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 / /
----
Check the appropriate box:
----
/ / Preliminary Proxy Statement
- ----
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/ / Confidential, for Use of the Commission Only (as
- ---- permitted by Rule 14a-6(e)(2))
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/ X / Definitive Proxy Statement
- ----
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/ / Definitive Additional Materials
- ----
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/ / Soliciting Material Pursuant to Sec. 240.14a-11(c) or
- ---- Sec. 240.14a-12
PUTNAM OTC EMERGING GROWTH FUND
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if
other than Registrant)
Payment of Filing Fee (Check the appropriate box):
----
/ X / No fee required
- ----
----
/ / Fee computed on table below per Exchange Act
- ---- Rule 14a-6(i)(1) 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 (set
forth
the amount on which the filing fee is calculated
and
state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
----
/ / Fee paid previously with preliminary materials.
- ----
----
/ / 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 OTC EMERGING GROWTH 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
5,
6 and 7 .
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. . . . . . . . . . . . . . . . . . .
. . . . . . 1
Notice of Shareholder Meeting. . . . . . . . . . . . . . . . . .
. . . . . . 2
Trustees' Recommendations. . . . . . . . . . . . . . . . . . . .
. . . 7
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;
3. Approving amendments to certain of your fund's fundamental
investment restrictions; and
4. Approving the elimination of certain of your fund's
fundamental
investment restrictions.
Although we would like very much to have each shareholder attend
his or her 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 do not 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 OTC EMERGING GROWTH 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 OTC Emerging Growth Fund:
A Meeting of Shareholders of your fund will be held on
February 6, 1997 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 8 .
2. Ratifying the selection by the Trustees of the independent
auditors of your fund for its current fiscal year. See page
25 .
3.A. Approving an amendment to the fund's fundamental
investment
restriction with respect to diversification. See page
27 .
3.B. Approving an amendment to the fund's fundamental
investment
restriction with respect to investments in the voting
securities of a single issuer. See page 28 .
3.C. Approving an amendment to the fund's fundamental
investment
restriction with respect to making loans. See page
30 .
3.D. Approving an amendment to the fund's fundamental
investment
restriction with respect to investments in real estate.
See
page 31 .
3.E. Approving an amendment to the fund's fundamental
investment
restriction with respect to concentration of its
assets. See
page 33 .
3.F. Approving an amendment to the fund's fundamental
investment
restriction with respect to investments in commodities.
See
page 34 .
4.A. 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 owns securities. See page 35 .
4.B. Approving the elimination of the fund's fundamental
investment
restriction with respect to margin transactions. See
page
36 .
4.C. Approving the elimination of the fund's fundamental
investment
restrictions with respect to short sales. See page
37 .
4.D. Approving the elimination of the fund's fundamental
investment
restriction with respect to pledging assets. See page
39 .
4.E. Approving the elimination of the fund's fundamental
investment
restriction with respect to investments in restricted
securities. See page 40 .
4.F. Approving the elimination of the fund's fundamental
investment
restriction with respect to investments in certain oil,
gas
and mineral interests. See page 41 .
4.G. Approving the elimination of the fund's fundamental
investment
restriction with respect to investing to gain control
of a
company's management. See page 43 .
4.H. Approving the elimination of the fund's fundamental
investment
restrictions with respect to investments in other
investment
companies. See page 44 .
4.I. Approving the elimination of the fund's fundamental
investment
restriction with respect to options transactions. See
page
45 .
4.J. Approving the elimination of the fund's fundamental
investment
restriction prohibiting the fund from investing in real
estate
as prohibited by German law. See page 47 .
5. Transacting other business as may properly come before the
meeting.
<PAGE>
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.
November 18 , 1996
<PAGE>
Proxy Statement
This document will give you the information you need to vote on
the
matters listed on the previous pages. 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 OTC
Emerging
Growth Fund for use at the Meeting of Shareholders of the fund to
be
held on February 6, 1997, and, if your fund's meeting is
adjourned, at
any later meetings, for the purposes stated in the Notice of
Meeting
(see previous pages).
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 Coopers & Lybrand L.L.P. as the independent
auditors of your fund;
3.A. For amending the fund's fundamental investment
restriction with
respect to diversification;
3.B. For amending the fund's fundamental investment
restriction with
respect to investments in the voting securities of a
single
issuer;
3.C. For amending the fund's fundamental investment
restriction with
respect to making 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 concentration of its assets;
3.F. For amending the fund's fundamental investment
restriction with
respect to investments in commodities;
4.A. 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
owns
securities;
4.B. For eliminating the fund's fundamental investment
restriction
with respect to margin transactions;
4.C. For eliminating the fund's fundamental investment
restrictions
with respect to short sales;
4.D. For eliminating the fund's fundamental investment
restriction
with respect to pledging assets;
4.E. For eliminating the fund's fundamental investment
restriction
with respect to investments in restricted securities;
4.F. For eliminating the fund's fundamental investment
restriction
with respect to investments in certain oil, gas and
mineral
interests;
4.G. For eliminating the fund's fundamental investment
restriction
with respect to investing to gain control of a
company's
management;
4.H. For eliminating the fund's fundamental investment
restrictions
with respect to investments in other investment
companies;
4.I. For eliminating the fund's fundamental investment
restriction
with respect to options transactions; and
4.J. For eliminating the fund's fundamental investment
restriction
prohibiting the fund from investing in real estate as
prohibited by German law.
Who is eligible to vote?
Shareholders of record at the close of business on November 8,
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 November
18 , 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
1. 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 53, 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 68, 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 toy and game
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 Talbots, a retailer and direct marketer of women's apparel.
Mr. Jackson currently serves as a Director of Safety 1st, Inc., a
company which markets a wide range of child care and safety
products.
He also serves as a Trustee of Salem Hospital and the
Peabody
Essex Museum. He previously served as a Director of a number of
public companies including Fisher-Price, Inc., Kenner Parker
Toys,
Inc., Stride-Rite, Inc., and Mattel, Inc., a major toy
manufacturer.
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. 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 54, 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. and General
Mills, Inc. Dr. Pounds is a graduate of Carnegie-Mellon
University.
George Putnam*
[Insert Picture]
Mr. Putnam, age 70, 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., 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 45, 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 80, 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
Officer 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
and
Mr. Jackson, all the nominees were elected by the shareholders in
July 1993 . Dr. Shapiro and Mr. Jackson were elected by
the
other Trustees in 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 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 $48 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
Trustees
Year first
elected as
Trustee of the
Putnam funds
Number of shares of
the fund
owned as of
9/30/96(1)
Number of shares of
all Putnam funds
owned as of
9/30/96(2)
Jameson A. Baxter
1994
712
35,991
Hans H. Estin
1972
1,140
27,467
John A. Hill
1985
6,453
127,131
Ronald J. Jackson
1996
1,289
66,402
Elizabeth T. Kennan
1992
1,427
29,939
Lawrence J. Lasser
1992
12,854
444,265
Robert E. Patterson
1984
560
59,066
Donald S. Perkins
1982
2,285
164,173
William F. Pounds
1971
17,146
350,849
George Putnam
1957
11,859
1,529,688
George Putnam, III
1984
11,332(3)
289,044
Eli Shapiro
1995(4)
- -0-
88,717
A.J.C. Smith
1986
2,027
46,915
W. Nicholas
Thorndike
1992
135
80,855
(1) Except as noted below, each Trustee has sole
investment power and sole
voting power with respect to his or her shares of
the fund.
(2) These holdings do not include shares of Putnam money
market funds.
(3) Mr. Putnam, III has shared investment power and shared
voting power with respect to
9,797 of the shares of which he has no present economic
interests.
(4) Dr. Shapiro previously served as a Trustee of
the Putnam funds from 1984 to
1989.
As of September 30, 1996 , the Trustees and
officers of the fund owned a
total of 107,431 shares of the fund, comprising
less than 1% of its outstanding
shares on that date. A total of 35,953 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.<PAGE>
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?
Each Trustee receives a fee for his or her
services.
Each Trustee also receives fees for serving as Trustee of
other Putnam funds. The Trustees periodically review their fees
to
assure that such fees continue to be appropriate in light of
their
responsibilities as well as in relation to fees paid to trustees
of
other mutual fund complexes. The Trustees meet monthly over a
two-
day period, except in August. The Compensation Committee, which
consists solely of Trustees not affiliated with Putnam Management
and
is responsible for recommending Trustee compensation, estimates
that
Committee and Trustee meeting time together with the appropriate
preparation requires the equivalent of at least three business
days
per Trustee meeting. The following table shows the year each
Trustee
was first elected a Trustee of the Putnam funds, the fees
paid to
each Trustee by the fund for fiscal 1996 and the fees paid to
each
Trustee by all of the Putnam funds during calendar year
1995 :
<PAGE>
Compensation Table
Trustees
Aggregate
compensation
from the
fund(1)
Pension or
retirement
benefits
accrued as part
of fund
expenses(2)
Estimated annual
benefits from
all Putnam
funds upon
retirement(3)
Total
compensation
from all
Putnam
funds (2)
Jameson A. Baxter/1994
$2,589
$0
$71,676
$150,854
Hans H. Estin/1972
2,574
0
70,043
150,854
John A. Hill/1985(5)
2,550
0
70,043
149,854
Ronald J.
Jackson/1996(5)(6)
549
0
N/A
N/A
Elizabeth T.
Kennan/1992
2,574
0
69,709
148,854
Lawrence J.
Lasser/1992
2,545
0
70,043
150,854
Robert E.
Patterson/1984
2,763
0
71,043
152,854
Donald S. Perkins/1982
2,559
0
69,376
150,854
William F. Pounds/1971
2,620
0
70,543
149,854
George Putnam/1957
2,888
(7)
0
70,043
150,854
George Putnam,
III/1984
2,574
0
70,043
150,854
Eli Shapiro/1995(8)
2,783
0
47,686
95,372
A.J.C. Smith/1986
2,545
0
68,252
149,854
W. Nicholas
Thorndike/1992
2,738
0
71,043
152,854
<PAGE>
(1) Includes an annual retainer and an attendance fee
for each
meeting attended.
(2) The Trustees approved a Retirement Plan for
Trustees of
the Putnam funds on October 1, 1996. Prior to that
date,
voluntary retirement benefits were paid to certain
retired
Trustees, and no such benefits were accrued as part
of
fund expenses.
(3) Assumes that each Trustee retires after at least five years
of
service. Estimated benefits for each are based on amounts
paid to
such Trustee for the three most recent calendar
years
(or, for Trustees who have not served as Trustees for the
three most
recent calendar years, the average amount paid to each
Trustee for
such years).
(4) As of December 31, 1995, there were 99 funds in the
Putnam
family
(5) Includes compensation deferred pursuant to
a
Trustee Compensation Deferral Plan. The total
amounts of
deferred compensation payable by the fund to
Mr.
Hill and Mr. Jackson as of July 31, 1996
were
$2,605 and $491, respectively . The total amount
of
deferred compensation payable by the Putnam funds
to Mr.
Hill as of December 31, 1995 was $51,141.
Information on
deferred compensation includes income earned on
such
amounts.
(6) Elected as a Trustee in May 1996.
(7) Includes additional compensation for service
as
Vice Chairman of the Putnam funds.
(8) Elected as a Trustee in April 1995.
Under a Retirement Plan for Trustees of the Putnam
funds (the "Plan"), each Trustee who retires with at
least five
years of service as a Trustee of the funds is entitled to receive
an
annual retirement benefit equal to one-half of the average
annual
compensation paid to such Trustee for the last three years of
service
prior to retirement. This retirement benefit is payable during a
Trustee's lifetime, beginning the year following retirement, for
a number
of years equal to such Trustee's years of service. A death
benefit is
also available under the Plan which assures that the Trustee and
his or
her beneficiaries will receive benefit payments for the lesser of
an
aggregate period of (i) ten years or (ii) such Trustee's total
years of
service.
The Plan administrator (a committee comprised of Trustees that
are not
"interested persons" of the fund, as defined in the Investment
Company
Act of 1940) may terminate or amend the Plan at any time, but no
termination or amendment will result in a reduction in the amount
of
benefits (i) currently being paid to a Trustee at the time of
such
termination or amendment, or (ii) to which a current Trustee
would have
been entitled to receive had he or she retired immediately prior
to such
termination or amendment.
For additional information about your fund, including further
information
about its Trustees and officers, please see "Further Information
About
Your Fund," on page 51 .
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
Coopers & Lybrand L.L.P., One Post Office Square, 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.
PROPOSALS 3 AND 4
As described in the following proposals, the Trustees are
recommending
that shareholders approve a number of changes to
your
fund's fundamental
investment restrictions, including the elimination of certain of
these
restrictions. The purpose of these changes is to standardize the
investment restrictions of all of the Putnam funds, including
your
fund
where appropriate, and in certain cases to increase the fund's
investment
flexibility. By having standard investment restrictions for all
Putnam
funds, Putnam Management will be able to more easily monitor each
fund's
compliance with its investment policies. Many of these changes
will have
little practical effect on the way the fund is managed given the
fund's
current investment objective and
policies.
Several
of the proposals request that certain fundamental restrictions
be
eliminated . These fundamental restrictions were
originally
adopted to comply with state securities law requirements, but are
no
longer applicable to the fund due to recently enacted federal
legislation
that effectively eliminated the ability of states to impose
investment
limitations on registered investment companies like the
fund.
In light of this development, Putnam Management believes that
these restrictions are unnecessary and should be
eliminated.
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
The Trustees are recommending that the fund's fundamental
investment
restriction with respect to the diversification of its
investments be
revised to reflect the standard restriction expected to be used
by other
Putnam funds and to grant the fund the maximum investment
flexibility
permitted by the Investment Company Act of 1940, as amended (the
"1940
Act"). Under the 1940 Act, the fund, as a diversified fund,
generally
may not, with respect to 75% of its total assets, invest more
than 5% of
its total assets in the securities of any one issuer (except U.S.
government securities). The remaining 25% of the fund's total
assets is
not subject to this restriction.
The fund's current restriction is more restrictive, and states
that the
fund may not:
"Invest in securities of any issuer if, immediately after
such
investment, more than 5% of the total assets of the fund
(taken at
current value) would be invested in the securities of such
issuer;
provided that this limitation does not apply to obligations
issued
or guaranteed as to interest and principal by the U.S.
government or
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."
If the proposed change is approved, the fund will be able to
invest up to
25% of its total assets in the securities of any one issuer. The
amended
restriction would continue to exclude from its limitations U.S.
government securities. Following the amendment, the fund would
continue
to be a diversified investment company for purposes of the 1940
Act.
Putnam Management believes that this enhanced flexibility could
assist
the fund in achieving its investment objective. However, during
times
when Putnam Management invests a higher percentage of the fund's
assets
in one or more issuers, the value of the fund's shares may
fluctuate more
widely than the value of shares of a portfolio investing in a
larger
number of issuers.
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 VOTING SECURITIES OF A SINGLE ISSUER
The Trustees are recommending that the fund's fundamental
investment
restriction with respect to investments in the voting securities
of a
single issuer be revised to reflect the standard restriction
expected to
be used by other Putnam funds and 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 voting 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:
"Acquire more than 10% of the voting securities of any
issuer."
The proposed amended fundamental investment restriction is set
forth
below.
"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 75%
of the
fund's total assets will enhance the fund's 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 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 were to own all or
a major
portion of the outstanding voting 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 voting securities when Putnam
Management
believes it advisable to do so, or may be able to sell the
securities
only at prices significantly 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. The securities of these companies 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, these securities 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 the
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
The Trustees are recommending that the fund's fundamental
investment
restriction with respect to making loans be revised to reflect
the
standard restriction expected to be used by other Putnam funds
and to
remove any asset limitations on the fund's ability to enter into
repurchase agreements and securities loans. The current
restriction
states that 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 with respect to not more than 25%
of the
fund's total assets (taken at current value), or by the
lending of
the fund's portfolio securities with respect to not more than
25% of
its total assets."
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 and applicable law, enter into repurchase
agreements and securities loans without limit. Putnam Management
believes that this increased investment flexibility could assist
the fund
in achieving its investment objective.
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 with respect to investments in real estate be revised
to
reflect the standard restriction expected to be used by other
Putnam
funds and to grant the fund greater flexibility. The current
restriction
states that the fund may not:
"Purchase or sell real estate, although it may purchase
securities of issuers which deal in real estate, including
securities of real estate investment trusts, and may purchase
securities which are secured by interests in real estate."
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."
The proposed amendment enables the fund to invest in a wide range
of real
estate-related investments, many in which the fund may already
invest
under the current restriction, including investments in companies
which
deal 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
unable to meet its obligations. Putnam Management believes that
this
enhanced flexibility could assist the fund in achieving its
investment
objective.
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.
In addition, in order to enforce its rights in the event of a
default of
an issuer of real estate-related securities, the fund may be
required to
participate in various legal proceedings or take possession of
and manage
assets securing the issuer's obligations. This could increase
the fund's
operating expenses and adversely affect the fund's net asset
value.
In Proposal 4.J. below, it is proposed that the fund's
fundamental
investment restriction limiting the fund's investments in real
estate
investment trusts or limited partnerships be eliminated. This
proposal
will not be effected by Proposal 4.J.
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.E. 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 reflect the
standard
restriction expected to be used by other Putnam funds and 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 the value of the total assets of the
fund
in any one industry."
The proposed amended fundamental investment 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 U.S. government securities 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 U.S. government issuers,
including agencies and instrumentalities of the U.S. government,
are not
members of any industry. However, to avoid any 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. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT
TO INVESTMENTS IN COMMODITIES
The Trustees are recommending that the fund's fundamental
investment
restriction with respect to investments in commodities be revised
to
reflect the standard restriction expected to be used by other
Putnam
funds. The current restriction states that the fund may not:
"Purchase or sell commodities or commodity contracts, except
that
the fund may buy or sell financial futures contracts and
related
options."
The proposed amended fundamental investment 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 and may enter into foreign exchange contracts and
other financial transactions not involving physical
commodities."
Under the revised restriction, the fund will continue to be able
to
engage in a variety of transactions involving the use of
financial
futures and options and foreign currencies, as well as various
other
financial transactions to the extent consistent with its
investment
objective and policies. Although the fund may already engage in
many of
these activities, Putnam Management believes that the revised
language
more clearly sets forth the fund's policy. The addition of
financial
transactions not involving physical commodities is intended to
give the
fund maximum flexibility to invest in a variety of financial
instruments
that could technically be considered commodities, but which do
not
involve the direct purchase or sale of physical commodities,
which is the
intended focus of the restriction.
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.
4.A. 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 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 owns a certain percentage of securities . The
restriction states that the fund may not:
"Invest in securities of any issuer if, to the knowledge of
the
fund, officers and Trustees of the fund and officers and
directors
of Putnam Management who beneficially own more than 0.5% of
the
securities of that issuer together beneficially own
more than
5%."
The fund originally adopted this restriction to comply with
certain state
securities law requirements which are no longer applicable to the
fund.
If this proposal is approved, 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.
Putnam Management believes that this enhanced flexibility could
assist
the fund in meeting its investment objective.
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.
4.B. 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 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 restriction states that
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 related
options."
The fund originally adopted this restriction to comply with
certain
state securities law requirement which are no longer
applicable to
the fund.
If this proposal is approved, the fund would have
no formal
restriction with respect to engaging in margin transactions.
However,
the fund originally adopted this restriction to comply with
certain state
securities law requirements which are no longer applicable to the
fund .
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 currently limited by SEC guidelines which
prohibit
margin transactions because they create senior securities. The
fund's
ability to engage in margin transactions is also limited by its
investment policies, which generally permit the fund to borrow
money only
in limited circumstances.
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.
4.C. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTIONS
WITH
RESPECT TO SHORT SALES
The Trustees are recommending that the fund's fundamental
investment
restrictions with respect to short sales be eliminated . The
restrictions state that 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 the fund 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 equal in amount to, the securities sold short."
"Make short sales of securities."
The fund originally adopted the first restriction to comply with
certain
state securities law requirements which are no
longer
applicable to the fund. The fund originally adopted the second
restriction at the request of German regulatory authorities in
connection
with the fund's offering of its shares in Germany. Since the
fund no
longer offers its shares in Germany, this restriction also is no
longer
applicable to the fund. For these reasons, Putnam Management has
recommended that both restrictions be eliminated.
If this proposal is approved, the fund would be able to
engage in
short sales. However, Putnam Management does not currently
intend to
engage in short sales on behalf of the fund .
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 which
are not
"against the box" that are significantly greater than the
value of
the securities at the time they are sold short.
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.
4.D. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
WITH
RESPECT TO PLEDGING 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 restriction states that the fund may
not:
"Pledge, hypothecate, mortgage or otherwise encumber its
assets in
excess of 15% of the fund's total assets (taken at cost) and
then
only to secure borrowings permitted by restriction 1 above.
(The
deposit of securities and other assets in escrow and other
collateral arrangements in connection with the writing of
covered
call options and collateral arrangements with respect to
margin for
financial futures contracts and related options are not
deemed to be
pledges or other encumbrances of assets.)" [Restriction 1
referred
to in this restriction permits the fund to borrow money in an
amount
equal to up to 10% of its total assets for certain limited
purposes.]
The fund originally adopted this restriction to comply with
certain state
securities law requirements which are no longer applicable to the
fund.
If this proposal is approved, the fund will no longer have
a
policy limiting its pledging activity. Putnam
Management
believes that this 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. If the fund needed to borrow the maximum amount permitted
by its
policies (currently 10% of its total assets), it might be
possible that a
bank would require collateral in excess of 15% of the fund's
total
assets. Thus, the current restriction could have the effect of
reducing
the amount that the fund may borrow in these situations.
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.
4.E.
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
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 the disposition of which is restricted
under
federal securities laws 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.
These requirements are currently reflected in the fund's
non-fundamental
policy with respect to illiquid investments. Eliminating the
fundamental
restriction would therefore provide the fund with maximum
flexibility to
respond quickly to legal, regulatory and market developments
regarding
illiquid investments. If the restriction were no longer
required, the
Trustees could modify or eliminate the restriction to increase
the fund's
investment flexibility without the need for shareholder approval.
To the extent the fund invests in illiquid investments, 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 satisfying redemption requests within seven
days if
it could not readily dispose of its illiquid investments.
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.
4.F. ELIMINATING
THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO INVESTMENTS IN 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
restriction
states that the fund may not:
"Buy or sell oil, gas, or other mineral leases, rights or
royalty
contracts. "
The fund originally adopted this restriction to comply
with
certain state securities law requirements which are no longer
applicable
to the fund.
If this proposal is approved, the fund would be able
to
invest directly in oil, gas and mineral interests and in a
variety
of securities the value of which is dependent upon the value of
such
interests. Putnam Management believes that this enhanced
flexibility
could assist the fund in achieving its investment objective.
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. In
addition, in order to enforce its rights in the event of a
default of an
issuer of these securities, the fund may be required to
participate in
various legal proceedings or take possession of and manage assets
securing the issuer's obligations. This could increase the
fund's
operating expenses and adversely affect 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 the
meeting if
more than 50% of the outstanding shares of the fund are present
at the
meeting in person or by proxy.
4.G. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
WITH
RESPECT TO INVESTING TO GAIN CONTROL OF A COMPANY'S
MANAGEMENT
The Trustees are recommending that the fund's fundamental
investment
restriction which states that the fund may not "make investments
for the
purpose of gaining control of a company's management" be
eliminated.
Eliminating the restriction would make it clear that the fund can
freely
exercise its rights as a shareholder of the various companies in
which it
may invest, which activities could at times fall under the
technical
definition of control under the securities laws . These
rights may
include the right to actively oppose or support the management of
such
companies. Putnam Management believes it would be in the best
interest
of the fund to eliminate the restriction.
Putnam Management believes that eliminating this restriction will
allow
the fund maximum flexibility to protect the value of its
investments
through influencing management of companies in which it invests.
Putnam
Management believes that the fund should be allowed to freely
communicate
its views as a shareholder on matters of policy to management,
the board
of directors, and other shareholders when a policy may affect the
value
of the fund's investment. Activities in which the fund may
engage might
include the fund, either individually or with others, seeking
changes in
a company's goals, management, or board of directors, seeking the
sale of
some or all of a company's assets, or voting to participate in or
oppose
a takeover effort with respect to a company. Although Putnam
Management
believes that the fund currently may engage in such activities
without
necessarily violating this restriction, it believes that
eliminating the
restriction will eliminate any potential obstacle to the fund in
protecting its interests as a shareholder.
This area of corporate activity is highly prone to litigation,
and
whether or not the restriction is eliminated, the fund could be
drawn
into lawsuits related to these activities. The fund will direct
its
efforts toward those instances where Putnam Management believes
the
potential for benefit to the fund outweighs potential litigation
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.
4.H.
ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTIONS
WITH
RESPECT TO INVESTMENTS IN OTHER INVESTMENT COMPANIES
The Trustees are recommending that the fund's fundamental
investment
restrictions with respect to investments in other investment
companies be
eliminated . The restrictions state that the fund may
not:
"Invest in the securities of other registered open-end
investment
companies, except by purchase in the open market
involving
only customary brokers' commissions. "
"Invest in securities of other investment companies,
including unit
investment trusts, in contravention of the German Foreign
Investment
Law (AuslandInvestmentGesetz)."
The 1940 Act imposes limitations on the fund's ability to invest
in other
investment companies, but these limitations are less restrictive
than the
fund's current restrictions . In addition, the fund
originally
adopted the second restriction at the request of German
regulatory
authorities in connection with the fund's offering of its shares
in
Germany; since the fund no longer offers its shares in Germany,
this
restriction is no longer applicable to the fund. For these
reasons,
Putnam Management has recommended that both restrictions be
eliminated.
If this proposal is approved, the fund would have
the
ability to invest in investment vehicles, such as unit investment
trusts
and other open- end investment companies, to the
extent
consistent with the 1940 Act 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
.
Putnam Management believes that this enhanced flexibility could
assist
the fund in meeting its investment objective.
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.
4.I. 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 or sell put or call options, straddles, spreads or
combinations thereof, except that, as permitted by the
investment objective and policies described in the prospectus
and [the] statement [of additional information] , (i)
the fund may write call options traded on a national
securities exchange on securities which it owns and purchase
options to close out call options written by it and (ii) may
buy or sell options on financial futures contracts, as well
as options on indices."
The fund originally adopted this restriction to comply with
certain
state securities law requirements which are no longer applicable
to the
fund. If the 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.
A call option gives the holder the right to purchase, and
obligates the
writer to sell, an asset, such as a security, a currency or a
unit of
an index, at the exercise price prior to or on the expiration
date. A
put option gives the holder the right to sell, and obligates the
writer
to buy, an asset at the exercise price prior to or on the
expiration
date. In order for a put option purchased by the fund to be
profitable, the market price of the underlying asset 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 asset must rise sufficiently above the exercise price
to
cover the premium and transaction costs paid by the fund. If an
option
expires unexercised, the fund will receive nothing for its
premium
payment.
When the fund writes a call option, it gives up the opportunity
to
profit from any increase in the price of an asset 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 an asset from the
option
holder at a price above the current market price of that asset.
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 and
other
assets underlying options purchased or sold by the fund could
result in
losses on an option, including the entire investment by 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.
4.J. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
PROHIBITING THE FUND FROM INVESTING IN REAL ESTATE AS
PROHIBITED
BY GERMAN LAW
The Trustees are recommending that the fund's fundamental
investment restriction with respect to certain investments in
real
estate prohibited under German law be eliminated. The fund
originally
adopted this restriction at the request of German regulatory
authorities in connection with the fund's offering of its shares
in
Germany. The restriction states that:
"The fund will not invest in real estate investment trusts or
limited partnerships whose purpose is to acquire real estate
solely for investment purposes in accordance with principals
of
diversification."
Since the fund no longer offers its shares in Germany, this
restriction
is no longer applicable to the fund . For this
reason ,
Putnam Management has recommended to the Trustees that the
restriction
be eliminated.
In Proposal 3.D. above, it is proposed that the fund's
fundamental
investment restriction limiting the fund's investments in real
estate
be amended by the Trustees . Proposal 3.D. will not be
affected
by this proposal.
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 registered and nominee accounts,
for a
fee not to exceed $12,500 plus reasonable out-of-pocket
expenses
for mailing and phone costs.
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 such adjournment those proxies required to
be
voted against 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 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, Jackson, 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 (58) Executive Vice President
1989
Patricia C. Flaherty (49) Senior Vice President
1993
John D. Hughes (61) Senior Vice President &
Treasurer
1987
Gordon H. Silver (49) Vice President
1990
Peter Carman (55) Vice President
1994
Steven L. Kirson* (35) Vice President
1996
Michael J. Mufson*(33) Vice President
1996
Brett C. Browchuk (33) Vice President
1994
Daniel L. Miller (39) Vice President
1994
John J. Morgan, Jr. (56) Vice President
1996
William N. Shiebler**(54) Vice President
1991
John R. Verani (57) Vice President
1987
Paul M. O'Neil (43) Vice President
1992
Beverly Marcus (52) Clerk
1982
- -----------------------------------------------------------------
- --
* One of the fund's portfolio managers
** 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 November 1,
1996
Net assets
$2,829,073,004
Class A shares outstanding
and authorized to vote
113,902,945 shares
Class B shares outstanding
and authorized to vote
54,239,609 shares
Class M shares outstanding
and authorized to vote
6,025,359 shares
Class Y shares outstanding
694,650 shares
and authorized to vote
5% beneficial ownership of your fund as of September 30,
1996
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
(1) Merrill Lynch Pierce 4,538,751
shares or 8.80%
Fenner & Smith, Inc.
Mutual Fund Operations
3rd Floor
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
Persons beneficially owning more than 5%
of the fund's class M shares
(1) Carwash & Co. TTEE 2,041,960
shares or 37%
ADP/State Street Collective Trust
State Street Bank & Trusts
1 Enterprise Drive
Quincy, MA 02171-2126
Persons beneficially owning more than 5%
of the fund's class Y shares
(1) Putnam Fiduciary Trust Company 676,920
shares or 100%
One Post Office Square
Boston, MA 02109<PAGE>
PUTNAMINVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581<PAGE>
PUTNAMINVESTMENTS
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!
<PAGE>
PUTNA M OTC EMERGING GROWTH FUND
Meeting of Shareholders
to be held on February 6, 1997 .
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
OTC Emerging Growth Fund on February 6, 1997, 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 each of the other
Proposals
listed below. In their discretion, the Proxies will also be
authorized
to vote upon such other matters that may properly 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 owner 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.
<PAGE>
THE TRUSTEES RECOMMEND A VOTE FOR ELECTING ALL OF THE NOMINEES
FOR
TRUSTEES AND FOR THE OTHER PROPOSALS LISTED BELOW.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: /
X /
FOR
COMMENTS ON REVERSE
RETURN
BOTH PORTIONS.
- -----------------------------------------------------------------
IF
NO COMMENTS,
RETURN THIS
PORTION ONLY.
PUTNAM EUROPE GROWTH FUND
For address changes and/or comments,
please write them on the back where
indicated.
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 and W.N. Thorndike.
/ / FOR ALL
/ / WITHHOLD ALL
/ / FOR ALL EXCEPT
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 Coopers & Lybrand
L.L.P. as the / / / / / /
independent auditors
of your fund.
3. Amend the fund's
fundamental investment
restriction with respect
to:
A. Diversification. / / / / / /
B. Investments in the voting/ / / / /
/
securities of a single
issuer.
C. Making loans. / / / / / /
D. Investments in real
estate. / / / / / /
E. Concentration of its
assets. / / / / / /
F. Investments in / / / / / /
commodities.
4. Eliminate the fund's
fundamental investment
restriction with respect
to:
A. Investments in securities/ / / / / /
of issuers in which
management of the fund
or Putnam Investment
Management owns securities.
B. Margin transactions. / / / / / /
C. Short sales. / / / / / /
D. Pledging assets. / / / / / /
E. Investments in / / / / / /
restricted securities.
F. Investments in certain / / / / / /
oil, gas and mineral
interests.
G. Investing to gain / / / / / /
control of a company's
management.
H. Investments in other / / / / / /
investment companies.
I. Options transactions. / / / / / /
J. Investments in real / / / / / /
estate as prohibited
by German law.
--------------------------------------------------------------
- ------
Signature Date
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Signature (Joint Owners) Date
<PAGE>
lipsett/106290.111/proxys/otc5.wpf
