SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
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Filed by the Registrant / X /
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Filed by a Party other than the Registrant / /
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Check the appropriate box:
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/ X / Preliminary Proxy Statement
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/ / Preliminary Additional Materials
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/ / Definitive Proxy Statement
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/ / Definitive Additional Materials
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/ / Soliciting Material Pursuant to Sec. 240.14a-11(e) or
- ---- Sec. 240.14a-12
PUTNAM NATURAL RESOURCES FUND
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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/ x / $125 per Exchange Act Rules 0-11(c)(1)(ii),
- ---- 14a-6(i)(1), or 14a-6(i)(2).
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/ / $500 per each party to the controversy pursuant
- ---- to Exchange Act Rule 14a-6(i)(3).
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/ / Fee computed on table below per Exchange Act Rules
- ---- 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which
transaction applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11:
(4) Proposed maximum aggregate value of transaction:
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/ / Check box if any part of the fee is offset as provided
- ---- by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed: <PAGE>
IMPORTANT INFORMATION
FOR SHAREHOLDERS IN
PUTNAM NATURAL RESOURCES FUND
The document you hold in your hands contains your proxy statement
and proxy card. A proxy card is, in essence, a ballot. When you
vote your proxy, it tells us how to vote on your behalf on
important issues relating to your fund. If you complete and sign
the proxy, we'll vote it exactly as you tell us. If you simply
sign the proxy, we'll vote it in accordance with the Trustees'
recommendations on pages and .
We urge you to spend a couple of minutes with the proxy
statement, fill out your proxy card, and return it to us. When
shareholders don't return their proxies in sufficient numbers, we
have to incur the expense of follow-up solicitations, which can
cost your fund money.
We want to know how you would like to vote and welcome your
comments. Please take a few moments with these materials and
return your proxy to us.
(PUTNAM LOGO APPEARS HERE)
BOSTON * LONDON * TOKYO
<PAGE>
Table of contents
A Message from the Chairman. . . . . . . . . . . . . . . . . . . . . . . .
Notice of Shareholder Meeting. . . . . . . . . . . . . . . . . . . . . . .
Trustees' Recommendations. . . . . . . . . . . . . . . . . . . . . . . . .
Proxy card enclosed
If you have any questions, please contact us at the special toll-
free number we have set up for you (1-800-225-1581) or call your
financial adviser.
<PAGE>
A Message from the Chairman
(Photograph of George Putnam appears here)
Dear Shareholder:
I am writing to you to ask for your vote on important questions
that affect your investment in your fund. While you are, of
course, welcome to join us at your fund's meeting, most
shareholders cast their vote by filling out and signing the
enclosed proxy. We are asking for your vote on the following
matters:
1. Electing Trustees to oversee your fund;
2. Ratifying the selection by the Trustees of the independent
auditors of your fund for its current fiscal year; and
3. Approving a number of changes to your fund's fundamental
investment restrictions, including the elimination of
certain of these restrictions.
Although we would like very much to have each shareholder attend
their fund's meeting, we realize this is not possible. Whether
or not you plan to be present, we need your vote. We urge you to
complete, sign, and return the enclosed proxy card promptly. A
postage-paid envelope is enclosed.
I'm sure that you, like most people, lead a busy life and are
tempted to put this proxy aside for another day. Please don't.
When shareholders don't return their proxies, their fund may have
to incur the expense of follow-up solicitations. All
shareholders benefit from the speedy return of proxies.
Your vote is important to us. We appreciate the time and
consideration that I am sure you will give this important matter.
If you have questions about the proposals, contact your financial
adviser or call a Putnam customer service representative at
1-800-225-1581.
Sincerely yours,
(signature of George Putnam)
George Putnam, Chairman
<PAGE>
PUTNAM NATURAL RESOURCES FUND
Notice of a Meeting of Shareholders
This is the formal agenda for your fund's shareholder meeting.
It tells you what matters will be voted on and the time and place
of the meeting, if you can attend in person.
To the Shareholders of Putnam Natural Resources Fund:
A Meeting of Shareholders of your fund will be held on July 31,
1996 at 2:00 p.m., Boston time, on the eighth floor of One Post
Office Square, Boston, Massachusetts, to consider the following:
1. Electing Trustees. See page .
2. Ratifying the selection by the Trustees of the independent
auditors of your fund for its current fiscal year. See
page .
3.A. Approving an amendment to the fund's fundamental investment
restriction with respect to diversification of investments.
See page .
3.B. Approving an amendment to the fund's fundamental investment
restriction with respect to investments in the securities of
a single issuer. See page .
3.C. Approving an amendment to the fund's fundamental investment
restriction with respect to making loans through purchases
of debt obligations, repurchase agreements and securities
loans. See page .
3.D. Approving an amendment to the fund's fundamental investment
restriction with respect to investments in real estate. See
page .
3.E. Approving an amendment to the fund's fundamental investment
restriction with respect to investments in commodities or
commodity contracts. See page .
3.F. Approving an amendment to the fund's fundamental investment
restriction with respect to concentration of its assets.
See page [ ].
3.G Approving the elimination of the fund's fundamental
investment restriction with respect to investments in
issuers that have been in operation for less than three
years. See page .
3.H. Approving the elimination of the fund's fundamental
investment restriction with respect to investments in
securities of issuers in which management of the fund or
Putnam Investment Management, Inc. owns securities. See
page .
3.I. Approving the elimination of the fund's fundamental
investment restriction with respect to margin transactions.
See page .
3.J. Approving the elimination of the fund's fundamental
investment restriction with respect to short sales. See
page [ ].
3.K. Approving the elimination of the fund's fundamental
investment restriction with respect to options transactions.
See page [ ].
3.L. Approving the elimination of the fund's fundamental
investment restriction which limits the fund's ability to
pledge assets. See page .
3.M. Approving the elimination of the fund's fundamental
investment restriction with respect to investments in
restricted securities. See page .
3.N. Approving the elimination of the fund's fundamental
investment restriction with respect to investments in
warrants. See page .
3.O. Approving the elimination of the fund's fundamental
investment restriction with respect to certain oil, gas, and
mineral interests. See page .
3.P. Approving the elimination of the fund's fundamental
investment restriction with respect to investments in other
investment companies. See page .
3.Q. Approving the elimination of the fund's fundamental
investment restriction with respect to participating in
trading accounts. See page .
4. Transacting other business as may properly come before the
meeting.
By the Trustees
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson A. Baxter Robert E. Patterson
Hans H. Estin Donald S. Perkins
John A. Hill George Putnam, III
Ronald J. Jackson Eli Shapiro
Elizabeth T. Kennan A.J.C. Smith
Lawrence J. Lasser W. Nicholas Thorndike
WE URGE YOU TO MARK, SIGN, DATE, AND MAIL THE ENCLOSED PROXY IN
THE POSTAGE-PAID ENVELOPE PROVIDED SO YOU WILL BE REPRESENTED AT
THE MEETING.
May , 1996
<PAGE>
Proxy Statement
This document will give you the information you need to vote on
the matters listed on the previous page. Much of the information
in the proxy statement is required under rules of the Securities
and Exchange Commission (SEC); some of it is technical. If there
is anything you don't understand, please contact us at our
special toll-free number, 1-800-225-1581, or call your financial
adviser.
Who is asking for my vote?
The enclosed proxy is solicited by the Trustees of Putnam Natural
Resources Fund for use at the Meeting of Shareholders of the fund
to be held on July 31, 1996, and, if your fund's meeting is
adjourned, at any later meetings, for the purposes stated in the
Notice of Meeting (see previous page).
How do your fund's Trustees recommend that shareholders vote on
these proposals?
The Trustees recommend that you vote
1. For the election of all nominees;
2. For selecting Price Waterhouse as the independent auditors
of your fund;
3.A. For amending the fund's fundamental investment restriction
with respect to diversification of investments;
3.B. For amending the fund's fundamental investment restriction
with respect to investments in the securities of a single
issuer;
3.C. For amending the fund's fundamental investment restriction
with respect to making loans through purchases of debt
obligations, repurchase agreements and securities loans;
3.D. For amending the fund's fundamental investment restriction
with respect to investments in real estate;
3.E. For amending the fund's fundamental investment restriction
with respect to investments in commodities or commodity
contracts;
3.F. For amending the fund's fundamental investment restriction
with respect to concentration of its assets;
3.G. For eliminating the fund's fundamental investment
restriction with respect to investments in issuers that have
been in operation for less than three years;
3.H. For eliminating the fund's fundamental investment
restriction with respect to investments in securities of
issuers in which management of the fund or Putnam Investment
Management, Inc. owns securities;
3.I. For eliminating the fund's fundamental investment
restriction with respect to margin transactions;
3.J. For eliminating the fund's fundamental investment
restriction with respect to short sales;
3.K. For eliminating the fund's fundamental investment
restriction with respect to options transactions;
3.L. For eliminating the fund's fundamental investment
restriction which limits the fund's ability to pledge
assets;
3.M. For eliminating the fund's fundamental investment
restriction with respect to investments in restricted
securities;
3.N. For eliminating the fund's fundamental investment
restriction with respect to investments in warrants;
3.O. For eliminating the fund's fundamental investment
restriction with respect to certain oil, gas, and mineral
interests;
3.P. For eliminating the fund's fundamental investment
restriction with respect to investments in other investment
companies; and
3.Q. For eliminating the fund's fundamental investment
restriction with respect to participating in trading
accounts.
Who is eligible to vote?
Shareholders of record at the close of business on May 3, 1996,
are entitled to be present and to vote at the meeting or any
adjourned meeting. The Notice of Meeting, the proxy, and the
Proxy Statement have been mailed to shareholders of record on or
about May , 1996.
Each share is entitled to one vote. Shares represented by duly
executed proxies will be voted in accordance with shareholders'
instructions. If you sign the proxy, but don't fill in a vote,
your shares will be voted in accordance with the Trustees'
recommendations. If any other business is brought before the
meeting, your shares will be voted at the Trustees' discretion.
<PAGE>
The Proposals
I. ELECTION OF TRUSTEES
Who are the nominees for Trustees?
The Nominating Committee of the Trustees recommends that the
number of Trustees be fixed at fourteen and that you vote for the
election of the nominees described below. Each nominee is
currently a Trustee of your fund and of the other Putnam funds.
The Nominating Committee of the Trustees consists solely of
Trustees who are not "interested persons" (as defined in the
Investment Company Act of 1940) of your fund or of Putnam
Investment Management, Inc., your fund's investment manager
("Putnam Management").
Jameson Adkins Baxter
[Insert Picture]
Ms. Baxter, age 52, is the President of Baxter Associates, Inc.,
a management and financial consulting firm which she founded in
1986. During that time, she was also a Vice President and
Principal of the Regency Group, Inc., and a Consultant to First
Boston Corporation, both of which are investment banking firms.
From 1965 to 1986, Ms. Baxter held various positions in
investment banking and corporate finance at First Boston.
Ms. Baxter currently also serves as a Director of Banta
Corporation, Avondale Federal Savings Bank, and ASHTA Chemicals,
Inc. She is also the Chairman Emeritus of the Board of Trustees
of Mount Holyoke College, having previously served as Chairman
for five years and as a Board member for thirteen years; an
Honorary Trustee and past President of the Board of Trustees of
the Emma Willard School; and Chair of the Board of Governors of
Good Shepherd Hospital. Ms. Baxter is a graduate of Mount
Holyoke College.
Hans H. Estin
[Insert Picture]
Mr. Estin, age 67, is a Chartered Financial Analyst and the Vice
Chairman of North American Management Corp., a registered
investment adviser serving individual clients and their families.
Mr. Estin currently also serves as a Director of The Boston
Company, Inc., a registered investment adviser which provides
administrative and investment management services to mutual funds
and other institutional investors, and Boston Safe Deposit and
Trust Company; a Corporation Member of Massachusetts General
Hospital; and a Trustee of New England Aquarium. He previously
served as the Chairman of the Board of Trustees of Boston
University and is currently active in various other civic
associations, including the Boys & Girls Clubs of Boston, Inc.
Mr. Estin is a graduate of Harvard College and holds honorary
doctorates from Merrimack College and Boston University.
John A. Hill
[Insert Picture]
Mr. Hill, age 54, is the Chairman and Managing Director of First
Reserve Corporation, a registered investment adviser investing in
companies in the world-wide energy industry on behalf of
institutional investors.
Prior to acquiring First Reserve in 1983, Mr. Hill held executive
positions with several investment advisory firms and held various
positions with the Federal government, including Associate
Director of the Office of Management and Budget and Deputy
Administrator of the Federal Energy Administration.
Mr. Hill currently also serves as a Director of Snyder Oil
Corporation, an exploration and production company which he
founded, Maverick Tube Corporation, a manufacturer of structural
steel, pipe and well casings, PetroCorp Incorporated, an
exploration and production company, Weatherford Enterra, Inc., an
oil field service company, various private companies controlled
by First Reserve Corporation, and various First Reserve Funds.
He is also a Member of the Board of Advisors of Fund Directions.
He is currently active in various business associations,
including the Economic Club of New York, and lectures on energy
issues in the United States and Europe. Mr. Hill is a graduate
of Southern Methodist University.
Ronald J. Jackson
[Insert Picture]
Mr. Jackson, age 52, was Chairman of the Board, President and
Chief Executive Officer of Fisher-Price, Inc., a major toy
manufacturer, from 1990 to 1993. He previously served as
President and Chief Executive Officer of Stride-Rite, Inc., a
manufacturer and distributor of footwear, from 1989 to 1990, and
as President and Chief Executive Officer of Kenner Parker Toys,
Inc., a major toys and games manufacturer, from 1985 to 1987.
Prior to that, he held various financial and marketing positions
at General Mills, Inc. from 1966 to 1985, including Vice
President, Controller and Vice President of Marketing for Parker
Brothers, a toy and game company, and President of Talbot's, a
retailer and direct marketer of women's apparel.
Mr. Jackson currently serves as a Trustee of Salem Hospital and
an Overseer of the Peabody Essex Museum. He previously served as
a Director of a number of public companies including Fisher-
Price, Inc., Kenner Parker Toys, Inc., and Mattel, Inc., major
toy manufacturers, and Stride-Rite, Inc. Mr. Jackson is a
graduate of Michigan State University Business School.
Elizabeth T. Kennan
[Insert Picture]
Ms. Kennan, age 58, is President Emeritus and Professor of Mount
Holyoke College. From 1978 through June 1995, she was President
of Mount Holyoke College. From 1966 to 1978, she was on the
faculty of Catholic University, where she taught history and
published numerous articles.
Ms. Kennan currently also serves as a Director of NYNEX
Corporation, a telecommunications company, Northeast Utilities,
the Kentucky Home Life Insurance Companies, and Talbots, a
women's clothing retailer. She also serves as a Member of The
Folger Shakespeare Library Committee. She is currently active in
various educational and civic associations, including the
Committee on Economic Development and the Council on Foreign
Relations. Ms. Kennan is a graduate of Mount Holyoke College,
the University of Washington and St. Hilda College at Oxford
University and holds several honorary doctorates.
Lawrence J. Lasser*
[Insert Picture]
Mr. Lasser, age 53, is the Vice President of your fund and the
other Putnam funds. He has been the President, Chief Executive
Officer and a Director of Putnam Investments, Inc. and Putnam
Management since 1985, having begun his career there in 1969.
Mr. Lasser currently also serves as a Director of Marsh &
McLennan Companies, Inc., the parent company of Putnam
Management, and INROADS/Central New England, Inc., a job market
internship program for minority high school and college students.
He is a Member of the Board of Overseers of the Museum of
Science, the Museum of Fine Arts and the Isabella Stewart Gardner
Museum in Boston. He is also a Trustee of the Beth Israel
Hospital and Buckingham, Browne and Nichols School. Mr. Lasser
is a graduate of Antioch College and Harvard Business School.
Robert E. Patterson
[Insert Picture]
Mr. Patterson, age 51, is the Executive Vice President and
Director of Acquisitions of Cabot Partners Limited Partnership, a
registered investment adviser which manages real estate
investments for institutional investors. Prior to 1990, he was
the Executive Vice President of Cabot, Cabot & Forbes Realty
Advisors, Inc., the predecessor company of Cabot Partners. Prior
to that, he was a Senior Vice President of the Beal Companies, a
real estate management, investment and development company. He
has also worked as an attorney and held various positions in
state government, including the founding Executive Director of
the Massachusetts Industrial Finance Agency.
Mr. Patterson currently also serves as Chairman of the Joslin
Diabetes Center and as a Director of Brandywine Trust Company.
Mr. Patterson is a graduate of Harvard College and Harvard Law
School.
Donald S. Perkins*
[Insert Picture]
Mr. Perkins, age 69, is the retired Chairman of the Board of
Jewel Companies, Inc., a diversified retailer, where among other
roles he served as President, Chief Executive Officer and
Chairman of the Board from 1965 to 1980. He currently also
serves as a Director of various other public corporations,
including AON Corp., an insurance company, Cummins Engine
Company, Inc., an engine and power generator equipment
manufacturer and assembler, Current Assets L.L.C., a corporation
providing financial staffing services, Illinova and Illinois
Power Co., Inland Steel Industries, Inc., LaSalle Street Fund,
Inc., a real estate investment trust, Lucent Technologies Inc.,
Springs Industries, Inc., a textile manufacturer, and Time
Warner, Inc., one of the nation's largest media conglomerates.
He previously served as a director of several other major public
corporations, including Corning Glass Works, Eastman Kodak
Company, Firestone Tire & Rubber Company and Kmart Corporation.
Mr. Perkins currently also serves as a Trustee and Vice Chairman
of Northwestern University and as a Trustee of the Hospital
Research and Education Trust. He is currently active in various
civic and business associations, including the Business Council
and the Civic Committee of the Commercial Club of Chicago, of
which he is the founding Chairman. Mr. Perkins is a graduate of
Yale University and Harvard Business School and holds an honorary
doctorate from Loyola University of Chicago.
William F. Pounds
[Insert Picture]
Dr. Pounds, age 68, is the Vice Chairman of your fund and of the
other Putnam funds. He has been a Professor of Management at the
Alfred P. Sloan School of Management at the Massachusetts
Institute of Technology since 1961 and served as Dean of that
School from 1966 to 1980. He previously served as Senior Advisor
to the Rockefeller Family and Associates and was a past Chairman
of Rockefeller & Co., Inc., a registered investment adviser which
manages Rockefeller family assets, and Rockefeller Trust Company.
Dr. Pounds currently also serves as a Director of IDEXX
Laboratories, Inc., EG&G, Inc., Perseptive Biosystems, Inc.,
Management Sciences For Health, Inc. and Sun Company, Inc. He is
also a Trustee of the Museum of Fine Arts in Boston; an Overseer
of WGBH Educational Foundation, and a Fellow of The American
Academy of Arts and Sciences. He previously served as a director
of Fisher-Price, Inc., a major toy manufacturer and General
Mills, Inc., a major manufacturer and distributor of food
products. Dr. Pounds is a graduate of Carnegie Mellon
University.
George Putnam*
[Insert Picture]
Mr. Putnam, age 69, is the Chairman and President of your fund
and of the other Putnam funds. He is the Chairman and a Director
of Putnam Management and Putnam Mutual Funds Corp. and a director
of Marsh & McLennan, their parent company. Mr. Putnam is the son
of the founder of the Putnam funds and Putnam Management and has
been employed in various capacities by Putnam Management since
1951, including Chief Executive Officer from 1961 to 1973. He is
a former Overseer and Treasurer of Harvard University; a past
Chairman of the Harvard Management Company; and a Trustee
Emeritus of Wellesley College and Bradford College.
Mr. Putnam currently also serves as a Director of The Boston
Company, Inc., Boston Safe Deposit and Trust Company, Freeport-
McMoRan, Inc., Freeport Copper and Gold, Inc., McMoRan Oil and
Gas, Inc., mining and natural resources companies, General Mills,
Inc., a major manufacturer of food products, Houghton Mifflin
Company, a major publishing company, and Rockefeller Group, Inc.,
a real estate manager. He is also a Trustee of Massachusetts
General Hospital, McLean Hospital, Vincent Memorial Hospital,
WGBH Educational Foundation and the Museum of Fine Arts and the
Museum of Science in Boston; the New England Aquarium; an
Overseer of Northeastern University; and a Fellow of The American
Academy of Arts and Sciences. Mr. Putnam is a graduate of
Harvard College and Harvard Business School and holds honorary
doctorates from Bates College and Harvard University.
George Putnam, III*
[Insert Picture]
Mr. Putnam, age 44, is the President of 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 which
provides advice to private funds specializing in investments in
such companies. Prior to founding New Generation in 1985, Mr.
Putnam was an attorney with the Philadelphia law firm Dechert
Price & Rhoads.
Mr. Putnam currently also serves as a Director of the
Massachusetts Audubon Society. He is also a Trustee of the Sea
Education Association and St. Mark's School and an Overseer of
the New England Medical Center. Mr. Putnam is a graduate of
Harvard College, Harvard Business School and Harvard Law School.
Eli Shapiro
[Insert Picture]
Dr. Shapiro, age 79, is the Alfred P. Sloan Professor of
Management, Emeritus at the Alfred P. Sloan School of Management
at the Massachusetts Institute of Technology, having served on
the faculty of the Sloan School for eighteen years. He
previously was also on the faculty of Harvard Business School,
The University of Chicago School of Business and Brooklyn
College. During his academic career, Dr. Shapiro authored
numerous publications concerning finance and related topics. He
previously served as the President and Chief Executive of the
National Bureau of Economic Research and also provided economic
and financial consulting services to various clients.
Dr. Shapiro is a past Director of many companies, including
Nomura Dividend Income Fund, Inc., a privately held registered
investment company managed by Putnam Management, Reece
Corporation, a sewing machine manufacturer, Commonwealth
Mortgage, Dexter Corporation, a manufacturer of plastics and
related products, Avis Corporation, a car rental company,
Connecticut Bank and Trust Company, Connecticut National Gas
Corporation, the Federal Home Loan Bank of Boston, where he
served as Chairman from 1977 to 1989, Travelers' Corporation, an
insurance company, and Norlin Corporation, a musical instrument
manufacturer; and a past Trustee of Mount Holyoke College and the
Putnam funds (from 1984 to 1989).
Dr. Shapiro is a Fellow of The American Academy of Arts and
Sciences and is active in various professional and civic
associations, including the American Economic Association, the
American Finance Association and the Council on Foreign
Relations. Dr. Shapiro is a graduate of Brooklyn College and
Columbia University.
A.J.C. Smith*
[Insert Picture]
Mr. Smith, age 62, is the Chairman and Chief Executive Officer of
Marsh & McLennan Companies, Inc. He has been employed by Marsh &
McLennan and related companies in various capacities since 1961.
Mr. Smith is a Director of the Trident Corp., and he also serves
as a Trustee of the Carnegie Hall Society, the Central Park
Conservancy, The American Institute for Chartered Property
Underwriters, and is a Founder of the Museum of Scotland Society.
He was educated in Scotland and is a Fellow of the Faculty of
Actuaries in Edinburgh, a Fellow of the Canadian Institute of
Actuaries, a Fellow of the Conference of Actuaries in Public
Practice, an Associate of the Society of Actuaries, a Member of
the American Academy of Actuaries, the International Actuarial
Association and the International Association of Consulting
Actuaries.
W. Nicholas Thorndike**
[Insert Picture]
Mr. Thorndike, age 63, serves as a Director of various
corporations and charitable organizations, including Data General
Corporation, a computer and high technology company, Bradley Real
Estate, Inc., a real estate investment firm, Providence Journal
Co., a newspaper publisher and owner of television stations, and
Courier Corporation, a book binding and printing company. He is
also a Trustee of Eastern Utilities Associates, Massachusetts
General Hospital, where he previously served as chairman and
president, and Northeastern University.
Prior to December 1988, he was the Chairman of the Board and
Managing Partner of Wellington Management Company/Thorndike,
Doran, Paine & Lewis, a registered investment adviser which
manages mutual funds and institutional assets. He also
previously served as a Trustee of the Wellington Group of Funds
(now The Vanguard Group) and was the Chairman and a Director of
Ivest Fund, Inc. Mr. Thorndike is a graduate of Harvard College.
- ----------------------------
* Nominees who are or may be deemed to be "interested persons"
(as defined in the Investment Company Act of 1940) of your
fund, Putnam Management, and Putnam Mutual Funds Corp.
("Putnam Mutual Funds"), the principal underwriter for all
the open-end Putnam funds and an affiliate of Putnam
Management. Messrs. Putnam, Lasser, and Smith are deemed
"interested persons" by virtue of their positions as
officers or shareholders of your 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 your fund, Putnam
Management, and Putnam Mutual Funds. Mr. Perkins may be
deemed to be an "interested person" of your fund because of
his service as a director of a certain publicly held company
that includes registered broker-dealer firms among its
subsidiaries. Neither your 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. The balance of the
nominees are not "interested persons."
** In February 1994, Mr. Thorndike accepted appointment as a
successor trustee of certain private trusts in which he has
no beneficial interest. At that time he also became
Chairman of the Board of two privately owned corporations
controlled by such trusts, serving in that capacity until
October 1994. These corporations filed voluntary petitions
for relief under Chapter 11 of the U.S. Bankruptcy Code in
August 1994.
Except as indicated above, the principal occupations and business
experience of the nominees for the last five years have been with
the employers indicated, although in some cases they have held
different positions with those employers. Except for Dr.
Shapiro, Ms. Baxter and Mr. Jackson, all the nominees were
elected by the shareholders in July, 1992. Ms. Baxter, Dr.
Shapiro and Mr. Jackson were elected by the other Trustees in
January 1994, April 1995 and May 1996, respectively. As
indicated above, Dr. Shapiro also previously served as a Trustee
of the Putnam funds from 1984 to 1989. The 14 nominees for
election as Trustees at the shareholder meeting of your fund who
receive the greatest number of votes will be elected Trustees of
your fund. The Trustees serve until their successors are elected
and qualified. Each of the nominees has agreed to serve as a
Trustee if elected. If any of the nominees is unavailable for
election at the time of the meeting, which is not anticipated,
the Trustees may vote for other nominees at their discretion, or
the Trustees may recommend that the shareholders fix the number
of Trustees at less than 14 for your fund.
What are the Trustees' responsibilities?
Your fund's Trustees are responsible for the general oversight of
your fund's business and for assuring that your fund is managed
in the best interests of its shareholders. The Trustees
periodically review your fund's investment performance as well as
the quality of other services provided to your fund and its
shareholders by Putnam Management and its affiliates, including
administration, custody, distribution and investor servicing. At
least annually, the Trustees review the fees paid to Putnam
Management and its affiliates for these services and the overall
level of your fund's operating expenses. In carrying out these
responsibilities, the Trustees are assisted by an independent
administrative staff and by your fund's auditors and legal
counsel, which are selected by the Trustees and are independent
of Putnam Management and its affiliates.
Do the Trustees have a stake in your fund?
The Trustees believe it is important that each Trustee have a
significant investment in the Putnam funds. The Trustees
allocate their investments among the more than 99 Putnam funds
based on their own investment needs. The Trustees' aggregate
investments in the Putnam funds total over $53 million. The
table below lists each Trustee's current investments in the fund
and in the Putnam funds as a group.<PAGE>
Share Ownership by Trustees
Year first Number of
elected as Number of shares of
Trustee of shares of the all Putnam
the Putnam fund owned funds owned
Trustees+ funds as of 4/25/96* as of 4/25/96**
- ------------------------------------------------------------------------------
Jameson A. Baxter 1994
Hans H. Estin 1972
John A. Hill 1985
Elizabeth T. Kennan 1992
Lawrence J. Lasser 1992
Robert E. Patterson 1984
Donald S. Perkins 1982
William F. Pounds 1971
George Putnam 1957
George Putnam, III 1984
Eli Shapiro 1995***
A.J.C. Smith 1986
W. Nicholas Thorndike 1992
- ------------------------------------------------------------------------------
+ Mr. Jackson became a Trustee of the fund effective May 3, 1996 and does not
own any
shares of the fund.
* Except as noted below, each Trustee has sole investment power and sole
voting power
with respect to his or her shares of the fund.
** These holdings do not include shares of Putnam money market funds.
*** Dr. Shapiro previously served as a Trustee of the Putnam funds from 1984
to 1989.
As of April 25, 1996, the Trustees and officers of the fund owned a total of
28,068 shares
of the fund, comprising less than 1% of its outstanding shares on that date.
A total of
1,649 of these shares are held by certain "interested" Trustees and officers
of your fund
and Putnam Management in their Putnam Investments, Inc. Profit Sharing
Retirement Plan
accounts. Each individual accountholder has sole investment power and shared
voting power
with respect to his/her account.
What are some of the ways in which the Trustees represent
shareholder interests?
The Trustees believe that, as substantial investors in the Putnam
funds, their interests are closely aligned with those of
individual shareholders. Among other ways, the Trustees seek to
represent shareholder interests:
by carefully reviewing your fund's investment
performance on an individual basis with your fund's
managers;
by also carefully reviewing the quality of the various
other services provided to the funds and their
shareholders by Putnam Management and its affiliates;
by discussing with senior management of Putnam
Management steps being taken to address any performance
deficiencies;
by reviewing the fees paid to Putnam Management to
ensure that such fees remain reasonable and competitive
with those of other mutual funds, while at the same
time providing Putnam Management sufficient resources
to continue to provide high quality services in the
future;
by monitoring potential conflicts between the funds and
Putnam Management and its affiliates to ensure that the
funds continue to be managed in the best interests of
their shareholders;
by also monitoring potential conflicts among funds to
ensure that shareholders continue to realize the
benefits of participation in a large and diverse family
of funds.
How often do the Trustees meet?
The Trustees meet each month (except August) over a two-day
period to review the operations of your fund and of the other
Putnam funds. A portion of these meetings is devoted to meetings
of various Committees of the board which focus on particular
matters. These include: the Contract Committee, which reviews
all contractual arrangements with Putnam Management and its
affiliates; the Communication and Service Committee, which
reviews the quality of services provided by your fund's investor
servicing agent, custodian and distributor; the Pricing,
Brokerage and Special Investments Committee, which reviews
matters relating to valuation of securities, best execution,
brokerage costs and allocations and new investment techniques;
the Audit Committee, which reviews accounting policies and the
adequacy of internal controls and supervises the engagement of
the funds' auditors; the Compensation, Administration and Legal
Affairs Committee, which reviews the compensation of the Trustees
and their administrative staff and supervises the engagement of
the funds' independent counsel; and the Nominating Committee,
which is responsible for selecting nominees for election as
Trustees.
Each Trustee generally attends at least two formal committee
meetings during such monthly meeting of the Trustees. During
1995, the average Trustee participated in approximately 40
committee and board meetings. In addition, the Trustees meet in
small groups with Chief Investment Officers and Portfolio
Managers to review recent performance and the current investment
climate for selected funds. These meetings ensure that each
fund's performance is reviewed in detail at least twice a year.
The Contract Committee typically meets on several additional
occasions during the year to carry out its responsibilities.
Other Committees, including an Executive Committee, may also meet
on special occasions as the need arises.
What are the Trustees paid for their services?
Your fund pays each Trustee a fee for his or her services. Each
Trustee also receives fees for serving as Trustee of the 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 fees paid to each
Trustee by your fund and by all of the Putnam funds are shown
below:
<PAGE>
COMPENSATION TABLE
Total
Aggregate compensation
compensation from all
Trustees from the fund* Putnam funds**
- --------------------------------------------------------------
Jameson A. Baxter $1,021 $150,854
Hans H. Estin 1,021 150,854
John A. Hill*** 1,015 149,850
Ronald J. Jackson+ N/A N/A
Elizabeth T. Kennan 1,009 148,854
Lawrence J. Lasser 1,021 150,854
Robert E. Patterson 1,034 152,854
Donald S. Perkins 1,021 150,854
William F. Pounds 1,027 149,854
George Putnam 1,021 150,854
George Putnam, III 1,021 150,854
Eli Shapiro**** 334 95,372
A.J.C. Smith 1,007 149,854
W. Nicholas Thorndike 1,034 152,854
+ Ronald J. Jackson became a Trustee of the fund effective May 3,
1996 and has received no compensation from the fund or the
other Putnam funds.
* Reflects amounts paid for fiscal year 1995. Includes an annual
retainer and an attendance fee for each meeting attended.
** Reflects total payments received from all Putnam funds in the
most recent calendar year. As of December 31, 1995, there were
99 funds in the Putnam family.
*** Includes amounts of compensation deferred pursuant to a Trustee
Compensation Deferral Plan. The total amount of deferred
compensation payable to Mr. Hill by all Putnam funds as of
August 31, 1995 was 17,217.31, including income earned on such
amounts.
**** Elected as a Trustee in April 1995.<PAGE>
Your fund's Trustees have approved Retirement Guidelines for
Trustees of the Putnam funds. These guidelines provide generally
that a Trustee who retires after reaching age 72 and who has at
least 10 years of continuous service will be eligible to receive a
retirement benefit from each Putnam fund for which he or she served
as a Trustee. The amount and form of such benefit is subject to
determination annually by the Trustees and, unless otherwise
determined by the Trustees, will be an annual cash benefit payable
for life equal to one-half of the Trustee retainer fees paid by each
fund at the time of retirement. Several retired Trustees are
currently receiving benefits pursuant to the Guidelines and it is
anticipated that the current Trustees will receive similar benefits
upon their retirement. A Trustee who retired in calendar 1995 and
was eligible to receive benefits under these Guidelines would have
received an annual benefit of $66,749, based upon the aggregate
retainer fees paid by the Putnam funds for such year. The Trustees
reserve the right to amend or terminate such Guidelines and the
related payments at any time, and may modify or waive the foregoing
eligibility requirements when deemed appropriate.
For additional information about your fund, including further
information about its Trustees and officers, please see "Further
Information About Your Fund," on page .
Putnam Investments
Putnam Investment Management, Inc. and its affiliates, Putnam Mutual
Funds, the principal underwriter for shares of your fund and Putnam
Fiduciary Trust Company, your fund's investor servicing agent and
custodian, are wholly owned by Putnam Investments, Inc., One Post
Office Square, Boston, Massachusetts 02109, a holding company that
is in turn wholly owned by Marsh & McLennan Companies, Inc., which
has executive offices at 1166 Avenue of the Americas, New York, New
York 10036. Marsh & McLennan Companies, Inc., and its operating
subsidiaries are professional services firms with insurance and
reinsurance brokering, consulting, and investment management
businesses.
2. SELECTION OF INDEPENDENT AUDITORS
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts,
independent accountants, has been selected by the Trustees as the
auditor of your fund for the current fiscal year. Among the
country's preeminent accounting firms, this firm also serves as the
auditor for approximately half of the other funds in the Putnam
family. It was selected primarily on the basis of its expertise as
auditors of investment companies, the quality of its audit services,
and the competitiveness of the fees charged for these services.
A majority of the votes on the matter is necessary to ratify the
selection of auditors. A representative of the independent auditors
is expected to be present at the meeting to make statements and to
respond to appropriate questions.
3.
Proposals A-Q.
As described in the following proposals, the Trustees are
recommending that shareholders approve a number of changes to the
fund's fundamental investment restrictions, including the
elimination of certain restrictions. The purpose of these proposed
changes is to increase the fund's investment flexibility and to
bring the fund's policies more in line with those of many other
Putnam funds. Several of these changes reflect the elimination of
certain restrictive policies which were required at one time by
various state securities authorities but which are no longer
required under current regulations.
The adoption of any of these proposals is not contingent on the
adoption of any other proposal.
3.A. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO DIVERSIFICATION OF INVESTMENTS
The Trustees are recommending that the fund's fundamental investment
restriction relating to the diversification of its investments be
revised to reflect tje current formulation used by many other Putnam
funds. The fund's current restriction states that the fund may not:
"With respect to 75% of its total assets, invest more than 5%
of its total assets in securities of any one issuer, other than
the U.S. government, its agencies or instrumentalities."
The proposed amended fundamental investment restriction is set forth
below.
"The fund may not ...
With respect to 75% of its total assets, invest in the
securities of any issuer if, immediately after such investment,
more than 5% of the total assets of the fund (taken at current
value) would be invested in the securities of such issuer;
provided that this limitation does not apply to obligations
issued or guaranteed as to interest or
principal by the U.S.
government or its agencies or instrumentalities."
The new restriction clarifies, consistent with the 1940 Act, that
U.S. government securities include those securities guaranteed as to
principal or interest by the U.S. government or its agencies or
instrumentalities, and makes other language changes.
Required Vote. Approval of this proposal requires the affirmative
vote
of
the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at
the meeting if more than 50% of the outstanding shares of the fund
are present at the meeting in person or by proxy.
3.B. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO INVESTMENTS IN THE SECURITIES OF A SINGLE ISSUER
The Trustees are recommending that the fund's fundamental investment
restriction with respect to investment in the securities of a single
issuer be revised to grant the fund the maximum flexibility
permitted under the 1940 Act. The 1940 Act prohibits a diversified
fund such as the fund from investing, with respect to 75% of its
total assets, in the securities of an issuer if as a result it would
own more than 10% of the outstanding voting securities of that
issuer. The fund's current investment restriction, which is more
restrictive than the 1940 Act, states that the fund may not:
"Buy more than 10% of the outstanding voting or other class of
securities of any one issuer."
The Trustees propose replacing this fundamental investment
restriction with the following fundamental restriction:
"The fund may not ...
With respect to 75% of its total assets, acquire more than 10%
of the outstanding voting securities of any issuer."
Putnam Management believes that limiting this restriction to voting
securities and 75% of the fund's assets will enhance investment
flexibility. Putnam Management has advised the Trustees that the
current restriction could prevent the fund from investing in certain
opportunities to the fullest extent that Putnam Management believes
would best serve the fund's investment objective.
The amendment removes all restrictions on the amount of a class of
an issuer's securities that the fund may purchase, and enables the
fund to purchase more than 10% of the voting securities of an issuer
with respect to 25% of the fund's total assets.
To
the extent the
fund individually or with other funds and accounts managed by Putnam
Management or its affiliates owns all or a major portion of the
outstanding securities of a particular issuer, 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. In addition,
certain of the companies in which the fund may invest a greater
portion of its assets following the amendment could have relatively
small equity market capitalizations (e.g., under $1 billion). Such
companies often have limited product lines, markets or financial
resources. They may trade less frequently and in limited volume,
and only in the over-the-counter market or on a regional securities
exchange. As a result, the securities of these companies may
fluctuate in value more than those of larger, more established
companies. Under such 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.
Required vote. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at a
meeting if more than 50% of the outstanding shares of the fund are
present at the meeting in person or by proxy.
3.C. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO MAKING LOANS THROUGH PURCHASES OF DEBT OBLIGATIONS,
REPURCHASE AGREEMENTS AND SECURITIES LOANS
The Trustees are recommending that the fund's fundamental investment
restriction with respect to making loans be revised to remove the
asset limitations on the fund's ability to enter into repurchase
agreements and securities loans and to reflect the current
formulation for debt securities used by many other Putnam funds.
The current restriction states that the fund may not:
"Lend any of its assets other than through (i) the
purchase of notes, bonds, certificates of deposit, or
other evidence of indebtedness of a type commonly
distributed publicly or privately to financial
institutions, (ii) cash deposits with banks, (iii) loans
of portfolio securities which are fully collateralized, or
(iv) execution of repurchase agreements."
The proposed amended fundamental investment restriction is set forth
below.
"The fund may not ...
Make loans, except by purchase of debt obligations in
which the fund may invest consistent with its investment
policies, by
entering into repurchase agreements,
or by
lending its portfolio securities
."
Following the amendment, the fund may, consistent with its
investment objective and policies, purchase all types of debt
obligations, whether or not issued to financial institutions, and
enter into repurchase agreements and securities loans without limit.
The fund will continue to allow to make cash deposits with banks,
which are generally not considered loans. Putnam Management believes
that the increased investment flexibility could assist the fund in
achieving its investment objective, because repurchase agreements
and securities loans often offer opportunities for increased
investment return.
When the fund enters into a repurchase agreement, it typically
purchases a security for a relatively short period (usually not more
than one week), which the seller agrees to repurchase at a fixed
time and price, representing the fund's cost plus interest. When
the fund enters into a securities loan, it lends certain of its
portfolio securities to broker-dealers or other parties and
typically receives an interest payment in return. These
transactions must be fully collateralized at all times, but involve
some risk to the fund if the other party should default on its
obligation. If the other party in these transactions should become
involved in bankruptcy or insolvency proceedings, it is possible
that the fund may be treated as an unsecured creditor and be
required to return the underlying collateral to the other party's
estate.
Required vote. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at
the meeting if more than 50% of the outstanding shares of the fund
are present at the meeting in person or by proxy.
3.D. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO INVESTMENTS IN REAL ESTATE
The
Trustees
are recommending that the fund's fundamental investment
restriction relating to investments in real estate and commodities
be revised to grant the fund the maximum flexibility in light of
current regulatory requirements. Although the fund is required to
have a fundamental policy with respect to investments in real
estate, the fund's current restriction is more restrictive than
current state securities law requirements. For this reason, Putnam
Management believes that the restriction should be amended to
increase the fund's investment flexibility. The current restriction
states that the fund may not:
"Buy or sell any real estate, real estate mortgages,
[commodities or commodity contracts.]"
The section of the restriction in brackets is proposed to be amended
by proposal 3E.
The proposed amended fundamental investment restriction is set forth
below.
"The fund may not ...
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."
Putnam Management believes that the enhanced flexibility could
assist the fund in achieving its investment objective. The proposed
amendment enables the fund to invest in a wide-range of real estate-
related investments, including investments in companies which invest
in real estate, securities which represent interests in real estate
and securities secured by real estate. In addition, the fund would
be able to own real estate directly as a result of the exercise of
its rights in connection with debt obligations it owns.
In such cases, the ability to acquire and dispose of real estate may
serve to protect the fund during times where an issuer of debt
securities is otherwise unable to meet its obligations.
To the extent the fund holds real estate-related securities, it will
be subject to the risks associated with the real estate market.
These risks may include declines in the value of real estate,
changes in general or local economic conditions, overbuilding,
difficulty in completing construction, increased competition,
changes in zoning laws, increases in property taxes and operating
expenses, and variations in rental income. Generally, increases in
interest rates will increase the costs of obtaining financing, which
may result in a decrease in the value of such investments.
Required vote. Approval of these proposals require the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at
the meeting if more than 50% of the outstanding shares of the fund
are present at the meeting in person or by proxy.
3E. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO INVESTMENTS IN COMMODITIES
The Trustees are recommending that the fund's fundamental investment
restriction regarding investments in commodities be revised to
permit the fund to invest in financial futures contracts and
options. The current restriction states that the fund may not:
"Buy or sell [any real estate, real estate mortgages,]
commodities or commodity contracts."
The section of the restriction in brackets is proposed to be amended
by proposal _____.
The proposed amended fundamental restriction is set forth below.
"The fund may not ...
Purchase or sell commodities or commodity contracts,
except that the fund may purchase and sell financial
futures contracts and options."
If the proposal is approved, the fund will be able to engage in a
variety of transactions involving the use of financial futures and
options. Putnam Management believes the enhanced investment
flexibility could assist the fund in achieving its investment
objective, because such strategies often offer opportunities for
hedging and increased investment return. The fund might buy and
sell financial futures contracts in order to hedge against changes
in the value of securities it owns or expects to purchase or to
hedge against changes in interest rates. The fund might also buy
and sell (otherwise known as "write") call and put options on
futures contracts for similar purposes. In addition, to the extent
permitted by applicable law, the fund may engage in financial
futures and options transactions for purposes other than hedging,
such as a substitute for direct investment in securities. The fund
might also buy and sell foreign currency futures and options.
A futures contract is a contract to buy or sell a commodity, such as
a security, a currency, or a unit of an index, at an agreed upon
price at a specified future date. A futures contract sale creates
an obligation of the seller to deliver the type of financial
instrument called for in the contract at the agreed upon price on
the specified date. A futures contract purchase creates an
obligation of the purchaser to take delivery of the type of
financial instrument called for in the contract at the agreed upon
price on the specified date. Depending on the change in the value
of the commodity between the time the fund enters into and
terminates a futures contract, the fund realizes a gain or loss. An
option gives its holder the right, in return for a premium paid, to
assume a position in a futures contract or commodity at the
specified option exercise price at any time during the period of the
option. If an option purchased by the fund expired unexercised,
the fund's loss would be limited to the price it paid for the option
(known as the "premium"). Where the fund writes an option, however,
the fund's loss would not be so limited, and would be equal to the
change in the value of the futures contract position or commodity
between the time the fund writes the option and the option's
exercise. In connection with futures and options transactions, the
fund would be required to make initial margin payments and
subsequent payments, called "variation margin," each day depending
on the value of the fund's position in any such contract.
Futures and options transactions involve costs and may result in
losses. Certain risks arise because of the possibility of imperfect
correlations between movements in the prices of futures and options
and movements in the prices of the underlying commodity or of the
portfolio securities that are the subject of a hedge. The
successful use by the fund of futures and options strategies further
depends on the ability of Putnam Management to forecast market
movements correctly. Other risks arise from the fund's potential
inability to close out such positions. There can be no assurance
that the fund will be able to effect closing transactions at any
particular time or at an acceptable price. The fund's ability to
terminate option positions established in the over-the-counter
market may be more limited than for exchange traded options and may
also involve the risk that securities dealers participating in such
transactions would fail to meet their obligations to the fund. The
use of futures and options for purposes other than hedging entails
greater risks.
Required vote. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at
the meeting if more than 50% of the outstanding shares of the fund
are present at the meeting in person or by proxy.
3.F. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO CONCENTRATION OF ITS ASSETS
The Trustees are recommending that the fund's fundamental investment
restriction regarding concentration be revised to make it clear that
the fund may invest more than 25% of its assets in the securities of
the U.S. government, its agencies or instrumentalities. The current
restriction states that the fund may not:
"Invest more than 25% of its assets in any one industry."
The proposed amended fundamental restriction is set forth below.
"The fund may not ...
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."
Putnam Management believes that this amendment will make it clear
that the fund may invest in the securities of the U.S. government or
its agencies or instrumentalities without regard to the 25% limit.
Putnam Management believes that the current restriction does not
prevent the fund from investing in such securities without limit,
because the SEC takes the position that government issuers,
including agencies and instrumentalities, are not members of any
industry. However, to avoid any possible ambiguity in the future,
Putnam Management believes that this clarification should be made at
this time.
Required vote. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at
the meeting if more than 50% of the outstanding shares of the fund
are present at the meeting in person or by proxy.3.F.
3.G. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO INVESTMENTS IN ISSUERS THAT HAVE BEEN IN OPERATION
FOR LESS THAN THREE YEARS
The Trustees are recommending that the fund's fundamental investment
restriction which limits the fund's investments in issuers with
limited operating histories, which are sometimes referred to as
"unseasoned issuers," be eliminated. The current restriction states
that the fund may not:
"Buy securities of any company that (including its predecessors
or controlling persons) has not been in business at least three
continuous years, if such investment at the time of purchase
would cause more than 5% of the total assets of the fund to be
invested in securities of such companies."
The fund originally adopted this restriction to comply with certain
state securities
requirements, and while the
restriction is
currently required by only one
state, it
is not required to be a
fundamental policy. If this proposal is approved, the Trustees
intend to replace this restriction with the following non-
fundamental investment restriction to comply with the remaining
state's requirement.
"The fund may not ...
Invest in securities of an issuer which, together with any
predecessors, controlling persons, general partners and
guarantors, have a record of less than three years' continuous
business operation or relevant business experience, if, as a
result, the aggregate of such investments would exceed 5% of
the value of the fund's net assets; provided, however, that
this restriction shall not apply to any obligations of the U.S.
government or its instrumentalities or agencies."
The new restriction reflects the current formulation used by many
other Putnam funds. If this proposal is approved, the fund will,
consistent with
the
state
requirement, be able to invest up to 5% of
its assets in the securities of unseasoned issuers. The restriction
will exempt certain U.S. government securities from its limitations
to provide the fund with maximum investment
flexibility.
By making this policy non-fundamental, the fund will have the
ability to modify or eliminate the policy if no longer required to
increase investment flexibility without the need for further
shareholder approval.
Companies which have been in operation for less than three years
include start-up companies and other companies with limited
operating histories, many of which would have relatively small
equity market capitalizations (e.g., under $1
billion).
Although
these companies may provide greater opportunities for capital
growth, they also involve greater risk. These companies often have
limited product lines, markets or financial resources. They may
trade less frequently and in limited volume, and only in the over-
the-counter market or on a regional securities exchange. As a
result, the securities of these companies may fluctuate in value
more than those of larger, more established companies.
Required vote. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at
the meeting if more than 50% of the outstanding shares of the fund
are present at the meeting in person or by proxy.
3.H. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO INVESTMENTS IN SECURITIES OF ISSUERS IN WHICH
MANAGEMENT OF THE FUND OR MANAGEMENT OR CERTAIN SHAREHOLDERS OF
PUTNAM MANAGEMENT OWNS SECURITIES
The Trustees are recommending eliminating the fund's fundamental
investment restriction which prevents the fund from investing in the
securities of issuers in which management of the fund or Putnam
Management or 10% shareholders of Putnam Management, owns a certain
percentage of securities. The current restriction states that the
fund may not:
"Buy or hold securities of any issuer if, to the knowledge
of the fund, any officer or Trustee of the fund, Putnam
Management or any officer, director or 10% shareholder of
Putnam Management owns individually 0.5% of a class of
securities of such issuer, and such persons owning 0.5% of
such class together owned beneficially more than 5% of
such securities."
Certain state securities laws impose restrictions on the fund's
ability to invest in certain affliated entities, but these
limitations are less restrictive than the fund's current restriction
and are not required to be contained in a fundamental policy. For
these reasons, Putnam Management believes that the restriction is
unnecessarily restrictive and should be eliminated. If this
proposal is approved, the Trustees intend to replace this
fundamental restriction with the following non-fundamental
investment restriction to comply with the remaining state's
requirements.
By making this policy non-fundamental, the fund will have the
ability to modify or eliminate the policy if no longer required to
increase investment flexibility without the need for further
shareholder approval. If the restriction was eliminated, the fund
would be able to invest in the securities of any issuer without
regard to ownership in such issuer by management of the fund or
Putnam Management, except to the extent prohibited by the fund's
investment policies or the 1940 Act.
Required vote. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at
the meeting if
more
than 50% of the outstanding shares of the fund
are present at the meeting in person or by proxy.
3.I. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO MARGIN TRANSACTIONS
The Trustees are recommending that the fund's fundamental investment
restriction with respect to margin transactions and options
transactions be eliminated. "Margin transactions" involve the
purchase of securities with money borrowed from a broker, with cash
or eligible securities being used as collateral against the loan.
The current restriction states that the fund may not:
"Purchase securities on margin [or sell short or write or
purchase put options or purchase call options, except that the
fund may purchase call options to close out a call option that
it has written.]"
The section of the restriction in brackets relating to short sales
is proposed to be amended by proposal 3.J. and the section of the
restriction in brackets relating to options is proposed to be
eliminated by proposal 3.K.
The fund originally adopted this restriction to comply with certain
state securities law requirements, and the restriction is currently
required by only one state, but is not required to be a fundamental
policy. If the proposal is approved, the Trustees intend to replace
this fundamental restriction with the following non-fundamental
investment restriction to comply with the remaining state's
requirement.
"The fund may not . . .
Purchase securities on margin, except such short-term credits
as may be necessary for the clearance of purchases and sales of
securities, and except that it may make margin payments in
connection with financial futures contracts or options."
The new restriction contains an exception for short-term credits
necessary for the clearance of securities transactions, which are
specifically excluded from the 1940 Act's general prohibition on
margin transactions. The restriction also contains an exception for
margin payments in connection with futures and related options
transactions, which is different from that of margin in securities
transactions because it does not involve the borrowing of funds to
finance the transactions. Rather, such margin payments are similar
to a performance bond or good faith deposit which would be returned
to the fund upon termination of the contract, assuming all
contractual obligations have been satisfied.
By making this policy non-fundamental, the fund will have the
ability to modify or eliminate the policy if no longer required to
increase investment flexibility without the need for further
shareholder approval. The fund's potential use of margin
transactions beyond transactions in financial futures and options
and for the clearance of purchases and sales of securities,
including the use of margin in ordinary securities transactions, is
generally limited by the current position taken by the Staff of the
SEC that margin transactions with respect to securities are
prohibited under Section 18 of the 1940 Act because they create
senior securities. The fund's ability to engage in margin
transactions is also limited by its investment policies, which
permit the fund to borrow money in limited circumstances and only
from banks.
3.J. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO SHORT SALES
The Trustees are recommending that the fund's fundamental investment
restriction with respect to short sales be eliminated. The current
restriction
states that the fund may not:
"[Purchase securities on margin] or sell short [or write or
purchase put options or purchase call options, except that the
fund may purchase call options to close out a call option that
it has written"].
The section of the restriction in brackets relating to margin
transactions is proposed to be amended by proposal 3.I. and the
section of the restriction in brackets relating to options is
proposed to be eliminated by proposal 3.K.
The fund originally adopted this restriction to comply with certain
state securities law requirements, and while the restriction is
currently required by one state, it is not required to be a
fundamental policy. If this proposal is approved, the Trustees
intend to replace this fundamental restriction with the following
non-fundamental restriction:
"The fund may not ...
Make short sales of securities or maintain a short
position for the account of the fund unless at all times
when a short position is open it owns an equal amount of
such securities or owns securities which, without payment
of any further consideration, are convertible into or
exchangeable for securities of the same issue as, and in
equal amount to, the securities sold short."
Under the proposed new restriction, the fund would be permitted to
enter into short sales where the fund owns or has the right to
acquire at no added cost securities identical to those sold short
(an investment technique known as a short sale "against the box").
Putnam Management believes that this enhanced investment flexibility
could assist the fund in meeting its objective, as short sales
"against the box" may be used to hedge against a decline in the
value of securities held by the fund. The fund would not be
permitted to engage in short sales other than short sales "against
the box."
Putnam Management believes that making this policy non-fundamental
will provide the fund with maximum flexibility to modify or
eliminate the policy if no longer required under state law. If the
restriction was no longer required, the Trustees could change or
remove the restriction to increase the fund's investment flexibility
without the need for further shareholder approval.
In
a typical short
sale,
the fund borrows securities from a broker
that it anticipates will decline in value in order to sell to a
third party. The fund becomes obligated to return securities of the
same issue and quantity at some future date, and it realizes a loss
to the extent the securities increase in value and a profit to the
extent the securities decline in value (after including any
associated costs). Since the value of a particular security can
increase without limit, the fund could potentially realize losses
with respect to short sales that are not "against the box" that are
significantly greater than the value of the securities at the time
they are sold short. The fund would collateralize its short
position by delivering to the broker an amount equal to the proceeds
of the short sale and an additional margin amount as required by
law. In addition, if such non-fundamental investment restriction is
modified or removed and the fund engages in short sales other than
short sales "against the box," current SEC guidelines would require
the fund to maintain in a segregated account cash, U.S. government
securities or other liquid high-grade debt obligations equal to the
current market value of the securities sold short minus the margin
amount delivered to the broker. The value of the segregated account
would be marked to market daily to reflect any changes in value of
the fund's short position.
Required vote. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at
the meeting if more than 50% of the outstanding shares of the fund
are present at the meeting in person or by proxy.
3.K. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO OPTIONS TRANSACTIONS
The Trustees are recommending that the fund's fundamental investment
restriction with respect to options transactions be eliminated. The
current
restriction
states that the fund may not:
"[Purchase securities on margin or sell short] or write or
purchase put options or purchase call options, except that the
fund may purchase call options to close out a call option that
it has written"].
The section of the restriction in brackets relating to margin
transactions is proposed to be amended by proposal 3.I. and the
section of the restriction in brackets relating to short sales is
proposed to be eliminated by proposal 3.J.
Certain state securities laws impose limitations on the fund's
ability to engage in options transactions, but these limitations are
less restrictive than the fund's current restriction and are not
required to be contained in a fundamental policy. For these
reasons, Putnam Management believes that the current restriction is
unnecessarily restrictive and should be eliminated.
If this proposal is approved, the fund will be able to engage in a
variety of options transactions for hedging purposes and to increase
investment return. Putnam Management believes that this enhanced
flexibility could assist the fund in achieving its investment
objective. The fund might buy and sell (or write) call and put
options on securities it owns or expects to purchase, and on
securities indices or on currencies. From time to time, the fund
might also buy and sell combinations of put and call options, known
as straddles and spreads, on the same underlying security.
A call option gives the holder the right to purchase, and obligates
the writer to sell, a security, a currency or a unit of an index,
at the exercise price at any time before the expiration date. A put
option gives the holder the right to sell, and obligates the writer
to buy, a security, a currency or a unit of an index at the exercise
price at any time before the expiration date. In order for a put
option purchased by the fund to be profitable, the market price of
the underlying security must decline sufficiently below the exercise
price to cover the premium and transaction costs paid by the fund.
In order for a call option purchased by the fund to be profitable,
the market price of the underlying security must rise sufficiently
above the exercise price to cover the premium and transaction costs
paid by the fund.
When the fund writes a call option, it gives up the opportunity to
profit from any increase in the price of a security above the
exercise price of the option; when it writes a put option, the fund
takes the risk that it will be required to purchase a security from
the option holder at a price above the current market price of the
security. The fund receives a premium for writing a call or a put
option (representing the cost of the option), which increases the
return if the option expires unexercised or is closed out at a net
profit.
The successful use of options depends on the ability of Putnam
Management to forecast correctly interest rate and market movements.
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. Disruptions such as trading interruptions or
restrictions on option exercise in the markets for securities
underlying options purchased or sold by the fund could result in
losses on an option, including the entire investment of the fund in
the option.
Required vote. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at
the meeting if more than 50% of the outstanding shares of the fund
are present at the meeting in person or by proxy.
3.L. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WHICH
LIMITS THE FUND'S ABILITY TO PLEDGE ASSETS
The Trustees are recommending that the fund's fundamental investment
restriction which limits the fund's ability to pledge its assets be
eliminated. The current restriction states that the fund may not:
"Mortgage or pledge any of its assets, except in connection
with the writing of call options covering such securities and
except that up to 5% of the market value of its total assets
may be mortgaged or pledged in connection with borrowings
permitted by restriction 1 above." [Restriction 1 referred to
in this restriction allows the fund to borrow money in an
amount up to 10% of its total assets to meet redemption
requests or for other extraordinary or emergency purposes.]
Certain state securities laws impose restrictions on the fund's
ability to invest in certain affliated entities, but these
limitations are less restrictive than the fund's current restriction
and are not required to be contained in a fundamental policy. For
these reasons, Putnam Management believes that the restriction is
unnecessarily restrictive and should be eliminated. If the proposal
is approved, the Trustees intend to replace this fundamental
restriction with the following non-fundamental investment
restriction to comply with current state requirements:
"The fund may not ...
Pledge, hypothecate, mortgage or otherwise encumber its
assets in excess of 33 1/3% of its total assets (taken at
cost) in connection with permitted borrowings."
This proposal would increase the fund's ability to pledge assets to
up to one-third of its total assets. In addition, the new
restriction only restricts the fund in connection with pledges of
assets with respect to borrowings; other activities which could be
deemed to be pledges or other encumbrances, such as collateral
arrangements with respect to certain forward commitments, will not
be restricted. Putnam Management believes that the enhanced
flexibility could assist the fund in achieving its investment
objective. Further, Putnam Management believes that the fund's
current limits on pledging may conflict with the fund's ability to
borrow money to meet redemption requests or for extraordinary or
emergency purposes. This conflict arises because banks may require
borrowers such as the fund to pledge assets in order to
collateralize the amount borrowed. These collateral requirements
are typically for amounts at least equal to, and often larger than,
the principal amount of the loan. Thus, the fund needed to borrow
the maximum amount permitted by its policies (currently 10% of its
gross assets), it might be possible that a bank would require
collateral in excess of 5% of the fund's gross assets. Therefore,
the limit on pledging assets may have the effect of reducing the
amount that the fund may borrow in these situations.
By making this policy non-fundamental, the fund will have the
ability to modify or eliminate the policy if no longer required to
increase investment flexibility without the need for further
shareholder approval.
Pledging assets does entail certain risks. To the extent that the
fund pledges its assets, the fund may have less flexibility in
liquidating its assets. If a large portion of the fund's assets
were involved, the fund's ability to meet redemption requests or
other obligations could be delayed.
Required vote. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at
the meeting if more than 50% of the outstanding shares of the fund
are present at the meeting in person or by proxy.
3.M. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO INVESTMENTS IN RESTRICTED SECURITIES
The Trustees are recommending that the fund's fundamental investment
restriction which limits the fund's investments in securities,
including securities subject to restrictions on resale which are
known as "restricted securities", be eliminated. The current
fundamental investment restriction states that the fund may not:
"Purchase securities restricted as to resale, if, as a result,
such investments would exceed 15% of the value of the fund's
net assets, excluding restricted securities that have been
determined by the Trustees of the fund (or the person
designated by them to make such determinations) to be readily
marketable."
Putnam Management believes the restriction is unnecessary in light
of current regulatory requirements and the fund's current investment
policies, which prohibit the fund from investing more than 15% of
its net assets in any combination of (a) securities which are not
readily marketable, (b) securities restricted as to resale
(excluding securities determined by the Trustees of the fund (or the
person designated by the Trustees of the fund to make such
determinations) to be readily marketable), and (c) repurchase
agreements maturing in more than seven days. Unlike the current
fundamental investment restriction, the fund's non-fundamental
investment restriction applies to all types of illiquid investments,
not just restricted securities.
Putnam Management believes that the fund may benefit from the added
flexibility of having the fund's policy with respect to illiquid
securities contained in a single non-fundamental investment
restriction. In the future, the fund will be able to respond more
quickly to legal, regulatory and market developments regarding
illiquid securities (which might result in the removal of the
restriction) because further shareholder approval will not be
required to bring the policy in line with these developments.
To the extent the fund invests in illiquid securities, including
restricted securities, the fund may encounter difficulty in
determining the fair value of such securities for purposes of
computing net asset value. In addition, the fund could encounter
difficulty in satisfying redemption requests within seven days if it
could not readily dispose of such securities.
Required vote. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at
the meeting if more than 50% of the outstanding shares of the fund
are present at the meeting in person or by proxy.
3
.N.
ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO INVESTMENTS IN WARRANTS
The Trustees are recommending that the fund's fundamental investment
restriction with respect to investment in warrants be eliminated.
The restriction states that the fund may not:
"Invest more than 5% of its total assets in warrants or more
than 2% of its total assets in warrants not listed on a
national securities exchange."
Certain state securities laws impose restrictions on the fund's
ability to invest in warrants, but these limitations are less
restrictive than the fund's current restriction and are not required
to be contained in a fundamental policy. These state limitations do
not limit the fund's ability to invest in warrants attached to
securities acquired by the fund, while the fund's current
restriction could be read to limit such investments. If the
proposal is approved, the Trustees intend to replace the current
restriction with the following non-fundamental investment
restriction to comply with current state requirements:
"The fund may not . . .
Invest in warrants (other than warrants acquired by the fund as
part of a unit or attached to securities at the time of
purchase) if, as a result, such investments (valued at the
lower of cost or market) would exceed 5% of the value of the
fund's net assets; provided that not more than 2% of the fund's
net assets may be invested in warrants not listed on the New
York or American Stock Exchanges."
The new restriction would provide the fund with maximum flexibility
under applicable law to invest in warrants by allowing the fund to
hold warrants acquired as part of a unit or attached to any other
type of securities, without regard to any investment limit. Putnam
Management believes that the enhanced investment flexibility could
assist the fund in achieving its investment objective.
By making this policy non-fundamental, the fund will have the
ability to modify or eliminate the policy if no longer required to
increase investment flexibility without the need for further
shareholder approval.
Required vote. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at
the meeting if more than 50% of the outstanding shares of the fund
are present at the meeting in person or by proxy.
3.O. ELIMINATING
THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO CERTAIN OIL, GAS AND MINERAL
INTERESTS
The Trustees are recommending that the fund's fundamental investment
restriction
with respect
to investments in oil, gas and mineral
leases, rights or royalty contracts be eliminated. The current
restriction states that the fund may not:
"Invest directly in interests in oil, gas or other mineral
leases or exploration or development programs (but the fund may
invest in companies investing in or engaged in such
endeavors)."
The fund originally adopted the restriction with respect to oil, gas
and mineral interests to comply with certain state securities law
requirements. While the restriction is currently required by one
state, it is not required to be a fundamental policy. If this
proposal is approved, the Trustees intend to adopt the following
non-fundamental restriction with respect to such investments to
comply with the remaining state's requirement:
"The
fund may not . . .
"Buy
or sell oil, gas or other mineral leases, rights or
royalty contracts, although it may purchase securities which
represent interests in, are secured by interests in, or which
are issued by issuers which deal in, such leases, rights or
contracts, and it may acquire and dispose of such leases,
rights or contracts acquired through the exercise of its rights
as a holder of debt obligations secured thereby."
Putnam Management believes that the current
oil, gas and mineral
interest restriction
is unnecessarily restrictive, and could prevent
the fund from investing in certain opportunities to the fullest
extent that Putnam Management believes would best serve the fund's
investment objective. If the proposal is approved, the fund will be
able to invest in a variety of securities the value of which is
dependent upon the value of oil, gas and mineral interests. Also, in
certain limited circumstances, the fund will be permitted to
directly own oil, gas and mineral interests as a result of the
exercise of its rights in connection with debt obligations it owns.
In such cases, the ability to acquire and dispose of such interests
may serve to protect the fund during times where an issuer of debt
securities is unable to meet its obligations.
Investments in oil, gas and other mineral leases, rights or royalty
contracts and in securities which derive their value in part from
such instruments, entail certain risks. The prices of these
investments are subject to substantial fluctuations, and may be
affected by unpredictable economic and political circumstances such
as social, political or military disturbances, the taxation and
regulatory policies of various governments, the activities and
policies of OPEC (an organization of major oil producing countries),
the existence of cartels in such industries, the discovery of new
reserves and the development of new techniques for producing,
refining and transporting such materials and related products, the
development of new technology, energy conservation practices, and
the development of alternative energy sources and alternative uses
for such materials and related products.
By making this policy non-fundamental, the Fund will have the
ability to modify or eliminate the policy if no longer required to
increase investment flexibility without the need for further
shareholder approval.
Required
vote. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at
the meeting if more than 50% of the outstanding shares of the fund
are present at the meeting in person or by proxy.
3.P.ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO INVESTMENTS IN OTHER INVESTMENT COMPANIES.
The Trustees are recommending that the fund's fundamental investment
restriction with respect to investments in other investment
companies be eliminated to provide the fund with maximum investment
flexibility. The current restriction states that the fund may not:
"Purchase securities of any other investment company, except in
the open market in transactions involving no commission or
profit to a sponsor or dealer (other than the customary
broker's commission) or as part of a merger, consolidation or
other organization."
The 1940 Act and certain state securities laws impose limitations on
the fund's ability to invest in other investment companies, but
these limitations are less restrictive than the fund's current
restriction and are not required to be contained in a fundamental
policy. For these reasons, Putnam Management believes that the
current restriction is unnecessarily restrictive and should be
eliminated. If the proposal is approved, the Trustees intend to
replace the current restriction with the following non-fundamental
investment restriction to comply with current requirements:
"The fund may not . . .
"Invest in the securities of registered open-end investment
companies, except as they may be acquired as part of a merger
or consolidation or acquisition of assets or by purchases in
the open market involving only customary brokers' commissions."
Putnam Management believes that the enhanced flexibility could
assist the fund in achieving its investment objective. Under the
new restriction, the fund would have the ability to invest in
investment vehicles (other than registered open-end investment
companies), such as unit investment trusts, that may be registered
investment companies under the 1940 Act, to the extent consistent
with applicable law and the fund's investment policies. Such pass-
through entities may involve duplication of some fees and expenses,
but may also provide attractive investment opportunities The fund
would continue to have the ability to enter into combinations with
another open-end investment companies through a merger,
consolidation or acquisition of assets, and to invest in other open-
end investment companies by open-market purchases. Of course, any
such combination transaction or investment by the fund would be
subject to the restrictions imposed under the 1940 Act.
By making this policy non-fundamental, the fund will have the
ability to modify or eliminate the policy if no longer required to
increase investment flexibility without the need for further
shareholder approval.
3.Q. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTIONS
RESPECT TO PARTICIPATING IN TRADING ACCOUNTS.
The Trustees are recommending that the fund's fundamental investment
restriction which prohibits the fund from participating in trading
accounts be eliminated. The current restriction states that the
fund may not
"Participate, on a joint or joint and several basis, in any
trading account in securities."
Since the fund's trading account activity is specifically regulated
under the 1940 Act, Putnam Management believes an express
restriction is unnecessary and, therefore, the restriction should be
eliminated.
Affiliated investment companies often maintain joint trading
accounts for the purpose of pooling cash balances to invest in short
term instruments, such as repurchase agreements. Under current law,
the fund would be required to obtain an exemptive order from the SEC
to engage in such activities. Approval of the proposal would permit
the fund to implement arrangements involving joint trading accounts
without shareholder approval by obtaining exemptive relief. In
addition, removing the restriction will enable to fund to respond
more quickly to legal and regulatory developments relating to
trading accounts without the need for further shareholder approval.
Required vote. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at
the meeting if more than 50% of the outstanding shares of the fund
are present at the meeting in person or by proxy.
Further Information About Voting and the Shareholder Meeting
Quorum and Methods of Tabulation. Thirty percent of the shares
entitled to vote -- present in person or represented by proxy --
constitutes a quorum for the transaction of business with respect to
any proposal at the meeting (unless otherwise noted in the proxy
statement). Shares represented by proxies that reflect abstentions
and "broker non-votes" (i.e., shares held by brokers or nominees as
to which (i) instructions have not been received from the beneficial
owners or the persons entitled to vote and (ii) the broker or
nominee does not have the discretionary voting power on a particular
matter) will be counted as shares that are present and entitled to
vote on the matter for purposes of determining the presence of a
quorum. Votes cast by proxy or in person at the meeting will be
counted by persons appointed by your fund as tellers for the
meeting.
The tellers will count the total number of votes cast "for" approval
of the proposals for purposes of determining whether sufficient
affirmative votes have been cast. With respect to the election of
Trustees and selection of auditors, neither abstentions nor broker
non-votes have any effect on the outcome of the proposal. With
respect to any other proposals, abstentions and broker non-votes
have the effect of a negative vote on the proposal.
Other business. The Trustees know of no other business to be
brought before the meeting. However, if any other matters properly
come before the meeting, it is their intention that proxies that do
not contain specific restrictions to the contrary will be voted on
such matters in accordance with the judgment of the persons named as
proxies in the enclosed form of proxy.
Simultaneous meetings. The meeting of shareholders of your fund is
called to be held at the same time as the meetings of shareholders
of certain of the other Putnam funds. It is anticipated that all
meetings will be held simultaneously. If any shareholder at the
meeting objects to the holding of a simultaneous meeting and moves
for an adjournment of the meeting to a time promptly after the
simultaneous meetings, the persons named as proxies will vote in
favor of such adjournment.
Solicitation of proxies. In addition to soliciting proxies by mail,
Trustees of your fund and employees of Putnam Management, Putnam
Fiduciary Trust Company, and Putnam Mutual Funds may solicit proxies
in person or by telephone. Your fund may also arrange to have votes
recorded by telephone. The telephone voting procedure is designed
to authenticate shareholders' identities, to allow shareholders to
authorize the voting of their shares in accordance with their
instructions and to confirm that their instructions have been
properly recorded. Your fund has been advised by counsel that these
procedures are consistent with the requirements of applicable law.
If these procedures were subject to a successful legal challenge,
such votes would not be counted at the meeting. Your fund is
unaware of any such challenge at this time. Shareholders would be
called at the phone number Putnam Investments has in its records for
their accounts, and would be asked for their Social Security number
or other identifying information. The shareholders would then be
given an opportunity to authorize proxies to vote their shares at
the meeting in accordance with their instructions. To ensure that
the shareholders' instructions have been recorded correctly, they
will also receive a confirmation of their instructions in the mail.
A special toll-free number will be available in case the information
contained in the confirmation is incorrect.
Your fund's Trustees have adopted a general policy of maintaining
confidentiality in the voting of proxies. Consistent with this
policy, your fund may solicit proxies from shareholders who have not
voted their shares or who have abstained from voting.
Persons holding shares as nominees will upon request be reimbursed
for their reasonable expenses in soliciting instructions from their
principals. Your fund has retained at its expense D. F. King & Co.,
Inc., 77 Water Street, New York, New York 10005, to aid in the
solicitation of instructions for nominee and registered accounts for
a fee not to exceed $5,000 plus reasonable out-of-pocket expenses.
Revocation of proxies. Proxies, including proxies given by
telephone, may be revoked at any time before they are voted by a
written revocation received by the Clerk of your fund, by properly
executing a later-dated proxy or by attending the meeting and voting
in person.
Date for receipt of shareholders' proposals for subsequent meetings
of shareholders. Your fund's Agreement and Declaration of Trust
does not provide for annual meetings of shareholders, and your fund
does not currently intend to hold such a meeting in 1997.
Shareholder proposals for inclusion in the proxy statement for any
subsequent meeting must be received by your fund within a reasonable
period of time prior to any such meeting.
Adjournment. If sufficient votes in favor of any of the proposals
set forth in the Notice of the Meeting are not received by the time
scheduled for the meeting, the persons named as proxies may propose
adjournments of the meeting for a period or periods of not more than
60 days in the aggregate to permit further solicitation of proxies
with respect to any of such proposals. Any adjournment will require
the affirmative vote of a majority of the votes cast on the question
in person or by proxy at the session of the meeting to be adjourned.
The persons named as proxies will vote in favor of such adjournment
those proxies which they are entitled to vote in favor of such
proposals. They will vote against any such adjournment those
proxies required to be voted against any of such proposals. Your
fund pays the costs of any additional solicitation and of any
adjourned session. Any proposals for which sufficient favorable
votes have been received by the time of the meeting may be acted
upon and considered final regardless of whether the meeting is
adjourned to permit additional solicitation with respect to any
other proposal.
Financial information. Your fund will furnish, without charge, to
you upon request a copy of the fund's annual report for its most
recent fiscal year, and a copy of its semiannual report for any
subsequent semiannual period. Such requests may be directed to
Putnam Investor Services, P.O. Box 41203, Providence, RI 02940-1203
or 1-800-225-1581.
Further Information About Your Fund
Limitation of Trustee liability. The Agreement and Declaration of
Trust of your 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 arising by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties. Your fund, at its expense, provides
liability insurance for the benefit of its Trustees and officers.
Audit and Nominating Committees. The voting members of the Audit
Committee of your fund include only Trustees who are not "interested
persons" of the fund or by reason of any affiliation with Putnam
Investments and its affiliates. The Audit Committee currently
consists of Messrs. Estin (Chairman), Perkins (without vote),
Putnam, III (without vote), Shapiro, Smith (without vote), and Ms.
Kennan. The Nominating Committee consists only of Trustees who are
not "interested persons" of your fund or Putnam Management. The
Nominating Committee currently consists of Dr. Pounds and Ms. Kennan
(Co-chairpersons), Ms. Baxter, and Messrs. Estin, Hill, Patterson,
Shapiro, and Thorndike.
Officers and other information. In addition to George Putnam and
Lawrence J. Lasser, the officers of your fund are as follows:
Year first
elected to
Name (age) Office office
- -----------------------------------------------------------------
Charles E. Porter (57) Executive Vice President 19
Patricia C. Flaherty (49) Senior Vice President 19
John D. Hughes (61) Senior Vice President
& Treasurer 19
Gordon H. Silver (48) Vice President 19
Peter Carmen (54) Senior Managing Director 19
Thomas V. Reilly (49) Managing Director 19
Jeanne L. Mockard* (32) Senior Vice President 19
William N. Shiebler** (54) Vice President 19
John R. Verani (56) Vice President 19
Paul M. O'Neil (42) Vice President 19
Beverly Marcus (51) Clerk 19
- -----------------------------------------------------------------
* The fund's portfolio manager
** President of Putnam Mutual Funds
All of the officers of your fund are employees of Putnam Management
or its affiliates. Because of their positions with Putnam
Management or its affiliates or their ownership of stock of Marsh &
McLennan Companies, Inc., the parent corporation of Putnam
Management and Putnam Mutual Funds, Messrs. Putnam, George Putnam,
III, Lasser and Smith (nominees for Trustees of your fund), as well
as the officers of your fund, will benefit from the management fees,
distribution fees, underwriting commissions, custodian fees, and
investor servicing fees paid or allowed by the fund.
Assets and shares outstanding of your fund
as of April 30, 1996
Net assets $228,280,442
Class A shares outstanding
and authorized to vote 9,240,537 shares
Class B shares outstanding
and authorized to vote 3,204,225 shares
Class M shares outstanding
and authorized to vote 100,568 shares
Persons beneficially owning more than 5%
of the fund's class A shares NONE
Persons beneficially owning more than 5%
of the fund's class B shares NONE
Persons beneficially owning more than 5%
of the fund's class M shares NONE
<PAGE>
PUTNAMINVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581<PAGE>
PUTNAMINVESTMENTS
This is your PROXY CARD.
Please vote this proxy, sign it below, and return it promptly in the
envelope provided. Your vote is important.
HAS YOUR ADDRESS CHANGED?
Please use this form to notify us of any change in address or
telephone number or to provide us with your comments. Detach this
form from the proxy ballot and return it with your signed proxy in
the enclosed envelope.
Street
- --------------------------------------------------------------------
City State Zip
- --------------------------------------------------------------------
Telephone
- --------------------------------------------------------------------
DO YOU HAVE ANY COMMENTS?
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- --------------------------------------------------------------------
DEAR SHAREHOLDER:
Your vote is important. Please help us to eliminate the expense of
follow-up mailings by signing and returning this proxy as soon as
possible. A postage-paid envelope is enclosed for your convenience.
THANK YOU!
- --------------------------------------------------------------------
Please fold at perforation before detaching
<PAGE>
Proxy for a meeting of shareholders, July 31, 1996, for Putnam
Natural Resources Fund.
This proxy is solicited on behalf of the Trustees of the fund.
The undersigned shareholder hereby appoints George Putnam, Hans H.
Estin, and Robert E. Patterson, and each of them separately,
proxies, with power of substitution, and hereby authorizes them to
represent and to vote, as designated below, at the meeting of
shareholders of Putnam Natural Resources Fund on July 31, 1996, at
2:00 p.m., Boston time, and at any adjournments thereof, all of the
shares of the fund that the undersigned shareholder would be
entitled to vote if personally present.
If you complete and sign the proxy, we'll vote it exactly as you
tell us. If you simply sign the proxy, it will be voted FOR
electing Trustees as set forth in Proposal 1 and FOR Proposals 2 and
3.A.-M. In their discretion, the Proxies will also be authorized to
vote upon such other matters that may come before the meeting.
Note: If you have questions on any of the proposals, please call
1-800-225-1581.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY.
Please sign your name exactly as it appears on this card. If you
are a joint owner, each of you should sign. When signing as
executor, administrator, attorney, trustee, or guardian, or as
custodian for a minor, please give your full title as such. If you
are signing for a corporation, please sign the full corporate name
and indicate the signer's office. If you are a partner, sign in the
partnership name.
- --------------------------------------------------------------------
Shareholder sign here Date
- --------------------------------------------------------------------
Co-owner sign here Date
<PAGE>
THE TRUSTEES RECOMMEND A VOTE FOR ELECTING ALL OF THE NOMINEES FOR
TRUSTEES AND FOR THE PROPOSALS LISTED BELOW:
Please mark your choices / X / in blue or black ink.
1. Proposal to elect Trustees
The nominees for Trustees are: J.A. Baxter, H.H. Estin, J.A.
Hill, R. J. Jackson, E.T. Kennan, L.J. Lasser, R.E. Patterson,
D.S. Perkins, W.F. Pounds, G. Putnam, G. Putnam, III, E.
Shapiro, A.J.C. Smith, W.N. Thorndike.
/ / FOR electing all the nominees
(except as marked to the contrary below.)
/ / WITHHOLD authority to vote for all nominees
To withhold authority to vote for one or more of the nominees, write
those nominees' names below:
- -------------------------------------------------------------
PROPOSAL TO:
2. Ratify the selection FOR AGAINST ABSTAIN
of Price Waterhouse LLP / / / / / /
as auditors.
3.A. Amend the / / / / / /
fund's fundamental
investment restriction
with respect to
diversification of
investments.
3.B. Amend the / / / / / /
fund's fundamental
investment restriction
with respect to
investments in the securities
of a single issuer.
3.C. Amend the / / / / / /
fund's fundamental
investment restriction
with respect to making
loans through purchases
of debt obligations,
repurchase agreements
and securities loans.
<PAGE>
3.D. Amend the / / / / / /
fund's fundamental
investment restriction
with respect to investments
in real estate.
3.E. Amend the / / / / / /
fund's fundamental
investment restriction
with respect to
commodities transactions.
3.F. Amend the / / / / / /
fund's fundamental
investment restriction
with respect to
concentration of its
assets.
3.G. Amend the / / / / / /
fund's fundamental
investment restriction
with respect to invest-
ment in issuers that have
been in operation for
less than three years.
3.H. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to
investments in securities
of issuers in which
management of the fund or
Putnam Investment Management,
Inc. owns securities.
3.I. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to margin
transactions.
3.J. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to short sales.
3.K. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to options
transactions.
3.L. Eliminate the / / / / / /
fund's fundamental
investment restriction
which limits the fund's
ability to pledge assets.
3.M. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to investments
in restricted securities.
3.N. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to investments
in warrants.
<PAGE>
3.O. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to certain
oil, gas, and mineral
interests.
3.P. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to investments
in other investment
companies.
3.Q. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to
participating in
trading accounts.
