None
Holmes,Maureen A.
Asst. Vice President
None
Hooley,Daniel F Jr.
Asst. Vice President
None
Hoyt,Paula J.
Asst. Vice President
None
Hurley,William J.
Managing Director & CFO
None
Hutchins,Robert B.
Vice President
None
Isgur,Marianne P.
Asst. Vice President
None
Jacobsen,Dwight D.
Managing Director
None
Jordan,Stephen R.
Asst. Vice President
None
Kapinos,Peter J.
Vice President
None
Kay,Karen R.
Senior Vice President
None
Keleher,Kevin J.
Asst. Vice President
None
Kelley,Brian J.
Vice President
None
Kelly,A.Siobhan
Asst. Vice President
None
Kennedy,Alicia C.
Asst. Vice President
None
King,David L.
Managing Director
None
King,David R.
Vice President
None
Kinsman,Anne
Senior Vice President
None
Kirk,Deborah H.
Senior Vice President
None
Koontz,Jill A.
Senior Vice President
None
Kreutzberg,Howard H.
Senior Vice President
None
Lacascia,Charles M.
Vice President
None
Landers,Bruce M.
Vice President
None
Lane, Linda L.
Asst . Vice President
None
LaPierre,Christopher W
Asst. Vice President
None
Lathrop,James D.
Senior Vice President
None
Lawlor,Stephanie T.
Asst. Vice President
None
Leary,Joan M.
Vice President
None
Ledbetter,Charles C.
Vice President
None
Leddy, Maura W.
Vice President
None
Leipsitz,Margaret
Asst. Vice President
None
Lemire,Kevin
Vice President
None
Levy,Eric S.
Senior Vice President
None
Levy,Norman S.
Vice President
None
Lewandowski Jr.,Edward V.
Vice President
None
Lewandowski,Edward V.
Senior Vice President
None
Li,Mei
Asst. Vice President
None
Lieberman,Samuel L.
Vice President
None
Lifsitz,David M.
Vice President
None
Lilien,David R.
Vice President
None
Linehan,Ann-Marie
Asst. Vice President
None
Litant,Lisa M.
Asst. Vice President
None
Lockwood,Maura A.
Senior Vice President
None
Lomba,Rufino R.
Senior Vice President
None
Long,Gregory T.
Vice President
None
Lucey,Kevin J
Vice President
None
Lucey,Robert F.
Director
None
Lyons ,Robert F.
Asst. Vice President
None
Malatos,Ann
Vice President
None
Mallin,Bonnie J.
Senior Vice President
None
Maloof,Renee L.
Asst. Vice President
None
Mancini,Dana
Asst. Vice President
None
Manning,George J.
Vice President
None
Manthorne,Heather M.
Asst. Vice President
None
Maravel,Alexi A.
Asst. Vice President
None
Marius,Frederick S.
Vice President
None
McAvoy,Bridget
Asst. Vice President
None
McCafferty,Karen A.
Vice President
None
McCarthy,Anne B.
Asst. Vice President
None
McConville,Paul D.
Senior Vice President
None
McCracken,Brian
Asst. Vice President
None
McCutcheon,Bruce A
Senior Vice President
None
McDermott,Daniel E.
Asst. Vice President
None
McKenna,Mark J.
Senior Vice President
None
McNamara,Laura
Vice President
None
McNamee,Mary G.
Asst. Vice President
None
Meagher,Dorothy B.
Asst. Vice President
None
Metelmann,Claye A.
Vice President
None
Miller,Bart D.
Senior Vice President
None
Miller,Jeffrey M.
Managing Director
None
Mills,Ronald K.
Vice President
None
Minsk,Judith
Asst. Vice President
None
Mintzer,Matthew P.
Senior Vice President
None
Richard Monaghan
President and Director
None
Monahan ,Kimberly A.
Vice President
None
Moody,Paul R.
Vice President
None
Moonin,Sara R.
Asst. Vice President
None
Moret,Mitchell L.
Senior Vice President
None
Richard Monaghan
President and Director
Mosher ,Barry L.
Asst. Vice President
None
Mullen,Donald E.
Senior Vice President
None
Murphy Jr.,Kenneth W.
Asst. Vice President
None
Murphy,Paul G.
Vice President
None
Murray,Brendan R.
Vice President
None
Nadherny,Robert
Senior Vice President
None
Natale,Ellen E.
Asst. Vice President
None
Nauen,Kimberly Page
Asst. Vice President
None
Neary,Ellen R.
Vice President
None
Nelson,Alexander L.
Managing Director
None
Newell,Amy Jane
Vice President
None
Nickodemus,John P.
Senior Vice President
None
Nickse,Gail A.
Asst. Vice President
None
O'Brien,Lois C.
Vice President
None
O'Brien,Nancy E.
Vice President
None
O'Connell,Gayle M.
Asst. Vice President
None
Onofrio,Ellen
Asst. Vice President
None
Owens,Kerry M.
Asst. Vice President
None
Palmer,Patrick J.
Vice President
None
Palombo,Joseph R.
Managing Director
None
Panessa,Brian
Vice President
None
Papes,Scott A.
Vice President
None
Parr,Cynthia O.
Vice President
None
Pelletier,Dale M.
Vice President
None
Peterson,Jennifer H.
Asst. Vice President
None
Peterson,Kathryn L.
Vice President
None
Petralia,Randolph S.
Senior Vice President
None
Phoenix,John G.
Senior Vice President
None
Phoenix,Joseph
Senior Vice President
None
Plapinger,Keith
Senior Vice President
None
Powers,Brian S.
Asst. Vice President
None
Present,Howard B.
Senior Vice President
None
Pulkrabek,Scott M.
Vice President
None
Putnam,George
Director
Chairman and President
Rezabek,Joseph L.
Asst. Vice President
None
Riley,Megan G.
Asst. Vice President
None
Ritenhouse,Marc J.
Vice President
None
Rodammer,Kris
Vice President
None
Rogers,Deborah A.
Vice President
None
Rothman,Debra V.
Vice President
None
Rowe,Robert B.
Vice President
None
Ruys de Perez,Charles A.
Senior Vice President
None
Ryan,Carolyn M.
Asst. Vice President
None
Ryan,Deborah A.
Vice President
None
Saunders,Catherine A.
Senior Vice President
None
Saunders,Robbin L.
Vice President
None
Saur,Karl W.
Vice President
None
Scanlon,Michael M.
Vice President
None
Schaefer,Jennifer L.
Asst. Vice President
None
Schofield,Shannon D.
Vice President
None
Schultz,Mitchell D.
Managing Director
None
Scordato,Christine A.
Senior Vice President
None
Scott,Joseph W.
Asst. Vice President
None
Segers,Elizabeth R.
Senior Vice President
None
Shamburg,John B.
Vice President
None
Sharpless,Kathy G.
Managing Director
None
Shiebler,William N.
Director
Vice President
Short,Jonathan D.
Senior Vice President
None
Siemon, Jr., Frank E.
Assistant Vice President
None
Silver,Gordon H.
Senior Managing Director
Vice President
Skistimas Jr,John J.
Vice President
None
Smith,Stuart C.
Asst. Vice President
None
Southard,Peter J.
Vice President
None
Spiegel,Steven
Sr Managing Director
None
Stack,Michael P.
Senior Vice President
None
Stanojev,Nicholas T.
Senior Vice President
None
Starr,Loren M.
Managing Director
None
Steinberg,Lauren B.
Asst. Vice President
None
Stern,Derek A.
Asst. Vice President
None
Stickney,Paul R.
Senior Vice President
None
Strumpf,Casey
Senior Vice President
None
Sugimoto, Toshifumi
Senior Vice President
None
Sullivan,Brian L.
Senior Vice President
None
Sullivan,Donna G
Vice President
None
Sullivan,Elaine M.
Senior Vice President
None
Sullivan,Guy
Managing Director
None
Sullivan,Kevin J.
Senior Vice President
None
Sullivan,Maryann
Asst. Vice President
None
Sutherland,George C.
Vice President
None
Sweeney,Janet C.
Senior Vice President
None
Talanian,John C.
Managing Director
None
Tanner,B Iris
Vice President
None
Tavares,April M.
Asst. Vice President
None
Taylor,David S.
Vice President
None
Telling,John R.
Senior Vice President
None
Tibbetts,Richard B.
Managing Director
None
Tirado,Patrice M.
Vice President
None
Toner,Robert J.
Asst. Vice President
None
Tosi,Janet E.
Vice President
None
Troped,Bonnie L.
Senior Vice President
None
Trowbridge,Wendy S.
Asst. Vice President
None
Twigg,Christine M.
Asst. Vice President
None
Vander Linde,Douglas J.
Senior Vice President
None
Veddern, Daniel R.
Vice President
None
Verani,John R.
Senior Vice President
Vice President
Vierra,Scott G.
Vice President
None
West-Smith,Deirdre
Asst. Vice President
None
Whalen,Brian
Vice President
None
Whalen,Edward F.
Senior Vice President
None
Whitaker,J. Greg
Vice President
None
White,J. Bennett
Vice President
None
Wolfson,Jane
Senior Vice President
None
Woloshin,Benjamin I.
Senior Vice President
None
Woolverton,William H.
Managing Director
None
Zeller,Michael P.
Vice President
None
Zografos,Laura J.
Vice President
None
Zukowski,Virginia A.
Senior Vice President
None
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
Persons maintaining physical possession of accounts,
books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules
promulgated thereunder are Registrant's Clerk, Beverly Marcus;
Registrant's investment adviser, Putnam Investment Management,
Inc.; Registrant's principal underwriter, Putnam Mutual Funds
Corp.; Registrant's custodian, Putnam Fiduciary Trust Company
("PFTC"); and Registrant's transfer and dividend disbursing
agent, Putnam Investor Services, a division of PFTC. The
address of the Clerk, investment adviser, principal
underwriter, custodian and transfer and dividend disbursing
agent is One Post Office Square, Boston, Massachusetts 02109.
ITEM 29. MANAGEMENT SERVICES
None.
ITEM 30. UNDERTAKINGS
(a) Registrant hereby undertakes to file a post-
effective amendment to this Registration Statement on Form N-
1A, using financial statements which need not be certified,
within four to six months from the effective date of this
Registration Statement.
---------------------
NOTICE
A copy of the Agreement and Declaration of Trust of Putnam
Funds Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed on behalf of the Registrant by an
officer of the Registrant as an officer and not individually
and the obligations of or arising out of this instrument are
not binding upon any of the Trustees, officers or shareholders
individually but are binding only upon the assets and property
of the Putnam Tax Managed Fund series of the Registrant.
POWER OF ATTORNEY
We, the undersigned Officers and Trustees of Putnam Tax Managed
Funds Trust, hereby severally constitute and appoint George
Putnam, Charles E. Porter, Gordon H. Silver, Edward A.
Benjamin, Timothy W. Diggins and John W. Gerstmayr, and each of
them singly, our true and lawful attorneys, with full power to
them and each of them, to sign for us, and in our names and in
the capacities indicated below, the Registration Statement on
Form N-1A of Putnam Tax Managed Funds Trust and any and all
amendments (including post-effective amendments) to said
Registration Statement and to file the same with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto our said
attorneys, and each of them acting alone, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done in the premises, as fully to
all intents and purposes as he might or could do in person, and
hereby ratify and confirm all that said attorneys or any of
them may lawfully do or cause to be done by virtue thereof.
WITNESS our hands and common seal on the date set forth
below.
SIGNATURE TITLE DATE
/s/ George Putnam Principal Executive April 8, 1999
George Putnam Officer; President
and Chairman of the
Trustees
/s/ John D. Hughes Principal Financial April 8, 1999
John D. Hughes Officer; Treasurer
/s/ Paul G. Bucuvalas Principal Accounting
PAUL G. BUCUVALAS OFFICER; ASSISTANT APRIL 8, 1999
TREASURER
/s/ Jameson A. Baxter Trustee April 8, 1999
Jameson A. Baxter
/s/ Hans H. Estin Trustee April 8, 1999
Hans H. Estin
/s/ John A. Hill Trustee April 8, 1999
John A. Hill
/s/ Ronald J. Jackson Trustee April 8, 1999
Ronald J. Jackson
/s/ Paul L. Joskow Trustee April 8, 1999
Paul L. Joskow
/s/ Elizabeth T. Kennan Trustee April 8, 1999
Elizabeth T. Kennan
/s/ Lawrence J. Lasser Trustee April 8, 1999
Lawrence J. Lasser
/s/ John H. Mullin, III Trustee April 8, 1999
John H. Mullin, III
/s/ Robert E. Patterson Trustee April 8, 1999
Robert E. Patterson
/s/ Donald S. Perkins Trustee April 8, 1999
Donald S. Perkins
/s/ William F. Pounds Trustee April 8, 1999
William F. Pounds
/s/ George Putnam, III Trustee April 8, 1999
George Putnam, III
/s/ A.J.C. Smith Trustee April 8, 1999
A.J.C. Smith
/s/ W. Thomas Stephens Trustee April 8, 1999
W. Thomas Stephens
/s/ W. Nicholas Thorndike Trustee April 8, 1999
W. Nicholas Thorndike
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant has duly
caused this Registration Statement to be signed on its behalf
by the undersigned, duly authorized, in the City of Boston, and
The Commonwealth of Massachusetts, on the 14th day of April, 1999.
PUTNAM TAX MANAGED FUNDS TRUST
/s/ Gordon H. Silver
-----------------------------
By: Gordon H. Silver, Vice
President
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement of Putnam Tax Managed Funds
Trust has been signed below by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE
George Putnam President and Chairman of the
Board; Principal Executive
Officer; Trustee
John D. Hughes Senior Vice President;
Treasurer and Principal
Financial Officer
Paul G. Bucuvalas Assistant Treasurer and
Principal Accounting Officer
Jameson A. Baxter Trustee
Hans H. Estin Trustee
John A. Hill Trustee
Ronald J. Jackson Trustee
Paul L. Joskow Trustee
Elizabeth T. Kennan Trustee
Lawrence J. Lasser Trustee
John H. Mullin, III Trustee
Robert E. Patterson Trustee
Donald S. Perkins Trustee
William F. Pounds Trustee
George Putnam, III Trustee
A.J.C. Smith Trustee
W. Thomas Stephens Trustee
W. Nicholas Thorndike Trustee
/s/ Gordon H. Silver
By: Gordon H. Silver,
as Attorney-in-Fact
April 14, 1999
EXHIBIT LIST
1. Agreement and Declaration of Trust dated April 6, 1999.
2. By-Laws, as amended through April 6, 1999.
3. Portions of Agreement and Declaration of Trust Relating to
Shareholders' Rights.
4. Portions of By-Laws Relating to Shareholders' Rights.
5. Form of Management Contract.
6. Distributor's Contract dated April 8, 1999.
7. Custodian Agreement with Putnam Fiduciary Trust Company
dated May 3, 1991, as amended July 13, 1992.
8. Investor Servicing Agreement dated June 3, 1991 with
Putnam Fiduciary Trust Company.
9. Investment Letter from Putnam Investments.
10. Class A Distribution Plan and Agreement dated April 8,
1999.
11. Class B Distribution Plan and Agreement dated April 8,
1999.
12. Class C Distribution Plan and Agreement dated April 8,
1999.
13. Class M Distribution Plan and Agreement dated April 8,
1999.
14. Form of Specimen Dealer Service Agreement
15. Form of Specimen Financial Institution Service Agreement.
18
PUTNAM TAX MANAGED FUNDS TRUST
AGREEMENT AND DECLARATION OF TRUST
This AGREEMENT AND DECLARATION OF TRUST made at Boston,
Massachusetts, on this 6th day of April, 1999 by the Trustees
hereunder and by the holders of shares of beneficial interest to
be issued hereunder as hereinafter provided.
WITNESSETH that
WHEREAS, this Trust has been formed to carry on the business
of an investment company; and
WHEREAS, the Trustees have agreed to manage all property
coming into their hands as trustees of a Massachusetts voluntary
association with transferable shares in accordance with the
provisions hereinafter set forth;
NOW, THEREFORE, the Trustees hereby declare that they will
hold all cash, securities and other assets, which they may from
time to time acquire in any manner as Trustees hereunder IN TRUST
to manage and dispose of the same upon the following terms and
conditions for the benefit of the holders from time to time of
Shares in this Trust as hereinafter set forth.
ARTICLE I
Name and Definitions
NAME
Section 1. This Trust shall be known as "Putnam Tax Managed
Funds Trust," and the Trustees shall conduct the business of the
Trust under that name or any other name as they may from time to
time determine.
DEFINITIONS
Section 2. Whenever used herein, unless otherwise required
by the context or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust
established by this Agreement and Declaration of Trust, as
amended from time to time;
(b) "Trustees" refers to the Trustees of the Trust named
herein or elected in accordance with Article IV;
(c) "Shares" means the equal proportionate transferable
units of interest into which the beneficial interest in the
Trust shall be divided from time to time or, if more than
one series or class of Shares is authorized by the Trustees,
the equal proportionate transferable units into which each
series or class of Shares shall be divided from time to
time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of
1940 and the Rules and Regulations thereunder, all as
amended from time to time;
(f) The terms "Affiliated Person", "Assignment",
"Commission", "Interested Person", "Principal Underwriter"
and "Majority Shareholder Vote" (the 67% or 50% requirement
of the third sentence of Section 2(a)(42) of the 1940 Act,
whichever may be applicable) shall have the meanings given
them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust as amended or restated from time to
time;
(h) "Bylaws" shall mean the Bylaws of the Trust as amended
from time to time;
(i) The term "series" or "series of Shares" refers to the
one or more separate investment portfolios of the Trust into
which the assets and liabilities of the Trust may be divided
and the Shares of the Trust representing the beneficial
interest of Shareholders in such respective portfolios; and
(j) The term "class" or "class of Shares" refers to the
division of Shares representing any series into two or more
classes as provided in Article III, Section 1 hereof.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to provide investors a managed
investment primarily in securities, debt instruments and other
instruments and rights of a financial character.
ARTICLE III
Shares
DIVISION OF BENEFICIAL INTEREST
Section 1. The Shares of the Trust shall be issued in one
or more series as the Trustees may, without shareholder approval,
authorize. Each series shall be preferred over all other series
in respect of the assets allocated to that series within the
meaning of the 1940 Act and shall represent a separate investment
portfolio of the Trust. The beneficial interest in each series
shall at all times be divided into Shares, without par value,
each of which shall, except as provided in the following
sentence, represent an equal proportionate interest in the series
with each other Share of the same series, none having priority or
preference over another. The Trustees may, without Shareholder
approval, divide the Shares of any series into two or more
classes, Shares of each such class having such preferences and
special or relative rights and privileges (including conversion
rights, if any) as the Trustees may determine and as shall be set
forth in the Bylaws. The number of Shares authorized shall be
unlimited. The Trustees may from time to time divide or combine
the Shares of any series or class into a greater or lesser number
without thereby changing the proportionate beneficial interest in
the series or class.
OWNERSHIP OF SHARES
Section 2. The ownership of Shares shall be recorded on the
books of the Trust or a transfer or similar agent. No
certificates certifying the ownership of Shares shall be issued
except as the Trustees may otherwise determine from time to time.
The Trustees may make such rules as they consider appropriate for
the issuance of Share certificates, the transfer of Shares and
similar matters. The record books of the Trust as kept by the
Trust or any transfer or similar agent, as the case may be, shall
be conclusive as to who are the Shareholders of each series and
class and as to the number of Shares of each series and class
held from time to time by each Shareholder.
INVESTMENT IN THE TRUST
Section 3. The Trustees shall accept investments in the
Trust from such persons and on such terms and for such
consideration, which may consist of cash or tangible or
intangible property or a combination thereof, as they or the
Bylaws from time to time authorize.
All consideration received by the Trust for the issue or
sale of Shares of each series, together with all income,
earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation thereof, and any
funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall irrevocably belong to the
series of Shares with respect to which the same were received by
the Trust for all purposes, subject only to the rights of
creditors, and shall be so handled upon the books of account of
the Trust and are herein referred to as "assets of" such series.
NO PREEMPTIVE RIGHTS
Section 4. Shareholders shall have no preemptive or other
right to subscribe to any additional Shares or other securities
issued by the Trust.
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
Section 5. Shares shall be deemed to be personal property
giving only the rights provided in this Declaration of Trust or
the Bylaws. Every Shareholder by virtue of having become a
Shareholder shall be held to have expressly assented and agreed
to the terms of this Declaration of Trust and the Bylaws and to
have become a party thereto. The death of a Shareholder during
the continuance of the Trust shall not operate to terminate the
same nor entitle the representative of any deceased Shareholder
to an accounting or to take any action in court or elsewhere
against the Trust or the Trustees, but only to the rights of said
decedent under this Trust. Ownership of Shares shall not entitle
the Shareholder to any title in or to the whole or any part of
the Trust property or right to call for a partition or division
of the same or for an accounting, nor shall the ownership of
Shares constitute the Shareholders partners. Neither the Trust
nor the Trustees, nor any officer, employee or agent of the Trust
shall have any power to bind personally any Shareholder, nor
except as specifically provided herein to call upon any
Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time
personally agree to pay.
ARTICLE IV
The Trustees
ELECTION
Section 1. A Trustee may be elected either by the Trustees
or by the Shareholders. The number of Trustees shall be fixed
from time to time by the Trustees and, at or after the
commencement of the business of the Trust, shall be not less than
three. Each Trustee elected by the Trustees or the Shareholders
shall serve until he or she retires, resigns, is removed or dies
or until the next meeting of Shareholders called for the purpose
of electing Trustees and until the election and qualification of
his or her successor. At any meeting called for the purpose, a
Trustee may be removed by vote of the holders of two-thirds of
the outstanding Shares. The initial Trustees, each of whom shall
serve until the first meeting of Shareholders at which Trustees
are elected and until his or her successor is elected and
qualified, or until he or she sooner dies, resigns or is removed,
shall be George Putnam and Lawrence J. Lasser and such other
persons as the Trustee or Trustees then in office shall, prior to
any sale of Shares pursuant to a public offering, appoint.
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
Section 2. The death, declination, resignation, retirement,
removal or incapacity of the Trustees, or any one of them, shall
not operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration of Trust.
POWERS
Section 3. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient
to carry out that responsibility. Without limiting the
foregoing, the Trustees may adopt Bylaws not inconsistent with
this Declaration of Trust providing for the conduct of the
business of the Trust and may amend and repeal them to the extent
that such Bylaws do not reserve that right to the Shareholders;
they may fill vacancies in or add to their number, and may elect
and remove such officers and appoint and terminate such agents as
they consider appropriate; they may appoint from their own
number, and terminate, any one or more committees consisting of
two or more Trustees, including an executive committee which may,
when the Trustees are not in session, exercise some or all of the
power and authority of the Trustees as the Trustees may
determine; they may employ one or more custodians of the assets
of the Trust and may authorize such custodians to employ
subcustodians and to deposit all or any part of such assets in a
system or systems for the central handling of securities, retain
a transfer agent or a Shareholder servicing agent, or both,
provide for the distribution of Shares by the Trust, through one
or more principal underwriters or otherwise, set record dates for
the determination of Shareholders with respect to various
matters, and in general delegate such authority as they consider
desirable to any officer of the Trust, to any committee of the
Trustees and to any agent or employee of the Trust or to any such
custodian or underwriter.
Without limiting the foregoing, the Trustees shall have power
and authority:
(a) To invest and reinvest cash, and to hold cash
uninvested;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate,
write options on and lease any or all of the assets of the
Trust;
(c) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or
property; and to execute and deliver proxies or powers of
attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power
and discretion with relation to securities or property as
the Trustees shall deem proper;
(d) To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of
securities;
(e) To hold any security or property in a form not
indicating any trust, whether in bearer, unregistered or
other negotiable form, or in the name of the Trustees or of
the Trust or in the name of a custodian, subcustodian or
other depositary or a nominee or nominees or otherwise;
(f) Subject to the provisions of Article III, Section 3, to
allocate assets, liabilities, income and expenses of the
Trust to a particular series of Shares or to apportion the
same among two or more series, provided that any liabilities
or expenses incurred by or arising in connection with a
particular series of Shares shall be payable solely out of
the assets of that series; and to the extent necessary or
appropriate to give effect to the preferences and special or
relative rights and privileges of any classes of Shares, to
allocate assets, liabilities, income and expenses of a
series to a particular class of Shares of that series or to
apportion the same among two or more classes of Shares of
that series;
(g) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation
or issuer, any security of which is or was held in the
Trust; to consent to any contract, lease, mortgage, purchase
or sale of property by such corporation or issuer, and to
pay calls or subscriptions with respect to any security held
in the Trust;
(h) To join other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in
that connection to deposit any security with, or transfer
any security to, any such committee, depositary or trustee,
and to delegate to them such power and authority with
relation to any security (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree
to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the
Trustees shall deem proper;
(i) To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any matter in controversy,
including but not limited to claims for taxes;
(j) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(k) To borrow funds;
(l) To endorse or guarantee the payment of any notes or
other obligations of any person; to make contracts of
guaranty or suretyship, or otherwise assume liability for
payment thereof; and to mortgage and pledge the Trust
property or any part thereof to secure any of or all such
obligations;
(m) To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for
the conduct of the business, including without limitation,
insurance policies insuring the assets of the Trust and
payment of distributions and principal on its portfolio
investments, and insurance policies insuring the
Shareholders, Trustees, officers, employees, agents,
investment advisers or managers, principal underwriters, or
independent contractors of the Trust individually against
all claims and liabilities of every nature arising by reason
of holding, being or having held any such office or
position, or by reason of any action alleged to have been
taken or omitted by any such person as Shareholder, Trustee,
officer, employee, agent, investment adviser or manager,
principal underwriter, or independent contractor, including
any action taken or omitted that may be determined to
constitute negligence, whether or not the Trust would have
the power to indemnify such person against such liability;
and
(n) To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and
carry out pension, profit-sharing, share bonus, share
purchase, savings, thrift and other retirement, incentive
and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a
means of providing such retirement and other benefits, for
any or all of the Trustees, officers, employees and agents
of the Trust.
The Trustees shall not in any way be bound or limited by any
present or future law or custom in regard to investments by
trustees. Except as otherwise provided herein or from time to
time in the Bylaws, any action to be taken by the Trustees may be
taken by a majority of the Trustees present at a meeting of the
Trustees (a quorum being present), within or without
Massachusetts, including any meeting held by means of a
conference telephone or other communications equipment by means
of which all persons participating in the meeting can hear each
other at the same time and participation by such means shall
constitute presence in person at a meeting, or by written
consents of a majority of the Trustees then in office.
PAYMENT OF EXPENSES BY TRUST
Section 4. The Trustees are authorized to pay or to cause
to be paid out of the assets of the Trust, all expenses, fees,
charges, taxes and liabilities incurred or arising in connection
with the Trust, or in connection with the management thereof,
including, but not limited to, the Trustees' compensation and
such expenses and charges for the services of the Trust's
officers, employees, investment adviser or manager, principal
underwriter, auditor, counsel, custodian, transfer agent,
Shareholder servicing agent, and such other agents or independent
contractors and such other expenses and charges as the Trustees
may deem necessary or proper to incur, provided, however, that
all expenses, fees, charges, taxes and liabilities incurred by or
arising in connection with a particular series of Shares shall be
payable solely out of the assets of that series.
OWNERSHIP OF ASSETS OF THE TRUST
Section 5. Title to all of the assets of each series of
Shares and of the Trust shall at all times be considered as
vested in the Trustees.
ADVISORY, MANAGEMENT AND DISTRIBUTION
Section 6. Subject to a favorable Majority Shareholder
Vote, the Trustees may, at any time and from time to time,
contract for exclusive or nonexclusive advisory and/or management
services with any corporation, trust, association or other
organization (the "Manager"), every such contract to comply with
such requirements and restrictions as may be set forth in the
Bylaws; and any such contract may contain such other terms
interpretive of or in addition to said requirements and
restrictions as the Trustees may determine, including, without
limitation, authority to determine from time to time what
investments shall be purchased, held, sold or exchanged and what
portion, if any, of the assets of the Trust shall be held
uninvested and to make changes in the Trust's investments. The
Trustees may also, at any time and from time to time, contract
with the Manager or any other corporation, trust, association or
other organization, appointing it exclusive or nonexclusive
distributor or principal underwriter for the Shares, every such
contract to comply with such requirements and restrictions as may
be set forth in the Bylaws; and any such contract may contain
such other terms interpretive of or in addition to said
requirements and restrictions as the Trustees may determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the
Trust is a shareholder, director, officer, partner, trustee,
employee, manager, adviser, principal underwriter or
distributor or agent of or for any corporation, trust,
association, or other organization, or of or for any parent
or affiliate of any organization, with which an advisory or
management contract, or principal underwriter's or
distributor's contract, or transfer, Shareholder servicing
or other agency contract may have been or may hereafter be
made, or that any such organization, or any parent or
affiliate thereof, is a Shareholder or has an interest in
the Trust, or that
(ii) any corporation, trust, association or other
organization with which an advisory or management contract
or principal underwriter's or distributor's contract, or
transfer, Shareholder servicing or other agency contract may
have been or may hereafter be made also has an advisory or
management contract, or transfer, Shareholder servicing or
other agency contract with one or more other corporations,
trusts, associations, or other organizations, or has other
business or interests
shall not affect the validity of any such contract or disqualify
any Shareholder, Trustee or officer of the Trust from voting upon
or executing the same or create any liability or accountability
to the Trust or its Shareholders.
ARTICLE V
Shareholders' Voting Powers and Meetings
VOTING POWERS
Section 1. Subject to the voting powers of one or more
classes of Shares as set forth elsewhere in this Declaration of
Trust or in the Bylaws, the Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Article IV,
Section 1, (ii) for the removal of Trustees as provided in
Article IV, Section 1, (iii) with respect to any Manager as
provided in Article IV, Section 6, (iv) with respect to any
termination of this Trust to the extent and as provided in
Article IX, Section 4, (v) with respect to any amendment of this
Declaration of Trust to the extent and as provided in Article IX,
Section 7, (vi) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court
action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the
Trust or the Shareholders, and (vii) with respect to such
additional matters relating to the Trust as may be required by
this Declaration of Trust, the Bylaws or any registration of the
Trust with the Securities and Exchange Commission (or any
successor agency) or any state, or as the Trustees may consider
necessary or desirable. Each whole Share shall be entitled to
one vote as to any matter on which it is entitled to vote and
each fractional Share shall be entitled to a proportionate
fractional vote. On any matter submitted to a vote of
Shareholders, all Shares of the Trust then entitled to vote
shall, except as otherwise provided in the Bylaws, be voted in
the aggregate as a single class without regard to series or
classes of shares, except (1) when required by the 1940 Act or
when the Trustees shall have determined that the matter affects
one or more series or classes of Shares materially differently,
Shares shall be voted by individual series or class; and (2) when
the Trustees have determined that the matter affects only the
interests of one or more series or classes, only Shareholders of
such series or classes shall be entitled to vote thereon. There
shall be no cumulative voting in the election of Trustees.
Shares may be voted in person or by proxy. A proxy with respect
to Shares held in the name of two or more persons shall be valid
if executed by any one of them unless at or prior to exercise of
the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed
by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Until Shares of any
series or class are issued, the Trustees may exercise all rights
of Shareholders and may take any action required by law, this
Declaration of Trust or the Bylaws to be taken by Shareholders as
to such series or class.
VOTING POWER AND MEETINGS
Section 2. Meetings of Shareholders of any or all series or
classes may be called by the Trustees from time to time for the
purpose of taking action upon any matter requiring the vote or
authority of the Shareholders of such series or classes as herein
provided or upon any other matter deemed by the Trustees to be
necessary or desirable. Written notice of any meeting of
Shareholders shall be given or caused to be given by the Trustees
by mailing such notice at least seven days before such meeting,
postage prepaid, stating the time, place and purpose of the
meeting, to each Shareholder entitled to vote at such meeting at
the Shareholder's address as it appears on the records of the
Trust. If the Trustees shall fail to call or give notice of any
meeting of Shareholders for a period of 30 days after written
application by Shareholders holding at least 10% of the then
outstanding shares of all series and classes entitled to vote at
such meeting requesting a meeting to be called for a purpose
requiring action by the Shareholders as provided herein or in the
Bylaws, then Shareholders holding at least 10% of the then
outstanding Shares of all series and classes entitled to vote at
such meeting may call and give notice of such meeting, and
thereupon the meeting shall be held in the manner provided for
herein in case of call thereof by the Trustees. Notice of a
meeting need not be given to any Shareholder if a written waiver
of notice, executed by him or her before or after the meeting, is
filed with the records of the meeting, or to any Shareholder who
attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her.
QUORUM AND REQUIRED VOTE
Section 3. Thirty percent of Shares entitled to vote on a
particular matter shall be a quorum for the transaction of
business on that matter at a Shareholders' meeting, except that
where any provision of law or of this Declaration of Trust or the
bylaws requires that holders of any series or class shall vote as
an individual series or class, then thirty percent of the
aggregate number of Shares of that series or class entitled to
vote shall be necessary to constitute a quorum for the
transaction of business by that series or class. Any lesser
number shall be sufficient for adjournments. Any adjourned
session or sessions may be held, within a reasonable time after
the date set for the original meeting, without the necessity of
further notice. Except when a larger vote is required by any
provision of law or of this Declaration of Trust or the Bylaws, a
majority of the Shares voted shall decide any questions and a
plurality shall elect a Trustee, provided that where any
provision of law or of this Declaration of Trust or the bylaws
requires that the holders of any series or class shall vote as an
individual series or class then a majority of the Shares of that
series or class voted on the matter (or a plurality with respect
to the election of a Trustee) shall decide that matter insofar as
that series or class is concerned.
ACTION BY WRITTEN CONSENT
Section 4. Any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote
on the matter (or such larger proportion thereof as shall be
required by any express provision of this Declaration of Trust or
the Bylaws) consent to the action in writing and such written
consents are filed with the records of the meetings of
Shareholders. Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
ADDITIONAL PROVISIONS
Section 5. The Bylaws may include further provisions, not
inconsistent with this Declaration of Trust, regarding
Shareholders' voting powers, the conduct of meetings and related
matters.
ARTICLE VI
Distributions, Redemptions and Repurchases
DISTRIBUTIONS
Section 1. The Trustees may each year, or more frequently
if they so determine, distribute to the Shareholders of each
series out of the assets of such series such amounts as the
Trustees may determine. Any such distribution to the
Shareholders of a particular series shall be made to said
Shareholders pro rata in proportion to the number of Shares of
such series held by each of them, except to the extent otherwise
required or permitted by the preferences and special or relative
rights and privileges of any classes of Shares of that Series,
and any distribution to the Shareholders of a particular class of
Shares shall be made to such Shareholders pro rata in proportion
to the number of Shares of such class held by each of them. Such
distributions shall be made in cash, Shares or other property, or
a combination thereof, as determined by the Trustees. Any such
distribution paid in Shares will be paid at the net asset value
thereof as determined in accordance with the Bylaws.
REDEMPTIONS AND REPURCHASES
Section 2. The Trust shall purchase such Shares as are
offered by any Shareholder for redemption, upon the presentation
of any certificate for the Shares to be purchased, a proper
instrument of transfer and a request directed to the Trust or a
person designated by the Trust that the Trust purchase such
Shares, or in accordance with such other procedures for
redemption as the Trustees may from time to time authorize; and
the Trust will pay therefor the net asset value thereof, as next
determined in accordance with the Bylaws, less any redemption
charge fixed by the Trustees. Payment for said Shares shall be
made by the Trust to the Shareholder within seven days after the
date on which the request is made. The obligation set forth in
this Section 2 is subject to the provision that in the event that
at any time the New York Stock Exchange is closed for other than
customary weekends or holidays, or, if permitted by rules of the
Securities and Exchange Commission, during periods when trading
on the Exchange is restricted or during any emergency which makes
it impractical for the Trust to dispose of its investments or to
determine fairly the value of its net assets, or during any other
period permitted by order of the Securities and Exchange
Commission for the protection of investors, such obligation may
be suspended or postponed by the Trustees. The Trust may also
purchase or repurchase Shares at a price not exceeding the net
asset value of such Shares in effect when the purchase or
repurchase or any contract to purchase or repurchase is made.
Payment for any redemption, purchase or repurchase may be made in
cash or in other property, or any combination thereof. The
composition of any such payment shall be determined by the Trust
in its sole discretion, and the Trust shall have no obligation to
effect a pro rata division of cash or other property in making
any such payment. In no event shall the Trust be liable for any
delay of any other person in transferring securities or other
property selected for delivery as all or part of any such
payment.
REDEMPTION AT THE OPTION OF THE TRUST
Section 3. The Trust shall have the right at its option and
at any time to redeem Shares of any Shareholder at the net asset
value thereof as determined in accordance with the Bylaws: (i)
if at such time such Shareholder owns fewer Shares than, or
Shares having an aggregate net asset value of less than, an
amount determined from time to time by the Trustees; or (ii) to
the extent that such Shareholder owns Shares of a particular
series of Shares equal to or in excess of a percentage of the
outstanding Shares of that series determined from time to time by
the Trustees; or (iii) to the extent that such Shareholder owns
Shares of the Trust representing a percentage equal to or in
excess of such percentage of the aggregate number of outstanding
Shares of the Trust or the aggregate net asset value of the Trust
determined from time to time by the Trustees.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
COMPENSATION
Section 1. The Trustees as such shall be entitled to
reasonable compensation from the Trust; they may fix the amount
of their compensation. Nothing herein shall in any way prevent
the employment of any Trustee for advisory, management, legal,
accounting, investment banking or other services and payment for
the same by the Trust.
LIMITATION OF LIABILITY
Section 2. The Trustees shall not be responsible or liable
in any event for any neglect or wrongdoing of any officer, agent,
employee, manager or principal underwriter of the Trust, nor
shall any Trustee be responsible for the act or omission of any
other Trustee, but nothing herein contained shall protect any
Trustee against any liability to which he or she would otherwise
be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his or her office.
Every note, bond, contract, instrument, certificate or
undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust or the Trustees or any of them
in connection with the Trust shall be conclusively deemed to
have been executed or done only in or with respect to their or
his or her capacity as Trustees or Trustee, and such Trustees or
Trustee shall not be personally liable thereon.
ARTICLE VIII
Indemnification
TRUSTEES, OFFICERS, ETC.
Section 1. The Trust shall indemnify each of its Trustees
and officers (including persons who serve at the Trust's request
as directors, officers or trustees of another organization in
which the Trust has any interest as a shareholder, creditor or
otherwise) (hereinafter referred to as a "Covered Person")
against all liabilities and expenses, including but not limited
to amounts paid in satisfaction of judgments, in compromise or as
fines and penalties, and counsel fees reasonably incurred by any
Covered Person in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or criminal,
before any court or administrative or legislative body, in which
such Covered Person may be or may have been involved as a party
or otherwise or with which such Covered Person may be or may have
been threatened, while in office or thereafter, by reason of
being or having been such a Covered Person except with respect to
any matter as to which such Covered Person shall have been
finally adjudicated in any such action, suit or other proceeding
(a) not to have acted in good faith in the reasonable belief that
such Covered Person's action was in the best interest of the
Trust or (b) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such
Covered Person's office. Expenses, including counsel fees so
incurred by any such Covered Person (but excluding amounts paid
in satisfaction of judgments, in compromise or as fines or
penalties), shall be paid from time to time by the Trust in
advance of the final disposition of any such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such
Covered Person to repay amounts so paid to the Trust if it is
ultimately determined that indemnification of such expenses is
not authorized under this Article, provided, however, that either
(a) such Covered Person shall have provided appropriate security
for such undertaking, (b) the Trust shall be insured against
losses arising from any such advance payments or (c) either a
majority of the disinterested Trustees acting on the matter
(provided that a majority of the disinterested Trustees then in
office act on the matter), or independent legal counsel in a
written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a full trial type inquiry)
that there is reason to believe that such Covered Person will be
found entitled to indemnification under this Article.
COMPROMISE PAYMENT
Section 2. As to any matter disposed of (whether by a
compromise payment, pursuant to a consent decree or otherwise)
without an adjudication by a court, or by any other body before
which the proceeding was brought, that such Covered Person either
(a) did not act in good faith in the reasonable belief that his
or her action was in the best interests of the Trust or (b) is
liable to the Trust or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office,
indemnification shall be provided if (a) approved as in the best
interests of the Trust, after notice that it involves such
indemnification, by at least a majority of the disinterested
Trustees acting on the matter (provided that a majority of the
disinterested Trustees then in office act on the matter) upon a
determination, based upon a review of readily available facts (as
opposed to a full trial type inquiry) that such Covered Person
acted in good faith in the reasonable belief that his or her
action was in the best interests of the Trust and is not liable
to the Trust or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office, or (b)
there has been obtained an opinion in writing of independent
legal counsel, based upon a review of readily available facts (as
opposed to a full trial type inquiry) to the effect that such
Covered Person appears to have acted in good faith in the
reasonable belief that his or her action was in the best
interests of the Trust and that such indemnification would not
protect such Covered Person against any liability to the Trust to
which he or she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office. Any
approval pursuant to this Section shall not prevent the recovery
from any Covered Person of any amount paid to such Covered Person
in accordance with this Section as indemnification if such
Covered Person is subsequently adjudicated by a court of
competent jurisdiction not to have acted in good faith in the
reasonable belief that such Covered Person's action was in the
best interests of the Trust or to have been liable to the Trust
or its Shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of such Covered Person's office.
INDEMNIFICATION NOT EXCLUSIVE
Section 3. The right of indemnification hereby provided
shall not be exclusive of or affect any other rights to which
such Covered Person may be entitled. As used in this Article
VIII, the term "Covered Person" shall include such person's
heirs, executors and administrators and a "disinterested Trustee"
is a Trustee who is not an "interested person" of the Trust as
defined in Section 2(a)(19) of the 1940 Act (or who has been
exempted from being an "interested person" by any rule,
regulation or order of the Securities and Exchange Commission)
and against whom none of such actions, suits or other proceedings
or another action, suit or other proceeding on the same or
similar grounds is then or has been pending. Nothing contained
in this Article shall affect any rights to indemnification to
which personnel of the Trust, other than Trustees or officers,
and other persons may be entitled by contract or otherwise under
law, nor the power of the Trust to purchase and maintain
liability insurance on behalf of any such person.
SHAREHOLDERS
Section 4. In case any Shareholder or former Shareholder
shall be held to be personally liable solely by reason of his or
her being or having been a Shareholder and not because of his or
her acts or omissions or for some other reason, the Shareholder
or former Shareholder (or his or her heirs, executors,
administrators or other legal representative or in the case of a
corporation or other entity, its corporate or other general
successor) shall be entitled to be held harmless from and
indemnified against all loss and expense arising from such
liability, but only out of the assets of the particular series of
Shares of which he or she is or was a Shareholder.
ARTICLE IX
Miscellaneous
TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE
Section 1. All persons extending credit to, contracting
with or having any claim against the Trust or a particular series
of Shares shall look only to the assets of the Trust or the
assets of that particular series of Shares for payment under such
credit, contract or claim, and neither the Shareholders nor the
Trustees, nor any of the Trust's officers, employees or agents,
whether past, present or future, shall be personally liable
therefor. Nothing in this Declaration of Trust shall protect any
Trustee against any liability to which such Trustee would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officer or
officers shall give notice that this Declaration of Trust is on
file with the Secretary of State of The Commonwealth of
Massachusetts and shall recite that the same was executed or made
by or on behalf of the Trust or by them as Trustee or Trustees or
as officer or officers and not individually and that the
obligations of such instrument are not binding upon any of them
or the Shareholders individually but are binding only upon the
assets and property of the Trust, and may contain such further
recital as he or she or they may deem appropriate, but the
omission thereof shall not operate to bind any Trustee or
Trustees or officer or officers or Shareholder or Shareholders
individually.
TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
Section 2. The exercise by the Trustees of their powers and
discretions hereunder shall be binding upon everyone interested.
A Trustee shall be liable for his or her own willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and for nothing
else. The Trustees may take advice of counsel or other experts
with respect to the meaning and operation of this Declaration of
Trust, and shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor
any surety if a bond is required.
LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEE
Section 3. No person dealing with the Trustees shall be
bound to make any inquiry concerning the validity of any
transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the
Trust or upon its order.
DURATION AND TERMINATION OF TRUST
Section 4. Unless terminated as provided herein, the Trust
shall continue without limitation of time. The Trust or any
series may be terminated at any time by the Trustees by written
notice to the Shareholders of each series entitled to vote or by
the affirmative vote of the lessor of (1) more than 50% of the
outstanding Shares of each series entitled to vote, or (2) 67% or
more of the Shares of each series entitled to vote and present at
a meeting called for this purpose if more than 50% of the
outstanding Shares of each series entitled to vote are present at
the meeting in person or by proxy or by the Trustees by written
notice to the Shareholders. Upon termination of the Trust or of
any one or more series of Shares, after paying or otherwise
providing for all charges, taxes, expenses and liabilities,
whether due or accrued or anticipated, of the Trust or of the
particular series as may be determined by the Trustees, the Trust
shall in accordance with such procedures as the Trustees consider
appropriate reduce the remaining assets to distributable form in
cash or shares or other property, or any combination thereof, and
distribute the proceeds to the Shareholders of the series
involved, ratably according to the number of Shares of such
series held by the several Shareholders of such series on the
date of termination, except to the extent otherwise required or
permitted by the preferences and special or relative rights and
privileges of any classes of Shares of that series, provided that
any distribution to the Shareholders of a particular class of
Shares shall be made to such Shareholders pro rata in proportion
to the number of Shares of such class held by each of them.
FILING AND COPIES, REFERENCES, HEADINGS
Section 5. The original or a copy of this instrument and of
each amendment hereto shall be kept at the office of the Trust
where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the
Trust with the Secretary of State of The Commonwealth of
Massachusetts and with the Boston City Clerk, as well as any
other governmental office where such filing may from time to time
be required. Anyone dealing with the Trust may rely on a
certificate by an officer of the Trust as to whether or not any
such amendments have been made and as to any matters in
connection with the Trust hereunder, and, with the same effect as
if it were the original, may rely on a copy certified by an
officer of the Trust to be a copy of this instrument or of any
such amendments. In this instrument and in any such amendment,
references to this instrument and all expressions like "herein",
"hereof" and "hereunder" shall be deemed to refer to this
instrument as amended or affected by any such amendments.
Headings are placed herein for convenience of reference only and
shall not be taken as a part hereof or control or affect the
meaning, construction or effect of this instrument. This
instrument may be executed in any number of counterparts each of
which shall be deemed an original.
APPLICABLE LAW
Section 6. This Declaration of Trust is made in The
Commonwealth of Massachusetts, and it is created under and is to
be governed by and construed and administered according to the
laws of said Commonwealth. The Trust shall be of the type
commonly called a Massachusetts business trust and, without
limiting the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such a trust.
AMENDMENTS
Section 7. This Declaration of Trust may be amended at any
time by an instrument in writing signed by a majority of the then
Trustees when authorized to do so by vote of Shareholders holding
a majority of the Shares entitled to vote, except that an
amendment which in the determination of the Trustees shall affect
the holders of one or more series or classes of Shares but not
the holders of all outstanding series and classes shall be
authorized by vote of the Shareholders holding a majority of the
Shares entitled to vote of each series and class affected and no
vote of Shareholders of a series or class not affected shall be
required. Amendments having the purpose of changing the name of
the Trust or of supplying any omission, curing any ambiguity or
curing, correcting or supplementing any defective or inconsistent
provision contained herein shall not require authorization by
Shareholders vote.
IN WITNESS WHEREOF, each of the undersigned has hereunto set
his hand and seal in the City of Boston, Massachusetts for
himself and his assigns, as of the day and year first above
written.
/s/George Putnam
George Putnam
/s/ Lawrence J. Lasser
Lawrence J. Lasser
THE COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. Boston,
Then personally appeared the above named George Putnam and
Lawrence J. Lasser and acknowledged the foregoing instrument to
be their free act and deed, before me,
/s/ Anne B. McCarthy
Notary Public
My Commission Expires: 9/18/03
The address of the Trust is One Post Office Square, Boston,
Massachusetts 02109.
TRUSTEES ADDRESSES
MR. GEORGE PUTNAM
36 PROCTOR STREET
MANCHESTER, MA 01944
MR. LAWRENCE J. LASSER
342 WARREN STREET
BROOKLINE, MA 0214 6
3
BYLAWS
OF
PUTNAM AMERICAN GOVERNMENT INCOME FUND,
PUTNAM ARIZONA TAX EXEMPT INCOME FUND,
PUTNAM ASIA PACIFIC GROWTH FUND,
PUTNAM ASSET ALLOCATION FUNDS,
PUTNAM BALANCED RETIREMENT FUND,
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND,
PUTNAM CAPITAL APPRECIATION FUND,
PUTNAM CONVERTIBLE INCOME-GROWTH TRUST,
PUTNAM DIVERSIFIED INCOME TRUST,
PUTNAM EQUITY INCOME FUND,
PUTNAM EUROPE GROWTH FUND,
PUTNAM FLORIDA TAX EXEMPT INCOME FUND,
THE GEORGE PUTNAM FUND OF BOSTON,
PUTNAM GLOBAL GOVERNMENTAL INCOME TRUST,
PUTNAM GLOBAL GROWTH FUND,
PUTNAM HEALTH SCIENCES TRUST,
PUTNAM HIGH YIELD TRUST,
PUTNAM INCOME FUND,
PUTNAM INVESTORS FUND,
PUTNAM INTERMEDIATE U.S. GOVERNMENT INCOME FUND
PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND,
PUTNAM MICHIGAN TAX EXEMPT INCOME FUND,
PUTNAM MINNESOTA TAX EXEMPT INCOME FUND,
PUTNAM MONEY MARKET FUND,
PUTNAM MUNICIPAL INCOME FUND,
PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND,
PUTNAM NEW OPPORTUNITIES FUND,
PUTNAM NEW YORK TAX EXEMPT MONEY MARKET FUND,
PUTNAM NEW YORK TAX EXEMPT OPPORTUNITIES FUND,
PUTNAM OHIO TAX EXEMPT INCOME FUND,
PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND,
PUTNAM TAX EXEMPT INCOME FUND,
PUTNAM TAX EXEMPT MONEY MARKET FUND,
PUTNAM TAX-FREE INCOME TRUST,
PUTNAM U.S. GOVERNMENT INCOME TRUST,
PUTNAM UTILITIES GROWTH AND INCOME FUND,
PUTNAM VISTA FUND,
PUTNAM VOYAGER FUND
(AS AMENDED THROUGH FEBRUARY 1, 1994),
PUTNAM DIVERSIFIED EQUITY TRUST
(AS APPROVED APRIL 13, 1994),
PUTNAM HIGH YIELD ADVANTAGE FUND
(AS AMENDED THROUGH JUNE 1, 1994),
PUTNAM HIGH QUALITY BOND FUND
(AS AMENDED THROUGH JUNE 6, 1994),
THE PUTNAM FUND FOR GROWTH AND INCOME
(AS AMENDED THROUGH JULY 7, 1994),
PUTNAM STRATEGIC INCOME FUND,
PUTNAM GROWTH AND INCOME FUND II
(AS AMENDED THROUGH OCTOBER 5, 1994),
PUTNAM PREFERRED INCOME FUND
(AS AMENDED THROUGH OCTOBER 6, 1994),
PUTNAM INVESTMENT FUNDS
(AS AMENDED THROUGH OCTOBER 30, 1994),
PUTNAM FUNDS TRUST
(AS AMENDED THROUGH JANUARY 19, 1996),
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND,
PUTNAM GLOBAL NATURAL RESOURCES FUND,
PUTNAM INTERNATIONAL GROWTH FUND,
PUTNAM NEW YORK TAX EXEMPT INCOME FUND,
PUTNAM OTC & EMERGING GROWTH FUND,
PUTNAM VARIABLE TRUST
(AS AMENDED THROUGH JANUARY 30, 1997), AND
PUTNAM TAX MANAGED FUNDS TRUST,
(AS AMENDED THROUGH APRIL 6, 1999)
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1 AGREEMENT AND DECLARATION OF TRUST. These Bylaws shall
be subject to the Agreement and Declaration of Trust, as from
time to time in effect (the "Declaration of Trust"), of the
Massachusetts business trust established by the Declaration of
Trust (the "Trust").
1.2 PRINCIPAL OFFICE OF THE TRUST. The principal office of
the Trust shall be located in Boston, Massachusetts.
ARTICLE 2
MEETINGS OF TRUSTEES
2.1 REGULAR MEETINGS. Regular meetings of the Trustees may
be held without call or notice at such places and at such times
as the Trustees may from time to time determine, provided that
notice of the first regular meeting following any such
determination shall be given to absent Trustees.
2.2 SPECIAL MEETINGS. Special meetings of the Trustees may
be held at any time and at any place designated in the call of
the meeting when called by the Chairman of the Trustees, the
President or the Treasurer or by two or more Trustees, sufficient
notice thereof being given to each Trustee by the Clerk or an
Assistant Clerk or by the officer or the Trustees calling the
meeting.
2.3 NOTICE OF SPECIAL MEETINGS. It shall be sufficient
notice to a Trustee of a special meeting to send notice by mail
at least forty-eight hours or by telegram at least twenty-four
hours before the meeting addressed to the Trustee at his or her
usual or last known business or residence address or to give
notice to him or her in person or by telephone at least
twenty-four hours before the meeting. Notice of a special
meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the meeting, is
filed with the records of the meeting, or to any Trustee who
attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her. Neither notice of
a meeting nor a waiver of a notice need specify the purposes of
the meeting.
2.4 QUORUM. At any meeting of the Trustees a majority of
the Trustees then in office shall constitute a quorum. Any
meeting may be adjourned from time to time by a majority of the
votes cast upon the question, whether or not a quorum is present,
and the meeting may be held as adjourned without further notice.
2.5 NOTICE OF CERTAIN ACTIONS BY CONSENT. If in accordance
with the provisions of the Declaration of Trust any action is
taken by the Trustees by a written consent of less than all of
the Trustees, then prompt notice of any such action shall be
furnished to each Trustee who did not execute such written
consent, provided that the effectiveness of such action shall not
be impaired by any delay or failure to furnish such notice.
ARTICLE 3
OFFICERS
3.1 ENUMERATION; QUALIFICATION. The officers of the Trust
shall be a Chairman of the Trustees, a President, a Treasurer, a
Clerk and such other officers, if any, as the Trustees from time
to time may in their discretion elect. The Trust may also have
such agents as the Trustees from time to time may in their
discretion appoint. The Chairman of the Trustees and the
President shall be a Trustee and may but need not be a
shareholder; and any other officer may but need not be a Trustee
or a shareholder. Any two or more offices may be held by the
same person. A Trustee may but need not be a shareholder.
3.2 ELECTION. The Chairman of the Trustees, the President,
the Treasurer and the Clerk shall be elected by the Trustees upon
the occurrence of any vacancy in any such office. Other
officers, if any, may be elected or appointed by the Trustees at
any time. Vacancies in any such other office may be filled at
any time.
3.3 TENURE. The Chairman of the Trustees, the President,
the Treasurer and the Clerk shall hold office in each case until
he or she dies, resigns, is removed or becomes disqualified.
Each other officer shall hold office and each agent shall retain
authority at the pleasure of the Trustees.
3.4 POWERS. Subject to the other provisions of these
Bylaws, each officer shall have, in addition to the duties and
powers herein and in the Declaration of Trust set forth, such
duties and powers as are commonly incident to the office occupied
by him or her as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the
Trustees may from time to time designate.
3.5 CHAIRMAN; PRESIDENT. Unless the Trustees otherwise
provide, the Chairman of the Trustees or, if there is none or in
the absence of the Chairman of the Trustees, the President shall
preside at all meetings of the shareholders and of the Trustees.
Unless the Trustees otherwise provide, the President shall be the
chief executive officer.
3.6 TREASURER. Unless the Trustees shall provide
otherwise, the Treasurer shall be the chief financial and
accounting officer of the Trust, and shall, subject to the
provisions of the Declaration of Trust and to any arrangement
made by the Trustees with a custodian, investment adviser or
manager, or transfer, shareholder servicing or similar agent, be
in charge of the valuable papers, books of account and accounting
records of the Trust, and shall have such other duties and powers
as may be designated from time to time by the Trustees or by the
President.
3.7 CLERK. The Clerk shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which
books or a copy thereof shall be kept at the principal office of
the Trust. In the absence of the Clerk from any meeting of the
shareholders or Trustees, an Assistant Clerk, or if there be none
or if he or she is absent, a temporary Clerk chosen at such
meeting shall record the proceedings thereof in the aforesaid
books.
3.8 RESIGNATIONS AND REMOVALS. Any Trustee or officer may
resign at any time by written instrument signed by him or her and
delivered to the Chairman of the Trustees, the President or the
Clerk or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some
other time. The Trustees may remove any officer elected by them
with or without cause. Except to the extent expressly provided
in a written agreement with the Trust, no Trustee or officer
resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation or
removal, or any right to damages on account of such removal.
ARTICLE 4
COMMITTEES
4.1 QUORUM; VOTING. A majority of the members of any
Committee of the Trustees shall constitute a quorum for the
transaction of business, and any action of such a Committee may
be taken at a meeting by a vote of a majority of the members
present (a quorum being present) or evidenced by one or more
writings signed by such a majority. Members of a Committee may
participate in a meeting of such Committee by means of a
conference telephone or other communications equipment by means
of which all persons participating in the meeting can hear each
other at the same time and participation by such means shall
constitute presence in person at a meeting.
ARTICLE 5
REPORTS
5.1 GENERAL. The Trustees and officers shall render
reports at the time and in the manner required by the Declaration
of Trust or any applicable law. Officers and Committees shall
render such additional reports as they may deem desirable or as
may from time to time be required by the Trustees.
ARTICLE 6
FISCAL YEAR
6.1 GENERAL. Except as from time to time otherwise
provided by the Trustees, the initial fiscal year of the Trust
shall end on such date as is determined in advance or in arrears
by the Treasurer, and subsequent fiscal years shall end on such
date in subsequent years.
ARTICLE 7
SEAL
7.1 GENERAL. The seal of the Trust shall consist of a
flat-faced die with the word "Massachusetts", together with the
name of the Trust and the year of its organization cut or
engraved thereon but, unless otherwise required by the Trustees,
the seal shall not be necessary to be placed on and its absence
shall not impair the validity of, any document, instrument or
other paper executed and delivered by or on behalf of the Trust.
ARTICLE 8
EXECUTION OF PAPERS
8.1 GENERAL. Except as the Trustees may generally or in
particular cases authorize the execution thereof in some other
manner, all deeds, leases, contracts, notes and other obligations
made by the Trustees shall be signed by the President, the Vice
Chairman, a Vice President or the Treasurer and need not bear the
seal of the Trust.
ARTICLE 9
ISSUANCE OF SHARES AND SHARE CERTIFICATES
9.1 SALE OF SHARES. Except as otherwise determined by the
Trustees, the Trust will issue and sell for cash or securities
from time to time, full and fractional shares of its shares of
beneficial interest, such shares to be issued and sold at a price
of not less than the par value per share, if any, and not less
than the net asset value per share as from time to time
determined in accordance with the Declaration of Trust and these
Bylaws and, in the case of fractional shares, at a proportionate
reduction in such price. In the case of shares sold for
securities, such securities shall be valued in accordance with
the provisions for determining the value of the assets of the
Trust as stated in the Declaration of Trust and these Bylaws.
The officers of the Trust are severally authorized to take all
such actions as may be necessary or desirable to carry out this
Section 9.1.
9.2 SHARE CERTIFICATES. In lieu of issuing certificates
for shares, the Trustees or the transfer agent may either issue
receipts therefor or may keep accounts upon the books of the
Trust for the record holders of such shares, who shall in either
case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and
agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled
to a certificate stating the number of shares of each class owned
by him, in such form as shall be prescribed from time to time by
the Trustees. Such certificate shall be signed by the President
or a Vice President and by the Treasurer or an Assistant
Treasurer. Such signatures may be facsimile if the certificate
is signed by a transfer agent or by a registrar. In case any
officer who has signed or whose facsimile signature has been
placed on such certificate shall cease to be such officer before
such certificate is issued, it may be issued by the Trust with
the same effect as if he were such officer at the time of its
issue.
9.3 LOSS OF CERTIFICATES. The transfer agent of the Trust,
with the approval of any two officers of the Trust, is authorized
to issue and countersign replacement certificates for the shares
of the Trust which have been lost, stolen or destroyed upon (i)
receipt of an affidavit or affidavits of loss or non-receipt and
of an indemnity agreement executed by the registered holder or
his legal representative and supported by an open penalty surety
bond, said agreement and said bond in all cases to be in form and
content satisfactory to and approved by the President or the
Treasurer, or (ii) receipt of such other documents as may be
approved by the Trustees.
9.4 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. A pledgee of
shares transferred as collateral security shall be entitled to a
new certificate if the instrument of transfer substantially
describes the debt or duty that is intended to be secured
thereby. Such new certificate shall express on its face that it
is held as collateral security, and the name of the pledgor shall
be stated thereon, who alone shall be liable as a shareholder and
entitled to vote thereon.
9.5 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The
Trustees may at any time discontinue the issuance of share
certificates and may, by written notice to each shareholder,
require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect
the ownership of shares in the Trust.
ARTICLE 10
PROVISIONS RELATING TO THE CONDUCT OF THE TRUST'S BUSINESS
10.1 CERTAIN DEFINITIONS. When used herein the following
words shall have the following meanings: "Distributor" shall mean
any one or more corporations, firms or associations which have
distributor's or principal underwriter's contracts in effect with
the Trust providing that redeemable shares issued by the Trust
shall be offered and sold by such Distributor. "Manager" shall
mean any corporation, firm or association which may at the time
have an advisory or management contract with the Trust.
10.2 LIMITATIONS ON DEALINGS WITH OFFICERS OR TRUSTEES.
The Trust will not lend any of its assets to the Distributor or
Manager or to any officer or director of the Distributor or
Manager or any officer or Trustee of the Trust, and shall not
permit any officer or Trustee or any officer or director of the
Distributor or Manager to deal for or on behalf of the Trust with
himself or herself as principal or agent, or with any
partnership, association or corporation in which he or she has a
financial interest; provided that the foregoing provisions shall
not prevent (a) officers and Trustees of the Trust or officers
and directors of the Distributor or Manager from buying, holding
or selling shares in the Trust or from being partners, officers
or directors of or otherwise financially interested in the
Distributor or the Manager; (b) purchases or sales of securities
or other property if such transaction is permitted by or is
exempt or exempted from the provisions of the Investment Company
Act of 1940 or any Rule or Regulation thereunder and if such
transaction does not involve any commission or profit to any
security dealer who is, or one or more of whose partners,
shareholders, officers or directors is, an officer or Trustee of
the Trust or an officer or director of the Distributor or
Manager; (c) employment of legal counsel, registrar, transfer
agent, shareholder servicing agent, dividend disbursing agent or
custodian who is, or has a partner, shareholder, officer or
director who is, an officer or Trustee of the Trust or an officer
or director of the Distributor or Manager; (d) sharing
statistical, research, legal and management expenses and office
hire and expenses with any other investment company in which an
officer or Trustee of the Trust or an officer or director of the
Distributor or Manager is an officer or director or otherwise
financially interested.
10.3 SECURITIES AND CASH OF THE TRUST TO BE HELD BY
CUSTODIAN SUBJECT TO CERTAIN TERMS AND CONDITIONS.
(a) All securities and cash owned by the Trust
shall be held by or deposited with one or more banks or
trust companies having (according to its last published
report) not less than $1,000,000 aggregate capital,
surplus and undivided profits (any such bank or trust
company being hereby designated as "Custodian"),
provided such a Custodian can be found ready and
willing to act; subject to such rules, regulations and
orders, if any, as the Securities and Exchange
Commission may adopt, the Trust may, or may permit any
Custodian to, deposit all or any part of the securities
owned by the Trust in a system for the central handling
of securities pursuant to which all securities of any
particular class or series of any issue deposited
within the system may be transferred or pledged by
bookkeeping entry, without physical delivery. The
Custodian may appoint, subject to the approval of the
Trustees, one or more subcustodians.
(b) The Trust shall enter into a written contract
with each Custodian regarding the powers, duties and
compensation of such Custodian with respect to the cash
and securities of the Trust held by such Custodian.
Said contract and all amendments thereto shall be
approved by the Trustees.
(c) The Trust shall upon the resignation or
inability to serve of any Custodian or upon change of
any Custodian:
(i) in case of such resignation or inability to
serve, use its best efforts to obtain a successor
Custodian;
(ii) require that the cash and securities owned
by the Trust be delivered directly to the successor
Custodian; and
(iii) in the event that no successor Custodian
can be found, submit to the shareholders, before
permitting delivery of the cash and securities owned by
the Trust otherwise than to a successor Custodian, the
question whether the Trust shall be liquidated or shall
function without a Custodian.
10.4 REPORTS TO SHAREHOLDERS. The Trust shall send to each
shareholder of record at least semi-annually a statement of the
condition of the Trust and of the results of its operations,
containing all information required by applicable laws or
regulations.
10.5 DETERMINATION OF NET ASSET VALUE PER SHARE. Net asset
value per share of each class or series of shares of the Trust
shall mean: (i) the value of all the assets properly allocable
to such class or series; (ii) less total liabilities properly
allocable to such class or series; (iii) divided by the number of
shares of such class or series outstanding, in each case at the
time of each determination. Except as otherwise determined by
the Trustees, the net asset value per share of each class or
series shall be determined no less frequently than once daily,
Monday through Friday, on days on which the New York Stock
Exchange is open for trading, at such time or times that the
Trustees set at least annually.
In valuing the portfolio investments of any class or series
of shares for the determination of the net asset value per share
of such class or series, securities for which market quotations
are readily available shall be valued at prices which, in the
opinion of the Trustees or the person designated by the Trustees
to make the determination, most nearly represent the market value
of such securities, and other securities and assets shall be
valued at their fair value as determined by or pursuant to the
direction of the Trustees, which in the case of debt obligations,
commercial paper and repurchase agreements may, but need not, be
on the basis of yields for securities of comparable maturity,
quality and type, or on the basis of amortized cost. Expenses
and liabilities of the Trust shall be accrued each day.
Liabilities may include such reserves for taxes, estimated
accrued expenses and contingencies as the Trustees or their
designates may in their sole discretion deem fair and reasonable
under the circumstances. No accruals shall be made in respect of
taxes on unrealized appreciation of securities owned unless the
Trustees shall otherwise determine.
ARTICLE 11
SHAREHOLDERS
11.1 MEETINGS. A meeting of the shareholders shall be
called by the Clerk whenever ordered by the Trustees, the
Chairman of the Trustees or requested in writing by the holder or
holders of at least one-tenth of the outstanding shares entitled
to vote at such meeting. If the Clerk, when so ordered or
requested, refuses or neglects for more than two days to call
such meeting, the Trustees, Chairman of the Trustees or the
shareholders so requesting may, in the name of the Clerk, call
the meeting by giving notice thereof in the manner required when
notice is given by the Clerk.
11.2 ACCESS TO SHAREHOLDER LIST. Shareholders of record
may apply to the Trustees for assistance in communicating with
other shareholders for the purpose of calling a meeting in order
to vote upon the question of removal of a Trustee. When ten or
more shareholders of record who have been such for at least six
months preceding the date of application and who hold in the
aggregate shares having a net asset value of at least $25,000 so
apply, the Trustees shall within five business days either:
(i) afford to such applicants access to a list of
names and addresses of all shareholders as recorded on
the books of the Trust; or
(ii) inform such applicants of the approximate
number of shareholders of record and the approximate
cost of mailing material to them, and, within a
reasonable time thereafter, mail, at the applicants'
expense, materials submitted by the applicants, to all
such shareholders of record. The Trustees shall not be
obligated to mail materials which they believe to be
misleading or in violation of applicable law.
11.3 RECORD DATES. For the purpose of determining the
shareholders of any class or series of shares of the Trust who
are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to receive payment of any dividend
or of any other distribution, the Trustees may from time to time
fix a time, which shall be not more than 90 days before the date
of any meeting of shareholders or more than 60 days before the
date of payment of any dividend or of any other distribution, as
the record date for determining the shareholders of such class or
series having the right to notice of and to vote at such meeting
and any adjournment thereof or the right to receive such dividend
or distribution, and in such case only shareholders of record on
such record date shall have such right notwithstanding any
transfer of shares on the books of the Trust after the record
date; or without fixing such record date the Trustees may for any
such purposes close the register or transfer books for all or
part of such period.
11.4 PROXIES. The placing of a shareholder's name on a
proxy pursuant to telephone or electronically transmitted
instructions obtained pursuant to procedures reasonably designed
to verify that such instructions have been authorized by such
shareholder shall constitute execution of such proxy by or on
behalf of such shareholder.
ARTICLE 12
PREFERENCES, RIGHTS AND PRIVILEGES OF THE
TRUST'S CLASSES OF SHARES
12.1 GENERAL. Each class of shares of the Trust or of a
particular series of the Trust, as the case may be, will
represent interests in the same portfolio of investments of the
Trust (or that series) and be identical in all respects, except
as set forth below: (a) each class of shares shall be charged
with the expense of any Distribution Plan adopted by the Trust
pursuant to Rule 12b-1 under the Investment Company Act of 1940
with respect to such class of shares, (b) each class of shares
will be charged with any incremental shareholder servicing
expense attributable solely to such class, as determined by the
Trustees, (c) each class of shares shall be charged with any
other expenses properly allocated to such class, as determined by
the Trustees and approved by the Securities and Exchange
Commission, (d) each class of shares shall vote as a separate
class on matters which pertain to any Rule 12b-1 Distribution
Plan pertaining to such class of shares, (e) each class of shares
will have only such exchange privileges as may from time to time
be described in the Trust's prospectus with respect to such
class, (f) each class of shares shall bear such designation as
may be approved from time to time by the Trustees and (g)
reinvestments of distributions from the Trust paid with respect
to the shares of a particular class will be paid in additional
shares of such class.
12.2. CONVERSION OF CLASS B SHARES. Except as hereinafter
provided with respect to shares acquired by exchange or
reinvestment of distributions, Class B shares of the Trust will
automatically convert into Class A shares of the Trust at the end
of the month eight years after the month of purchase, or at such
earlier time as the Trustees may in their sole discretion
determine from time to time as to all Class B shares purchased on
or before such date as the Trustees may specify. Class B shares
acquired by exchange from Class B shares of another Putnam Fund
will convert into Class A shares based on the date of the initial
purchase of the Class B shares of such other Fund. Class B
shares acquired through reinvestment of distributions will
convert into Class A shares based on the date of the initial
purchase of Class B shares to which such reinvestment shares
relate. For this purpose, Class B shares acquired through
reinvestment of distributions will be attributed to particular
purchases of Class B shares in accordance with such procedures,
which may include without limitation methods of proration or
approximation, as the Trustees may in their sole discretion
determine from time to time.
ARTICLE 13
AMENDMENTS TO THE BYLAWS
13.1 GENERAL. These Bylaws may be amended or repealed, in
whole or in part, by a majority of the Trustees then in office at
any meeting of the Trustees, or by one or more writings signed by
such a majority.
PUTNAM TAX MANAGED FUNDS TRUST
(PORTIONS OF AGREEMENT AND DECLARATION OF TRUST RELATING TO
SHAREHOLDERS' RIGHTS)
*******
ARTICLE I
Name and Definitions
(c) "Shares" means the equal proportionate
transferable units of interest into which the
beneficial interest in the Trust shall be divided from
time to time or, if more than one series or class of
Shares is authorized by the Trustees, the equal
proportionate transferable units into which each series
or class of Shares shall be divided from time to time;
(d) "Shareholder" means a record owner of Shares;
ARTICLE III
Shares
DIVISION OF BENEFICIAL INTEREST
Section 1. The Shares of the Trust shall be issued in
one or more series as the Trustees may, without shareholder
approval, authorize. Each series shall be preferred over
all other series in respect of the assets allocated to that
series within the meaning of the 1940 Act and shall
represent a separate investment portfolio of the Trust. The
beneficial interest in each series shall at all times be
divided into Shares, without par value, each of which shall,
except as provided in the following sentence, represent an
equal proportionate interest in the series with each other
Share of the same series, none having priority or preference
over another. The Trustees may, without Shareholder
approval, divide the Shares of any series into two or more
classes, Shares of each such class having such preferences
and special or relative rights and privileges (including
conversion rights, if any) as the Trustees may determine and
as shall be set forth in the Bylaws. The number of Shares
authorized shall be unlimited. The Trustees may from time
to time divide or combine the Shares of any series or class
into a greater or lesser number without thereby changing the
proportionate beneficial interest in the series or class.
OWNERSHIP OF SHARES
Section 2. The ownership of Shares shall be recorded
on the books of the Trust or a transfer or similar agent.
No certificates certifying the ownership of Shares shall be
issued except as the Trustees may otherwise determine from
time to time. The Trustees may make such rules as they
consider appropriate for the issuance of Share certificates,
the transfer of Shares and similar matters. The record
books of the Trust as kept by the Trust or any transfer or
similar agent, as the case may be, shall be conclusive as to
who are the Shareholders of each series and class and as to
the number of Shares of each series and class held from time
to time by each Shareholder.
NO PREEMPTIVE RIGHTS
Section 4. Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other
securities issued by the Trust.
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
Section 5. Shares shall be deemed to be personal
property giving only the rights provided in this Declaration
of Trust or the Bylaws. Every Shareholder by virtue of
having become a Shareholder shall be held to have expressly
assented and agreed to the terms of this Declaration of
Trust and the Bylaws and to have become a party thereto.
The death of a Shareholder during the continuance of the
Trust shall not operate to terminate the same nor entitle
the representative of any deceased Shareholder to an
accounting or to take any action in court or elsewhere
against the Trust or the Trustees, but only to the rights of
said decedent under this Trust. Ownership of Shares shall
not entitle the Shareholder to any title in or to the whole
or any part of the Trust property or right to call for a
partition or division of the same or for an accounting, nor
shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any
officer, employee or agent of the Trust shall have any power
to bind personally any Shareholder, nor except as
specifically provided herein to call upon any Shareholder
for the payment of any sum of money or assessment whatsoever
other than such as the Shareholder may at any time
personally agree to pay.
ARTICLE V
Shareholders' Voting Powers and Meetings
VOTING POWERS
Section 1. Subject to the voting powers of one or more
classes of Shares as set forth elsewhere in this Declaration
of Trust or in the Bylaws, the Shareholders shall have power
to vote only (i) for the election of Trustees as provided in
Article IV, Section 1, (ii) for the removal of Trustees as
provided in Article IV, Section 1, (iii) with respect to any
Manager as provided in Article IV, Section 6, (iv) with
respect to any termination of this Trust to the extent and
as provided in Article IX, Section 4, (v) with respect to
any amendment of this Declaration of Trust to the extent and
as provided in Article IX, Section 7, (vi) to the same
extent as the stockholders of a Massachusetts business
corporation as to whether or not a court action, proceeding
or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or
the Shareholders, and (vii) with respect to such additional
matters relating to the Trust as may be required by this
Declaration of Trust, the Bylaws or any registration of the
Trust with the Securities and Exchange Commission (or any
successor agency) or any state, or as the Trustees may
consider necessary or desirable. Each whole Share shall be
entitled to one vote as to any matter on which it is
entitled to vote and each fractional Share shall be entitled
to a proportionate fractional vote. On any matter submitted
to a vote of Shareholders, all Shares of the Trust then
entitled to vote shall, except as otherwise provided in the
Bylaws, be voted in the aggregate as a single class without
regard to series or classes of shares, except (1) when
required by the 1940 Act or when the Trustees shall have
determined that the matter affects one or more series or
classes of Shares materially differently, Shares shall be
voted by individual series or class; and (2) when the
Trustees have determined that the matter affects only the
interests of one or more series or classes, only
Shareholders of such series or classes shall be entitled to
vote thereon. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by
proxy. A proxy with respect to Shares held in the name of
two or more persons shall be valid if executed by any one of
them unless at or prior to exercise of the proxy the Trust
receives a specific written notice to the contrary from any
one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger. Until
Shares of any series or class are issued, the Trustees may
exercise all rights of Shareholders and may take any action
required by law, this Declaration of Trust or the Bylaws to
be taken by Shareholders as to such series or class.
VOTING POWER AND MEETINGS
Section 2. Meetings of Shareholders of any or all
series or classes may be called by the Trustees from time to
time for the purpose of taking action upon any matter
requiring the vote or authority of the Shareholders of such
series or classes as herein provided or upon any other
matter deemed by the Trustees to be necessary or desirable.
Written notice of any meeting of Shareholders shall be given
or caused to be given by the Trustees by mailing such notice
at least seven days before such meeting, postage prepaid,
stating the time, place and purpose of the meeting, to each
Shareholder entitled to vote at such meeting at the
Shareholder's address as it appears on the records of the
Trust. If the Trustees shall fail to call or give notice of
any meeting of Shareholders for a period of 30 days after
written application by Shareholders holding at least 10% of
the then outstanding shares of all series and classes
entitled to vote at such meeting requesting a meeting to be
called for a purpose requiring action by the Shareholders as
provided herein or in the Bylaws, then Shareholders holding
at least 10% of the then outstanding Shares of all series
and classes entitled to vote at such meeting may call and
give notice of such meeting, and thereupon the meeting shall
be held in the manner provided for herein in case of call
thereof by the Trustees. Notice of a meeting need not be
given to any Shareholder if a written waiver of notice,
executed by him or her before or after the meeting, is filed
with the records of the meeting, or to any Shareholder who
attends the meeting without protesting prior thereto or at
its commencement the lack of notice to him or her.
QUORUM AND REQUIRED VOTE
Section 3. Thirty percent of Shares entitled to vote
on a particular matter shall be a quorum for the transaction
of business on that matter at a Shareholders' meeting,
except that where any provision of law or of this
Declaration of Trust or the bylaws requires that holders of
any series or class shall vote as an individual series or
class, then thirty percent of the aggregate number of Shares
of that series or class entitled to vote shall be necessary
to constitute a quorum for the transaction of business by
that series or class. Any lesser number shall be sufficient
for adjournments. Any adjourned session or sessions may be
held, within a reasonable time after the date set for the
original meeting, without the necessity of further notice.
Except when a larger vote is required by any provision of
law or of this Declaration of Trust or the Bylaws, a
majority of the Shares voted shall decide any questions and
a plurality shall elect a Trustee, provided that where any
provision of law or of this Declaration of Trust or the
bylaws requires that the holders of any series or class
shall vote as an individual series or class then a majority
of the Shares of that series or class voted on the matter
(or a plurality with respect to the election of a Trustee)
shall decide that matter insofar as that series or class is
concerned.
ACTION BY WRITTEN CONSENT
Section 4. Any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders
entitled to vote on the matter (or such larger proportion
thereof as shall be required by any express provision of
this Declaration of Trust or the Bylaws) consent to the
action in writing and such written consents are filed with
the records of the meetings of Shareholders. Such consent
shall be treated for all purposes as a vote taken at a
meeting of Shareholders.
ADDITIONAL PROVISIONS
Section 5. The Bylaws may include further provisions,
not inconsistent with this Declaration of Trust, regarding
Shareholders' voting powers, the conduct of meetings and
related matters.
ARTICLE VI
Distributions, Redemptions and Repurchases
DISTRIBUTIONS
Section 1. The Trustees may each year, or more
frequently if they so determine, distribute to the
Shareholders of each series out of the assets of such series
such amounts as the Trustees may determine. Any such
distribution to the Shareholders of a particular series
shall be made to said Shareholders pro rata in proportion to
the number of Shares of such series held by each of them,
except to the extent otherwise required or permitted by the
preferences and special or relative rights and privileges of
any classes of Shares of that Series, and any distribution
to the Shareholders of a particular class of Shares shall be
made to such Shareholders pro rata in proportion to the
number of Shares of such class held by each of them. Such
distributions shall be made in cash, Shares or other
property, or a combination thereof, as determined by the
Trustees. Any such distribution paid in Shares will be paid
at the net asset value thereof as determined in accordance
with the Bylaws.
REDEMPTIONS AND REPURCHASES
Section 2. The Trust shall purchase such Shares as are
offered by any Shareholder for redemption, upon the
presentation of any certificate for the Shares to be
purchased, a proper instrument of transfer and a request
directed to the Trust or a person designated by the Trust
that the Trust purchase such Shares, or in accordance with
such other procedures for redemption as the Trustees may
from time to time authorize; and the Trust will pay therefor
the net asset value thereof, as next determined in
accordance with the Bylaws, less any redemption charge fixed
by the Trustees. Payment for said Shares shall be made by
the Trust to the Shareholder within seven days after the
date on which the request is made. The obligation set forth
in this Section 2 is subject to the provision that in the
event that at any time the New York Stock Exchange is closed
for other than customary weekends or holidays, or, if
permitted by rules of the Securities and Exchange
Commission, during periods when trading on the Exchange is
restricted or during any emergency which makes it
impractical for the Trust to dispose of its investments or
to determine fairly the value of its net assets, or during
any other period permitted by order of the Securities and
Exchange Commission for the protection of investors, such
obligation may be suspended or postponed by the Trustees.
The Trust may also purchase or repurchase Shares at a price
not exceeding the net asset value of such Shares in effect
when the purchase or repurchase or any contract to purchase
or repurchase is made. Payment for any redemption, purchase
or repurchase may be made in cash or in other property, or
any combination thereof. The composition of any such
payment shall be determined by the Trust in its sole
discretion, and the Trust shall have no obligation to effect
a pro rata division of cash or other property in making any
such payment. In no event shall the Trust be liable for any
delay of any other person in transferring securities or
other property selected for delivery as all or part of any
such payment.
REDEMPTION AT THE OPTION OF THE TRUST
Section 3. The Trust shall have the right at its
option and at any time to redeem Shares of any Shareholder
at the net asset value thereof as determined in accordance
with the Bylaws: (i) if at such time such Shareholder owns
fewer Shares than, or Shares having an aggregate net asset
value of less than, an amount determined from time to time
by the Trustees; or (ii) to the extent that such Shareholder
owns Shares of a particular series of Shares equal to or in
excess of a percentage of the outstanding Shares of that
series determined from time to time by the Trustees; or
(iii) to the extent that such Shareholder owns Shares of the
Trust representing a percentage equal to or in excess of
such percentage of the aggregate number of outstanding
Shares of the Trust or the aggregate net asset value of the
Trust determined from time to time by the Trustees.
ARTICLE VIII
Indemnification
SHAREHOLDERS
Section 4. In case any Shareholder or former
Shareholder shall be held to be personally liable solely by
reason of his or her being or having been a Shareholder and
not because of his or her acts or omissions or for some
other reason, the Shareholder or former Shareholder (or his
or her heirs, executors, administrators or other legal
representative or in the case of a corporation or other
entity, its corporate or other general successor) shall be
entitled to be held harmless from and indemnified against
all loss and expense arising from such liability, but only
out of the assets of the particular series of Shares of
which he or she is or was a Shareholder.
ARTICLE IX
Miscellaneous
TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE
Section 1. All persons extending credit to,
contracting with or having any claim against the Trust or a
particular series of Shares shall look only to the assets of
the Trust or the assets of that particular series of Shares
for payment under such credit, contract or claim, and
neither the Shareholders nor the Trustees, nor any of the
Trust's officers, employees or agents, whether past, present
or future, shall be personally liable therefor. Nothing in
this Declaration of Trust shall protect any Trustee against
any liability to which such Trustee would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in
the conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officer
or officers shall give notice that this Declaration of Trust
is on file with the Secretary of State of The Commonwealth
of Massachusetts and shall recite that the same was executed
or made by or on behalf of the Trust or by them as Trustee
or Trustees or as officer or officers and not individually
and that the obligations of such instrument are not binding
upon any of them or the Shareholders individually but are
binding only upon the assets and property of the Trust, and
may contain such further recital as he or she or they may
deem appropriate, but the omission thereof shall not operate
to bind any Trustee or Trustees or officer or officers or
Shareholder or Shareholders individually.
PUTNAM TAX MANAGED FUNDS TRUST
(PORTIONS OF THE BYLAWS RELATING TO SHAREHOLDERS' RIGHTS)
*********
ARTICLE 9
ISSUANCE OF SHARES AND SHARE CERTIFICATES
9.1 SALE OF SHARES. Except as otherwise determined by
the Trustees, the Trust will issue and sell for cash or
securities from time to time, full and fractional shares of
its shares of beneficial interest, such shares to be issued
and sold at a price of not less than the par value per
share, if any, and not less than the net asset value per
share as from time to time determined in accordance with the
Declaration of Trust and these Bylaws and, in the case of
fractional shares, at a proportionate reduction in such
price. In the case of shares sold for securities, such
securities shall be valued in accordance with the provisions
for determining the value of the assets of the Trust as
stated in the Declaration of Trust and these Bylaws. The
officers of the Trust are severally authorized to take all
such actions as may be necessary or desirable to carry out
this Section 9.1.
9.2 SHARE CERTIFICATES. In lieu of issuing
certificates for shares, the Trustees or the transfer agent
may either issue receipts therefor or may keep accounts upon
the books of the Trust for the record holders of such
shares, who shall in either case be deemed, for all purposes
hereunder, to be the holders of certificates for such shares
as if they had accepted such certificates and shall be held
to have expressly assented and agreed to the terms hereof.
The Trustees may at any time authorize the issuance of
share certificates. In that event, each shareholder shall
be entitled to a certificate stating the number of shares of
each class owned by him, in such form as shall be prescribed
from time to time by the Trustees. Such certificate shall
be signed by the President or a Vice President and by the
Treasurer or an Assistant Treasurer. Such signatures may be
facsimile if the certificate is signed by a transfer agent
or by a registrar. In case any officer who has signed or
whose facsimile signature has been placed on such
certificate shall cease to be such officer before such
certificate is issued, it may be issued by the Trust with
the same effect as if he were such officer at the time of
its issue.
9.3 LOSS OF CERTIFICATES. The transfer agent of the
Trust, with the approval of any two officers of the Trust,
is authorized to issue and countersign replacement
certificates for the shares of the Trust which have been
lost, stolen or destroyed upon (i) receipt of an affidavit
or affidavits of loss or non-receipt and of an indemnity
agreement executed by the registered holder or his legal
representative and supported by an open penalty surety bond,
said agreement and said bond in all cases to be in form and
content satisfactory to and approved by the President or the
Treasurer, or (ii) receipt of such other documents as may be
approved by the Trustees.
9.4 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. A pledgee
of shares transferred as collateral security shall be
entitled to a new certificate if the instrument of transfer
substantially describes the debt or duty that is intended to
be secured thereby. Such new certificate shall express on
its face that it is held as collateral security, and the
name of the pledgor shall be stated thereon, who alone shall
be liable as a shareholder and entitled to vote thereon.
9.5 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The
Trustees may at any time discontinue the issuance of share
certificates and may, by written notice to each shareholder,
require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not
affect the ownership of shares in the Trust.
ARTICLE 10
PROVISIONS RELATING TO THE CONDUCT OF THE TRUST'S BUSINESS
10.1 CERTAIN DEFINITIONS. When used herein the
following words shall have the following meanings:
"Distributor" shall mean any one or more corporations, firms
or associations which have distributor's or principal
underwriter's contracts in effect with the Trust providing
that redeemable shares issued by the Trust shall be offered
and sold by such Distributor. "Manager" shall
mean any corporation, firm or association which may at the
time have an advisory or management contract with the Trust.
10.2 LIMITATIONS ON DEALINGS WITH OFFICERS OR
TRUSTEES. The Trust will not lend any of its assets to the
Distributor or Manager or to any officer or director of the
Distributor or Manager or any officer or Trustee of the
Trust, and shall not permit any officer or Trustee or any
officer or director of the Distributor or Manager to deal
for or on behalf of the Trust with himself or herself as
principal or agent, or with any partnership, association or
corporation in which he or she has a financial interest;
provided that the foregoing provisions shall not prevent (a)
officers and Trustees of the Trust or officers and directors
of the Distributor or Manager from buying, holding or
selling shares in the Trust or from being partners, officers
or directors of or otherwise financially interested in the
Distributor or the Manager; (b) purchases or sales of
securities or other property if such transaction is
permitted by or is exempt or exempted from the provisions of
the Investment Company Act of 1940 or any Rule or Regulation
thereunder and if such transaction does not involve any
commission or profit to any security dealer who is, or one
or more of whose partners, shareholders, officers or
directors is, an officer or Trustee of the Trust or an
officer or director of the Distributor or Manager; (c)
employment of legal counsel, registrar, transfer agent,
shareholder servicing agent, dividend disbursing agent or
custodian who is, or has a partner, shareholder, officer or
director who is, an officer or Trustee of the Trust or an
officer or director of the Distributor or Manager; (d)
sharing statistical, research, legal and management expenses
and office hire and expenses with any other investment
company in which an officer or Trustee of the Trust or an
officer or director of the Distributor or Manager is an
officer or director or otherwise financially interested.
10.3 SECURITIES AND CASH OF THE TRUST TO BE HELD BY
CUSTODIAN SUBJECT TO CERTAIN TERMS AND CONDITIONS.
(a) All securities and cash owned by the
Trust shall be held by or deposited with one or
more banks or trust companies having (according to
its last published report) not less than
$1,000,000 aggregate capital, surplus and
undivided profits (any such bank or trust company
being hereby designated as "Custodian"), provided
such a Custodian can be found ready and willing to
act; subject to such rules, regulations and
orders, if any, as the Securities and Exchange
Commission may adopt, the Trust may, or may permit
any Custodian to, deposit all or any part of the
securities owned by the Trust in a system for the
central handling of securities pursuant to which
all securities of any particular class or series
of any issue deposited within the system may be
transferred or pledged by bookkeeping entry,
without physical delivery. The Custodian may
appoint, subject to the approval of the Trustees,
one or more subcustodians.
(b) The Trust shall enter into a written
contract with each Custodian regarding the powers,
duties and compensation of such Custodian with
respect to the cash and securities of the Trust
held by such Custodian. Said contract and all
amendments thereto shall be approved by the
Trustees.
(c) The Trust shall upon the resignation or
inability to serve of any Custodian or upon change
of any Custodian:
(i) in case of such resignation or
inability to serve, use its best efforts to obtain
a successor Custodian;
(ii) require that the cash and securities
owned by the Trust be delivered directly to the
successor Custodian; and
(iii) in the event that no successor
Custodian can be found, submit to the
shareholders, before permitting delivery of the
cash and securities owned by the Trust otherwise
than to a successor Custodian, the question
whether the Trust shall be liquidated or shall
function without a Custodian.
10.4 REPORTS TO SHAREHOLDERS. The Trust shall send to
each shareholder of record at least semi-annually a
statement of the condition of the Trust and of the results
of its operations, containing all information required by
applicable laws or regulations.
10.5 DETERMINATION OF NET ASSET VALUE PER SHARE. Net
asset value per share of each class or series of shares of
the Trust shall mean: (i) the value of all the assets
properly allocable to such class or series; (ii) less total
liabilities properly allocable to such class or series;
(iii) divided by the number of shares of such class or
series outstanding, in each case at the time of each
determination. Except as otherwise determined by the
Trustees, the net asset value per share of each class or
series shall be determined no less frequently than once
daily, Monday through Friday, on days on which the New York
Stock Exchange is open for trading, at such time or times
that the Trustees set at least annually.
In valuing the portfolio investments of any class or
series of shares for the determination of the net asset
value per share of such class or series, securities for
which market quotations are readily available shall be
valued at prices which, in the opinion of the Trustees or
the person designated by the Trustees to make the
determination, most nearly represent the market value of
such securities, and other securities and assets shall be
valued at their fair value as determined by or pursuant to
the direction of the Trustees, which in the case of debt
obligations, commercial paper and repurchase agreements may,
but need not, be on the basis of yields for securities of
comparable maturity, quality and type, or on the basis of
amortized cost. Expenses and liabilities of the Trust shall
be accrued each day. Liabilities may include such reserves
for taxes, estimated accrued expenses and contingencies as
the Trustees or their designates may in their sole
discretion deem fair and reasonable under the circumstances.
No accruals shall be made in respect of taxes on unrealized
appreciation of securities owned unless the Trustees shall
otherwise determine.
ARTICLE 11
SHAREHOLDERS
11.1 MEETINGS. A meeting of the shareholders shall be
called by the Clerk whenever ordered by the Trustees, the
Chairman of the Trustees or requested in writing by the
holder or holders of at least one-tenth of the outstanding
shares entitled to vote at such meeting. If the Clerk, when
so ordered or requested, refuses or neglects for more than
two days to call such meeting, the Trustees, Chairman of the
Trustees or the shareholders so requesting may, in the name
of the Clerk, call the meeting by giving notice thereof in
the manner required when notice is given by the Clerk.
11.2 ACCESS TO SHAREHOLDER LIST. Shareholders of
record may apply to the Trustees for assistance in
communicating with other shareholders for the purpose of
calling a meeting in order to vote upon the question of
removal of a Trustee. When ten or more shareholders of
record who have been such for at least six months preceding
the date of application and who hold in the aggregate shares
having a net asset value of at least $25,000 so apply, the
Trustees shall within five business days either:
(i) afford to such applicants access to a
list of names and addresses of all shareholders as
recorded on the books of the Trust; or
(ii) inform such applicants of the
approximate number of shareholders of record and
the approximate cost of mailing material to them,
and, within a reasonable time thereafter, mail, at
the applicants' expense, materials submitted by
the applicants, to all such shareholders of
record. The Trustees shall not be obligated to
mail materials which they believe to be misleading
or in violation of applicable law.
11.3 RECORD DATES. For the purpose of determining the
shareholders of any class or series of shares of the Trust
who are entitled to vote or act at any meeting or any
adjournment thereof, or who are entitled to receive payment
of any dividend or of any other distribution, the Trustees
may from time to time fix a time, which shall be not more
than 90 days before the date of any meeting of shareholders
or more than 60 days before the date of payment of any
dividend or of any other distribution, as the record date
for determining the shareholders of such class or series
having the right to notice of and to vote at such meeting
and any adjournment thereof or the right to receive such
dividend or distribution, and in such case only shareholders
of record on such record date shall have such right
notwithstanding any transfer of shares on the books of the
Trust after the record date; or without fixing such record
date the Trustees may for any such purposes close the
register or transfer books for all or part of such period.
11.4 PROXIES. The placing of a shareholder's name on a
proxy pursuant to telephone or electronically transmitted
instructions obtained pursuant to procedures reasonably
designed to verify that such instructions have been
authorized by such shareholder shall constitute execution of
such proxy by or on behalf of such shareholder.
ARTICLE 12
PREFERENCES, RIGHTS AND PRIVILEGES OF THE
TRUST'S CLASSES OF SHARES
12.1 GENERAL. Each class of shares of the Trust or of
a particular series of the Trust, as the case may be, will
represent interests in the same portfolio of investments of
the Trust (or that series) and be identical in all respects,
except as set forth below: (a) each class of shares shall
be charged with the expense of any Distribution Plan adopted
by the Trust pursuant to Rule 12b-1 under the Investment
Company Act of 1940 with respect to such class of shares,
(b) each class of shares will be charged with any
incremental shareholder servicing expense attributable
solely to such class, as determined by the Trustees, (c)
each class of shares shall be charged with any other
expenses properly allocated to such class, as determined by
the Trustees and approved by the Securities and Exchange
Commission, (d) each class of shares shall vote as a
separate class on matters which pertain to any Rule 12b-1
Distribution Plan pertaining to such class of shares, (e)
each class of shares will have only such exchange privileges
as may from time to time be described in the Trust's
prospectus with respect to such class, (f) each class of
shares shall bear such designation as may be approved from
time to time by the Trustees and (g) reinvestments of
distributions from the Trust paid with respect to the shares
of a particular class will be paid in additional shares of
such class.
12.2. CONVERSION OF CLASS B SHARES. Except as
hereinafter provided with respect to shares acquired by
exchange or reinvestment of distributions, Class B shares of
the Trust will automatically convert into Class A shares of
the Trust at the end of the month eight years after the
month of purchase, or at such earlier time as the Trustees
may in their sole discretion determine from time to time as
to all Class B shares purchased on or before such date as
the Trustees may specify. Class B shares acquired by
exchange from Class B shares of another Putnam Fund will
convert into Class A shares based on the date of the initial
purchase of the Class B shares of such other Fund. Class B
shares acquired through reinvestment of distributions will
convert into Class A shares based on the date of the initial
purchase of Class B shares to which such reinvestment shares
relate. For this purpose, Class B shares acquired through
reinvestment of distributions will be attributed to
particular purchases of Class B shares in accordance with
such procedures, which may include without limitation
methods of proration or approximation, as the Trustees may
in their sole discretion determine from time to time.
ARTICLE 13
AMENDMENTS TO THE BYLAWS
13.1 GENERAL. These Bylaws may be amended or
repealed, in whole or in part, by a majority of the Trustees
then in office at any meeting of the Trustees, or by one or
more writings signed by such a majority.
3
PUTNAM TAX MANAGED FUNDS TRUST
MANAGEMENT CONTRACT
Management Contract dated as of April 13, 1999 between
PUTNAM TAX MANAGED FUNDS TRUST, a Massachusetts business trust
(the "Fund"), and PUTNAM INVESTMENT MANAGEMENT, INC., a
Massachusetts corporation (the "Manager").
WITNESSETH:
That in consideration of the mutual covenants herein
contained, it is agreed as follows:
1. SERVICES TO BE RENDERED BY MANAGER TO FUND.
(a) The Manager, at its expense, will furnish continuously
an investment program for each series of the Fund, will determine
what investments shall be purchased, held, sold or exchanged by
each series of the Fund and what portion, if any, of the assets
of each series of the Fund shall be held uninvested and shall, on
behalf of each series of the Fund, make changes in such series'
investments. Subject always to the control of the Trustees of
the Fund and except for the functions carried out by the officers
and personnel referred to in Section 1(d), the Manager will also
manage, supervise and conduct the other affairs and business of
the Fund and matters incidental thereto. In the performance of
its duties, the Manager will comply with the provisions of the
Agreement and Declaration of Trust and By-Laws of the Fund and
the stated investment objectives, policies and restrictions of
each series of the Fund, and will use its best efforts to
safeguard and promote the welfare of the Fund and to comply with
other policies which the Trustees may from time to time determine
and shall exercise the same care and diligence expected of the
Trustees.
(b) The Manager, at its expense, except as such expense is
paid by the Fund as provided in Section 1(d), will furnish (1)
all necessary investment and management facilities, including
salaries of personnel, required for it to execute its duties
faithfully; (2) suitable office space for the Fund; and (3)
administrative facilities, including bookkeeping, clerical
personnel and equipment necessary for the efficient conduct of
the affairs of the Fund, including determination of the net asset
value of each series of the Fund, but excluding shareholder
accounting services. Except as otherwise provided in Section
1(d), the Manager will pay the compensation, if any, of the
officers of the Fund.
(c) The Manager, at its expense, shall place all orders for
the purchase and sale of portfolio investments for the Fund's
account with brokers or dealers selected by the Manager. In the
selection of such brokers or dealers and the placing of such
orders, the Manager shall use its best efforts to obtain for the
Fund the most favorable price and execution available, except to
the extent it may be permitted to pay higher brokerage
commissions for brokerage and research services as described
below. In using its best efforts to obtain for the Fund the most
favorable price and execution available, the Manager, bearing in
mind the Fund's best interests at all times, shall consider all
factors it deems relevant, including by way of illustration,
price, the size of the transaction, the nature of the market for
the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker or
dealer involved and the quality of service rendered by the broker
or dealer in other transactions. Subject to such policies as the
Trustees of the Fund may determine, the Manager shall not be
deemed to have acted unlawfully or to have breached any duty
created by this Contract or otherwise solely by reason of its
having caused the Fund to pay a broker or dealer that provides
brokerage and research services to the Manager an amount of
commission for effecting a portfolio investment transaction in
excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, if the Manager
determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Manager's overall
responsibilities with respect to the Fund and to other clients of
the Manager as to which the Manager exercises investment
discretion. The Manager agrees that in connection with purchases
or sales of portfolio investments for the Fund's account, neither
the Manager nor any officer, director, employee or agent of the
Manager shall act as a principal or receive any commission other
than as provided in Section 3.
(d) The Fund will pay or reimburse the Manager for the
compensation in whole or in part of such officers of the Fund and
persons assisting them as may be determined from time to time by
the Trustees of the Fund. The Fund will also pay or reimburse
the Manager for all or part of the cost of suitable office space,
utilities, support services and equipment attributable to such
officers and persons, as may be determined in each case by the
Trustees of the Fund. The Fund will pay the fees, if any, of the
Trustees of the Fund.
(e) The Manager shall pay all expenses incurred in
connection with the organization of the Fund and the initial
public offering and sale of its shares of beneficial interest,
provided that upon the issuance and sale of such shares to the
public pursuant to the offering, and only in such event, the Fund
shall become liable for, and to the extent requested reimburse
the Manager for, registration fees payable to the Securities and
Exchange Commission and for an additional amount not exceeding
$125,000 as its agreed share of such expenses.
(f) The Manager shall not be obligated to pay any expenses
of or for the Fund not expressly assumed by the Manager pursuant
to this Section 1 other than as provided in Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees,
officers and employees of the Fund may be a shareholder,
director, officer or employee of, or be otherwise interested in,
the Manager, and in any person controlled by or under common
control with the Manager, and that the Manager and any person
controlled by or under common control with the Manager may have
an interest in the Fund. It is also understood that the Manager
and any person controlled by or under common control with the
Manager have and may have advisory, management, service or other
contracts with other organizations and persons, and may have
other interests and business.
3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.
The Fund will pay to the Manager as compensation for the
Manager's services rendered, for the facilities furnished and for
the expenses borne by the Manager pursuant to paragraphs (a),
(b), (c) and (e) of Section 1, a fee, computed and paid quarterly
at the following annual rates for each series of the Fund:
PUTNAM U.S. CORE TAX MANAGED FUND:
(a) 0.70% of the first $500 million of the average net asset
value of the series;
(b) 0.60% of the next $500 million of such average net asset
value;
(c) 0.55% of the next $500 million of such average net asset
value;
(d) 0.50% of the next $5 billion of such average net asset
value;
(e) 0.475% of the next $5 billion of such average net asset
value;
(f) 0.455% of the next $5 billion of such average net asset
value;
(g) 0.44% of the next $5 billion of such average net asset
value; and
(h) 0.43% of any excess thereafter.
Such average net asset value shall be determined by taking an
average of all of the determinations of such net asset value
during such quarter at the close of business on each business day
during such quarter while this Contract is in effect. Such fee
shall be payable for each fiscal quarter within 30 days after the
close of such quarter and shall commence accruing as of the date
of the initial issuance of shares of the Fund to the public.
The fees payable by the Fund to the Manager pursuant to this
Section 3 shall be reduced by any commissions, fees, brokerage or
similar payments received by the Manager or any affiliated person
of the Manager in connection with the purchase and sale of
portfolio investments of the Fund, less any direct expenses
approved by the Trustees incurred by the Manager or any
affiliated person of the Manager in connection with obtaining
such payments.
In the event that expenses of the Fund or any series of the
Fund for any fiscal year should exceed the expense limitation on
investment company expenses imposed by any statute or regulatory
authority of any jurisdiction in which shares of the Fund or such
series are qualified for offer or sale, the compensation due the
Manager for such fiscal year shall be reduced by the amount of
excess by a reduction or refund thereof. In the event that the
expenses of the Fund or any series of the Fund exceed any expense
limitation which the Manager may, by written notice to the Fund,
voluntarily declare to be effective subject to such terms and
conditions as the Manager may prescribe in such notice, the
compensation due the Manager shall be reduced, and, if necessary,
the Manager shall assume expenses of the Fund or such series to
the extent required by the terms and conditions of such expense
limitation.
If the Manager shall serve for less than the whole of a
quarter, the foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT.
This Contract shall automatically terminate, without the
payment of any penalty, in the event of its assignment; and this
Contract shall not be amended as to any series of the Fund unless
such amendment be approved at a meeting by the affirmative vote
of a majority of the outstanding shares of such series, and by
the vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the Trustees of the
Fund who are not interested persons of the Fund or of the
Manager.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and
shall remain in full force and effect as to a particular series
continuously thereafter (unless terminated automatically as set
forth in Section 4) until terminated as follows:
(a) Either party hereto may at any time terminate this
Contract as to any series by not more than sixty days' nor less
than thirty days' written notice delivered or mailed by
registered mail, postage prepaid, to the other party, or
(b) If (i) the Trustees of the Fund or the shareholders by
the affirmative vote of a majority of the outstanding shares of
such series, and (ii) a majority of the Trustees of the Fund who
are not interested persons of the Fund or of the Manager, by vote
cast in person at a meeting called for the purpose of voting on
such approval, do not specifically approve at least annually the
continuance of this Contract with respect to such series, then
this Contract shall automatically terminate with respect to such
series at the close of business on the second anniversary of its
execution, or upon the expiration of one year from the effective
date of the last such continuance, whichever is later.
Action by the Fund under (a) above may be taken either (i)
by vote of a majority of its Trustees, or (ii) by the affirmative
vote of a majority of the outstanding shares of the relevant
series.
Termination of this Contract pursuant to this Section 5 will
be without the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of
a majority of the outstanding shares" of a series means the
affirmative vote, at a duly called and held meeting of
shareholders of such series, (a) of the holders of 67% or more of
the shares of such series present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50%
of the outstanding shares of such series entitled to vote at such
meeting are present in person or by proxy, or (b) of the holders
of more than 50% of the outstanding shares of such series
entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated
person", "control", "interested person" and "assignment" shall
have their respective meanings defined in the Investment Company
Act of 1940 and the Rules and Regulations thereunder (the "1940
Act"), subject, however, to such exemptions as may be granted by
the Securities and Exchange Commission under said Act; the term
"specifically approve at least annually" shall be construed in a
manner consistent with the 1940 Act, and the Rules and
Regulations thereunder; and the term "brokerage and research
services" shall have the meaning given in the Securities Exchange
Act of 1934 and the Rules and Regulations thereunder.
7. NON-LIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Manager, or reckless disregard of
its obligations and duties hereunder, the Manager shall not be
subject to any liability to the Fund or to any shareholder of the
Fund, for any act or omission in the course of, or connected
with, rendering services hereunder.
8. LIMITATION OF LIABILITY OF THE TRUSTEES, OFFICERS, AND
SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Fund
is on file with the Secretary of State of The Commonwealth of
Massachusetts, and notice is hereby given that this instrument is
executed on behalf of the Trustees of the Fund as Trustees and
not individually and that the obligations of or arising out of
this instrument are not binding upon any of the Trustees,
officers or shareholders individually but are binding only upon
the assets and property of the relevant series of the Fund.
IN WITNESS WHEREOF, PUTNAM TAX MANAGED FUNDS TRUST and
PUTNAM INVESTMENT MANAGEMENT, INC. have each caused this
instrument to be signed in duplicate in its behalf by its
President or a Vice President thereunto duly authorized, all as
of the day and year first above written.
PUTNAM TAX MANAGED FUNDS TRUST
/s/ Charles E. Porter
By: --------------------------------
Charles E. Porter
Executive Vice President
PUTNAM INVESTMENT MANAGEMENT, INC.
/s/ Gordon H. Silver
By: --------------------------------
Gordon H. Silver
Senior Managing Director
5
PUTNAM TAX MANAGED FUNDS TRUST
DISTRIBUTOR'S CONTRACT
Distributor's Contract dated April 8, 1999, by and between
PUTNAM TAX MANAGED FUNDS TRUST, a Massachusetts business trust
(the "Fund"), and PUTNAM MUTUAL FUNDS CORP., a Massachusetts
corporation ("Putnam").
WHEREAS, the Fund and Putnam are desirous of entering into
this agreement to provide for the distribution by Putnam of
shares of the Fund;
NOW, THEREFORE, in consideration of the mutual agreements
contained in the Terms and Conditions of Distributor's Contract
attached to and forming a part of this Contract (the "Terms and
Conditions"), the Fund hereby appoints Putnam as a distributor of
shares of the Fund, and Putnam hereby accepts such appointment,
all as set forth in the Terms and Conditions.
A copy of the Agreement and Declaration of Trust of the Fund
is on file with the Secretary of State of The Commonwealth of
Massachusetts and notice is hereby given that this instrument is
executed on behalf of the Trustees of the Fund as Trustees and
not individually, and that the obligations of or arising out of
this instrument are not binding upon any of the Trustees,
officers or shareholders individually but are binding only upon
the assets and property of the Fund.
IN WITNESS WHEREOF, PUTNAM TAX MANAGED FUNDS TRUST and
PUTNAM MUTUAL FUNDS CORP. have each caused this Distributor's
Contract to be signed in duplicate in its behalf, all as of the
day and year first above written.
PUTNAM TAX MANAGED FUNDS TRUST
/s/ Charles E. Porter
By:_________________________________
Charles E. Porter
Executive Vice President
PUTNAM MUTUAL FUNDS CORP.
/s/ Richard A. Monaghan
By: ______________________________
Richard A. Monaghan
Managing Director
Chief of Mutual Fund Business
TERMS AND CONDITIONS
OF
DISTRIBUTOR'S CONTRACT
1. RESERVATION OF RIGHT NOT TO SELL. The Fund reserves the
right to refuse at any time or times to sell any of its shares of
beneficial interest ("shares") hereunder for any reason deemed
adequate by it.
2. PAYMENTS TO PUTNAM. In connection with the distribution of
shares of the Fund, Putnam will be entitled to receive: (a)
payments pursuant to any Distribution Plan and Agreement from
time to time in effect between the Fund and Putnam with respect
to the Fund or any particular class of shares of the Fund, (b)
any contingent deferred sales charges applicable to the
redemption of shares of the Fund or of any particular class of
shares of the Fund, determined in the manner set forth in the
then current Prospectus and Statement of Additional Information
of the Fund and (c) subject to the provisions of Section 3 below,
any front-end sales charges applicable to the sale of shares of
the Fund or of any particular class of shares of the Fund, less
any applicable dealer discount.
3. SALES OF SHARES TO PUTNAM AND SALES BY PUTNAM. Putnam will
have the right, as principal, to sell shares of the Fund to
investment dealers against orders therefor (a) at the public
offering price (calculated as described below) less a discount
determined by Putnam, which discount shall not exceed the amount
of the sales charge referred to below, or (b) at net asset value.
Upon receipt of an order to purchase Fund shares from an
investment dealer with whom Putnam has a Sales Contract, Putnam
will promptly purchase shares from the Fund to fill such order.
The public offering price of a class of shares shall be the net
asset value of such shares then in effect, plus any applicable
front-end sales charge determined in the manner set forth in the
then current Prospectus and Statement of Additional Information
of the Fund or as permitted by the Investment Company Act of
1940, as amended, and the Rules and Regulations of the Securities
and Exchange Commission promulgated thereunder. In no event
shall the public offering price exceed 1000/915ths of such net
asset value, and in no event shall any applicable sales charge
exceed 8 1/2% of the public offering price. The net asset value
of the shares shall be determined in the manner provided in the
Agreement and Declaration of Trust of the Fund as then amended
and when determined shall be applicable to transactions as
provided for in the then current Prospectus and Statement of
Additional Information of the Fund.
Putnam will also have the right, as principal, to purchase
shares from the Fund at their net asset value and to sell such
shares to the public against orders therefor at the public
offering price or at net asset value.
Putnam will also have the right, as principal, to sell
shares at their net asset value and not subject to a contingent
deferred sales charge to such persons as may be approved by the
Trustees of the Fund, all such sales to comply with the
provisions of the Investment Company Act of 1940, as amended, and
the Rules and Regulations of the Securities and Exchange
Commission promulgated thereunder.
Putnam will also have the right, as agent for the Fund, to
sell shares at the public offering price or at net asset value to
such persons and upon such conditions as the Trustees of the Fund
may from time to time determine.
On every sale the Fund shall receive the applicable net
asset value of the shares. Putnam will reimburse the Fund for
any increased issue tax paid on account of sales charges. Upon
receipt of registration instructions in proper form and payment
for shares, Putnam will transmit such instructions to the Fund or
its agent for registration of the shares purchased.
4. SALES OF SHARES BY THE FUND. The Fund reserves the right to
issue shares at any time directly to its shareholders as a stock
dividend or stock split and to sell shares to its shareholders or
to other persons approved by Putnam at not less than net asset
value.
5. REPURCHASE OF SHARES. Putnam will act as agent for the Fund
in connection with the repurchase of shares by the Fund upon the
terms and conditions set forth in the then current Prospectus and
Statement of Additional Information of the Fund.
6. BASIS OF PURCHASES AND SALES OF SHARES. Putnam will use its
best efforts to place shares sold by it on an investment basis.
Putnam does not agree to sell any specific number of shares.
Shares will be sold by Putnam only against orders therefor.
Putnam will not purchase shares from anyone other than the Fund
except in accordance with Section 5, and will not take "long" or
"short" positions in shares contrary to the Agreement and
Declaration of Trust of the Fund.
7. RULES OF NASD, ETC. Putnam will conform to the Rules of
Fair Practice of the National Association of Securities Dealers,
Inc. and the sale of securities laws of any jurisdiction in which
it sells, directly or indirectly, any shares. Putnam also agrees
to furnish to the Fund sufficient copies of any agreements or
plans it intends to use in connection with any sales of shares in
adequate time for the Fund to file and clear them with the proper
authorities before they are put in use, and not to use them until
so filed and cleared.
8. PUTNAM INDEPENDENT CONTRACTOR. Putnam shall be an
independent contractor and neither Putnam nor any of its officers
or employees as such is or shall be an employee of the Fund.
Putnam is responsible for its own conduct and the employment,
control and conduct of its agents and employees and for injury to
such agents or employees or to others through its agents or
employees. Putnam assumes full responsibility for its agents and
employees under applicable statutes and agrees to pay all
employer taxes thereunder.
Putnam will maintain at its own expense insurance against
public liability in such an amount as the Trustees of the Fund
may from time to time reasonably request.
9. EXPENSES. Putnam will pay all expenses of qualifying shares
of the Fund for sale under the so-called "Blue Sky" laws of any
state (except expenses of any action by the Fund relating to its
Agreement and Declaration of Trust or other matters in which the
Fund has a direct concern), and expenses of preparing, printing
and distributing advertising and sales literature (apart from
expenses of registering shares under the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
and the preparation and printing of Prospectuses and Statements
of Additional Information and reports as required by said Acts
and the direct expenses of the issue of shares, except that
Putnam will pay the cost of the preparation and printing of
Prospectuses and Statements of Additional Information and
shareholders' reports used by it and by others in the sale of
Fund shares to the extent such cost is not paid by others).
10. INDEMNIFICATION OF FUND. Putnam agrees to indemnify and
hold harmless the Fund and each person who has been, is, or may
hereafter be a Trustee of the Fund against expenses reasonably
incurred by any of them in connection with any claim or in
connection with any action, suit or proceeding to which any of
them may be a party, which arises out of or is alleged to arise
out of any misrepresentation or omission to state a material
fact, or out of any alleged misrepresentation or omission to
state a material fact, on the part of Putnam or any agent or
employee of Putnam or any other person for whose acts Putnam is
responsible or is alleged to be responsible unless such
misrepresentation or omission was made in reliance upon written
information furnished by the Fund. Putnam also agrees likewise
to indemnify and hold harmless the Fund and each such person in
connection with any claim or in connection with any action, suit
or proceeding which arises out of or is alleged to arise out of
Putnam's (or an affiliate of Putnam's) failure to exercise
reasonable care and diligence with respect to its services
rendered in connection with investment, reinvestment, automatic
withdrawal and other plans for shares. The term "expenses"
includes amounts paid in satisfaction of judgments or in
settlements which are made with Putnam's consent. The foregoing
rights of indemnification shall be in addition to any other
rights to which the Fund or a Trustee may be entitled as a matter
of law.
11. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT. This Contract shall automatically terminate, without
the payment of any penalty, in the event of its assignment. This
Contract may be amended only if such amendment be approved either
by action of the Trustees of the Fund or at a meeting of the
shareholders of the Fund by the affirmative vote of a majority of
the outstanding shares of the Fund, and by a majority of the
Trustees of the Fund who are not interested persons of the Fund
or of Putnam by vote cast in person at a meeting called for the
purpose of voting on such approval.
12. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT. This
Contract shall take effect upon the date first above written and
shall remain in full force and effect continuously (unless
terminated automatically as set forth in Section 11) until
terminated as follows:
(a) Either by the Fund or Putnam by not more
than sixty (60) days' nor less than ten (10) days'
written notice delivered or mailed by registered
mail, postage prepaid, to the other party; or
(b) If the continuance of this Contract is not
specifically approved at least annually by the
Trustees of the Fund or the shareholders of the Fund
by the affirmative vote of a majority of the
outstanding shares of the Fund, and by a majority of
the Trustees of the Fund who are not interested
persons of the Fund or of Putnam by vote cast in
person at a meeting called for the purpose of voting
on such approval, then this Contract shall
automatically terminate at the close of business on
the second anniversary of its execution, or upon the
expiration of one year from the effective date of the
last such continuance, whichever is later.
Action by the Fund under (a) above may be taken either (i) by
vote of its Trustees or (ii) by the affirmative vote of a
majority of the outstanding shares of the Fund. The requirement
under (b) above that continuance of this Contract be
"specifically approved at least annually" shall be construed in a
manner consistent with the Investment Company Act of 1940, as
amended, and the Rules and Regulations thereunder.
Termination of this Contract pursuant to this Section 12
shall be without the payment of any penalty.
13. CERTAIN DEFINITIONS. For the purposes of this Contract,
the "affirmative vote of a majority of the outstanding shares of
the Fund" means the affirmative vote, at a duly called and held
meeting of shareholders of the Fund, (a) of the holders of 67% or
more of the shares of the Fund present (in person or by proxy)
and entitled to vote at such meeting, if the holders of more than
50% of the outstanding shares of the Fund entitled to vote at
such meeting are present in person or by proxy, or (b) of the
holders of more than 50% of the outstanding shares of the Fund
entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "interested
person" and "assignment" shall have the meanings defined in the
Investment Company Act of 1940, as amended, subject, however, to
such exemptions as may be granted by the Securities and Exchange
Commission under said Act.
6
CUSTODIAN AGREEMENT
AGREEMENT made as of the 3rd day of May, 1991, as amended
July 13, 1992, between each of the Putnam Funds listed in
Schedule A, each of such Funds acting on its own behalf
separately from all the other Funds and not jointly or jointly
and severally with any of the other Funds (each of the Funds
being hereinafter referred to as the "Fund"), and Putnam
Fiduciary Trust Company (the "Custodian").
WHEREAS, the Custodian represents to the Fund that it is
eligible to serve as a custodian for a management investment
company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), and
WHEREAS, the Fund wishes to appoint the Custodian as the
Fund's custodian.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF CUSTODIAN. The Fund hereby employs and
appoints the Custodian as custodian of its assets for the term
and subject to the provisions of this Agreement. At the
direction of the Custodian, the Fund agrees to deliver to the Sub-
Custodians appointed pursuant to Section 2 below (the "Sub-
Custodians") securities, funds and other property owned by it.
The Custodian shall have no responsibility or liability for or on
account of securities, funds or other property not so delivered
to the Sub-Custodians. Upon request, the Fund shall deliver to
the Custodian or to such Sub-Custodians as the Custodian may
direct such proxies, powers of attorney or other instruments as
may be reasonably necessary or desirable in connection with the
performance by the Custodian or any Sub-Custodian of their
respective obligations under this Agreement or any applicable Sub-
Custodian Agreement.
2. APPOINTMENT OF SUB-CUSTODIANS. The Custodian may at any time
and from time to time appoint, at its own cost and expense, as a
Sub-Custodian for the Fund any bank or trust company which meets
the requirements of the 1940 Act and the rules and regulations
thereunder to act as a custodian, provided that the Fund shall
have approved in writing any such bank or trust company and the
Custodian gives prompt written notice to the Fund of any such
appointment. The agreement between the Custodian and any Sub-
Custodian shall be substantially in the form of the Sub-Custodian
agreement attached hereto as Exhibit 1 (the "Sub-Custodian
Agreement") unless otherwise approved by the Fund, provided,
however, that the agreement between the Custodian and any Sub-
Custodian appointed primarily for the purpose of holding foreign
securities of the Fund shall be substantially in the form of the
Sub-Custodian Agreement attached hereto as Exhibit 1(A) (the
"Foreign Sub-Custodian Agreement"; the "Sub-Custodian Agreement"
and the "Foreign Sub-Custodian Agreement" are herein referred to
collectively and each individually as the "Sub-Custodian
Agreement"). All Sub-Custodians shall be subject to the
instructions of the Custodian and not the Fund. The Custodian
may, at any time in its discretion, remove any bank or trust
company which has been appointed as a Sub-Custodian but shall in
such case promptly notify the Fund in writing of any such action.
Securities, funds and other property of the Fund delivered
pursuant to this Agreement shall be held exclusively by Sub-
Custodians appointed pursuant to the provisions of this Section
2.
The Sub-Custodians which the Fund has approved to date are
set forth in Schedule B hereto. Schedule B shall be amended from
time to time as Sub-Custodians are changed, added or deleted. The
Fund shall be responsible for informing the Custodian
sufficiently in advance of a proposed investment which is to be
held at a location not listed on Schedule B, in order that there
shall be sufficient time for the Custodian to put the appropriate
arrangements in place with such Sub-Custodian pursuant to such
Sub-Custodian Agreement.
With respect to the securities, funds or other property held
by a Sub-Custodian, the Custodian shall be liable to the Fund if
and only to the extent that such Sub-Custodian is liable to the
Custodian. The Custodian shall nevertheless be liable to the
Fund for its own negligence in transmitting any instructions
received by it from the Fund and for its own negligence in
connection with the delivery of any securities, funds or other
property of the Fund to any such Sub-Custodian.
In the event that any Sub-Custodian appointed pursuant to
the provisions of this Section 2 fails to perform any of its
obligations under the terms and conditions of the applicable Sub-
Custodian Agreement, the Custodian shall use its best efforts to
cause such Sub-Custodian to perform such obligations. In the
event that the Custodian is unable to cause such Sub-Custodian to
perform fully its obligations thereunder, the Custodian shall
forthwith terminate such Sub-Custodian and, if necessary or
desirable, appoint another Sub-Custodian in accordance with the
provisions of this Section 2. The Custodian may with the
approval of the Fund commence any legal or equitable action which
it believes is necessary or appropriate in connection with the
failure by a Sub-Custodian to perform its obligations under the
applicable Sub-Custodian Agreement. Provided the Custodian shall
not have been negligent with respect to any such matter, such
action shall be at the expense of the Fund. The Custodian shall
keep the Fund fully informed regarding such action and the Fund
may at any time upon notice to the Custodian elect to take
responsibility for prosecuting such action. In such event the
Fund shall have the right to enforce and shall be subrogated to
the Custodian's rights against any such Sub-Custodian for loss or
damage caused the Fund by such Sub-Custodian.
At the written request of the Fund, the Custodian will
terminate any Sub-Custodian appointed pursuant to the provisions
of this Section 2 in accordance with the termination provisions
of the applicable Sub-Custodian Agreement. The Custodian will
not amend any Sub-Custodian Agreement in any material manner
except upon the prior written approval of the Fund and shall in
any case give prompt written notice to the Fund of any amendment
to the Sub-Custodian Agreement.
3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND
HELD BY SUB-CUSTODIANS.
3.1 HOLDING SECURITIES - The Custodian shall cause one or
more Sub-Custodians to hold and, by book-entry or otherwise,
identify as belonging to the Fund all non-cash property delivered
to such Sub-Custodian.
3.2 DELIVERY OF SECURITIES - The Custodian shall cause Sub-
Custodians holding securities of the Fund to release and deliver
securities owned by the Fund held by the Sub-Custodian or in a
Securities System account of the Sub-Custodian only upon receipt
of Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties, and only in the following
cases:
3.2.1 Upon sale of such securities for the account
of the Fund and receipt of payment therefor;
PROVIDED, HOWEVER, that a Sub-Custodian may
release and deliver securities prior to the
receipt of payment therefor if (i) in the
Sub-Custodian's judgment, (A) release and
delivery prior to payment is required by the
terms of the instrument evidencing the
security or (B) release and delivery prior
to payment is the prevailing method of
settling securities transactions between
institutional investors in the applicable
market and (ii) release and delivery prior
to payment is in accordance with generally
accepted trade practice and with any
pplicable governmental regulations and the
rules of Securities Systems or other
securities depositories and clearing
agencies in the applicable market. The
Custodian agrees, upon request, to advise
the Fund of all pending transactions in
which release and delivery will be made
prior to the receipt of payment therefor;
3.2.2 Upon the receipt of payment in connection
with any repurchase agreement related to
such securities entered into by the Fund;
3.2.3 In the case of a sale effected through a
Securities System, in accordance with the
provisions of Section 3.12 hereof;
3.2.4 To the depository agent in connection with
tender or other similar offers for portfolio
securities of the Fund; provided that, in
any such case, the cash or other
consideration is thereafter to be delivered
to the Sub-Custodian;
3.2.5 To the issuer thereof or its agent, when
such securities are called, redeemed,
retired or otherwise become payable;
provided that, in any such case, the cash or
other consideration is to be delivered to
the Sub-Custodian;
3.2.6 To the issuer thereof, or its agent for
transfer into the name of the Fund or into
the name of any nominee or nominees of the
Sub-Custodian or into the name or nominee
name of any agent appointed pursuant to
Section 3.11 or any other name permitted
pursuant to Section 3.3; or for exchange for
a different number of bonds, certificates or
other evidence representing the same
aggregate face amount or number of units;
provided that, in any such case, the new
securities are to be delivered to the Sub-
Custodian;
3.2.7 Upon the sale of such securities for the
account of the Fund, to the broker or its
clearing agent, against a receipt, for
examination in accordance with "street
delivery" custom; provided that in any such
case, the Sub-Custodian shall have no
responsibility or liability for any loss
arising from the delivery of such securities
prior to receiving payment for such
securities except as may arise from the Sub-
Custodian's own negligence or willful
misconduct;
3.2.8 For exchange or conversion pursuant to any
plan of merger, consolidation,
recapitalization, reorganization or
readjustment of the securities of the issuer
of such securities, or pursuant to
provisions for conversion contained in such
securities, or pursuant to any deposit
agreement; provided that, in any such case,
the new securities and cash, if any, are to
be delivered to the Sub-Custodian;
3.2.9 In the case of warrants, rights or similar
securities, the surrender thereof in the
exercise of such warrants, rights or similar
securities or the surrender of interim
receipts or temporary securities for
definitive securities; provided that, in any
such case, the new securities and cash, if
any, are to be delivered to the Sub-
Custodian;
3.2.10 For delivery in connection with any loans of
securities made by the Fund, but only
against receipt of adequate collateral as
agreed upon from time to time by the
Custodian and the Fund, which may be in the
form of cash or obligations issued by the
United States government, its agencies or
instrumentalities; except that in connection
with any loan of securities held in a
Securities System for which collateral is to
credited to the Sub-Custodian's account in
another Securities System, the Sub-Custodian
will not be held liable or responsible for
delivery of the securities prior to the
receipt of such collateral.
3.2.11 For delivery as security in connection with
any borrowings by the Fund requiring a
pledge of assets by the Fund, but only
against receipt of amounts borrowed;
3.2.12 Upon receipt of instructions from the
transfer agent ("Transfer Agent") for the
Fund, for delivery to such Transfer Agent or
to the shareholders of the Fund in
connection with distributions in kind, as
may be described from time to time in the
Fund's Declaration of Trust and currently
effective registration statement, if any, in
satisfaction of requests by Fund
shareholders for repurchase or redemption;
3.2.13 For delivery to another Sub-Custodian of the
Fund; and
3.2.14 For any other proper corporate purpose, but
only upon receipt of, in addition to Proper
Instructions, a certified copy of a
resolution of the Trustees or of the
Executive Committee of the Fund signed by an
officer of the Fund and certified by its
Clerk or an Assistant Clerk, specifying the
securities to be delivered, setting forth
the purpose for which such delivery is to be
made, declaring such purposes to be proper
corporate purposes, and naming the person or
persons to whom delivery of such securities
shall be made.
3.3 REGISTRATION OF SECURITIES. Securities of the Fund
held by the Sub-Custodians hereunder (other than bearer
securities) shall be registered in the name of the Fund or
in the name of any nominee of the Fund or of any nominee of
the Sub-Custodians or any 17f-5 Sub-Custodian or Foreign
Depository (as each of those terms is defined in the Foreign
Sub-Custodian Agreement, which nominee shall be assigned
exclusively to the Fund, unless the Fund has authorized in
writing the appointment of a nominee to be used in common
with other registered investment companies having the same
investment adviser as the Fund, or in the name or nominee
name of any agent appointed pursuant to Section 3.12.
Notwithstanding the foregoing, a Sub-Custodian, agent, 17f-5
Sub-Custodian or Foreign Depository may hold securities of
the Fund in a nominee name which is used for its other
clients provided that such name is not used by the Sub-
Custodian, agent, 17f-5 Sub-Custodian or Foreign Depository
for its own securities and that securities of the Fund are,
by book-entry or otherwise, at all times identified as
belonging to the Fund and distinguished from other
securities held for other clients using the same nominee
name. In addition, and notwithstanding the foregoing, a Sub-
Custodian or agent thereof or 17f-5 Sub-Custodian or Foreign
Depository may hold securities of the Fund in its own name
if such registration is the prevailing method in the
applicable market by which custodians register securities of
institutional clients and provided that securities of the
Fund are, by book-entry or otherwise, at all times
identified as belonging to the Fund and distinguished from
other securities held for other clients or for the Sub-
Custodian or agent thereof or 17f-5 Sub-Custodian or Foreign
Depository. All securities accepted by a Sub-Custodian
under the terms of a Sub-Custodian Agreement shall be in
good delivery form.
3.4 BANK ACCOUNTS. The Custodian shall cause one or
more Sub-Custodians to open and maintain a separate bank account
or accounts in the name of the Fund or the Custodian, subject
only to draft or order by the Sub-Custodian acting pursuant to
the terms of a Sub-Custodian Contract or by the Custodian acting
pursuant to this Agreement, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by
it from or for the account of the Fund, other than cash
maintained by the Fund in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act of
1940. Funds held by the Sub-Custodian for the Fund may be
deposited by it to its credit as sub-custodian or to the
Custodian's credit as custodian in the Banking Department of the
Sub-Custodian or in such other banks or trust companies as it may
in its discretion deem necessary or desirable; provided, however,
that every such bank or trust company shall be qualified to act
as a custodian under the Investment Company Act of 1940 and that
each such bank or trust company and the funds to be deposited
with each such bank or trust company shall be approved by vote of
a majority of the Trustees of the Fund. Such funds shall be
deposited by the Sub-Custodian or the Custodian in its capacity
as sub-custodian or custodian, respectively, and shall be
withdrawable by the Sub-Custodian or the Custodian only in that
capacity. The Sub-Custodian shall be liable for actual losses
incurred by the Fund attributable to any failure on the part of
the Sub-Custodian to report accurate cash availability
information with respect to the Fund's or the Custodian's bank
accounts maintained by the Sub-Custodian or any of its agents.
3.5 PAYMENTS FOR SHARES. The Custodian shall cause one or
more Sub-Custodians to deposit into the Fund's account amounts
received from the Transfer Agent of the Fund for shares of the
Fund issued by the Fund and sold by its distributor. The
Custodian will provide timely notification to the Fund of any
receipt by the Sub-Custodian from the Transfer Agent of payments
for shares of the Fund.
3.6 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement
between the Fund and the Custodian, the Custodian shall cause one
or more Sub-Custodians, upon the receipt of Proper Instructions,
to make federal funds available to the Fund as of specified times
agreed upon from time to time by the Fund and the Custodian with
respect to amounts received by the Sub-Custodians for the
purchase of shares of the Fund.
3.7 COLLECTION OF INCOME. The Custodian shall cause one or
more Sub-Custodians to collect on a timely basis all income and
other payments with respect to registered securities held
hereunder, including securities held in a Securities System, to
which the Fund shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a timely
basis all income and other payments with respect to bearer
securities if, on the date of payment by the issuer, such
securities are held by the Sub-Custodian or agent thereof and
shall credit such income, as collected, to the Fund's account.
Without limiting the generality of the foregoing, the Custodian
shall cause the Sub-Custodian to detach and present for payment
all coupons and other income items requiring presentation as and
when they become due and shall collect interest when due on
securities held under the applicable Sub-Custodian Agreement.
Arranging for the collection of income due the Fund on securities
loaned pursuant to the provisions of Section 3.2.10 shall be the
responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the
Fund with such information or data as may be necessary to assist
the Fund in arranging for the timely delivery to the Sub-
Custodian of the income to which the Fund is properly entitled.
3.8 PAYMENT OF FUND MONIES. Upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, the Custodian shall cause one or more
Sub-Custodians to pay out monies of the Fund in the following
cases only:
3.8.1 Upon the purchase of securities for the
account of the Fund but only (a) against the
delivery of such securities to the Sub-
Custodian (or any bank, banking firm or
trust company doing business in the United
States or abroad which is qualified under
the Investment Company Act of 1940, as
amended, to act as a custodian and has been
designated by the Sub-Custodian as its agent
for this purpose) or any 17f-5 Sub-Custodian
or any Foreign Depository registered in the
name of the Fund or in the name of a nominee
of the Sub-Custodian referred to in Section
3.3 hereof or in proper form for transfer;
PROVIDED, HOWEVER, that the Sub-Custodian
may cause monies of the Fund to be paid out
prior to delivery of such securities if (i)
in the Sub-Custodian's judgment, (A) payment
prior to delivery is required by the terms
of the instrument evidencing the security or
(B) payment prior to delivery is the
prevailing method of settling securities
transactions between institutional investors
in the applicable market and (ii) payment
prior to delivery is in accordance with
generally accepted trade practice and with
any applicable governmental regulations and
the rules of Securities Systems or other
securities depositories and clearing
agencies in the applicable market; the
Custodian agrees, upon request, to advise
the Fund of all pending transactions in
which payment will be made prior to the
receipt of securities in accordance with the
provision to the foregoing sentence; (b) in
the case of a purchase effected through a
Securities System, in accordance with the
conditions set forth in Section 3.13 hereof;
or (c)(i) in the case of a repurchase
agreement entered into between the Fund and
the Sub-Custodian, another bank, or a broker-
dealer against delivery of the securities
either in certificate form or through an
entry crediting the Sub-Custodian's account
at the Federal Reserve Bank with such
securities or (ii) in the case of a
repurchase agreement entered into between
the Fund and the Sub-Custodian, against
delivery of a receipt evidencing purchase by
the Fund of Securities owned by the Sub-
Custodian along with written evidence of the
agreement by the Sub-Custodian to repurchase
such securities from the Fund; or (d) for
transfer to a time deposit account of the
Fund in any bank, whether domestic or
foreign, which transfer may be effected
prior to receipt of a confirmation of the
deposit from the applicable bank or a
financial intermediary;
3.8.2 In connection with conversion, exchange or
surrender of securities owned by the Fund as
set forth in Section 3.2 hereof;
3.8.3 For the redemption or repurchase of Shares
issued by the Fund as set forth in Section
3.10 hereof;
3.8.4 For the payment of any expense or liability
incurred by the Fund, including but not
limited to the following payments for the
account of the Fund: interest, taxes,
management, accounting, transfer agent and
legal fees, including the Custodian's fee;
and operating expenses of the Fund whether
or not such expenses are to be in whole or
part capitalized or treated as deferred
expenses;
3.8.5 For the payment of any dividends or other
distributions declared to shareholders of
the Fund;
3.8.6 For transfer to another Sub-Custodian of the
Fund;
3.8.7 For any other proper purpose, but only upon
receipt of, in addition to Proper
Instructions, a certified copy of a
resolution of the Trustees or of the
Executive Committee of the Fund signed by an
officer of the Fund and certified by its
Clerk or an Assistant Clerk, specifying the
amount of such payment, setting forth the
purpose for which such payment is to be
made, declaring such purpose to be a proper
purpose, and naming the person or persons to
whom such payments is to be made.
3.9 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF
SECURITIES PURCHASED. Except as otherwise provided in this
Agreement, in any and every case where payment for purchase of
securities for the account of the Fund is made by a Sub-Custodian
in advance of receipt of the securities purchased in the absence
of specific written instructions from the Fund to so pay in
advance, the Custodian shall cause the Sub-Custodian to be
absolutely liable to the Fund in the event any loss results to
the Fund from the payment by the Sub-Custodian in advance of
delivery of such securities.
3.10 PAYMENTS FOR REPURCHASE OR REDEMPTIONS OF SHARES OF
THE FUND. From such funds as may be available, the Custodian
shall, upon receipt Proper Instructions, cause one or more Sub-
Custodians to make funds available for payment to a shareholder
who has delivered to the Transfer Agent a request for redemption
or repurchase of shares of the Fund. In connection with the
redemption or repurchase of shares of the Fund, the Custodian is
authorized, upon receipt of Proper Instructions, to cause one or
more Sub-Custodian, to wire funds to or through a commercial bank
designated by the redeeming shareholder. In connection with the
redemption or repurchase of Shares of the Fund, the Custodian,
upon receipt of Proper Instructions, shall cause one or more Sub-
Custodians to honor checks drawn on the Sub-Custodian by a
shareholder when presented to the Sub-Custodian in accordance
with such procedures and controls as are mutually agreed upon
from time to time among the Fund, the Custodian and the Sub-
Custodian.
3.11 APPOINTMENT OF AGENTS. The Custodian may permit any Sub-
Custodian at any time or times in its discretion to appoint (and
may at any time remove) any other bank or trust company which is
itself qualified under the Investment Company Act of 1940, as
amended, to act as a custodian, as its agent to carry out such of
the provisions of this Section 3 as the Sub-Custodian may from
time to time direct; provided, however, that the appointment of
any agent shall not relieve the Custodian or any Sub-Custodian of
its responsibilities or liabilities hereunder and provided that
any such agent shall have been approved by vote of the Trustees
of the Fund. The Custodian may also permit any Sub-Custodian to
which foreign securities of the Fund have been delivered to
direct such securities to be held by 17f-5 Sub-Custodians and to
use the facilities of Foreign Depositories, as those terms are
defined in the Foreign Sub-Custodian Agreement, in accordance
with the terms of the Foreign Sub-Custodian Agreement.
The agents which the Fund and the Custodian have approved to
date are set forth in Schedule B hereto. Schedule B shall be
amended from time to time as agents are changed, added or
deleted. The Fund shall be responsible for informing the
Custodian, and the Custodian shall be responsible for informing
the appropriate Sub-Custodian, sufficiently in advance of a
proposed investment which is to be held at a location not listed
on Schedule B, in order that there shall be sufficient time for
the Sub-Custodian to complete the appropriate contractual and
technical arrangements with such agent. Any Sub-Custodian
Agreement shall provide that the engagement by the Sub-Custodian
of one or more agents shall not relieve the Sub-Custodian of its
responsibilities or liabilities thereunder.
3.12 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The
Custodian may permit any Sub-Custodian to deposit and/or maintain
securities owned by the Fund in a clearing agency registered with
the Securities and Exchange Commission under Section 17A of the
Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System" in
accordance with applicable rules and regulations (including Rule
17f-4 of the 1940 Act) and subject to the following provisions:
3.12.1 The Sub-Custodian may, either directly or
through one or more agents, keep securities
of the Fund in a Securities System provided
that such securities are represented in an
account ("Account") of the Sub-Custodian in
the Securities System which shall not
include any assets of the Sub-Custodian
other than assets held as a fiduciary,
custodian or otherwise for customers;
3.12.2 The records of the Sub-Custodian with
respect to securities of the Fund which are
maintained in a Securities System shall
identify by book-entry those securities
belonging to the Fund;
3.12.3 The Sub-Custodian shall pay for securities
purchased for the account of the Fund upon
(i) receipt of advice from the Securities
System that such securities have been
transferred to the Account, and (ii) the
making of an entry on the records of the Sub-
Custodian to reflect such payment and
transfer for the account of the Fund. The
Sub-Custodian shall transfer securities sold
for the account of the Fund upon (i) receipt
of advice from the Securities System that
payment for such securities has been
transferred to the Account, and (ii) the
making of an entry on the records of the Sub-
Custodian to reflect such transfer and
payment for the account of the Fund. Copies
of all advices from the Securities System of
transfers of securities for the account of
the Fund shall identify the Fund, be
maintained for the Fund by the Sub-Custodian
or such an agent and be provided to the Fund
at its request. The Sub-Custodian shall
furnish the Fund confirmation of each
transfer to or from the account of the Fund
in the form of a written advice or notice
and shall furnish to the Fund copies of
daily transaction sheets reflecting each
day's transactions in the Securities System
for the account of the Fund on the next
business day;
3.12.4 The Sub-Custodian shall provide the Fund
with any report obtained by the Sub-
Custodian on the Securities System's
accounting system, internal accounting
controls and procedures for safeguarding
securities deposited in the Securities
System;
3.12.5 The Sub-Custodian shall utilize only such
Securities Systems as are approved by the
Board of Trustees of the Fund, and included
on a list maintained by the Custodian;
3.12.6 Anything to the contrary in this Agreement
notwithstanding, the Sub-Custodian shall be
liable to the Fund for any loss or damage to
the Fund resulting from use of the
Securities System by reason of any
negligence, misfeasance or misconduct of the
Sub-Custodian or any of its agents or of any
of its or their employees or from failure of
the Sub-Custodian or any such agent to
enforce effectively such rights as it may
have against the Securities System; at the
election of the Fund, it shall be entitled
to be subrogated to the rights of the Sub-
Custodian with respect to any claim against
the Securities System or any other person
which the Sub-Custodian may have as a
consequence of any such loss or damage if
and to the extent that the Fund has not been
made whole for any such loss or damage.
3.12A DEPOSITARY RECEIPTS. Only upon receipt of Proper
Instructions, the Sub-Custodian shall instruct a 17f-5 Sub-
Custodian or an agent of the Sub-Custodian appointed pursuant to
the applicable Foreign Sub-Custodian Agreement (an "Agent") to
surrender securities to the depositary used by an issuer of
American Depositary Receipts or International Depositary Receipts
(hereinafter collectively referred to as "ADRs") for such
securities against a written receipt therefor adequately
describing such securities and written evidence satisfactory to
the 17f-5 Sub-Custodian or Agent that the depositary has
acknowledged receipt of instructions to issue with respect to
such securities ADRs in the name of the Sub-Custodian, or a
nominee of the Sub-Custodian, for delivery to the Sub-Custodian.
Only upon receipt of Proper Instructions, the Sub-Custodian
shall surrender ADRs to the issuer thereof against a written
receipt therefor adequately describing the ADRs surrendered and
written evidence satisfactory to the Sub-Custodian that the
issuer of the ADRs has acknowledged receipt of instructions to
cause its depository to deliver the securities underlying such
ADRs to a 17f-5 Sub-Custodian or an Agent.
3.12B FOREIGN EXCHANGE TRANSACTIONS AND FUTURES
CONTRACTS. Only upon receipt of Proper Instructions, the Sub-
Custodian shall enter into foreign exchange contracts or options
to purchase and sell foreign currencies for spot and future
delivery on behalf and for the account of the Fund or shall enter
into futures contracts or options on futures contracts. Such
transactions may be undertaken by the Sub-Custodian with such
banking institutions, including the Sub-Custodian and 17f-5 Sub-
Custodian(s) appointed pursuant to the applicable Foreign Sub-
Custodian Agreement, as principals, as approved and authorized by
the Fund. Foreign exchange contracts, futures contracts and
options, other than those executed with the Sub-Custodian, shall
for all purposes of this Agreement be deemed to be portfolio
securities of the Fund.
3.12C OPTION TRANSACTIONS. Only upon receipt of Proper
Instructions, the Sub-Custodian shall enter into option
transactions in accordance with the provisions of any agreement
among the Fund, the Custodian and/or the Sub-Custodian and a
broker-dealer.
3.13OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian
shall cause one or more Sub-Custodians as may be appropriate to
execute ownership and other certificates and affidavits for all
federal and state tax purposes in connection with receipt of
income or other payments with respect to securities of the Fund
held by the Sub-Custodian and in connection with transfers of
securities.
3.14 PROXIES. The Custodian shall, with respect to the
securities held by the Sub-Custodians, cause to be promptly
executed by the registered holder of such securities, if the
securities are registered other than in the name of the Fund or a
nominee of the fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly
deliver to the Fund such proxies, all proxy soliciting materials
and all notices relating to such securities.
3.15 COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES.
The Custodian shall cause the Sub-Custodians to transmit promptly
to the Custodian, and the Custodian shall transmit promptly to
the Fund, all written information (including, without limitation,
pendency of calls and maturities of securities and expirations of
rights in connection therewith) received by the Sub-Custodian
from issuers of the securities being held for the account of the
Fund. With respect to tender or exchange offers, the Custodian
shall cause the Sub-Custodian to transmit promptly to the Fund,
all written information received by the Sub-Custodian from
issuers of the securities whose tender or exchange is sought and
from the party (or his agents) making the tender or exchange
offer. If the Fund desires to take action with respect to any
tender offer, exchange offer or any other similar transaction,
the Fund shall notify the Custodian of the action the Fund
desires such Sub-Custodian to take, provided, however, neither
the Custodian nor the Sub-Custodian shall be liable to the Fund
for the failure to take any such action unless such instructions
are received by the Custodian at least four business days prior
to the date on which the Sub-Custodian is to take such action or,
in the case of foreign securities, such longer period as shall
have been agreed upon in writing by the Custodian and the Sub-
Custodian.
3.16 PROPER INSTRUCTIONS. Proper Instructions as used
throughout this Agreement means a writing signed or initialed by
one or more person or persons who are authorized by the Trustees
of the Fund and the Custodian. Each such writing shall set forth
the specific transaction or type of transaction involved,
including a specific statement of the purpose for which such
action is requested. Oral instructions will be considered Proper
Instructions if the Custodian or Sub-Custodian, as the case may
be, reasonably believes them to have been given by a person
authorized to give such instructions with respect to the
transaction involved. All oral instructions shall be confirmed
in writing. Proper Instructions also include communications
effected directly between electro-mechanical or electronic
devices provided that the Trustees have approved such procedures.
Notwithstanding the foregoing, no Trustee, officer, employee or
agent of the Fund shall be permitted access to any securities or
similar investments of the Fund deposited with any Sub-Custodian
or any agent of any Sub-Custodian for any reason except in
accordance with the provisions of Rule 17f-2 under the 1940 Act.
3.17 ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The
Custodian may in its discretion, and may permit one or more Sub-
Custodians in their discretion, without express authority from
the Fund to:
3.17.1 make payments to itself or others for minor
expenses of handling securities or other
similar items relating to its duties under
this Agreement, or in the case of a Sub-
Custodian, under the applicable Sub-
Custodian Agreement, provided that all such
payments shall be accounted for to the Fund;
3.17.2 surrender securities in temporary form for
securities in definitive form;
3.17.3 endorse for collection, in the name of the
Fund, checks, drafts and other negotiable
instruments; and
3.17.4 in general, attend to all non-discretionary
details in connection with the sale,
exchange, substitution, purchase, transfer
and other dealings with the securities and
property of the Fund except as otherwise
directed by the Trustees of the Fund.
3.18 EVIDENCE OF AUTHORITY. The Custodian shall be protected
in acting upon any instructions, notice, request, consent,
certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the
Fund.
3.19 INVESTMENT LIMITATIONS. In performing its duties
generally, and more particularly in connection with the purchase,
sale and exchange of securities made by or for the Fund, the
Custodian may assume, unless and until notified in writing to the
contrary, that Proper Instructions received by it are not in
conflict with or in any way contrary to any provisions of the
Fund's Declaration of Trust or By-Laws (or comparable documents)
or votes or proceedings of the shareholders or Trustees of the
Fund. The Custodian shall in no event be liable to the Fund and
shall be indemnified by the Fund for any violation of any
investment limitations to which the Fund is subject or other
limitations with respect to the Fund's powers to expend funds,
encumber securities, borrow or take similar actions affecting its
portfolio.
4. PERFORMANCE STANDARDS. The Custodian shall use its best
efforts to perform its duties hereunder in accordance with the
standards set forth in Schedule C hereto. Schedule C may be
amended from time to time as agreed to by the Custodian and the
Trustees of the Fund.
5. RECORDS. The Custodian shall create and maintain all records
relating to the Custodian's activities and obligations under this
Agreement and cause all Sub-Custodians to create and maintain all
records relating to the Sub-Custodian's activities and
obligations under the appropriate Sub-Custodian Agreement in such
manner as will meet the obligations of the Fund under the 1940
Act, with particular attention to Sections 17(f) and 31 thereof
and Rules 17f-2, 31a-1 and 31a-2 thereunder, applicable federal
and state tax laws, and any other law or administrative rules or
procedures which may be applicable to the Fund. All such records
shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian or during the regular
business hours of the Sub-Custodian, as the case may be, be open
for inspection by duly authorized officers, employees or agents
of the Custodian and Fund and employees and agents of the
Securities and Exchange Commission. At the Fund's request, the
Custodian shall supply the Fund and cause one or more Sub-
Custodians to supply the Custodian with a tabulation of
securities owned by the Fund and held under this Agreement. When
requested to do so by the Fund and for such compensation as shall
be agreed upon, the Custodian shall include and cause one or more
Sub-Custodians to include certificate numbers in such
tabulations.
6. OPINION AND REPORTS OF FUND'S INDEPENDENT ACCOUNTANTS. The
Custodian shall take all reasonable actions, as the Fund may from
time to time request, to furnish such information with respect to
its activities hereunder as the Fund's independent public
accountants may request in connection with the accountant's
verification of the Fund's securities and similar investments as
required by Rule 17f-2 under the 1940 Act, the preparation of the
Fund's registration statement and amendments thereto, the Fund's
reports to the Securities and Exchange Commission, and with
respect to any other requirements of such Commission.
The Custodian shall also direct any Sub-Custodian to take
all reasonable actions, as the Fund may from time to time
request, to furnish such information with respect to its
activities under the applicable Sub-Custodian Agreement as the
Fund's independent public accountant may request in connection
with the accountant's verification of the Fund's securities and
similar investments as required by Rule 17f-2 under the 1940 Act,
the preparation of the Fund's registration statement and
amendments thereto, the Fund's reports to the Securities and
Exchange Commission, and with respect to any other requirements
of such Commission.
7. REPORTS OF CUSTODIAN'S AND SUB-CUSTODIANS' INDEPENDENT
ACCOUNTANTS. The Custodian shall provide the Fund, at such times
as the Fund may reasonably require, with reports by its
independent public accountant on its accounting system, internal
accounting controls and procedures for safeguarding securities,
including securities deposited and/or maintained in Securities
Systems, relating to services provided by the Custodian under
this Agreement. The Custodian shall also cause one or more of
the Sub-Custodians to provide the Fund, at such time as the Fund
may reasonably require, with reports by independent public
accountants on their accounting systems, internal accounting
controls and procedures for safeguarding securities, including
securities deposited and/or maintained in Securities Systems,
relating to services provided by those Sub-Custodians under their
respective Sub-Custody Agreements. Such reports, which shall be
of sufficient scope and in sufficient detail as may reasonably be
required by the Fund, shall provide reasonable assurance that any
material inadequacies would be disclosed by such examinations,
and, if there is no such inadequacies, shall so state.
8. COMPENSATION. The Custodian shall be entitled to reasonable
compensation for its services and expenses as custodian, as
agreed upon from time to time between the Fund and the Custodian.
Such expenses shall not include, however, the fees paid by the
Custodian to any Sub-Custodian.
9. RESPONSIBILITY OF CUSTODIAN. The Custodian shall exercise
reasonable care and diligence in carrying out the provisions of
this Agreement and shall not be liable to the Fund for any action
taken or omitted by it in good faith without negligence. So long
as and to the extent that it is in the exercise of reasonable
care, neither the Custodian nor any Sub-Custodian shall be
responsible for the title, validity or genuineness of any
property or evidence of title thereto received by it or delivered
by it pursuant to this Agreement and shall be held harmless in
acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and, if in
writing, reasonably believed by it to be signed by the proper
party or parties. It shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all
matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice. Notwithstanding the
foregoing, the responsibility of the Custodian or a Sub-Custodian
with respect to redemptions effected by check shall be in
accordance with a separate Agreement entered into between the
Custodian and the Fund. It is also understood that the Custodian
shall not be liable for any loss resulting from a Sovereign Risk.
A "Sovereign Risk" shall mean nationalization, expropriation,
devaluation, revaluation, confiscation, seizure, cancellation,
destruction or similar action by any governmental authority, de
facto or de jure; or enactment, promulgation, imposition or
enforcement by any such governmental authority of currency
restrictions, exchange controls, taxes, levies or other charges
affecting the Fund's property; or acts of war, terrorism,
insurrection or revolution; or any other similar act or event
beyond the Custodian's control.
If the Fund requires the Custodian which in turn may require
a Sub-Custodian to take any action with respect to securities,
which action involves the payment of money or which action may,
in the opinion of the Custodian or the Sub-Custodian result in
the Custodian or its nominee or a Sub-Custodian or its nominee
being liable for the payment of money or incurring liability of
some other form, the Fund, as a prerequisite to requiring the
Custodian or the Custodian requiring any Sub-Custodian to take
such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
The Fund agrees to indemnify and hold harmless the Custodian
and its nominee from and against all taxes, charges, expenses,
assessments, claims and liabilities (including counsel fees)
incurred or assessed against it or its nominee or any Sub-
Custodian or its nominee in connection with the performance of
this Agreement, or any Sub-Custodian Agreement except, as to the
Custodian, such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct,
and as to a Sub-Custodian, such as may arise from such Sub-
Custodian's or its nominee's own negligent action, negligent
failure to act or willful misconduct. The negligent action,
negligent failure to act or willful misconduct of the Custodian
shall not diminish the Fund's obligation to indemnify the
Custodian in the amount, but only in the amount, of any indemnity
required to be paid to a Sub-Custodian under its Sub-Custodian
Agreement. The Custodian may assign this indemnity from the Fund
directly to, and for the benefit of, any Sub-Custodian. The
Custodian is authorized, and may authorize any Sub-Custodian, to
charge any account of the Fund for such items and such fees. To
secure any such authorized charges and any advances of cash or
securities made by the Custodian or any Sub-Custodian to or for
the benefit of the Fund for any purpose which results in the Fund
incurring an overdraft at the end of any business day or for
extraordinary or emergency purposes during any business day, the
Fund (except a Fund specified in Schedule D to this Agreement)
hereby grants to the Custodian a security interest in and pledges
to the Custodian securities up to a maximum of 10% of the value
of the Fund's net assets for the purpose of securing payment of
any such advances and hereby authorizes the Custodian on behalf
of the Fund to grant to any Sub-Custodian a security interest in
and pledge of securities held for the Fund (including those which
may be held in a Securities System) up to a maximum of 10% of the
value of the net assets held by such Sub-Custodian. The specific
securities subject to such security interest may be designated in
writing from time to time by the Fund or its investment adviser.
In the absence of any designation of securities subject to such
security interest, the Custodian or the Sub-Custodian, as the
case may be, may designate securities held by it. Should the
Fund fail to repay promptly any authorized charges or advances of
cash or securities, the Custodian or the Sub-Custodian shall be
entitled to use such available cash and to dispose of pledged
securities and property as is necessary to repay any such
authorized charges or advances and to exercise its rights as a
secured party under the U.C.C. The Fund agrees that a Sub-
Custodian shall have the right to proceed directly against the
Fund and not solely as subrogee to the Custodian with respect to
any indemnity hereunder assigned to a Sub-Custodian, and in that
regard, the Fund agrees that it shall not assert against any Sub-
Custodian proceeding against it any defense or right of set-off
the Fund may have against the Custodian arising out of the
negligent action, negligent failure to act or willful misconduct
of the Custodian, and hereby waives all rights it may have to
object to the right of a Sub-Custodian to maintain an action
against it.
10. SUCCESSOR CUSTODIAN. If a successor custodian shall be
appointed by the Trustees of the Fund, the Custodian shall, upon
termination, cause to be delivered to such successor custodian,
duly endorsed and in the form for transfer, all securities, funds
and other properties then held by the Sub-Custodians and all
instruments held by the Sub-Custodians relative thereto and cause
the transfer to an account of the successor custodian all of the
Fund's securities held in any Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy
of a vote of the Trustees of the Fund, cause to be delivered at
the office of the Custodian and transfer such securities, funds
and other properties in accordance with such vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Trustees shall have
been delivered to the Custodian on or before the date when such
termination shall become effective, then the Custodian shall have
the right to deliver to a bank or trust company, which meets the
requirements of the 1940 Act and the rules and regulations
thereunder, such securities, funds and other properties.
Thereafter, such bank or trust company shall be the successor of
the Custodian under this Agreement.
In the event that such securities, funds and other
properties remain in the possession of the Custodian or any Sub-
Custodian after the date of termination hereof owing to failure
of the Fund to procure the certified copy of the vote referred to
or of the Trustees to appoint a successor custodian, the
Custodian shall be entitled to fair compensation for its services
during such period as the Sub-Custodians retain possession of
such securities, funds and other properties and the provisions of
this Agreement relating to the duties and obligations of the
Custodian shall remain in full force and effect.
11. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT. This Agreement
shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided,
may be amended at any time by mutual agreement of the parties
hereto and may be terminated by either party by an instrument in
writing delivered or mailed, postage prepaid to the other party,
such termination to take effect not sooner than thirty (30) days
after the date of such delivery or mailing; provided either party
may at any time immediately terminate this Agreement in the event
of the appointment of a conservator or receiver for the other
party or upon the happening of a like event at the direction of
an appropriate regulatory agency or court of competent
jurisdiction. No provision of this Agreement may be amended or
terminated except by a statement in writing signed by the party
against which enforcement of the amendment or termination is
sought.
Upon termination of the Agreement, the Fund shall pay to the
Custodian such compensation as may be due as of the date of such
termination and shall likewise reimburse the Custodian and
through the Custodian any Sub-Custodian for its costs, expenses
and disbursements.
12. INTERPRETATION. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to
the subject matter hereof. In connection with the operation of
this Agreement, the Custodian and the Fund may from time to time
agree in writing on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their
joint opinion be consistent with the general tenor of this
Agreement. No interpretive or additional provisions made as
provided in the preceding sentence shall be deemed to be an
amendment of this Agreement.
13. GOVERNING LAW. This instrument is executed and delivered in
The Commonwealth of Massachusetts and shall be governed by and
construed according to the internal laws of said Commonwealth,
without regard to principles of conflicts of law.
14. NOTICES. Notices and other writings delivered or mailed
postage prepaid to the Fund addressed to the Fund attention: John
Hughes, or to such other person or address as the Fund may have
designated to the Custodian in writing, or to the Custodian at
One Post Office Square, Boston, Massachusetts 02109 attention:
George Crane, or to such other address as the Custodian may have
designated to the Fund in writing, shall be deemed to have been
properly delivered or given hereunder to the respective
addressee.
15. BINDING OBLIGATION. This Agreement shall be binding on and
shall inure to the benefit of the Fund and the Custodian and
their respective successors and assigns, provided that neither
party hereto may assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of the
other party.
16. DECLARATION OF TRUST. A copy of the Declaration of Trust of
each of the Funds is on file with the Secretary of The
Commonwealth of Massachusetts and notice is hereby given that
this instrument is executed on behalf of the Trustees of each of
the Funds as Trustees and not individually and that the
obligations of this instrument are not binding on any of the
Trustees or officers or shareholders individually, but are
binding only on the assets and property of each Fund with respect
to its obligations hereunder.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf as of the day
and year first above written.
THE PUTNAM FUNDS LISTED
IN SCHEDULE A
/s/ John D. Hughes
By ----------------------------
Vice President and Treasurer
PUTNAM FIDUCIARY TRUST COMPANY
/s/ Robert F. Lucey
By ----------------------------
President
Putnam Investments, Inc. ("Putnam"), the sole owner of the
Custodian, agrees that Putnam shall be the primary obligor with
respect to compensation due the Sub-Custodians pursuant to the
Sub-Custodian Agreements in connection with the Sub-Custodians'
performance of their responsibilities thereunder and agrees to
take all actions necessary and appropriate to assure that the Sub-
Custodians shall be compensated in the amounts and on the
schedules agreed to by the Custodian and the Sub-Custodians
pursuant to those Agreements.
PUTNAM INVESTMENTS, INC.
/s/ Douglas B. Jamieson
By ------------------------------
EXHIBIT 1
MASTER SUB-CUSTODIAN AGREEMENT
AGREEMENT made this day of , 199 , between
Putnam Fiduciary Trust Company, a Massachusetts-chartered trust
company (the "Custodian"), and , a
(the "Sub-Custodian").
WHEREAS, the Sub-Custodian represents to the Custodian that
it is eligible to serve as a custodian for a management
investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), and
WHEREAS, the Custodian has entered into a Custodian
Agreement between it and each of the Putnam Funds listed in
Schedule A, each of such Funds acting on its own behalf
separately from all the other Funds and not jointly or jointly
and severally with any of the other Funds (each of the Funds
being hereinafter referred to as the "Fund"), and
WHEREAS, the Custodian and the Fund desire to utilize sub-
custodians for the purpose of holding cash and securities of the
Fund, and
WHEREAS, the Custodian wishes to appoint the Sub-Custodian
as the Fund's Sub-Custodian,
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF CUSTODIAN. The Custodian hereby employs
and appoints the Sub-Custodian as a Sub-Custodian for the Fund
for the term and subject to the provisions of this Agreement.
Upon request, the Custodian shall deliver to the Sub-Custodian
such proxies, powers of attorney or other instruments as may be
reasonably necessary or desirable in connection with the
performance by the Sub-Custodian of its obligations under this
Agreement on behalf of the Fund.
2. DUTIES OF THE SUB-CUSTODIAN WITH RESPECT TO PROPERTY OF
THE FUND HELD BY IT. The Custodian may from time to time deposit
securities or cash owned by the Fund with the Sub-Custodian. The
Sub-Custodian shall have no responsibility or liability for or on
account of securities, funds or other property of the Fund not so
delivered to it. The Sub-Custodian shall hold and dispose of the
securities hereafter held by or deposited with the Sub-Custodian
as follows:
2.1 HOLDING SECURITIES. The Sub-Custodian shall hold and
physically segregate for the account of the Fund all non-cash
property, including all securities owned by the Funds, other than
securities which are maintained pursuant to Section 2.13 in a
Securities System. All such securities are to be held or
disposed of for, and subject at all times to the instructions of,
the Custodian pursuant to the terms of this Agreement. The Sub-
Custodian shall maintain adequate records identifying the
securities as being held by it as Sub-Custodian of the Fund.
2.2 DELIVERY OF SECURITIES. The Sub-Custodian shall release
and deliver securities of the Fund held by it hereunder (or in a
Securities System account of the Sub-Custodian) only upon receipt
of Proper Instructions (as defined in Section 2.17), which may be
continuing instructions when deemed appropriate by the parties,
and only in the following cases:
1) Upon sale of such securities for the account of the
Fund and receipt of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered into by
the Fund;
3) In the case of a sale effected through a Securities
System, in accordance with the provisions of Section 2.13 hereof;
4) To the depository agent in connection with tender
or other similar offers for portfolio securities of the Fund;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or otherwise become
payable; provided that, in any such case, the cash or other
consideration is to be delivered to the Sub-Custodian;
6) To the issuer thereof, or its agent, for transfer
into the name of the Fund or into the name of any nominee or
nominees of the Sub-Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.12; or for exchange for
a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be
delivered to the Sub-Custodian;
7) Upon the sale of such securities for the account of
the Fund, to the broker or its clearing agent, against a receipt,
for examination in accordance with "street delivery" custom;
provided that, in any such case, the Sub-Custodian shall have no
responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Sub-Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such securities,
or pursuant to provisions for conversion contained in such
securities, or pursuant to any deposit agreement; provided that,
in any such case, the new securities and cash, if any, are to be
delivered to the Sub-Custodian;
9) In the case of warrants, rights or similar
securities, the surrender thereof in the exercise of such
warrants, rights or similar securities or the surrender of
interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Sub-Custodian;
10) For delivery in connection with any loans of
securities made by the Fund, but only against receipt of adequate
collateral as agreed upon from time to time by the Custodian and
the Sub-Custodian, which may be in the form of cash or
obligations issued by the United States government, its agencies
or instrumentalities;
11) For delivery as security in connection with any
borrowings by the Fund requiring a pledge of assets by the Fund,
but only against receipt of amounts borrowed;
12) Upon receipt of instructions from the transfer
agent for the Fund (the "Transfer Agent"), for delivery to such
Transfer Agent or to the shareholders of the Fund in connection
with distributions in kind, as may be described from time to time
in the Fund's Declaration of Trust and currently effective
registration statement, if any, in satisfaction of requests by
shareholders for repurchase or redemption;
13) For delivery to another Sub-Custodian of the Fund;
and
14) For any other proper purpose, but only upon receipt
of, in addition to Proper Instructions, a certified copy of a
resolution of the Trustees or of the Executive Committee of the
Fund signed by an officer of the Fund and certified by its Clerk
or an Assistant Clerk, specifying the securities to be delivered,
setting forth the purpose for which such delivery is to be made,
declaring such purposes to be proper corporate purposes, and
naming the person or persons to whom delivery of such securities
is to be made.
2.3 REGISTRATION OF SECURITIES. Securities of the Fund held
by the Sub-Custodian hereunder (other than bearer securities)
shall be registered in the name of the Fund or in the name of any
nominee of the Fund or of any nominee of the Sub-Custodian, which
nominee shall be assigned exclusively to the Fund, unless the
Fund has authorized in writing the appointment of a nominee to be
used in common with other registered investment companies having
the same investment adviser as the Fund, or in the name or
nominee name of any agent appointed pursuant to Section 2.12.
Notwithstanding the foregoing, a Sub-Custodian or agent thereof
may hold securities of the Fund in a nominee name which is used
for its other clients provided such name is not used by the Sub-
Custodian or agent for its own securities and that securities of
the Fund are physically segregated at all times from other
securities held for other clients using the same nominee name.
All securities accepted by the Sub-Custodian under the terms of
this Agreement shall be in "street name" or other good delivery
form.
2.4 BANK ACCOUNTS. The Sub-Custodian shall open and
maintain a separate bank account or accounts in the name of the
Fund, subject only to draft or order by the Sub-Custodian acting
pursuant to the terms of this Agreement, and shall hold in such
account or accounts, subject to the provisions hereof, all cash
received for the account of the Funds, other than cash maintained
by the Fund in a bank account established and used in accordance
with Rule 17f-3 under the 1940 Act. Funds held by the Sub-
Custodian for the Fund shall be deposited by it to its credit as
Sub-Custodian of the Fund in the Banking Department of the Sub-
Custodian or other banks. Such funds shall be deposited by the
Sub-Custodian in its capacity as Sub-Custodian and shall be
withdrawable by the Sub-Custodian only in that capacity. The Sub-
Custodian shall be liable for losses incurred by the Fund
attributable to any failure on the part of the Sub-Custodian to
report accurate cash availability information with respect to the
Fund's bank accounts maintained by the Sub-Custodian or any of
its agents, provided that such liability shall be determined
solely on a cost-of-funds basis.
2.5 PAYMENTS FOR SHARES. The Sub-Custodian shall receive
from any distributor of the Fund's shares or from the Transfer
Agent of the Fund and deposit into the Fund's account such
payments as are received for shares of the Fund issued or sold
from time to time by the Fund. The Sub-Custodian will provide
timely notification to the Custodian, and the Transfer Agent of
any receipt by it of payments for shares of the Fund.
2.6 INVESTMENT AND AVAILABILITY OF FEDERAL FUNDS. Upon
mutual agreement between the Custodian and the Sub-Custodian, the
Sub-Custodian shall, upon the receipt of Proper Instructions,
1) invest in such instruments as may be set forth in
such instructions on the same day as received all federal funds
received after a time agreed upon between the Sub-Custodian and
the Custodian; and
2) make federal funds available to the Fund as of
specified times agreed upon from time to time by the Custodian
and the Sub-Custodian in the amount of checks, when cleared
within the Federal Reserve System, received in payment for shares
of the Fund which are deposited into the Fund's account or
accounts.
2.7 COLLECTION OF INCOME. The Sub-Custodian shall collect
on a timely basis all income and other payments with respect to
registered securities held hereunder to which the Fund shall be
entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and
other payments with respect to bearer securities if, on the date
of payment by the issuer, such securities are held hereunder and
shall credit such income, as collected, to the Fund's account.
Without limiting the generality of the foregoing, the Sub-
Custodian shall detach and present for payment all coupons and
other income items requiring presentation as and when they become
due and shall collect interest when due on securities held
hereunder. Arranging for the collection of income due the Fund
on securities loaned pursuant to the provisions of Section
2.2(10) shall be the responsibility of the Custodian. The Sub-
Custodian will have no duty or responsibility in connection
therewith, other than to provide the Custodian with such
information or data as may be necessary to assist the Custodian
in arranging for the timely delivery to the Sub-Custodian of the
income to which the Fund is properly entitled.
2.8 PAYMENT OF FUND MONIES. Upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, the Sub-Custodian shall cause monies
of a Fund to be paid out in the following cases only:
1) Upon the purchase of securities for the account of
the Fund but only (a) against the delivery of such securities to
the Sub-Custodian (or any bank, banking firm or trust company
doing business in the United States or abroad which is qualified
under the 1940 Act, as amended, to act as a custodian and has
been designated by the Sub-Custodian as its agent for this
purpose) registered in the name of the Fund or in the name of a
nominee referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set forth in
Section 2.13 hereof; or (c) in the case of repurchase agreements
entered into between the Fund and the Sub-Custodian, or another
bank, (i) against delivery of the securities either in
certificate form or through an entry crediting the Sub-
Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt evidencing
purchase by the Fund of securities owned by the Sub-Custodian
along with written evidence of the agreement by the Sub-Custodian
to repurchase such securities from the Fund;
2) In connection with conversion, exchange or
surrender of securities owned by the Fund as set forth in Section
2.2 hereof;
3) For the redemption or repurchase of shares issued
by the Fund as set forth in Section 2.10 hereof;
4) For the payment of any expense or liability
incurred by the Fund, including but not limited to the following
payments for the account of the Fund: interest, taxes,
management, accounting, custodian and Sub-Custodian, transfer
agent and legal fees, including the Custodian's fee; and
operating expenses of the Fund whether or not such expenses are
to be in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends declared pursuant
to the governing documents of the Fund;
6) For transfer to another Sub-Custodian of the Fund;
and
7) For any other proper purpose, but only upon receipt
of, in addition to Proper Instructions, a certified copy of a
resolution of the Trustees or of the Executive Committee of the
Fund signed by an officer of the Fund and certified by its Clerk
or an Assistant Clerk, specifying the amount of such payment,
setting forth the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and naming the
person or persons to whom such payment is to be made.
2.9 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF
SECURITIES PURCHASED. In any and every case where payment for
purchase of securities for the account of a Fund is made by the
Sub-Custodian in advance of receipt of the securities purchased
in the absence of specific written instructions from the
Custodian to so pay in advance, the Sub-Custodian shall be
absolutely liable to the Fund and the Custodian in the event any
loss results to the Fund or the Custodian from the failure of the
Sub-Custodian to make such payment against delivery of such
securities, except that in the case of repurchase agreements
entered into by the Fund with a bank which is a member of the
Federal Reserve System, the Sub-Custodian may transfer funds to
the account of such bank prior to the receipt of written evidence
that the securities subject to such a repurchase agreement have
been transferred by book-entry into a segregated non-proprietary
account of the Sub-Custodian maintained with any Federal Reserve
Bank or of the safe-keeping receipt, provided that such
securities have in fact been so transferred by book-entry.
2.10PAYMENTS FOR REPURCHASES OR REDEMPTIONS OF SHARES OF THE
FUND. From such funds as may be available for the purpose but
subject to the limitations of the Declaration of Trust and By-
Laws and any applicable votes of the Trustees of the Fund
pursuant thereto, the Sub-Custodian shall, upon receipt of
instructions from the Custodian, make funds available for payment
to shareholders of the Fund who have delivered to the Transfer
Agent a request for redemption or repurchase of their shares. In
connection with the redemption or repurchase of shares of the
Fund, the Sub-Custodian, upon receipt of Proper Instructions, is
authorized to wire funds to or through a commercial bank
designated by the redeeming shareholders. In connection with the
redemption or repurchase of shares of the Fund, the Sub-
Custodian, upon receipt of Proper Instructions, shall honor
checks drawn on the Sub-Custodian by a shareholder, when
presented to the Sub-Custodian in accordance with such procedures
and controls as are mutually agreed upon from time to time among
the Fund, the Custodian and the Sub-Custodian.
2.11VARIANCES. The Sub-Custodian may accept securities or
cash delivered in settlement of trades notwithstanding variances
between the amount of securities or cash so delivered and the
amount specified in the instructions furnished to it by the
Custodian, provided that the variance in any particular
transaction does not exceed (i) $25 in the case of transactions
of $1,000,000 or less, and (ii) $50 in the case of transactions
exceeding $1,000,000. The Sub-Custodian shall maintain a record
of any such variances and notify the Custodian of such variances
in periodic transaction reports submitted to the Custodian. The
Sub-Custodian will not advise any party with whom the Fund
effects securities transactions of the existence of these
variance provisions without the consent of the Fund and the
Custodian.
2.12APPOINTMENT OF AGENTS. Without limiting its own
responsibility for its obligations assumed hereunder, the Sub-
Custodian may at any time and from time to time engage, at its
own cost and expense, as an agent to act for the Fund on the Sub-
Custodian's behalf with respect to any such obligations any bank
or trust company which meets the requirements of the 1940 Act,
and the rules and regulations thereunder, to perform services
delegated to the Sub-Custodian hereunder, provided that the Fund
shall have approved in writing any such bank or trust company and
the Sub-Custodian shall give prompt written notice to the
Custodian and the Fund of any such engagement. All agents of the
Sub-Custodian shall be subject to the instructions of the Sub-
Custodian and not the Custodian. The Sub-Custodian may, at any
time in its discretion, and shall at the Custodian's direction,
remove any bank or trust company which has been appointed as an
agent, and shall in either case promptly notify the Custodian and
the Fund in writing of the completion of any such action.
The agents which the Fund has approved to date are set forth
in Schedule B hereto. Schedule B shall be amended from time to
time as approved agents are changed, added or deleted. The
Custodian shall be responsible for informing the Sub-Custodian
sufficiently in advance of a proposed investment which is to be
held at a location not listed on Schedule B, in order that there
shall be sufficient time for the Fund to give the approval
required by the preceding paragraph and for the Sub-Custodian to
complete the appropriate contractual and technical arrangements
with such agent. The engagement by the Sub-Custodian of one or
more agents to carry out such of the provisions of this Section 2
shall not relieve the Sub-Custodian of its responsibilities or
liabilities hereunder.
2.13DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The Sub-
Custodian may deposit and/or maintain securities owned by the
Fund in a clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities Exchange
Act of 1934, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of the
Treasury (collectively referred to herein as "Securities System")
in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations
(including Rule 17f-4 of the 1940 Act), and subject to the
following provisions:
1) The Sub-Custodian may keep securities of the Fund
in a Securities System provided that such securities are
represented in an account ("Account") of the Sub-Custodian in the
Securities System which shall not include any assets other than
assets held as a fiduciary, custodian or otherwise for customers;
2) The records of the Sub-Custodian with respect to
securities of the Fund which are maintained in a Securities
System shall identify by book-entry those securities belonging to
the Fund;
3) The Sub-Custodian shall pay for securities
purchased for the account of the Fund upon (i) receipt of advice
from the Securities System that such securities have been
transferred to the Account, and (ii) the making of an entry on
the records of the Sub-Custodian to reflect such payment and
transfer for the account of the Fund. The Sub-Custodian shall
transfer securities sold for the account of the Fund upon (a)
receipt of advice from the Securities System that payment for
such securities has been transferred to the Account, and (b) the
making of an entry on the records of the Sub-Custodian to reflect
such transfer and payment for the account of the Fund. Copies of
all advices from the Securities System of transfers of securities
for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Sub-Custodian and be provided to
the Fund or the Custodian at the Custodian's request. The Sub-
Custodian shall furnish the Custodian confirmation of each
transfer to or from the account of the Fund in the form of a
written advice or notice and shall furnish to the Custodian
copies of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of the Fund
on the next business day;
4) The Sub-Custodian shall provide the Custodian with
any report obtained by the Sub-Custodian on the Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the
Securities System;
5) The Sub-Custodian shall have received the initial
or annual certificate, as the case may be, required by Section
2.10 hereof;
6) Anything to the contrary in this Agreement
notwithstanding, the Sub-Custodian shall be liable to the Fund
and the Custodian for any loss or damage to the Fund or the
Custodian resulting from use of the Securities System by reason
of any negligence, misfeasance or misconduct of the Sub-Custodian
or any of its agents or of any of its or their employees or from
failure of the Sub-Custodian or any such agent to enforce
effectively such rights as it may have against the Securities
System; at the election of the Custodian, it shall be entitled to
be subrogated to the rights of the Sub-Custodian with respect to
any claim against the Securities System or any other person which
the Sub-Custodian may have as a consequence of any such loss or
damage if and to the extent that the Fund and the Custodian have
not been made whole for any such loss or damage.
2.14OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Sub-
Custodian shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection
with receipt of income or other payments with respect to
securities held by it hereunder and in connection with transfers
of securities.
2.15PROXIES. The Sub-Custodian shall, with respect to the
securities held hereunder, cause to be promptly executed by the
registered holder of such securities, if the securities are
registered otherwise than in the name of a Fund, all proxies,
without indication of the manner in which such proxies are to be
voted, and shall promptly deliver to the Custodian such proxies,
all proxy soliciting materials and all notices relating to such
securities.
2.16COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES.
The Sub-Custodian shall transmit promptly to the Custodian all
written information (including, without limitation, pendency of
calls and maturities of securities and expirations of rights in
connection therewith) received by the Sub-Custodian from issuers
of the securities being held for the account of the Fund. With
respect to tender or exchange offers, the Sub-Custodian shall
transmit promptly to the Custodian all written information
received by the Sub-Custodian from issuers of the securities
whose tender or exchange is sought and from the party (or his
agents) making the tender or exchange offer. If the Fund desires
to take action with respect to any tender offer, exchange offer
or any other similar transactions, the Custodian shall notify the
Sub-Custodian of the action the Fund desires the Sub-Custodian to
take; provided, however, that the Sub-Custodian shall not be
liable to the Fund or the Custodian for the failure to take any
such action unless such instructions are received by the Sub-
Custodian at least two business days prior to the date on which
the Sub-Custodian is to take such action.
2.17PROPER INSTRUCTIONS. Proper Instructions as used
throughout this Agreement means a writing signed or initialed by
one or more persons who are authorized by the Trustees of the
Fund and by vote of the Board of Directors of the Custodian.
Each such writing shall set forth the specific transaction or
type of transaction involved, including a specific statement of
the purpose for which such action is requested. Oral
instructions will be considered Proper Instructions if the Sub-
Custodian reasonably believes them to have been given by a person
authorized to give such instructions with respect to the
transaction involved. The Custodian shall cause all oral
instructions to be confirmed in writing. Upon receipt of a
certificate of the Clerk or an Assistant Clerk as to the
authorization by the Trustees of the Funds accompanied by a
detailed description of procedures approved by the Trustees,
Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices, provided that
the Trustees, the Custodian and the Sub-Custodian are satisfied
that such procedures afford adequate safeguards for the Fund's
assets. Notwithstanding the foregoing, no Trustee, officer,
employee or agent of the Fund shall be permitted access to any
securities or similar investments of the Fund deposited with the
Sub-Custodian or any agent for any reason except in accordance
with the provisions of Rule 17f-2 under the 1940 Act.
2.18ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The Sub-
Custodian may in its discretion, without express authority from
the Custodian:
1) make payments to itself or others for minor
expenses of handling securities or other similar items relating
to its duties under this Agreement, provided that all such
payments shall be accounted for to the Fund and the Custodian;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the Fund,
checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details
in connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property of
the Fund held by the Sub-Custodian hereunder except as otherwise
directed by the Custodian or the Trustees of the Fund.
2.19EVIDENCE OF AUTHORITY. The Sub-Custodian shall be
protected in acting upon any instruction, notice, request,
consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to have been properly executed
by or on behalf of the Fund or the Custodian as custodian of the
Fund. The Sub-Custodian may receive and accept a certified copy
of a vote of the Trustees of the Fund or the Board of Directors
of the Custodian, as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any
determination or of any action by the Trustees pursuant to the
Declaration of Trust and By-Laws and the Board of Directors of
the Custodian, as the case may be as described in such vote, and
such vote may be considered as in full force and effect until
receipt by the Sub-Custodian of written notice to the contrary.
3. PERFORMANCE STANDARDS; PROTECTION OF THE FUND. The Sub-
Custodian shall use its best efforts to perform its duties
hereunder in accordance with the standards set forth in Schedule
C hereto. Schedule C may be amended from time to time as agreed
to by the Custodian and the Trustees of the Fund.
4. RECORDS. The Sub-Custodian shall cooperate with and
supply necessary information to the entity or entities appointed
by the Trustees of the Fund to keep the books of account of the
Funds or, if directed in writing to do so by the Custodian, shall
itself keep such books of account. The Sub-Custodian shall
create and maintain all records relating to its activities and
obligations under this Agreement in such manner as will meet the
obligations of the Custodian under its Custodian Agreement with
the Fund under the 1940 Act, with particular attention to
Sections 17(f) and 31 thereof and Rules 17f-2, 31a-1 and 31a-2
thereunder, applicable federal and state tax laws, and any other
law or administrative rules or procedures which may be applicable
to the Fund or the Custodian. All such records shall be the
property of the Fund and shall at all times during the regular
business hours of the Sub-Custodian be open for inspection by
duly authorized officers, employees or agents of the Custodian
and the Fund and employees and agents of the Securities and
Exchange Commission. The Sub-Custodian shall, at the Custodian's
request, supply the Custodian with a tabulation of securities
owned by the Fund and held under this Agreement and shall, when
requested to do so by the Custodian and for such compensation as
shall be agreed upon between the Custodian and Sub-Custodian,
include certificate numbers in such tabulations.
5. OPINION AND REPORTS OF THE FUND'S INDEPENDENT
ACCOUNTANTS. The Sub-Custodian shall take all reasonable
actions, as the Custodian may from time to time request, to
obtain from year to year favorable opinions from the Fund's
independent public accountants with respect to its activities
hereunder in connection with the preparation of the Fund's
registration statements and amendments thereto, the Fund's
reports to the Securities and Exchange Commission and with
respect to any other requirements of such Commission.
6. REPORTS OF SUB-CUSTODIAN'S INDEPENDENT ACCOUNTANTS. The
Sub-Custodian shall provide the Custodian, at such times as the
Custodian may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, including
securities deposited and/or maintained in a Securities System,
relating to the services provided by the Sub-Custodian under this
Agreement; such reports, which shall be of sufficient scope and
in sufficient detail as may reasonably be required by the
Custodian, shall provide reasonable assurance that any material
inadequacies would be disclosed by such examination, and, if
there are no such inadequacies, shall so state.
7. COMPENSATION. The Sub-Custodian shall be entitled to
reasonable compensation for its services and expenses as Sub-
Custodian, as agreed upon from time to time between the Custodian
and the Sub-Custodian.
8. RESPONSIBILITY OF SUB-CUSTODIAN. The Sub-Custodian
shall exercise reasonable care and diligence in carrying out the
provisions of this Agreement and shall not be liable to the Fund
or the Custodian for any action taken or omitted by it in good
faith without negligence. So long as and to the extent that it
is in the exercise of reasonable care, the Sub-Custodian shall
not be responsible for the title, validity or genuineness of any
property or evidence of title thereto received by it or delivered
by it pursuant to this Agreement and shall be held harmless in
acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be
signed by the proper party or parties. It shall be entitled to
rely on and may act upon advice of counsel (who may be counsel
for the Fund) on all matters, and shall be without liability for
any action reasonably taken or omitted pursuant to such advice.
Notwithstanding the foregoing, the responsibility of the Sub-
Custodian with respect to redemptions effected by check shall be
in accordance with a separate agreement entered into between the
Custodian and the Sub-Custodian.
The Sub-Custodian shall protect the Fund and the Custodian
from direct losses to the Fund resulting from any act or failure
to act of the Sub-Custodian in violation of its duties hereunder
or of law and shall maintain customary errors and omissions and
fidelity insurance policies in an amount not less than $25
million to cover losses to the Fund resulting from any such act
or failure to act.
If the Custodian requires the Sub-Custodian to take any
action with respect to securities, which action involves the
payment of money or which action may, in the opinion of the Sub-
Custodian, result in the Sub-Custodian's being liable for the
payment of money or incurring liability of some other form, the
Custodian, as a prerequisite to requiring the Sub-Custodian to
take such action, shall provide indemnity to the Sub-Custodian in
an amount and form satisfactory to it.
The Custodian agrees to indemnify and hold harmless the Sub-
Custodian from and against all taxes, charges, expenses,
assessments, claims and liabilities (including counsel fees)
incurred or assessed against it or its nominee in connection with
the performance of this Agreement, except such as may arise from
its own negligent action, negligent failure to act or willful
misconduct. To secure any such authorized charges and any
advances of cash or securities made by the Sub-Custodian to or
for the benefit of the Fund for any purpose which results in the
Fund's incurring an overdraft at the end of any business day or
for extraordinary or emergency purposes during any business day,
the Custodian on behalf of the Fund, unless prohibited from doing
so by one or more of the Fund's fundamental investment
restrictions, hereby represents that it has obtained from the
Fund authorization to apply available cash in any account
maintained by the Sub-Custodian on behalf of the Fund and a
security interest in and pledge to it of securities held for the
Fund by the Sub-Custodian, in an amount not to exceed the amount
not prohibited by such restrictions, for the purposes of securing
payment of any such advances, and that the Fund has agreed, from
time to time, to designate in writing, or to cause its investment
adviser to designate in writing, the specific securities subject
to such security interest and pledge. The Custodian hereby
assigns the benefits of such security interest and pledge to the
Sub-Custodian, and agrees that, should the Fund or the Custodian
fail to repay promptly any advances of cash or securities, the
Sub-Custodian shall be entitled to use such available cash and to
dispose of such pledged securities as is necessary to repay any
such advances.
9. SUCCESSOR SUB-CUSTODIAN. If a successor Sub-Custodian
shall be appointed by the Custodian, the Sub-Custodian shall,
upon termination, cause to be delivered to such successor Sub-
Custodian, duly endorsed and in the form for transfer, all
securities then held by it, shall cause the transfer to an
account of the successor Sub-Custodian all of the Fund's
securities held in a Securities System and shall cause to be
delivered to such successor Sub-Custodian all funds and other
property held by it or any of its agents.
If no such successor Sub-Custodian shall be appointed, the
Sub-Custodian shall, in like manner, upon receipt of a certified
copy of a vote of the Trustees of the Fund, cause to be delivered
at the office of the Sub-Custodian and transfer such securities,
funds and other properties in accordance with such vote.
In the event that no written order designating a successor
Sub-Custodian or certified copy of a vote of the Trustees shall
have been delivered to the Sub-Custodian on or before the date
when such termination shall become effective, then the Sub-
Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the 1940 Act, doing
business in Boston, Massachusetts, of its own selection, having
an aggregate capital, surplus, and undivided profits, as shown by
its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Sub-Custodian
and its agents and all instruments held by the Sub-Custodian and
its agents relative thereto and all other property held by it and
its agents under this Agreement and to cause to be transferred to
an account of such successor Sub-Custodian all of the Fund's
securities held in any Securities System. Thereafter, such bank
or trust company shall be the successor of the Sub-Custodian
under this Agreement.
In the event that securities, funds and other properties
remain in the possession of the Sub-Custodian after the date of
termination hereof owing to failure of the Custodian to obtain
the certified copy of vote referred to or of the Trustees to
appoint a successor Sub-Custodian, the Sub-Custodian shall be
entitled to fair compensation for its services during such period
as the Sub-Custodian retains possession of such securities, funds
and other properties and the provisions of this Agreement
relating to the duties and obligations of the Sub-Custodian shall
remain in full force and effect.
Upon termination, the Sub-Custodian shall, upon receipt of a
certified copy of a vote of the Trustees of the Fund, cause to be
delivered to any other Sub-Custodian designated in such vote such
assets, securities and other property of the Fund as are
designated in such vote, or pursuant to Proper Instructions,
cause such assets, securities and other property of the Fund as
are designated by the Custodian to be delivered to one or more of
the sub-custodians designated on Schedule D hereto, as from time
to time amended.
10. EFFECTIVE PERIOD; TERMINATION AND AMENDMENT. This
Agreement shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement of the
parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed, postage prepaid, to
the other party, such termination to take effect not sooner than
thirty (30) days after the date of mailing; provided, however,
that the Sub-Custodian shall not act under Section 2.13 hereof in
the absence of receipt of an initial certificate of the Clerk or
an Assistant Clerk that the Trustees of the Fund have approved
the initial use of a particular Securities System and the receipt
of an annual certificate of the Clerk or an Assistant Clerk that
the Trustees have reviewed the use by the Fund of such Securities
System, as required in each case by Rule 17f-4 under the
Investment Company Act of 1940; and provided, further, however,
that the Custodian shall not amend or terminate this Agreement in
contravention of any applicable federal or state regulations or
any provision of the Declarations of Trust or By-Laws of the
Fund; and provided, further, that the Custodian may at any time,
by action of its Board of Directors, or the Trustees of the Fund,
as the case may be, immediately terminate this Agreement in the
event of the appointment of a conservator or receiver for the Sub-
Custodian by the Comptroller of the Currency or upon the
happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
Upon termination of this Agreement, the Custodian shall pay
to the Sub-Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Sub-
Custodian for its reimbursable costs, expenses and disbursements.
11. AMENDMENT AND INTERPRETATION. This Agreement
constitutes the entire understanding and agreement of the parties
hereto with respect to the subject matter hereof. No provision
of this Agreement may be amended or terminated except by a
statement in writing signed by the party against which
enforcement of the amendment or termination is sought.
In connection with the operation of this Agreement, the Sub-
Custodian and the Custodian may from time to time agree in
writing on such provisions interpretive of or in addition to the
provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. No
interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this
Agreement.
12. GOVERNING LAW. This Agreement is executed and delivered
in The Commonwealth of Massachusetts and shall be governed by and
construed according to the laws of said Commonwealth.
13. NOTICES. Notices and other writings delivered or mailed
postage prepaid to the Custodian addressed to the Custodian
attention: , or to such other person or address as the
Custodian may have designated to the Sub-Custodian in writing, or
to the Sub-Custodian at , or to such other address as
the Sub-Custodian may have designated to the Custodian in
writing, shall be deemed to have been properly delivered or given
hereunder to the respective addressee.
14. BINDING OBLIGATION. This Agreement shall be binding on
and shall inure to the benefit of the Custodian and the Sub-
Custodian and their respective successors and assigns, provided
that neither party hereto may assign this Agreement or any of its
rights or obligations hereunder without the prior written consent
of the other party.
15. PRIOR AGREEMENTS. This Agreement supersedes and
terminates, as of the date hereof, all prior contracts between
the Fund or the Custodian and the Sub-Custodian relating to the
custody of the Fund's assets.
16. DECLARATION OF TRUST. A copy of the Agreement and
Declaration of Trust of the Fund is on file with the Secretary of
The Commonwealth of Massachusetts, and notice is hereby given
that the obligations of or arising out of this instrument are not
binding upon any of the Trustees or beneficiaries individually
but binding only upon the assets and property of the Funds.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the day of , 199 .
PUTNAM FIDUCIARY TRUST COMPANY
By ---------------------------
(SUB-CUSTODIAN)
By ---------------------------
EXHIBIT 1(A)
MASTER FOREIGN SUB-CUSTODIAN AGREEMENT
AGREEMENT made this day of , 199 , between
Putnam Fiduciary Trust Company, a Massachusetts-chartered trust
company (the "Custodian"), and ,
(the "Sub-Custodian").
WHEREAS, the Sub-Custodian represents to the Custodian that
it is eligible to serve as a custodian for a management
investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), and
WHEREAS, the Custodian has entered into a Custodian
Agreement between it and each of the Putnam Funds listed in
Schedule A to this Agreement, each of such Funds acting on its
own behalf separately from all the other Funds and not jointly or
jointly and severally with any of the other Funds (each of the
Funds being hereinafter referred to as the "Fund"), and
WHEREAS, the Custodian and the Fund desire to utilize
sub-custodians for the purpose of holding cash and securities of
the Fund, and
WHEREAS, the Custodian wishes to appoint the Sub-Custodian
as the Fund's Sub-Custodian,
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
10 APPOINTMENT OF SUB-CUSTODIAN. The Custodian hereby employs
and appoints the Sub-Custodian as a sub-custodian for safekeeping
of securities and other assets of the Fund for the term and
subject to the provisions of this Agreement. Upon request, the
Custodian shall deliver to the Sub-Custodian such proxies, powers
of attorney or other instruments as may be reasonably necessary
or desirable in connection with the performance by the
Sub-Custodian of its obligations under this Agreement on behalf
of the Fund.
20 DUTIES OF THE SUB-CUSTODIAN WITH RESPECT TO PROPERTY OF
THE FUND HELD BY IT. The Custodian may from time to time deposit
or direct the deposit of securities or cash owned by the Fund
with the Sub-Custodian. The Sub-Custodian shall have no
responsibility or liability for or on account of securities,
funds or other property of the Fund not so delivered to it.
Except for securities and funds held by 17f-5 Sub-Custodians (as
defined in Section 2.11(b)) the Sub-Custodian shall hold and
dispose of the securities or cash hereafter held by or deposited
with the Sub-Custodian as follows:
2.1. HOLDING SECURITIES. The Sub-Custodian shall hold
and, by book-entry or otherwise, identify as belonging to the
Fund all non-cash property which has been delivered to the
Sub-Custodian. All such securities are to be held or disposed of
for, and subject at all times to the instructions of, the
Custodian pursuant to the terms of this Agreement. The
Sub-Custodian shall maintain adequate records identifying the
securities as being held by it as sub-custodian of the Fund.
2.2. DELIVERY OF SECURITIES. The Sub-Custodian shall
release and deliver securities of the Fund held by it hereunder
(or in a Securities System account of the Sub-Custodian) only
upon receipt of Proper Instructions (as defined in Section 2.19),
which may be continuing instructions when deemed appropriate by
the parties, and only in the following cases:
1 Upon sale of such securities for the account
of the Fund and receipt of payment therefor, provided, however,
that the Sub-Custodian may release and deliver securities prior
to the receipt of payment therefor if (i) in the Sub-Custodian's
judgment, (A) release and delivery prior to payment is required
by the terms of the instrument evidencing the security or (B)
release and delivery prior to payment is the prevailing method of
settling securities transactions between institutional investors
in the applicable market and (ii) release and delivery prior to
payment is in accordance with generally accepted trade practice
and with any applicable governmental regulations and the rules of
Securities Systems or other securities depositories and clearing
agencies in the applicable market. The Sub-Custodian agrees,
upon request, to advise the Custodian of all pending transactions
in which release and delivery will be made prior to the receipt
of payment therefor;
2) Upon the receipt of payment in connection with
any
repurchase agreement related to such securities entered into by
the Fund;
3) In the case of a sale effected through a
Securities
System, in accordance with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with
tender
or other similar offers for such securities; provided that, in any
such case, the cash or other consideration is thereafter to be
delivered to the Sub-Custodian;
5 To the issuer thereof or its agent when such
securities are called, redeemed, retired or otherwise become
payable; provided that, in any such case, the cash or other
consideration is thereafter to be delivered to the Sub-Custodian;
6 To the issuer thereof, or its agent, for
transfer into the name of the Fund or into the name of any nominee
or nominees of the Sub-Custodian or into the name or nominee name
of any agent appointed pursuant to Section 2.11 or any other name
permitted pursuant to Section 2.3; or for exchange for a different
number of bonds, certificates or other evidence representing the
same aggregate face amount or number of units; provided that, in
any such case, the new securities are thereafter to be delivered
to the Sub-Custodian;
7 Upon the sale of such securities for the
account of the Fund, to the broker or its clearing agent, against
a receipt, for examination in accordance with "street delivery"
custom; provided that, in any such case, the Sub-Custodian shall
have no responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Sub-Custodian's own
negligence or willful misconduct;
8 For exchange or conversion pursuant to any plan
of merger, consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such securities,
or pursuant to provisions for conversion contained in such
securities, or pursuant to any deposit agreement; provided that,
in any such case, the new securities and cash, if any, thereafter
are to be delivered to the Sub-Custodian;
9 In the case of warrants, rights or similar
securities, the surrender thereof in the exercise of such
warrants, rights or similar securities or the surrender of interim
receipts or temporary securities for definitive securities;
provided that, in any such case, the now securities and cash, if
any, are thereafter to be delivered to the Sub-Custodian;
10 For delivery in connection with any loans of
securities made by the Fund, but only against receipt of
collateral the adequacy and timing of receipt of which shall be as
agreed upon from time to time in writing by the Custodian and the
Sub-Custodian, which may be in the form of cash or obligations
issued by the United States government, its agencies or
instrumentalities;
11 For delivery as security in connection with
any borrowings by the Fund requiring a pledge of assets by the
Fund, but only against receipt of amounts borrowed;
12 Upon receipt of instructions from the transfer
agent for the Fund (the "Transfer Agent"), for delivery to such
Transfer Agent or to the shareholders of the Fund in connection
with distributions in kind, in satisfaction of requests by
shareholders for repurchase or redemption;
13 For delivery to the Custodian or another
sub-custodian of the Fund; and
14 For any other proper purpose, but only upon
receipt of, in addition to Proper Instructions, a certified copy
of a resolution of the Trustees or of the Executive Committee of
the Fund signed by an officer of the Fund and certified by its
Clerk or an Assistant Clerk, specifying the securities to be
delivered, setting forth the purpose for which such delivery is to
be made, declaring such purposes to be proper corporate purposes,
and naming the person or persons to whom delivery of such
securities is to be made.
2.3. REGISTRATION OF SECURITIES. Securities of the
Fund held by the Sub-Custodian hereunder (other than bearer
securities) shall be registered in the name of the Fund or in the
name of any nominee of the Fund or of any nominee of the
Sub-Custodian or any 17f-5 Sub-Custodian or Foreign Depository (as
each of those terms is defined in Section 2.11(b)), which nominee
shall be assigned exclusively to the Fund, unless the Fund has
authorized in writing the appointment of a nominee to be used in
common with other registered investment companies having the same
investment adviser as the Fund, or in the name or nominee name of
any agent appointed pursuant to Section 2.11(a). Notwithstanding
the foregoing, the Sub-Custodian or agent thereof or any 17f-5 Sub-
Custodian or Foreign Depository may hold securities of the Fund in
a nominee name which is used for its other clients provided that
such name is not used by the Sub-Custodian, agent, 17f-5 Sub-
Custodian or Foreign Depository for its own securities and that
securities of the Fund are, by book-entry or otherwise, at all
times identified as belonging to the Fund and distinguished from
other securities held for other clients using the same nominee
name. In addition, and notwithstanding the foregoing, the Sub-
Custodian or agent thereof or 17f-5 Sub-Custodian or Foreign
Depository may hold securities of the Fund in its own name if such
registration is the prevailing method in the applicable market by
which custodians register securities of institutional clients and
provided that securities of the Fund are, by book-entry or
otherwise, at all times identified as belonging to the Fund and
distinguished from other securities held for other clients or for
the Sub-Custodian or agent thereof or 17f-5 Sub-Custodian or
Foreign Depository. All securities accepted by the Sub-Custodian
under the terms of this Agreement shall be in good delivery form.
2.4. BANK ACCOUNTS. The Sub-Custodian shall open and
maintain a separate bank account or accounts in the name of the
Fund or of the Custodian for the benefit of the Fund, subject only
to draft or order by the Sub-Custodian acting pursuant to the
terms of this Agreement or by the Custodian acting pursuant to the
Custodian Agreement, and shall hold in such account or accounts,
subject to the provisions hereof, to the Sub-Custodian's credit as
sub-custodian of the Fund or the Custodian's credit as custodian
for the Fund, cash received for the account of the Fund other than
cash maintained by the Fund in a bank account established and used
in accordance with Rule 17f-3 under the 1940 Act or cash held as
deposits with 17f-5 Sub-Custodians in accordance with the
following paragraph. The responsibilities of the Sub-Custodian
for cash, including foreign currency, of the Fund accepted on the
Sub-Custodian's books as a deposit shall be that of a U.S. bank
for a similar deposit.
The Sub-Custodian may open a bank account on the books of a
17f-5 Sub-Custodian in the name of the Fund or of the Sub-
Custodian as a sub-custodian for the Fund, and may deposit cash,
including foreign currency, of the Fund in such account, and such
funds shall be withdrawable only pursuant to draft or order of the
Sub-Custodian. The records for such account will be maintained by
the Sub-Custodian but such account shall not constitute a deposit
liability of the Sub-Custodian. The responsibilities of the Sub-
Custodian for deposits maintained in such account shall be the
same as and no greater than the Sub-Custodian's responsibility in
respect of other portfolio securities of the Fund.
The Sub-Custodian shall be liable for actual losses incurred
by the Fund attributable to any failure on the part of the Sub-
Custodian to report accurate cash availability information with
respect to the bank accounts referred to in this Section 2.4.
2.5. PAYMENTS FOR SHARES. The Sub-Custodian shall
maintain custody of amounts received from the Transfer Agent of
the Fund for shares of the Fund issued by the Fund and sold by its
distributor and deposit such amounts into the Fund's account. The
Sub-Custodian will provide timely notification to the Custodian
and the Transfer Agent of any receipt by it of payments for shares
of the Fund.
2.6. AVAILABILITY OF FEDERAL FUNDS. Upon mutual
agreement between the Custodian and the Sub-Custodian, the
Sub-Custodian shall, upon the receipt of Proper Instructions, make
federal funds available to the Custodian for the account of the
Fund as of specified times agreed upon from time to time by the
Custodian and the Sub-Custodian with respect to amounts received
by the Sub-Custodian for the purchase of shares of the Fund.
2.7. COLLECTION OF INCOME. The Sub-Custodian shall
collect on a timely basis all income and other payments with
respect to registered securities held hereunder, including
securities held in a Securities System, to which the Fund shall be
entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and other
payments with respect to bearer securities if, on the date of
payment by the issuer, such securities are held hereunder and
shall credit such income, as collected, to the Fund's account.
Without limiting the generality of the foregoing, the
Sub-Custodian shall detach and present for payment all coupons and
other income items requiring presentation as and when they become
due and shall collect interest when due on securities held
hereunder. Arranging for the collection of income due the Fund on
securities loaned pursuant to the provisions of Section 2.2(10)
shall be the responsibility of the Custodian. The Sub-Custodian
will have no duty or responsibility in connection therewith, other
than to provide the Custodian with such information or data as may
be necessary to assist the Custodian in arranging for the timely
delivery to the Sub-Custodian of the income to which the Fund is
properly entitled.
2.8. PAYMENT OF FUND MONIES. Upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, the Sub-Custodian shall cause monies
of the Fund to be paid out in the following cases only:
1 Upon the purchase of securities for the account
of the Fund but only (a) against the delivery of such securities
to the Sub-Custodian (or any bank, banking firm or trust company
doing business in the United States or abroad which is qualified
under the 1940 Act, as amended, to act as a custodian and has been
designated by the Sub-Custodian as its agent for this purpose) or
any 17f-5 Sub-Custodian or any Foreign Depository (as each of
those terms is defined in Section 2.11(b)) registered in the name
of the Fund or in the name of a nominee referred to in Section 2.3
hereof or in proper form for transfer, provided, however, that the
Sub-Custodian may cause monies of the Fund to be paid out prior to
delivery of such securities if (i) in the Sub-Custodian's
judgment, (A) payment prior to delivery is required by the terms
of the instrument evidencing the security or (B) payment prior to
delivery is the prevailing method of settling securities
transactions between institutional investors in the applicable
market and (ii) payment prior to delivery is in accordance with
generally accepted trade practice and with any applicable
governmental regulations and the rules of Securities Systems or
other securities depositories and clearing agencies in the
applicable market. The Sub-Custodian agrees, upon request, to
advise the Custodian of all pending transactions in which payment
will be made prior to the receipt of securities in accordance with
the proviso to the foregoing sentence; (b) in the case of a
purchase effected through a Securities System, in accordance with
the conditions set forth in Section 2.12 hereof; or (c) (i) in the
case of a repurchase agreement entered into between the Fund and
the Sub-Custodian, another bank or a broker-dealer, against
delivery of the securities either in certificate form or through
an entry crediting the Sub-Custodian's or its agent's
non-proprietary account at any Federal Reserve Bank with such
securities or (ii) in the case of a repurchase agreement entered
into between the Fund and the Sub-Custodian, against delivery of a
receipt evidencing purchase by the Fund of securities owned by the
Sub-Custodian along with written evidence of the agreement by the
Sub-Custodian to repurchase such securities from the Fund; or (d)
for transfer to a time deposit account of the Fund in any bank,
whether domestic or foreign, which transfer may be effected prior
to receipt of a confirmation of the deposit from the applicable
bank or a financial intermediary;
2) In connection with conversion, exchange or
surrender or tender or exercise of securities owned by the Fund as
set forth in Section 2.2 hereof;
3) For the redemption or repurchase of shares
issued by the Fund as set forth in Section 2.10 hereof;
4) For the payment of any expense or liability
incurred by the Fund, including but not limited to the following
payments for the account of the Fund: interest, taxes, management,
accounting, custodian and sub-custodian, transfer agent and legal
fees, including the Custodian's fee; and operating expenses of the
Fund whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends or other
distributions declared to shareholders of the Fund;
6) For transfer to the Custodian or another
sub-custodian of the Fund; and
7) For any other proper purpose, but only upon
receipt of, in addition to Proper Instructions, a certified copy
of a resolution of the Trustees or of the Executive Committee of
the Fund signed by an officer of the Fund and certified by its
Clerk or Assistant Clerk, specifying the amount of such payment,
setting forth the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and naming the
person or persons to whom such payment is to be made.
2.9. LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF
SECURITIES PURCHASED. Except as otherwise provided in this
Agreement, in any and every case where payment for purchase of
securities for the account of the Fund is made by the
Sub-Custodian in advance of receipt of the securities purchased in
the absence of Proper Instructions from the Custodian to so pay in
advance, the Sub-Custodian shall be absolutely liable to the Fund
and the Custodian in the event any loss results to the Fund or the
Custodian from the payment by the Sub-Custodian in advance of
delivery of such securities.
2.10. PAYMENTS FOR REPURCHASES OR REDEMPTIONS OF SHARES
OF THE FUND. From such funds as may be available, the
Sub-custodian shall, upon receipt of Proper Instructions, make
funds available for payment to a shareholder of the Fund who has
delivered to the Transfer Agent a request for redemption or
repurchase of shares of the Fund. In connection with the
redemption or repurchase of shares of the Fund, the Sub-Custodian,
upon receipt of Proper Instructions, is authorized to wire funds
to or through a commercial bank designated by the redeeming
shareholder. In connection with the redemption or repurchase of
shares of the Fund, the Sub-Custodian, upon receipt of Proper
Instructions, shall honor checks drawn on the Sub-Custodian by a
shareholder, when presented to the Sub-Custodian in accordance
with such procedures and controls as are mutually agreed upon from
time to time among the Fund, the Custodian and the Sub-Custodian.
2.11. APPOINTMENT OF AGENTS AND SUB-CUSTODIANS PURSUANT
TO RULE 17F-5.
(a) Agents. Without limiting its own responsibility
for its obligations assumed hereunder, the Sub-Custodian may at
any time and from time to time engage, at its own cost and
expense, as an agent to act for the Fund on the Sub-Custodian's
behalf with respect to any such obligations any bank or trust
company which meets the requirements of the 1940 Act, and the
rules and regulations thereunder, to perform services delegated to
the Sub-Custodian hereunder, provided that the Fund and the
Custodian shall have approved in writing any such bank or trust
company. All agents of the Sub-Custodian shall be subject to the
instructions of the Sub-Custodian and not the Custodian. The Sub-
Custodian may, at any time in its discretion, and shall at the
Custodian's direction, remove any bank or trust company which has
been appointed as an agent, and shall in either case promptly
notify the Custodian and the Fund in writing of the completion of
any such action.
The agents which the Fund has approved to date are set forth
in Schedule B hereto. Schedule B shall be amended from time to
time as approved agents are changed, added or deleted. The
Custodian shall be responsible for informing the Sub-Custodian
sufficiently in advance of a proposed investment which is to be
held at a location not listed on Schedule B, in order that there
shall be sufficient time for the Fund to give the approval
required by the preceding paragraph and for the Sub-Custodian to
complete the appropriate contractual and technical arrangements
with such agent. The engagement by the Sub-Custodian of one or
more agents shall not relieve the Sub-Custodian of its
responsibilities or liabilities hereunder.
(b) 17f-5 Sub-Custodians. Securities, funds and other
property of the Fund may be held by sub-custodians appointed
pursuant to the provisions of this Section 2.11 (each, a "17f-5
Sub-Custodian"). The Sub-Custodian may, at any time and from time
to time, appoint any bank or trust company (that meets the
requirements of a custodian or a foreign custodian under the
Investment Company Act of 1940 and the rules and regulations
thereunder, including without limitation Rule 17f-5 thereunder, or
that has received an order of the Securities and Exchange
Commission ("SEC") exempting it from any of such requirements that
it does not meet) to act as a 17f-5 Sub-Custodian for the Fund,
provided that the Fund shall have approved in writing (1) any such
bank or trust company and the sub-custodian agreement to be
entered into between such bank or trust company and the Sub-
Custodian, and (2) the 17f-5 Sub-Custodian's offices or branches
at which the 17f-5 Sub-Custodian is authorized to hold securities,
cash and other property of the Fund. Upon such approval by the
Fund, the Sub-Custodian is authorized on behalf of the Fund to
notify each 17f-5 Sub-Custodian of its appointment as such. The
Sub-Custodian may, at any time in its discretion, remove any bank
or trust company that has been appointed as a 17f-5 Sub-Custodian.
Those 17f-5 Sub-Custodians and their offices or branches
which the Fund has approved to date are set forth on Schedule C
hereto. Such Schedule C shall be amended from time to time as 17f-
5 Sub-Custodians, branches or offices are changed, added or
deleted. The Custodian shall be responsible for informing the Sub-
Custodian sufficiently in advance of a proposed investment which
is to be held at a location not listed on Schedule C, in order
that there shall be sufficient time for the Fund to give the
approval required by the preceding paragraph and for the Sub-
Custodian to put the appropriate arrangements in place with such
17f-5 Sub-Custodian pursuant to such sub-custodian agreement.
With respect to the securities and funds held by a 17f-5 Sub-
Custodian, either directly or indirectly, including demand and
interest bearing deposits, currencies or other deposits and
foreign exchange contracts, the Sub-Custodian shall be liable to
the Custodian and the Fund if and only to the extent that such 17f-
5 Sub-Custodian is liable to the Sub-Custodian and the Sub-
Custodian recovers under the applicable sub-custodian agreement,
provided, however, that the foregoing limitation shall not apply
if such 17f-5 Sub-Custodian's liability to the Sub-Custodian is
limited because the applicable sub-custodian agreement does not
contain provisions substantially similar to the provisions of
Section 2 (but not including Section 2.12) of this Agreement. The
Sub-Custodian shall also be liable to the Custodian and the Fund
for its own negligence in transmitting any instructions received
by it from the Fund or the Custodian and for its own negligence in
connection with the delivery of any securities or funds held by it
to any such 17f-5 Sub-Custodian.
The Custodian or the Fund may authorize the Sub-Custodian or
one or more of the 17f-5 Sub-Custodians to use the facilities of
one or more foreign securities depositories or clearing agencies
(each, a "Foreign Depository") that is permitted to be used by
registered investment companies by a Rule or Rules of the SEC or
that has received an order of the SEC exempting it from any of
such requirements that it does not meet. The records of the Sub-
Custodian or a 17f-5 Sub-Custodian employing a Foreign Depository
or clearing agency shall identify those securities belonging to
the Fund which are maintained in such a Foreign Depository. The
engagement by the Sub-Custodian of one or more Foreign
Depositories shall not relieve the Sub-Custodian of its
responsibilities or liabilities hereunder. The Foreign
Depositories which the Fund has approved to date are set forth in
Schedule C hereto. Schedule C shall be amended from time to time
as approved Foreign Depositories are changed, added or deleted.
The Custodian shall be responsible for informing the Sub-Custodian
sufficiently in advance of a proposed investment which is to be
held at a location not listed on Schedule C, in order that there
shall be sufficient time for the Fund to give the approval
required by the preceding paragraph and for the Sub-Custodian to
complete the appropriate contractual and technical arrangements
with such Foreign Depository.
In the event that any 17f-5 Sub-Custodian appointed pursuant
to the provisions of this Section 2.11 fails to perform any of its
obligations under the terms and conditions of the applicable sub-
custodian agreement, the Sub-Custodian shall use its best efforts
to cause such 17f-5 Sub-Custodian to perform such obligations. In
the event that the Sub-Custodian is unable to cause such 17f-5 Sub-
Custodian to perform fully its obligations thereunder, the Sub-
Custodian shall forthwith upon the Custodian's request terminate
such 17f-5 Sub-Custodian as a sub-custodian for the Fund and, if
necessary or desirable, appoint another 17f-5 Sub-Custodian in
accordance with the provisions of this Section 2.11. At the
election of the Custodian, it shall have the right to enforce and
shall be subrogated to the Sub-Custodian's rights against any such
17f-5 Sub-Custodian for loss or damage caused the Fund by such 17f-
5 Sub-Custodian.
At the written request of the Fund, the Sub-Custodian will
terminate as a sub-custodian for the Fund any 17f-5 Sub-Custodian
appointed pursuant to the provisions of this Section 2.11 in
accordance with the termination provisions under the applicable
sub-custodian agreement. The Sub-Custodian will not amend any sub-
custodian agreement or agree to change or permit any changes
thereunder except upon the prior written approval of the Fund.
In the event the Sub-Custodian makes any payment to a 17f-5
Sub-Custodian under the indemnification provisions of any sub-
custodian agreement, no more than thirty days after written notice
to the Custodian of the Sub-Custodian's having made such payment,
the Custodian will reimburse the Sub-Custodian the amount of such
payment except in respect of any negligence or misconduct of the
Sub-Custodian.
2.12. DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS.
The Sub-Custodian may deposit and/or maintain securities owned by
the Fund in a clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities Exchange
Act of 1934, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of the
Treasury or by a federal agency (collectively referred to herein
as "Securities System") in accordance with applicable rules and
regulations (including Rule 17f-4 of the 1940 Act), and subject to
the following provisions:
1) The Sub-Custodian may, either directly or
through one or more agents, keep securities of the Fund in a
Securities System provided that such securities are represented in
an account ("Account") of the Sub-Custodian or such an agent in
the Securities System which shall not include any assets other
than assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Sub-Custodian with respect
to securities of the Fund which are maintained in a Securities
System shall identify by book-entry those securities belonging to
the Fund;
3) The Sub-Custodian shall pay for securities
purchased for the account of the Fund upon (i) receipt of advice
from the Securities System that such securities have been
transferred to the Account, and (ii) the making of an entry on the
records of the Sub-Custodian to reflect such payment and transfer
for the account of the Fund. The Sub-Custodian shall transfer
securities sold for the account of the Fund upon (i) receipt of
advice from the Securities System that payment for such securities
has been transferred to the Account, and (ii) the making of an
entry on the records of the Sub-Custodian to reflect such transfer
and payment for the account of the Fund. Copies of all advices
from the Securities System of transfers of securities for the
account of the Fund shall identify the Fund, be maintained for the
Fund by the Sub-Custodian or such an agent and be provided to the
Fund or the Custodian at the Custodian's request. The
Sub-Custodian shall furnish the Custodian confirmation of each
transfer to or from the account of the Fund in the form of a
written advice or notice and shall furnish to the Custodian copies
of daily transaction statements reflecting each day's transactions
in the Securities System for the account of the Fund on the next
business day;
4) The Sub-Custodian shall provide the Custodian
with any report obtained by the Sub-Custodian on the Securities
System's accounting system, internal accounting controls and
procedures for safeguarding securities deposited in the Securities
System;
5) The Sub-Custodian shall utilize only such
Securities Systems as are set forth in a list provided by the
Custodian of Securities Systems approved for use by the Board of
Trustees of the Fund, which list will be amended from time to time
by the Custodian as may be necessary to reflect any subsequent
action taken by the Trustees of the Fund;
6) Anything to the contrary in this Agreement
notwithstanding, the Sub-Custodian shall be liable to the Fund and
the Custodian for any loss or damage to the Fund or the Custodian
resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Sub-Custodian or any
of its agents or of any of its or their employees or from failure
of the Sub-Custodian or any such agent or employee to enforce
effectively such rights as it may have against the Securities
System. At the election of the Custodian, it shall be entitled to
be subrogated to the rights of the Sub-Custodian with respect to
any claim against the Securities System or any other person which
the Sub-Custodian may have as a consequence of any such loss or
damage if and to the extent that the Fund and the Custodian have
not been made whole for any such loss or damage.
2.13. DEPOSITARY RECEIPTS. Only upon receipt of Proper
Instructions, the Sub-Custodian shall instruct a 17f-5 Sub-
Custodian appointed pursuant to Section 2.11(b) hereof or an agent
of the Sub-Custodian appointed pursuant to Section 2.11(a) hereof
(an "Agent") to surrender securities to the depositary used by an
issuer of American Depositary Receipts or International Depositary
Receipts (hereinafter collectively referred to as "ADRs") for such
securities against a written receipt therefor adequately
describing such securities and written evidence satisfactory to
the 17f-5 Sub-Custodian or Agent that the depositary has
acknowledged receipt of instructions to issue with respect to such
securities ADRs in the name of the Sub-Custodian, or a nominee of
the Sub-Custodian, for delivery to the Sub-Custodian in Boston,
Massachusetts, or at such other place as the Sub-Custodian may
from time to time designate.
Only upon receipt of Proper Instructions, the Sub-Custodian
shall surrender ADRs to the issuer thereof against a written
receipt therefor adequately describing the ADRs surrendered and
written evidence satisfactory to the Sub-Custodian that the issuer
of the ADRs has acknowledged receipt of instructions to cause its
depository to deliver the securities underlying such ADRs to a 17f-
5 Sub-Custodian or an Agent.
2.14. FOREIGN EXCHANGE TRANSACTIONS AND FUTURES
CONTRACTS. Only upon receipt of Proper Instructions, the Sub-
Custodian shall enter into foreign exchange contracts or options
to purchase and sell foreign currencies for spot and future
delivery on behalf and for the account of the Fund or shall enter
into futures contracts or options on futures contracts. Such
transactions may be undertaken by the Sub-Custodian with such
banking institutions, including the Sub-Custodian and 17f-5 Sub-
Custodian(s) appointed pursuant to Section 2.11(b), as principals,
as approved and authorized by the Fund. In connection with such
transaction, the Sub-Custodian is authorized to make free outgoing
payments of cash in the form of U.S. Dollars or foreign currency
without receiving confirmation of a foreign exchange contract,
futures contract or option thereon or confirmation that the
countervalue currency completing the foreign exchange contract or
futures contract has been delivered or received or that the option
has been delivered or received. Foreign exchange contracts,
futures contracts and options, other than those executed with the
Sub-Custodian as principal, shall for all purposes of this
Agreement be deemed to be portfolio securities of the Fund.
2.15. OPTION TRANSACTIONS. Only upon receipt of Proper
Instructions, the Sub-Custodian shall enter into option
transactions in accordance with the provisions of any agreement
among the Fund, the Custodian, and/or the Sub-Custodian and a
broker-dealer.
2.16. OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The
Sub-Custodian shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection
with receipt of income or other payments with respect to
securities held by it hereunder and in connection with transfers
of securities.
2.17. PROXIES. The Sub-Custodian shall, with respect
to the securities held hereunder, cause to be promptly executed by
the registered holder of such securities, if the securities are
registered other than in the name of the Fund, all proxies that
are received by the Sub-Custodian, without indication of the
manner in which such proxies are to be voted, and shall promptly
deliver to the Custodian such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.18. COMMUNICATIONS RELATING TO FUND PORTFOLIO
SECURITIES. The Sub-Custodian shall transmit promptly to the
Custodian all written information (including, without limitation,
pendency of calls and maturities of securities and expirations of
rights in connection therewith) received by the Sub-Custodian from
issuers of the securities being held for the account of the Fund.
With respect to tender or exchange offers, the Sub-Custodian shall
transmit promptly to the Custodian all written information
received by the Sub-Custodian from issuers of the securities whose
tender or exchange is sought and from the party (or his agents)
making the tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer or any
other similar transactions, the Custodian shall notify the
Sub-Custodian of the action the Fund desires the Sub-Custodian to
take; provided, however, that the Sub-Custodian shall not be
liable to the Fund or the Custodian for the failure to take any
such action unless Proper Instructions are received by the
Sub-Custodian at least two business days prior to the date on
which the Sub-Custodian is to take such action, or in the case of
foreign securities, such longer periods as shall have been agreed
upon in writing by the Custodian and the Sub-Custodian, which may
be in the form of written operating procedures or standards.
2.19. PROPER INSTRUCTIONS. Proper Instructions as used
throughout this Agreement means a writing signed or initialed by
one or more persons who are authorized by the Trustees of the Fund
and by the Custodian. Each such writing shall set forth the
specific transaction or type of transaction involved. Oral
instructions will be considered Proper Instructions if the
Sub-Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the
transaction involved. The Custodian shall cause all oral
instructions to be confirmed in writing. Proper Instructions
shall also include communications effected directly between the
Custodian and Sub-Custodian by electro-mechanical or electronic
devices, provided that the Custodian and the Sub-Custodian have
approved such procedures. Notwithstanding the foregoing, no
Trustee, officer, employee or agent of the Fund
shall be permitted access to any securities or similar investments
of the Fund deposited with the Sub-Custodian or any agent for any
reason except in accordance with the provisions of Rule 17f-2
under the 1940 Act.
2.20. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The
Sub-Custodian may in its discretion, without express authority
from the Custodian:
1) make payments to itself or others for minor
expenses of handling securities or other similar items relating to
its duties under this Agreement, provided that all such payments
shall be accounted for to the Custodian;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the
Fund, checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary
details in connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the securities and
property of the Fund held by the Sub-Custodian hereunder except as
otherwise directed by the Custodian.
2.21. EVIDENCE OF AUTHORITY. The Sub-Custodian shall
be protected in acting upon any instruction, notice, request,
consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to have been properly executed by
or on behalf of the Fund or the Custodian as custodian of the
Fund.
2.22. PERFORMANCE STANDARDS. The Sub-Custodian shall
use its best efforts to perform its duties hereunder in accordance
with such standards as are agreed upon from time to time by the
Custodian and the Sub-Custodian.
3. RECORDS. The Sub-Custodian shall cooperate with and
supply necessary information to the entity or entities appointed
by the Trustees of the Fund to keep the books of account of the
Fund or, if directed in writing to do so by the Custodian, shall
itself keep such books of account. The Sub-Custodian shall create
and maintain all records relating to its activities and
obligations under this Agreement in such manner as will meet the
obligations of the Fund under the 1940 Act, with particular
attention to Sections 17(f) and 31 thereof and Rules 17f-2, 31a-1
and 31a-2 thereunder; the Sub-Custodian shall also create and
maintain such records as are required by applicable federal and
state tax laws, and any other law or administrative rules or
procedures which may be applicable to the Fund or the Custodian,
such laws, rules or procedures to be specified by the Custodian
from time to time. All such records shall be the property of the
Fund and shall at all times during the regular business hours of
the Sub-Custodian be open for inspection by duly authorized
officers, employees or agents of the Custodian and the Fund and
employees and agents of the Securities and Exchange Commission.
The Sub-Custodian shall, at the Custodian's request, supply the
Custodian with a tabulation of securities owned by the Fund and
held under this Agreement and shall, when requested to do so by
the Custodian and for such compensation as shall be agreed upon
between the Custodian and Sub-Custodian, include certificate
numbers in such tabulations.
4. Opinion and Reports of the Fund's Independent Accountant.
The Sub-Custodian shall take all reasonable actions, as the
Custodian may from time to time request, to furnish such
information with respect to its activities hereunder as the Fund's
independent public accountant may request in connection with the
accountant's verification of the Fund's securities and similar
investments as required by Rule 17f-2 under the 1940 Act, the
preparation of the Fund's registration statement and amendments
thereto, the Fund's reports to the Securities and Exchange
Commission and with respect to any other requirements of such
Commission.
5. Reports of Sub-Custodian's Independent Accountant. The
Sub-Custodian shall provide the Custodian, at such times as the
Custodian may reasonably require, with reports by an independent
public accountant on the accounting system, internal accounting
controls and procedures for safeguarding securities, including
securities deposited and/or maintained in a Securities System,
relating to the services provided by the Sub-Custodian under this
Agreement; such reports, which shall be of sufficient scope and in
sufficient detail as may reasonably be required by the Custodian,
shall provide reasonable assurance that any material inadequacies
would be disclosed by such examination, and if there are no such
inadequacies, shall so state.
6. Compensation. The Sub-Custodian shall be entitled to
reasonable compensation for its services and expenses as
sub-custodian, as agreed upon from time to time between the
Custodian and the Sub-Custodian.
7. Responsibility of Sub-Custodian. The Sub-Custodian shall
exercise reasonable care and diligence in carrying out the
provisions of this Agreement and shall not be liable to the Fund
or the Custodian for any action taken or omitted by it in good
faith without negligence or willful misconduct. So long as and to
the extent that it is in the exercise of reasonable care, the
Sub-Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received
by it or delivered by it pursuant to this Agreement and shall be
held harmless in acting upon any notice, request, consent,
certificate or other instrument reasonably believed by it to be
genuine and, if in writing, reasonably believed to be signed by
the proper party or parties. It shall be entitled to rely on and
may act upon advice of counsel (who may be counsel for the Fund)
on all matters and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
Notwithstanding the foregoing, the responsibility of the
Sub-Custodian with respect to redemptions effected by check shall
be in accordance with a separate agreement entered into between
the Custodian and the Sub-Custodian. It is also understood that
the Sub-Custodian shall not be liable for any loss resulting from
a Sovereign Risk. A "Sovereign Risk" shall mean nationalization,
expropriation, devaluation, revaluation, confiscation, seizure,
cancellation, destruction or similar action by any governmental
authority, de facto or de jure; or enactment, promulgation,
imposition or enforcement by any such governmental authority of
currency restrictions, exchange controls, taxes, levies or other
charges affecting the Fund's property; or acts of war, terrorism,
insurrection or revolution; or any other similar act or event
beyond the Sub-Custodian's control.
The Sub-Custodian shall protect the Fund and the Custodian
from losses to the Fund resulting from any act or failure to act
of the Sub-Custodian in violation of its duties hereunder or of
any law applicable to the Sub-Custodian's duties hereunder.
If the Custodian requires the Sub-Custodian to take any
action with respect to securities, which action involves the
payment of money or which action may, in the opinion of the
Sub-Custodian, result in the Sub-Custodian's being liable for the
payment of money or incurring liability of some other form, the
Custodian, as a prerequisite to requiring the Sub-Custodian to
take such action, shall provide indemnity to the Sub-Custodian in
an amount and form satisfactory to the Sub-Custodian.
The Custodian agrees to indemnify and hold harmless the
Sub-Custodian from and against all taxes, charges, expenses,
assessments, claims and liabilities (including counsel fees)
(collectively, "Authorized Charges") incurred or assessed against
it or its nominee in connection with the performance of this
Agreement, except such as may arise from its own negligent action,
negligent failure to act or willful misconduct. The Sub-Custodian
is authorized to charge any account of the Fund for such items and
such fees. To secure any such Authorized Charges and any advances
of cash or securities made by the Sub-Custodian to or for the
benefit of the Fund for any purpose which results in the Fund's
incurring an overdraft at the end of any business day or for
extraordinary or emergency purposes during any business day, the
Custodian on behalf of the Fund hereby represents that it has
obtained from the Fund authorization to apply available cash in
any account maintained by the Sub-Custodian on behalf of the Fund
and a security interest in and pledge to the Sub-Custodian of
securities of the Fund held by the Sub-Custodian (including those
which may be held in a Securities System) up to a maximum of 10%
of the value of the net assets held by the Sub-Custodian for the
purposes of securing payment of any Authorized Charges and any
advances of cash or securities, and that the Fund has agreed, from
time to time, to designate in writing, or to cause its investment
adviser to, or permit the Custodian to, designate in writing, the
securities subject to such security interest and pledge with such
specificity and detail as the Sub-Custodian may reasonably request
(and in the absence of such designation to permit the Sub-
Custodian so to designate securities). The Custodian hereby
grants on behalf of the Fund a security interest and pledge to the
Sub-Custodian, as aforesaid, in securities and available cash, as
security for any Authorized Charges and any advances of cash or
securities and agrees that, should the Fund or the Custodian fail
to repay promptly any Authorized Charges and any advances of cash
or securities, the Sub-Custodian shall be entitled to use such
available cash and to dispose of such pledged securities as is
necessary to repay any such Authorized Charges or any advances of
cash or securities and to exercise the rights of a secured party
under the Uniform Commercial Code.
The Custodian agrees not to amend the third paragraph of
Section 9 of the Custodian Agreement unless it provides the Sub-
Custodian with at least thirty (30) days' prior written notice of
the substance of any proposed amendments, provided that the
foregoing shall not be construed to in any way to provide that the
Sub-Custodian's consent shall be required to make such an
amendment effective or that the Sub-Custodian's failure to give
such consent shall in any way affect its obligations under this
Agreement.
8. SUCCESSOR SUB-CUSTODIAN. If a successor sub-custodian
shall be appointed by the Custodian, the Sub-Custodian shall, upon
termination and upon receipt of Proper Instructions, cause to be
delivered to such successor sub-custodian, duly endorsed and in
the form for transfer, all securities, funds and other property of
the Fund then held by it and all instruments held by the
Sub-Custodian related thereto and cause the transfer to an account
of the successor sub-custodian all of the Fund's securities held
in any Securities Systems.
If no such successor sub-custodian shall be appointed, the
Sub-Custodian shall, in like manner, upon receipt of a certified
copy of a vote of the Trustees of the Fund, cause to be
transferred such securities, funds and other property in
accordance with such vote.
In the event that no written order designating a successor
sub-custodian or certified copy of a vote of the Trustees shall
have been delivered to the Sub-Custodian on or before the date
when such termination shall become effective, then the Sub
Custodian shall have the right to deliver to a bank or trust
company, which meets the requirements of the 1940 Act and the
rules and regulations thereunder, all securities, funds and other
properties of the Fund. Thereafter, such bank or trust company
shall be the successor of the Sub-Custodian under this Agreement.
In the event that securities, funds and other property remain
in the possession of the Sub-Custodian after the date of
termination hereof owing to failure of the Custodian to obtain a
certified copy of the Trustees appointing a successor sub
custodian, the Sub-Custodian shall be entitled to fair
compensation for its services during such period as the Sub
Custodian retains possession of such securities, funds and other
property and the provisions of this Agreement relating to the
duties and obligations of the Sub-Custodian shall remain in full
force and affect.
9. EFFECTIVE PERIOD; TERMINATION AND AMENDMENT. This
Agreement shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement of the
parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed, postage prepaid, to the
other party, such termination to take effect not sooner than
thirty (30) days after the date of mailing; provided, that either
party may at any time immediately terminate this Agreement in the
event of the appointment of a conservator or receiver for the
other party or upon the happening of a like event at the direction
of an appropriate regulatory agency or court of competent
jurisdiction. No provision of this Agreement may be amended or
terminated except by a statement in writing signed by the party
against which enforcement of the amendment or termination is
sought.
Upon termination of this Agreement, the Custodian shall pay
to the Sub-Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the
Sub-Custodian for its reimbursable costs, expenses and
disbursements. The provisions of Section 7, including, until any
Authorized Charges and any advances of cash or securities referred
to therein are repaid, all liens and security interests created
pursuant thereto, and all rights to indemnification, shall survive
any termination of this Agreement.
10. INTERPRETATION. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to
the subject matter hereof. In connection with the operation of
this Agreement, the Sub-Custodian and the Custodian may from time
to time agree in writing on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint
opinion be consistent with the general tenor of this Agreement.
No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this
Agreement.
11. GOVERNING LAW. This Agreement is executed and delivered
in The Commonwealth of Massachusetts and shall be governed by and
construed according to the internal laws of said Commonwealth,
without regard to principles of conflicts of law.
12. NOTICES. Notices and other writings delivered or mailed
postage prepaid to the Custodian addressed to the Custodian
attention: George H. Crane, Senior Vice President, The Putnam
Companies, 99 High Street, Boston, MA 02109 or to such other
person or address as the Custodian may have designated to the Sub
Custodian in writing, or to the Sub-Custodian attention:
or to such other address as the SubCustodian may have designated
to the Custodian in writing, shall be deemed to have been properly
delivered or given hereunder to the respective addressee.
13. BINDING OBLIGATION. This Agreement shall be binding on
and shall inure to the benefit of the Custodian and the Sub
Custodian and their respective successors and assigns, provided
that neither party hereto may assign this Agreement or any of its
rights or obligations hereunder without the prior written consent
of the other party.
14. PRIOR AGREEMENTS. This Agreement supersedes and
terminates, as of the date hereof, all prior contracts between the
Fund or the Custodian and the Sub-Custodian relating to the
custody of the Fund's assets.
15. DECLARATION OF TRUST. A copy of the Declaration of
Trust of the Fund is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that
the obligations of or arising out of this instrument are not
binding upon any of the Trustees or beneficiaries individually
but binding only upon the assets and property of the Fund.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the day of , 199 .
PUTNAM FIDUCIARY TRUST COMPANY
By--------------------------------
Name:
Title:
(Sub-Custodian)
By---------------------------------
Name:
Title:
The Sub-Custodian and Putnam Investments, Inc. ("Putnam"),
the sole owner of the Custodian, agree that Putnam shall be the
primary obligor with respect to compensation due the
Sub-Custodian pursuant to Section 6 of this Agreement in
connection with the Sub-Custodian's performance of its
responsibilities hereunder. The Custodian and Putnam agree to
take all actions necessary and appropriate to assure that the
Sub-Custodian shall be compensatedin the amounts and on the
schedule agreed to by the Custodian and the Sub-Custodian
pursuant to Section 6.
PUTNAM INVESTMENTS, INC.
By:-------------------------------
Name:
Title:
PUTNAM FIDUCIARY TRUST COMPANY
By:--------------------------------
Name:
Title:
(Sub-Custodian)
By:----------------------------------
Name:
Title:
PFTC TRANSITION FEE SCHEDULE
1. ACCOUNT MAINTENANCE
Provide daily cash availability reports; provide daily
cash transactions reports; maintain cash account for each
Fund, process check disbursements; record cash receipts and
cash disbursements; process checks received, disburse
expenses as authorized; collect income; process paydowns;
expedite trade settlement of security transactions; report
on buy and sell fails; make claims against brokers as
required; consolidate information from sub-custodians and
prepare and deliver reports as necessary; provide
information on securities "out for transfer"; provide
security position and income reconcilement reports; provide
corporate action information; select and manage sub-
custodian bank relationships; negotiate fees with sub-
custodians, and complete other duties as required.
First $100 million of net assets* 5.0 basis points
Next $100 million of net assets 4.0 basis points
Next $200 million of net assets 2.0 basis points
More than $400 million of net assets 0.2 basis points
* The foregoing fee schedule is applied per Fund.
2. HOLDINGS CHARGE
Provide safekeeping for securities; monitor and report
on relevant security capital changes:
Per position per year $90.00
3. TRANSACTION FEES
Transaction charges for receiving and delivering
securities; processing principal and interest paydowns on
mortgage-backed securities:
DTC receipt or delivery $15.00
FBE receipt or delivery $15.00
GNMA receipt or delivery $25.00
Non-GNMA physicals receipt or delivery $25.00
Non-GNMA physical bond maturities $25.00
Short-term maturities $20.00
GNMA principal and interest payments
(physical) per pool per month $10.00
GNMA principal and interest payments
(PTC) per pool per month $ 5.00
4. FEE CREDITS
The aggregate fees set forth in Sections 1, 2 and 3
above shall be reduced prospectively by crediting the Funds
with such credits as the Funds have customarily received
from custodians, plus an amount equal to 50% of the net pre-
tax profits attributable to PFTC's custodian activities
(before such extraordinary items as are not properly
chargeable as an expense to purchasers of custodian
services) to the extent such profits would increase PFTC's
pre-tax profit margin attributable to such activities above
30% and by crediting the Funds an amount equal to 70% of
such profits to the extent such profits would increase such
margin above 40%.
The customary credits referred to above shall be
credited to the Funds quarterly, as part of the normal
billing process. With respect to the credits, if any,
attributable to PFTC's pre-tax profits, on or before the
calendar quarter ending March 31 of each transition year.
The Custodian shall apply the appropriate credit for the
preceding calendar year against the custody fees billed to
the Funds for such quarter and it shall apply the unapplied
balance, if any, of such credit to the custody fees billed
to the Fund in each successive quarter until such credit
shall have been fully applied. The Custodian's calendar
year-end financial statements (and the profit margin
reflected therein) shall be reviewed by the independent
public accountants of the Funds, and an appropriate
adjustment to the credit, if any, due the Fund in respect of
such year will be made following the end of the next
succeeding quarter after which the amount of such adjustment
is determined.
The fee credits provided for above shall be allocated
among the Funds on the basis of each Fund's pro rata share
of the aggregate custody fees billed by the Custodian
(before any fee reduction) or on such other basis as the
Trustees of the Funds may from time to time determine.
5. OUT-OF-POCKET EXPENSES
Ordinary and customary charges of the Custodian or a
Sub-Custodian in providing security settlements and related
payments including, but not limited to, the following:
Postage and security transfer insurance
International communications charges (re: Telex, Swift)
Armored car
Courier service
Wire charges (incoming and outgoing)
Archives
Photocopies
Book-entry deposit and withdrawal charges
Securities transfer charges
Interest collection for securities held in "street name",
per payment
Cost of transfer agent proof
Internal control review audit letter
6. EXPENSE LIMITATION DURING TRANSITION
During the transition, the fees and expenses set forth
above shall not in any event exceed the charges payable by
the Fund pursuant to that certain custodian agreement, dated
February 12, 1988, between the Fund and State Street Bank &
Trust Company ("the SSB Contract"), as if the SSB Contract
had continued in effect during the term of this Agreement,
taking into account all variables, including transaction
volume, new Funds, changes in component asset mix, etc.
During the transition, the Custodian shall furnish the Fund
quarterly a calculation of the charges payable under the SSB
Contract and shall reduce the charges payable hereunder to
the extent such charges would exceed the charges under the
SSB Contract. Subsequent to the close of PFTC's fiscal year,
based upon PFTC's audited financial statements, passed on by
the Funds' independent accountants, PFTC's aggregate charges
pursuant to this Fee Schedule for the year (or portion
thereof) shall be calculated and compared to the amount that
would have been charged pursuant to the SSB Contract. In the
event that such comparison shall show either an overcharge or
an undercharge for such year, PFTC or the Fund, as the case
may be, shall reimburse the other in the amount of such
overcharge or undercharge.
SCHEDULE A
Putnam American Government Income Fund
Putnam Arizona Tax Exempt Income Fund
Putnam Asia Pacific Growth Fund
Putnam Asset Allocation Funds
- Balanced Portfolio
- Conservative Portfolio
- Growth Portfolio
Putnam Balanced Retirement Fund
Putnam California Investment Grade Municipal Trust
Putnam California Tax Exempt Income Fund
Putnam California Tax Exempt Money Market Fund
Putnam Capital Appreciation Fund
Putnam Convertible Income-Growth Trust
Putnam Convertible Opportunities and Income Trust
Putnam Diversified Equity Trust
Putnam Diversified Income Trust
Putnam Dividend Income Fund
Putnam Equity Income Fund
Putnam Europe Growth Fund
Putnam Florida Tax Exempt Income Fund
Putnam Funds Trust
-Putnam Asia Pacific Fund II
-Putnam Equity Fund 98
-Putnam Growth Fund
-Putnam High Yield Total Return
-Putnam High Yield Trust II
-Putnam International Growth and Income Fund
-Putnam Investment Fund 98
-Putnam Latin America Fund
-Putnam U.S. Core Fund
-Putnam Value Fund
The George Putnam Fund of Boston
Putnam Global Governmental Income Trust
Putnam Global Growth Fund
Putnam Global Natural Resources Fund
The Putnam Fund for Growth and Income
Putnam Growth and Income Fund II
Putnam Health Sciences Trust
Putnam High Income Convertible and Bond Fund
Putnam High Quality Bond Fund
Putnam High Yield Advantage Fund
Putnam High Yield Trust
Putnam High Yield Municipal Trust
Putnam Income Fund
Putnam U.S. Intermediate Government Income Trust
Putnam International Growth Fund
Putnam Investment Funds
-Putnam Balanced Fund
-Putnam Capital Opportunities Fund
-Putnam Emerging Markets Fund
-Putnam Global Equity Fund
-Putnam Global Growth and Income Fund
-Putnam Growth Opportunities Fund
-Putnam International Fund
-Putnam International New Opportunities Fund
-Putnam International Voyager Fund
-Putnam New Value Fund
-Putnam Research Fund
-Putnam Small Cap Value Fund
-Putnam U.S. Core Fund II
Putnam Investment Grade Municipal Trust
Putnam Investment Grade Municipal Trust II
Putnam Investment Grade Municipal Trust III
Putnam Investors Fund
Putnam Managed High Yield Trust
Putnam Managed Municipal Income Trust
Putnam Massachusetts Tax Exempt Income Fund
Putnam Master Income Trust
Putnam Master Intermediate Income Trust
Putnam Michigan Tax Exempt Income Fund
Putnam Minnesota Tax Exempt Income Fund
Putnam Money Market Fund
Putnam Municipal Income Fund
Putnam Municipal Opportunities Trust
Putnam New Jersey Tax Exempt Income Fund
Putnam New Opportunities Fund
Putnam New York Investment Grade Municipal Trust
Putnam New York Tax Exempt Income Fund
Putnam New York Tax Exempt Money Market Fund
Putnam New York Tax Exempt Opportunities Fund
Putnam Ohio Tax Exempt Income Fund
Putnam OTC & Emerging Growth Fund
Putnam Pennsylvania Tax Exempt Income Fund
Putnam Preferred Income Fund
Putnam Premier Income Trust
Putnam Strategic Income Fund
Putnam Tax Exempt Income Fund
Putnam Tax Exempt Money Market Fund
Putnam Tax-Free Health Care Fund
Putnam Tax-Free Income Trust
-Tax-Free High Yield Fund
-Tax-Free Insured Fund
Putnam Tax Managed Funds Trust
-Putnam U.S. Core Tax Managed Fund
Putnam U.S. Government Income Trust
Putnam Utilities Growth and Income Fund
Putnam Variable Trust
-Putnam VT Asia Pacific Growth Fund
-Putnam VT Diversified Income Fund
-Putnam VT Global Asset Allocation Fund
-Putnam VT Global Growth Fund
-Putnam VT Growth & Income Fund
-Putnam VT Health Sciences Fund
-Putnam VT High Yield Fund
-Putnam VT Investors Fund
-Putnam VT International Growth Fund
-Putnam VT International Growth and Income Fund
-Putnam VT International New Opportunities Fund
-Putnam VT Money Market Fund
-Putnam VT New Opportunities Fund
-Putnam VT New Value Fund
-Putnam VT OTC & Emerging Growth Fund
-Putnam VT Research Fund
-Putnam VT Small Cap Value Fund
-Putnam VT The George Putnam Fund of Boston
-Putnam VT U.S. Government and High Quality Bond Fund
-Putnam VT Utilities Growth and Income Fund
-Putnam VT Vista Fund
-Putnam VT Voyager Fund
Putnam Vista Fund
Putnam Voyager Fund
Putnam Voyager Fund II
4/7/99
SCHEDULE B
Boston Safe Deposit and Trust Company
Bankers Trust Company
The Northern Trust Company
Brown Brothers Harriman
United Missouri Bank
Chase Manhattan Bank N.A.
SCHEDULE C
PERFORMANCE STANDARDS
INCOME COLLECTION
O Income will be paid to the Funds or its agents as follows if
no mitigating circumstances exist:
Federal Reserve Book Entry Securities Payable Date
Depository Trust Company Securities Payable Date + 1
Participant Trust Company Securities Payable Date + 1
Physical Mortgaged-Backed Securities Payable Date + 5
Physical Municipal Securities
Registered Outside the Eastern
Seaboard Area Payable Date + 5
Other Physical Securities Payable Date + 3
O In the event that income is not received within timeframes
indicated above because of improper or untimely actions by
the custodian, the Funds will receive an earnings credit for
the value of these funds beginning with the dates indicated
on the above schedule. The credit will be reflected on the
custody invoice.
O In the event that Income is not received within the indicated
timeframes because of claims against third parties, where the
custodian is not at fault, the Funds will be paid upon actual
receipt of income but no later than 60 calendar days after
payable date.
O If any particular situations occur that render the standards
as inappropriate, the circumstances will be reviewed on a
case-by-case basis to determine due diligence by the
custodian with respect to its responsibility.
TRADE SETTLEMENTS
O All trade fails will be reported to the Funds or its agents
within one business day of the fail.
O All purchase fails will accrue an earnings credit to the
Funds to be applied against the custody invoice.
O The Funds will receive compensation for sell fails that occur
because of custodian error. This will be accomplished by
crediting the Fund with sale proceeds on contractual
settlement date.
SCHEDULE C
REPORTING
O The Funds or its agents will receive Reports monthly as
indicated below:
O Principal and Interest
Reconcilement Report 2nd Business Day
O Trade Fail Report 5th Business Day
O Cash Transactions Report 10th Business Day (1)
O Open Trades Report 10th Business Day
O Position Reconciliation Report 10th Business Day
O Past Due Income Report 15th Business Day
O Dividend Reinvestment Report 20th Business Day
(1) With the exception of the Government Funds which will be the
15th Business Day.
CAPITAL CHANGES
O The Funds will be notified of pending corporate actions
within 5 business days of receipt by the custodian or its
agent, but no later than 5 business days prior to expiration
date.
O In the event that the custodian receives information less
than 5 days prior to expiration date, the Funds will be
immediately informed.
O Preliminary Bond Call Notices will be received prior to call
date.
O Final Bond Call Notices will be received by the 5th business
day after call date.
O If the Bond Call Notice is received after the 5th business
day following the call date, the custodian will reimburse the
Funds for accrued interest lost.
O If the Bond Call Notice is received after 30 days following
the call date, the custodian will reimburse the Funds for
accrued interest lost plus the face amount of the called bond
at the current price or the call price, whichever is greater.
O If any particular situations occur that render the standards
as inappropriate, the circumstances will be reviewed on a
case-by-case basis to determine due diligence by the
custodian with respect to its responsibility.
INVESTOR SERVICING AGREEMENT
AGREEMENT made as of the 3rd day of June, 1991, between
each of the Putnam Funds listed in Appendix A hereto (as the same
may from time to time be amended to add one or more additional
Putnam Funds or to delete one or more of such Funds), each of
such Funds acting severally on its own behalf and not jointly
with any of such other Funds (each of such Funds being
hereinafter referred to as the "Fund"), and The Putnam Management
Company, Inc. (the "Manager"), a Delaware corporation, and Putnam
Fiduciary Trust Company (the "Agent"), a Massachusetts trust
company.
W I T N E S S E T H:
WHEREAS, the Fund is an investment company registered
under the Investment Company Act of 1940; and
WHEREAS, the Fund desires to engage the Manager and the
Agent to provide all services required by the Fund in connection
with the establishment, maintenance and recording of shareholder
accounts, including without limitation all related tax and other
reporting requirements, and the implementation of investment and
redemption arrangements offered in connection with the sale of
the Fund's shares; and
WHEREAS, the Agent, an affiliate of the Manager, is
willing to provide such services on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants set forth herein, the parties hereto agree as
follows:
1. APPOINTMENT.
The Fund hereby appoints the Agent as its "Investor
Servicing Agent" on the terms and conditions set forth herein.
In such capacity the Agent shall act as transfer, distribution
disbursing and redemption agent for the Fund and shall act as
agent for the shareholders of the Fund in connection with the
various shareholder investment and/or redemption plans from time
to time made available to shareholders. The Agent hereby accepts
such appointment and agrees to perform the respective duties and
functions of such offices in accordance with the terms of this
agreement and in a manner generally consistent with the practices
and standards customarily followed by other high quality investor
servicing agents for registered investment companies.
Notwithstanding such appointment, however, the parties
agree that the Manager may, upon thirty (30) days prior written
notice to the Fund, assume such appointment and perform such
duties and functions itself. Pending any such assumption,
however, the Manager hereby guarantees the performance of the
Agent hereunder and shall be fully responsible to the Fund,
financially and otherwise, for the performance by the Agent of
its agreements contained herein.
2. GENERAL AUTHORITY AND DUTIES.
By its acceptance of the foregoing appointment, the Agent
shall be responsible for performing all functions and duties
which, in the reasonable judgment of the Fund, are necessary or
desirable in connection with the establishment, maintenance and
recording of the Fund's shareholder accounts and the conduct of
its relations with shareholders with respect to their accounts.
Without limiting the generality of the foregoing, the Agent shall
be responsible:
(a) as transfer agent, for performing all functions
customarily performed by transfer agents for registered
investment companies, including without limitation all
functions necessary or desirable to establish and maintain
accounts evidencing the ownership of securities issued by
the Fund and, to the extent applicable, the issuance of
certificates representing such securities, the recording of
all transactions pertaining to such accounts, and effecting
the issuance and redemption of securities issued by the
Fund;
(b) as distribution disbursing agent, for performing
all functions customarily performed by distribution
disbursing agents for registered investment companies,
including without limitation all functions necessary or
desirable to effect the payment to shareholders of
distributions declared from time to time by the Trustees of
the Fund;
(c) as redemption agent for the Fund, for performing
all functions necessary or desirable to effect the
redemption of securities issued by the Fund and payment of
the proceeds thereof; and
(d) as agent for shareholders of the Fund, performing
all functions necessary or desirable to maintain all plans
or arrangements from time to time made available to
shareholders to facilitate the purchase or redemption of
securities issued by the Fund.
In performing its duties hereunder, in addition to the
provisions set forth herein, the Agent shall comply with the
terms of the Declaration of Trust, the Bylaws and the current
Prospectus and Statement of Additional Information of the Fund,
and with the terms of votes adopted from time to time by the
Trustees and shareholders of the Fund, relating to the subject
matters of this Agreement, all as the same may be amended from
time to time.
3. STANDARD OF SERVICE; COMPLIANCE WITH LAWS.
The Agent will use its best efforts to provide high
quality services to the Fund's shareholders and in so doing will
seek to take advantage of such innovations and technological
improvements as may be appropriate or desirable with a view to
improving the quality and, where possible, reducing the cost of
its services to the Fund. In performing its duties hereunder,
the Agent shall comply with the provisions of all applicable laws
and regulations and shall comply with the requirements of any
governmental authority, having jurisdiction over the Agent or the
Fund with respect to the duties of the Agent hereunder.
4. COMPENSATION.
The Fund shall pay to the Agent, for its services rendered
and its costs incurred in connection with the performance of its
duties hereunder, such compensation and reimbursements as may
from time to time be approved by vote of the Trustees of the
Fund.
5. DUTY OF CARE; INDEMNIFICATION.
The Agent will at all times act in good faith and exercise
reasonable care in performing its duties hereunder. The Agent
will not be liable or responsible for delays of errors resulting
from circumstances beyond its control, including acts of civil or
military authorities, national emergencies, labor difficulties,
fire, mechanical breakdown beyond its control, flood or
catastrophe, acts of God, insurrection, war, riots or failure
beyond its control of transportation, communication or power
supply.
The Agent may rely on certifications of the Clerk, the
President, the Vice Chairman, the Executive Vice President, the
Senior Vice President or the Treasurer of the Fund as to any
action taken by the shareholders or trustees of the Fund, and
upon instructions not inconsistent with this Agreement received
from the President, Vice Chairman, the Executive Vice President,
the Senior Vice President or the Treasurer of the Fund. If any
officer of the Fund shall no longer be vested with authority to
sign for the Fund, written notice thereof shall forthwith be
given to the Agent by the Fund and, until receipt of such notice
by it, the Agent shall be entitled to recognize and act in good
faith upon certificates or other instruments bearing the
signatures or facsimile signatures of such officers. The Agent
may request advice of counsel for the Fund, at the expense of the
Fund, with respect to the performance of its duties hereunder.
The Fund will indemnify and hold the Agent harmless from
any and all losses, claims, damages, liabilities and expenses
(including reasonable fees and expenses of counsel) arising out
of (i) any action taken by the Agent in good faith consistent
with the exercise of reasonable care in accordance with such
certifications, instructions or advice, (ii) any action taken by
the Agent in good faith consistent with the exercise of
reasonable care in reliance upon any instrument or certificate
for securities believed by it (a) to be genuine, and (b) to be
executed by any person or persons authorized to execute the same;
PROVIDED, HOWEVER, that the Agent shall not be so indemnified in
the event of its failure to obtain a proper signature guarantee
to the extent the same is required by the Declaration of Trust,
Bylaws, current Prospectus or Statement of Additional Information
of the Fund or a vote of the Trustees of the Fund, and such
requirement has not been waived by vote of the Trustees of the
Fund, or (iii) any other action taken by the Agent in good faith
consistent with the exercise of reasonable care in connection
with the performance of its duties hereunder.
In the event that the Agent proposes to assert the right
to be indemnified under this Section 5 in connection with any
action, suit or proceeding against it, the Agent shall promptly
after receipt of notice of commencement of such action, suit or
proceeding notify the Fund of the same, enclosing a copy of all
papers served. In such event, the Fund shall be entitled to
participate in such action, suit or proceeding, and, to the
extent that it shall wish, to assume the defense thereof, and
after notice from the Fund to the Agent of its election so to
assume the defense thereof the Fund shall not be liable to the
Agent for any legal or other expenses. The parties shall
cooperate with each other in the defense of any such action, suit
or proceeding. In no event shall the Fund be liable for any
settlement of any action or claim effected without its consent.
6. MAINTENANCE OF RECORDS.
The Agent will maintain and preserve all records relating
to its duties under this Agreement in compliance with the
requirements of applicable statutes, rules and regulations,
including, without limitation, Rule 31a-1 under the Investment
Company Act of 1940. Such records shall be the property of the
Fund and shall at all times be available for inspection and use
by the officers and agents of the Fund. The Agent shall furnish
to the Fund such information pertaining to the shareholder
accounts of the Fund and the performance of its duties hereunder
as the Fund may from time to time request. The Agent shall
notify the Fund promptly of any request or demand by any third
party to inspect the records of the Fund maintained by it and
will act upon the instructions of the Fund in permitting or
refusing such inspection.
7. FUND ACCOUNTS.
All moneys of the Fund from time to time made available
for the payment of distributions to shareholders or redemptions
of shares, or otherwise coming into the possession or control of
the Agent or its officers, shall be deposited and held in one or
more accounts maintained by the Agent solely for the benefit of
the Funds.
8. INSURANCE.
The Agent will at all times maintain in effect insurance
coverage, including, without limitation, Errors and Omissions,
Fidelity Bond and Electronic Data Processing coverages, at levels
of coverage consistent with those customarily maintained by other
high quality investor servicing agents for registered investment
companies and with such policies as the Trustees of the Fund may
from time to time adopt.
9. EMPLOYEES.
The Agent shall be responsible for the employment, control
and conduct of its agents and employees and for injury to such
agents or employees or to others caused by such agents or
employees. The Agent shall assume full responsibility for its
agents and employees under applicable statutes and agrees to pay
all applicable employer taxes thereunder with respect to such
agents and employees, and such agents and employees shall in no
event be considered to be agents or employees of the Fund.
10. TERMINATION.
This Agreement shall continue indefinitely until
terminated by not less than ninety (90) days prior written notice
given by the Fund to the Agent, or by not less than six months
prior written notice given by the Agent to the Fund.
In the event that in connection with any such termination
a successor to any of the Agent's duties or responsibilities
hereunder is designated by the Fund by written notice to the
Agent, the Agent will cooperate fully in the transfer of such
duties and responsibilities, including provision for assistance
by the Agent's personnel in the establishment of books, records
and other data by such successor. The Fund will reimburse the
Agent for all expenses incurred by the Agent in connection with
such transfer.
11. MISCELLANEOUS.
This Agreement shall be construed and enforced in
accordance with and governed by the laws of The Commonwealth of
Massachusetts.
The captions in this Agreement are included for
convenience of reference only and in no way define or limit any
of the provisions of this Agreement or otherwise affect their
construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which taken together shall
constitute one and the same instrument.
A copy of the Declaration of Trust (including any
amendments thereto) of the Fund is on file with the Secretary of
The Commonwealth of Massachusetts, and notice is hereby given
that this instrument is executed on behalf of the Trustees of the
Fund as Trustees and not individually and that the obligations of
or arising out of this instrument are not binding upon any of the
Trustees or officers or shareholders individually, but binding
only upon the assets and property of the Fund.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their duly authorized officers as of the date
and year first above written.
THE PUTNAM FUNDS, listed on Appendix A
/s/Charles E. Porter
By -----------------------------------
Charles E. Porter
Executive Vice President
PUTNAM FIDUCIARY TRUST COMPANY
/s/John R. Verani
By -----------------------------------
John R. Verani
President
THE PUTNAM MANAGEMENT COMPANY, INC.
/s/Gordon H. Silver
By -----------------------------------
Gordon H. Silver
Senior Managing Director
APPENDIX A
Putnam American Government Income Fund
Putnam Arizona Tax Exempt Income Fund
Putnam Asia Pacific Growth Fund
Putnam Asset Allocation Funds
- Balanced Portfolio
- Conservative Portfolio
- Growth Portfolio
Putnam Balanced Retirement Fund
Putnam California Investment Grade Municipal Trust
Putnam California Tax Exempt Income Fund
Putnam California Tax Exempt Money Market Fund
Putnam Capital Appreciation Fund
Putnam Convertible Income-Growth Trust
Putnam Convertible Opportunities and Income Trust
Putnam Diversified Equity Trust
Putnam Diversified Income Trust
Putnam Dividend Income Fund
Putnam Equity Income Fund
Putnam Europe Growth Fund
Putnam Florida Tax Exempt Income Fund
Putnam Funds Trust
-Putnam Asia Pacific Fund II
-Putnam Equity Fund 98
-Putnam Growth Fund
-Putnam High Yield Total Return
-Putnam High Yield Trust II
-Putnam International Growth and Income Fund
-Putnam Investment Fund 98
-Putnam Latin America Fund
-Putnam U.S. Core Fund
-Putnam Value Fund
The George Putnam Fund of Boston
Putnam Global Governmental Income Trust
Putnam Global Growth Fund
Putnam Global Natural Resources Fund
The Putnam Fund for Growth and Income
Putnam Growth and Income Fund II
Putnam Health Sciences Trust
Putnam High Income Convertible and Bond Fund
Putnam High Quality Bond Fund
Putnam High Yield Advantage Fund
Putnam High Yield Trust
Putnam High Yield Municipal Trust
Putnam Income Fund
Putnam U.S. Intermediate Government Income Trust
Putnam International Growth Fund
Putnam Investment Funds
-Putnam Balanced Fund
-Putnam Capital Opportunities Fund
-Putnam Emerging Markets Fund
-Putnam Global Equity Fund
-Putnam Global Growth and Income Fund
-Putnam Growth Opportunities Fund
-Putnam International Fund
-Putnam International New Opportunities Fund
-Putnam International Voyager Fund
-Putnam New Value Fund
-Putnam Research Fund
-Putnam Small Cap Value Fund
-Putnam U.S. Core Fund II
Putnam Investment Grade Municipal Trust
Putnam Investment Grade Municipal Trust II
Putnam Investment Grade Municipal Trust III
Putnam Investors Fund
Putnam Managed High Yield Trust
Putnam Managed Municipal Income Trust
Putnam Massachusetts Tax Exempt Income Fund
Putnam Master Income Trust
Putnam Master Intermediate Income Trust
Putnam Michigan Tax Exempt Income Fund
Putnam Minnesota Tax Exempt Income Fund
Putnam Money Market Fund
Putnam Municipal Income Fund
Putnam Municipal Opportunities Trust
Putnam New Jersey Tax Exempt Income Fund
Putnam New Opportunities Fund
Putnam New York Investment Grade Municipal Trust
Putnam New York Tax Exempt Income Fund
Putnam New York Tax Exempt Money Market Fund
Putnam New York Tax Exempt Opportunities Fund
Putnam Ohio Tax Exempt Income Fund
Putnam OTC & Emerging Growth Fund
Putnam Pennsylvania Tax Exempt Income Fund
Putnam Preferred Income Fund
Putnam Premier Income Trust
Putnam Strategic Income Fund
Putnam Tax Exempt Income Fund
Putnam Tax Exempt Money Market Fund
Putnam Tax-Free Health Care Fund
Putnam Tax-Free Income Trust
-Tax-Free High Yield Fund
-Tax-Free Insured Fund
Putnam Tax Managed Funds Trust
-Putnam U.S. Core Tax Managed Fund
Putnam U.S. Government Income Trust
Putnam Utilities Growth and Income Fund
Putnam Variable Trust
-Putnam VT Asia Pacific Growth Fund
-Putnam VT Diversified Income Fund
-Putnam VT Global Asset Allocation Fund
-Putnam VT Global Growth Fund
-Putnam VT Growth & Income Fund
-Putnam VT Health Sciences Fund
-Putnam VT High Yield Fund
-Putnam VT Investors Fund
-Putnam VT International Growth Fund
-Putnam VT International Growth and Income Fund
-Putnam VT International New Opportunities Fund
-Putnam VT Money Market Fund
-Putnam VT New Opportunities Fund
-Putnam VT New Value Fund
-Putnam VT OTC & Emerging Growth Fund
-Putnam VT Research Fund
-Putnam VT Small Cap Value Fund
-Putnam VT The George Putnam Fund of Boston
-Putnam VT U.S. Government and High Quality Bond Fund
-Putnam VT Utilities Growth and Income Fund
-Putnam VT Vista Fund
-Putnam VT Voyager Fund
Putnam Vista Fund
Putnam Voyager Fund
Putnam Voyager Fund II
Class A only
April 8, 1999
Putnam U.S. Core Tax Managed Fund
One Post Office Square
Boston, MA 02109
Gentlemen:
In connection with your sale to us today of 352,941 shares
of beneficial interest (the "Shares") in Putnam U.S. Core Tax
Managed Fund (the "Fund"), we understand that: (i) the Shares
have not been registered under the Securities Act of 1933, as
amended; (ii) your sale of the Shares to us is in reliance on the
sale's being exempt under Section 4(2) of the Act as not
involving any public offering; and (iii) in part, your reliance
on such exemption is predicated on our representation, which we
hereby confirm, that we are acquiring the Shares for investment
and for our own account as the sole beneficial owner hereof, and
not with a view to or in connection with any resale or
distribution of any or all of the Shares or of any interest
therein. We hereby agree that we will not sell, assign or
transfer the Shares or any interest therein except upon
repurchase or redemption by the Fund unless and until the Shares
have been registered under the Securities Act of 1933, as
amended, or you have received an opinion of your counsel
indicating to your satisfaction that such sale, assignment or
transfer will not violate the provisions of the Securities Act of
1933, as amended, or any rules and regulations promulgated
thereunder.
This letter is intended to take effect as an instrument
under seal, shall be construed under the laws of Massachusetts,
and is delivered at Boston, Massachusetts, as of the date written
above.
Very truly yours,
PUTNAM INVESTMENTS, INC.
By: /s/ John R. Verani
John R. Verani
Vice President
3
PUTNAM TAX MANAGED FUNDS TRUST
CLASS A
DISTRIBUTION PLAN AND AGREEMENT
This Plan and Agreement (the "Plan") constitutes the
Distribution Plan for the Class A shares of the portfolio series
(each a "Fund" and collectively the "Funds") of Putnam Tax
Managed Funds Trust, a Massachusetts business trust (the
"Trust"), adopted pursuant to the provisions of Rule 12b-1 under
the Investment Company Act of 1940 (the "Act") and the related
agreement between the Trust and Putnam Mutual Funds Corp.
("PMF"), the principal underwriter of the Trust's shares. During
the effective term of this Plan, the Trust may make payments to
PMF upon the terms and conditions hereinafter set forth:
SECTION 1. The Trust may make payments to PMF, in the form
of fees or reimbursements, to compensate PMF for services
provided and expenses incurred by it for purposes of promoting
the sale of Class A shares of the Funds, reducing redemptions of
shares, or maintaining or improving services provided to
shareholders by PMF and investment dealers. The amount of such
payments and the purposes for which they are made shall be
determined by the Qualified Trustees (as defined below).
Payments under this Plan shall not exceed in any fiscal year the
annual rate of 0.35% of the average net asset value of the Class
A shares of each Fund, as determined at the close of each
business day during the year. A majority of the Qualified
Trustees may, at any time and from time to time, reduce the
amount of such payments, or may suspend the operation of the Plan
for such period or periods of time as they may determine.
SECTION 2. This Plan shall not take effect with respect to
a Fund until:
(a) it has been approved by a vote of a majority of
the outstanding Class A shares of the Fund, but only if the
Plan is adopted after the commencement of any public
offering of the Fund's Class A shares or the sale of the
Fund's Class A shares to persons who are not affiliated
persons of the Fund, affiliated persons of such persons,
promoters of the Fund or affiliated persons of such
promoters;
(b) it has been approved, together with any related
agreements, by votes of the majority (or whatever greater
percentage may, from time to time, be required by Section
12(b) of the Act or the rules and regulations thereunder) of
both (i) the Trustees of the Trust, and (ii) the Qualified
Trustees of the Trust, cast in person at a meeting called
for the purpose of voting on this Plan or such agreement;
and
(c) the Fund has received the proceeds of the initial
public offering of its Class A shares.
SECTION 3. This Plan shall continue in effect with respect
to a Fund for a period of more than one year after it takes
effect only so long as such continuance is specifically approved
at least annually in the manner provided for approval of this
Plan in Section 2(b).
SECTION 4. PMF shall provide to the Trustees of the Trust,
and the Trustees shall review, at least quarterly, a written
report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 5. This Plan may be terminated at any time with
respect to a Fund by vote of a majority of the Qualified
Trustees, or by vote of a majority of the outstanding Class A
shares of the Fund.
SECTION 6. All agreements with any person relating to
implementation of this Plan shall be in writing, and any
agreement related to this Plan shall provide:
(a) that such agreement may be terminated with respect
to a Fund at any time, without payment of any penalty, by
vote of a majority of the Qualified Trustees or by vote of a
majority of the outstanding Class A shares of the Fund, on
not more than 60 days' written notice to any other party to
the agreement; and
(b) that such agreement shall terminate automatically
in the event of its assignment.
SECTION 7. This Plan may not be amended to increase
materially the amount of distribution expenses with respect to a
Fund permitted pursuant to Section 1 hereof without the approval
of a majority of the outstanding Class A shares of the Fund, and
all material amendments to this Plan with respect to a Fund shall
be approved in the manner provided for approval of this Plan in
Section 2(b).
SECTION 8. As used in this Plan, (a) the term "Qualified
Trustees" shall mean those Trustees of the Trust who are not
interested persons of the Trust, and have no direct or indirect
financial interest in the operation of this Plan or any
agreements related to it, (b) the term "majority of the
outstanding Class A shares of the Fund" means the affirmative
vote, at a duly called and held meeting of Class A shareholders
of the relevant Fund, (i) of the holders of 67% or more of the
Class A shares of such Fund present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50%
of the outstanding Class A shares of such Fund entitled to vote
at such meeting are present in person or by proxy, or (ii) of the
holders of more than 50% of the outstanding Class A shares of
such Fund entitled to vote at such meeting, whichever is less,
and (c) the terms "assignment," "affiliated person," "interested
person" and "promoter" shall have the respective meanings
specified in the Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities
and Exchange Commission.
SECTION 9. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and notice is hereby given that
this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually, and that the obligations
of or arising out of this instrument are not binding upon any of
the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the relevant Fund.
Executed as of April 8, 1999.
PUTNAM MUTUAL FUNDS CORP. PUTNAM TAX MANAGED FUNDS TRUST
By: /s/ Richard A. Monaghan By: /s/Charles E. Porter
---------------------- --------------------
Richard A. Monaghan Charles E. Porter
Managing Director Executive Vice President
Chief of Mutual Fund Business
3
PUTNAM TAX MANAGED FUNDS TRUST
CLASS B
DISTRIBUTION PLAN AND AGREEMENT
This Plan and Agreement (the "Plan") constitutes the
Distribution Plan for the Class B shares of the portfolio series
(each a "Fund" and collectively the "Funds") of Putnam Tax
Managed Funds Trust, a Massachusetts business trust (the
"Trust"), adopted pursuant to the provisions of Rule 12b-1 under
the Investment Company Act of 1940 (the "Act") and the related
agreement between the Trust and Putnam Mutual Funds Corp.
("PMF"). During the effective term of this Plan, the Trust may
incur expenses primarily intended to result in the sale of its
Class B shares upon the terms and conditions hereinafter set
forth:
SECTION 1. The Trust shall pay to PMF a monthly fee at the
annual rate of 1.00% of the average net asset value of the Class
B shares of the Funds, as determined at the close of each
business day during the month, to compensate PMF for services
provided and expenses incurred by it in connection with the
offering of Class B shares, which may include, without
limitation, the payment by PMF to investment dealers of
commissions on the sale of Class B shares, as set forth in the
then current Prospectus or Statement of Additional Information of
the Trust, and the payment of a service fee of up to 0.25% of
such net asset value for the purposes of maintaining or improving
services provided to shareholders by PMF and investment dealers.
Such fees shall be payable for each month within 15 days after
the close of such month. A majority of the Qualified Trustees,
as defined below, may, from time to time, reduce the amount of
such payments, or may suspend the operation of the Plan for such
period or periods of time as they may determine.
SECTION 2. This Plan shall not take effect with respect to
a Fund until:
(a) it has been approved by a vote of a majority of
the outstanding Class B shares of the Fund, but
only if the Plan is adopted after the commencement
of any public offering of the Fund's Class B
shares or the sale of the Fund's Class B shares to
persons who are not affiliated persons of the
Fund, affiliated persons of such persons,
promoters of the Fund or affiliated persons of
such promoters;
(b) it has been approved, together with any related
agreements, by votes of the majority (or whatever
greater percentage may, from time to time, be
required by Section 12(b) of the Act or the rules
and regulations thereunder) of both (i) the
Trustees of the Trust, and (ii) the Qualified
Trustees of the Trust, cast in person at a meeting
called for the purpose of voting on this Plan or
such agreement; and
(c) the Fund has received the proceeds of the initial
public offering of its Class B shares.
SECTION 3. This Plan shall continue in effect with respect
to a Fund for a period of more than one year after it takes
effect only so long as such continuance is specifically approved
at least annually in the manner provided for approval of this
Plan in Section 2(b).
SECTION 4. PMF shall provide to the Trustees of the Trust,
and the Trustees shall review, at least quarterly, a written
report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 5. This Plan may be terminated with respect to a
Fund at any time by vote of a majority of the Qualified Trustees
or by vote of the majority of the outstanding Class B shares of
the Fund.
SECTION 6. All agreements with any person relating to
implementation of this Plan shall be in writing, and any
agreement related to this Plan shall provide:
(a) that such agreement may be terminated with respect
to a Fund at any time, without payment of any
penalty, by vote of a majority of the Qualified
Trustees or by vote of a majority of the
outstanding Class B shares of the Fund, on not
more than 60 days' written notice to any other
party to the agreement; and
(b) that such agreement shall terminate automatically
in the event of its assignment.
SECTION 7. This Plan may not be amended to increase
materially the amount of distribution expenses with respect to a
Fund permitted pursuant to Section 1 hereof without the approval
of a majority of the outstanding Class B shares of the Fund and
all material amendments to this Plan with respect to a Fund shall
be approved in the manner provided for approval of this Plan in
Section 2(b).
SECTION 8. As used in this Plan, (a) the term "Qualified
Trustees" shall mean those Trustees of the Trust who are not
interested persons of the Trust, and have no direct or indirect
financial interest in the operation of this Plan or any
agreements related to it, and (b) the term "majority of the
outstanding Class B shares of the Fund" means the affirmative
vote, at a duly called and held meeting of Class B shareholders
of the relevant Fund, (i) of the holders of 67% or more of the
Class B shares of the Fund present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50%
of the outstanding Class B shares of such Fund entitled to vote
at such meeting are present in person or by proxy, or (ii) of the
holders of more than 50% of the outstanding Class B shares of
such Fund entitled to vote at such meeting, whichever is less,
and (c) the terms "assignment," "affiliated person," "interested
person" and "promoter" shall have the respective meanings
specified in the Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities
and Exchange Commission.
SECTION 9. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and notice is hereby given that
this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually, and that the obligations
of or arising out of this instrument are not binding upon any of
the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the relevant Fund.
Executed as of April 8, 1999.
PUTNAM MUTUAL FUNDS CORP. PUTNAM TAX MANAGED FUNDS TRUST
/s/ Richard A. Monaghan /s/ Charles E. Porter
By: -------------------------- By: ------------------------
Richard A. Monaghan Charles E. Porter
Managing Director Executive Vice President
Chief of Mutual Fund Business
3
PUTNAM TAX MANAGED FUNDS TRUST
CLASS C
DISTRIBUTION PLAN AND AGREEMENT
This Plan and Agreement (the "Plan") constitutes the
Distribution Plan for the Class C shares of Putnam Tax Managed
Funds Trust, a Massachusetts business trust (the "Trust"),
adopted pursuant to the provisions of Rule 12b-1 under the
Investment Company Act of 1940 (the "Act") and the related
agreement between the Trust and Putnam Mutual Funds Corp.
("PMF"). During the effective term of this Plan, the Trust may
incur expenses primarily intended to result in the sale of its
Class C shares upon the terms and conditions hereinafter set
forth:
SECTION 1. The Trust shall pay to PMF a monthly fee at the
annual rate of 1.00% of the average net asset value of the Class
C shares of the Trust, as determined at the close of each
business day during the month, to compensate PMF for services
provided and expenses incurred by it in connection with the
offering of the Trust's Class C shares, which may include,
without limitation, the payment by PMF to investment dealers of
commissions on the sale of Class C shares, as set forth in the
then current Prospectus or Statement of Additional Information of
the Trust and the payment of a service fee of up to 0.25% of such
net asset value for the purposes of maintaining or improving
services provided to shareholders by PMF and investment dealers.
Such fees shall be payable for each month within 15 days after
the close of such month. A majority of the Qualified Trustees,
as defined below, may, from time to time, reduce the amount of
such payments, or may suspend the operation of the Plan for such
period or periods of time as they may determine.
SECTION 2. This Plan shall not take effect until:
(a) it has been approved by a vote of a majority of
the outstanding Class C shares of the Trust;
(b) it has been approved, together with any related
agreements, by votes of the majority (or whatever
greater percentage may, from time to time, be
required by Section 12(b) of the Act or the rules
and regulations thereunder) of both (i) the
Trustees of the Trust, and (ii) the Qualified
Trustees of the Trust, cast in person at a meeting
called for the purpose of voting on this Plan or
such agreement; and
(c) the Trust has received the proceeds of the initial
public offering of its Class C shares.
SECTION 3. This Plan shall continue in effect for a period
of more than one year after it takes effect only so long as such
continuance is specifically approved at least annually in the
manner provided for approval of this Plan in Section 2(b).
SECTION 4. PMF shall provide to the Trustees of the Trust,
and the Trustees shall review, at least quarterly, a written
report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 5. This Plan may be terminated at any time by vote
of a majority of the Qualified Trustees or by vote of the
majority of the outstanding Class C shares of the Trust.
SECTION 6. All agreements with any person relating to
implementation of this Plan shall be in writing, and any
agreement related to this Plan shall provide:
(a) that such agreement may be terminated at any time,
without payment of any penalty, by vote of a
majority of the Qualified Trustees or by vote of a
majority of the outstanding Class C shares of the
Trust, on not more than 60 days' written notice to
any other party to the agreement; and
(b) that such agreement shall terminate automatically
in the event of its assignment.
SECTION 7. This Plan may not be amended to increase
materially the amount of distribution expenses permitted pursuant
to Section 1 hereof without the approval of a majority of the
outstanding Class C shares of the Trust and all material
amendments to this Plan shall be approved in the manner provided
for approval of this Plan in Section 2(b).
SECTION 8. As used in this Plan, (a) the term "Qualified
Trustees" shall mean those Trustees of the Trust who are not
interested persons of the Trust, and have no direct or indirect
financial interest in the operation of this Plan or any
agreements related to it, and (b) the term "majority of the
outstanding Class C shares of the Trust" means the affirmative
vote, at a duly called and held meeting of Class C shareholders
of the Trust, (i) of the holders of 67% or more of the Class C
shares of the Trust present (in person or by proxy) and entitled
to vote at such meeting, if the holders of more than 50% of the
outstanding Class C shares of the Trust entitled to vote at such
meeting are present in person or by proxy, or (ii) of the holders
of more than 50% of the outstanding Class C shares of the Trust
entitled to vote at such meeting, whichever is less, and (c) the
terms "assignment" and "interested person" shall have the
respective meanings specified in the Act and the rules and
regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission.
SECTION 9. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and notice is hereby given that
this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually, and that the obligations
of or arising out of this instrument are not binding upon any of
the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the Trust.
Executed as of April 8, 1999.
PUTNAM MUTUAL FUNDS CORP. PUTNAM TAX MANAGED FUNDS
TRUST
/s/ Richard A. Monaghan /s/ Charles E. Porter
By: -------------------------- By: ------------------------
Richard A. Monaghan Charles E. Porter
Managing Director Executive Vice President
Chief of Mutual Fund Business
3
PUTNAM TAX MANAGED FUNDS TRUST
CLASS M
DISTRIBUTION PLAN AND AGREEMENT
This Plan and Agreement (the "Plan") constitutes the
Distribution Plan for the Class M shares of the portfolio series
(each a "Fund" and collectively the "Funds") of Putnam Tax
Managed Funds Trust, a Massachusetts business trust (the
"Trust"), adopted pursuant to the provisions of Rule 12b-1 under
the Investment Company Act of 1940 (the "Act") and the related
agreement between the Trust and Putnam Mutual Funds Corp.
("PMF"). During the effective term of this Plan, the Trust may
incur expenses primarily intended to result in the sale of its
Class M shares upon the terms and conditions hereinafter set
forth:
SECTION 1. The Trust shall pay to PMF a monthly fee at the
annual rate of 1.00% of the average net asset value of the Class
M shares of the Funds, as determined at the close of each
business day during the month, to compensate PMF for services
provided and expenses incurred by it in connection with the
offering of Class M shares, which may include, without
limitation, payments by PMF to investment dealers with respect to
Class M shares, as set forth in the then current Prospectus or
Statement of Additional Information of the Trust, including the
payment of a service fee of up to 0.25% of such net asset value
for the purpose of maintaining or improving services provided to
shareholders by PMF and investment dealers. Such fees shall be
payable for each month within 15 days after the close of such
month. A majority of the Qualified Trustees, as defined below,
may, from time to time, reduce the amount of such payments, or
may suspend the operation of the Plan for such period or periods
of time as they may determine.
SECTION 2. This Plan shall not take effect with respect to
a Fund until:
(a) it has been approved by a vote of a majority of the
outstanding Class M shares of the Fund, but only if the
Plan is adopted after the commencement of any public
offering of the Fund's Class M shares or the sale of the
Fund's Class M shares to persons who are not affiliated
persons of the Fund, affiliated persons of such persons,
promoters of the Fund or affiliated persons of such
promoters;
(b) it has been approved, together with any related
agreements, by votes of the majority (or whatever greater
percentage may, from time to time, be required by Section
12(b) of the Act or the rules and regulations thereunder)
of both (i) the Trustees of the Trust, and (ii) the
Qualified Trustees of the Trust, cast in person at a
meeting called for the purpose of voting on this Plan or
such agreement; and
(c) the Fund has received the proceeds of the initial
public offering of its Class M shares.
SECTION 3. This Plan shall continue in effect with respect
to a Fund for a period of more than one year after it takes
effect only so long as such continuance is specifically approved
at least annually in the manner provided for approval of this
Plan in Section 2(b).
SECTION 4. PMF shall provide to the Trustees of the Trust,
and the Trustees shall review, at least quarterly, a written
report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 5. This Plan may be terminated with respect to a
Fund at any time by vote of a majority of the Qualified Trustees
or by vote of the majority of the outstanding Class M shares of
the Fund.
SECTION 6. All agreements with any person relating to
implementation of this Plan shall be in writing, and any
agreement related to this Plan shall provide:
(a) that such agreement may be terminated with respect to
a Fund at any time, without payment of any penalty,
by vote of a majority of the Qualified Trustees or by
vote of a majority of the outstanding Class M shares
of the Fund, on not more than 60 days' written notice
to any other party to the agreement; and
(b) that such agreement shall terminate automatically in
the event of its assignment.
SECTION 7. This Plan may not be amended to increase
materially the amount of distribution expenses with respect to a
Fund permitted pursuant to Section 1 hereof without the approval
of a majority of the outstanding Class M shares of the Fund and
all material amendments to this Plan with respect to a Fund shall
be approved in the manner provided for approval of this Plan in
Section 2(b).
SECTION 8. As used in this Plan, (a) the term "Qualified
Trustees" shall mean those Trustees of the Trust who are not
interested persons of the Trust, and have no direct or indirect
financial interest in the operation of this Plan or any
agreements related to it, and (b) the term "majority of the
outstanding Class M shares of the Fund" means the affirmative
vote, at a duly called and held meeting of Class M shareholders
of the relevant Fund, (i) of the holders of 67% or more of the
Class M shares of such Fund present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50%
of the outstanding Class M shares of such Fund entitled to vote
at such meeting are present in person or by proxy, or (ii) of the
holders of more than 50% of the outstanding Class M shares of
such Fund entitled to vote at such meeting, whichever is less,
and (c) the terms "assignment," "affiliated person," "interested
person" and "promoter" shall have the respective meanings
specified in the Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities
and Exchange Commission.
SECTION 9. A copy of the Agreement and Declaration of
Trust of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and notice is hereby given that
this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually, and that the obligations
of or arising out of this instrument are not binding upon any of
the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the relevant Fund.
Executed as of April 8, 1999.
PUTNAM MUTUAL FUNDS CORP. PUTNAM TAX MANAGED FUNDS TRUST
By: /s/Richard A. Monaghan By: /s/ Charles E. Porter
Richard A. Monaghan Charles E. Porter
Managing Director Executive Vice President
Chief of Mutual Fund Business
6
DEALER SERVICE AGREEMENT
Between: and
PUTNAM MUTUAL FUNDS CORP.
General Distributor of
The Putnam Family of Mutual Funds
One Post Office Square
Boston, MA 02109
We are pleased to inform you that, pursuant to the terms of this
Dealer Service Agreement, we are authorized to pay you service
fees in connection with the accounts of your customers that hold
shares of certain Putnam Funds listed in SCHEDULE 1 that have
adopted distribution plans pursuant to Rule 12b-1 (the "12b-1
Funds"). Payment of the service fees is subject to your initial
and continuing satisfaction of the following terms and conditions
which may be revised by us from time to time:
1. QUALIFICATION REQUIREMENTS
(a) You have entered into a Sales Contract with us with respect
to the Putnam Family of Mutual Funds (the "Putnam Funds").
(b) You are the dealer of record for accounts in Putnam Funds
having an aggregate average net asset value of at least the
minimum amount set forth in SCHEDULE 2 (DEALER FIRM REQUIREMENTS)
during the period for which a service fee is to be paid. Putnam
Fund accounts are accounts in any open-end Putnam Fund, but
excluding any accounts for your firm's own retirement plans.
(c) One or more of your current employees must be the designated
registered representative(s) on accounts in Putnam Funds having
an aggregate average net asset value of at least the minimum
amount set forth in SCHEDULE 2 (REGISTERED REPRESENTATIVE
REQUIREMENTS) during the period for which a service fee is to be
paid.
(d) You will provide the following information and agree that we
will be entitled to rely on the accuracy of such information in
updating our records for determining the levels of service fees
payable to you under the terms of this Agreement. You understand
that such payments will be based solely on Putnam's records.
For each Putnam Fund account registered in the
name of one of your customers, you will advise us,
preferably by electronic means, before the end of the
second month in each calendar quarter, of the
registered representative's name, identification
number, branch number, and telephone number.
2. SERVICE FEES
(a) If you meet the qualification requirements set forth above
in Paragraph 1, you will be paid a service fee on assets in the
12b-1 Funds for which you are the dealer of record and which are
serviced by a registered representative of your firm meeting the
Registered Representative Requirements, if any, at the annual
rates specified (excluding any accounts for your firm's own
retirement plans).
(b) You understand and agree that:
(i) all service fee payments are subject to the
limitations contained in each 12b-1 Fund's Distribution
Plan, which may be varied or discontinued at any time;
(ii) you shall waive the right to receive service fee
payments to the extent any 12b-1 Fund fails to make
payments to us under its distribution plan with us;
(iii) your failure to provide the services
described in Paragraph 4 below as may be amended by us
from time to time, or otherwise comply with the terms
of this Agreement, will render you ineligible to
receive service fees; and
(iv) failure of an assigned registered
representative to provide services required by this
Agreement will render that representative's accounts
ineligible as accounts on which service fees are paid.
3. PAYMENTS AND COMMUNICATIONS TO REGISTERED REPRESENTATIVES
(a) You will pass through to your registered representatives a
significant share of the service fees paid to you pursuant to
this Agreement.
(b) You will assist us in distributing to your registered
representatives periodic statements which we will have prepared
showing the aggregate average net asset value of shares in Putnam
Funds with which they are credited on our records.
4. REQUIRED SERVICES
(a) You will assign one of your registered representatives to
each Putnam Fund account on your records and reassign the Putnam
Fund account should that representative leave your firm.
(b) You and your registered representatives will assist us and
our affiliates in providing the following services to
shareholders of the Putnam Funds:
(i) Maintain regular contact with shareholders in
assigned accounts and assist in answering inquiries
concerning the Putnam Funds.
(ii) Assist in distributing sales and service
literature provided by us, particularly to the
beneficial owners of accounts registered in your name
(nominee name accounts).
(iii)Assist us and our affiliates in the
establishment and maintenance of shareholder accounts
and records.
(iv) Assist shareholders in effecting
administrative changes, such as changing dividend
options, account designations, address, automatic
investment programs or systematic investment plans.
(v) Assist in processing purchase and redemption
transactions.
(vi) Provide any other information or services as
the customer or we may reasonably request.
(c) You will support our marketing efforts by granting
reasonable requests for visits to your offices by our wholesalers
and by including all Putnam Funds on your "approved" list.
(d) Your compliance with the service requirements set forth in
this Agreement will be evaluated by us from time to time by
surveying shareholder satisfaction with service, by monitoring
redemption levels of shareholder accounts assigned to you and by
such other methods as we deem appropriate.
(e) The provisions of this Paragraph 4 may be amended by us from
time to time upon notice to you.
5. AMENDMENT
This Agreement, including any Schedule hereto, shall be deemed
amended as provided in any written notice delivered by us to you.
6. EFFECTIVE PERIOD AND TERMINATION
The provisions of this Agreement shall remain in effect for not
more than one year from the date of its execution or adoption and
thereafter for successive annual periods only so long as such
continuance is specifically approved at least annually by the
Trustees of each of the 12b-1 Funds in conformity with Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act"). This
Agreement shall automatically terminate in the event of its
assignment (as defined by the 1940 Act). In addition, this
Agreement may be terminated at any time, without the payment of
any penalty, by either party upon written notice delivered or
mailed by registered mail, postage prepaid, to the other party,
or, as provided in Rule 12b-1 under the 1940 Act, by the Trustees
of any 12b-1 Fund or by the vote of the holders of the
outstanding voting securities of any 12b-1 Fund.
7. WRITTEN REPORTS
Putnam Mutual Funds Corp. shall provide the Trustees of each of
the 12b-1 Funds, and such Trustees shall review at least
quarterly, a written report of the amounts paid to you under this
Agreement and the purposes for which such expenditures were made.
8. MISCELLANEOUS
(a) All communications mailed to us should be sent to the
address listed below. Any notice to you shall be duly given if
mailed or delivered to you at the address specified by you below.
(b) The provisions of this Agreement shall be governed by and
construed in accordance with the laws of The Commonwealth of
Massachusetts.
Very truly yours,
PUTNAM MUTUAL FUNDS CORP.
By: ------------------------------
William N. Shiebler, President
and Chief Executive Officer
We accept and agree to the foregoing Agreement as of the date set
forth below.
Dealer: -------------------------
By: ----------------------------
Authorized Signature, Title
------------------------------
------------------------------
Address
Dated: -------------------------
Please return the signed Putnam copy of this Agreement to Putnam
Mutual Funds Corp., P.O. Box 41203, Providence, RI 02940-1203.
SCHEDULE 1: THE 12B-1 FUNDS
Service fees will be paid on the following Putnam Funds at the
rates set forth in the Prospectus of that Fund:
Putnam American Government Income Fund
Putnam Arizona Tax Exempt Income Fund
Putnam Asia Pacific Growth Fund
Putnam Asset Allocation Funds
- Balanced Portfolio
- Conservative Portfolio
- Growth Portfolio
Putnam Balanced Retirement Fund
Putnam California Tax Exempt Income Fund
Putnam Capital Appreciation Fund
Putnam Convertible Income-Growth Trust
Putnam Diversified Equity Trust
Putnam Diversified Income Trust
Putnam Dividend Income Fund
Putnam Equity Income Fund
Putnam Europe Growth Fund
Putnam Florida Tax Exempt Income Fund
Putnam Funds Trust
-Putnam Asia Pacific Fund II
-Putnam Equity Fund 98
-Putnam Growth Fund
-Putnam High Yield Total Return
-Putnam High Yield Trust II
-Putnam International Growth and Income Fund
-Putnam Investment Fund 98
-Putnam Latin America Fund
-Putnam U.S. Core Fund
-Putnam Value Fund
The George Putnam Fund of Boston
Putnam Global Governmental Income Trust
Putnam Global Growth Fund
Putnam Global Natural Resources Fund
The Putnam Fund for Growth and Income
Putnam Growth and Income Fund II
Putnam Health Sciences Trust
Putnam High Quality Bond Fund
Putnam High Yield Advantage Fund
Putnam High Yield Total Return Fund
Putnam High Yield Trust
Putnam High Yield Trust II
Putnam Income Fund
Putnam U.S. Intermediate Government Income Trust
Putnam International Growth Fund
Putnam Investment Funds
-Putnam Balanced Fund
-Putnam Capital Opportunities Fund
-Putnam Emerging Markets Fund
-Putnam Global Equity Fund
-Putnam Global Growth and Income Fund
-Putnam Growth Opportunities Fund
-Putnam International Fund
-Putnam International New Opportunities Fund
-Putnam International Voyager Fund
-Putnam New Value Fund
-Putnam Research Fund
-Putnam Small Cap Value Fund
-Putnam U.S. Core Fund II
Putnam Investors Fund
Putnam Massachusetts Tax Exempt Income Fund
Putnam Michigan Tax Exempt Income Fund
Putnam Minnesota Tax Exempt Income Fund
Putnam Municipal Income Fund
Putnam Municipal Opportunities Trust
Putnam New Jersey Tax Exempt Income Fund
Putnam New Opportunities Fund
Putnam New York Tax Exempt Income Fund
Putnam New York Tax Exempt Opportunities Fund
Putnam Ohio Tax Exempt Income Fund
Putnam OTC & Emerging Growth Fund
Putnam Pennsylvania Tax Exempt Income Fund
Putnam Preferred Income Fund
Putnam Strategic Income Fund
Putnam Tax Exempt Income Fund
Putnam Tax-Free Health Care Fund
Putnam Tax-Free Income Trust
-Tax-Free High Yield Fund
-Tax-Free Insured Fund
Putnam Tax Managed Funds Trust
-Putnam U.S. Core Tax Managed Funds Trust
Putnam U.S. Government Income Trust
Putnam Utilities Growth and Income Fund
Putnam Vista Fund
Putnam Voyager Fund
Putnam Voyager Fund II
SCHEDULE 2: MINIMUM ASSETS
DEALER FIRM REQUIREMENTS. The minimum aggregate average net
asset value of all accounts in Putnam Funds specified by
Paragraph 1(b) is $250,000. We will review this requirement
prior to the start of each year and inform you of any changes.
REGISTERED REPRESENTATIVE REQUIREMENTS. With respect to
Paragraph 1(c), there is no minimum asset qualification
requirement in the Putnam Funds applicable to each of your
representatives. We will review this requirement prior to the
start of each year and inform you of any changes.
3
FINANCIAL INSTITUTION
SERVICE AGREEMENT
Between: and
PUTNAM MUTUAL FUNDS CORP.
General Distributor of
The Putnam Family of Mutual Funds
One Post Office Square
Boston, MA 02109
We are pleased to inform you that, pursuant to the terms of this
FINANCIAL INSTITUTION SERVICE AGREEMENT, we are authorized to pay
you service fees in connection with the accounts of your
customers that hold shares of certain Putnam funds listed in
SCHEDULE 1 that have adopted distribution plans pursuant to Rule
12b-1 (the "12b-1 Funds"). Payment of the service fees is
subject to your initial and continuing satisfaction of the
following terms and conditions which may be revised by us from
time to time:
1. QUALIFICATION REQUIREMENTS
(a) You have entered into a Financial Institution Sales Contract
with us with respect to the Putnam Family of Mutual Funds (the
"Putnam Funds"), whose shares you have agreed to make available
to your customers on an agency basis.
(b) You are the financial institution of record for accounts in
Putnam Funds having an aggregate average net asset value of at
least the minimum amount set forth in SCHEDULE 2 (FINANCIAL
INSTITUTION REQUIREMENTS) during the period for which a service
fee is to be paid. Putnam Fund accounts are accounts in any open-
end Putnam Fund but excluding any accounts for your
organization's own retirement plans.
(c) One or more of your current employees must be the designated
registered representative(s) in the case of a bank affiliated
dealer, or agent representative(s) in the case of a bank (both
referred to as "representatives"), on accounts in Putnam Funds
having an aggregate average net asset value of at least the
minimum amount set forth in SCHEDULE 2 (REPRESENTATIVE
REQUIREMENTS) during the period for which a service fee is to be
paid.
(d) You will provide the following information and agree that we
will be entitled to rely on the accuracy of such information in
updating our records for determining the levels of service fees
payable to you under the terms of this Agreement. You understand
that such payments will be based solely on Putnam's records:
For each Putnam Fund account registered in the name of one
of your customers, you will advise us, preferably by
electronic means, before the end of the second month in each
calendar quarter, of the representative's name,
identification number, branch number, and telephone number.
2. SERVICE FEES
(a) If you meet the qualification requirements set forth above in
Paragraph 1, you will be paid, at the end of each calendar
quarter, a service fee on assets of your customers in the 12b-1
Funds for which you are the financial institution of record and
which are serviced by a representative of your organization
meeting the Representative Requirements, if any at the annual
rates specified (excluding any accounts for your organization's
own retirement plans), provided that you have evaluated such
service fees and have concluded that it is consistent with
applicable laws, rules, regulations and regulatory
interpretations for you to receive such service fees.
(b) You understand and agree that:
(i) all service fee payments are subject to the limitations
contained in each 12b-1 Fund's Distribution Plan, which may
be varied or discontinued at any time;
(ii) you shall waive the right to receive service fee
payments to the
extent any 12b-1 Fund fails to make payments to us under its
distribution
plan with us;
(iii)your failure to provide the services described in
Paragraph 4 below as may be amended by us from time to time,
or otherwise comply with the terms of this Agreement, will
render you ineligible to receive service fees; and
(iv) failure of an assigned representative to provide
services required by this Agreement will render that
representative's accounts ineligible as accounts on which
service fees are paid.
3. PAYMENTS AND COMMUNICATIONS TO REPRESENTATIVES
(a) Where consistent with applicable laws, rules, regulations and
regulatory interpretations, you will pass through to your
representatives a significant share of the service fees paid to
you pursuant to this Agreement, or you will otherwise use the
payments of service fees to advance the objective of providing
and improving service to shareholders of the Putnam Funds in a
manner specifically approved by Putnam Mutual Funds (for example,
via training courses for representatives or shareholder
seminars).
(b) You will assist us in distributing to your representatives
periodic statements which we will have prepared showing the
aggregate average net asset value of shares in Putnam Funds with
which they are credited on our records.
4. REQUIRED SERVICES
(a) You will assign one of your representatives to each Putnam
Fund account on your records and reassign the Putnam Fund account
should that representative leave your organization.
(b) You and your representatives will assist us and our
affiliates in providing the following services to shareholders of
the Putnam Funds:
(i) Maintain regular contact with shareholders in assigned
accounts and assist in answering inquiries concerning the
Putnam Funds.
(ii) Assist in distributing sales and service literature
provided by us, particularly to the beneficial owners of
accounts registered in your name (nominee name accounts).
(iii) Assist us and our affiliates in the establishment and
maintenance of shareholder accounts and records.
(iv) Assist shareholders in effecting administrative
changes, such as changing dividend options, account
designations, address, automatic investment programs or
systematic investment plans.
(v) Assist in processing purchase and redemption
transactions.
(vi) Provide any other information or services as the
customer or we may reasonably request.
(c) You will grant reasonable requests for visits to your offices
by our wholesalers and include all Putnam Funds on your menu or
list of investments made available by you to your customers.
(d) Your compliance with the service requirements set forth in
this Agreement will be evaluated by us from time to time by
surveying shareholder satisfaction with service, by monitoring
redemption levels of shareholder accounts assigned to you and by
such other methods as we deem appropriate.
(e) The provisions of this Paragraph 4 may be amended by us from
time to time upon notice to you.
5. AMENDMENT
This Agreement, including any Schedule hereto, shall be deemed
amended as provided in any written notice delivered by us to you.
6. EFFECTIVE PERIOD AND TERMINATION
The provisions of this Agreement shall remain in effect for one
year from the date of its execution or adoption and thereafter
for successive annual periods only so long as such continuance is
specifically approved at least annually by the Trustees of each
of the 12b-1 Funds in conformity with Rule 12b-1 under the
Investment Company Act of 1940 (the "1940 Act"). This Agreement
shall automatically terminate in the event of its assignment (as
defined by the 1940 Act). In addition, this Agreement may be
terminated at any time, without the payment of any penalty, by
either party upon written notice to the other party, or, as
provided in Rule 12b-1 under the 1940 Act, by the Trustees of any
12b-1 Fund or by the vote of the holders of the outstanding
voting securities of any 12b-1 Fund.
7. WRITTEN REPORTS
Putnam Mutual Funds Corp. shall provide the Trustees of each of
the 12b-1 Funds, and such Trustees shall review at least
quarterly, a written report of the amounts paid to you under this
Agreement and the purposes for which such expenditures were made.
8. COMPLIANCE WITH LAWS
With respect to the receipt of service fees under the terms of
this Agreement, you will comply with all applicable federal and
state laws and rules, and all applicable regulations and
interpretations of regulatory agencies or authorities, which may
affect your business practices, including any requirement of
written authorization or consent by your customers to your
receipt of service fees, and any requirement to provide
disclosure to your customers of such service fees.
9. MISCELLANEOUS
(a) All communications mailed to us should be sent to the address
listed below. Any notice to you shall be duly given if mailed or
delivered to you at the address specified by you below.
(b) The provisions of this Agreement shall be governed by and
construed in accordance with the laws of The Commonwealth of
Massachusetts.
Very truly yours,
PUTNAM MUTUAL FUNDS CORP.
By: --------------------------
William N. Shiebler,
President and
Chief Executive Officer
We accept and agree to the foregoing Agreement as of the date set
forth below.
Financial Institution:
_______________________
By:___________________________________
Authorized Signature, Title
___________________________________
___________________________________
Address
Dated:___________________________________
Please return the signed Putnam copy of this Agreement to Putnam
Mutual Funds Corp., P.O. Box 41203, Providence, RI 02940-1203.
SCHEDULE 1: THE 12B-1 FUNDS
Service fees will be paid on the following Putnam Funds at the
rates set forth in the Prospectus of that Fund:
Putnam American Government Income Fund
Putnam Arizona Tax Exempt Income Fund
Putnam Asia Pacific Growth Fund
Putnam Asset Allocation Funds
- Balanced Portfolio
- Conservative Portfolio
- Growth Portfolio
Putnam Balanced Retirement Fund
Putnam California Tax Exempt Income Fund
Putnam Capital Appreciation Fund
Putnam Convertible Income-Growth Trust
Putnam Diversified Equity Trust
Putnam Diversified Income Trust
Putnam Dividend Income Fund
Putnam Equity Income Fund
Putnam Europe Growth Fund
Putnam Florida Tax Exempt Income Fund
Putnam Funds Trust
-Putnam Asia Pacific Fund II
-Putnam Equity Fund 98
-Putnam Growth Fund
-Putnam High Yield Total Return
-Putnam High Yield Trust II
-Putnam International Growth and Income Fund
-Putnam Investment Fund 98
-Putnam Latin America Fund
-Putnam U.S. Core Fund
-Putnam Value Fund
The George Putnam Fund of Boston
Putnam Global Governmental Income Trust
Putnam Global Growth Fund
Putnam Global Natural Resources Fund
The Putnam Fund for Growth and Income
Putnam Growth and Income Fund II
Putnam Health Sciences Trust
Putnam High Quality Bond Fund
Putnam High Yield Advantage Fund
Putnam High Yield Total Return Fund
Putnam High Yield Trust
Putnam High Yield Trust II
Putnam Income Fund
Putnam U.S. Intermediate Government Income Trust
Putnam International Growth Fund
Putnam Investment Funds
-Putnam Balanced Fund
-Putnam Capital Opportunities Fund
-Putnam Emerging Markets Fund
-Putnam Global Equity Fund
-Putnam Global Growth and Income Fund
-Putnam Growth Opportunities Fund
-Putnam International Fund
-Putnam International New Opportunities Fund
-Putnam International Voyager Fund
-Putnam New Value Fund
-Putnam Research Fund
-Putnam Small Cap Value Fund
-Putnam U.S. Core Fund II
Putnam Investors Fund
Putnam Massachusetts Tax Exempt Income Fund
Putnam Michigan Tax Exempt Income Fund
Putnam Minnesota Tax Exempt Income Fund
Putnam Municipal Income Fund
Putnam Municipal Opportunities Trust
Putnam New Jersey Tax Exempt Income Fund
Putnam New Opportunities Fund
Putnam New York Tax Exempt Income Fund
Putnam New York Tax Exempt Opportunities Fund
Putnam Ohio Tax Exempt Income Fund
Putnam OTC & Emerging Growth Fund
Putnam Pennsylvania Tax Exempt Income Fund
Putnam Preferred Income Fund
Putnam Strategic Income Fund
Putnam Tax Exempt Income Fund
Putnam Tax-Free Health Care Fund
Putnam Tax-Free Income Trust
-Tax-Free High Yield Fund
-Tax-Free Insured Fund
Putnam Tax Managed Funds Trust
-Putnam U.S. Core Tax Managed Fund
Putnam U.S. Government Income Trust
Putnam Utilities Growth and Income Fund
Putnam Vista Fund
Putnam Voyager Fund
Putnam Voyager Fund II
SCHEDULE 2: MINIMUM ASSETS
FINANCIAL INSTITUTION REQUIREMENTS. The minimum aggregate
average net asset value of all accounts in Putnam Funds specified
by Paragraph 1(b) is $250,000. We will review this requirement
prior to the start of each year and inform you of any changes.
REPRESENTATIVE REQUIREMENTS. With respect to Paragraph
1(c), there is no minimum asset qualification requirement in the
Putnam Funds applicable to each of your representatives. We will
review this requirement prior to the start of each year and
inform you of any changes. We reserve the right to set a minimum
at any time.
