As filed with the Securities and Exchange Commission on
January 31, 1995
- -----------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
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Pre-Effective Amendment No. / /
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Post-Effective Amendment No. 17 / X /
and ----
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X /
ACT OF 1940 ----
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Amendment No. 18 / X /
(Check appropriate box or boxes) ----
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PUTNAM CALIFORNIA TAX EXEMPT Registration No. 2-81011
INCOME TRUST 811-3630
(Exact name of registrant as specified in charter)
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
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Pre-Effective Amendment No. / /
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Post-Effective Amendment No. 10 / X /
and ----
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X /
ACT OF 1940 ----
----
Amendment No. 10 / X /
(Check appropriate box or boxes) ----
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PUTNAM CALIFORNIA TAX EXEMPT Registration No. 33-17211
MONEY MARKET FUND 811-5333
(Exact name of registrant as specified in charter)
One Post Office Square, Boston, Massachusetts 02109
(Address of principal executive offices)
Registrants' Telephone Number, including Area Code (617) 292-1000
<PAGE>
It is proposed that this filing will become effective
(check appropriate box)
----
/ / immediately upon filing pursuant to paragraph (b)
- ----
----
/ X / on February 1, 1995 pursuant to paragraph
(b)
- ----
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/ / 60 days after filing pursuant to paragraph
(a) (1)
- ----
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/ / on (date) pursuant to paragraph (a) (1)
- ----
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/ / 75 days after filing pursuant to paragraph (a)(2)
- ----
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/ / on (date) pursuant to paragraph (a)(2) of rule 485.
- ----
If appropriate, check the following box:
----
/ / this post-effective amendment designates a new
- ---- effective date for a previously filed post-effective
amendment.
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JOHN R. VERANI, Vice President
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND
One Post Office Square
Boston, Massachusetts 02109
(Name and address of agent for service)
---------------
Copy to:
JOHN W. GERSTMAYR, Esquire
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
Each Registrant has registered an indefinite number or
amount of securities under the Securities Act of 1933 pursuant to
Rule 24f-2. Rule 24f-2 notices for Putnam California Tax
Exempt Income Trust and Putnam California Tax Exempt Money
Market Fund for the fiscal year ended September 30, 1994
were filed on November 30, 1994 .
<TABLE>
<CAPTION>
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Proposed Proposed
maximum maximum
Amount offering aggregate Amount of
Title of securities being price per offering registration
being registeredregistered unit* price* fee
- -------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
Shares of Beneficial
Interest 1,689,656 shs. $1.00 $290,000 $100.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Calculated pursuant to Rule 24e-2 under the Investment Company Act of 1940.
The total amount of securities redeemed or repurchased during the Registrant's
previous fiscal year was 126,928,129 shares, 125,528,473 of which have been used
for reductions pursuant to Rule 24e-2(a) or Rule 24f-2(c) under said Act in the
current fiscal year, and 1,399,656 of which are being used for such reduction
in this Amendment.
</TABLE>
<PAGE>
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(A))
PART A
N - 1A ITEM NO. LOCATION
1. Cover Page . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . Expenses summary
3. Condensed Financial Information Financial
highlights ;
How performance
is
shown
4. General Description of Registrant Objectives;
How
objectives
are pursued;
Organization
and history
5. Management of the Fund . . . . . Expenses summary;
How the
Funds are managed;
About Putnam
Investments, Inc.
5A . . . . . . . . . . . . . . . . . Management's
Discussion of Fund
Performance . . . . . . . . . . (Contained in the
Annual
Reports of the
Registrants)
6. Capital Stock and Other Securities Cover
Page;
Organization
and history;
How distributions
are made; tax
information
7. Purchase of Securities Being Offered How to
buy shares;
Distribution
Plans; How to
sell shares; How
to exchange
shares; How
each Fund values
its shares
<PAGE>
8. Redemption or Repurchase . . . . How to buy shares;
How to
sell shares; How to
exchange
shares;
Organization and
history
9. Pending Legal Proceedings . . . Not Applicable
<PAGE>
PART B
N - 1A ITEM NO. LOCATION
10. Cover Page . . . . . . . . . . Cover Page
11. Table of Contents . . . . . . . Cover Page
12. General Information and History Organization and
history (Part A)
13. Investment Objectives and Policies How
objectives are pursued (Part
A);
Investment
Restrictions
of the Funds;
Miscellaneous
Investment
Practices
14. Management of the Registrant . . Management of the
Fund
(Trustees;
Officers); Additional
Officers of
the Trust
and the Money
Market Fund
15. Control Persons and Principal. . . . . Management of
the
Holders of Securities Fund (Trustees
;
Officers); Fund
Charges and
Expenses (Ownership
of Fund Shares)
16. Investment Advisory and Other. . . . . Management of
the
Services Fund
(Trustees;
Officers; The
Management Contract;
Principal
Underwriter ;
Investor Servicing
Agent and
Custodian) ;
Fund Charges
and Expenses;
Distribution
Plan ;
Independent
Accountants and
Financial
Statements
<PAGE>
17. Brokerage Allocation . . . . . . Management of the
Fund
(Portfolio
Transactions);
Fund Charges
and Expenses
18. Capital Stock and Other Securities
Organization and
history
(Part A); How
distributions
are made; tax
information
(Part A);
Suspension of
Redemptions
19. Purchase, Redemption , and Pricing How to buy
shares
of Securities Being Offered (Part A); How
to sell shares (Part
A); How to
exchange shares (Part
A); How to
Buy Shares;
Determination of Net
Asset Value;
Suspension of
Redemptions
20. Tax Status . . . . . . . . . . . How distributions
are made;
tax information (Part
A); Taxes
21. Underwriters . . . . . . . . . . Management of the
Fund
(Principal
Underwriter);
Fund Charges and
Expenses
22. Calculation of Performance Data How performance is
shown
(Part A);
Investment
Performance
of the Funds;
Standard Performance
Measures
23. Financial Statements . . . . . . Independent
Accountants
and Financial
Statements
PART C
Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C of the
Registration Statement.
<PAGE>
PROSPECTUS
FEBRUARY 1,
1995
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
CLASS A, B AND M SHARES
PUTNAM CALIFORNIA INTERMEDIATE TAX EXEMPT FUND
CLASS A AND B SHARES
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND
INVESTMENT STRATEGY: TAX-FREE
This Prospectus explains concisely what you should know before
investing in Putnam California Tax Exempt Income Fund (the
"Income Fund"), Putnam California Intermediate Tax Exempt Fund
(the "Intermediate Fund") or Putnam California Tax Exempt Money
Market Fund (the "Money Market Fund"). Please read this
Prospectus carefully and keep it for future reference. You
can find more detailed information about each Fund in the
February 1, 1995 Statement of Additional
Information, as amended from time to time. For a free copy of
the Statement, call Putnam Investor Services at 1-800-225-1581.
The Statement has been filed with the Securities and Exchange
Commission and is incorporated into this Prospectus by reference.
The Income Fund and the Intermediate Fund are separate
portfolios of Putnam California Tax Exempt Income Trust (the
"Trust"). The Income Fund, the Intermediate Fund and the Money
Market Fund are referred to in this Prospectus as the "Funds."
An investment in the Money Market Fund is neither insured nor
guaranteed by the U.S. Government. There can be no assurance
that the Money Market Fund will be able to maintain a stable net
asset value of $1.00 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND INVOLVE RISK, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL.
BOSTON*LONDON*TOKYO<PAGE>
ABOUT THE FUNDS
Expenses summary
............................................................
Financial highlights
-The Income Fund
-The Intermediate Fund
-The Money Market Fund
............................................................
Objectives
............................................................
How objectives are pursued
............................................................
Risk factors
............................................................
How performance is shown
............................................................
How the Funds are managed
............................................................
Organization and history
ABOUT YOUR INVESTMENT
Alternative sales arrangements
(Income and Intermediate Funds only)
...........................................................
How to buy shares
-The Income and Intermediate Funds
-The Money Market Fund
............................................................
Distribution Plans
-The Income and Intermediate Funds
-The Money Market Fund
............................................................
How to sell shares
-The Income and Intermediate Funds
-The Money Market Fund
............................................................
How to exchange shares
............................................................
How each Fund values its shares
............................................................
How distributions are made; tax information
ABOUT PUTNAM INVESTMENTS, INC.
<PAGE>
ABOUT THE FUNDS
EXPENSES SUMMARY
Expenses are one of several factors to consider when investing in
a Fund. The following tables summarize your
maximum transaction costs from investing in a Fund and
expenses incurred by each Fund based on its most recent
fiscal year , except that expenses for the Intermediate Fund
are estimated for its first full fiscal year . The Examples
show the cumulative expenses attributable to a hypothetical
$1,000 investment over specified periods.
INCOME FUND
CLASS A CLASS B CLASS M
SHARES SHARES SHARES
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Charge
Imposed on Purchases
(as a percentage of
offering price) 4.75% NONE* 3.25%*
Deferred Sales Charge 5.0% in the first
(as a percentage year, declining
of the lower of to 1.0% in the
original purchase sixth year, and
price or redemption eliminated
proceeds) NONE** thereafter NONE
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)
Management Fees 0.45% 0.45% 0.45%
12b-1 Fees 0.20% 0.85% 0.50%
Other Expenses 0.03% 0.02% 0.03%
Total Fund Operating
Expenses 0.68% 1.32% 0.98%
<PAGE>
INTERMEDIATE FUND
CLASS A SHARES CLASS B SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed
on Purchases (as a percentage
of offering price) 3.25% NONE*
3.0% in the
first year,
declining to
Deferred Sales Charge (as a 1.0% in
the
percentage of the lower fourth year,
and
of original purchase
eliminated
price or redemption proceeds) NONE** thereafter
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.60% 0.60%
12b-1 Fees 0.15% 0.75%
Other Expenses 0.41% 0.41%
Total Fund Operating Expenses 1.16% 1.76%
MONEY MARKET FUND
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) NONE
Deferred Sales Charge (as a
percentage of the lower
of original purchase
price or redemption proceeds) NONE
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.45%
12b-1 Fees NONE
Other Expenses 0.21%
Total Fund Operating Expenses 0.66%
<PAGE>
The tables are provided to help you understand the expenses of
investing in a Fund and your share of the operating expenses
which each Fund incurs. The 12b-1 fees for Class M shares of the
Income Fund reflect the amount to which the Trustees currently
limit payments under the Class M Distribution Plan, and
management fees and "Other Expenses" for Class M shares are based
on the operating expenses for the Income Fund's Class A shares.
For the Intermediate Fund, management fees reflect the
elimination of an expense limitation currently in effect, and
12b-1 fees reflect the amount to which the Trustees currently
limit payments under the Class A and Class B Distribution Plans.
"Other Expenses" for the Intermediate Fund are based on estimated
expenses for the Fund's first full fiscal year. For the Money
Market Fund, the table reflects the termination of 12b-1 payments
effective January 1, 1994. Actual 12b-1 fees were 0.01%.
EXAMPLES
Your investment of $1,000 would incur the following expenses,
assuming 5% annual return and redemption at the end of each
period:
1 3 5 10
year years years years
INCOME FUND
CLASS A $54 $68 $84 $128
CLASS B $63 $72 $92 $141***
CLASS M $42 $63 $85 $149
INTERMEDIATE FUND
CLASS A $44 $68 $94 $169
CLASS B $48 $75 $95 $192***
MONEY MARKET FUND $7 $21 $37 $82
Your investment of $1,000 would incur the following expenses,
assuming 5% annual return but no redemption:
1 3 5 10
year years years years
INCOME FUND
CLASS A $54 $68 $84 $128
CLASS B $13 $42 $72 $141***
CLASS M $42 $63 $85 $149
INTERMEDIATE FUND
CLASS A $44 $68 $94 $169
CLASS B $18 $55 $95 $192***
<PAGE>
The Examples do not represent past or future expense levels.
Actual expenses may be greater or less than those shown.
Federal regulations require the Examples to assume a 5% annual
return, but actual annual return will vary.
* The higher 12b-1 fees borne by Class B and Class M
shares may cause long-term shareholders to pay more
than the economic equivalent of the maximum permitted
front-end sales charge on Class A shares .
** A deferred sales charge of up to 1.00% is assessed on
certain redemptions of Class A shares that were
purchased without an initial sales charge as part of an
investment of $1 million or more. See "How to buy shares
-- The Income and Intermediate Funds - - Class A
shares."
*** Reflects conversion of Class B shares to Class A shares
(which pay lower ongoing expenses) approximately eight
years after purchase. See "How to buy shares -- The
Income and Intermediate Funds -- Class B
shares --Conversion of Class B shares."
FINANCIAL HIGHLIGHTS
The tables on the following pages present per share
financial information for the Funds. No Class M shares of
the Income Fund were outstanding during these periods .
The table for the Income Fund is adjusted to reflect a
two-for-one share split which occurred after the close of
business on October 27, 1989. This information has been audited
and reported on by the Funds' independent accountants.
The Report of Independent Accountants and financial statements
included in each Fund's Annual Report to shareholders for
its 1994 fiscal year are incorporated by reference into
this Prospectus. Each Fund's Annual Report, which
contains additional unaudited performance information, is
available without charge upon request.
<TABLE>
<CAPTION>
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
FINANCIAL HIGHLIGHTS*
(For a share outstanding throughout the period)
For the period
January 4, 1993
(commencement of
Year ended operations)to Year ended
September 30 September 30 September 30
1994 1993 1994 1993 1992 1991 1990
Class B Class A
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $8.91 $8.37 $8.92 $8.39 $8.11 $7.70 $7.83
Investment Operations
Net Investment Income .45 .32 .50 .53 .54 .54 .54
Net Realized and Unrealized
Gain (Loss) on Investments(.81) .55 (.81) .57 .27 .41 (.10)
Total from Investment
Operations (.36) .87 (.31) 1.10 .81 .95 .44
Distributions to
Shareholders from:
Net Investment Income(.45) (.33) (.50) (.53) (.53) (.54) (.54)
Net Realized Gain or Loss
on Investments (.02) -- (.02) (.04) -- -- (.03)
Total Distributions (.47) (.33) (.52) (.57) (.53) (.54) (.57)
Net Asset Value, End of
Period $8.08 $8.91 $8.09 $8.92 $ 8.39 $ 8.11 $ 7.70
Total Investment Return at
Net Asset Value (%) (a)(4.15) 10.51(b) (3.53) 13.63 10.34 12.71 5.75
Net Assets, End of Period
(in thousands)$349,609 $209,657 $3,260,769 $3,600,182 $2,854,165 $2,295,154 $1,807,931
Ratio of Expenses to
Average Net Assets (%) 1.32 1.00(b) .68 .69 .60 .56 .52
Ratio of Net Investment
Income to Average Net Assets (%)5.16 3.68(b) 5.86 6.16 6.53 6.796.90
Portfolio Turnover (%) 21.06 22.95 21.06 22.95 31.25 35.76 33.42
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Eleven Months Year
ended ended
September 30 October 31
1989 1988 1987 1986 1985 1984
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $7.67 $7.14 $7.80 $6.97 $6.48 $6.80
Investment Operations
Net Investment Income .56 .57 .57 .61 .58 .62
Net Realized and Unrealized
Gain (Loss) on Investments .16 .52 (.66) .83 .49 (.32)
Total from Investment
Operations .72 1.09 (.09) 1.44 1.07 .30
Distributions to
Shareholders from:
Net Investment Income (.56) (.56) (.57) (.61) (.58) (.62)
Net Realized Gain or Loss
on Investments -- -- -- -- -- --
Total Distributions (.56) (.56) (.57) (.61) (.58) (.62)
Net Asset Value, End of
Period $7.83 $ 7.67 $ 7.14 $ 7.80 $ 6.97 $ 6.48
Total Investment Return at
Net Asset Value (%) (a)9.63 15.69 (1.52) 21.36 16.90(b) 4.66
Net Assets, End of Period
(in thousands)$1,541,563 $1,228,401 $1,088,122 $811,399 $463,189 $302,450
Ratio of Expenses to
Average Net Assets (%) .52 .51 .52 .53 .55(b) .65
Ratio of Net Investment
Income to Average Net Assets (%)7.09 7.51 7.22 7.91 8.30(b) 9.32
Portfolio Turnover (%) 60.77 95.05 93.46 65.88 80.61(b) 167.68
<FN>
* Table has been restated to reflect a 2-for-1 share split declared by the
fund to shareholders of record on October 27, 1989, effective October 28,
1989.
(a) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(b) Not annualized.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PUTNAM CALIFORNIA INTERMEDIATE TAX EXEMPT FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
FOR THE PERIOD JUNE 1, 1994
(COMMENCEMENT OF OPERATIONS)
TO SEPTEMBER 30, 1994
CLASS A CLASS B
<S> <C> <C>
Net asset value, beginning of period $8.50 $8.50
Investment operations
Net investment income (a) 0.14 0.12
Net realized and unrealized gain (loss)
on investments (0.15) (0.16)
Total from investment operations (0.01) (0.04)
Less distributions:
From net investment income (0.14) (0.12)
Total distributions (0.14) (0.12)
Net asset value, end of period $8.35 $8.34
Total investment return at net asset
value (%) (b) (0.09) (c) (0.42) (c)
Net assets, end of period (in thousands) $5,797 $1,519
Ratio of expenses to average
net assets (%) (a) (c) 0.00% 0.12%
Ratio of net investment income to
average net assets (%) (a) (c) 1.75% 1.39%
Portfolio turnover (%) (c) 73.18% 73.18%
<FN>
(a)Reflects a limitation and voluntary absorption of expenses incurred by
the Fund. As a result of this limitation, expenses for the period ended
September 30, 1994, reflect a reduction of $0.04 and $0.05 for class A and
class B, respectively. Without these limitations, results would have been lower.
(b)Total investment return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c)Not annualized.
</TABLE>
<TABLE>
<CAPTION>
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
FOR THE PERIOD
OCTOBER 26,1987
(COMMENCEMENT
OF OPERATIONS) TO
YEAR ENDED SEPTEMBER 30 SEPTEMBER 30
1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C>
NET INVESTMENT
INCOME $.0192 $.0175 $.0262(A) $.0407(A) $.0513(A) $.0566(A) $.0416(A)
NET REALIZED GAIN
ON INVESTMENTS -- -- .0001 -- -- .0001 .0001
TOTAL FROM
INVESTMENT
OPERATIONS $.0192 $.0175 $.0263 $.0407 $ .0513 $ .0567 $ .0417
TOTAL
DISTRIBUTIONS: ($.0192) ($.0175) ($.0263) ($.0407) ($.0513) ($.0567) ($ .0417)
TOTAL INVESTMENT
RETURN AT NET
ASSET VALUE
(%)(B) 1.94 1.77 2.67 4.15 5.26 5.82 4.25(C)
NET ASSETS, END OF
PERIOD (IN
THOUSANDS) $44,799 $45,364 $58,858 $69,184 $87,095 $ 73,136 $ 43,436
RATIO OF EXPENSES
TO AVERAGE NET
ASSETS (%) .67 .89 .85(A) .80(A) .69(A) .69(A) .58(A)(C)
<PAGE>
RATIO OF NET
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS (%) 1.84 1.78 2.70(A) 4.03(A) 5.12(A) 5.65(A) 4.21(A)(C)
<FN>
(A)REFLECTS AN EXPENSE LIMITATION AND, DURING THE PERIOD ENDED
SEPTEMBER 30, 1988, A WAVIER OF A PORTION OF DISTRIBUTION FEES IN EFFECT
DURING THE PERIOD. AS A RESULT OF SUCH EXPENSE LIMITATION AND WAIVER, EXPENSES
OF THE FUND FOR THE YEARS ENDED SEPTEMBER 30, 1992, 1991, 1990, 1989 AND FOR
THE PERIOD ENDED SEPTEMBER 30, 1988, REFLECT PER SHARE REDUCTIONS OF $0.0026,
$0.0033, $0.0033, $0.0043 AND $0.0051, RESPECTIVELY.
(B)TOTAL INVESTMENT RETURN ASSUMES DIVIDEND REINVESTMENT AND DOES NOT REFLECT
THE EFFECT OF SALES CHARGES.
(C)NOT ANNUALIZED.
/TABLE
<PAGE>
OBJECTIVES
EACH OF THE FUNDS SEEKS AS HIGH A LEVEL OF CURRENT INCOME
EXEMPT FROM FEDERAL INCOME TAX AND CALIFORNIA PERSONAL INCOME TAX
AS PUTNAM MANAGEMENT BELIEVES IS CONSISTENT WITH PRESERVATION OF
CAPITAL AND, IN THE CASE OF THE MONEY MARKET FUND, WITH
MAINTENANCE OF LIQUIDITY AND STABILITY OF PRINCIPAL . Under
current law, to the extent distributions by the Funds are derived
from interest on California Tax Exempt Securities (which are
described below) and are designated as such, they shall be exempt
from federal and California personal income taxes. None of
the Funds is intended to be a complete investment program,
and there is no assurance that any of the Funds will
achieve its objective.
HOW OBJECTIVES ARE PURSUED
BASIC INVESTMENT STRATEGY
EACH FUND SEEKS ITS OBJECTIVE BY INVESTING PRIMARILY IN A
PORTFOLIO OF CALIFORNIA TAX EXEMPT SECURITIES (AS DEFINED BELOW).
The Funds have separate investment policies involving differing
levels of yield and risk.
THE INCOME FUND
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND SEEKS ITS
OBJECTIVE BY INVESTING PRIMARILY IN LONGER-TERM CALIFORNIA TAX
EXEMPT SECURITIES . It is a fundamental policy of the
Income Fund that at least 90% of the Income Fund's income
distributions will be exempt from both federal income tax and
California personal income tax, except during times of adverse
market conditions when more than 10% of the Income Fund's income
distributions could be subject to federal income tax and/or
California personal income tax. For temporary or liquidity
purposes, the Income Fund may also invest in taxable obligations,
provided that not more than 10% of the Income Fund's income
distributions are subject to federal income tax and/or California
personal income tax. The Income Fund may also hold its assets in
money market instruments or in cash. Putnam Management may
take full advantage of the entire range of California Tax Exempt
Securities and may adjust the average maturity of the Income
Fund's portfolio from time to time depending on its assessment of
relative yields on securities of different maturities and its
expectations of future changes in interest rates.
The Income Fund's investments in California Tax Exempt Securities
and taxable obligations will be limited to securities rated not
lower than the five highest grades assigned by Moody's Investors
Service, Inc. ("Moody's") (Aaa, Aa, A, Baa or Ba) and Standard &
Poor's Corporation ("S&P") (AAA, AA, A, BBB or BB), or
unrated securities which Putnam Management determines are of
comparable quality.
THE INTERMEDIATE FUND
PUTNAM CALIFORNIA INTERMEDIATE TAX EXEMPT FUND SEEKS ITS
OBJECTIVE BY INVESTING PRIMARILY IN INTERMEDIATE-TERM CALIFORNIA
TAX EXEMPT SECURITIES . It is a fundamental policy of the
Intermediate Fund to invest at least 80% of its net assets in
California Tax Exempt Securities, except when it is investing for
temporary defensive purposes. The Intermediate Fund may also
hold its assets in cash or money market instruments.
Under normal market conditions, the Intermediate Fund expects to
maintain a portfolio of California Tax Exempt Securities with an
intermediate-term dollar-weighted average maturity (i.e., six to
ten years). Subject to the foregoing limitations, Putnam will
adjust the average maturity of the investments held in the
portfolio from time to time, depending on its assessment of
relative yields and risks of securities of different maturities
and its expectations of future changes in interest rates.
The Intermediate Fund's investments in California Tax Exempt
Securities and taxable obligations will be limited to securities
rated at the time of purchase not lower than the five highest
grades assigned by Moody's (Aaa, Aa, A, Baa, or Ba), S&P (AAA,
AA, A, BBB or BB) and Fitch Investors Service, Inc. ("Fitch")
(AAA, AA, A, BBB or BB), or unrated securities which Putnam
Management determines are of comparable quality.
THE MONEY MARKET FUND
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND FOLLOWS THE
FUNDAMENTAL POLICY THAT AT LEAST 90% OF THE FUND'S INCOME
DISTRIBUTIONS NORMALLY WILL BE EXEMPT FROM BOTH FEDERAL INCOME
TAX AND CALIFORNIA PERSONAL INCOME TAX. Subject to this
limitation, the Money Market Fund may also invest in high quality
taxable money market instruments of the type described under
"Alternative investment strategies" below.
The Money Market Fund will invest in only the following short-
term, high quality California Tax Exempt Securities: (i)
municipal notes; (ii) municipal bonds; (iii) municipal
securities backed by the U.S. government; (iv) short-term
discount notes (tax-exempt commercial paper); (v) participation
interests in any of the foregoing; and (vi) unrated securities or
new types of tax-exempt instruments which become available in the
future if Putnam Management determines they are of quality
comparable to those mentioned above. In connection with the
purchase of California Tax Exempt Securities, the Money Market
Fund may acquire stand-by commitments, which give the Money
Market Fund the right to resell the security to the dealer at a
specified price. Stand-by commitments may provide additional
liquidity for the Money Market Fund but are subject to the risk
that the dealer may fail to meet its obligations. The Money
Market Fund does not generally expect to pay additional
consideration for stand-by commitments nor to assign any value to
them.
The Money Market Fund will invest only in high-quality California
Tax Exempt Securities or other money market instruments that
Putnam Management believes present minimal credit risk. High-
quality securities are securities rated in one of the two highest
categories by at least two nationally recognized rating services
(or, if only one rating service has rated the security, by that
service) or if the security is unrated, judged to be of
equivalent quality by Putnam Management. The Money Market Fund
will maintain a dollar-weighted average maturity of 90 days or
less and will not invest in securities with remaining maturities
of more than 397 days. The Money Market Fund may invest in
variable or floating-rate California Tax Exempt Securities which
bear interest at rates subject to periodic adjustment or which
provide for periodic recovery of principal on demand. Under
certain conditions, these securities may be deemed to have
remaining maturities equal to the time remaining until the next
interest adjustment date or the date on which principal can be
recovered on demand.
Considerations of liquidity and preservation of capital mean that
the Money Market Fund may not necessarily invest in California
Tax Exempt Securities paying the highest available yield at a
particular time. Consistent with its investment objective, the
Money Market Fund will attempt to maximize yields by portfolio
trading and by buying and selling portfolio investments in
anticipation of or in response to changing economic and money
market conditions and trends. The Money Market Fund will also
invest to take advantage of what Putnam Management believes to be
temporary disparities in yields of different segments of the
market for California Tax Exempt Securities or among particular
instruments within the same segment of the market. These
policies, as well as the relatively short maturity of obligations
purchased by the Fund, may result in frequent changes in the
Fund's portfolio. Such portfolio turnover may give rise to
taxable gains. The Money Market Fund does not usually pay
brokerage commissions in connection with the purchase of
portfolio securities. See "Portfolio transactions -- Brokerage
and research services" in the Statement of Additional Information
for a discussion of underwriters' commissions and dealers'
spreads involved in the purchase and sale of portfolio
securities.
The portfolio of the Money Market Fund will be affected by
general changes in interest rates resulting in increases or
decreases in the value of the obligations held by the Money
Market Fund. Although the Money Market Fund's investment
policies are designed to minimize these changes and to maintain a
net asset value of $1.00 per share, there is no assurance that
these policies will be successful. Withdrawals by shareholders
could require the sale of portfolio investments at a time when
such a sale might not otherwise be desirable.
<PAGE>
ALTERNATIVE MINIMUM TAX
INTEREST INCOME FROM CERTAIN TYPES OF CALIFORNIA TAX EXEMPT
SECURITIES MAY BE SUBJECT TO FEDERAL ALTERNATIVE MINIMUM TAX FOR
INDIVIDUALS AND CORPORATIONS. As part of the Income Fund's and
the Money Market Fund's fundamental 90% policy on income from
investments in California Tax Exempt Securities and the
Intermediate Fund's 80% policy on investments in California Tax
Exempt Securities, each Fund will not treat interest income that
may be subject to federal alternative minimum tax for individuals
as tax-exempt for purposes of measuring compliance with such
policy. To the extent that a Fund earns such income, individual
and corporate shareholders, depending on their own tax status,
may be subject to federal (but not California) alternative
minimum tax on that part of the Funds' distributions attributable
to such income.
ALTERNATIVE INVESTMENT STRATEGIES
At times Putnam Management may judge that conditions in the
markets for California Tax Exempt Securities make pursuing a
Fund's basic investment strategy inconsistent with the best
interests of its shareholders. At such times Putnam Management
may temporarily use alternative investment strategies.
In implementing these "defensive" strategies, the Income and
Intermediate Funds may invest in taxable obligations, such as
obligations of the U.S. government, its agencies or
instrumentalities; other debt securities rated within the four
highest grades by either Moody's, S&P or Fitch; commercial paper
rated in the highest grade by Moody's or S&P rating service
(Prime-1 or A-1+, respectively); certificates of deposit and
bankers' acceptances; repurchase agreements with respect to any
of the foregoing investments; or any other fixed-income
securities that Putnam Management considers consistent with such
defensive strategies.
Similary, when implementing these "defensive" strategies, the
Money Market Fund may invest in high quality money market
instruments, including bank certificates of deposit, bankers'
acceptances, prime commercial paper, high-grade short-term
corporate obligations, short-term U.S. government securities or
repurchase agreements, or other securities Putnam Management
considers consistent with such defensive strategies.
The interest income from these instruments would be subject to
federal income tax and/or California personal income tax. It is
impossible to predict when, or for how long, a Fund will use such
alternative strategies.
As indicated above, under current market conditions the
Intermediate Fund expects to maintain a portfolio of securities
with an intermediate-term dollar-weighted average maturity,
because an intermediate-term portfolio of securities generally
provides a higher yield than a short-term portfolio of securities
of comparable quality. The Intermediate Fund may, however, be
primarily invested in short-term securities for temporary
defensive purposes. When the Fund invests in short-term
securities for defensive purposes, the Fund's dollar-weighted
average maturity may be less than six years.
CALIFORNIA TAX EXEMPT SECURITIES
CALIFORNIA TAX EXEMPT SECURITIES ARE DEBT OBLIGATIONS ISSUED BY
THE STATE OF CALIFORNIA, ITS POLITICAL SUBDIVISIONS, AND THEIR
AGENCIES, INSTRUMENTALITIES OR OTHER GOVERNMENTAL UNITS, THE
INTEREST FROM WHICH IS, IN THE OPINION OF BOND COUNSEL, EXEMPT
FROM FEDERAL INCOME TAX AND CALIFORNIA PERSONAL INCOME TAX.
These securities are issued to obtain funds for various public
purposes, such as the construction of public facilities, the
payment of general operating expenses or the refunding of
outstanding debts. They may also be issued to finance various
private activities, including the lending of funds to public or
private institutions for the construction of housing, educational
or medical facilities and may also include certain types of
industrial development bonds, private activity bonds, or notes
issued by public authorities to finance privately owned or
operated facilities or to fund short-term cash requirements.
Short-term California Tax Exempt Securities are generally issued
as interim financing in anticipation of tax collections, revenue
receipts or bond sales to finance various public purposes.
THE TWO PRINCIPAL CLASSIFICATIONS OF CALIFORNIA TAX EXEMPT
SECURITIES ARE GENERAL OBLIGATION AND SPECIAL OBLIGATION (OR
SPECIAL REVENUE OBLIGATION) SECURITIES. GENERAL OBLIGATION
securities involve the credit of an issuer possessing taxing
power and are payable from the issuer's general unrestricted
revenues. Their payment may depend on an appropriation by the
issuer's legislative body. The characteristics and methods of
enforcement of general obligation securities vary according to
the law applicable to the particular issuer. SPECIAL OBLIGATION
(OR SPECIAL REVENUE OBLIGATION) securities are payable only from
the revenues derived from a particular facility or class of
facilities, or a specific revenue source, and generally are not
payable from the unrestricted revenues of the issuer. Industrial
development bonds and private activity bonds are in most cases
special obligation securities, the credit quality of which is
directly related to the private user of the facilities.
Each of the Income and Intermediate Funds may invest in
securities representing interests in California Tax Exempt
Securities, known as "inverse floating obligations" or "residual
interest bonds," paying interest rates that vary inversely to
changes in the interest rates of specified short-term tax exempt
securities or an index of short-term tax exempt securities. The
interest rates on inverse floating obligations or residual
interest bonds will typically decline as short-term market
interest rates increase and increase as short-term market rates
decline. Such securities have the effect of providing a degree
of investment leverage, since they will generally increase or
decrease in value in response to changes in market interest rates
at a rate which is a multiple (typically two) of the rate at
which fixed-rate long-term tax exempt securities increase or
decrease in response to such changes. As a result, the market
values of inverse floating obligations and residual interest
bonds will generally be more volatile than the market values of
fixed-rate California Tax Exempt Securities.
INVESTMENTS IN PREMIUM SECURITIES
During a period of declining interest rates, many of the
portfolio investments of each of the Income and Intermediate
Funds will likely bear coupon rates which are higher than current
market rates, regardless of whether such securities were
originally purchased at a premium. Such securities would
generally carry market values greater than the principal amounts
payable on maturity, which would be reflected in the net asset
value of each Fund's shares. The values of such "premium"
securities tend to approach the principal amount as they approach
maturity (or call price in the case of securities approaching
their first call date). As a result, an investor who purchases
shares of each Fund during such periods would initially receive
higher distributions (derived from the higher coupon rates
payable on each Fund's investments) than might be available from
alternative investments bearing current market interest rates,
but may face an increased risk of capital loss as these higher
coupon securities approach maturity (or first call date). In
evaluating the potential performance of an investment in each
Fund, investors may find it useful to compare each Fund's current
dividend rate with its "yield," which is computed on a yield-to-
maturity basis in accordance with SEC regulations and which
reflects amortization of market premiums. See "How performance
is shown."
RISK FACTORS
THE VALUES OF CALIFORNIA TAX EXEMPT SECURITIES IN WHICH THE
INCOME AND INTERMEDIATE FUNDS MAY INVEST FLUCTUATE IN RESPONSE TO
CHANGES IN INTEREST RATES. Thus, a decrease in interest rates
will generally result in an increase in the value of a Fund's
assets. Conversely, during periods of rising interest rates,
the values of a Fund's assets will generally decline. The
magnitude of these fluctuations generally has been smaller for
intermediate-term securities than for securities with longer
maturities. While the volatility associated with intermediate-
term securities may be lower than that for longer-term
securities, the yields on such securities are also generally
lower. In addition, the values of California Tax Exempt
securities are affected by changes in general economic conditions
and business conditions affecting the specific industries of
their issuers. Changes by recognized rating services in
their ratings of California Tax Exempt Securities and in the
ability of an issuer to make payments of interest and principal
will also affect the value of these investments. Changes in the
value of portfolio securities will not affect income
derived from those securities , but will affect a Fund's
net asset value. A Fund will not necessarily dispose of a
security when its rating is reduced below its rating at the time
of purchase, although Putnam Management will monitor the
investment to determine whether continued investment in the
security will assist in meeting its investment objective.
EACH OF THE INCOME AND INTERMEDIATE FUNDS MAY INVEST IN
BOTH HIGHER-RATED AND LOWER-RATED CALIFORNIA TAX EXEMPT
SECURITIES. The values of lower-rated securities generally
fluctuate more than those of higher-rated securities. In
addition, the lower rating reflects a greater possibility that
the financial condition of the issuer, or adverse changes in
general economic conditions, or both, may impair the ability of
the issuer to make payments of income and principal.
The table below shows the percentages of the Income Fund's
assets invested during fiscal 1994 in securities assigned
to the various rating categories by Moody's and S&P and in
unrated securities determined by Putnam Management to be
of comparable quality.
UNRATED SECURITIES
RATED SECURITIES,OF COMPARABLE
QUALITY,
AS PERCENTAGE OFAS PERCENTAGE OF
RATING FUND'S ASSETS FUND'S ASSETS
"AAA"/"Aaa" 55.55% --
"AA"/"Aa" 13.22% --
"A"/"A" 14.88% --
"BBB"/"Baa" 8.22% 1.65%
"BB"/"Ba" 0.86% 5.21%
"B"/"B" 0.31% --
Not Rated -- 0.09%
------ -----
Total 93.04% 6.95%
====== =====
The Funds will not purchase a California Tax Exempt Security
rated at the time of purchase Ba by Moody's, BB by S&P
and, in the case of the Intermediate Fund, BB by Fitch, or, if
unrated, determined to be of comparable quality , if, as a
result, more than 25% of a Fund's total assets would be of that
quality. The rating services' descriptions of the five highest
grades of debt securities and other rating information are
included in the Statement of Additional Information. California
Tax Exempt Securities rated Ba or BB, commonly known as "junk
bonds," are considered to have speculative elements, with large
uncertainties or major risk exposures to adverse conditions.
Putnam Management seeks to minimize the risks of investing in
lower-rated securities through careful investment analysis
. However, the amount of information about the financial
condition of an issuer of California Tax Exempt Securities may
not be as extensive as that which is made avaible by
corporations whose securities are publicly traded. When a Fund
invests in California Tax Exempt Securities in the lower rating
categories, the achievement of such Fund's goals is more
dependent on Putnam Management's ability to analyze risks
than would be the case if the Fund were investing in California
Tax Exempt Securities in the higher rating categories. Investors
should consider carefully their ability to assume
the risks of owning shares of a mutual fund which may invest
in securities in the lower rating categories .
At times, a substantial portion of each Fund's assets may
be invested in securities as to which such Fund, by itself or
together with other funds and accounts managed by Putnam
Management and its affiliates, holds a major portion or all of an
issue of California Tax Exempt Securities. Under adverse market
or economic conditions or in the event of adverse changes in the
financial condition of the issuer, a Fund could find it more
difficult to sell such securities when Putnam Management believes
it advisable to do so or may be able to sell such securities only
at prices lower than if such securities were more widely held.
Under such circumstances, it may also be more difficult to
determine the fair value of such securities for purposes of
computing that Fund's net asset value. In order to enforce its
rights in the event of a default under such securities, a Fund
may be required to take possession of and manage assets securing
the issuer's obligations on such securities, which may increase
the Fund's operating expenses and adversely affect the Fund's net
asset value. Any income derived from a Fund's ownership or
operation of such assets would not be tax-exempt.
<PAGE>
Certain securities held by the Funds may permit the issuer at its
option to "call," or redeem, such securities. If an issuer were
to redeem securities held by a Fund during a time of declining
interest rates, such Fund may not be able to reinvest the
proceeds in securities providing the same investment return as
the securities redeemed.
Each of the Income and Intermediate Funds
may invest in so-called "zero-coupon" bonds whose
values are subject to greater fluctuation in response to changes
in market interest rates than bonds which pay interest currently.
Zero-coupon bonds are issued at a significant discount from face
value and pay interest only at maturity rather than at intervals
during the life of the security. Zero-coupon bonds allow an
issuer to avoid the need to generate cash to meet current
interest payments. Accordingly, such bonds may involve greater
credit risks than bonds paying interest currently. Each Fund is
required to accrue and distribute income from zero-coupon bonds
on a current basis, even though it does not receive that income
currently in cash. Thus, each Fund may have to sell other
investments to obtain cash needed to make income distributions.
The secondary market for California Tax Exempt Securities
is generally less liquid than that for taxable fixed-income
securities, particularly in the lower rating categories. Thus,
the ability of a Fund to buy and sell certain securities may be
limited from time to time.
FOR ADDITIONAL INFORMATION CONCERNING THE RISKS ASSOCIATED WITH
INVESTMENTS BY THE FUNDS IN SECURITIES IN THE LOWER RATING
CATEGORIES, SEE THE STATEMENT OF ADDITIONAL INFORMATION.
SINCE THE FUNDS INVEST PRIMARILY IN CALIFORNIA TAX EXEMPT
SECURITIES , THE PERFORMANCE OF EACH FUND MAY BE ESPECIALLY
AFFECTED BY FACTORS PERTAINING TO THE CALIFORNIA ECONOMY AND
OTHER FACTORS SPECIFICALLY AFFECTING THE ABILITY OF ISSUERS
OF CALIFORNIA TAX EXEMPT SECURITIES TO MEET THEIR
OBLIGATIONS. As a result, the value of each of
the Income and Intermediate Fund's shares may fluctuate more
widely than the value of shares of a portfolio investing
in securities relating to a number of different states. The
ability of state, county, or local governments to meet their
obligations will depend primarily on the availability of tax and
other revenues to those governments and on their fiscal
conditions generally. The amounts of tax and other revenues
available to governmental issuers of California Tax Exempt
Securities may be affected from time to time by economic,
political, and demographic conditions. The State of California
has experienced significant financial difficulties as a result of
the ongoing recession in California. In addition, constitutional
or statutory restrictions may limit a government's power to raise
revenues or increase taxes. The availability of federal, state,
and local aid to issuers of California Tax Exempt Securities may
also affect their ability to meet their obligations. Payments of
principal and interest on special obligation securities will
depend on the economic condition of the facility or specific
revenue source from whose revenues the payments will be made,
which in turn could be affected by economic, political, and
demographic conditions in the State of California. Any reduction
in the actual or perceived ability of an issuer of California Tax
Exempt Securities to meet its obligations (including a reduction
in the rating of its outstanding securities) would likely affect
adversely the market value and marketability of its obligations
and could affect adversely the values of other California Tax
Exempt Securities as well .
DIVERSIFICATION AND CONCENTRATION POLICIES
Each of the Income Fund and the Money Market Fund
is a "diversified" investment company under the Investment
Company Act of 1940 (the "1940 Act"). The Intermediate Fund is a
"non-diversified" investment company under the 1940 Act. Under
the 1940 Act and the Internal Revenue Code , this means
that with respect to 75% of its total assets in the case of
each of the Income and Money Market Funds , and with
respect to 50% of its total assets in the case of the
Intermediate Fund, a Fund generally may not invest more than 5%
of its total assets in the securities of any one issuer
(except U.S. government obligations) . The balance of a
Fund's assets is not subject to this limitation. However, under
the Internal Revenue Code, a regulated investment company at the
close of each quarter of a taxable year may not hold more
than 25% of its assets in securities of any one issuer (other
than U.S. government securities or the securities of other
regulated investment companies). Thus, each of the Income
and Money Market Funds may invest up to 25% of its total
assets in the securities of any one issuer, and the Intermediate
Fund may invest up to 25% of its total assets in the securities
of each of any two issuers. Because of the relatively small
number of issuers of California Tax Exempt Securities, each Fund
is more likely to invest a higher percentage of its assets in the
securities of a single issuer than an investment company which
invests in a broad range of tax-exempt securities. This practice
involves an increased risk of loss to the Fund if the issuer is
unable to make interest or principal payments or if the market
value of such securities declines.
A Fund will not invest more than 25% of its total assets in any
one industry. Governmental issuers of California Tax Exempt
Securities are not considered part of any "industry." However,
California Tax Exempt Securities backed only by the assets and
revenues of nongovernmental users may for this purpose (and for
diversification purposes discussed above) be deemed to be issued
by such nongovernmental users . Thus, the 25% limitation
would apply to such obligations.
It is nonetheless possible that a Fund may invest more than 25%
of its assets in a broader segment of the California Tax Exempt
Securities market, such as revenue obligations of hospitals and
other health care facilities, housing agency revenue obligations,
or airport revenue obligations. This would be the case only if
Putnam Management determined that the yields available from
obligations in a particular segment of the market justified the
additional risks associated with such concentration. Although
such obligations could be supported by the credit of governmental
users or by the credit of nongovernmental users engaged in a
number of industries, economic, business, political and other
developments generally affecting the revenues of such users (for
example, proposed legislation or pending court decisions
affecting the financing of such projects and market factors
affecting the demand for their services or products) may have a
general adverse effect on all California Tax Exempt Securities in
such a market segment.
Each Fund reserves the right to invest more than 25% of its
assets in industrial development securities and private activity
bonds consistent with its concentration and diversification
policies.
<PAGE>
PORTFOLIO TURNOVER
The length of time each Fund has held a particular security is
not generally a consideration in investment decisions. A change
in the securities held by a Fund is known as "portfolio
turnover." As a result of the Funds' investment policies, under
certain market conditions the Funds' portfolio turnover rates
may be higher than that of other mutual funds. Portfolio
turnover generally involves some expense to a Fund, including
brokerage commissions or dealer mark-ups and other transaction
costs on the sale of securities and reinvestment in other
securities. Such transactions may result in realization of
taxable capital gains. Portfolio turnover rates for the
ten most recent fiscal years of the Income Fund , and for the
life of the Intermediate Fund, are shown in the section
"Financial highlights."
FINANCIAL FUTURES AND OPTIONS
EACH OF THE INCOME AND INTERMEDIATE FUNDS MAY PURCHASE AND
SELL FINANCIAL FUTURES CONTRACTS AND RELATED OPTIONS FOR
HEDGING PURPOSES. Futures contracts on a Municipal Bond Index
are traded on the Chicago Board of Trade. This Index is intended
to represent a numerical measure of market performance for long-
term tax-exempt bonds. An "index future" is a contract to buy or
sell units of a particular securities index at an agreed price on
a specified future date. Depending on the change in value of the
index between the time when a Fund enters into and terminates an
index futures contract, the Fund realizes a gain or loss. Each
of the Income and Intermediate Funds may purchase and sell
futures contracts on the Index (or any other tax-exempt bond
index approved for trading by the Commodity Futures Trading
Commission) to hedge against general changes in market values of
California Tax Exempt Securities which such Fund owns or
expects to purchase. Each of the Income and Intermediate
Funds may also purchase and sell put and call options on
index futures or on the indices directly, in addition to or as an
alternative to purchasing and selling index futures.
Each of the Income and Intermediate Funds may also, for
hedging purposes, purchase and sell futures contracts and related
options with respect to U.S. Treasury securities, including U.S.
Treasury bills, notes and bonds ("U.S. Government Securities")
and options directly on U.S. Government Securities. U.S.
Government Securities futures and options would be used in a way
similar to a Fund's use of index futures and options.
In addition, each of the Income and Intermediate Funds may
purchase put and call options on, or warrants to purchase,
California Tax Exempt Securities, either directly or through
custodial arrangements in which the Fund and other investors own
an interest in one or more options on California Tax Exempt
Securities.
THE USE OF FUTURES AND OPTIONS INVOLVES CERTAIN SPECIAL RISKS AND
MAY RESULT IN REALIZATION OF TAXABLE INCOME OR CAPITAL GAINS.
FUTURES AND OPTIONS TRANSACTIONS INVOLVE COSTS AND MAY RESULT IN
LOSSES. Certain risks arise because of the possibility of
imperfect correlations between movements in the prices of
financial futures and options and movements in the prices of the
underlying bond index or U.S. Government Securities or of the
California Tax Exempt Securities which are the subject of the
hedge. The successful use of futures and options further depends
on Putnam Management's ability to forecast interest rate
movements correctly. Other risks arise from a Fund's potential
inability to close out its futures or related options positions,
and there can be no assurance that a liquid secondary market will
exist for any futures contract or option at a particular time.
Certain provisions of the Internal Revenue Code and certain
regulatory requirements may limit each Fund's ability to engage
in futures and options transactions.
A MORE DETAILED EXPLANATION OF FINANCIAL FUTURES AND OPTIONS
TRANSACTIONS AND THE RISKS ASSOCIATED WITH THEM IS INCLUDED IN
THE STATEMENT OF ADDITIONAL INFORMATION.
OTHER INVESTMENT PRACTICES
EACH OF THE FUNDS MAY ALSO ENGAGE TO A LIMITED EXTENT IN THE
FOLLOWING INVESTMENT PRACTICES, EACH OF WHICH MAY RESULT IN
TAXABLE INCOME OR CAPITAL GAINS AND INVOLVES CERTAIN SPECIAL
RISKS. THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE
DETAILED INFORMATION ABOUT THESE PRACTICES, INCLUDING LIMITATIONS
DESIGNED TO REDUCE THESE RISKS.
REPURCHASE AGREEMENTS AND FORWARD COMMITMENTS. Each Fund may
enter into repurchase agreements on up to 25% of its assets.
These transactions must be fully collateralized at all times.
Each Fund may also purchase securities for future delivery, which
may increase its overall investment exposure and involves a risk
of loss if the value of the securities declines prior to the
settlement date. These transactions involve some risk to a Fund
if the other party should default on its obligation and that Fund
is delayed or prevented from recovering the collateral or
completing the transaction.
LIMITING INVESTMENT RISK
SPECIFIC INVESTMENT RESTRICTIONS HELP THE FUNDS LIMIT INVESTMENT
RISKS FOR THEIR SHAREHOLDERS. THESE RESTRICTIONS PROHIBIT A FUND
FROM INVESTING MORE THAN: (a) (for the Income and Money Market
Funds) 5% of its total assets in securities of any one issuer
(other than securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities, or by the State
of California or its political subdivisions);* (b) (for the
Income and Money Market Funds) 5% of its net assets in
securities of any issuers if the party responsible for payment,
together with any predecessor, has been in operation less than
three years (except U.S. government and agency obligations and
obligations backed by the faith, credit and taxing power of any
person authorized to issue California Tax Exempt Securities); (c)
(for the Income and Money Market Funds) 15% of its net
assets in securities restricted as to resale (excluding
restricted securities that have been determined by the Trustees
(or the person designated by them to make such determinations) to
be readily marketable)*; or (d) (for all Funds) 15% of its
net assets in any combination of securities that are not readily
marketable, in securities restricted as to resale (excluding
restricted securities that have been determined by the Trustees
(or the person designated by them to make such determinations) to
be readily marketable) and in repurchase agreements maturing in
more than seven days. The Money Market Fund has not invested
more than 10% of its net assets in the types of securities listed
in item (d) and has no current intention of doing so.
Restrictions marked with an asterisk (*) above are summaries of
fundamental investment policies. See the
Statement of Additional Information for the full text of these
policies and the Funds' other fundamental investment
policies. Except for investment policies designated as
fundamental in this Prospectus or the Statement, the investment
policies described in this Prospectus and in the Statement are
not fundamental investment policies. The Trustees may
change any non-fundamental investment policies without
shareholder approval. As a matter of policy, the Trustees would
not materially change a Fund's investment objective
without shareholder approval.
HOW PERFORMANCE IS SHOWN
THE INCOME AND INTERMEDIATE FUNDS
THE INVESTMENT PERFORMANCE FOR THE INCOME AND INTERMEDIATE
FUNDS MAY FROM TIME TO TIME BE INCLUDED IN
ADVERTISEMENTS ABOUT THE FUNDS. "Yield" for each class of
shares is calculated by dividing the annualized net investment
income per share during a recent 30-day period by the maximum
public offering price per share of such class on the last day of
that period. For this purpose, net investment income is
calculated in accordance with SEC regulations and may differ from
net investment income as determined for financial
reporting purposes. SEC regulations require that net investment
income be calculated on a "yield-to-maturity" basis, which has
the effect of amortizing any premiums or discounts in the current
market value of fixed-income securities. The current
dividend rate is based on net investment income as
determined for tax purposes, which may not reflect
amortization in the same manner. See "How objectives are pursued
- -- Investments in premium securities." Yield reflects the
deduction of the maximum initial sales charge in the case of
Class A and Class M shares, but does not reflect the
deduction of any contingent deferred sales charge in the case of
Class B shares. "Tax-equivalent yield " for each
class of shares shows the effect on performance of the tax-exempt
status of distributions received from a Fund. It reflects the
approximate yield that a taxable investment must earn for
shareholders at stated income levels to produce an after-tax
yield equivalent to a Fund's tax-exempt yield.
"Total return" for the one-, five- and ten-year periods
(or for the life of a class, if shorter)
through the most recent calendar quarter represents the average
annual compounded rate of return on an investment of $1,000 in a
Fund invested at the maximum public offering price (in the case
of Class A and Class M shares) or reflecting the deduction
of any applicable contingent deferred sales charge (in the case
of Class B shares). Total return may also be presented for other
periods or based on investment at reduced sales charge levels or
net asset value. Any quotation of investment performance
not reflecting the maximum initial sales charge or contingent
deferred sales charge would be reduced if such sales charges were
used.
THE MONEY MARKET FUND
THE MONEY MARKET FUND'S INVESTMENT PERFORMANCE MAY FROM TIME TO
TIME BE INCLUDED IN ADVERTISEMENTS ABOUT THE FUND. "Yield"
represents an annualization of the change in value of a
shareholder account (excluding any capital changes) for a
specific seven-day period. "Effective yield" compounds the Money
Market Fund's yield for a year and is, for that reason, greater
than the Money Market Fund's yield. "Tax -equivalent yield
" shows the effect on performance of the tax-
exempt status of distributions received from the Money Market
Fund. It reflects the approximate yield that a taxable
investment must earn for shareholders at stated income levels to
produce an after-tax yield equivalent to the Money Market Fund's
tax-exempt yield or tax-exempt effective yield.
ALL FUNDS
ALL DATA IS BASED ON EACH FUND'S PAST INVESTMENT RESULTS AND DOES
NOT PREDICT FUTURE PERFORMANCE. Investment performance, which
will vary, is based on many factors, including market conditions,
the composition of each Fund's portfolio, each Fund's operating
expenses and which class of shares you purchase.
Investment performance also often reflects the risks associated
with each Fund's investment objective and policies. These
factors should be considered when comparing each Fund's
investment results to those of other mutual funds and other
investment vehicles. Quotations of investment performance for
any period when an expense limitation was in effect will be
greater than if the limitation had not been in effect. Each
Fund's performance may be compared to various indices. See the
Statement of Additional Information.
HOW THE FUNDS ARE MANAGED
THE TRUSTEES OF THE TRUST AND THE MONEY MARKET FUND ARE
RESPONSIBLE FOR GENERALLY OVERSEEING THE CONDUCT OF EACH FUND'S
BUSINESS. Subject to such policies as the Trustees may
determine, Putnam Management furnishes a continuing investment
program for each Fund and makes investment decisions on its
behalf. Subject to the control of the Trustees, Putnam
Management also manages the Funds' other affairs and business.
William H. Reeves, Vice President of Putnam Management and Vice
President of the Trust, has had primary responsibility for the
day-to-day management of the Income Fund's portfolio since 1986.
Thomas C. Goggins, Vice President of Putnam Management and Vice
President of the Trust, has had primary responsibility for the
day-to-day management of the Intermediate Fund's portfolio since
the Fund's inception in June, 1994. Mr. Goggins has been
employed by Putnam Management since June, 1993, before which he
was a Portfolio Manager at Transamerica Investments Services,
Inc. for more than five years.
Each Fund pays all expenses not assumed by Putnam Management,
including Trustees' fees, auditing, legal, custodial, investor
servicing, and shareholder reporting expenses, and payments under
its Distribution Plans (in the case of the Income Fund and the
Intermediate Fund, payments are in turn allocated to the
relevant class of shares). Expenses of the Trust directly
charged or attributable to the Income or Intermediate Fund
will be paid from the assets of that Fund. General expenses of
the Trust will be allocated among and charged to the assets of
the Income and Intermediate Funds on a basis that the
Trustees deem fair and equitable, which may be based on the
relative assets of each Fund or the nature of the services
performed and relative applicability to each Fund. All of
the Funds reimburse Putnam Management for the compensation
and related expenses of certain officers and their staff
who provide administrative services to the Trust and the Money
Market Fund, as the case may be . The total reimbursement is
determined annually by the Trustees.
Putnam Management places all orders for purchases and sales of
each Fund's portfolio securities. In selecting broker-dealers,
Putnam Management may consider research and brokerage services
furnished to it and its affiliates. Subject to seeking the most
favorable price and execution available, Putnam Management may
consider sales of shares of each Fund (and, if permitted by law,
of the other Putnam funds) as a factor in the selection of
broker-dealers.
ORGANIZATION AND HISTORY
Each of the Trust and the Money Market Fund is a
Massachusetts business trust organized on December 17, 1982 and
September 2, 1987, respectively. Copies of their Agreements and
Declarations of Trust, which are governed by
Massachusetts law, are on file with the Secretary of State
of The Commonwealth of Massachusetts. Prior to June 1, 1994, the
Trust was known as Putnam California Tax Exempt Income Fund.
The Trust is an open-end management investment company with an
unlimited number of authorized shares of beneficial interest.
Shares of the Trust may, without shareholder approval, be divided
into two or more series of such shares and are currently divided
into two series of shares: Putnam California Tax Exempt Income
Fund and Putnam California Intermediate Tax Exempt Fund.
Shares of both Funds may be divided, without shareholder
approval , into two or more classes of shares having such
preferences and special or relative rights and privileges as the
Trustees may determine. The Income Fund's shares are
currently divided into three classes, and the Intermediate
Fund's shares are currently divided into two classes.
The Money Market Fund is an open-end management investment
company with an unlimited number of authorized shares of
beneficial interest. Shares of the Fund may, without shareholder
approval, be divided into two or more series of such shares,
although the Fund is not currently divided into series. Shares
of the Fund may be divided, without shareholder approval, into
two or more classes of shares having such preferences and special
or relative rights and privileges as the Trustees may determine.
The Fund's shares are not currently divided into classes.
For all of the Funds, each share has one vote, with
fractional shares voting proportionally. Shares of the
Trust vote by individual series on all matters except
(1) when required by the Investment Company Act of 1940,
shares of both series shall be voted in the aggregate and
_ii) when the Trustees have determined that the matter
affects only the interests of one series, in which case
only shareholders of such series shall be entitled to
vote. Shares of each class of a Fund will vote together as a
single class except when otherwise required by law or as
determined by the Trustees.
Shares of the Funds are freely transferable, are
entitled to dividends as declared by the Trustees, and, if a Fund
were liquidated, would receive the net assets of that Fund.
A Fund may suspend the sale of shares at any time and may
refuse any order to purchase shares. Although the Trust and
the Money Market Fund are not required to hold annual
shareholder meetings , shareholders holding at
least 10% of the Trust's or the Money Market Fund's
outstanding shares entitled to vote have the right to
call a meeting to elect or remove Trustees, or to take other
actions as provided in the relevant Agreement and
Declaration of Trust.
<PAGE>
If you own fewer shares than a minimum amount set by the Trustees
(presently 20 shares for the Income and Intermediate Funds and
500 shares for the Money Market Fund), the Funds may choose
to redeem your shares and pay you for them. You will receive at
least 30 days' written notice before a Fund redeems your
shares, and you may purchase additional shares at any time to
avoid a redemption. Each Fund may also redeem your shares if you
own shares above a maximum amount set by the Trustees. There is
presently no maximum for any Fund, but the Trustees may
establish one at any time, which could apply to both present and
future shareholders.
THE TRUSTEES OF THE TRUST AND THE MONEY MARKET
FUND : GEORGE PUTNAM,* CHAIRMAN. President of the Putnam
funds. Chairman and Director of Putnam Management and Putnam
Mutual Funds Corp. ("Putnam Mutual Funds"). Director,
Marsh & McLennan Companies, Inc.; WILLIAM F. POUNDS, VICE
CHAIRMAN. Professor of Management, Alfred P. Sloan School of
Management, M.I.T.; JAMESON ADKINS BAXTER, President, Baxter
Associates, Inc.; HANS H. ESTIN, Vice Chairman, North American
Management Corp. ; JOHN A. HILL, Principal and Managing
Director, First Reserve Corporation; ELIZABETH T. KENNAN,
President, Mount Holyoke College; LAWRENCE J. LASSER,* Vice
President of the Putnam funds. President, Chief Executive
Officer and Director of Putnam Investments, Inc. and Putnam
Management. Director, Marsh & McLennan Companies, Inc.; ROBERT
E. PATTERSON, Executive Vice President, Cabot Partners Limited
Partnership; DONALD S. PERKINS, Director of various corporations,
including AT&T, K mart Corporation and Time Warner Inc.; GEORGE
PUTNAM, III,* President, New Generation Research, Inc.; A.J.C.
SMITH,* Chairman, Chief Executive Officer and Director, Marsh &
McLennan Companies, Inc.; and W. NICHOLAS THORNDIKE, Director of
various corporations and charitable organizations, including
Data General Corporation, Bradley Real Estate, Inc. and
Providence Journal Co. Also, Trustee of Massachusetts
General Hospital and Eastern Utilities Associates. The
Trustees of the Trust and the Money Market Fund
are also Trustees of the other Putnam funds. Those marked with
an asterisk (*) are "interested persons" of the Trust, Putnam
Management or Putnam Mutual Funds.
ABOUT YOUR INVESTMENT
ALTERNATIVE SALES ARRANGEMENTS
(INCOME AND INTERMEDIATE FUNDS ONLY)
The Income Fund offers investors three classes of shares, and the
Intermediate Fund offers investors two classes of
shares . Each class of shares bears sales charges in
different forms and amounts and bears different levels of
expenses .
<PAGE>
CLASS A SHARES. An investor who purchases Class A shares pays a
sales charge at the time of purchase. As a result, Class A
shares are not subject to any charges when they are redeemed
(except for sales at net asset value in excess of $1 million
which are subject to a contingent deferred sales charge).
Certain purchases of Class A shares qualify for reduced sales
charges. Class A shares of the Income Fund currently bear a 12b-
1 fee at the annual rate of 0.20% of the Income Fund's average
net assets attributable to Class A shares. Class A shares of the
Intermediate Fund currently bear a 12b-1 fee at the annual rate
of 0.15% of the Intermediate Fund's average net assets
attributable to Class A shares. See "How to buy shares - - The
Income and Intermediate Funds -- Class A shares."
CLASS B SHARES. Class B shares of the Income Fund are sold
without an initial sales charge, but are subject to a contingent
deferred sales charge of up to 5% if redeemed within six years.
Class B shares of the Intermediate Fund are also sold without an
initial sales charge, but are subject to a contingent deferred
sales charge of up to 3% if redeemed within four years. Class B
shares of each Fund also bear a higher 12b-1 fee than
Class A shares, currently at the annual rate of 0.85% of the
Income Fund's average net assets attributable to its Class B
shares and 0.75% of the Intermediate Fund's average net assets
attributable to its Class B shares. Class B shares of each Fund
will automatically convert into Class A shares of such Fund,
based on relative net asset value, approximately eight years
after purchase. Class B shares provide an investor the benefit
of putting all of the investor's dollars to work from the time
the investment is made, but (until conversion) will have a higher
expense ratio and pay lower dividends than Class A shares due to
the higher 12b-1 fee. See "How to buy shares - - The Income
and Intermediate Funds -- Class B shares."
CLASS M SHARES (INCOME FUND ONLY). An investor who purchases
Class M shares of the Income Fund pays a sales charge at the time
of purchase which is lower than the sales charge applicable to
Class A shares. Class M shares are not subject to any contingent
deferred sales charge when they are redeemed. Certain purchases
of Class M shares qualify for reduced sales charges. Class M
shares currently bear a 12b-1 fee at the annual rate of 0.50% of
the Fund's average net assets attributable to Class M shares.
See "How to buy shares -- The Income and Intermediate Funds --
Class M shares."
WHICH ARRANGEMENT IS BETTER FOR YOU? The decision as to which
class of shares provides a more suitable investment for an
investor depends on a number of factors, including the amount and
intended length of the investment. Investors making investments
that qualify for reduced sales charges might consider Class A
or Class M shares. Investors who prefer not to pay an
initial sales charge might consider Class B shares. Orders for
Class B shares for $250,000 or more and orders for Class M
shares for $1 million or more will be treated as orders for
Class A shares or declined. For more information about these
sales arrangements, consult your investment dealer or Putnam
Investor Services. Sales personnel may receive different
compensation depending on which class of shares they sell. Shares
may only be exchanged for shares of the same class of another
Putnam fund. See "How to exchange shares."
HOW TO BUY SHARES
THE INCOME AND INTERMEDIATE FUNDS
You can open an account with as little as $500 and make
additional investments at any time with as little as $50. You
can buy shares of the Income and Intermediate Funds three
ways - through most investment dealers, through Putnam Mutual
Funds (at 1-800-225-1581), or through a systematic investment
plan. If you do not have a dealer, Putnam Mutual Funds can refer
you to one.
BUYING SHARES THROUGH PUTNAM MUTUAL FUNDS. Complete an order
form and return it with a check payable to the Fund or to Putnam
Mutual Funds, which will act as your agent in purchasing shares
through your designated investment dealer.
BUYING SHARES THROUGH SYSTEMATIC INVESTING. You can make regular
investments of $25 or more per month through automatic deductions
from your bank checking account. Application forms are available
from your investment dealer or through Putnam Investor Services.
Shares are sold at the public offering price based on the net
asset value next determined after Putnam Investor Services
receives your order. In most cases, in order to receive that
day's public offering price, Putnam Investor Services must
receive your order before the close of regular trading on the New
York Stock Exchange. If you buy shares through your investment
dealer, the dealer must receive your order before the close of
regular trading on the New York Stock Exchange to receive that
day's public offering price.
CLASS A SHARES
The public offering price of Class A shares is the net asset
value plus a sales charge. Each Fund receives the net asset
value. The sales charge varies depending on the size of your
purchase and is allocated between your investment dealer and
Putnam Mutual Funds. The current sales charges for each Fund
are:
<TABLE>
<CAPTION>
THE INCOME FUND
SALES CHARGE AMOUNT OF
AS A PERCENTAGE OF: SALES CHARGE
---------------------- REALLOWED
NET TO DEALERS
AMOUNT OF TRANSACTION AMOUNT OFFERING AS A PERCENTAGE
AT OFFERING PRICE INVESTED PRICE OF OFFERING PRICE*
- -----------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
Less than $ 25,000 4.99% 4.75%4.50%
$ 25,000 but less than $ 100,000 4.71 4.50 4.25
100,000 but less than 250,000 3.90 3.75 3.50
250,000 but less than 500,000 3.09 3.00 2.75
500,000 but less than1,000,000 2.04 2.00 1.85
- ---------------------------------------------------------------------------------------
THE INTERMEDIATE FUND
SALES CHARGE AMOUNT OF
AS A PERCENTAGE OF: SALES CHARGE
---------------------- REALLOWED
NET TO DEALERS
AMOUNT OF TRANSACTION AMOUNT OFFERING AS A PERCENTAGE
AT OFFERING PRICE INVESTED PRICE OF OFFERING PRICE*
- -----------------------------------------------------------------------------------------
-
<C> <C> <C> <C> <C> <C>
Less than $ 100,000 3.36% 3.25%3.00%
$ 100,000 but less than $ 250,000 2.56 2.50 2.25
250,000 but less than 500,000 2.04 2.00 1.75
500,000 but less than1,000,000 1.52 1.50 1.25
- --------------------------------------------------------------------------------
</TABLE> * At the discretion of Putnam Mutual Funds, however, the
entire sales charge may at times be reallowed to
dealers. The Staff of the Securities and Exchange
Commission has indicated that dealers who receive more
than 90% of the sales charge may be considered
underwriters.
There is no initial sales charge on purchases of Class A shares
of $1 million or more. However, a contingent deferred sales
charge ("CDSC") of 1.00% or 0.50%, respectively, is imposed on
redemptions of such shares within the first or second year after
purchase, based on the lower of the shares' cost and current net
asset value. Any shares acquired by reinvestment of
distributions will be redeemed without a CDSC. In addition,
shares purchased by certain investors investing $1 million or
more that have made arrangements with Putnam Mutual Funds and
whose dealer of record waived the commission described in the
next paragraph are not subject to the CDSC. In determining
whether a CDSC is payable, the Fund will first redeem shares not
subject to any charge. Putnam Mutual Funds receives the entire
amount of any CDSC you pay. See the Statement of Additional
Information for more information about the CDSC.
Except as stated below, Putnam Mutual Funds pays investment
dealers of record commissions on sales of Class A shares of $1
million or more based on an investor's cumulative purchases
during the one-year period beginning with the date of the initial
purchase at net asset value . Each subsequent one-year
measuring period for these purposes begin with the
first net asset value purchase following the end
of the prior period. Such commissions are paid at the rate of
1.00% of the amount under $3 million, 0.50% of the next $47
million and 0.25% thereafter. On sales at net asset value to a
participant-directed qualified retirement plan initially
investing less than $20 million in Putnam funds and other
investments managed by Putnam Management or its affiliates
(including a plan sponsored by an employer with more than 750
employees), Putnam Mutual Funds pays commissions on cumulative
purchases during the life of the account at the rate of 1.00% of
the amount under $3 million and 0.50% thereafter. On sales at
net asset value to all other participant-directed qualified
retirement plans, Putnam Mutual Funds pays commissions on the
initial investment and on subsequent net quarterly sales at the
rate of 0.15%.
CLASS B SHARES
Class B shares are sold without an initial sales charge,
although a CDSC will be imposed if you redeem shares of the
Income Fund within six years of purchase or if you redeem shares
of the Intermediate Fund within four years of purchase. The
following types of shares may be redeemed without charge at any
time: (i) shares acquired by reinvestment of distributions and
(ii) shares otherwise exempt from the CDSC, as described in
"How to buy shares -- The Income and Intermediate Funds --
General" below. For other shares , the amount of the
charge is determined as a percentage of the lesser of the current
market value or the cost of the shares being redeemed.
The amount of the CDSC will depend on the number of years since
you invested and the dollar amount being redeemed, according to
the following tables:
THE INCOME FUND
CONTINGENT DEFERRED
SALES CHARGE AS A
PERCENTAGE OF
YEARS SINCE PURCHASE DOLLAR AMOUNT
PAYMENT MADE SUBJECT TO CHARGE
- ------------------- -------------------
0-1. . . . . . . . . . . . . . . . . .5.0%
1-2. . . . . . . . . . . . . . . . . .4.0%
2-3. . . . . . . . . . . . . . . . . .3.0%
3-4. . . . . . . . . . . . . . . . . .3.0%
4-5. . . . . . . . . . . . . . . . . .2.0%
5-6. . . . . . . . . . . . . . . . . .1.0%
6 and thereafter. . . . . . . . . . . . . . .NONE
THE INTERMEDIATE FUND
CONTINGENT DEFERRED
SALES CHARGE AS A
PERCENTAGE OF
YEARS SINCE PURCHASE DOLLAR AMOUNT
PAYMENT MADE SUBJECT TO CHARGE
- ------------------- -------------------
0-1. . . . . . . . . . . . . . . . . .3.0%
1-2. . . . . . . . . . . . . . . . . .3.0%
2-3. . . . . . . . . . . . . . . . . .2.0%
3-4. . . . . . . . . . . . . . . . . .1.0%
4 and thereafter. . . . . . . . . . . . . . .NONE
In determining whether a CDSC is payable on any redemption, a
Fund will first redeem shares not subject to any charge, and then
shares held longest during the relevant period. For this
purpose, the amount of any increase in a share's value above its
initial purchase price is not regarded as a share exempt from the
CDSC. Thus, when a share that has appreciated in value is
redeemed during the relevant period, a CDSC is assessed on its
initial purchase price. For information on how sales charges
are calculated if you exchange your shares, see "How to exchange
shares." Putnam Mutual Funds receives the entire amount of any
CDSC you pay.
CONVERSION OF CLASS B SHARES. Class B shares of each Fund will
automatically convert to Class A shares of such Fund at the end
of the month eight years after the purchase date, except as noted
below. Class B shares acquired by exchanging Class B
shares of another Putnam Fund will convert into Class A shares
based on the time of the initial purchase. Class B shares
acquired through reinvestment of distributions will convert into
Class A shares based on the date of the initial purchase to which
such shares relate. For this purpose, Class B shares acquired
through reinvestment of distributions will be attributed to
particular purchases of Class B shares in accordance with such
procedures as the Trustees may determine from time to time. The
conversion of Class B shares to Class A shares is subject to the
continuing availability of a ruling from the Internal Revenue
Service or an opinion of counsel that such conversions will not
constitute taxable events for Federal tax purposes. There can be
no assurance that such ruling or opinion will be available, and
the conversion of Class B shares to Class A shares will not occur
if such ruling or opinion is not available. In such event, Class
B shares would continue to be subject to higher expenses than
Class A shares for an indefinite period.
CLASS M SHARES (INCOME FUND ONLY)
The public offering price of Class M shares of the Income Fund is
the net asset value plus a sales charge. The Income Fund
receives the net asset value. The sales charge varies depending
on the size of your purchase and is allocated between your
investment dealer and Putnam Mutual Funds. The current sales
charges are:
<PAGE>
<TABLE>
<CAPTION>
SALES CHARGE
AS A PERCENTAGE OF: AMOUNT OF SALES
------------------- CHARGE REALLOWED
NET TO DEALERS
AMOUNT OF TRANSACTION AMOUNT OFFERING AS A PERCENTAGE OF
AT OFFERING PRICE INVESTED PRICE OFFERING PRICE*
- ---------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
Less than $50,000 3.36% 3.25% 3.00%
$ 50,000 but less than $100,000 2.30 2.25 2.00
100,000 but less than 250,000 1.52 1.50 1.25
250,000 but less than 500,000 1.01 1.00 1.00
500,000 but less than 1,000,000 None None None
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
* At the discretion of Putnam Mutual Funds, however, the
entire sales charge may at times be reallowed to dealers.
The Staff of the Securities and Exchange Commission has
indicated that dealers who receive more than 90% of the
sales charge may be considered underwriters.
Class M shares of the Income Fund do not convert to any other
class of shares.
GENERAL
YOU MAY BE ELIGIBLE TO BUY CLASS A SHARES OF THE INCOME AND
INTERMEDIATE FUNDS, AND CLASS M SHARES OF THE INCOME FUND, AT
REDUCED SALES CHARGES. Consult your investment dealer or Putnam
Mutual Funds for details about Putnam's Combined Purchase
Privilege, Cumulative Quantity Discount, Statement of Intention,
Group Sales Plan, Employee Benefit Plans and other plans.
Descriptions are also included in the order form and in the
Statement of Additional Information. In addition, sales charges
will not apply to Class M shares of the Income Fund purchased
with redemption proceeds received within the prior ninety days
from non-Putnam mutual funds on which the investor paid a front-
end or contingent deferred sales charge.
Each Fund may sell Class A and Class B shares , and the Income
Fund may sell Class M shares, at net asset value without an
initial sales charge or a CDSC to the Trust's current and retired
Trustees (and their families), current and retired employees (and
their families) of Putnam Management and affiliates, registered
representatives and other employees (and their families) of
broker-dealers having sales agreements with Putnam Mutual Funds,
employees (and their families) of financial institutions having
sales agreements with Putnam Mutual Funds (or otherwise having an
arrangement with a broker-dealer or financial institution with
respect to sales of a Fund's shares), financial institution trust
departments investing an aggregate of $1 million or more in
Putnam funds, clients of certain administrators of tax-qualified
plans, employee benefit plans of companies with more than 750
employees, tax-qualified plans when proceeds from repayments of
loans to participants are invested (or reinvested) in Putnam
funds, "wrap accounts" for the benefit of clients of broker-
dealers, financial institutions or financial planners adhering to
certain standards established by Putnam Mutual Funds, and
investors meeting certain requirements who sold shares of certain
Putnam closed-end funds pursuant to a tender offer by the closed-
end fund. In addition, each Fund may sell shares at net asset
value without an initial sales charge or a CDSC in connection
with the acquisition by each Fund of assets of an investment
company or personal holding company, and the CDSC will be waived
on redemptions of Class B shares arising out of death or
disability or in connection with certain withdrawals from IRA or
other retirement plans. Up to 12% of the value of Class B shares
subject to a Systematic Withdrawal Plan may also be
redeemed each year without a CDSC. See the Statement of
Additional Information.
Shareholders of other Putnam funds may be entitled to exchange
their shares for, or reinvest distributions from their funds in,
shares of either Fund at net asset value.
If you are considering redeeming or exchanging shares or
transferring shares to another person shortly after purchase, you
should pay for those shares with a certified check to avoid any
delay in redemption, exchange or transfer. Otherwise the Trust
may delay payment until the purchase price of those shares has
been collected or, if you redeem by telephone, until 15 calendar
days after the purchase date.
To eliminate the need for safekeeping, the Trust will not issue
certificates for your shares unless you request them. Putnam
Mutual Funds may, at its expense, provide additional promotional
incentives or payments to dealers that sell shares of the Putnam
funds. In some instances, these incentives or payments may be
offered only to certain dealers who have sold or may sell
significant amounts of shares. Certain dealers may not sell all
classes of shares.
THE MONEY MARKET FUND
The Money Market Fund continuously offers its shares at a price
of $1.00 per share. You can open an account for $1,000 or more
and make additional investments at any time for as little as
$100. You can buy Money Market Fund shares three ways - by mail,
by wire, or through most investment dealers. There are no sales
charges on the sales of Money Market Fund shares although the
Money Market Fund pays certain distribution expenses described
below.
Because the Money Market Fund seeks to be fully invested at all
times, investments must be in Same Day Funds to be accepted.
Same Day Funds are monies credited to the account of the Money
Market Fund's designated bank by the Federal Reserve Bank of
Boston. When payment in Same Day Funds is available to the Money
Market Fund prior to the close of regular trading on the New York
Stock Exchange, the Money Market Fund will accept the order to
purchase shares that day.
<PAGE>
If you are considering redeeming shares or transferring shares to
another person shortly after purchase, you should pay for those
shares with wired Same Day Funds or a certified check to avoid
any delay in redemption or transfer. Otherwise, the Money Market
Fund may delay payment for shares until the purchase price of
those shares has been collected or, if you redeem by check,
telephone or Telex, until 15 calendar days after the purchase
date.
After you make your initial investment in the Money Market Fund,
Putnam Investor Services will establish an Investing Account for
you on the Money Market Fund's records. This account is a
complete record of all transactions between you and the Money
Market Fund, which at all times shows the balance of shares you
own. The Money Market Fund will not issue share certificates.
BUYING SHARES BY MAIL. Complete the order form and send it to
Putnam Investor Services with your check, Federal Reserve Draft
or other negotiable bank draft drawn on a U.S. bank and payable
in U.S. dollars to the order of Putnam California Tax Exempt
Money Market Fund. If you pay by check or draft, the Money
Market Fund's designated bank will make Same Day Funds available
to the Money Market Fund, and the Money Market Fund will accept
the order on the first business day after receipt of your check
or draft. If you pay by Federal Reserve Draft, the Money Market
Fund will accept the order the day it is received provided it is
received before the close of regular trading on the New York
Stock Exchange.
BUYING SHARES BY WIRE. You may invest in the Money Market Fund
by bank wire transfer of Same Day Funds to the Money Market
Fund's designated bank. For wiring instructions, see the order
form.
Any commercial bank can transfer Same Day Funds by wire. Wired
funds received by the Money Market Fund's designated bank by 3:00
p.m. Boston time are normally accepted for investment on the day
received. To be sure that a bank wire order is accepted on the
same day it is sent, your bank should wire funds as early in the
day as possible. Your bank may charge for sending Same Day Funds
on your behalf. The Money Market Fund's designated bank
presently does not charge you for receipt of wired Same Day
Funds, but reserves the right to charge for this service.
BUYING SHARES THROUGH INVESTMENT DEALERS. You may, if you wish,
purchase shares of the Money Market Fund through investment
dealers, which may charge a fee for their services. Most
investment dealers have a sales agreement with Putnam Mutual
Funds and will be glad to accept your order. If you do not have
a dealer, Putnam Mutual Funds can refer you to one. Investment
dealers must follow the instructions in the order form.
<PAGE>
DISTRIBUTION PLANS
THE INCOME AND INTERMEDIATE FUNDS
CLASS A DISTRIBUTION PLANS. Each Fund's Class A Plan
provides for payments by the Fund to Putnam Mutual Funds at the
annual rate of up to 0.35% of such Fund's average net assets
attributable to its Class A shares . The Trustees of the
Trust currently limit payments under the Income Fund's
Class A Plan to the annual rate of 0.20% of such
assets and payments under the Intermediate Fund's
Class A Plan to the annual rate of 0.15% of such
assets . Should the Trustees decide in the future to approve
payments in excess of these amounts, shareholders will be
notified and this Prospectus will be revised.
In order to compensate investment dealers (including, for this
purpose, certain financial institutions) for services provided in
connection with sales of Class A shares and the
maintenance of shareholder accounts, Putnam Mutual Funds makes
quarterly payments to qualifying dealers based on the average net
asset value of Class A shares which are attributable to
shareholders for whom the dealers are designated as the dealer of
record. This calculation excludes until one year after purchase
shares purchased at net asset value by shareholders
investing $1 million or more and by participant-directed
qualified retirement plans sponsored by employers with more than
750 employees ("NAV Shares"), except for shares owned by certain
investors investing $1 million or more that have made
arrangements with Putnam Mutual Funds and whose dealer of record
waived the sales commission. Except as stated below, Putnam
Mutual Funds makes such payments at the annual rate of 0.15% of
such average net asset value for Class A shares of the Income
Fund outstanding as of December 31, 1992 and 0.20% of such
average net asset value of shares acquired after that date
(including shares acquired through reinvestment of
distributions). Except as stated below, Putnam Mutual Funds
makes such payments at the annual rate of 0.15% of such average
net asset value for Class A shares of the Intermediate Fund. For
participant-directed qualified retirement plans initially
investing less than $20 million in Putnam funds and other
investments managed by Putnam Management or its affiliates,
Putnam Mutual Funds' payments to qualifying dealers on NAV Shares
are 100% of the rate stated above if average plan assets in
Putnam funds (excluding money market funds) during the quarter
are less than $20 million, 60% of the stated rate if average plan
assets are at least $20 million but less than $30 million, and
40% of the stated rate if average plan assets are $30 million or
more. For all other participant-directed qualified retirement
plans purchasing NAV Shares, Putnam Mutual Funds makes quarterly
payments to qualifying dealers at the annual rate of 0.10% of the
average net asset value of such shares.
<PAGE>
CLASS B AND CLASS M DISTRIBUTION PLANS. The
Class B Plans and, in the case of the Income Fund, the Class M
Plan, provide for payments by the Fund to Putnam
Mutual Funds at the annual rate of up to 1.00% of the
Fund's average net assets attributable to Class B shares and
Class M shares, as the case may be. The Trustees of the
Trust currently limit payments under the Class B
Plans to the annual rates of 0.85% of such average net assets
in the case of the Income Fund and 0.75% of such average net
assets in the case of the Intermediate Fund. The Trustees
currently limit payments under the Class M Plan to the annual
rate of 0.50% of such average net assets .
Should the Trustees decide in the future to approve payments in
excess of these amounts, shareholders will be notified and this
Prospectus will be revised.
Although Class B shares of each Fund are sold without an initial
sales charge, Putnam Mutual Funds pays a sales commission equal
to 4.00% of the amount invested (including a prepaid service fee
of 0.20% of the amount invested) to dealers who sell Class B
shares of the Income Fund and a sales commission equal to 2.75%
of the amount invested to dealers who sell Class B shares of the
Intermediate Fund. These commissions are not paid on exchanges
from other Putnam funds and sales to investors exempt from the
CDSC. The amount paid to dealers at the time of the sale of
Class M shares of the Income Fund is set forth above under "How
to buy shares -- The Income and Intermediate Funds -- Class M
shares." In addition, in order to further compensate dealers
(including, for this purpose, certain financial institutions) for
services provided in connection with sales of Class B and
M shares and the maintenance of shareholder accounts,
Putnam Mutual Funds makes quarterly payments to qualifying
dealers based on the average net asset value of Class B and
Class M shares which are attributable to shareholders
for whom the dealers are designated as the dealer of record,
except for the first year's service fees in respect of Class B
shares of the Income Fund, which are prepaid as described above.
Putnam Mutual Funds makes such payments at an annual rate of
0.20% of such average net asset value of Class B and Class
M shares , as the case may be, of the Income
Fund , and 0.15% of such average net asset value of Class B
shares of the Intermediate Fund. In addition, Putnam Mutual
Funds also pays to dealers, as additional compensation with
respect to the sale of Class M shares of the Income Fund,
0.20% of such average net asset value of those shares. For Class
M shares of the Income Fund, the total annual payment to dealers
equals 0.40% of such average net asset value.
<PAGE>
THE MONEY MARKET FUND
DISTRIBUTION PLAN. The purpose of the Plan is to permit the
Money Market Fund to compensate Putnam Mutual Funds for services
provided and expenses incurred by it in promoting the sale of
shares of the Money Market Fund, reducing redemptions, or
maintaining or improving services provided to shareholders by
Putnam Mutual Funds or dealers. The Plan provides for payments
by the Money Market Fund to Putnam Mutual Funds at the annual
rate of up to 0.35% of the Money Market Fund's average net
assets. The Money Market Fund's Trustees have not authorized any
payments under the Plan for the period beginning January 1, 1994.
Should the Money Market Fund's Trustees decide in the future to
approve payments, shareholders will be notified and this
Prospectus will be revised.
GENERAL (ALL FUNDS).
Payments under the Plans are intended to compensate Putnam Mutual
Funds for services provided and expenses incurred by it as
principal underwriter of the Funds' shares, including the
payments to dealers mentioned above. Putnam Mutual
Funds may suspend or modify such payments to
dealers . Such payments are also subject to the
continuation of the relevant Distribution Plan ,
the terms of Service Agreements between dealers and Putnam Mutual
Funds, and any applicable limits imposed by the National
Association of Securities Dealers, Inc.
HOW TO SELL SHARES
THE INCOME AND INTERMEDIATE FUNDS
You can sell your shares to each Fund any day the New York Stock
Exchange is open, either directly to a Fund or through your
investment dealer. Either Fund will only redeem shares
for which it has received payment.
SELLING SHARES DIRECTLY TO A FUND. Send a signed letter of
instruction or stock power form to Putnam Investor Services,
along with any certificates that represent shares you want to
sell. The price you will receive is the next net asset value
calculated after the Fund receives your request in proper form
less any applicable CDSC. In order to receive that day's net
asset value, Putnam Investor Services must receive your request
before the close of regular trading on the New York Stock
Exchange. If you sell shares having a net asset value of
$100,000 or more, the signatures of registered owners or their
legal representatives must be guaranteed by a bank, broker-dealer
or certain other financial institutions. See the Statement of
Additional Information for more information about where to obtain
a signature guarantee. Stock power forms are available from your
investment dealer, Putnam Investor Services and many commercial
banks. If you want your redemption proceeds sent to an address
other than your address as it appears on Putnam's records, a
signature guarantee is required. Putnam Investor Services
usually requires additional documentation for the sale of shares
by a corporation, partnership, agent or fiduciary, or a surviving
joint owner. Contact Putnam Investor Services for details.
BOTH FUNDS GENERALLY SEND YOU PAYMENT FOR YOUR SHARES THE
BUSINESS DAY AFTER YOUR REQUEST IS RECEIVED. Under unusual
circumstances, either Fund may suspend redemptions , or
postpone payment for more than seven days, as permitted by
federal securities law.
You may use Putnam's Telephone Redemption Privilege to redeem
shares valued up to $100,000 from your account unless you have
notified Putnam Investor Services of an address change within the
preceding 15 days. Unless an investor indicates otherwise on the
Account Application, Putnam Investor Services will be authorized
to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as
his or her representative, who can provide Putnam Investor
Services with his or her account registration and address as it
appears on Putnam Investor Services' records. Putnam Investor
Services will employ these and other reasonable procedures to
confirm that instructions communicated by telephone are genuine;
if it fails to employ reasonable procedures, Putnam Investor
Services may be liable for any losses due to unauthorized or
fraudulent instructions. For information, consult Putnam
Investor Services. During periods of unusual market changes and
shareholder activity, you may experience delays in contacting
Putnam Investor Services by telephone in which case you may wish
to submit a written redemption request, as described above, or
contact your investment dealer, as described below. The
Telephone Redemption Privilege is not available if you were
issued certificates for your shares which remain outstanding.
The Telephone Redemption Privilege may be modified or terminated
without notice.
SELLING SHARES THROUGH YOUR INVESTMENT DEALER. Your dealer must
receive your request before the close of regular trading on the
New York Stock Exchange to receive that day's net asset value.
Your dealer will be responsible for furnishing all necessary
documentation to Putnam Investor Services, and may charge for its
services.
THE MONEY MARKET FUND
You can sell your shares to the Money Market Fund any day the New
York Stock Exchange is open, by check, by telephone or Telex, by
mail or through your investment dealer. The Money Market Fund
must receive your properly completed application before you may
sell shares; certain methods require additional documentation
(see below). To enable shareholders to earn daily dividends as
long as possible, the Money Market Fund has arranged the
following methods of selling shares:
SELLING SHARES BY CHECK. If you would like to use the Money
Market Fund's check writing service, mark the proper box on the
order form and complete the signature card and, if applicable,
the resolution. When Putnam Investor Services receives your
properly completed order form, card and resolution, the Money
Market Fund will provide you with checks drawn on the Money
Market Fund's designated bank. These checks may be made payable
to the order of any person in the amount of $500 or more. You
will continue to earn dividends until the check clears. When a
check is presented to the Money Market Fund's designated bank for
payment, a sufficient number of full and fractional shares in
your account will be redeemed to cover the amount of the check.
Shareholders using Money Market Fund checks are subject to the
Fund's designated bank's rules governing checking accounts.
There is currently no charge to the shareholder for the use of
checks. You should make sure that there are sufficient shares in
your account to cover the amount of the check drawn. If there is
an insufficient number of shares in the account, the check will
be returned marked "insufficient funds" and no shares will be
redeemed. Because dividends declared on shares held in your
account or prior withdrawals may cause the value of your account
to change, it is impossible to determine in advance your
account's total value. Accordingly, you should not write a check
for the entire value of your account or close your account by
writing a check. Redemptions by check will be confirmed at least
monthly.
SELLING SHARES BY TELEPHONE OR TELEX. If you would like to sell
Money Market Fund shares by telephone or Telex with proceeds
directed to your bank account, please mark the proper box on the
order form. You may call toll-free 1-800-225-1581 or by Telex
94-0153. On the following business day, the amounts withdrawn
from your account will either be mailed by check or wired in Same
Day Funds to the bank account designated on your application.
(To wire proceeds, the amount must be $1,000 or more and the
designated bank must be a commercial bank within the United
States.) You may change a designated bank account by sending a
written request to Putnam Investor Services with your signature
guaranteed by a bank, broker-dealer or certain other financial
institutions. See the Statement of Additional Information for
more information about how to obtain a signature guarantee.
<PAGE>
You may also use Putnam's Telephone Redemption Privilege to
redeem shares valued up to $100,000 from your account unless you
have notified Putnam Investor Services of an address change
within the preceding 15 days. Unless an investor indicates
otherwise on the Account Application, Putnam Investor Services
will be authorized to act upon redemption and transfer
instructions received by telephone from a shareholder, or any
person claiming to act as his or her representative, who can
provide Putnam Investor Services with his or her account
registration and address as it appears on Putnam Investor
Services' records. Putnam Investor Services will employ these and
other reasonable procedures to confirm that instructions
communicated by telephone are genuine; if it fails to employ
reasonable procedures, Putnam Investor Services may be liable for
any losses due to unauthorized or fraudulent instructions. For
information, consult Putnam Investor Services. During periods of
unusual market changes and shareholder activity, you may
experience delays in contacting Putnam Investor Services by
telephone in which case you may wish to submit a written
redemption request, as described below, or contact your
investment dealer. The Telephone Redemption Privilege may be
modified or terminated without notice.
SELLING SHARES BY MAIL. You may also sell shares of the Money
Market Fund by sending a written withdrawal request to: Putnam
Investor Services, Mailing address: P.O. Box 41203, Providence,
RI 02940-1203. If you sell shares having a net asset value of
$100,000 or more, the signatures of registered owners or their
legal representatives must be guaranteed by a bank, broker-dealer
or certain other financial institutions. See the Statement of
Additional Information for more information about where to obtain
a signature guarantee.
Putnam Investor Services may require additional documentation
from shareholders which are corporations, partnerships, agents,
fiduciaries or surviving joint owners. Corporations,
partnerships, agents, trusts and fiduciary accounts must submit a
completed resolution in proper form before selling shares by
telephone or check. Resolution forms are available from Putnam
Investor Services. If you are currently a shareholder and did
not request the check writing service or telephone/Telex
redemption privilege on your initial order form, you must first
complete and return an authorization form, available from Putnam
Investor Services. A shareholder may revoke authorization for
the check writing service or telephone/Telex redemption by
written notice at any time, effective when Putnam Investor
Services receives such notice.
The Money Market Fund reserves the right to terminate or modify
the terms of the check writing service or telephone/Telex
redemption privilege, or to charge shareholders for the use of
these services at any time.
<PAGE>
THE MONEY MARKET FUND GENERALLY SENDS YOU PAYMENT FOR YOUR SHARES
THE BUSINESS DAY AFTER YOUR REQUEST IS RECEIVED. Under unusual
circumstances, the Fund may suspend repurchases, or postpone
payment for more than seven days, as permitted by federal
securities law.
HOW TO EXCHANGE SHARES
Shareholders of the Money Market Fund who received their
shares in exchange for shares of another Putnam
fund with a sales charge, and shareholders of the Income and
Intermediate Funds, can exchange their shares for shares of
other Putnam funds at net asset value beginning 15 days after
purchase. Other shareholders of the Money Market Fund may
need to pay a sales charge, which varies depending on the fund in
which they exchange and the amount exchanged. Shareholders of
the Money Market Fund exchanging into funds with more than
one class of shares may exchange their shares only for Class A
shares. Shareholders of the Income and Intermediate Funds may
exchange their shares only for shares of the same class. Not all
Putnam funds offer all classes of shares . If the other
Putnam fund offers only one class of shares, only Class A shares
may be exchanged for such class. If you exchange shares subject
to a CDSC, the transaction will not be subject to the CDSC.
However, when you redeem the shares acquired through the
exchange, the redemption may be subject to the CDSC, depending
upon when you originally purchased the shares and using the
schedule of any fund into or from which you have exchanged your
shares that would result in your paying the highest CDSC
applicable to your class of shares. Class B shares of
most other Putnam funds have a higher CDSC than
the Intermediate Fund . For purposes of computing the
CDSC, the length of time you have owned your shares will be
measured from the date of original purchase and will not be
affected by any exchange.
To exchange your shares, simply complete an Exchange
Authorization Form and send it to Putnam Investor Services.
Exchange Authorization Forms are available by calling or writing
Putnam Investor Services. For federal income tax purposes, an
exchange is treated as a sale of shares and generally results in
a capital gain or loss. A Telephone Exchange Privilege is
currently available for amounts up to $500,000. Putnam Investor
Services' procedures for telephonic transactions are described
above under "How to sell shares." The Telephone Exchange
Privilege is not available if you were issued certificates of a
Fund for shares which remain outstanding. Ask your investment
dealer or Putnam Investor Services for prospectuses of other
Putnam funds. Shares of certain Putnam funds are not available
to residents of all states.
<PAGE>
The exchange privilege is not intended as a vehicle for short-
term trading. Excessive exchange activity may interfere with
portfolio management and have an adverse effect on all
shareholders. In order to limit excessive exchange activity and
in other circumstances where Putnam Management or the
Trustees believe doing so would be in the best interests of
the Funds, the Funds reserve the right to revise or terminate the
exchange privilege, limit the amount or number of exchanges or
reject any exchange. Shareholders would be notified of any such
action to the extent required by law. Consult Putnam Investor
Services before requesting an exchange. See the Statement of
Additional Information to find out more about the exchange
privilege.
HOW EACH FUND VALUES ITS SHARES
GENERAL. The Money Market Fund calculates the net asset value
of a share, and each of the Income and Intermediate Funds
calculates the net asset value of each class, by dividing the
total value of its assets, less liabilities, by the number of
shares outstanding. Shares are valued as of the close of regular
trading on the New York Stock Exchange each day the Exchange is
open.
THE INCOME AND INTERMEDIATE FUNDS. The values of tax-
exempt securities (including California Tax Exempt Securities)
are determined on the basis of valuations provided by a pricing
service approved by the Trustees, which uses information with
respect to transactions in bonds, quotations from bond dealers,
market transactions in comparable securities and various
relationships between securities in determining value. Each Fund
believes that reliable market quotations are generally not
readily available for purposes of valuing its portfolio
securities. As a result, it is likely that most of the
valuations provided by such pricing service will be based upon
fair value determined on the basis of the factors listed above.
Non-tax exempt securities for which market quotations are readily
available are valued at market value. Short-term investments
that will mature in 60 days or less are valued at amortized cost,
which approximates market value. All other securities and assets
are valued at their fair value following procedures approved by
the Trustees.
THE MONEY MARKET FUND. The Money Market Fund values its
portfolio investments at amortized cost according to Rule 2a-7
of the 1940 Act. The amortized cost of an instrument is
determined by valuing it at cost originally and thereafter
amortizing any discount or premium from its face value at a
constant rate until maturity.
<PAGE>
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
THE INCOME AND INTERMEDIATE FUNDS. Each Fund declares all
of its net interest income as a distribution on each day it is
open for business. Net interest income consists of interest
accrued on portfolio investments of a Fund, less accrued
expenses, computed in each case since the most recent
determination of net asset value. Normally, a Fund pays
distributions of net interest income monthly. A Fund will
distribute at least annually all net realized capital gains, if
any, after applying any available capital loss carryovers.
Distributions paid by a Fund with respect to Class A
shares will generally be greater than those paid with respect to
Class B and Class M shares because expenses attributable
to Class B and Class M shares will generally be higher.
You begin earning distributions on the business day that
Putnam Mutual Funds receives payment for your shares. It is your
responsibility to see that your dealer forwards payment promptly.
THE MONEY MARKET FUND. The Money Market Fund determines its net
income once each day the New York Stock Exchange is open, as of
the close of regular trading on the Exchange. Each determination
of the Money Market Fund's net income includes (i) all accrued
interest on portfolio investments of the Fund, (ii) plus or minus
all realized and unrealized gains and losses on the Fund's
investments, (iii) less all accrued expenses of the Fund. (The
Money Market Fund will not have unrealized gains or losses so
long as it values its investments by the amortized cost method.)
All of the net income of the Money Market Fund is declared each
day that the Money Market Fund is open for business as a dividend
to shareholders of record at the time of each declaration.
Shareholders begin earning dividends on the day after the Money
Market Fund accepts their orders. Each month's dividends will be
paid and reinvested on the fifth business day of the next month.
Since the net income of the Fund is declared as a dividend each
time it is determined, the net asset value per share of the Fund
remains at $1.00 immediately after each determination and
dividend declaration.
YOU CAN CHOOSE FROM THESE DISTRIBUTION OPTIONS: (1)
(ALL FUNDS) reinvest all distributions in additional
shares of your Fund without a sales charge; (2) (INCOME AND
INTERMEDIATE FUNDS ONLY) receive distributions from net
interest income in cash while reinvesting capital gains
distributions in additional shares of your Fund without a sales
charge; or (3) (ALL FUNDS) receive all distributions in
cash. You can change your distribution option by notifying
Putnam Investor Services in writing. If you do not select an
option when you open your account, all distributions will be
reinvested. All distributions paid by the Funds not paid in cash
will be reinvested in shares of the class on which the
distribution is paid. You will receive a statement confirming
reinvestment of distributions in additional Fund shares (or in
shares of other Putnam funds for Dividends Plus accounts)
promptly following the quarter in which the reinvestment occurs.
If a check representing a Fund distribution is not cashed within
a specified period, Putnam Investor Services will notify you that
you have the option of requesting another check or reinvesting
the distribution in your Fund or in another Putnam fund.
If Putnam Investor Services does not receive your election, the
distribution will be reinvested in your Fund. Similarly,
if correspondence sent by a Fund or Putnam Investor Services is
returned as "undeliverable," Fund distributions will
automatically be reinvested in that Fund or in another Putnam
fund.
Each Fund intends to qualify as a "regulated investment company"
for federal income tax purposes and to meet all other
requirements that are necessary for it to be relieved of federal
taxes on income and gains it distributes to shareholders. The
Funds will distribute substantially all of their ordinary income
and capital gain net income on a current basis.
Distributions designated by any Fund as "exempt-interest
dividends" are not generally subject to federal income tax. In
addition, to the extent that distributions are derived from
interest on California Tax Exempt Securities, such distributions
will be exempt from California personal income tax (but not from
California franchise and corporate income tax). However, if you
receive Social Security or railroad retirement benefits, you
should consult your tax adviser to determine what effect, if any,
an investment in a Fund may have on the federal taxation of your
benefits. California does not tax any portion of Social Security
or railroad retirement benefits. In addition, an
investment in a Fund may result in liability for federal
alternative minimum tax, both for individual and
corporate shareholders.
All Fund distributions other than exempt-interest dividends will
be taxable to you as ordinary income except that any
distributions of net long-term capital gains will be taxable to
you as such, regardless of how long you have held your shares.
Distributions will be taxable as described above whether received
in cash or in shares through the reinvestment of distributions.
The Funds may at times purchase California Tax Exempt Securities
at a discount from the price at which they were initially issued.
For federal income tax purposes, some or all of this
market discount will be included in the Fund's ordinary income
and will be taxable to shareholders as such when it is
distributed to them.
<PAGE>
For California tax purposes, distributions derived from
investments in other than (i) California Tax Exempt Securities
and (ii) obligations of the United States (or other obligations)
which pay interest exempt from California personal income
taxation under the Constitution or laws of the United States will
be taxable as ordinary income, whether paid in cash or reinvested
in additional shares.
Early in each year each Fund will notify you of the amount and
tax status of distributions paid to you by that Fund for the
preceding year.
The foregoing is a summary of certain federal and California tax
consequences of investing in a Fund. You should consult your tax
adviser to determine the precise effect of an investment in a
Fund on your particular tax situation (including possible
liability for alternative minimum tax and for state and local
taxes).
ABOUT PUTNAM INVESTMENTS, INC.
PUTNAM MANAGEMENT HAS BEEN MANAGING MUTUAL FUNDS SINCE 1937.
Putnam Mutual Funds is the principal underwriter of each Fund and
of other Putnam funds. Putnam Fiduciary Trust Company is the
custodian for each Fund. Putnam Investor Services, a division of
Putnam Fiduciary Trust Company, is each Fund's investor servicing
and transfer agent.
Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust
Company are subsidiaries of Putnam Investments, Inc., which is
wholly owned by Marsh & McLennan Companies, Inc., a
publicly - owned holding company whose principal businesses
are international insurance and reinsurance brokerage, employee
benefit consulting and investment management.
<PAGE>
MAKE THE MOST OF YOUR PUTNAM PRIVILEGES
As a Putnam mutual fund shareholder, you have access to a number
of services that can help you build a more effective and flexible
financial program. Here are some of the ways you can use these
privileges to make the most of your Putnam mutual fund
investment.
SYSTEMATIC INVESTMENT PLAN
Invest as much as you wish ($25 or more) on any day of the month
except for the 29th, 30th, or 31st. The amount will be
automatically transferred from your checking or savings account.
SYSTEMATIC WITHDRAWAL
Make regular withdrawals of $50 or more monthly, quarterly, or
semiannually from an account valued at $10,000 or more. You may
establish your withdrawal on any day of the month except for the
29th, 30th, or 31st.
SYSTEMATIC EXCHANGE
Transfer assets automatically from one Putnam account to another
on a regular, prearranged basis. There is no additional charge
for this service.
FREE EXCHANGE PRIVILEGE
Exchange money between Putnam funds in the same class of shares
without charge. The exchange privilege allows you to adjust your
investments as your objectives change. A signature guarantee is
required for exchanges of more than $500,000.
DIVIDENDS PLUS
Diversify your portfolio by investing dividends and other
distributions from one Putnam fund automatically into another at
net asset value.
STATEMENT OF INTENTION
To reduce a front-end sales charge, you agree to invest a minimum
dollar amount over 13 months. Depending on your fund, the
minimum is $25,000, $50,000, or $100,000. Whenever you make an
investment under this arrangement, you or your investment advisor
should notify Putnam that a Statement of Intention is in effect.
Investors may not maintain, within the same fund, simultaneous
plans for systematic investment or exchange and systematic
withdrawal or exchange. These privileges are subject to change
or termination.
<PAGE>
For more information about any of these or other services and
privileges, call your investment advisor or a Putnam customer
service representative toll free at 1-800-225-1581.
<PAGE>
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
PUTNAM CALIFORNIA INTERMEDIATE TAX EXEMPT FUND
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND
One Post Office Square
Boston, MA 02109
FUND INFORMATION:
INVESTMENT MANAGER
Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
INVESTOR SERVICING AGENT
Putnam Investor Services
Mailing address:
P.O. Box 41203
Providence, RI 02940-1203
CUSTODIAN
Putnam Fiduciary Trust Company
One Post Office Square
Boston, MA 02109
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110
PUTNAMINVESTMENTS
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581
<PAGE>
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 1, 1995
This Statement of Additional Information is not a Prospectus and
is only authorized for distribution when accompanied or preceded
by the Prospectus of Putnam California Tax Exempt Income Trust
(the "Trust") and Putnam California Tax Exempt Money Market
Fund (the "Money Market Fund") dated February 1, 1995 , as
revised from time to time. This Statement contains information
which may be useful to investors but which is not included in the
Prospectus. The Trust currently offers two portfolio
series : Putnam California Tax Exempt Income Fund (the
"Income Fund") and Putnam California Intermediate Tax Exempt Fund
(the "Intermediate Fund"). The Income Fund, Intermediate Fund
and Money Market Fund are referred to in this Statement as the
"Funds." If a Fund has more than one current Prospectus,
each reference to the Prospectus in this Statement shall include
all such Fund's Prospectuses, unless otherwise noted. The
Statement should be read together with the applicable Prospectus.
Investors may obtain a free copy of the applicable Prospectus
from Putnam Investor Services, Mailing address: P.O. Box 41203,
Providence, RI 02940-1203.
Part I of this Statement contains specific information about the
Funds . Part II contains information about the
Funds and the other Putnam funds.
<PAGE>
TABLE OF CONTENTS
PART I PAGE
CALIFORNIA TAX EXEMPT SECURITIES. . . . . . . . . . . . . . . .I-3
SECURITIES RATINGS . . . . . . . . . . . . . . . . . . .I-5
INVESTMENT RESTRICTIONS OF THE FUNDS. . . . . . . . . . . . . .I-7
FUND CHARGES AND EXPENSES . . . . . . . . . . . . . . . . . . I-12
AMORTIZED COST VALUATION AND DAILY DIVIDENDS (THE MONEY
MARKET FUND) . . . . . . . . . . . . . . . . . . . . . . . . I-20
INVESTMENT PERFORMANCE OF THE FUNDS . . . . . . . . . I-
22
TAXES . . . . . . . . . . . . . . . . . . . . . . . . I- 33
EQUIVALENT YIELDS: TAX-EXEMPT VERSUS TAXABLE SECURITIES. . . I-35
ADDITIONAL OFFICERS OF THE TRUST AND THE MONEY MARKET
FUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-36
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS. . . I- 37
PART II
MISCELLANEOUS INVESTMENT PRACTICES. . . . . . . . . . . . . . II-1
TAXES . . . . . . . . . . . . . . . . . . . . . .II- 22
MANAGEMENT OF THE FUND. . . . . . . . . . . . . . . . II- 27
DETERMINATION OF NET ASSET VALUE. . . . . . . . . . . II- 36
HOW TO BUY SHARES . . . . . . . . . . . . . . . . . . . . . .II-38
DISTRIBUTION PLAN . . . . . . . . . . . . . . . . . . II- 49
INVESTOR SERVICES . . . . . . . . . . . . . . . . . . II- 50
SIGNATURE GUARANTEES. . . . . . . . . . . . . . . . . II- 56
SUSPENSION OF REDEMPTIONS . . . . . . . . . . . . . . II- 56
SHAREHOLDER LIABILITY . . . . . . . . . . . . . . . . II- 56
STANDARD PERFORMANCE MEASURES . . . . . . . . . . . . II- 57
COMPARISON OF PORTFOLIO PERFORMANCE . . . . . . . . . II- 58
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . II- 63
<PAGE>
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND
STATEMENT OF ADDITIONAL INFORMATION
PART I
CALIFORNIA TAX EXEMPT SECURITIES
GENERAL DESCRIPTION. As used in the Prospectus and in this
Statement, the term "California Tax Exempt Securities" includes
debt obligations issued by California, its political
subdivisions (for example, counties, cities, towns, villages,
districts and authorities) and their agencies,
instrumentalities or other governmental units, the interest
from which is, in the opinion of bond counsel, exempt from
federal income tax and California personal income tax .
Such obligations are issued to obtain funds for various public
purposes, including the construction of a wide range of public
facilities, such as airports, bridges, highways, housing,
hospitals, mass transportation, schools, streets , and
water and sewer works. Other public purposes for which
California Tax Exempt Securities may be issued include the
refunding of outstanding obligations or obtaining funds for
general operating expenses. Short-term California Tax Exempt
Securities are generally issued by state and local governments
and public authorities as interim financing in anticipation of
tax collections, revenue receipts, or bond sales to finance such
public purposes. In addition, certain types of "private
activity" bonds may be issued by public authorities to finance
such projects as privately operated housing facilities and
certain local facilities for water supply, gas, electricity or
sewage or solid waste disposal, student loans, or the obtaining
of funds to lend to public or private institutions for the
construction of facilities such as educational, hospital and
housing facilities. Such obligations are included within the
term California Tax Exempt Securities if the interest paid
thereon is, in the opinion of bond counsel, exempt from federal
income tax and California personal income tax (such
interest may, however, be subject to federal alternative minimum
tax). Other types of private activity bonds, the proceeds of
which are used for the construction, repair or improvement of, or
to obtain equipment for, privately operated industrial or
commercial facilities, may constitute California Tax Exempt
Securities, although the current federal tax laws place
substantial limitations on the size of such issues. California
Tax Exempt Securities also include short-term discount notes
(tax-exempt commercial paper), which are promissory notes issued
by municipalities to enhance their cash flows.
<PAGE>
STAND-BY COMMITMENTS. When a Fund purchases California Tax
Exempt Securities, it has the authority to acquire stand-by
commitments from banks and broker-dealers with respect to those
California Tax Exempt Securities. A stand-by commitment may be
considered a security independent of the California Tax Exempt
Security to which it relates. The amount payable by a bank or
dealer during the time a stand-by commitment is exercisable,
absent unusual circumstances, would be substantially the same as
the market value of the underlying California Tax Exempt Security
to a third party at any time. Each Fund expects that stand-by
commitments generally will be available without the payment of
direct or indirect consideration. None of the Funds
expect to assign any value to stand-by commitments.
YIELDS. The yields on California Tax Exempt Securities depend on
a variety of factors, including general money market conditions,
effective marginal tax rates, the financial condition of the
issuer, general conditions of the California Tax Exempt Security
market, the size of a particular offering, the maturity of the
obligation and the rating of the issue. The ratings of Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's
Corporation ("Standard & Poor's") and Fitch Investors Service,
Inc. ("Fitch") represent their opinions as to the quality of the
California Tax Exempt Securities which they undertake to rate.
It should be emphasized, however, that ratings are general and
are not absolute standards of quality. Consequently, California
Tax Exempt Securities with the same maturity and interest rate
but with different ratings may have the same yield. Yield
disparities may occur for reasons not directly related to the
investment quality of particular issues or the general movement
of interest rates, due to such factors as changes in the overall
demand or supply of various types of California Tax Exempt
Securities or changes in the investment objectives of investors.
Subsequent to purchase by a Fund, an issue of California Tax
Exempt Securities or other investments may cease to be rated or
its rating may be reduced below the minimum rating required for
purchase by such Fund. Neither event will require the
elimination of an investment from the Fund's portfolio, but
Putnam Management will consider such an event in its
determination of whether the Fund should continue to hold an
investment in its portfolio.
"MORAL OBLIGATION" BONDS. None of the Funds currently
intends to invest in so-called "moral obligation" bonds, where
repayment is backed by a moral commitment of an entity other than
the issuer, unless the credit of the issuer itself, without
regard to the "moral obligation , " meets the
investment criteria established for investments by such Fund.
<PAGE>
ADDITIONAL RISKS. Securities in which the Funds may invest,
including California Tax Exempt Securities, are subject to the
provisions of bankruptcy, insolvency and other laws affecting the
rights and remedies of creditors, such as the federal Bankruptcy
Code, and laws, if any, which may be enacted by Congress or
state legislatures extending the time for payment of
principal or interest, or both, or imposing other constraints
upon enforcement of such obligations. There is also the
possibility that as a result of litigation or other conditions
the power or ability of issuers to meet their obligations for the
payment of interest and principal on their California Tax Exempt
Securities may be materially affected.
From time to time, proposals have been introduced before Congress
for the purpose of restricting or eliminating the federal income
tax exemption for interest on debt obligations issued by states
and their political subdivisions. Federal tax laws limit
the types and amounts of tax-exempt bonds issuable for certain
purposes, especially for industrial development bonds and
private activity bonds . Such limits may affect the future
supply and yields of these types of California Tax Exempt
Securities. Further proposals limiting the issuance of tax-
exempt bonds may well be introduced in the future. If it
appeared that the availability of California Tax Exempt
Securities for investment by a Fund and the value of that Fund's
portfolio could be materially affected by such changes in law,
the Trustees would reevaluate its investment objectives and
policies and consider changes in the structure of the Fund or its
dissolution.
SECURITIES RATINGS
The following rating services describe rated securities
as follows :
MOODY'S INVESTORS SERVICE, INC.
Aaa -- Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt-edge". Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
<PAGE>
Aa -- Bonds which are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise what
are generally known as high-grade bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger
than in Aaa securities.
A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest
are considered adequate but elements may be present which suggest
a susceptibility to impairment sometime in the future.
Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Ba -- Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position
characterizes bonds in this class.
STANDARD & POOR'S CORPORATION
AAA -- Debt rated AAA has the highest rating assigned by Standard
& Poor's. Capacity to pay interest and repay principal is
extremely strong.
AA -- Debt rated AA has a very strong capacity to pay interest
and repay principal and differs from the higher rated issues only
in small degree.
A -- Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
debt in higher rated categories.
BBB -- Debt rated BBB is regarded as having an adequate capacity
to pay interest and repay principal. Whereas it normally
exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in
this category than in higher rated categories.
<PAGE>
BB -- Debt rated BB is regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the
obligation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
FITCH INVESTORS SERVICE, INC.:
AAA - Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability
to pay interest and repay principal, which is unlikely to be
affected by reasonably foreseeable events.
AA - Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds
rated AAA.
A - Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable
to adverse changes in economic conditions and circumstances than
bonds with higher ratings.
BBB - Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in
economic conditions and circumstances, however, are more likely
to have adverse impact on these bonds, and therefore impair
timely payment. The likelihood that the ratings of these bonds
will fall below investment grade is higher than for bonds with
higher ratings.
BB - Bonds considered to be speculative. The obligor's ability
to pay interest and repay principal may be affected over time by
adverse economic changes. However, business and financial
alternatives can be identified which could assist the obligor in
satisfying its debt service requirements.
INVESTMENT RESTRICTIONS OF THE FUNDS
THE INCOME AND MONEY MARKET FUNDS
AS FUNDAMENTAL INVESTMENT RESTRICTIONS, WHICH MAY NOT BE CHANGED
WITHOUT A VOTE OF A MAJORITY OF ITS OUTSTANDING VOTING
SECURITIES, EACH OF THE INCOME AND MONEY MARKET
FUNDS MAY NOT AND WILL NOT:
<PAGE>
(1) Borrow money in excess of 10% of the value (taken at the
lower of cost or current value) of its total assets (not
including the amount borrowed) at the time the borrowing is made,
and then only from banks as a temporary measure to facilitate the
meeting of redemption requests (not for leverage) which might
otherwise require the untimely disposition of portfolio
investments or for extraordinary or emergency purposes. Such
borrowings will be repaid before any additional investments are
purchased.
(2) Pledge, hypothecate, mortgage, or otherwise encumber its
assets in excess of 10% of its total assets (taken at the lower
of cost or current value) in connection with borrowings permitted
by restriction 1 above (relating to permitted bank borrowings).
(3) Purchase securities on margin, except such short-term
credits as may be necessary for the clearance of purchases and
sales of securities, but it may make margin payments in
connection with financial futures contracts or related options.
(4) Make short sales of securities or maintain a short position
for the account of the Fund unless at all times when a short
position is open it owns an equal amount of such securities or
owns securities which, without payment of any further
consideration, are convertible into or exchangeable for
securities of the same issue as, and equal in amount to, the
securities sold short.
(5) Underwrite securities issued by other persons except to the
extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under certain
federal securities laws.
(6) Purchase or sell real estate, although it may purchase
securities which are secured by or represent interests in real
estate.
(7) Purchase or sell commodities or commodity contracts except
financial futures contracts and related options.
(8) Make loans, except by purchase of debt obligations in which
the Fund may invest consistent with its investment policies, and
through repurchase agreements.
(9) 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 own more than 5%.
<PAGE>
(10) 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 or by
the State of California or its political subdivisions.
(11) Purchase securities which are restricted as to resale, if,
as a result, such investments would exceed 15% of the value of
the Fund's net assets, excluding restricted securities that have
been determined by the Trustees of the Fund (or the person
designated by them to make such determinations) to be readily
marketable.
(12) Purchase securities (other than securities of the U.S.
government, its agencies or instrumentalities or the State of
California or its political subdivisions) if as a result of such
purchase more than 25% of the Fund's total assets would be
invested in any one industry.
(13) Acquire more than 10% of the voting securities of any
issuer.
(14) Issue any class of securities which is senior to the Fund's
shares of beneficial interest.
IT IS CONTRARY TO THE PRESENT POLICY OF EACH OF THE INCOME
AND MONEY MARKET FUNDS , WHICH POLICY MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL, TO:
(1) Invest in securities of registered open-end investment
companies, except as they may be acquired as part of a merger,
consolidation or acquisition of assets or by purchases in the
open market involving only customary brokers' commissions.
(2) Engage in puts, calls, straddles, spreads or any combination
thereof, except that the Fund may buy and sell call and put
options (and any combination) thereof on securities, on financial
futures contracts and on securities indices and may, in
connection with the purchase of fixed-income securities, acquire
attached warrants or other rights to subscribe for securities of
companies issuing such fixed-income securities or securities of
parents or subsidiaries of such companies. (The Fund's
investment policies do not currently permit them to exercise
warrants or rights with respect to equity securities.)
<PAGE>
(3) Invest in securities of any issuer if the party responsible
for payment, together with any predecessor, has been in operation
for less than three years, and, as a result of the investment,
the aggregate of such investments would exceed 5% of the value of
the Fund's net assets; provided, however, that this restriction
shall not apply to any obligation of the United States or its
agencies or for the payment of which is pledged the faith, credit
and taxing power of any person authorized to issue California Tax
Exempt Securities.
(4) Buy or sell oil, gas or other mineral leases, rights or
royalty contracts.
(5) Invest in (a) securities which at the time of such
investment are not readily marketable, (b) securities restricted
as to resale (excluding securities determined by the Trustees of
the Fund (or the person designated by Trustees of the Trust to
make such determinations) to be readily marketable), and (c)
repurchase agreements maturing in more than seven days, if, as a
result, more than 15% of the Fund's net assets (taken at current
value) would be invested in securities described in (a), (b) and
(c) above.
THE INTERMEDIATE FUND
AS FUNDAMENTAL INVESTMENT RESTRICTIONS, WHICH MAY NOT BE CHANGED
WITHOUT A VOTE OF A MAJORITY OF ITS OUTSTANDING VOTING
SECURITIES, THE INTERMEDIATE FUND MAY NOT AND WILL NOT:
(1) Borrow money in excess of 10% of the value (taken at the
lower of cost or current value) of its total assets (not
including the amount borrowed) at the time the borrowing is made,
and then only from banks as a temporary measure to facilitate the
meeting of redemption requests (not for leverage) which might
otherwise require the untimely disposition of portfolio
investments or for extraordinary or emergency purposes. Such
borrowings will be repaid before any additional investments are
purchased.
(2) Underwrite securities issued by other persons except to the
extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under certain
federal securities laws.
(3) Purchase or sell real estate, although it may purchase
securities of issuers which deal in real estate, securities which
are secured by interests in real estate, and securities which
represent interests in real estate, and it may acquire and
dispose of real estate or interests in real estate acquired
through the exercise of its rights as a holder of debt
obligations secured by real estate or interests therein.
<PAGE>
(4) Purchase or sell commodities or commodity contracts, except
that the Fund may purchase and sell financial futures contracts
and options.
(5) 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 its total assets (taken at current value) or through the
lending of its portfolio securities with respect to not more than
25% of its total assets (taken at current value).
(6) Purchase securities (other than securities of the U.S.
government, its agencies or instrumentalities or California Tax
Exempt Securities, except obligations backed only by the assets
and revenues of nongovernmental issuers) if, as a result of such
purchase, more than 25% of the Fund's total assets would be
invested in any one industry.
(7) Issue any class of securities which is senior to the Fund's
shares of beneficial interest.
IT IS CONTRARY TO THE INTERMEDIATE FUND'S PRESENT POLICY, WHICH
MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL, TO:
(1) Invest in (a) securities which at the time of such
investment are not readily marketable, (b) securities restricted
as to resale (excluding securities determined by the Trustees of
the Trust (or the person designated by the Trustees of the Trust
to make such determinations) to be readily marketable), and (c)
repurchase agreements maturing in more than seven days, if, as a
result, more than 15% of the Fund's net assets (taken at current
value) would be invested in securities described in (a), (b) and
(c) above.
(2) Invest in securities of registered open-end investment
companies, except as they may be acquired as part of a merger,
consolidation or acquisition of assets or by purchases in the
open market involving only customary brokers' commissions.
(3) Invest in securities of any issuer if the party responsible
for payment, together with any predecessor, has been in operation
for less than three years, and, as a result of the investment,
the aggregate of such investments would exceed 5% of the value of
the Fund's net assets; provided, however, that this restriction
shall not apply to any obligation of the United States or its
agencies or for the payment of which is pledged the faith, credit
and taxing power of any person authorized to issue California Tax
Exempt Securities.
-----------------------
<PAGE>
GENERAL
Although certain of the Funds' fundamental investment
restrictions permit the Funds to borrow money to a limited
extent, the Funds do not currently intend to do so and none
of the Funds did do so last year.
All percentage limitations on investments will apply at the time
of the making of an investment and shall not be considered
violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment.
The Investment Company Act of 1940 provides that a "vote of a
majority of the outstanding voting securities" of a Fund means
the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of such Fund or (2) 67% or more of the shares
present at a meeting if more than 50% of the outstanding shares
are represented at the meeting in person or by proxy.
FUND CHARGES AND EXPENSES
THE TRUST
TRUSTEE FEES
<TABLE>
<CAPTION>
The Trust pays each Trustee 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 Compensation Committee, which consists solely of Trustees not
affiliated with Putnam Management and is responsible for recommending Trustee
compensation, estimates that the Committee and Trustee meeting time together with the
appropriate preparation requires the equivalent of at least three business days per
Trustee meeting. The fees paid to each Trustee by the Trust and by all of the Putnam
funds are shown below:
RETIREMENT
BENEFITS TOTAL
YEAR FIRST AGGREGATE ACCRUED AS COMPENSATION
ELECTED COMPENSATION PART OF TRUST'S FROM ALL
TRUSTEES AS A TRUSTEE FROM THE TRUST* EXPENSES PUTNAM FUNDS**
- ---------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
Jameson A. Baxter 1994 $4,002.91 $0 $135,850.02
Hans H. Estin 1972 5,409.13 0 141,850.02
John A. Hill 1985 5,489.34 0 143,850.01
Elizabeth T. Kennan 1992 5,409.13 0 141,850.02
Lawrence J. Lasser 1992 5,409.13 0 141,850.02
Robert E. Patterson 1984 5,523.49 0 144,850.02
Donald S. Perkins 1982 5,339.77 0 139,850.02
William F. Pounds 1971 5,488.81 0 143,850.02
George Putnam 1964 5,409.13 0 141,850.02
George Putnam, III 1984 5,409.13 0 141,850.02
A.J.C. Smith 1986 5,268.53 0 137,850.02
W. Nicholas Thorndike 1992 5,523.49 0 144,850.02
- ----------------------------------------------------------------------------------
* Reflects amounts paid by the Trust for its fiscal year ended September 30, 1994.
Includes an annual retainer and, in the case of all Trustees other than Messrs.
Lasser and Putnam, an attendance fee for each meeting attended.
** Reflects total payments received from all Putnam funds in the most recent calendar
year. As of December 31, 1994, there were 72 funds in the Putnam family.
</TABLE>The Trust's Trustees have approved Retirement Guidelines for
Trustees of the Putnam funds. These guidelines provide generally
that a Trustee who retires after reaching age 72 and who has at
least 10 years of continuous service will be eligible to receive
a retirement benefit for each Putnam fund for which he or she
served as a Trustee. The amount and form of such benefit is
subject to determination annually by the Trustees and, unless
otherwise determined by the Trustees, will be an annual cash
benefit equal to one half of the Trustee retainer fees paid by
the Trust at the time of retirement. Several retired Trustees
are currently receiving benefits pursuant to the Guidelines and
it is anticipated that the current Trustees of the Trust will
receive similar benefits upon their retirement. A Trustee who
retired in the most recent calendar year and was eligible to
receive benefits under these Guidelines would have received an
annual benefit of $60,425, based upon the aggregate retainer fees
paid by the Putnam funds for such year. The Trustees of the
Trust reserve the right to amend or terminate such Guidelines and
the related payments at any time, and may modify or waive the
foregoing eligibility requirements when deemed appropriate.
For additional information concerning the Trust's Trustees, see
"Management of the Fund" in Part II of this Statement of
Additional Information.
ADMINISTRATIVE EXPENSE REIMBURSEMENT
The Income and Intermediate Funds reimbursed Putnam Management
$50,500 and $51, respectively, for administrative services in
fiscal 1994, including $46,613 and $47, respectively, for the
compensation of certain officers of the Trust and their staff and
contributions to the Putnam Investments, Inc. Profit Sharing
Retirement Plan for their benefit.
THE INCOME FUND
MANAGEMENT FEES
Under a Management Contract dated July 11, 1991, the Income Fund
pays a quarterly fee to Putnam Management based on the average
net assets of the Fund, as determined at the close of each
business day during the quarter, at an annual rate of 0.60% of
the first $500 million of the Fund's average net assets, 0.50% of
the next $500 million, 0.45% of the next $500 million and 0.40%
of any amount over $1.5 billion. For its 1992 ,
1993 and 1994 fiscal years, pursuant to the Management
Contract , the Income Fund incurred fees of
$12,096,522 , $14,851,520 and $16,808,364 ,
respectively.
<PAGE>
BROKERAGE COMMISSIONS
Most purchases and sales of portfolio investments are with
underwriters of or dealers acting as principal. Accordingly, the
Income Fund does not ordinarily pay significant brokerage
commissions. During fiscal 1992 , 1993 and
1994 , the Income Fund paid no brokerage commissions on agency
transactions. In fiscal 1992 , 1993 and
1994 the Income Fund paid underwriting commissions
aggregating $982,950 , $3,668,723, and
$3,853,206 respectively, on underwritten transactions.
OWNERSHIP OF FUND SHARES
At December 31, 1994 the officers and Trustees of the
Trust as a group owned less than 1% of the outstanding shares of
any class of the Income Fund, and to the knowledge of the
Trust no person owned of record or beneficially 5% or more
of the shares of any class of the Income Fund, except that
Merrill Lynch, Pierce, Fenner & Smith, Inc., P.O. Box 30561, New
Brunswick, New Jersey, 08989, owned of record 10.3% of the
Class A shares of the Income Fund and 9.5% of the Class B
shares of the Income Fund. No Class M shares were outstanding
at December 31, 1994.
CLASS A SALES CHARGES, CONTINGENT DEFERRED SALES CHARGES AND
12B-1 FEES
During fiscal 1992 , 1993 and 1994 , Putnam
Mutual Funds received $21,288,820, $21,381,778,
and $10,267,664, respectively, in sales charges on sales
of Class A shares of the Income Fund, of which it retained
$1,381,153, $1,027,363, and $673,215,
respectively, after allowance of dealer concessions. During
fiscal 1992, Putnam Mutual Funds received no contingent
deferred sales charges upon redemptions of Class A shares of the
Income Fund. During fiscal 1993 and 1994 , Putnam Mutual
Funds received $69,676 and $189,771, respectively, in
contingent deferred sales charges upon redemptions of Class A
shares of the Income Fund. During fiscal 1994 , the Income
Fund incurred $6,909,728 in 12b-1 fees to Putnam Mutual
Funds pursuant to the Income Fund's Class A Distribution Plan.
CLASS B CONTINGENT DEFERRED SALES CHARGES AND 12B-1 FEES
During fiscal 1993 and 1994 , Putnam Mutual Funds received
$97,829 , and $777,478, respectively, in contingent
deferred sales charges upon redemptions of Class B shares of the
Income Fund. During fiscal 1994 , the Income Fund incurred
$2,562,554 in 12b-1 fees to Putnam Mutual Funds pursuant
to the Income Fund's Class B Distribution Plan.
INVESTOR SERVICING FEES AND CUSTODY FEES AND EXPENSES
During the 1994 fiscal year, the Income Fund incurred
$590,712 in fees and out-of-pocket expenses for investor
servicing and custody services provided by Putnam Fiduciary Trust
Company.
THE INTERMEDIATE FUND
MANAGEMENT FEES
Under a Management Contract dated May 6, 1994, the Intermediate
Fund pays a quarterly fee to Putnam Management based on the
average net assets of the Fund, as determined at the close of
each business day during the quarter, at an annual rate of 0.60%
of the first $500 million of the Fund's average net
assets, 0.50% of the next $500 million, 0.45% of the next $500
million and 0.40% of any amount over $1.5 billion. For its
fiscal 1994 period, pursuant to the Management Contract, the Fund
paid no net fees, reflecting a reduction of $16,410, pursuant to
an expense limitation then in effect.
EXPENSE LIMITATION. In order to limit the Intermediate Fund's
expenses during its start-up period, Putnam Management has agreed
to limit its compensation (and, to the extent necessary,
bear other expenses of the Fund) until the earlier of the
date the net assets of the Fund exceed $100,000,000 or June 1,
1995, to the extent that expenses of the Fund (exclusive of
brokerage, interest, taxes, deferred organizational and
extraordinary expenses, and payments under the Fund's
Distribution Plans) exceed an annual rate of 0.65% of the
Fund's average net assets. For the purpose of determining any
such limitation on Putnam Management's compensation,
expenses of the Fund shall not reflect the application of
commissions or cash management credits that may reduce designated
Fund expenses. With Trustee approval, this expense limitation
may be terminated earlier, in which event shareholders would be
notified and this Statement of Additional Information would be
revised.
BROKERAGE COMMISSIONS
Most purchases and sales of portfolio investments are with
underwriters of or dealers acting as principal. Accordingly, the
Intermediate Fund does not ordinarily pay significant brokerage
commissions. During fiscal 1994, the Intermediate Fund paid no
brokerage commissions on agency transactions. In fiscal 1994,
the Intermediate Fund paid no underwriting commissions.
OWNERSHIP OF FUND SHARES
At December 31, 1994, the officers and Trustees of the Trust
as a group owned less than 1% of the outstanding shares of any
class of the Intermediate Fund, and to the knowledge of the Trust
no person owned of record or beneficially 5% or more of the
shares of any class of the Intermediate Fund, except that Paine
Webber Inc., 1000 Harbor Boulevard, Weehawken, NJ 07087, Kathleen
Kohn Fetzer, Trustee of the Kathleen Kohn Fetzer Living Trust,
1150 Bel Arbres Road, Red Wood Valley, CA, 95470-9695, Harriet
Kostic 301 Tamalpais Avenue, Mill Valley, CA, 94941-1084 and John
H. Kohn 1150A Bel Arbres Road Red Wood Valley , CA, 95470-9695,
owned of record 12.7%, 8.8%, 6.8% and 5.5%, respectively, of the
Class A shares of the Intermediate Fund; and, Dorothy Cook
Trustee of the Cook Family Trust, 80 Hollins Drive, Santa Cruz,
CA, 95060-1805, BA Investment Services Inc., 2000 Broadway,
Oakland, CA, 94612, Smith Barney Inc., 1345 Avenue of the
Americas, New York City, NY, 10105, Eugene G. Sidamonidze Trustee
of the Sidamonidze Family Trust, 2533 Bethards Drive, Santa Rosa,
CA, 95405-8719, and Merrill Lynch , Pierce, Fenner & Smith, Inc.,
4800 Deer Lake Drive, Jacksonville, FL, 32246, owned of record
8.8%, 7.2%, 7.1%, 5.0% and 5.0%, respectively, of the Class B
shares of the Intermediate Fund.
CLASS A SALES CHARGES, CONTINGENT DEFERRED SALES CHARGES AND
12B-1 FEES
During fiscal 1994, Putnam Mutual Funds received $34,853, in
sales charges on sales of Class A shares of the Intermediate
Fund, of which it retained $3,205 after allowance of dealer
concessions. During fiscal 1994, Putnam Mutual Funds received no
contingent deferred sales charges upon redemptions of Class A
shares of the Intermediate Fund. During fiscal 1994, the Income
Fund incurred $1,405 in 12b-1 fees to Putnam Mutual Funds
pursuant to the Intermediate Fund's Class A Distribution Plan.
CLASS B CONTINGENT DEFERRED SALES CHARGES AND 12B-1 FEES
During fiscal 1994, Putnam Mutual Funds received $1,822 in
contingent deferred sales charges upon redemptions of Class B
shares of the Intermediate Fund. During fiscal 1994, the
Intermediate Fund incurred $1,418 in 12b-1 fees to Putnam Mutual
Funds pursuant to the Intermediate Fund's Class B Distribution
Plan.
INVESTOR SERVICING FEES AND CUSTODY FEES AND EXPENSES
During the 1994 fiscal year, after receipt of net custody credits
earned by the Fund, the Intermediate Fund incurred no fees or
out-of-pocket expenses for investor servicing and custody
services provided by Putnam Fiduciary Trust Company.
THE MONEY MARKET FUND
MANAGEMENT FEES
Under a Management Contract dated July 9, 1992, the Money Market
Fund pays a quarterly fee to Putnam Management based on the
average net assets of the Money Market Fund, as determined at the
close of each business day during the quarter, at an annual rate
of 0.45% of the first $500 million of the Fund's average net
assets, 0.35% of the next $500 million, 0.30% of the next $500
million and 0.25% of any amount over $1.5 billion. For its 1992,
1993 and 1994 fiscal years, pursuant to the Management Contract
and a management contract in effect prior to July 9, 1992 under
which the management fee payable to Putnam Management was paid at
the rate of 0.55% of the Fund's average net assets, the Money
Market Fund incurred fees of $169,685, $241,375, and $217,108,
respectively. (This reflects a reduction of $171,430 pursuant to
expense limitations in effect during fiscal 1992.)
<PAGE>
BROKERAGE COMMISSIONS
It is anticipated that most purchases and sales of portfolio
investments will be with the issuer or with major dealers in
money market instruments acting as principal. Accordingly, it is
not anticipated that the Money Market Fund will pay significant
brokerage commissions. During fiscal 1992, 1993 and 1994, the
Money Market Fund paid no brokerage commissions. In underwritten
offerings, the price paid by the Money Market Fund includes a
disclosed, fixed commission or discount retained by the
underwriter. There is generally no stated commission in the case
of securities purchased from or sold to dealers, but the prices
of such securities usually include an undisclosed dealer's mark-
up or mark-down. During fiscal 1992, 1993 and 1994, the Money
Market Fund paid no underwriting commissions.
ADMINISTRATIVE EXPENSE REIMBURSEMENT
The Money Market Fund reimbursed Putnam Management $3,245 for
administrative services in fiscal 1994, including $2,985 for the
compensation of certain officers of the Fund and their staff and
contributions to the Putnam Investments, Inc. Profit Sharing
Retirement Plan for their benefit.
QUALIFICATION AND REGISTRATION FEES
The Money Market Fund pays all fees for its qualification or
registration as an issuer or broker-dealer or for registration of
its shares in states in connection with such qualifications or
registrations.
TRUSTEE FEES
<TABLE>
<CAPTION>
The Fund pays each Trustee 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
Compensation Committee, which consists solely of Trustees not affiliated with Putnam
Management and is responsible for recommending Trustee compensation, estimates that the
Committee and Trustee meeting time together with the appropriate preparation requires the
equivalent of at least three business days per Trustee meeting. The fees paid to each
Trustee by the Fund and by all of the Putnam funds are shown below:
RETIREMENT
BENEFITS TOTAL
YEAR FIRST AGGREGATE ACCRUED AS COMPENSATION
ELECTED COMPENSATION PART OF FUND'S FROM ALL
TRUSTEES AS A TRUSTEE FROM THE FUND* EXPENSES PUTNAM FUNDS**
- ---------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
Jameson A. Baxter 1994 $324.59 $0 $135,850.02
Hans H. Estin 1972 438.25 0 141,850.02
John A. Hill 1985 442.32 0 143,850.01
Elizabeth T. Kennan 1992 438.25 0 141,850.02
Lawrence J. Lasser 1992 438.25 0 141,850.02
Robert E. Patterson 1984 443.83 0 144,850.02
Donald S. Perkins 1982 434.81 0 139,850.02
William F. Pounds 1971 442.11 0 143,850.02
George Putnam 1964 438.25 0 141,850.02
George Putnam, III 1984 438.25 0 141,850.02
A.J.C. Smith 1986 431.93 0 137,850.02
W. Nicholas Thorndike 1992 443.83 0 144,850.02
- ----------------------------------------------------------------------------------
* Reflects amounts paid by the Fund for its fiscal year ended September 30, 1994.
Includes an annual retainer and, in the case of all Trustees other than Messrs.
Lasser and Putnam, an attendance fee for each meeting attended.
** Reflects total payments received from all Putnam funds in the most recent calendar
year. As of December 31, 1994, there were 72 funds in the Putnam family.
</TABLE>The Fund's Trustees have approved Retirement Guidelines for
Trustees of the Putnam funds. These guidelines provide generally
that a Trustee who retires after reaching age 72 and who has at
least 10 years of continuous service will be eligible to receive
a retirement benefit for each Putnam fund for which he or she
served as a Trustee. The amount and form of such benefit is
subject to determination annually by the Trustees and, unless
otherwise determined by the Trustees, will be an annual cash
benefit equal to one half of the Trustee retainer fees paid by
the Fund at the time of retirement. Several retired Trustees are
currently receiving benefits pursuant to the Guidelines and it is
anticipated that the current Trustees of the Fund will receive
similar benefits upon their retirement. A Trustee who retired in
the most recent calendar year and was eligible to receive
benefits under these Guidelines would have received an annual
benefit of $60,425, based upon the aggregate retainer fees paid
by the Putnam funds for such year. The Trustees of the Fund
reserve the right to amend or terminate such Guidelines and the
related payments at any time, and may modify or waive the
foregoing eligibility requirements when deemed appropriate.
For additional information concerning the Fund's Trustees, see
"Management of the Fund" in Part II of this Statement of
Additional Information.
OWNERSHIP OF FUND SHARES
At December 31, 1994, the officers and Trustees of the Money
Market Fund as a group owned less than 1% of the outstanding
shares of the Money Market Fund, and to the knowledge of the
Money Market Fund no person owned of record or beneficially 5% or
more of the shares of the Money Market Fund.
SALES CHARGES AND 12B-1 FEES
Shares are distributed directly by the Money Market Fund through
Putnam Mutual Funds, which acts as principal underwriter for the
Money Market Fund. During fiscal 1994, the Money Market Fund
incurred $4,724 in 12b-1 fees to Putnam Mutual Funds pursuant to
the Money Market Fund's Distribution Plan.
INVESTOR SERVICING AND CUSTODY FEES AND EXPENSES
During the 1994 fiscal year, after receipt of net custody credits
earned by the Fund, the Money Market Fund incurred no fees or
out-of-pocket expenses for investor servicing and custody
services provided by Putnam Fiduciary Trust Company.
AMORTIZED COST VALUATION AND DAILY DIVIDENDS (THE MONEY MARKET
FUND)
The valuation of the Money Market Fund's portfolio instruments at
amortized cost is permitted in accordance with Securities and
Exchange Commission Rule 2a-7 and certain procedures adopted by
the Trustees. The amortized cost of an instrument is determined
by valuing it at cost originally and thereafter amortizing any
discount or premium from its face value at a constant rate until
maturity, regardless of the effect of fluctuating interest rates
on the market value of the instrument. Although the amortized
cost method provides certainty in valuation, it may result at
times in determinations of value that are higher or lower than
the price the Money Market Fund would receive if the instruments
were sold. Consequently, in the absence of circumstances
described below, changes in the market value of portfolio
instruments during periods of rising or falling interest rates
will not be reflected either in the computation of net asset
value of the Money Market Fund's portfolio or in the daily
computation of net income. Under procedures adopted by the
Trustees, the Money Market Fund must maintain a dollar-weighted
average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of 397 days or less and
invest in securities determined to be of high quality with
minimal credit risks. The Trustees have also established
procedures designed to stabilize, to the extent reasonably
possible, the Money Market Fund's price per share as computed for
the purpose of distribution, redemption and repurchase at $1.00.
Such procedures will include review of the Money Market Fund's
portfolio holdings by the Trustees, at such intervals as they may
deem appropriate, to determine whether the Money Market Fund's
net asset value calculated by using readily available market
quotations deviates from $1.00 per share, and, if so, whether
such deviation may result in material dilution or is otherwise
unfair to existing shareholders. In the event the Trustees
determine that such a deviation exists, they will take such
corrective action as they regard as necessary and appropriate,
including the sale of portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio
maturity; withholding dividends; redemption of shares in kind; or
establishing a net asset value per share by using readily
available market quotations.
Since the net income of the Money Market Fund is declared as a
dividend each time it is determined, the net asset value per
share of the Money Market Fund remains at $1.00 per share
immediately after such determination and dividend declaration.
Any increase in the value of a shareholder's investment in the
Money Market Fund representing the reinvestment of dividend
income is reflected by an increase in the number of shares of the
Money Market Fund in the shareholder's account on the fifth day
of the next month (or, if that day is not a business day, on the
next business day). It is expected that the Money Market Fund's
net income will be positive each time it is determined. However,
if because of realized losses on sales of portfolio investments,
a sudden rise in interest rates, or for any other reason the net
income of the Money Market Fund determined at any time is a
negative amount, the Money Market Fund will offset such amount
allocable to each shareholder's account from dividends accrued
during the month with respect to such account. If at the time of
payment of a dividend (either at the regular monthly dividend
payment date, or, in the case of a shareholder who is withdrawing
all or substantially all of the shares in an account, at the time
of withdrawal), such negative amount exceeds a shareholder's
accrued dividends, the Money Market Fund will reduce the number
of outstanding shares by treating the shareholder as having
contributed to the capital of the Money Market Fund that number
of full and fractional shares which represent the amount of the
excess. Each shareholder is deemed to have agreed to such
contribution in these circumstances by his or her investment in
the Money Market Fund.
INVESTMENT PERFORMANCE OF THE FUNDS
STANDARD PERFORMANCE MEASURES
THE INCOME FUND. The Income Fund's tax-exempt yield for
Class A shares for the thirty-day period ended September 30,
1994 was 5.30%, adjusted to reflect deduction of the maximum
sales charge of 4.75% . A Class A shareholder in a 46.24%
combined federal/California tax bracket would have to earn
9.86% from a taxable investment to produce an after-tax
yield equal to a tax-exempt yield of 5.30% . The Income
Fund's average annual total return (compounded annually) for
Class A shares for the one-, five- and ten periods ended
September 30, 1994 was -8.07%, 6.55% and
9.46% , respectively, adjusted to reflect deduction of the
maximum sales charge of 4.75%.
The Income Fund's tax-exempt yield for Class B shares
for the thirty-day period ended September 30, 1994 was
4.84% . A Class B shareholder in a 46.24% combined
federal/California tax bracket would have to earn 9.00%
from a taxable investment to produce an after-tax yield equal
to the Fund's tax-exempt yield of 4.84%. The
average annual total return (compounded annually)
for Class B shares for the one-year period ended September
30, 1994 and for the life of the class through September 30,
1994 was -8.69% and 1.18%, respectively , adjusted to reflect
deduction of the applicable contingent deferred
sales charge . The maximum contingent deferred sales charge
is 5.00%. See "Other Performance Information" below for
the inception date of each class. No Class M shares were
outstanding on September 30, 1994. See "Standard Performance
Measures" in Part II of this Statement for information on how the
Income Fund's investment performance is calculated.
THE INTERMEDIATE FUND. The Intermediate Fund's tax-exempt
yield for Class A shares for the thirty-day period ended
September 30, 1994 was 5.26%, adjusted to reflect the deduction
of the maximum sales charge of 3.25%, reflecting an expense
limitation then in effect; without the limitation, such yield
would have been 5.03%. A Class A shareholder in a 46.24%
combined federal/California tax bracket would have to earn 9.36%
from a taxable investment to produce an after-tax yield equal to
a tax-exempt yield of 5.03%. The cumulative total return for
Class A shares for the life of the class through September 30,
1994 was -3.38%, adjusted to reflect the deduction of the maximum
sales charge of 3.25%. Total return would have been lower if
the current expense limitation had not been in effect.
The Intermediate Fund's tax-exempt yield for Class B shares for
the thirty-day period ended September 30, 1994 was 5.46%,
reflecting an expense limitation then in effect; without the
limitation, such yield would have been 5.27%. A Class B
shareholder in a 46.24% combined federal/California tax bracket
would have to earn 10.16% from a taxable investment to produce an
after-tax yield equal to a tax-exempt yield of 5.46%. The
cumulative total return for Class B shares for the life of the
class through September 30, 1994 was -3.36%, adjusted to reflect
deduction of the applicable contingent deferred sales charge.
The maximum contingent deferred sales charge is 3.00%. See
"Other Performance Information" below for the inception date of
each class. See "Standard Performance Measures" in Part II of
this Statement for information on how the Intermediate Fund's
investment performance is calculated.
THE MONEY MARKET FUND. Based on the seven-day period ended
September 30, 1994, the Money Market Fund's tax-exempt yield was
2.64%, and the Money Market Fund's tax-exempt effective yield was
2.69%. A shareholder in a 46.24% combined federal/California tax
bracket would have to earn 4.91% from a taxable investment to
produce an after-tax yield equal to the Money Market Fund's tax-
exempt yield of 2.64%. See "Standard Performance Measures" in
Part II of this Statement for information on how the Money Market
Fund's investment performance is calculated.
PERFORMANCE RATINGS
THE INCOME FUND. For the 1994 fiscal year, the
Class A shares of the Income Fund were ranked 20 of 74
California municipal debt funds by Lipper Analytical Services,
Inc and 351 of 695 municipal single state funds by
CDA/Weisenberger's Management Results. As of the end of the
fiscal year, Class A shares of the Income Fund were given a
5 -star rating (out of 5 stars) by Morningstar, Inc. For
the 1994 fiscal year, the Class B shares of the Income
Fund were ranked 35 of 74 California municipal debt funds by
Lipper Analytical Services, Inc. and 449 of 695 municipal single
state funds by CDA/Wiesenberger's Management Results. As of the
end of the fiscal year, Class B shares were not rated by
Morningstar, Inc. No Class M shares were outstanding during
fiscal 1994 . See "Comparison of Portfolio Performance" in
Part II of this Statement for information about how these ratings
and rankings are determined. Past performance is no guarantee of
future results.
THE INTERMEDIATE FUND. For the 1994 fiscal year, the Class A
and B shares of the Intermediate Fund were not ranked or
rated.
THE MONEY MARKET FUND. For the 1994 fiscal year, the Money
Market Fund was ranked 45 of 51 California Tax Exempt Money
Market funds by Lipper Analytical Services, Inc. See "Comparison
of Portfolio Performance" in Part II of this Statement for
information about how this ranking is determined. Past
performance is no guarantee of future results.
OTHER PERFORMANCE INFORMATION
The tables below show total return (capital changes plus
reinvestment of all distributions) on a hypothetical investment
in one share of each Fund during the life of the
Funds . This was a period of fluctuating tax-exempt
security prices. The tables do not project the future
performance of the Funds. No Class M shares of the Income
Fund were outstanding during these periods .
<TABLE>
<CAPTION>
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
CLASS A SHARES
CUMULATIVE
MAXIMUM NET ASSET DISTRIBUTIONS NET ASSET VALUE
OFFERING VALUE ------------------AT YEAR-END
FISCAL PRICE AT ----------------- FROM FROM WITH ALL
YEAR BEGINNING BEGINNING END OF INVESTMENT CAPITAL DISTRIBUTIONS
ENDED OF YEAR OF YEAR YEAR INCOME GAINS REINVESTED
- -----------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
10/31/83(1) $7.51 $7.15 $6.80 $0.272 $ --- $7.07
10/31/84 7.14 6.80 6.48 0.618 --- 7.40
9/30/85 6.80 6.48 6.97 0.579 --- 8.65
9/30/86 7.32 6.97 7.80 0.607 --- 10.50
9/30/87 8.19 7.80 7.14 0.565 --- 10.34
9/30/88 7.50 7.14 7.67 0.565 --- 11.96
9/30/89 8.05 7.67 7.83 0.555 --- 13.11
9/30/90 8.22 7.83 7.70 0.543 0.031 13.87
9/30/91 8.08 7.70 8.11 0.541 --- 15.63
9/30/92 8.51 8.11 8.39 0.534 --- 17.25
9/30/93 8.81 8.39 8.92 0.534 0.038 19.60
9/30/94 9.36 8.92 8.09 0.498 0.025 18.90
------- ------
Total distributions $6.411 $0.094
(1) Investment operations commenced on April 29, 1983.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING LIFE OF CLASS A SHARES
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
----------------------------------------
MAXIMUM OFFERING NET ASSET VALUE LEHMAN BROTHERS
PRICE TO NET TO NET MUNICIPAL CONSUMER
ASSET VALUE ASSET VALUE BOND INDEX PRICE INDEX
FISCAL --------------- -------------- ------------- -------------
YEAR CUMULA- CUMULA- CUMULA- CUMULA-
ENDED ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE
- ---------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
10/31/83(1) - -5.7% - -1.0% - -1.8% - +2.4%
10/31/84 -0.3 % -1.3 +4.7 % +3.6 +7.6 % +5.7
+4.3 % +6.8
9/30/85 +11.4 +15.3 +16.9 +21.1 +14.8 +21.3 +2.9 +9.8
9/30/86 +15.6 +40.0 +21.4 +46.9 +24.7 +51.2 +1.8 +11.8
9/30/87 -6.2 +37.8 -1.5 +44.7 +0.5 +52.0 +4.4 +16.6
9/30/88 +10.1 +59.5 +15.7 +67.4 +13.0 +71.7 +4.2 +21.5
9/30/89 +4.4 +74.8 +9.6 +83.5 +8.7 +86.7 +4.3 +26.8
9/30/90 +0.7 +84.9 +5.8 +94.1 +6.8 +99.4 +6.2 +34.6
9/30/91 +7.4 +108.4 +12.7 +118.8 +13.2 +125.6 +3.4 +39.2
9/30/92 +5.2 +130.0 +10.3 +141.4 +10.5 +149.2 +3.0 +43.3
9/30/93 +8.2 +161.3 +13.6 +174.3 +12.7 +181.0 +2.7+47.2
9/30/94 -8.1 +152.1 -3.5 +164.6 -2.4 +174.1 +3.0 +51.5
(1) Investment operations began April 29, 1983.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
CLASS B SHARES
CUMULATIVE
NET ASSET DISTRIBUTIONS NET ASSET VALUE
VALUE ------------------- AT YEAR-END
FISCAL ----------------- FROM FROM WITH ALL
YEAR BEGINNING END OF INVESTMENT CAPITAL DISTRIBUTIONS
ENDED OF YEAR YEAR INCOME GAINS REINVESTED
- --------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
09/30/93 (1) $8.37 $8.91 $0.326 --- $9.25
09/30/94 8.91 8.08 0.444 0.025 8.87
Total distributions $0.770 $0.025
(1) Class B shares were offered beginning January 4, 1993.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING LIFE OF CLASS B SHARES
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
-----------------
NET ASSET VALUE LEHMAN BROTHERS
TO NET MUNICIPAL BOND CONSUMER
FISCAL ASSET VALUE INDEX PRICE INDEX
YEAR CUMULA- CUMULA- CUMULA-
ENDED ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE
- ---------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
09/30/93 (1) -- +10.51 % -- +10.73 % -- +2.26%
09/30/94 -4.15% +5.92 -2.44% +8.03 +2.96% +5.29
(1) Class B shares were offered beginning January 4, 1993.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PUTNAM CALIFORNIA INTERMEDIATE TAX EXEMPT FUND
CLASS A SHARES
CUMULATIVE
MAXIMUM NET ASSET DISTRIBUTIONS NET ASSET VALUE
OFFERING VALUE ------------------AT YEAR-END
FISCAL PRICE AT ----------------- FROM FROM WITH ALL
YEAR BEGINNING BEGINNING END OF INVESTMENT CAPITAL DISTRIBUTIONS
ENDED OF YEAR OF YEAR YEAR INCOME GAINS REINVESTED
- -----------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
9/30/94 (1) $8.79 $8.50 $8.35 $0.1427 $0.00 $8.49
------- ------
Total distributions $0.1427 $0.00
(1) Investment operations commenced on June 1, 1994.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING LIFE OF CLASS A SHARES
PUTNAM CALIFORNIA INTERMEDIATE TAX EXEMPT FUND
----------------------------------------------
MAXIMUM OFFERING NET ASSET VALUE LEHMAN BROTHERS
PRICE TO NET TO NET MUNICIPAL CONSUMER
ASSET VALUE ASSET VALUE BOND INDEX PRICE INDEX
FISCAL --------------- -------------- ------------- -------------
YEAR CUMULA- CUMULA- CUMULA- CUMULA-
ENDED ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE
- ---------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/94 (1) -- -3.38% -- -0.09% -- 0.07% -- 1.29%
(1) Investment operations began June 1, 1994.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PUTNAM CALIFORNIA INTERMEDIATE TAX EXEMPT FUND
CLASS B SHARES
CUMULATIVE
NET ASSET DISTRIBUTIONS NET ASSET VALUE
VALUE ------------------- AT YEAR-END
FISCAL ----------------- FROM FROM WITH ALL
YEAR BEGINNING END OF INVESTMENT CAPITAL DISTRIBUTIONS
ENDED OF YEAR YEAR INCOME GAINS REINVESTED
- --------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
09/30/94 (1) $8.50 $8.34 $0.1248 $0.00 $8.46
(1) Class B shares were offered beginning June 1, 1994.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING LIFE OF CLASS B SHARES
PUTNAM CALIFORNIA INTERMEDIATE TAX EXEMPT FUND
- ----------------------------------------------
NET ASSET VALUE LEHMAN BROTHERS
TO NET MUNICIPAL BOND CONSUMER
FISCAL ASSET VALUE INDEX PRICE INDEX
YEAR CUMULA- CUMULA- CUMULA-
ENDED ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE
- ---------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
09/30/94 (1) -- -0.42% -- 0.07% -- 1.29%
(1) Class B shares were offered beginning June 1, 1994.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND
- ----------------------------------------------
PUTNAM
CALIFORNIA CUMULATIVE
TAX EXEMPT NET ASSET VALUE
MONEY MARKET DISTRIBUTIONS AT YEAR-END CONSUMER
FISCAL FUND FROM NET WITH ALL PRICE INDEX
YEAR CUMULA- INVESTMENT DISTRIBUTIONS CUMULA-
ENDED ANNUAL TIVE INCOME REINVESTED ANNUAL TIVE
- --------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
9/30/88(1) -- +4.3% $0.041689 $1.04 -- 3.9%
9/30/89 +5.8% +10.3 0.056653 1.10 4.3% 8.4
9/30/90 +5.3 +16.1 0.051342 1.16 6.2 15.1
9/30/91 +4.2 +20.9 0.040742 1.21 3.4 19.0
9/30/92 +2.7 +24.2 0.026349 1.24 3.0 22.6
9/30/93 +1.8 +26.4 0.017516 1.26 2.7 25.9
9/30/94 +1.9 +28.8 0.019200 1.29 3.0 29.6
Total distributions $ 0.253491
(1) Investment operations began October 26, 1987.
/TABLE
<PAGE>
The tables are not adjusted for any payments under the Income
Fund's Class A Distribution Plan prior to its implementation in
fiscal 1993 or taxes payable on reinvested distributions or for
any contingent deferred sales charges which would be applied upon
redemption of Class B shares. The total values for the Funds
as of the end of each period reflect reinvestment of all
distributions and all changes in net asset value.
The Lehman Brothers Municipal Bond Index is an unmanaged list of
approximately 20,000 investment-grade, fixed-rate tax-exempt
bonds. The average quality of bonds held in the index may differ
from the average quality of those bonds in which the Income
and Intermediate Funds invest . The index does not include
bonds in certain of the lower-rating classifications in which the
Income and Intermediate Funds may invest. The performance
figures for the index reflect changes of market prices and
reinvestment of all interest payments. Because each of
the Income and Intermediate Funds is a managed portfolio
investing in California Tax Exempt Securities, the securities it
owns will not match those in the index.
The Consumer Price Index, prepared by the U.S. Bureau of Labor
Statistics, is a commonly used measure of the rate of inflation.
The index shows the average change in the cost of selected
consumer goods and services and does not represent a return on an
investment vehicle.
TAXES
The Prospectus describes generally the tax treatment of
distributions by the Funds. This section of the Statement and
the section entitled "Taxes" in Part II of this Statement include
additional information concerning federal and California income
taxes.
Each Fund intends to qualify as a regulated investment company in
order to distribute exempt-interest dividends to its
shareholders, which requires that at the end of each quarter at
least 50% of total assets be invested in tax-exempt obligations.
The ability of a Fund to invest in securities other than
California Tax Exempt Securities is limited, however, by a
requirement of the California Revenue and Taxation Code that at
the end of each quarter at least 50% of the value of its total
assets be invested in obligations which if held by an individual,
the interest on which would be exempt from California taxation
under the California Constitution or any California statute or
under the Constitution or any statute of the United States, in
order to pass through to shareholders the California personal
income tax exemption for dividends derived from net investment
income on California Tax Exempt Securities. This requirement may
limit the extent to which a Fund can engage in forward
commitments, repurchase agreements, futures and options.
<PAGE>
Unlike federal law, interest from tax exempt obligations is not
subject to the California alternative minimum tax. Furthermore,
the California personal income tax does not apply to any portion
of Social Security or railroad retirement benefits. Finally, for
both federal and California personal income tax purposes,
interest on indebtedness incurred or continued to purchase or
carry shares of an investment company, such as a Fund, that pays
exempt-interest dividends is disallowed.<PAGE>
<TABLE>
<CAPTION>
EQUIVALENT YIELDS: TAX-EXEMPT VERSUS TAXABLE SECURITIES
The table below shows the effect of the tax status of California Tax Exempt Securities on the effective yield received
by their individual holders under the federal income tax and California personal income tax laws currently in effect for
1995 . It gives the approximate yield a taxable security must earn at various income levels to produce after-tax
yields equivalent to those of tax-exempt securities yielding from 2.0% to 9.0% .
- ------------------------------------------------------------------------------------------------------------------------
COMBINED
TAXABLE INCOME* CALIFORNIA TAX-EXEMPT YIELD
------------------------ AND ----------------------------------------------------- ------------
- -
FEDERAL
JOINT *** SINGLE *** RATE** 2% 3% 4% 5% 6% 7%
8% 9%
- ------------------------------------------------------------------------------------------------------------------------
EQUIVALENT TAXABLE YIELD
- ------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<C>
0 - 9,444 0 - 4,722 15.85% 2.38% 3.57% 4.75% 5.94% 7.13% 8.32% 9.51% 10.70%
9,445 - 22,384 4,723 - 11,192 16.70% 2.40% 3.60% 4.80% 6.00% 7.20% 8.40% 9.60% 10.80%
22,385 - 35,324 11,193 - 17,662 18.40% 2.45% 3.68% 4.90% 6.13% 7.35% 8.58% 9.80% 11.03%
35,325 - 39,000 17,663 - 23,350 20.10% 2.50% 3.75% 5.01% 6.26% 7.51% 8.76% 10.01% 11.26%
39,001 - 49,03823,351 - 24,519 32.32% 2.96% 4.43% 5.91% 7.39% 8.87% 10.34%
11.82% 13.30%
49,039 - 61,974 24,520 - 30,987 33.76% 3.02% 4.53% 6.04% 7.55% 9.06% 10.57% 12.08% 13.59%
61,975 - 94,250 30,988 - 56,550 34.70% 3.06% 4.59% 6.13% 7.66% 9.19% 10.72% 12.25% 13.78%
94,251 -143,600 56,551 -107,464 37.42% 3.20% 4.79% 6.39% 7.99% 9.59% 11.19% 12.78% 14.38%
--- 107,465 -117,950 37.90% 3.22% 4.83% 6.44% 8.05% 9.66% 11.27% 12.86% 14.49%
143,601 - 214,928 --- 41.95% 3.45% 5.17% 6.89% 8.61% 10.34% 12.06% 13.78% 15.50%
214,929 - 256,500117,951 - 214,929 42.40% 3.47% 5.21% 6.94% 8.68% 10.42% 12.15% 13.89% 15.63%
--- 214,930 - 256,500 43.04% 3.51% 5.27% 7.02% 8.78% 10.53% 12.29% 14.04% 15.80%
256,501 - 429,858 --- 45.64% 3.68% 5.52% 7.36% 9.20% 11.04% 12.88% 14.72% 16.56%
over 429,858 over 256,500 46.24% 3.72% 5.58% 7.44% 9.30% 11.16% 13.02% 14.88% 16.74%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
* This amount represents taxable income as defined in the
Internal Revenue Code of 1986, as amended (the "Code").
It assumed that taxable income as defined in the Code
is the same as under the California Revenue and Taxation
Code. However, California taxable income may differ
due to differences in exemptions, itemized deductions, and
other items.
** For federal tax purposes, these combined rates
reflect the marginal rates on taxable income currently
in effect for 1995 . For California personal income
tax purposes, the table reflects the announced tax rates
for 1995 , which may be effectively increased by the
phase-out of exemption credits under California laws. The
brackets for 1995 may change due to the indexing
provisions of California law. (These combined rates
include the effect of deducting state income taxes on your
federal return.)
*** The amount of taxable income in this bracket may be
affected by the phase-out of personal exemptions and the
limitation on itemized deductions based upon adjusted
gross income under the Code, and under the California
Revenue and Taxation Code.
Of course, there is no assurance that the Funds will achieve any
specific tax-exempt yield. While it is expected that the Funds
will invest principally in obligations which pay interest exempt
from federal income tax and California personal income tax, other
income received by the Funds may be taxable. The table does not
take into account any state or local taxes except for California
personal income tax.
ADDITIONAL OFFICERS OF THE TRUST AND THE MONEY MARKET FUND
THE TRUST
In addition to the persons listed as officers of the Trust in
Part II of this Statement, the following persons are also
officers of the Trust. Officers of Putnam Management hold the
same offices in Putnam Management's parent company, Putnam
Investments, Inc.
GARY N. COBURN, Vice President. Senior Managing Director of
Putnam Management. Vice President of certain of the Putnam
funds.
JAMES E. ERICKSON, Vice President. Managing Director of Putnam
Management. Vice President of certain of the Putnam funds.
WILLIAM H. REEVES, Vice President. Senior Vice President of
Putnam Management. Vice President of certain of the Putnam
funds.
THOMAS C. GOGGINS, Vice President. Vice President of Putnam
Management. Director, Putnam Investments, Inc. Vice President
of certain of the Putnam funds. Prior to June, 1993, Mr. Goggins
was a Portfolio Manager at Transamerica Investments Services,
Inc.
BLAKE E. ANDERSON, Vice President. Senior Vice President of
Putnam Management. Vice President of certain of the Putnam Funds
THE MONEY MARKET FUND
In addition to the persons listed as officers of the Money Market
Fund in Part II of this Statement, the following persons are also
officers of the Fund. Officers of Putnam Management hold the
same offices in Putnam Management's parent company, Putnam
Investments, Inc.
GARY N. COBURN, Vice President. Senior Managing Director of
Putnam Management. Vice President of certain of the Putnam
funds.
JAMES E. ERICKSON, Vice President. Managing Director of Putnam
Management. Vice President of certain of the Putnam funds.
LINDSEY CALLEN, Vice President. Vice President of Putnam
Management.
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
Price Waterhouse LLP are the Funds' independent
accountants, providing audit services, tax return review and
other tax consulting services and assistance and consultation in
connection with the review of various Securities and Exchange
Commission filings. The Reports of Independent
Accountants and financial statements included in the
Funds' Annual Reports for the fiscal year or
period ended September 30, 1994 , filed electronically
on December 12, 1994, December 6, 1994, and November 22, 1994
(File Nos. 811-3630 for the Trust and 811-5333 for the Money
Market Fund) , are incorporated by reference into this
Statement of Additional Information. The financial highlights
in the Prospectus and the financial statements
incorporated by reference into the Prospectus and the Statement
of Additional Information have been so included and incorporated
in reliance upon the report of the independent accountants, given
on their authority as experts in auditing and accounting.
<PAGE>
<PAGE>
TABLE OF CONTENTS
MISCELLANEOUS INVESTMENT PRACTICES . . . . . . . . . . . . . . . . . . II-1
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-22
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . .II-27
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . .II-36
HOW TO BUY SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-38
DISTRIBUTION PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . .II-49
INVESTOR SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-50
SIGNATURE GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . .II-56
SUSPENSION OF REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . . .II-56
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . .II-56
STANDARD PERFORMANCE MEASURES. . . . . . . . . . . . . . . . . . . . .II-57
COMPARISON OF PORTFOLIO PERFORMANCE. . . . . . . . . . . . . . . . . .II-58
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-63
<PAGE>
THE PUTNAM FUNDS
STATEMENT OF ADDITIONAL INFORMATION
PART II
The following information applies generally to your Fund and to
the other Putnam funds. In certain cases the discussion applies
to some but not all of the funds or their shareholders, and you
should refer to your Prospectus to determine whether the matter
is applicable to you or your Fund. You will also be referred to
Part I for certain information applicable to your particular
Fund. Shareholders who purchase shares at net asset value
through employer-sponsored defined contribution plans should also
consult their employer for information about the extent to which
the matters described below apply to them.
MISCELLANEOUS INVESTMENT PRACTICES
YOUR FUND'S PROSPECTUS STATES WHICH OF THE FOLLOWING INVESTMENT
PRACTICES ARE AVAILABLE TO YOUR FUND. THE FACT THAT YOUR FUND IS
AUTHORIZED TO ENGAGE IN A PARTICULAR PRACTICE DOES NOT
NECESSARILY MEAN THAT IT WILL ACTUALLY DO SO. YOU SHOULD
DISREGARD ANY PRACTICE DESCRIBED BELOW WHICH IS NOT MENTIONED IN
THE PROSPECTUS.
SHORT-TERM TRADING
In seeking the Fund's objective, Putnam Management will buy or
sell portfolio securities whenever Putnam Management believes it
appropriate to do so. In deciding whether to sell a portfolio
security, Putnam Management does not consider how long the Fund
has owned the security. From time to time the Fund will buy
securities intending to seek short-term trading profits. A
change in the securities held by the Fund is known as "portfolio
turnover" and generally involves some expense to the Fund. These
expenses may include brokerage commissions or dealer mark-ups and
other transaction costs on both the sale of securities and the
reinvestment of the proceeds in other securities. If sales of
portfolio securities cause the Fund to realize net short-term
capital gains, such gains will be taxable as ordinary income. As
a result of the Fund's investment policies, under certain market
conditions the Fund's portfolio turnover rate may be higher than
that of other mutual funds. Portfolio turnover rate for a fiscal
year is the ratio of the lesser of purchases or sales of
portfolio securities to the monthly average of the value of
portfolio securities -- excluding securities whose maturities at
acquisition were one year or less. The Fund's portfolio turnover
rate is not a limiting factor when Putnam Management considers a
change in the Fund's portfolio.
<PAGE>
LOWER-RATED SECURITIES
The Fund may invest in lower-rated fixed-income securities
(commonly known as "junk bonds"), to the extent described in the
Prospectus. The lower ratings of certain securities held by the
Fund reflect a greater possibility that adverse changes in the
financial condition of the issuer or in general economic
conditions, or both, or an unanticipated rise in interest rates,
may impair the ability of the issuer to make payments of interest
and principal. The inability (or perceived inability) of issuers
to make timely payment of interest and principal would likely
make the values of securities held by the Fund more volatile and
could limit the Fund's ability to sell its securities at prices
approximating the values the Fund had placed on such securities.
In the absence of a liquid trading market for securities held by
it, the Fund may be unable at times to establish the fair value
of such securities. The rating assigned to a security by Moody's
Investors Service, Inc. or Standard & Poor's Corporation (or by
any other nationally recognized securities rating organization)
does not reflect an assessment of the volatility of the
security's market value or the liquidity of an investment in the
security. See the Prospectus or Part I of this Statement for a
description of security ratings.
Like those of other fixed-income securities, the values of
lower-rated securities fluctuate in response to changes in
interest rates. Thus, a decrease in interest rates will
generally result in an increase in the value of the Fund's
assets. Conversely, during periods of rising interest rates, the
value of the Fund's assets will generally decline. In addition,
the values of such securities are also affected by changes in
general economic conditions and business conditions affecting the
specific industries of their issuers. Changes by recognized
rating services in their ratings of any fixed-income security and
in the ability of an issuer to make payments of interest and
principal may also affect the value of these investments.
Changes in the value of portfolio securities generally will not
affect cash income derived from such securities, but will affect
the Fund's net asset value. The Fund will not necessarily
dispose of a security when its rating is reduced below its rating
at the time of purchase, although Putnam Management will monitor
the investment to determine whether its retention will assist in
meeting the Fund's investment objective.
At times, a substantial portion of the Fund's assets may be
invested in securities as to which the Fund, by itself or
together with other funds and accounts managed by Putnam
Management and its affiliates, holds a major portion or all of
such securities. Although Putnam Management generally considers
such securities to be liquid because of the availability of an
institutional market for such securities, it is possible that,
under adverse market or economic conditions or in the event of
adverse changes in the financial condition of the issuer, the
Fund could find it more difficult to sell such securities when
Putnam Management believes it advisable to do so or may be able
to sell such securities only at prices lower than if such
securities were more widely held. 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.
In order to enforce its rights in the event of a default under
such securities, the Fund may be required to take possession of
and manage assets securing the issuer's obligations on such
securities, which may increase the Fund's operating expenses and
adversely affect the Fund's net asset value. In the case of
tax-exempt funds, any income derived from the Fund's ownership or
operation of such assets would not be tax-exempt. In addition,
the Fund's intention to qualify as a "regulated investment
company" under the Internal Revenue Code may limit the extent to
which the Fund may exercise its rights by taking possession of
such assets.
Certain securities held by the Fund may permit the issuer at its
option to "call", or redeem, its securities. If an issuer were
to redeem securities held by the Fund during a time of declining
interest rates, the Fund may not be able to reinvest the proceeds
in securities providing the same investment return as the
securities redeemed.
If the Fund's Prospectus describes so-called "zero-coupon" bonds
and "payment-in-kind" bonds as possible investments, the Fund may
invest without limit in such bonds unless otherwise specified in
the Prospectus. Zero-coupon bonds are issued at a significant
discount from their principal amount in lieu of paying interest
periodically. Payment-in-kind bonds allow the issuer, at its
option, to make current interest payments on the bonds either in
cash or in additional bonds. Because zero-coupon bonds do not
pay current interest, their value is subject to greater
fluctuation in response to changes in market interest rates than
bonds which pay interest currently. Both zero-coupon and
payment-in-kind bonds allow an issuer to avoid the need to
generate cash to meet current interest payments. Accordingly,
such bonds may involve greater credit risks than bonds paying
interest currently. Even though such bonds do not pay current
interest in cash, the Fund is nonetheless required to accrue
interest income on such investments and to distribute such
amounts at least annually to shareholders. Thus, the Fund could
be required at times to liquidate investments in order to satisfy
its dividend requirements.
The amount of information about the financial condition of an
issuer of tax exempt securities may not be as extensive as that
which is made available by corporations whose securities are
publicly traded. Therefore, to the extent the Fund invests in
tax exempt securities in the lower rating categories, the
achievement of the Fund's goals is more dependent on Putnam
Management's investment analysis than would be the case if the
Fund were investing in securities in the higher rating
categories.
INVESTMENTS IN MISCELLANEOUS FIXED INCOME SECURITIES
Unless otherwise specified in the Prospectus or elsewhere in this
Statement of Additional Information, if the Fund may invest in
inverse floating obligations and premium securities, it may do so
without limit. The Fund, however, currently does not intend to
invest more than 15% of its assets in inverse floating
obligations under normal market conditions.
SECURITIES LOANS
The Fund may make secured loans of its portfolio securities, on
either a short-term or long-term basis, amounting to not more
than 25% of its total assets, thereby realizing additional
income. The risks in lending portfolio securities, as with other
extensions of credit, consist of possible delay in recovery of
the securities or possible loss of rights in the collateral
should the borrower fail financially. As a matter of policy,
securities loans are made to broker-dealers pursuant to
agreements requiring that loans be continuously secured by
collateral consisting of cash or short-term debt obligations at
least equal at all times to the value of the securities on loan,
"marked-to-market" daily. The borrower pays to the Fund an
amount equal to any dividends or interest received on securities
lent. The Fund retains all or a portion of the interest received
on investment of the cash collateral or receives a fee from the
borrower. Although voting rights, or rights to consent, with
respect to the loaned securities pass to the borrower, the Fund
retains the right to call the loans at any time on reasonable
notice, and it will do so to enable the Fund to exercise voting
rights on any matters materially affecting the investment. The
Fund may also call such loans in order to sell the securities.
FORWARD COMMITMENTS
The Fund may enter into contracts to purchase securities for a
fixed price at a future date beyond customary settlement time
("forward commitments") if the Fund holds, and maintains until
the settlement date in a segregated account, cash or high-grade
debt obligations in an amount sufficient to meet the purchase
price, or if the Fund enters into offsetting contracts for the
forward sale of other securities it owns. In the case of to-be-
announced ("TBA") purchase commitments, the unit price and the
estimated principal amount are established when the Fund enters
into a contract, with the actual principal amount being within a
specified range of the estimate. Forward commitments may be
considered securities in themselves, and involve a risk of loss
if the value of the security to be purchased declines prior to
the settlement date, which risk is in addition to the risk of
decline in the value of the Fund's other assets. Where such
purchases are made through dealers, the Fund relies on the dealer
to consummate the sale. The dealer's failure to do so may result
in the loss to the Fund of an advantageous yield or price.
Although the Fund will generally enter into forward commitments
with the intention of acquiring securities for its portfolio or
for delivery pursuant to options contracts it has entered into,
the Fund may dispose of a commitment prior to settlement if
Putnam Management deems it appropriate to do so. The Fund may
realize short-term profits or losses upon the sale of forward
commitments.
The Fund may enter into TBA sale commitments to hedge its
portfolio positions or to sell mortgage-backed securities it owns
under delayed delivery arrangements. Proceeds of TBA sale
commitments are not received until the contractual settlement
date. During the time a TBA sale commitment is outstanding,
equivalent deliverable securities, or an offsetting TBA purchase
commitment deliverable on or before the sale commitment date, are
held as "cover" for the transaction. Unsettled TBA sale
commitments are valued at current market value of the underlying
securities. If the TBA sale commitment is closed through the
acquisition of an offsetting purchase commitment, the Fund
realizes a gain or loss on the commitment without regard to any
unrealized gain or loss on the underlying security. If the Fund
delivers securities under the commitment, the Fund realizes a
gain or loss from the sale of the securities based upon the unit
price established at the date the commitment was entered into.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements up to the limit
specified in the Prospectus. A repurchase agreement is a
contract under which the Fund acquires a security for a
relatively short period (usually not more than one week) subject
to the obligation of the seller to repurchase and the Fund to
resell such security at a fixed time and price (representing the
Fund's cost plus interest). It is the Fund's present intention
to enter into repurchase agreements only with commercial banks
and registered broker-dealers and only with respect to
obligations of the U.S. government or its agencies or
instrumentalities. Repurchase agreements may also be viewed as
loans made by the Fund which are collateralized by the securities
subject to repurchase. Putnam Management will monitor such
transactions to ensure that the value of the underlying
securities will be at least equal at all times to the total
amount of the repurchase obligation, including the interest
factor. If the seller defaults, the Fund could realize a loss on
the sale of the underlying security to the extent that the
proceeds of sale including accrued interest are less than the
resale price provided in the agreement including interest. In
addition, if the seller should be involved in bankruptcy or
insolvency proceedings, the Fund may incur delay and costs in
selling the underlying security or may suffer a loss of principal
and interest if the Fund is treated as an unsecured creditor and
required to return the underlying collateral to the seller's
estate.
Pursuant to an exemptive order issued by the Securities and
Exchange Commission, the Fund may transfer uninvested cash
balances into a joint account, along with cash of other Putnam
funds and certain other accounts. These balances may be invested
in one or more repurchase agreements and/or short-term money
market instruments.
OPTIONS ON SECURITIES
WRITING COVERED OPTIONS. The Fund may write covered call options
and covered put options on optionable securities held in its
portfolio, when in the opinion of Putnam Management such
transactions are consistent with the Fund's investment objectives
and policies. Call options written by the Fund give the
purchaser the right to buy the underlying securities from the
Fund at a stated exercise price; put options give the purchaser
the right to sell the underlying securities to the Fund at a
stated price.
The Fund may write only covered options, which means that, so
long as the Fund is obligated as the writer of a call option, it
will own the underlying securities subject to the option (or
comparable securities satisfying the cover requirements of
securities exchanges). In the case of put options, the Fund will
hold cash and/or high-grade short-term debt obligations equal to
the price to be paid if the option is exercised. In addition,
the Fund will be considered to have covered a put or call option
if and to the extent that it holds an option that offsets some or
all of the risk of the option it has written. The Fund may write
combinations of covered puts and calls on the same underlying
security.
The Fund will receive a premium from writing a put or call
option, which increases the Fund's return on the underlying
security in the event the option expires unexercised or is closed
out at a profit. The amount of the premium reflects, among other
things, the relationship between the exercise price and the
current market value of the underlying security, the volatility
of the underlying security, the amount of time remaining until
expiration, current interest rates, and the effect of supply and
demand in the options market and in the market for the underlying
security. By writing a call option, the Fund limits its
opportunity to profit from any increase in the market value of
the underlying security above the exercise price of the option
but continues to bear the risk of a decline in the value of the
underlying security. By writing a put option, the Fund assumes
the risk that it may be required to purchase the underlying
security for an exercise price higher than its then-current
market value, resulting in a potential capital loss unless the
security subsequently appreciates in value.
The Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction, in
which it purchases an offsetting option. The Fund realizes a
profit or loss from a closing transaction if the cost of the
transaction (option premium plus transaction costs) is less or
more than the premium received from writing the option. Because
increases in the market price of a call option generally reflect
increases in the market price of the security underlying the
option, any loss resulting from a closing purchase transaction
may be offset in whole or in part by unrealized appreciation of
the underlying security owned by the Fund.
If the Fund writes a call option but does not own the underlying
security, and when it writes a put option, the Fund may be
required to deposit cash or securities with its broker as
"margin", or collateral, for its obligation to buy or sell the
underlying security. As the value of the underlying security
varies, the Fund may have to deposit additional margin with the
broker. Margin requirements are complex and are fixed by
individual brokers, subject to minimum requirements currently
imposed by the Federal Reserve Board and by stock exchanges and
other self-regulatory organizations.
PURCHASING PUT OPTIONS. The Fund may purchase put options to
protect its portfolio holdings in an underlying security against
a decline in market value. Such protection is provided during
the life of the put option since the Fund, as holder of the
option, is able to sell the underlying security at the put
exercise price regardless of any decline in the underlying
security's market price. In order for a put option to be
profitable, the market price of the underlying security must
decline sufficiently below the exercise price to cover the
premium and transaction costs. By using put options in this
manner, the Fund will reduce any profit it might otherwise have
realized from appreciation of the underlying security by the
premium paid for the put option and by transaction costs.
PURCHASING CALL OPTIONS. The Fund may purchase call options to
hedge against an increase in the price of securities that the
Fund wants ultimately to buy. Such hedge protection is provided
during the life of the call option since the Fund, as holder of
the call option, is able to buy the underlying security at the
exercise price regardless of any increase in the underlying
security's market price. In order for a call option to be
profitable, the market price of the underlying security must rise
sufficiently above the exercise price to cover the premium and
transaction costs.
RISK FACTORS IN OPTIONS TRANSACTIONS
The successful use of the Fund's options strategies depends on
the ability of Putnam Management to forecast correctly interest
rate and market movements. For example, if the Fund were to
write a call option based on Putnam Management's expectation that
the price of the underlying security would fall, but the price
were to rise instead, the Fund could be required to sell the
security upon exercise at a price below the current market price.
Similarly, if the Fund were to write a put option based on Putnam
Management's expectation that the price of the underlying
security would rise, but the price were to fall instead, the Fund
could be required to purchase the security upon exercise at a
price higher than the current market price.
When the Fund purchases an option, it runs the risk that it will
lose its entire investment in the option in a relatively short
period of time, unless the Fund exercises the option or enters
into a closing sale transaction before the option's expiration.
If the price of the underlying security does not rise (in the
case of a call) or fall (in the case of a put) to an extent
sufficient to cover the option premium and transaction costs, the
Fund will lose part or all of its investment in the option. This
contrasts with an investment by the Fund in the underlying
security, since the Fund will not realize a loss if the
security's price does not change.
The effective use of options also depends on the Fund's ability
to terminate option positions at times when Putnam Management
deems it desirable to do so. There is no assurance that the Fund
will be able to effect closing transactions at any particular
time or at an acceptable price.
If a secondary market in options were to become unavailable, the
Fund could no longer engage in closing transactions. Lack of
investor interest might adversely affect the liquidity of the
market for particular options or series of options. A market may
discontinue trading of a particular option or options generally.
In addition, a market could become temporarily unavailable if
unusual events -- such as volume in excess of trading or clearing
capability -- were to interrupt its normal operations.
A market may at times find it necessary to impose restrictions on
particular types of options transactions, such as opening
transactions. For example, if an underlying security ceases to
meet qualifications imposed by the market or the Options Clearing
Corporation, new series of options on that security will no
longer be opened to replace expiring series, and opening
transactions in existing series may be prohibited. If an options
market were to become unavailable, the Fund as a holder of an
option would be able to realize profits or limit losses only by
exercising the option, and the Fund, as option writer, would
remain obligated under the option until expiration or exercise.
Disruptions in the markets for the securities underlying options
purchased or sold by the Fund could result in losses on the
options. If trading is interrupted in an underlying security,
the trading of options on that security is normally halted as
well. As a result, the Fund as purchaser or writer of an option
will be unable to close out its positions until options trading
resumes, and it may be faced with considerable losses if trading
in the security reopens at a substantially different price. In
addition, the Options Clearing Corporation or other options
markets may impose exercise restrictions. If a prohibition on
exercise is imposed at the time when trading in the option has
also been halted, the Fund as purchaser or writer of an option
will be locked into its position until one of the two
restrictions has been lifted. If the Options Clearing
Corporation were to determine that the available supply of an
underlying security appears insufficient to permit delivery by
the writers of all outstanding calls in the event of exercise, it
may prohibit indefinitely the exercise of put options. The Fund,
as holder of such a put option, could lose its entire investment
if the prohibition remained in effect until the put option's
expiration.
Special risks are presented by internationally-traded options.
Because of time differences between the United States and various
foreign countries, and because different holidays are observed in
different countries, foreign options markets may be open for
trading during hours or on days when U.S. markets are closed. As
a result, option premiums may not reflect the current prices of
the underlying interest in the United States.
Over-the-counter ("OTC") options purchased by the Fund and assets
held to cover OTC options written by the Fund may, under certain
circumstances, be considered illiquid securities for purposes of
any limitation on the Fund's ability to invest in illiquid
securities.
FUTURES CONTRACTS AND RELATED OPTIONS
Subject to applicable law, and unless otherwise specified in the
Prospectus, the Fund may invest without limit in the types of
futures contracts and related options identified in the
Prospectus. A financial futures contract sale creates an
obligation by the seller to deliver the type of financial
instrument called for in the contract in a specified delivery
month for a stated price. A financial futures contract purchase
creates an obligation by the purchaser to take delivery of the
type of financial instrument called for in the contract in a
specified delivery month at a stated price. The specific
instruments delivered or taken, respectively, at settlement date
are not determined until on or near that date. The determination
is made in accordance with the rules of the exchange on which the
futures contract sale or purchase was made. Futures contracts
are traded in the United States only on commodity exchanges or
boards of trade -- known as "contract markets" -- approved for
such trading by the Commodity Futures Trading Commission (the
"CFTC"), and must be executed through a futures commission
merchant or brokerage firm which is a member of the relevant
contract market.
Although futures contracts (other than index futures) by their
terms call for actual delivery or acceptance of commodities or
securities, in most cases the contracts are closed out before the
settlement date without the making or taking of delivery.
Closing out a futures contract sale is effected by purchasing a
futures contract for the same aggregate amount of the specific
type of financial instrument or commodity with the same delivery
date. If the price of the initial sale of the futures contract
exceeds the price of the offsetting purchase, the seller is paid
the difference and realizes a gain. Conversely, if the price of
the offsetting purchase exceeds the price of the initial sale,
the seller realizes a loss. Similarly, the closing out of a
futures contract purchase is effected by the purchaser's entering
into a futures contract sale. If the offsetting sale price
exceeds the purchase price, the purchaser realizes a gain, and if
the purchase price exceeds the offsetting sale price, he realizes
a loss. In general 40% of the gain or loss arising from the
closing out of a futures contract traded on an exchange approved
by the CFTC is treated as short-term gain or loss, and 60% is
treated as long-term gain or loss.
Unlike when the Fund purchases or sells a security, no price is
paid or received by the Fund upon the purchase or sale of a
futures contract. Upon entering into a contract, the Fund is
required to deposit with its custodian in a segregated account in
the name of the futures broker an amount of cash and/or U.S.
Government Securities. This amount is known as "initial margin."
The nature of initial margin in futures transactions is different
from that of margin in security transactions in that futures
contract margin does not involve the borrowing of funds to
finance the transactions. Rather, initial margin is similar to a
performance bond or good faith deposit which is returned to the
Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. Futures contracts
also involve brokerage costs.
Subsequent payments, called "variation margin" or "maintenance
margin", to and from the broker (or the custodian) are made on a
daily basis as the price of the underlying security or commodity
fluctuates, making the long and short positions in the futures
contract more or less valuable, a process known as "marking to
the market." For example, when the Fund has purchased a futures
contract on a security and the price of the underlying security
has risen, that position will have increased in value and the
Fund will receive from the broker a variation margin payment
based on that increase in value. Conversely, when the Fund has
purchased a security futures contract and the price of the
underlying security has declined, the position would be less
valuable and the Fund would be required to make a variation
margin payment to the broker.
The Fund may elect to close some or all of its futures positions
at any time prior to their expiration in order to reduce or
eliminate a hedge position then currently held by the Fund. The
Fund may close its positions by taking opposite positions which
will operate to terminate the Fund's position in the futures
contracts. Final determinations of variation margin are then
made, additional cash is required to be paid by or released to
the Fund, and the Fund realizes a loss or a gain. Such closing
transactions involve additional commission costs.
OPTIONS ON FUTURES CONTRACTS. The Fund may purchase and write
call and put options on futures contracts it may buy or sell and
enter into closing transactions with respect to such options to
terminate existing positions. Options on future contracts give
the purchaser the right in return for the premium paid to assume
a position in a futures contract at the specified option exercise
price at any time during the period of the option. The Fund may
use options on futures contracts in lieu of writing or buying
options directly on the underlying securities or purchasing and
selling the underlying futures contracts. For example, to hedge
against a possible decrease in the value of its portfolio
securities, the Fund may purchase put options or write call
options on futures contracts rather than selling futures
contracts. Similarly, the Fund may purchase call options or
write put options on futures contracts as a substitute for the
purchase of futures contracts to hedge against a possible
increase in the price of securities which the Fund expects to
purchase. Such options generally operate in the same manner as
options purchased or written directly on the underlying
investments.
As with options on securities, the holder or writer of an option
may terminate his position by selling or purchasing an offsetting
option. There is no guarantee that such closing transactions can
be effected.
The Fund will be required to deposit initial margin and
maintenance margin with respect to put and call options on
futures contracts written by it pursuant to brokers' requirements
similar to those described above in connection with the
discussion of futures contracts.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS.
Successful use of futures contracts by the Fund is subject to
Putnam Management's ability to predict movements in the direction
of interest rates and other factors affecting securities markets.
For example, if the Fund has hedged against the possibility of
decline in the values of its investments and the values of its
investments increase instead, the Fund will lose part or all of
the benefit of the increase through payments of daily maintenance
margin. The Fund may have to sell investments at a time when it
may be disadvantageous to do so in order to meet margin
requirements.
Compared to the purchase or sale of futures contracts, the
purchase of call or put options on futures contracts involves
less potential risk to the Fund because the maximum amount at
risk is the premium paid for the options (plus transaction
costs). However, there may be circumstances when the purchase of
a call or put option on a futures contract would result in a loss
to the Fund when the purchase or sale of a futures contract would
not, such as when there is no movement in the prices of the
hedged investments. The writing of an option on a futures
contract involves risks similar to those risks relating to the
sale of futures contracts.
There is no assurance that higher than anticipated trading
activity or other unforeseen events might not, at times, render
certain market clearing facilities inadequate, and thereby result
in the institution by exchanges of special procedures which may
interfere with the timely execution of customer orders.
To reduce or eliminate a hedge position held by the Fund, the
Fund may seek to close out a position. The ability to establish
and close out positions will be subject to the development and
maintenance of a liquid secondary market. It is not certain that
this market will develop or continue to exist for a particular
futures contract or option. Reasons for the absence of a liquid
secondary market on an exchange include the following: (i) there
may be insufficient trading interest in certain contracts or
options; (ii) restrictions may be imposed by an exchange on
opening transactions or closing transactions or both; (iii)
trading halts, suspensions or other restrictions may be imposed
with respect to particular classes or series of contracts or
options, or underlying securities; (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v)
the facilities of an exchange or a clearing corporation may not
at all times be adequate to handle current trading volume; or
(vi) one or more exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the
trading of contracts or options (or a particular class or series
of contracts or options), in which event the secondary market on
that exchange for such contracts or options (or in the class or
series of contracts or options) would cease to exist, although
outstanding contracts or options on the exchange that had been
issued by a clearing corporation as a result of trades on that
exchange would continue to be exercisable in accordance with
their terms.
U.S. TREASURY SECURITY FUTURES CONTRACTS AND OPTIONS. If the
Fund invests in tax-exempt securities issued by a governmental
entity, the Fund may purchase and sell futures contracts and
related options on U.S. Treasury securities when, in the opinion
of Putnam Management, price movements in Treasury security
futures and related options will correlate closely with price
movements in the tax-exempt securities which are the subject of
the hedge. U.S. Treasury security futures contracts require the
seller to deliver, or the purchaser to take delivery of, the type
of U.S. Treasury security called for in the contract at a
specified date and price. Options on U.S. Treasury security
futures contracts give the purchaser the right in return for the
premium paid to assume a position in a U.S. Treasury security
futures contract at the specified option exercise price at any
time during the period of the option.
Successful use of U.S. Treasury security futures contracts by the
Fund is subject to Putnam Management's ability to predict
movements in the direction of interest rates and other factors
affecting markets for debt securities. For example, if the Fund
has sold U.S. Treasury security futures contracts in order to
hedge against the possibility of an increase in interest rates
which would adversely affect tax-exempt securities held in its
portfolio, and the prices of the Fund's tax-exempt securities
increase instead as a result of a decline in interest rates, the
Fund will lose part or all of the benefit of the increased value
of its securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such
situations, if the Fund has insufficient cash, it may have to
sell securities to meet daily maintenance margin requirements at
a time when it may be disadvantageous to do so.
There is also a risk that price movements in U.S. Treasury
security futures contracts and related options will not correlate
closely with price movements in markets for tax-exempt
securities. For example, if the Fund has hedged against a
decline in the values of tax-exempt securities held by it by
selling Treasury security futures and the values of Treasury
securities subsequently increase while the values of its
tax-exempt securities decrease, the Fund would incur losses on
both the Treasury security futures contracts written by it and
the tax-exempt securities held in its portfolio. Putnam
Management will seek to reduce this risk by monitoring movements
in markets for U.S. Treasury security futures and options and for
tax-exempt securities closely. The Fund will only purchase or
sell Treasury security futures or related options when, in the
opinion of Putnam Management, price movements in Treasury
security futures and related options will correlate closely with
price movements in tax-exempt securities in which the Fund
invests.
INDEX FUTURES CONTRACTS. An index futures contract is a contract
to buy or sell units of an index at a specified future date at a
price agreed upon when the contract is made. Entering into a
contract to buy units of an index is commonly referred to as
buying or purchasing a contract or holding a long position in
the index. Entering into a contract to sell units of an index is
commonly referred to as selling a contract or holding a short
position. A unit is the current value of the index. The Fund
may enter into stock index futures contracts, debt index futures
contracts, or other index futures contracts appropriate to its
objective. The Fund may also purchase and sell options on index
futures contracts.
For example, the Standard & Poor's Composite 500 Stock Price
Index ("S&P 500") is composed of 500 selected common stocks, most
of which are listed on the New York Stock Exchange. The S&P 500
assigns relative weightings to the common stocks included in the
Index, and the value fluctuates with changes in the market values
of those common stocks. In the case of the S&P 500, contracts
are to buy or sell 500 units. Thus, if the value of the S&P 500
were $150, one contract would be worth $75,000 (500 units x
$150). The stock index futures contract specifies that no
delivery of the actual stocks making up the index will take
place. Instead, settlement in cash must occur upon the
termination of the contract, with the settlement being the
difference between the contract price and the actual level of the
stock index at the expiration of the contract. For example, if
the Fund enters into a futures contract to buy 500 units of the
S&P 500 at a specified future date at a contract price of $150
and the S&P 500 is at $154 on that future date, the Fund will
gain $2,000 (500 units x gain of $4). If the Fund enters into a
futures contract to sell 500 units of the stock index at a
specified future date at a contract price of $150 and the S&P 500
is at $152 on that future date, the Fund will lose $1,000 (500
units x loss of $2).
There are several risks in connection with the use by the Fund of
index futures as a hedging device. One risk arises because of
the imperfect correlation between movements in the prices of the
index futures and movements in the prices of securities which are
the subject of the hedge. Putnam Management will, however,
attempt to reduce this risk by buying or selling, to the extent
possible, futures on indices the movements of which will, in its
judgment, have a significant correlation with movements in the
prices of the securities sought to be hedged.
Successful use of index futures by the Fund for hedging purposes
is also subject to Putnam Management's ability to predict
movements in the direction of the market. It is possible that,
where the Fund has sold futures to hedge its portfolio against a
decline in the market, the index on which the futures are written
may advance and the value of securities held in the Fund's
portfolio may decline. If this occurred, the Fund would lose
money on the futures and also experience a decline in value in
its portfolio securities. It is also possible that, if the Fund
has hedged against the possibility of a decline in the market
adversely affecting securities held in its portfolio and
securities prices increase instead, the Fund will lose part or
all of the benefit of the increased value of those securities it
has hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if the Fund has
insufficient cash, it may have to sell securities to meet daily
variation margin requirements at a time when it is
disadvantageous to do so.
In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the
index futures and the portion of the portfolio being hedged, the
prices of index futures may not correlate perfectly with
movements in the underlying index due to certain market
distortions. First, all participants in the futures market are
subject to margin deposit and maintenance requirements. Rather
than meeting additional margin deposit requirements, investors
may close futures contracts through offsetting transactions which
could distort the normal relationship between the index and
futures markets. Second, margin requirements in the futures
market are less onerous than margin requirements in the
securities market, and as a result the futures market may attract
more speculators than the securities market does. Increased
participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price
distortions in the futures market and also because of the
imperfect correlation between movements in the index and
movements in the prices of index futures, even a correct forecast
of general market trends by Putnam Management may still not
result in a successful hedging transaction over a short time
period.
OPTIONS ON STOCK INDEX FUTURES. Options on index futures are
similar to options on securities except that options on index
futures give the purchaser the right, in return for the premium
paid, to assume a position in an index futures contract (a long
position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during
the period of the option. Upon exercise of the option, the
delivery of the futures position by the writer of the option to
the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account which
represents the amount by which the market price of the index
futures contract, at exercise, exceeds (in the case of a call) or
is less than (in the case of a put) the exercise price of the
option on the index future. If an option is exercised on the
last trading day prior to its expiration date, the settlement
will be made entirely in cash equal to the difference between the
exercise price of the option and the closing level of the index
on which the future is based on the expiration date. Purchasers
of options who fail to exercise their options prior to the
exercise date suffer a loss of the premium paid.
OPTIONS ON INDICES
As an alternative to purchasing call and put options on index
futures, the Fund may purchase and sell call and put options on
the underlying indices themselves. Such options would be used in
a manner identical to the use of options on index futures.
INDEX WARRANTS
The Fund may purchase put warrants and call warrants whose values
vary depending on the change in the value of one or more
specified securities indices ("index warrants"). Index warrants
are generally issued by banks or other financial institutions and
give the holder the right, at any time during the term of the
warrant, to receive upon exercise of the warrant a cash payment
from the issuer based on the value of the underlying index at the
time of exercise. In general, if the value of the underlying
index rises above the exercise price of the index warrant, the
holder of a call warrant will be entitled to receive a cash
payment from the issuer upon exercise based on the difference
between the value of the index and the exercise price of the
warrant; if the value of the underlying index falls, the holder
of a put warrant will be entitled to receive a cash payment from
the issuer upon exercise based on the difference between the
exercise price of the warrant and the value of the index. The
holder of a warrant would not be entitled to any payments from
the issuer at any time when, in the case of a call warrant, the
exercise price is greater than the value of the underlying index,
or, in the case of a put warrant, the exercise price is less than
the value of the underlying index. If the Fund were not to
exercise an index warrant prior to its expiration, then the Fund
would lose the amount of the purchase price paid by it for the
warrant.
The Fund will normally use index warrants in a manner similar to
its use of options on securities indices. The risks of the
Fund's use of index warrants are generally similar to those
relating to its use of index options. Unlike most index options,
however, index warrants are issued in limited amounts and are not
obligations of a regulated clearing agency, but are backed only
by the credit of the bank or other institution which issues the
warrant. Also, index warrants generally have longer terms than
index options. Although the Fund will normally invest only in
exchange-listed warrants, index warrants are not likely to be as
liquid as certain index options backed by a recognized clearing
agency. In addition, the terms of index warrants may limit the
Fund's ability to exercise the warrants at such time, or in such
quantities, as the Fund would otherwise wish to do.
FOREIGN SECURITIES
Under its current policy, which may be changed without
shareholder approval, the Fund may invest up to the limit of its
total assets specified in its Prospectus in securities
principally traded in markets outside the United States.
Eurodollar certificates of deposit are excluded for purposes of
this limitation. Foreign investments can be affected favorably
or unfavorably by changes in currency exchange rates and in
exchange control regulations. There may be less publicly
available information about a foreign company than about a U.S.
company, and foreign companies may not be subject to accounting,
auditing and financial reporting standards and requirements
comparable to those applicable to U.S. companies. Securities of
some foreign companies are less liquid or more volatile than
securities of U.S. companies, and foreign brokerage commissions
and custodian fees are generally higher than in the United
States. Investments in foreign securities can involve other
risks different from those affecting U.S. investments, including
local political or economic developments, expropriation or
nationalization of assets and imposition of withholding taxes on
dividend or interest payments. To hedge against possible
variations in foreign exchange rates, the Fund may purchase and
sell forward foreign currency contracts. These represent
agreements to purchase or sell specified currencies at specified
dates and prices. The Fund will only purchase and sell forward
foreign currency contracts in amounts Putnam Management deems
appropriate to hedge existing or anticipated portfolio positions
and will not use such forward contracts for speculative purposes.
Foreign securities, like other assets of the Fund, will be held
by the Fund's custodian or by a subcustodian.
FOREIGN CURRENCY TRANSACTIONS
Unless otherwise specified in the Prospectus, the Fund may engage
without limit in currency exchange transactions, as well as
foreign currency forward and futures contracts, to protect
against uncertainty in the level of future currency exchange
rates. In addition, the Fund may write covered call and put
options on foreign currencies for the purpose of increasing its
current return.
Generally, the Fund may engage in both "transaction hedging" and
"position hedging". When it engages in transaction hedging, the
Fund enters into foreign currency transactions with respect to
specific receivables or payables, generally arising in connection
with the purchase or sale of portfolio securities. The Fund will
engage in transaction hedging when it desires to "lock in" the
U.S. dollar price of a security it has agreed to purchase or
sell, or the U.S. dollar equivalent of a dividend or interest
payment in a foreign currency. By transaction hedging the Fund
will attempt to protect itself against a possible loss resulting
from an adverse change in the relationship between the U.S.
dollar and the applicable foreign currency during the period
between the date on which the security is purchased or sold, or
on which the dividend or interest payment is earned, and the date
on which such payments are made or received.
The Fund may purchase or sell a foreign currency on a spot (or
cash) basis at the prevailing spot rate in connection with the
settlement of transactions in portfolio securities denominated in
that foreign currency. The Fund may also enter into contracts to
purchase or sell foreign currencies at a future date ("forward
contracts") and purchase and sell foreign currency futures
contracts.
For transaction hedging purposes the Fund may also purchase
exchange-listed and over-the-counter call and put options on
foreign currency futures contracts and on foreign currencies. A
put option on a futures contract gives the Fund the right to
assume a short position in the futures contract until the
expiration of the option. A put option on a currency gives the
Fund the right to sell the currency at an exercise price until
the expiration of the option. A call option on a futures
contract gives the Fund the right to assume a long position in
the futures contract until the expiration of the option. A call
option on a currency gives the Fund the right to purchase the
currency at the exercise price until the expiration of the
option.
When it engages in position hedging, the Fund enters into foreign
currency exchange transactions to protect against a decline in
the values of the foreign currencies in which its portfolio
securities are denominated (or an increase in the value of
currency for securities which the Fund expects to purchase, when
the Fund holds cash or short-term investments). In connection
with position hedging, the Fund may purchase put or call options
on foreign currency and on foreign currency futures contracts and
buy or sell forward contracts and foreign currency futures
contracts. The Fund may also purchase or sell foreign currency
on a spot basis.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved
will not generally be possible since the future value of such
securities in foreign currencies will change as a consequence of
market movements in the value of those securities between the
dates the currency exchange transactions are entered into and the
dates they mature.
It is impossible to forecast with precision the market value of
portfolio securities at the expiration or maturity of a forward
or futures contract. Accordingly, it may be necessary for the
Fund to purchase additional foreign currency on the spot market
(and bear the expense of such purchase) if the market value of
the security or securities being hedged is less than the amount
of foreign currency the Fund is obligated to deliver and a
decision is made to sell the security or securities and make
delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency
received upon the sale of the portfolio security or securities if
the market value of such security or securities exceeds the
amount of foreign currency the Fund is obligated to deliver.
Transaction and position hedging do not eliminate fluctuations in
the underlying prices of the securities which the Fund owns or
intends to purchase or sell. They simply establish a rate of
exchange which one can achieve at some future point in time.
Additionally, although these techniques tend to minimize the risk
of loss due to a decline in the value of the hedged currency,
they tend to limit any potential gain which might result from the
increase in value of such currency.
The Fund may seek to increase its current return or to offset
some of the costs of hedging against fluctuations in current
exchange rates by writing covered call options and covered put
options on foreign currencies. The Fund receives a premium from
writing a call or put option, which increases the Fund's current
return if the option expires unexercised or is closed out at a
net profit. The Fund may terminate an option that it has written
prior to its expiration by entering into a closing purchase
transaction in which it purchases an option having the same terms
as the option written.
The Fund's currency hedging transactions may call for the
delivery of one foreign currency in exchange for another foreign
currency and may at times not involve currencies in which its
portfolio securities are then denominated. Putnam Management
will engage in such "cross hedging" activities when it believes
that such transactions provide significant hedging opportunities
for the Fund. Cross hedging transactions by the Fund involve the
risk of imperfect correlation between changes in the values of
the currencies to which such transactions relate and changes in
the value of the currency or other asset or liability which is
the subject of the hedge.
CURRENCY FORWARD AND FUTURES CONTRACTS. A forward foreign
currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number
of days from the date of the contract as agreed by the parties,
at a price set at the time of the contract. In the case of a
cancelable forward contract, the holder has the unilateral right
to cancel the contract at maturity by paying a specified fee.
The contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial
banks) and their customers. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage
for trades. A foreign currency futures contract is a
standardized contract for the future delivery of a specified
amount of a foreign currency at a future date at a price set at
the time of the contract. Foreign currency futures contracts
traded in the United States are designed by and traded on
exchanges regulated by the CFTC, such as the New York Mercantile
Exchange.
Forward foreign currency exchange contracts differ from foreign
currency futures contracts in certain respects. For example, the
maturity date of a forward contract may be any fixed number of
days from the date of the contract agreed upon by the parties,
rather than a predetermined date in a given month. Forward
contracts may be in any amounts agreed upon by the parties rather
than predetermined amounts. Also, forward foreign exchange
contracts are traded directly between currency traders so that no
intermediary is required. A forward contract generally requires
no margin or other deposit.
At the maturity of a forward or futures contract, the Fund either
may accept or make delivery of the currency specified in the
contract, or at or prior to maturity enter into a closing
transaction involving the purchase or sale of an offsetting
contract. Closing transactions with respect to forward contracts
are usually effected with the currency trader who is a party to
the original forward contract. Closing transactions with respect
to futures contracts are effected on a commodities exchange; a
clearing corporation associated with the exchange assumes
responsibility for closing out such contracts.
Positions in the foreign currency futures contracts may be closed
out only on an exchange or board of trade which provides a
secondary market in such contracts. Although the Fund intends to
purchase or sell foreign currency futures contracts only on
exchanges or boards of trade where there appears to be an active
secondary market, there is no assurance that a secondary market
on an exchange or board of trade will exist for any particular
contract or at any particular time. In such event, it may not be
possible to close a futures position and, in the event of adverse
price movements, the Fund would continue to be required to make
daily cash payments of variation margin.
FOREIGN CURRENCY OPTIONS. In general, options on foreign
currencies operate similarly to options on securities and are
subject to many similar risks. Foreign currency options are
traded primarily in the over-the-counter market, although options
on foreign currencies have recently been listed on several
exchanges. Options are traded not only on the currencies of
individual nations, but also on the European Currency Unit
("ECU"). The ECU is composed of amounts of a number of
currencies, and is the official medium of exchange of the
European Community's European Monetary System.
The Fund will only purchase or write foreign currency options
when Putnam Management believes that a liquid secondary market
exists for such options. There can be no assurance that a liquid
secondary market will exist for a particular option at any
specific time. Options on foreign currencies are affected by all
of those factors which influence foreign exchange rates and
investments generally.
The value of any currency, including U.S. dollars and foreign
currencies, may be affected by complex political and economic
factors applicable to the issuing country. In addition, the
exchange rates of foreign currencies (and therefore the values
of foreign currency options) may be affected significantly,
fixed, or supported directly or indirectly by U.S. and foreign
government actions. Government intervention may increase risks
involved in purchasing or selling foreign currency options, since
exchange rates may not be free to fluctuate in response to other
market forces.
The value of a foreign currency option reflects the value of an
exchange rate, which in turn reflects relative values of two
currencies, the U.S. dollar and the foreign currency in question.
Because foreign currency transactions occurring in the interbank
market involve substantially larger amounts than those that may
be involved in the exercise of foreign currency options,
investors may be disadvantaged by having to deal in an odd lot
market for the underlying foreign currencies in connection with
options at prices that are less favorable than for round lots.
Foreign governmental restrictions or taxes could result in
adverse changes in the cost of acquiring or disposing of foreign
currencies.
There is no systematic reporting of last sale information for
foreign currencies and there is no regulatory requirement that
quotations available through dealers or other market sources be
firm or revised on a timely basis. Available quotation
information is generally representative of very large round-lot
transactions in the interbank market and thus may not reflect
exchange rates for smaller odd-lot transactions (less than $1
million) where rates may be less favorable. The interbank market
in foreign currencies is a global, around-the-clock market. To
the extent that options markets are closed while the markets for
the underlying currencies remain open, significant price and rate
movements may take place in the underlying markets that cannot be
reflected in the options markets.
SETTLEMENT PROCEDURES. Settlement procedures relating to the
Fund's investments in foreign securities and to the Fund's
foreign currency exchange transactions may be more complex than
settlements with respect to investments in debt or equity
securities of U.S. issuers, and may involve certain risks not
present in the Fund's domestic investments. For example,
settlement of transactions involving foreign securities or
foreign currency may occur within a foreign country, and the Fund
may be required to accept or make delivery of the underlying
securities or currency in conformity with any applicable U.S. or
foreign restrictions or regulations, and may be required to pay
any fees, taxes or charges associated with such delivery. Such
investments may also involve the risk that an entity involved in
the settlement may not meet its obligations.
FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers
do not charge a fee for currency conversion, they do realize a
profit based on the difference (the "spread") between prices at
which they are buying and selling various currencies. Thus, a
dealer may offer to sell a foreign currency to the Fund at one
rate, while offering a lesser rate of exchange should the Fund
desire to resell that currency to the dealer.
RESTRICTED SECURITIES
The SEC Staff currently takes the view that any designation by
the Trustees of the authority to determine that a restricted
security is readily marketable (as described in the investment
restrictions of the Funds) must be pursuant to written procedures
established by the Trustees. It is the present intention of the
Funds' Trustees that, if the Trustees decide to delegate such
determinations to Putnam Management or another person, they would
do so pursuant to written procedures, consistent with the Staff's
position. Should the Staff modify its position in the future,
the Trustees would consider what action would be appropriate in
light of the Staff's position at that time.
TAXES
TAXATION OF THE FUND. The Fund intends to qualify each year as a
regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). In order so to
qualify and to qualify for the special tax treatment accorded
regulated investment companies and their shareholders, the Fund
must, among other things:
(a) Derive at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, and
gains from the sale of stock, securities and foreign currencies,
or other income (including but not limited to gains from options,
futures, or forward contracts) derived with respect to its
business of investing in such stock, securities, or currencies;
(b) derive less than 30% of its gross income from the sale or
other disposition of certain assets (including stock or
securities and certain options, futures contracts, forward
contracts and foreign currencies) held for less than three
months;
(c) distribute with respect to each taxable year at least 90% of
the sum of its taxable net investment income, its net tax-exempt
income, and the excess, if any, of net short-term capital gains
over net long-term capital losses for such year; and
(d) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the market value of the Fund's
assets is represented by cash and cash items, U.S. Government
securities, securities of other regulated investment companies,
and other securities limited in respect of any one issuer to a
value not greater than 5% of the value of the Fund's total assets
and to not more than 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities (other than those of the
U.S. Government or other regulated investment companies) of any
one issuer or of two or more issuers which the Fund controls and
which are engaged in the same, similar, or related trades or
businesses.
If the Fund qualifies as a regulated investment company that is
accorded special tax treatment, the Fund will not be subject to
federal income tax on income paid to its shareholders in the form
of dividends (including capital gain dividends).
If the Fund failed to qualify as a regulated investment company
accorded special tax treatment in any taxable year, the Fund
would be subject to tax on its taxable income at corporate rates,
and all distributions from earnings and profits, including any
distributions of net tax-exempt income and net long-term capital
gains, would be taxable to shareholders as ordinary income. In
addition, the Fund could be required to recognize unrealized
gains, pay substantial taxes and interest and make substantial
distributions before requalifying as a regulated investment
company that is accorded special tax treatment.
If the Fund fails to distribute in a calendar year substantially
all of its ordinary income for such year and substantially all of
its capital gain net income for the one-year period ending
October 31 (or later if the Fund is permitted so to elect and so
elects), plus any retained amount from the prior year, the Fund
will be subject to a 4% excise tax on the undistributed amounts.
A dividend paid to shareholders by the Fund in January of a year
generally is deemed to have been paid by the Fund on December 31
of the preceding year, if the dividend was declared and payable
to shareholders of record on a date in October, November or
December of that preceding year. The Fund intends generally to
make distributions sufficient to avoid imposition of the 4%
excise tax.
EXEMPT-INTEREST DIVIDENDS. The Fund will be qualified to pay
exempt-interest dividends to its shareholders only if, at the
close of each quarter of the Fund's taxable year, at least 50% of
the total value of the Fund's assets consists of obligations the
interest on which is exempt from federal income tax.
Distributions that the Fund properly designates as exempt-
interest dividends are treated by shareholders as interest
excludable from their gross income for federal income tax
purposes but may be taxable for federal alternative minimum tax
purposes and for state and local purposes. If the Fund intends
to be qualified to pay exempt-interest dividends, the Fund may be
limited in its ability to enter into taxable transactions
involving forward commitments, repurchase agreements, financial
futures, and options contracts on financial futures, tax-exempt
bond indices, and other assets.
Part or all of the interest on indebtedness, if any, incurred or
continued by a shareholder to purchase or carry shares of a Fund
paying exempt-interest dividends is not deductible. The portion
of interest that is not deductible is equal to the total interest
paid or accrued on the indebtedness, multiplied by the percentage
of the Fund's total distributions (not including distributions
from net long-term capital gains) paid to the shareholder that
are exempt-interest dividends. Under rules used by the Internal
Revenue Service for determining when borrowed funds are
considered used for the purpose of purchasing or carrying
particular assets, the purchase of shares may be considered to
have been made with borrowed funds even though such funds are not
directly traceable to the purchase of shares.
In general, exempt-interest dividends, if any, attributable to
interest received on certain private activity obligations and
certain industrial development bonds will not be tax-exempt to
any shareholders who are "substantial users" of the facilities
financed by such obligations or bonds or who are "related
persons" of such substantial users.
A Fund which is qualified to pay exempt-interest dividends will
inform investors within 60 days of the Fund's fiscal year-end of
the percentage of its income distributions designated as
tax-exempt. The percentage is applied uniformly to all
distributions made during the year. The percentage of income
designated as tax-exempt for any particular distribution may be
substantially different from the percentage of the Fund's income
that was tax-exempt during the period covered by the
distribution.
HEDGING TRANSACTIONS. If the Fund engages in transactions,
including hedging transactions in options, futures contracts, and
straddles, or other similar transactions, it will be subject to
special tax rules (including mark-to-market, straddle, wash sale,
and short sale rules), the effect of which may be to accelerate
income to the Fund, defer losses to the Fund, cause adjustments
in the holding periods of the Fund's securities, or convert
short-term capital losses into long-term capital losses. These
rules could therefore affect the amount, timing and character of
distributions to shareholders. The Fund will endeavor to make
any available elections pertaining to such transactions in a
manner believed to be in the best interests of the Fund.
Under the 30% of gross income test described above (see "Taxation
of the Fund"), the Fund will be restricted in selling assets held
or considered under Code rules to have been held for less than
three months, and in engaging in certain hedging transactions
(including hedging transactions in options and futures) that in
some circumstances could cause certain Fund assets to be treated
as held for less than three months.
Certain of the Fund's hedging activities (including its
transactions, if any, in foreign currencies or foreign
currency-denominated instruments) are likely to produce a
difference between its book income and its taxable income. If
the Fund's book income exceeds its taxable income, the
distribution (if any) of such excess will be treated as a
dividend to the extent of the Fund's remaining earnings and
profits (including earnings and profits arising from tax-exempt
income), and thereafter as a return of capital or as gain from
the sale or exchange of a capital asset, as the case may be. If
the Fund's book income is less than its taxable income, the Fund
could be required to make distributions exceeding book income to
qualify as a regulated investment company that is accorded
special tax treatment.
RETURN OF CAPITAL DISTRIBUTIONS. If the Fund makes a
distribution to you in excess of its current and accumulated
"earnings and profits" in any taxable year, the excess
distribution will be treated as a return of capital to the extent
of your tax basis in your shares, and thereafter as capital gain.
A return of capital is not taxable, but it reduces your tax basis
in your shares, thus reducing any loss or increasing any gain on
a subsequent taxable disposition by you of your shares.
SECURITIES ISSUED OR PURCHASED AT A DISCOUNT. The Fund's
investment in securities issued at a discount and certain other
obligations will (and investments in securities purchased at a
discount may) require the Fund to accrue and distribute income
not yet received. In order to generate sufficient cash to make
the requisite distributions, the Fund may be required to sell
securities in its portfolio that it otherwise would have
continued to hold.
CAPITAL LOSS CARRYOVER. The amounts and expiration dates of any
capital loss carryovers available to the Fund are shown in Note 1
(Federal income taxes) to the financial statements included in
Part I of this Statement or incorporated by reference into this
Statement.
FOREIGN CURRENCY-DENOMINATED SECURITIES AND RELATED HEDGING
TRANSACTIONS. The Fund's transactions in foreign currencies,
foreign currency-denominated debt securities and certain foreign
currency options, futures contracts, and forward contracts (and
similar instruments) may give rise to ordinary income or loss to
the extent such income or loss results from fluctuations in the
value of the foreign currency concerned.
If more than 50% of the Fund's assets at year end consists of the
debt and equity securities of foreign corporations, the Fund may
elect to permit shareholders to claim a credit or deduction on
their income tax returns for their pro rata portion of qualified
taxes paid by the Fund to foreign countries. In such a case,
shareholders will include in gross income from foreign sources
their pro rata shares of such taxes. A shareholder's ability to
claim a foreign tax credit or deduction in respect of foreign
taxes paid by the Fund may be subject to certain limitations
imposed by the Code, as a result of which a shareholder may not
get a full credit or deduction for the amount of such taxes.
Shareholders who do not itemize on their federal income tax
returns may claim a credit (but no deduction) for such foreign
taxes.
Investment by the Fund in certain "passive foreign investment
companies" could subject the Fund to a U.S. federal income tax or
other charge on the proceeds from the sale of its investment in
such a company; however, this tax can be avoided by making an
election to mark such investments to market annually or to treat
the passive foreign investment company as a "qualified electing
fund."
SALE OR REDEMPTION OF SHARES. The sale, exchange or redemption
of Fund shares may give rise to a gain or loss. In general, any
gain or loss realized upon a taxable disposition of shares will
be treated as long-term capital gain or loss if the shares have
been held for more than 12 months, and otherwise as short-term
capital gain or loss. However, if a shareholder sells shares at
a loss within six months of purchase, any loss will be disallowed
for Federal income tax purposes to the extent of any exempt-
interest dividends received on such shares. In addition, any
loss (not already disallowed as provided in the preceding
sentence) realized upon a taxable disposition of shares held for
six months or less will be treated as long-term, rather than
short-term, to the extent of any long-term capital gain
distributions received by the shareholder with respect to the
shares. All or a portion of any loss realized upon a taxable
disposition of Fund shares will be disallowed if other Fund
shares are purchased within 30 days before or after the
disposition. In such a case, the basis of the newly purchased
shares will be adjusted to reflect the disallowed loss.
SHARES PURCHASED THROUGH TAX-QUALIFIED PLANS. Special tax rules
apply to investments though defined contribution plans and other
tax-qualified plans. Shareholders should consult their tax
adviser to determine the suitability of shares of a fund as an
investment through such plans and the precise effect of an
investment on their particular tax situation.
BACKUP WITHHOLDING. The Fund generally is required to withhold
and remit to the U.S. Treasury 31% of the taxable dividends and
other distributions paid to any individual shareholder who fails
to furnish the Fund with a correct taxpayer identification number
(TIN), who has underreported dividends or interest income, or who
fails to certify to the Fund that he or she is not subject to
such withholding. Shareholders who fail to furnish their currect
TIN are subject to a penalty of $50 for each such failure unless
the failure is due to reasonable cause and not wilful neglect.
An individual's taxpayer identification number is his or her
social security number.
MANAGEMENT OF THE FUND
TRUSTEES
*+GEORGE PUTNAM, Chairman and President. Chairman and Director
of Putnam Management and Putnam Mutual Funds. Director, The
Boston Company, Inc., Boston Safe Deposit and Trust Company,
Freeport-McMoRan, Inc., General Mills, Inc., Houghton Mifflin
Company, Marsh & McLennan Companies, Inc. and Rockefeller Group,
Inc.
+WILLIAM F. POUNDS, Vice Chairman. Professor of Management,
Alfred P. Sloan School of Management, Massachusetts Institute of
Technology. Director of EG&G, Inc., Fisher Price, Inc., IDEXX,
M/A-COM, Inc., and Sun Company, Inc.
JAMESON A. BAXTER, Trustee. President, Baxter Associates, Inc.
(consultants to management). Director of Avondale Federal Savings
Bank, ASHTA Chemicals, Inc. and Banta Corporation. Chairman of
the Board of Trustees, Mount Holyoke College.
+HANS H. ESTIN, Trustee. Vice Chairman, North American
Management Corp. (a registered investment adviser). Director of
The Boston Company, Inc. and Boston Safe Deposit and Trust
Company.
ELIZABETH T. KENNAN, Trustee. President of Mount Holyoke
College. Director, the Kentucky Home Life Insurance Companies,
NYNEX Corporation, Northeast Utilities and Talbots and Trustee of
the University of Notre Dame.
*LAWRENCE J. LASSER, Trustee and Vice President. President,
Chief Executive Officer and Director of Putnam Investments, Inc.
and Putnam Investment Management, Inc. Director of Marsh &
McLennan Companies, Inc. Vice President of the Putnam funds.
JOHN A. HILL, Trustee. Chairman and Managing Director, First
Reserve Corporation (a registered investment adviser). Director,
Lantana Corporation, Maverick Tube Corporation, Snyder Oil
Corporation and various First Reserve Funds.
+ROBERT E. PATTERSON, Trustee. Executive Vice President, Cabot
Partners Limited Partnership (a registered investment adviser).
DONALD S. PERKINS, Trustee. Director of various corporations,
including American Telephone & Telegraph Company, AON Corp.,
Cummins Engine Company, Inc., Illinois Power Company, Inland
Steel Industries, Inc., K mart Corporation, LaSalle Street Fund,
Inc., Springs Industries, Inc., TBG, Inc. and Time Warner Inc.
*#GEORGE PUTNAM, III, Trustee. President, New Generation
Research, Inc. (publisher of bankruptcy information). Director,
World Environment Center.
*A.J.C. SMITH, Trustee. Chairman, Chief Executive Officer and
Director, Marsh & McLennan Companies, Inc.
W. NICHOLAS THORNDIKE, Trustee. Director of various corporations
and charitable organizations, including Courier Corporation and
Providence Journal Co. Also, Trustee and President of
Massachusetts General Hospital and Trustee of Bradley Real Estate
Trust and Eastern Utilities Associates.
OFFICERS
CHARLES E. PORTER, Executive Vice President. Managing Director
of Putnam Investments, Inc. and Putnam Investment Management,
Inc. Executive Vice President of the Putnam funds.
PATRICIA C. FLAHERTY, Senior Vice President. Senior Vice
President of Putnam Investments, Inc. and Putnam Investment
Management, Inc.
WILLIAM N. SHIEBLER, Vice President. Director and Senior
Managing Director of Putnam Investments, Inc. President, Chief
Operating Officer and Director of Putnam Mutual Funds. Vice
President of the Putnam funds.
GORDON H. SILVER, Vice President. Senior Managing Director of
Putnam Investments, Inc. and Putnam Investment Management, Inc.
Director, Putnam Investments, Inc. and Putnam Investment
Management, Inc. Vice President of the Putnam funds.
JOHN R. VERANI, Vice President. Senior Vice President of Putnam
Investments, Inc. and Putnam Investment Management, Inc. Vice
President of the Putnam funds.
PAUL M. O'NEIL, Vice President. Vice President of Putnam
Investments, Inc. and Putnam Investment Management, Inc. Vice
President of the Putnam funds.
JOHN D. HUGHES, Vice President and Treasurer. Vice President and
Treasurer of the Putnam funds.
KATHERINE HOWARD, Assistant Vice President. Assistant Vice
President of the Putnam funds.
BEVERLY MARCUS, Clerk and Assistant Treasurer. Clerk and
Assistant Treasurer of the Putnam funds.
*Trustees who are "interested persons" (as defined in the
Investment Company Act of 1940) of the Fund, Putnam Management or
Putnam Mutual Funds.
+Members of the Executive Committee of the Trustees. The
Executive Committee meets between regular meetings of the
Trustees as may be required to review investment matters and
other affairs of the Fund and may exercise all of the powers of
the Trustees.
#George Putnam, III is the son of George Putnam.
-----------------
Certain other officers of Putnam Management are officers of your
Fund. SEE "ADDITIONAL OFFICERS OF THE FUND" IN PART I OF THIS
STATEMENT. The mailing address of each of the officers and
Trustees is One Post Office Square, Boston, Massachusetts 02109.
Except as stated below, the principal occupations of the officers
and Trustees for the last five years have been with the employers
as shown above, although in some cases they have held different
positions with such employers. Also, prior to January, 1992, Ms.
Baxter was Vice President and Principal, Regency Group, Inc. and
Consultant, The First Boston Corporation. Prior to May, 1991,
Mr. Pounds was Senior Advisor to the Rockefeller Family and
Associates, Chairman of Rockefeller Trust Company and Director of
Rockefeller Group, Inc. Prior to November, 1990, Mr. Shiebler
was President and Chief Operating Officer of the Intercapital
Division of Dean Witter Reynolds, Inc., Vice President of the
Dean Witter Funds and Director of Dean Witter Trust Company.
Each Trustee of the Fund receives an annual fee and an additional
fee for each Trustees' meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on
committees of the Trustees receive additional fees for attendance
at certain committee meetings and for special services rendered
in that connection. All of the Trustees are Trustees of all the
Putnam funds and each receives fees for his or her services. FOR
DETAILS OF TRUSTEES' FEES PAID BY THE FUND, SEE "FUND CHARGES AND
EXPENSES" IN PART I OF THIS STATEMENT.
The Agreement and Declaration of Trust of the Fund provides that
the Fund will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with the
Fund, except if it is determined in the manner specified in the
Agreement and Declaration of Trust that they have not acted in
good faith in the reasonable belief that their actions were in
the best interests of the Fund or that such indemnification would
relieve any officer or Trustee of any liability to the Fund or
its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of his or her duties. The
Fund, at its expense, provides liability insurance for the
benefit of its Trustees and officers.
Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust
Company are subsidiaries of Putnam Investments, Inc., a holding
company which is in turn wholly owned by Marsh & McLennan
Companies, Inc., a publicly owned holding company whose principal
operating subsidiaries are international insurance and
reinsurance brokers, investment managers and management
consultants.
Trustees and officers of the Fund who are also officers of Putnam
Management or its affiliates or who are stockholders of Marsh &
McLennan Companies, Inc. will benefit from the advisory fees,
sales commissions, distribution fees (if any), custodian fees and
transfer agency fees paid or allowed by the Fund.
PUTNAM MANAGEMENT
Putnam Management is one of America's oldest and largest money
management firms. Putnam Management's staff of experienced
portfolio managers and research analysts selects securities and
constantly supervises the Fund's portfolio. By pooling an
investor's money with that of other investors, a greater variety
of securities can be purchased than would be the case
individually; the resulting diversification helps reduce
investment risk. Putnam Management has been managing mutual funds
since 1937. Today, the firm serves as the investment manager for
the funds in the Putnam Family, with over $67 billion in assets
in over 4.1 million shareholder accounts at December 31, 1994.
An affiliate, The Putnam Advisory Company, Inc., manages domestic
and foreign institutional accounts and mutual funds, including
the accounts of many Fortune 500 companies. Another affiliate,
Putnam Fiduciary Trust Company, provides investment advice to
institutional clients under its banking and fiduciary powers. At
December 31, 1994, Putnam Management and its affiliates managed
over $95 billion in assets, including over $15 billion in tax
exempt securities and over $36 billion in retirement plan assets.
THE MANAGEMENT CONTRACT
Under a Management Contract between the Fund and Putnam
Management, subject to such policies as the Trustees may
determine, Putnam Management, at its expense, furnishes
continuously an investment program for the Fund and makes
investment decisions on behalf of the Fund. Subject to the
control of the Trustees, Putnam Management also manages,
supervises and conducts the other affairs and business of the
Fund, furnishes office space and equipment, provides bookkeeping
and clerical services (including determination of the Fund's net
asset value, but excluding shareholder accounting services) and
places all orders for the purchase and sale of the Fund's
portfolio securities. Putnam Management may place Fund portfolio
transactions with broker-dealers which furnish Putnam Management,
without cost to it, certain research, statistical and quotation
services of value to Putnam Management and its affiliates in
advising the Fund and other clients. In so doing, Putnam
Management may cause the Fund to pay greater brokerage
commissions than it might otherwise pay.
FOR DETAILS OF PUTNAM MANAGEMENT'S COMPENSATION UNDER THE
MANAGEMENT CONTRACT, SEE "FUND CHARGES AND EXPENSES" IN PART I OF
THIS STATEMENT. Putnam Management's compensation under the
Management Contract may be reduced in any year if the Fund's
expenses exceed the limits on investment company expenses imposed
by any statute or regulatory authority of any jurisdiction in
which shares of the Fund are qualified for offer or sale. The
term "expenses" is defined in the statutes or regulations of such
jurisdictions, and generally, excludes brokerage commissions,
taxes, interest, extraordinary expenses and, if the Fund has a
Distribution Plan, payments made under such Plan. The only such
limitation as of the date of this Statement (applicable to any
Fund registered for sale in California) was 2.5% of the first $30
million of average net assets, 2% of the next $70 million and
1.5% of any excess over $100 million.
Under the Management Contract, Putnam Management may reduce its
compensation to the extent that the Fund's expenses exceed such
lower expense limitation as Putnam Management may, by notice to
the Fund, declare to be effective. The expenses subject to this
limitation are exclusive of brokerage commissions, interest,
taxes, deferred organizational and extraordinary expenses and,
if the Fund has a Distribution Plan, payments required under such
Plan. THE TERMS OF ANY EXPENSE LIMITATION FROM TIME TO TIME IN
EFFECT ARE DESCRIBED IN EITHER THE PROSPECTUS OR PART I OF THIS
STATEMENT.
In addition to the fee paid to Putnam Management, the Fund
reimburses Putnam Management for the compensation and related
expenses of certain officers of the Fund and their assistants who
provide certain administrative services for the Fund and the
other funds in the Putnam Family, each of which bears an
allocated share of the foregoing costs. The aggregate amount of
all such payments and reimbursements is determined annually by
the Trustees. THE AMOUNT OF THIS REIMBURSEMENT FOR THE FUND'S
MOST RECENT FISCAL YEAR IS INCLUDED IN "FUND CHARGES AND
EXPENSES" IN PART I OF THIS STATEMENT. Putnam Management pays
all other salaries of officers of the Fund. The Fund pays all
expenses not assumed by Putnam Management including, without
limitation, auditing, legal, custodial, investor servicing and
shareholder reporting expenses. The Fund pays the cost of
typesetting for its Prospectuses and the cost of printing and
mailing any Prospectuses sent to its shareholders. Putnam Mutual
Funds pays the cost of printing and distributing all other
Prospectuses.
The Management Contract provides that Putnam Management shall not
be subject to any liability to the Fund or to any shareholder of
the Fund for any act or omission in the course of or connected
with rendering services to the Fund in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
its duties on the part of Putnam Management.
The Management Contract may be terminated without penalty by vote
of the Trustees or the shareholders of the Fund, or by Putnam
Management, on 30 days' written notice. It may be amended only
by a vote of the shareholders of the Fund. The Management
Contract also terminates without payment of any penalty in the
event of its assignment. The Management Contract provides that
it will continue in effect only so long as such continuance is
approved at least annually by vote of either the Trustees or the
shareholders, and, in either case, by a majority of the Trustees
who are not "interested persons" of Putnam Management or the
Fund. In each of the foregoing cases, the vote of the
shareholders is the affirmative vote of a "majority of the
outstanding voting securities" as defined in the Investment
Company Act of 1940.
PORTFOLIO TRANSACTIONS
INVESTMENT DECISIONS. Investment decisions for the Fund and for
the other investment advisory clients of Putnam Management and
its affiliates are made with a view to achieving their respective
investment objectives. Investment decisions are the product of
many factors in addition to basic suitability for the particular
client involved. Thus, a particular security may be bought or
sold for certain clients even though it could have been bought or
sold for other clients at the same time. Likewise, a particular
security may be bought for one or more clients when one or more
other clients are selling the security. In some instances, one
client may sell a particular security to another client. It also
sometimes happens that two or more clients simultaneously
purchase or sell the same security, in which event each day's
transactions in such security are, insofar as possible, averaged
as to price and allocated between such clients in a manner which
in Putnam Management's opinion is equitable to each and in
accordance with the amount being purchased or sold by each.
There may be circumstances when purchases or sales of portfolio
securities for one or more clients will have an adverse effect on
other clients.
BROKERAGE AND RESEARCH SERVICES. Transactions on U.S. stock
exchanges, commodities markets and futures markets and other
agency transactions involve the payment by the Fund of negotiated
brokerage commissions. Such commissions vary among different
brokers. A particular broker may charge different commissions
according to such factors as the difficulty and size of the
transaction. Transactions in foreign investments often involve
the payment of fixed brokerage commissions, which may be higher
than those in the United States. There is generally no stated
commission in the case of securities traded in the
over-the-counter markets, but the price paid by the Fund usually
includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid by the Fund includes a
disclosed, fixed commission or discount retained by the
underwriter or dealer. It is anticipated that most purchases and
sales of securities by funds investing primarily in tax-exempt
securities and certain other fixed-income securities will be with
the issuer or with underwriters of or dealers in those
securities, acting as principal. Accordingly, those funds would
not ordinarily pay significant brokerage commissions with respect
to securities transactions. SEE "FUND CHARGES AND EXPENSES" IN
PART I OF THIS STATEMENT FOR INFORMATION CONCERNING COMMISSIONS
PAID BY THE FUND.
It has for many years been a common practice in the investment
advisory business for advisers of investment companies and other
institutional investors to receive brokerage and research
services (as defined in the Securities Exchange Act of 1934, as
amended (the "1934 Act")) from broker-dealers that execute
portfolio transactions for the clients of such advisers and from
third parties with which such broker-dealers have arrangements.
Consistent with this practice, Putnam Management receives
brokerage and research services and other similar services from
many broker-dealers with which Putnam Management places the
Fund's portfolio transactions and from third parties with which
these broker-dealers have arrangements. These services include
such matters as general economic and market reviews, industry and
company reviews, evaluations of investments, recommendations as
to the purchase and sale of investments, newspapers, magazines,
pricing services, quotation services, news services and personal
computers utilized by Putnam Management's managers and analysts.
Where the services referred to above are not used exclusively by
Putnam Management for research purposes, Putnam Management, based
upon its own allocations of expected use, bears that portion of
the cost of these services which directly relates to their
non-research use. Some of these services are of value to Putnam
Management and its affiliates in advising various of their
clients (including the Fund), although not all of these services
are necessarily useful and of value in managing the Fund. The
management fee paid by the Fund is not reduced because Putnam
Management and its affiliates receive these services even though
Putnam Management might otherwise be required to purchase some of
these services for cash.
Putnam Management places all orders for the purchase and sale of
portfolio investments for the Fund and buys and sells investments
for the Fund through a substantial number of brokers and dealers.
In so doing, Putnam Management uses its best efforts to obtain
for the Fund the most favorable price and execution available,
except to the extent it may be permitted to pay higher brokerage
commissions as described below. In seeking the most favorable
price and execution, Putnam Management, having in mind the Fund's
best interests, considers all factors it deems relevant,
including, by way of illustration, price, the size of the
transaction, the nature of the market for the security or other
investment, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the
reputation, experience and financial stability of the
broker-dealer involved and the quality of service rendered by the
broker-dealer in other transactions.
As permitted by Section 28(e) of the 1934 Act, and by the
Management Contract, Putnam Management may cause the Fund to pay
a broker-dealer which provides "brokerage and research services"
(as defined in the 1934 Act) to Putnam Management an amount of
disclosed commission for effecting securities transactions on
stock exchanges and other transactions for the Fund on an agency
basis in excess of the commission which another broker-dealer
would have charged for effecting that transaction. Putnam
Management's authority to cause the Fund to pay any such greater
commissions is also subject to such policies as the Trustees may
adopt from time to time. Putnam Management does not currently
intend to cause the Fund to make such payments. It is the
position of the staff of the Securities and Exchange Commission
that Section 28(e) does not apply to the payment of such greater
commissions in "principal" transactions. Accordingly Putnam
Management will use its best effort to obtain the most favorable
price and execution available with respect to such transactions,
as described above.
The Management Contract provides that commissions, fees,
brokerage or similar payments received by Putnam Management or an
affiliate in connection with the purchase and sale of portfolio
investments of the Fund, less any direct expenses approved by the
Trustees, shall be recaptured by the Fund through a reduction of
the fee payable by the Fund under the Management Contract.
Putnam Management seeks to recapture for the Fund soliciting
dealer fees on the tender of the Fund's portfolio securities in
tender or exchange offers. Any such fees which may be recaptured
are likely to be minor in amount.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. and subject to seeking
the most favorable price and execution available and such other
policies as the Trustees may determine, Putnam Management may
consider sales of shares of the Fund (and, if permitted by law,
of the other Putnam funds) as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.
PRINCIPAL UNDERWRITER
Putnam Mutual Funds is the principal underwriter of shares of the
Fund and the other continuously offered Putnam funds. Putnam
Mutual Funds is not obligated to sell any specific amount of
shares of the Fund and will purchase shares for resale only
against orders for shares. SEE "FUND CHARGES AND EXPENSES" IN
PART I OF THIS STATEMENT FOR INFORMATION ON SALES CHARGES AND
OTHER PAYMENTS RECEIVED BY PUTNAM MUTUAL FUNDS.
INVESTOR SERVICING AGENT AND CUSTODIAN
Putnam Investor Services, a division of Putnam Fiduciary Trust
Company ("PFTC"), is the Fund's investor servicing agent
(transfer, plan and dividend disbursing agent), for which it
receives fees which are paid monthly by the Fund as an expense of
all its shareholders. The fee paid to Putnam Investor Services
is determined by the Trustees taking into account the number of
shareholder accounts and transactions. Putnam Investor Services
has won the DALBAR Quality Tested Service Seal every year since
the award's 1990 inception. Over 10,000 tests of 38 separate
shareholders service components demonstrated that Putnam Investor
Services exceeded the industry standard in all categories.
PFTC is the custodian of the Fund's assets. In carrying out its
duties under its custodian contract, PFTC may employ one or more
subcustodians whose responsibilities will include safeguarding
and controlling the Fund's cash and securities, handling the
receipt and delivery of securities and collecting interest and
dividends on the Fund's investments. PFTC and any subcustodians
employed by it have a lien on the securities of the Fund (to the
extent permitted by the Fund's investment restrictions) to secure
charges and any advances made by such subcustodians at the end of
any day for the purpose of paying for securities purchased by the
Fund. The Fund expects that such advances will exist only in
unusual circumstances. Neither PFTC nor any subcustodian
determines the investment policies of the Fund or decides which
securities the Fund will buy or sell. PFTC pays the fees and
other charges of any subcustodians employed by it. The Fund may
from time to time pay custodial expenses in full or in part
through the placement by Putnam Management of the Fund's
portfolio transactions with the subcustodians or with a third-
party broker having an agreement with the subcustodians. The
Fund pays PFTC an annual fee based on the Fund's assets,
securities transactions and securities holdings and reimburses
PFTC for certain out-of-pocket expenses incurred by it or any
subcustodian employed by it in performing custodial services.
SEE "FUND CHARGES AND EXPENSES" IN PART I OF THIS STATEMENT FOR
INFORMATION ON FEES AND REIMBURSEMENTS FOR INVESTOR SERVICING AND
CUSTODY RECEIVED BY PFTC. THE FEES MAY BE REDUCED BY CREDITS
ALLOWED BY PFTC.
DETERMINATION OF NET ASSET VALUE
The Fund determines the net asset value per share of each class
of shares once each day the New York Stock Exchange (the
"Exchange") is open. Currently, the Exchange is closed
Saturdays, Sundays and the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, the Fourth of July,
Labor Day, Thanksgiving and Christmas. The Fund determines net
asset value as of the close of regular trading on the Exchange,
currently 4:00 p.m. However, equity options held by the Fund are
priced as of the close of trading at 4:10 p.m., and futures
contracts on U.S. Government securities and index options held by
the Fund are priced as of their close of trading at 4:15 p.m.
Securities for which market quotations are readily available are
valued at prices which, in the opinion of the Trustees or Putnam
Management, most nearly represent the market values of such
securities. Currently, such prices are determined using the last
reported sale price or, if no sales are reported (as in the case
of some securities traded over-the-counter), the last reported
bid price, except that certain U.S. Government securities are
stated at the mean between the last reported bid and asked
prices. Short-term investments having remaining maturities of 60
days or less are stated at amortized cost, which approximates
market value. All other securities and assets are valued at
their fair value following procedures approved by the Trustees.
Liabilities are deducted from the total, and the resulting amount
is divided by the number of shares of the class outstanding.
Reliable market quotations are not considered to be readily
available for long-term corporate bonds and notes, certain
preferred stocks, tax-exempt securities, and certain foreign
securities. These investments are stated at fair value on the
basis of valuations furnished by pricing services approved by the
Trustees, which determine valuations for normal,
institutional-size trading units of such securities using methods
based on market transactions for comparable securities and
various relationships between securities which are generally
recognized by institutional traders.
If any securities held by the Fund are restricted as to resale,
Putnam Management determines their fair value following
procedures approved by the Trustees. The fair value of such
securities is generally determined as the amount which the Fund
could reasonably expect to realize from an orderly disposition of
such securities over a reasonable period of time. The valuation
procedures applied in any specific instance are likely to vary
from case to case. However, consideration is generally given to
the financial position of the issuer and other fundamental
analytical data relating to the investment and to the nature of
the restrictions on disposition of the securities (including any
registration expenses that might be borne by the Fund in
connection with such disposition). In addition, specific factors
are also generally considered, such as the cost of the
investment, the market value of any unrestricted securities of
the same class, the size of the holding, the prices
of any recent transactions or offers with respect to such
securities and any available analysts' reports regarding the
issuer.
Generally, trading in certain securities (such as foreign
securities) is substantially completed each day at various times
prior to the close of the Exchange. The values of these
securities used in determining the net asset value of the Fund's
shares are computed as of such times. Also, because of the
amount of time required to collect and process trading
information as to large numbers of securities issues, the values
of certain securities (such as convertible bonds, U.S. Government
securities, and tax-exempt securities) are determined based on
market quotations collected earlier in the day at the latest
practicable time prior to the close of the Exchange.
Occasionally, events affecting the value of such securities may
occur between such times and the close of the Exchange which will
not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such
securities occur during such period, then these securities will
be valued at their fair value following procedures approved by
the Trustees.
Money market funds generally value their portfolio securities at
amortized cost according to Rule 2a-7 under the Investment
Company Act of 1940.
HOW TO BUY SHARES
General
The Prospectus contains a general description of how investors
may buy shares of the Fund and states whether the Fund offers
more than one class of shares. This Statement contains
additional information which may be of interest to investors.
Class A shares and Class M shares are sold with a sales charge
payable at the time of purchase (except for Class A shares and
Class M shares of money market funds). As used in this Statement
and unless the context requires otherwise, the term "Class A
shares" includes shares of Funds that offer only one class of
shares. The Prospectus contains a table of applicable sales
charges. For information about how to purchase Class A shares of
a Putnam fund at net asset value through an employer's defined
contribution plan, please consult your employer. Certain
purchases of Class A shares and Class M shares may be exempt from
a sales charge or, in the case of Class A shares, may be subject
to a contingent deferred sales charge ("CDSC"). See "General--
Sales without sales charges or contingent deferred sales
charges", "Additional Information About Class A and Class M
Shares", and "Contingent Deferred Sales Charges--Class A shares".
Class B shares and Class C shares are sold subject to a CDSC
payable upon redemption within a specified period after purchase.
The Prospectus contains a table of applicable CDSCs.
Class Y shares, which are available only to employer-sponsored
defined contribution plans initially investing at least $250
million in a combination of Putnam funds and other investments
managed by Putnam Management or its affiliates, are not subject
to sales charges or a CDSC.
Certain purchase programs described below are not available to
defined contribution plans. Consult your employer for
information on how to purchase shares through your plan.
The Fund is currently making a continuous offering of its shares.
The Fund receives the entire net asset value of shares sold. The
Fund will accept unconditional orders for shares to be executed
at the public offering price based on the net asset value per
share next determined after the order is placed. In the case of
Class A shares and Class M shares, the public offering price is
the net asset value plus the applicable sales charge, if any. No
sales charge is included in the public offering price of other
classes of shares. In the case of orders for purchase of shares
placed through dealers, the public offering price will be based
on the net asset value determined on the day the order is placed,
but only if the dealer receives the order before the close of
regular trading on the Exchange. If the dealer receives the
order after the close of the Exchange, the price will be based on
the net asset value next determined. If funds for the purchase
of shares are sent directly to Putnam Investor Services, they
will be invested at the public offering price based on the net
asset value next determined after receipt. Payment for shares of
the Fund must be in U.S. dollars; if made by check, the check
must be drawn on a U.S. bank.
Initial and subsequent purchases must satisfy the minimums stated
in the Prospectus, except that (i) individual investments under
certain employee benefit plans or Tax Qualified Retirement Plans
may be lower, (ii) persons who are already shareholders may make
additional purchases of $50 or more by sending funds directly to
Putnam Investor Services (see "Your Investing Account" below),
and (iii) for investors participating in systematic investment
plans and military allotment plans, the initial and subsequent
purchases must be $25 or more. Information about these plans is
available from investment dealers or from Putnam Mutual Funds.
As a convenience to investors, shares may be purchased through a
systematic investment plan. Preauthorized monthly bank drafts
for a fixed amount (at least $25) are used to purchase Fund
shares at the applicable public offering price next determined
after Putnam Mutual Funds receives the proceeds from the draft
(normally the 20th of each month, or the next business day
thereafter). Further information and application forms are
available from investment dealers or from Putnam Mutual Funds.
Except for Putnam funds that declare a distribution daily,
distributions to be reinvested are reinvested without a sales
charge in shares of the same class as of the ex-dividend date
using the net asset value determined on that date, and are
credited to a shareholder's account on the payment date.
Dividends for Putnam money market funds are credited to a
shareholder's account on the payment date. Distributions for
Putnam Tax-Free Income Trust and Putnam Corporate Asset Trust are
reinvested without a sales charge as of the last day of the
period for which distributions are paid using the net asset value
determined on that date, and are credited to a shareholder's
account on the payment date. Distributions for all other Putnam
funds that declare a distribution daily are reinvested without a
sales charge as of the next day following the period for which
distributions are paid using the net asset value determined on
that date, and are credited to a shareholder's account on the
payment date.
PAYMENT IN SECURITIES. In addition to cash, the Fund may accept
securities as payment for Fund shares at the applicable net asset
value. Generally, the Fund will only consider accepting
securities to increase its holdings in a portfolio security, or
if Putnam Management determines that the offered securities are a
suitable investment for the Fund and in a sufficient amount for
efficient management.
While no minimum has been established, it is expected that the
Fund would not accept securities with a value of less than
$100,000 per issue as payment for shares. The Fund may reject in
whole or in part any or all offers to pay for purchases of Fund
shares with securities, may require partial payment in cash for
such purchases to provide funds for applicable sales charges, and
may discontinue accepting securities as payment for Fund shares
at any time without notice. The Fund will value accepted
securities in the manner described in the section "Determination
of Net Asset Value" for valuing shares of the Fund. The Fund
will only accept securities which are delivered in proper form.
The Fund will not accept options or restricted securities as
payment for shares. The acceptance of securities by certain
Funds in exchange for Fund shares are subject to additional
requirements. In the case of Putnam American Government Income
Fund, Putnam Asia Pacific Growth Fund, Putnam Asset Allocation
Funds: Balanced Portfolio, Putnam Asset Allocation Funds:
Conservative Portfolio, Putnam Asset Allocation Funds: Growth
Portfolio, Putnam Capital Appreciation Fund, Putnam Corporate
Asset Trust, Putnam Diversified Equity Trust, Putnam Equity
Income Fund, Putnam Europe Growth Fund, The Putnam Fund for
Growth & Income, Putnam Growth and Income Fund II, Putnam High
Yield Advantage Fund, Putnam Intermediate Tax Exempt Fund, Putnam
Municipal Income Fund, Putnam OTC Emerging Growth Fund, Putnam
Overseas Growth Fund, Putnam Tax Exempt Income Fund and Putnam
Total Return Bond Funds, transactions involving the issuance of
Fund shares for securities or assets other than cash will be
limited to a bona-fide re-organization or statutory merger and to
other acquisitions of portfolio securities that meet all the
following conditions: (a) such securities meet the investment
objectives and policies of the Fund; (b) such securities are
acquired for investment and not for resale; (c) such securities
are liquid securities which are not restricted as to transfer
either by law or liquidity of market; and (d) such securities
have a value which is readily ascertainable, as evidenced by a
listing on the American Stock Exchange, the New York Stock
Exchange or NASDAQ. In addition, Putnam Global Governmental
Income Trust may accept only investment grade bonds with prices
regularly stated in publications generally accepted by investors,
such as the London Financial Times and the Association of
International Bond Dealers manual, or securities listed on the
New York or American Stock Exchanges or with NASDAQ, and Putnam
Diversified Income Trust may accept only bonds with prices
regularly stated in publications generally accepted by investors.
For federal income tax purposes, a purchase of Fund shares with
securities will be treated as a sale or exchange of such
securities on which the investor will realize a taxable gain or
loss. The processing of a purchase of Fund shares with
securities involves certain delays while the Fund considers the
suitability of such securities and while other requirements are
satisfied. For information regarding procedures for payment in
securities, contact Putnam Mutual Funds. Investors should not
send securities to the Fund except when authorized to do so and
in accordance with specific instructions received from Putnam
Mutual Funds.
SALES WITHOUT SALES CHARGES OR CONTINGENT DEFERRED SALES CHARGES.
The Fund may sell shares without a sales charge or CDSC to:
(i) current and retired Trustees of the Fund; officers of
the Fund; directors and current and retired U.S. full-time
employees of Putnam Management, Putnam Mutual Funds, their
parent corporations and certain corporate affiliates;
family members of and employee benefit plans for the
foregoing; and partnerships, trusts or other entities in
which any of the foregoing has a substantial interest;
(ii) employee benefit plans, for the repurchase of shares
in connection with repayment of plan loans made to plan
participants (if the sum loaned was obtained by redeeming
shares of a Putnam fund sold with a sales charge) (not
offered by tax-exempt funds);
(iii) clients of administrators of tax-qualified employee
benefit plans which have entered into agreements with
Putnam Mutual Funds (not offered by tax-exempt funds);
(iv) registered representatives and other employees of
broker-dealers having sales agreements with Putnam Mutual
Funds; employees of financial institutions having sales
agreements with Putnam Mutual Funds or otherwise having an
arrangement with any such broker-dealer or financial
institution with respect to sales of Fund shares; and
their spouses and children under age 21 (Putnam Mutual
Funds is regarded as the dealer of record for all such
accounts);
(v) investors meeting certain requirements who sold shares
of certain Putnam closed-end funds pursuant to a tender
offer by such closed-end fund;
(vi) a trust department of any financial institution
purchasing shares of the Fund in its capacity as trustee
of any trust, if the value of the shares of the Fund and
other Putnam funds purchased or held by all such trusts
exceeds $1 million in the aggregate; and
(vii) "wrap accounts" maintained for clients of broker-
dealers, financial institutions or financial planners who
have entered into agreements with Putnam Mutual Funds with
respect to such accounts.
In addition, the Fund may issue its shares at net asset value in
connection with the acquisition of substantially all of the
securities owned by other investment companies or personal
holding companies.
PAYMENTS TO DEALERS. Putnam Mutual Funds may, at its expense,
pay concessions in addition to the payments disclosed in the
Prospectus to dealers which satisfy certain criteria established
from time to time by Putnam Mutual Funds relating to increasing
net sales of shares of the Putnam funds over prior periods, and
certain other factors.
ADDITIONAL INFORMATION ABOUT CLASS A AND CLASS M SHARES
The underwriter's commission is the sales charge shown in the
Prospectus less any applicable dealer discount. Putnam Mutual
Funds will give dealers ten days' notice of any changes in the
dealer discount. Putnam Mutual Funds retains the entire sales
charge on any retail sales made by it.
Putnam Mutual Funds offers several plans by which an investor may
obtain reduced sales charges on purchases of Class A shares and
Class M shares. The variations in sales charges reflect the
varying efforts required to sell shares to separate categories of
purchasers. These plans may be altered or discontinued at any
time.
COMBINED PURCHASE PRIVILEGE. The following persons may qualify
for the sales charge reductions or eliminations shown in the
Prospectus by combining into a single transaction the purchase of
Class A shares or Class M shares with other purchases of any
class of shares:
(i) an individual, or a "company" as defined in Section
2(a)(8) of the Investment Company Act of 1940 (which
includes corporations which are corporate affiliates of
each other);
(ii) an individual, his or her spouse and their children
under twenty-one, purchasing for his, her or their own
account;
(iii) a trustee or other fiduciary purchasing for a single
trust estate or single fiduciary account (including a
pension, profit-sharing, or other employee benefit trust
created pursuant to a plan qualified under Section 401 of
the Internal Revenue Code);
(iv) tax-exempt organizations qualifying under Section
501(c)(3) of the Internal Revenue Code (not including
403(b) plans); and
(v) employee benefit plans of a single employer or of
affiliated employers, other than 403(b) plans.
A combined purchase currently may also include shares of any
class of other continuously offered Putnam funds (other than
money market funds) purchased at the same time through a single
investment dealer, if the dealer places the order for such shares
directly with Putnam Mutual Funds.
CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION). A
purchaser of Class A shares or Class M shares may qualify for a
cumulative quantity discount by combining a current purchase (or
combined purchases as described above) with certain other shares
of any class of Putnam funds already owned. The applicable sales
charge is based on the total of:
(i) the investor's current purchase; and
(ii) the maximum public offering price (at the close of
business on the previous day) of:
(a) all shares held by the investor in all of the
Putnam funds (except money market funds); and
(b) any shares of money market funds acquired by
exchange from other Putnam funds; and
(iii) the maximum public offering price of all shares
described in paragraph (ii) owned by another shareholder
eligible to participate with the investor in a "combined
purchase" (see above).
To qualify for the combined purchase privilege or to obtain the
cumulative quantity discount on a purchase through an investment
dealer, when each purchase is made the investor or dealer must
provide Putnam Mutual Funds with sufficient information to verify
that the purchase qualifies for the privilege or discount. The
shareholder must furnish this information to Putnam Investor
Services when making direct cash investments.
STATEMENT OF INTENTION. Investors may also obtain the reduced
sales charges for Class A shares or Class M shares shown in the
Prospectus for investments of a particular amount by means of a
written Statement of Intention, which expresses the investor's
intention to invest that amount (including certain "credits," as
described below) within a period of 13 months in shares of any
class of the Fund or any other continuously offered Putnam fund
(excluding money market funds). Each purchase of Class A shares
or Class M shares under a Statement of Intention will be made at
the public offering price applicable at the time of such purchase
to a single transaction of the total dollar amount indicated in
the Statement. A Statement of Intention may include purchases of
shares made not more than 90 days prior to the date that an
investor signs a Statement; however, the 13-month period during
which the Statement is in effect will begin on the date of the
earliest purchase to be included.
An investor may receive a credit toward the amount indicated in
the Statement equal to the maximum public offering price as of
the close of business on the previous day of all shares he or she
owns on the date of the Statement which are eligible for purchase
under a Statement (plus any shares of money market funds acquired
by exchange of such eligible shares). Investors do not receive
credit for shares purchased by the reinvestment of distributions.
Investors qualifying for the "combined purchase privilege" (see
above) may purchase shares under a single Statement of Intention.
The Statement of Intention is not a binding obligation upon the
investor to purchase the full amount indicated. The minimum
initial investment under a Statement of Intention is 5% of such
amount, and must be invested immediately. Class A shares or
Class M shares purchased with the first 5% of such amount will be
held in escrow to secure payment of the higher sales charge
applicable to the shares actually purchased if the full amount
indicated is not purchased. When the full amount indicated has
been purchased, the escrow will be released. If an investor
desires to redeem escrowed shares before the full amount has been
purchased, the shares will be released from escrow only if the
investor pays the sales charge that, without regard to the
Statement of Intention, would apply to the total investment made
to date.
To the extent that an investor purchases more than the dollar
amount indicated on the Statement of Intention and qualifies for
a further reduced sales charge, the sales charge will be adjusted
for the entire amount purchased at the end of the 13-month
period, upon recovery from the investor's dealer of its portion
of the sales charge adjustment. Once received from the dealer,
which may take a period of time or may never occur, the sales
charge adjustment will be used to purchase additional shares at
the then current offering price applicable to the actual amount
of the aggregate purchases. These additional shares will not be
considered as part of the total investment for the purpose of
determining the applicable sales charge pursuant to the Statement
of Intention. No sales charge adjustment will be made unless and
until the investor's dealer returns any excess commissions
previously received.
To the extent that an investor purchases less than the dollar
amount indicated on the Statement of Intention within the 13-
month period, the sales charge will be adjusted upward for the
entire amount purchased at the end of the 13-month period. This
adjustment will be made by redeeming shares from the account to
cover the additional sales charge, the proceeds of which will be
paid to the investor's dealer and Putnam Mutual Funds in
accordance with the Prospectus. If the account exceeds an amount
that would otherwise qualify for a reduced sales charge, that
reduced sales charge will be applied.
Statements of Intention are not available for certain employee
benefit plans.
Statement of Intention forms may be obtained from Putnam Mutual
Funds or from investment dealers. Interested investors should
read the Statement of Intention carefully.
REDUCED SALES CHARGE FOR GROUP PURCHASES OF CLASS A SHARES.
Members of qualified groups may purchase Class A shares of the
Fund at a group sales charge rate of 4.5% of the public offering
price (4.71% of the net amount invested). The dealer discount on
such sales is 3.75% of the offering price.
To receive the group rate, group members must purchase Class A
shares through a single investment dealer designated by the
group. The designated dealer must transmit each member's initial
purchase to Putnam Mutual Funds, together with payment and
completed application forms. After the initial purchase, a
member may send funds for the purchase of Class A shares directly
to Putnam Investor Services. Purchases of Class A shares are
made at the public offering price based on the net asset value
next determined after Putnam Mutual Funds or Putnam Investor
Services receives payment for the shares. The minimum investment
requirements described above apply to purchases by any group
member. Only Class A shares are included in calculating the
purchased amount.
Qualified groups include the employees of a corporation or a sole
proprietorship, members and employees of a partnership or
association, or other organized groups of persons (the members of
which may include other qualified groups) provided that: (i) the
group has at least 25 members of which at least 10 members
participate in the initial purchase; (ii) the group has been in
existence for at least six months; (iii) the group has some
purpose in addition to the purchase of investment company shares
at a reduced sales charge; (iv) the group's sole organizational
nexus or connection is not that the members are credit card
holders of a company, policy holders of an insurance company,
customers of a bank or broker-dealer, clients of an investment
adviser or security holders of a company; (v) the group agrees to
provide its designated investment dealer access to the group's
membership by means of written communication or direct
presentation to the membership at a meeting on not less
frequently than an annual basis; (vi) the group or its investment
dealer will provide annual certification in form satisfactory to
Putnam Investor Services that the group then has at least 25
members and that at least ten members participated in group
purchases during the immediately preceding 12 calendar months;
and (vii) the group or its investment dealer will provide
periodic certification in form satisfactory to Putnam Investor
Services as to the eligibility of the purchasing members of the
group.
Members of a qualified group include: (i) any group which meets
the requirements stated above and which is a constituent member
of a qualified group; (ii) any individual purchasing for his or
her own account who is carried on the records of the group or on
the records of any constituent member of the group as being a
good standing employee, partner, member or person of like status
of the group or constituent member; or (iii) any fiduciary
purchasing shares for the account of a member of a qualified
group or a member's beneficiary. For example, a qualified group
could consist of a trade association which would have as its
members individuals, sole proprietors, partnerships and
corporations. The members of the group would then consist of the
individuals, the sole proprietors and their employees, the
members of the partnerships and their employees, and the
corporations and their employees, as well as the trustees of
employee benefit trusts acquiring Class A shares for the benefit
of any of the foregoing.
A member of a qualified group may, depending upon the value of
Class A shares of the Fund owned or proposed to be purchased by
the member, be entitled to purchase Class A shares of the Fund at
non-group sales charge rates shown in the Prospectus which may be
lower than the group sales charge rate, if the member qualifies
as a person entitled to reduced non-group sales charges. Such a
group member will be entitled to purchase at the lower rate if,
at the time of purchase, the member or his or her investment
dealer furnishes sufficient information for Putnam Mutual Funds
or Putnam Investor Services to verify that the purchase qualifies
for the lower rate.
Interested groups should contact their investment dealer or
Putnam Mutual Funds. The Fund reserves the right to revise the
terms of or to suspend or discontinue group sales at any time.
EMPLOYEE BENEFIT PLANS; INDIVIDUAL ACCOUNT PLANS. The term
"employee benefit plan" means any plan or arrangement, whether or
not tax-qualified, which provides for the purchase of Class A
shares. The term "affiliated employer" means employers who are
affiliated with each other within the meaning of Section
2(a)(3)(C) of the Investment Company Act of 1940. The term
"individual account plan" means any employee benefit plan whereby
(i) Class A shares are purchased through payroll deductions or
otherwise by a fiduciary or other person for the account of
participants who are employees (or their spouses) of an employer,
or of affiliated employers, and (ii) a separate Investing Account
is maintained in the name of such fiduciary or other person for
the account of each participant in the plan.
The table of sales charges in the Prospectus applies to sales to
employee benefit plans, except that the Fund may sell Class A
shares at net asset value to employee benefit plans, including
individual account plans, of employers or of affiliated employers
which have at least 750 employees to whom such plan is made
available, in connection with a payroll deduction system of plan
funding (or other system acceptable to Putnam Investor Services)
by which contributions or account information for plan
participation are transmitted to Putnam Investor Services by
methods acceptable to Putnam Investor Services. The Fund may
also sell Class A shares at net asset value to employee benefit
plans of employers or of affiliated employers which have at least
750 employees, if such plans are qualified under Section 401 of
the Internal Revenue Code.
Additional information about employee benefit plans and
individual account plans is available from investment dealers or
from Putnam Mutual Funds.
CONTINGENT DEFERRED SALES CHARGES
CLASS A SHARES. Class A shares purchased at net asset value by
shareholders investing $1 million or more, including purchases
pursuant to any Combined Purchase Privilege, Right of
Accumulation or Statement of Intention, are subject to a CDSC of
1.00% or 0.50%, respectively, if redeemed within the first or
second year after purchase. The Class A CDSC is imposed on the
lower of the cost and the current net asset value of the shares
redeemed. The CDSC does not apply to shares sold without a sales
charge through participant-directed qualified retirement plans
and shares purchased by certain investors investing $1 million or
more that have made arrangements with Putnam Mutual Funds and
whose dealer of record waived the commission described in the
next paragraph.
Except as stated below, Putnam Mutual Funds pays investment
dealers of record commissions on sales of Class A shares of $1
million or more based on an investor's cumulative purchases of
such shares, including purchases pursuant to any Combined
Purchase Privilege, Right of Accumulation or Statement of
Intention, during the one-year period beginning with the date of
the initial purchase at net asset value and each subsequent one-
year period beginning with the first net asset value purchase
following the end of the prior period. Such commissions are paid
at the rate of 1.00% of the amount under $3 million, 0.50% of the
next $47 million and 0.25% thereafter. On sales at net asset
value to a participant-directed qualified retirement plan
initially investing less than $20 million in Putnam funds and
other investments managed by Putnam Management or its affiliates
(including a plan sponsored by an employer with more than 750
employees), Putnam Mutual Funds pays commissions on cumulative
purchases during the life of the account at the rate of 1.00% of
the amount under $3 million and 0.50% thereafter. On sales at
net asset value to all other participant-directed qualified
retirement plans, Putnam Mutual Funds pays commissions on the
initial investment and on subsequent net quarterly sales (gross
sales minus gross redemptions during the quarter) at the rate of
0.15%. Money market fund shares are excluded from all commission
calculations, except for determining the amount initially
invested by a participant-directed qualified retirement plan.
Commissions on sales at net asset value to such plans are subject
to Putnam Mutual Funds' right to reclaim such commissions if the
shares are redeemed within two years.
Different CDSC and commission rates may apply to shares purchased
before April 1, 1994.
CLASS B AND CLASS C SHARES. Investors who set up an Automatic
Cash Withdrawal Plan (ACWP) for a Class B and Class C share
account (see "Plans Available To Shareholders -- Automatic Cash
Withdrawal Plan") may withdraw through the ACWP up to 12% of the
net asset value of the account (calculated as set forth below)
each year without incurring any CDSC. Shares not subject to a
CDSC (such as shares representing reinvestment of distributions)
will be redeemed first and will count toward the 12% limitation.
If there are insufficient shares not subject to a CDSC, shares
subject to the lowest CDSC liability will be redeemed next until
the 12% limit is reached. The 12% figure is calculated on a pro
rata basis at the time of the first payment made pursuant to a
ACWP and recalculated thereafter on a pro rata basis at the time
of each ACWP payment. Therefore, shareholders who have chosen a
ACWP based on a percentage of the net asset value of their
account of up to 12% will be able to receive ACWP payments
without incurring a CDSC. However, shareholders who have chosen
a specific dollar amount (for example, $100 per month from a fund
that pays income distributions monthly) for their periodic ACWP
payment should be aware that the amount of that payment not
subject to a CDSC may vary over time depending on the net asset
value of their account. For example, if the net asset value of
the account is $10,000 at the time of payment, the shareholder
will receive $100 free of the CDSC (12% of $10,000 divided by 12
monthly payments). However, if at the time of the next payment
the net asset value of the account has fallen to $9,400, the
shareholder will receive $94 free of any CDSC (12% of $9,400
divided by 12 monthly payments) and $6 subject to the lowest
applicable CDSC. This ACWP privilege may be revised or
terminated at any time.
ALL SHARES. No CDSC is imposed on shares of any class subject to
a CDSC ("CDSC Shares") to the extent that the CDSC Shares
redeemed (i) are no longer subject to the holding period
therefor, (ii) resulted from reinvestment of distributions on
CDSC Shares, or (iii) were exchanged for shares of another Putnam
fund, provided that the shares acquired in such exchange or
subsequent exchanges (including shares of a Putnam money market
fund) will continue to remain subject to the CDSC, if applicable,
until the applicable holding period expires. In determining
whether the CDSC applies to each redemption of CDSC Shares, CDSC
Shares not subject to a CDSC are redeemed first.
The Fund will waive any CDSC on redemptions, in the case of
individual or Uniform Transfers to Minors Act accounts, in case
of death or disability or for the purpose of paying benefits
pursuant to tax-qualified retirement plans. Such payments
currently include, without limitation, (1) distributions from an
IRA due to death or disability, (2) a return of excess
contributions to an IRA or 401(k) plan, and (3) distributions
from retirement plans qualified under section 401(a) or section
403(b)(7) (a "403(b) plan") of the Internal Revenue Code of 1986,
as amended (the "Code"), due to death, disability, retirement or
separation from service. The Fund will also waive any CDSC in
the case of the death of one joint tenant. These waivers may be
changed at any time. Additional waivers may apply to IRA
accounts opened prior to February 1, 1994.
DISTRIBUTION PLAN
If the Fund or a class of shares of the Fund has adopted a
Distribution Plan, the Prospectus describes the principal
features of the Plan. This Statement contains additional
information which may be of interest to investors.
Continuance of a Plan is subject to annual approval by a vote of
the Trustees, including a majority of the Trustees who are not
interested persons of the Fund and who have no direct or indirect
interest in the Plan or related arrangements (the "Qualified
Trustees"), cast in person at a meeting called for that purpose.
All material amendments to a Plan must be likewise approved by
the Trustees and the Qualified Trustees. No Plan may be amended
in order to increase materially the costs which the Fund may bear
for distribution pursuant to such Plan without also being
approved by a majority of the outstanding voting securities of
the Fund or the relevant class of the Fund, as the case may be.
A Plan terminates automatically in the event of its assignment
and may be terminated without penalty, at any time, by a vote of
a majority of the Qualified Trustees or by a vote of a majority
of the outstanding voting securities of the Fund or the relevant
class of the Fund, as the case may be.
If Plan payments are made to reimburse Putnam Mutual Funds for
payments to dealers based on the average net asset value of Fund
shares attributable to shareholders for whom the dealers are
designated as the dealer of record, "average net asset value"
attributable to a shareholder account means the product of (i)
the Fund's average daily share balance of the account and (ii)
the Fund's average daily net asset value per share (or the
average daily net asset value per share of the class, if
applicable). For administrative reasons, Putnam Mutual Funds may
enter into agreements with certain dealers providing for the
calculation of "average net asset value" on the basis of assets
of the accounts of the dealer's customers on an established day
in each quarter.
Financial institutions receiving payments from Putnam Mutual
Funds as described above may be required to comply with various
state and federal regulatory requirements, including among others
those regulating the activities of securities brokers or dealers.
INVESTOR SERVICES
SHAREHOLDER INFORMATION
Each time shareholders buy or sell shares, they will receive a
statement confirming the transaction and listing their current
share balance. (Under certain investment plans, a statement may
only be sent quarterly.) Shareholders will receive a statement
confirming reinvestment of distributions in additional Fund
shares (or in shares of other Putnam funds for Dividends Plus
accounts) promptly following the quarter in which the
reinvestment occurs. To help shareholders take full advantage of
their Putnam investment, they will receive a Welcome Kit and a
periodic publication covering many topics of interest to
investors. The Fund also sends annual and semiannual reports
that keep shareholders informed about its portfolio and
performance, and year-end tax information to simplify their
recordkeeping. Easy-to-read, free booklets on special subjects
such as the Exchange Privilege and IRAs are available from Putnam
Investor Services. Shareholders may call Putnam Investor
Services toll-free weekdays at 1-800-225-1581 between 8:30 a.m.
and 7:00 p.m. Boston time for more information, including account
balances.
YOUR INVESTING ACCOUNT
The following information provides more detail concerning the
operation of a Putnam Investing Account. For further information
or assistance, investors should consult Putnam Investor Services.
Shareholders who purchase shares through a defined contribution
plan should note that not all of the services or features
described below may be available to them, and they should contact
their employer for details.
A shareholder may reinvest a recent cash distribution without a
front-end sales charge or without the reinvested shares being
subject to a CDSC, as the case may be, by delivering to Putnam
Investor Services the uncashed distribution check, endorsed to
the order of the Fund. Putnam Investor Services must receive the
properly endorsed check within 30 days after the date of the
check. Upon written notice to shareholders, the Fund may permit
shareholders who receive cash distributions to reinvest amounts
representing returns of capital without a sales charge or without
being subject to the CDSC.
The Investing Account also provides a way to accumulate shares of
the Fund. In most cases, after an initial investment of $500, a
shareholder may send checks to Putnam Investor Services for $50
or more, made payable to the Fund, to purchase additional shares
at the applicable public offering price next determined after
Putnam Investor Services receives the check. For Putnam
Corporate Asset Trust, the minimum initial investment is $25,000
and the minimum subsequent investment is $5,000. Checks must be
drawn on a U.S. bank and must be payable in U.S. dollars.
Putnam Investor Services acts as the shareholder's agent whenever
it receives instructions to carry out a transaction on the
shareholder's account. Upon receipt of instructions that shares
are to be purchased for a shareholder's account, shares will be
purchased through the investment dealer designated by the
shareholder. Shareholders may change investment dealers at any
time by written notice to Putnam Investor Services, provided the
new dealer has a sales agreement with Putnam Mutual Funds.
Shares credited to an account are transferable upon written
instructions in good order to Putnam Investor Services and may be
sold to the Fund as described under "How to buy shares, sell
shares and exchange shares" in the Prospectus. Money market
funds and certain other funds will not issue share certificates.
A shareholder may send any certificates which have been
previously issued to Putnam Investor Services for safekeeping at
no charge to the shareholder.
Putnam Mutual Funds, at its expense, may provide certain
additional reports and administrative material to qualifying
institutional investors with fiduciary responsibilities to assist
these investors in discharging their responsibilities.
Institutions seeking further information about this service
should contact Putnam Mutual Funds, which may modify or terminate
this service at any time.
Putnam Investor Services may make special services available to
shareholders with investments exceeding $1,000,000. Contact
Putnam Investor Services for details.
The Fund pays Putnam Investor Services' fees for maintaining
Investing Accounts.
REINSTATEMENT PRIVILEGE
An investor who has redeemed shares to the Fund may reinvest
(within 1 year) the proceeds of such sale in shares of the same
class of the Fund, or may be able to reinvest (within 1 year) the
proceeds in shares of the same class of one of the other
continuously offered Putnam funds (through the Exchange Privilege
described in the Prospectus), including, in the case of shares
subject to a CDSC, the amount of CDSC charged on the redemption.
Any such reinvestment would be at the net asset value of the
shares of the fund(s) the investor selects, next determined after
Putnam Mutual Funds receives a Reinstatement Authorization. The
time that the previous investment was held will be included in
determining any applicable CDSC due upon redemptions and, in the
case of Class B shares, the eight-year period for conversion to
Class A shares. Shareholders will receive from Putnam Mutual
Funds the amount of any CDSC paid at the time of redemption as
part of the reinstated investment, which may be treated as
capital gains to the shareholder for tax purposes. Exercise of
the Reinstatement Privilege does not alter the federal income tax
treatment of any capital gains realized on a sale of Fund shares,
but to the extent that any shares are sold at a loss and the
proceeds are reinvested in shares of the Fund, some or all of the
loss may be disallowed as a deduction. Consult your tax adviser.
Investors who desire to exercise this Privilege should contact
their investment dealer or Putnam Investor Services.
EXCHANGE PRIVILEGE
Except as otherwise set forth in this section, by calling Putnam
Investor Services, investors may exchange shares valued up to
$500,000 between accounts with identical registrations, provided
that no certificates are outstanding for such shares and no
address change has been made within the preceding 15 days.
During periods of unusual market changes and shareholder
activity, shareholders may experience delays in contacting Putnam
Investor Services by telephone to exercise the Telephone Exchange
Privilege.
Putnam Investor Services also makes exchanges promptly after
receiving a properly completed Exchange Authorization Form and,
if issued, share certificates. If the shareholder is a
corporation, partnership, agent, or surviving joint owner, Putnam
Investor Services will require additional documentation of a
customary nature. Because an exchange of shares involves the
redemption of Fund shares and reinvestment of the proceeds in
shares of another Putnam fund, completion of an exchange may be
delayed under unusual circumstances if the Fund were to suspend
redemptions or postpone payment for the Fund shares being
exchanged, in accordance with federal securities laws. Exchange
Authorization Forms and prospectuses of the other Putnam funds
are available from Putnam Mutual Funds or investment dealers
having sales contracts with Putnam Mutual Funds. The prospectus
of each fund describes its investment objective(s) and policies,
and shareholders should obtain a prospectus and consider these
objectives and policies carefully before requesting an exchange.
Shares of certain Putnam funds are not available to residents of
all states. The Fund reserves the right to change or suspend the
Exchange Privilege at any time. Shareholders would be notified
of any change or suspension. Additional information is available
from Putnam Investor Services.
Shares of the Fund must be held at least 15 days by the
shareholder requesting an exchange. There is no holding period
if the shareholder acquired the shares to be exchanged through
reinvestment of distributions, transfer from another shareholder,
prior exchange or certain employer-sponsored defined contribution
plans. In all cases, the shares to be exchanged must be
registered on the records of the Fund in the name of the
shareholder requesting the exchange.
Shareholders of other Putnam funds may also exchange their shares
at net asset value for shares of the Fund, as set forth in the
current prospectus of each fund.
For federal income tax purposes, an exchange is a sale on which
the investor generally will realize a capital gain or loss
depending on whether the net asset value at the time of the
exchange is more or less than the investor's basis. The Exchange
Privilege may be revised or terminated at any time. Shareholders
would be notified of any such change or suspension.
DIVIDENDS PLUS
Shareholders may invest the Fund's distributions of net
investment income or distributions combining net investment
income and short-term capital gains in shares of the same class
of another continuously offered Putnam fund (the "receiving
fund") using the net asset value per share of the receiving fund
determined on the date the Fund's distribution is payable. No
sales charge or CDSC will apply to the purchased shares unless
the Fund is a money market fund. The prospectus of each fund
describes its investment objective(s) and policies, and
shareholders should obtain a prospectus and consider these
objective(s) and policies carefully before investing their
distributions in the receiving fund. Shares of certain Putnam
funds are not available to residents of all states.
The minimum account size requirement for the receiving fund will
not apply if the current value of your account in this Fund is
more than $5,000.
Shareholders of other Putnam funds (except for money market
funds, whose shareholders must pay a sales charge or become
subject to a CDSC) may also use their distributions to purchase
shares of the Fund at net asset value.
For federal tax purposes, distributions from the Fund which are
reinvested in another fund are treated as paid by the Fund to the
shareholder and invested by the shareholder in the receiving fund
and thus, to the extent comprised of taxable income and deemed
paid to a taxable shareholder, are taxable.
The Dividends PLUS program may be revised or terminated at any
time.
PLANS AVAILABLE TO SHAREHOLDERS
The Plans described below are fully voluntary and may be
terminated at any time without the imposition by the Fund or
Putnam Investor Services of any penalty. All Plans provide for
automatic reinvestment of all distributions in additional shares
of the Fund at net asset value. The Fund, Putnam Mutual Funds or
Putnam Investor Services may modify or cease offering these Plans
at any time.
AUTOMATIC CASH WITHDRAWAL PLAN. An investor who owns or buys
shares of the Fund valued at $10,000 or more at the current
public offering price may open a Withdrawal Plan and have a
designated sum of money ($50 or more) paid monthly, quarterly,
semi-annually or annually to the investor or another person.
(Payments from the Fund can be combined with payments from other
Putnam funds into a single check through a Designated Payment
Plan.) Shares are deposited in a Plan account, and all
distributions are reinvested in additional shares of the Fund at
net asset value (except where the Plan is utilized in connection
with a charitable remainder trust). Shares in a Plan account are
then redeemed at net asset value to make each withdrawal payment.
Payment will be made to any person the investor designates;
however, if shares are registered in the name of a trustee or
other fiduciary, payment will be made only to the fiduciary,
except in the case of a profit-sharing or pension plan where
payment will be made to a designee. As withdrawal payments may
include a return of principal, they cannot be considered a
guaranteed annuity or actual yield of income to the investor.
The redemption of shares in connection with a Withdrawal Plan
generally will result in a gain or loss for tax purposes. Some
or all of the losses realized upon redemption may be disallowed
pursuant to the so-called wash sale rules if shares of the same
fund from which shares were redeemed are purchased (including
through the reinvestment of fund distributions) within a period
beginning 30 days before, and ending 30 days after, such
redemption. In such a case, the basis of the replacement shares
will be increased to reflect the disallowed loss. Continued
withdrawals in excess of income will reduce and possibly exhaust
invested principal, especially in the event of a market decline.
The maintenance of a Withdrawal Plan concurrently with purchases
of additional shares of the Fund would be disadvantageous to the
investor because of the sales charge payable on such purchases.
For this reason, the minimum investment accepted while a
Withdrawal Plan is in effect is $1,000, and an investor may not
maintain a Plan for the accumulation of shares of the Fund (other
than through reinvestment of distributions) and a Withdrawal Plan
at the same time. The cost of administering these Plans for the
benefit of those shareholders participating in them is borne by
the Fund as an expense of all shareholders. The Fund, Putnam
Mutual Funds or Putnam Investor Services may terminate or change
the terms of the Withdrawal Plan at any time. A Withdrawal Plan
will be terminated if communications mailed to the shareholder
are returned as undeliverable.
Investors should consider carefully with their own financial
advisers whether the Plan and the specified amounts to be
withdrawn are appropriate in their circumstances. The Fund and
Putnam Investor Services make no recommendations or
representations in this regard.
TAX QUALIFIED RETIREMENT PLANS; 403(B) AND SEP PLANS. (NOT
OFFERED BY FUNDS INVESTING PRIMARILY IN TAX-EXEMPT SECURITIES.)
Investors may purchase shares of the Fund through the following
Tax Qualified Retirement Plans, available to qualified
individuals or organizations:
Standard and variable profit-sharing (including 401(k))
and money purchase pension plans; and
Individual Retirement Account Plans (IRAs).
Each of these Plans has been qualified as a prototype plan by the
Internal Revenue Service. Putnam Investor Services will furnish
services under each plan at a specified annual cost. Putnam
Fiduciary Trust Company serves as trustee under each of these
Plans.
Forms and further information on these Plans are available from
investment dealers or from Putnam Mutual Funds. In addition,
specialized professional plan administration services are
available on an optional basis; contact Putnam Defined
Contribution Plan Services at 1-800-225-2465, extension 8600.
A 403(b) Retirement Plan is available for employees of public
school systems and organizations which meet the requirements of
Section 501(c)(3) of the Internal Revenue Code. Forms and
further information on the 403(b) Plan are also available from
investment dealers or from Putnam Mutual Funds. Shares of the
Fund may also be used in simplified employee pension (SEP) plans.
For further information on the Putnam prototype SEP plan, contact
an investment dealer or Putnam Mutual Funds.
Consultation with a competent financial and tax adviser regarding
these Plans and consideration of the suitability of Fund shares
as an investment under the Employee Retirement Income Security
Act of 1974, or otherwise, is recommended.
SIGNATURE GUARANTEES
Redemption requests for shares having a net asset value of
$100,000 or more must be signed by the registered owners or their
legal representatives and must be guaranteed by a bank,
broker/dealer, municipal securities dealer or broker, government
securities dealer or broker, credit union, national securities
exchange, registered securities association, clearing agency,
savings association or trust company, provided such institution
is acceptable under and conforms with Putnam Fiduciary Trust
Company's signature guarantee procedures. A copy of such
procedures is available upon request. If you want your
redemption proceeds sent to an address other than your address as
it appears on Putnam's records, you must provide a signature
guarantee. Putnam Investor Services usually requires additional
documentation for the sale of shares by a corporation,
partnership, agent or fiduciary, or a surviving joint owner.
Contact Putnam Investor Services for details.
SUSPENSION OF REDEMPTIONS
The Fund may not suspend shareholders' right of redemption, or
postpone payment for more than seven days, unless the New York
Stock Exchange is closed for other than customary weekends or
holidays, or if permitted by the rules of the Securities and
Exchange Commission during periods when trading on the Exchange
is restricted or during any emergency which makes it
impracticable for the Fund to dispose of its securities or to
determine fairly the value of its net assets, or during any other
period permitted by order of the Commission for protection of
investors.
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of
the Fund. However, the Agreement and Declaration of Trust
disclaims shareholder liability for acts or obligations of the
Fund and requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by
the Fund or the Trustees. The Agreement and Declaration of Trust
provides for indemnification out of Fund property for all loss
and expense of any shareholder held personally liable for the
obligations of the Fund. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund would be unable to
meet its obligations. The likelihood of such circumstances is
remote.
STANDARD PERFORMANCE MEASURES
Yield and total return data for the Fund may from time to time be
presented in Part I of this Statement and in advertisements. In
the case of funds with more than one class of shares, all
performance information is calculated separately for each class.
The data is calculated as follows.
Total return for one-, five- and ten-year periods (or for such
shorter periods as the Fund has been in operation or shares of
the relevant class have been outstanding) is determined by
calculating the actual dollar amount of investment return on a
$1,000 investment in the Fund made at the beginning of the
period, at the maximum public offering price for Class A shares
and Class M shares and net asset value for other classes of
shares, and then calculating the annual compounded rate of return
which would produce that amount. Total return for a period of
one year is equal to the actual return of the Fund during that
period. Total return calculations assume deduction of the Fund's
maximum sales charge or CDSC, if applicable, and reinvestment of
all Fund distributions at net asset value on their respective
reinvestment dates.
The Fund's yield is presented for a specified thirty-day period
(the "base period"). Yield is based on the amount determined by
(i) calculating the aggregate amount of dividends and interest
earned by the Fund during the base period less expenses accrued
for that period, and (ii) dividing that amount by the product of
(A) the average daily number of shares of the Fund outstanding
during the base period and entitled to receive dividends and (B)
the per share maximum public offering price for Class A shares or
Class M shares, as appropriate and net asset value for other
classes of shares on the last day of the base period. The result
is annualized on a compounding basis to determine the yield. For
this calculation, interest earned on debt obligations held by the
Fund is generally calculated using the yield to maturity (or
first expected call date) of such obligations based on their
market values (or, in the case of receivables-backed securities
such as GNMA's, based on cost). Dividends on equity securities
are accrued daily at their stated dividend rates.
If the Fund is a money market fund, yield is computed by
determining the percentage net change, excluding capital changes,
in the value of an investment in one share over the seven-day
period for which yield is presented (the "base period"), and
multiplying the net change by 365/7 (or approximately 52 weeks).
Effective yield represents a compounding of the yield by adding 1
to the number representing the percentage change in value of the
investment during the base period, raising that sum to a power
equal to 365/7, and subtracting 1 from the result.
If the Fund is a tax-exempt fund, the tax-equivalent yield during
the base period may be presented for shareholders in one or more
stated tax brackets. Tax-equivalent yield is calculated by
adjusting the tax-exempt yield by a factor designed to show the
approximate yield that a taxable investment would have to earn to
produce an after-tax yield equal, for that shareholder, to the
tax-exempt yield. The tax-equivalent yield will differ for
shareholders in other tax brackets.
At times, Putnam Management may reduce its compensation or assume
expenses of the Fund in order to reduce the Fund's expenses. The
per share amount of any such fee reduction or assumption of
expenses during the Fund's past ten fiscal years (or for the life
of the Fund, if shorter) is reflected in the table in the section
entitled "Financial history" in the Prospectus. Any such fee
reduction or assumption of expenses would increase the Fund's
yield and total return during the period of the fee reduction or
assumption of expenses.
All data are based on past performance and do not predict future
results.
COMPARISON OF PORTFOLIO PERFORMANCE
Independent statistical agencies measure the Fund's investment
performance and publish comparative information showing how the
Fund, and other investment companies, performed in specified time
periods. Three agencies whose reports are commonly used for such
comparisons are set forth below. From time to time, the Fund may
distribute these comparisons to its shareholders or to potential
investors. THE AGENCIES LISTED BELOW MEASURE PERFORMANCE BASED
ON THEIR OWN CRITERIA RATHER THAN ON THE STANDARDIZED
PERFORMANCE MEASURES DESCRIBED IN THE PRECEDING SECTION.
LIPPER ANALYTICAL SERVICES, INC. distributes mutual fund
rankings monthly. The rankings are based on total return
performance calculated by Lipper, reflecting generally
changes in net asset value adjusted for reinvestment of
capital gains and income dividends. They do not reflect
deduction of any sales charges. Lipper rankings cover a
variety of performance periods, for example year-to-date,
1-year, 5-year, and 10-year performance. Lipper
classifies mutual funds by investment objective and asset
category.
MORNINGSTAR, INC. distributes mutual fund ratings twice a
month. The ratings are divided into five groups:
highest, above average, neutral, below average and lowest.
They represent a fund's historical risk/reward ratio
relative to other funds with similar objectives. The
performance factor is a weighted-average assessment of the
Fund's 3-year, 5-year, and 10-year total return
performance (if available) reflecting deduction of
expenses and sales charges. Performance is adjusted using
quantitative techniques to reflect the risk profile of the
fund. The ratings are derived from a purely quantitative
system that does not utilize the subjective criteria
customarily employed by rating agencies such as Standard &
Poor's Corporation and Moody's Investor Service, Inc.
CDA/WIESENBERGER'S MANAGEMENT RESULTS publishes mutual
fund rankings and is distributed monthly. The rankings
are based entirely on total return calculated by
Weisenberger for periods such as year-to-date, 1-year,
3-year, 5-year and 10-year. Mutual funds are ranked in
general categories (e.g., international bond,
international equity, municipal bond, and maximum capital
gain). Weisenberger rankings do not reflect deduction of
sales charges or fees.
Independent publications may also evaluate the Fund's
performance. Certain of those publications are listed below, at
the request of Putnam Mutual Funds, which bears full
responsibility for their use and the descriptions appearing
below. From time to time the Fund may distribute evaluations by
or excerpts from these publications to its shareholders or to
potential investors. The following illustrates the types of
information provided by these publications.
BUSINESS WEEK publishes mutual fund rankings in its
Investment Figures of the Week column. The rankings are
based on 4-week and 52-week total return reflecting
changes in net asset value and the reinvestment of all
distributions. They do not reflect deduction of any sales
charges. Funds are not categorized; they compete in a
large universe of over 2000 funds. The source for
rankings is data generated by Morningstar, Inc.
INVESTOR'S BUSINESS DAILY publishes mutual fund rankings
on a daily basis. The rankings are depicted as the top 25
funds in a given category. The categories are based
loosely on the type of fund, e.g., growth funds, balanced
funds, U.S. government funds, GNMA funds, growth and
income funds, corporate bond funds, etc. Performance
periods for sector equity funds can vary from 4 weeks to
39 weeks; performance periods for other fund groups vary
from 1 year to 3 years. Total return performance reflects
changes in net asset value and reinvestment of dividends
and capital gains. The rankings are based strictly on
total return. They do not reflect deduction of any sales
charges. Performance grades are conferred from A+ to E.
An A+ rating means that the fund has performed within the
top 5% of a general universe of over 2000 funds; an A
rating denotes the top 10%; an A- is given to the top 15%,
etc.
BARRON'S periodically publishes mutual fund rankings. The
rankings are based on total return performance provided by
Lipper Analytical Services. The Lipper total return data
reflects changes in net asset value and reinvestment of
distributions, but does not reflect deduction of any sales
charges. The performance periods vary from short-term
intervals (current quarter or year-to-date, for example)
to long-term periods (five-year or ten-year performance,
for example). Barron's classifies the funds using the
Lipper mutual fund categories, such as Capital
Appreciation Funds, Growth Funds, U.S. Government Funds,
Equity Income Funds, Global Funds, etc. Occasionally,
Barron's modifies the Lipper information by ranking the
funds in asset classes. "Large funds" may be those with
assets in excess of $25 million; "small funds" may be
those with less than $25 million in assets.
THE WALL STREET JOURNAL publishes its Mutual Fund
Scorecard on a daily basis. Each Scorecard is a ranking
of the top-15 funds in a given Lipper Analytical Services
category. Lipper provides the rankings based on its total
return data reflecting changes in net asset value and
reinvestment of distributions and not reflecting any sales
charges. The Scorecard portrays 4-week, year-to-date,
one-year and 5-year performance; however, the ranking is
based on the one-year results. The rankings for any given
category appear approximately once per month.
FORTUNE magazine periodically publishes mutual fund
rankings that have been compiled for the magazine by
Morningstar, Inc. Funds are placed in stock or bond fund
categories (for example, aggressive growth stock funds,
growth stock funds, small company stock funds, junk bond
funds, Treasury bond funds, etc.), with the top-10 stock
funds and the top-5 bond funds appearing in the rankings.
The rankings are based on 3-year annualized total return
reflecting changes in net asset value and reinvestment of
distributions and not reflecting sales charges.
Performance is adjusted using quantitative techniques to
reflect the risk profile of the fund.
MONEY magazine periodically publishes mutual fund rankings
on a database of funds tracked for performance by Lipper
Analytical Services. The funds are placed in 23 stock or
bond fund categories and analyzed for five-year risk
adjusted return. Total return reflects changes in net
asset value and reinvestment of all dividends and capital
gains distributions and does not reflect deduction of any
sales charges. Grades are conferred (from A to E): the
top 20% in each category receive an A, the next 20% a B,
etc. To be ranked, a fund must be at least one year old,
accept a minimum investment of $25,000 or less and have
had assets of at least $25 million as of a given date.
FINANCIAL WORLD publishes its monthly Independent
Appraisals of Mutual Funds, a survey of approximately 1000
mutual funds. Funds are categorized as to type, e.g.,
balanced funds, corporate bond funds, global bond funds,
growth and income funds, U.S. government bond funds, etc.
To compete, funds must be over one year old, have over $1
million in assets, require a maximum of $10,000 initial
investment, and should be available in at least 10 states
in the United States. The funds receive a composite past
performance rating, which weighs the intermediate- and
long-term past performance of each fund versus its
category, as well as taking into account its risk, reward
to risk, and fees. An A+ rated fund is one of the best,
while a D-rated fund is one of the worst. The source for
Financial World rating is Schabacker investment management
in Rockville, MD.
FORBES magazine periodically publishes mutual fund ratings
based on performance over at least two bull and bear
market cycles. The funds are categorized by type,
including stock and balanced funds, taxable bond funds,
municipal bond funds, etc. Data sources include Lipper
Analytical Services and CDA Investment Technologies. The
ratings are based strictly on performance at net asset
value over the given cycles. Funds performing in the top
5% receive an A+ rating; the top 15% receive an A rating;
and so on until the bottom 5% receive an F rating. Each
fund exhibits two ratings, one for performance in "up"
markets and another for performance in "down" markets.
KIPLINGER'S PERSONAL FINANCE MAGAZINE (formerly Changing
Times), periodically publishes rankings of mutual funds
based on one-, three- and five-year total return
performance reflecting changes in net asset value and
reinvestment of dividends and capital gains and not
reflecting deduction of any sales charges. Funds are
ranked by tenths: a rank of 1 means that a fund was among
the highest 10% in total return for the period; a rank of
10 denotes the bottom 10%. Funds compete in categories of
similar funds--aggressive growth funds, growth and income
funds, sector funds, corporate bond funds, global
governmental bond funds, mortgage-backed securities funds,
etc. Kiplinger's also provides a risk-adjusted grade in
both rising and falling markets. Funds are graded against
others with the same objective. The average weekly total
return over two years is calculated. Performance is
adjusted using quantitative techniques to reflect the risk
profile of the fund.
U.S. NEWS AND WORLD REPORT periodically publishes mutual
fund rankings based on an overall performance index (OPI)
devised by Kanon Bloch Carre & Co., a Boston research
firm. Over 2000 funds are tracked and divided into 10
equity, taxable bond and tax-free bond categories. Funds
compete within the 10 groups and three broad categories.
The OPI is a number from 0-100 that measures the relative
performance of funds at least three years old over the
last 1, 3, 5 and 10 years and the last six bear markets.
Total return reflects changes in net asset value and the
reinvestment of any dividends and capital gains
distributions and does not reflect deduction of any sales
charges. Results for the longer periods receive the most
weight.
THE 100 BEST MUTUAL FUNDS YOU CAN BUY (1992), authored by
Gordon K. Williamson. The author's list of funds is
divided into 12 equity and bond fund categories, and the
100 funds are determined by applying four criteria.
First, equity funds whose current management teams have
been in place for less than five years are eliminated.
(The standard for bond funds is three years.) Second, the
author excludes any fund that ranks in the bottom 20
percent of its category's risk level. Risk is determined
by analyzing how many months over the past three years the
fund has underperformed a bank CD or a U.S. Treasury bill.
Third, a fund must have demonstrated strong results for
current three-year and five-year performance. Fourth, the
fund must either possess, in Mr. Williamson's judgment,
"excellent" risk-adjusted return or "superior" return with
low levels of risk. Each of the 100 funds is ranked in
five categories: total return, risk/volatility,
management, current income and expenses. The rankings
follow a five-point system: zero designates "poor"; one
point means "fair"; two points denote "good"; three points
qualify as a "very good"; four points rank as "superior";
and five points mean "excellent."
In addition, Putnam Mutual Funds may distribute to shareholders
or prospective investors illustrations of the benefits of
reinvesting tax-exempt or tax-deferred distributions over
specified time periods, which may include comparisons to fully
taxable distributions. These illustrations use hypothetical
rates of tax-advantaged and taxable returns and are not intended
to indicate the past or future performance of any fund.
<PAGE>
DEFINITIONS
"Putnam Management" -- Putnam Investment Management,
Inc., the Fund's investment
manager.
"Putnam Mutual Funds" -- Putnam Mutual Funds Corp., the
Fund's principal underwriter.
"Putnam Fiduciary Trust -- Putnam Fiduciary Trust Company,
Company" the Fund's custodian.
"Putnam Investor Services" -- Putnam Investor Services, a
division of Putnam Fiduciary
Trust Company, the Fund's
investor servicing agent.
<PAGE>
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND
FORM N-1A
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Index to Financial Statements and
Supporting Schedules:
(1) Financial Statements for Putnam
California Tax Exempt Income Fund,
Putnam California Intermediate Tax
Exempt Fund, and Putnam California Tax
Exempt Money Market Fund:
Statement of assets and liabilities -
- - September 30, 1994 (a).
Statement of operations -- year ended
September 30, 1994 (a).
Statement of changes in net assets --
Putnam California Tax Exempt Income Fund
and Putnam California Tax Exempt Money
Market Fund -- years ended September 30,
1994 and September 30, 1993 (a).
Financial highlights (a) (b).
Notes to financial statements (a).
(2) Supporting Schedules for Putnam
California Tax Exempt Income Fund,
Putnam California Intermediate Tax
Exempt Fund, and Putnam California Tax
Exempt Money Market Fund:
Schedule I -- Portfolio of investments
owned -- September 30, 1994 (a).
Schedules II through IX omitted
because the required matter is not
present.
--------------
(a) Incorporated by reference into
Parts A and B.
(b) Included in Part A.
(b) Exhibits:
1a. Agreement and Declaration of Trust, as
amended May 6, 1994 for Putnam
California Tax Exempt Income Trust --
Exhibit 1.
<PAGE>
1b. Agreement and Declaration of Trust, as
amended July 9, 1992 for Putnam
California Tax Exempt Money Market Fund
-- Incorporated by reference to Post-
Effective Amendment No. 6 to the
Registrant's Registration Statement.
2 . By-Laws, as amended April 8, 1994
for Putnam California Tax Exempt Income
Trust and February 1, 1994
for Putnam California Tax Exempt
Money Market Fund -- Exhibit 2.
3. Not applicable.
4a. Class A Specimen share certificate for
Putnam California Tax Exempt Income Fund
-- Exhibit 3.
4b. Class B Specimen share certificate for
Putnam California Tax Exempt Income Fund
-- Exhibit 4.
4c. Class M Specimen share certificate
for Putnam California Tax Exempt
Income Fund -- Exhibit 5.
4d. Class A Specimen share certificate for
Putnam California Intermediate Tax
Exempt Fund -- Exhibit 6.
4e. Class B Specimen share certificate for
Putnam California Intermediate Tax
Exempt Fund -- Exhibit 7.
4f. Portions of California Tax Exempt Income
Trust Agreement and Declaration of
Trust relating to Shareholders' Rights -
- Exhibit 8.
4g . Portions of California Tax Exempt Money
Market Fund Agreement and Declaration of
Trust relating to Shareholders' Rights
-- Incorporated by reference to
Post-Effective Amendment No. 7 to the
Registrant's Registration Statement.
4h . Portions of Bylaws Relating to
Shareholders' Rights for Putnam
California Tax Exempt Income Trust
and Putnam Tax
Exempt Money Market Fund-- Exhibit
9.
5a. Copy of Management Contract dated July
11, 1991 for Putnam California Tax
Exempt Income Fund -- Incorporated by
reference to Post-Effective Amendment
No. 12 to the Registrant's Registration
Statement.
5b. Copy of Management Contract dated May 6,
1994 for Putnam California Intermediate
Tax Exempt Fund -- Exhibit 10.
<PAGE>
5c . Copy of Management Contract for Putnam
California Tax Exempt Money Market Fund
dated July 9, 1992 -- Incorporated by
reference to Post-Effective Amendment
No. 6 to the Registrant's Registration
Statement.
6a. Copy of Distributor's Contract dated
May 6, 1994 for Putnam California
Tax Exempt Income Trust -- Exhibit
11.
6b. Copy of Distributor's Contract dated
May 6, 1994 for Putnam California
Tax Exempt Money Market Fund --
Exhibit 12.
6c. Copy of Specimen Dealer Sales
Contract for Putnam California
Tax Exempt Income Trust and Putnam
California Tax Exempt Money Market
Fund -- Exhibit 13.
6d. Copy of Specimen Financial
Institution Sales Contract for
Putnam California Tax Exempt Income
Trust and Putnam
California Tax Exempt Money Market Fund
-- Exhibit 14.
7. Not applicable.
8a . Copy of Custodian Agreement with Putnam
Fiduciary Trust Company dated May 3,
1991, as amended, July 13, 1992 for
Putnam California Tax Exempt Income
Trust and Putnam California Tax
Exempt Money Market Fund --
Incorporated by reference to Post-
Effective Amendment No. 14 and 7,
respectively .
9a. Copy of Investor Servicing Agreement
dated June 3, 1991 for Putnam California
Tax Exempt Income Trust and Putnam
California Tax Exempt Money Market
Fund -- Incorporated by reference to
Post- effective Amendment No. 12
and 5, respectively.
10. Opinion of Ropes & Gray, including
consent -- Exhibit 15.
11. Not applicable.
12. Not applicable.
13a. Investment Letter from Putnam
Investment Management, Inc. to Putnam
California Tax Exempt Income Fund --
Incorporated by reference to Post-
Effective Amendment No. 14 to the
Registrant's Registration Statement.
<PAGE>
13b. Investment Letter from Putnam Investment
Management, Inc. to Putnam California
Tax Exempt Money Market Fund --
Incorporated by reference to the
Registrant's Initial Registration
Statement.
14. Not applicable.
15a. Copy of Class A Distribution Plan and
Agreement for Putnam California Tax
Exempt Income Fund -- Exhibit 16.
15b. Copy of Class B Distribution Plan and
Agreement for Putnam California Tax
Exempt Income Fund -- Exhibit 17.
15c. Form of Class M Distribution Plan and
Agreement for Putnam California Tax
Exempt Income Fund -- Exhibit 18.
15d. Copy of Class A Distribution Plan and
Agreement for Putnam California
Intermediate Tax Exempt Fund -- Exhibit
19.
15e. Copy of Class B Distribution Plan and
Agreement for Putnam California
Intermediate Tax Exempt Fund -- Exhibit
20.
15f. Copy of Distribution Plan
and Agreement for Putnam California Tax
Exempt Money Market Fund --
Incorporated by reference to Post-
Effective Amendment No. 14 to the
Registrant's Registration Statement.
15g. Copy of Specimen Dealer Service
Agreement for Putnam California Tax
Exempt Income Trust and Putnam
California Tax Exempt Money Market
Fund -- Exhibit 21.
15h. Copy of Specimen Financial
Institution Service Agreement for
Putnam California Tax Exempt Income
Trust and Putnam California Tax
Exempt Money Market Fund --
Exhibit 22.
16a. Schedules for computation of performance
quotations for Putnam California Tax
Exempt Income Fund -- Exhibit 23.
16b. Schedules for computation of performance
quotations for Putnam California
Intermediate Tax Exempt Fund --
Exhibit 24.
16b. Schedules for computation of performance
quotations for Putnam California Tax
Exempt Money Market Fund --
Exhibit 25.
<PAGE>
17a. Financial Data Schedule for Putnam
California Tax Exempt Income Fund
Class A shares -- Exhibit 26.
17b. Financial Data Shecdule for
Putnam California Tax Exempt Income Fund
Class B shares -- Exhibit 27.
17c. Financial Data Schedule for
Putnam California Intermediate Tax
Exempt Fund Class A shares -- Exhibit
28.
17d. Financial Data Schedule for Putnam
California Intermediate Tax Exempt Fund
Class B shares -- Exhibit 29.
17e. Financial Data Schedule for Putnam
Tax Exempt Money Market Fund --
Exhibit 30.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
THE INCOME FUND
As of December 31 , 1994 there were 56,502
holders of the Class A shares of beneficial interest of the
Income Fund and there were 9,025 holders of the Class B
shares of beneficial interest of the Income Fund.
THE INTERMEDIATE FUND
As of December 31, 1994 there were 103 holders of the
Class A shares of beneficial interest of the Intermediate Fund
and there were 64 holders of the Class B shares of beneficial
interest of the Intermediate Fund.
THE MONEY MARKET FUND
As of December 31 , 1994 there were 2,450
holders of the shares of beneficial interest of the Money
Market Fund.
ITEM 27. INDEMNIFICATION
The information required by this item is incorporated
by reference from the Registrants' initial Registration
Statements on Form N-1A under the Investment Company Act
of 1940 (File Nos. 811-3630 for the Trust and 811-5333 for the
Money Market Fund).
<PAGE>
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
Except as set forth below, the directors and officers
of the Registrant's investment adviser have been engaged during
the past two fiscal years in no business, vocation or employment
of a substantial nature other than as directors or officers of
the investment adviser or certain of its corporate affiliates.
Certain officers of the investment adviser serve as officers of
some or all of the Putnam funds. The address of the investment
adviser, its corporate affiliates and the Putnam Funds is One
Post Office Square, Boston, Massachusetts 02109.
NAME NON-PUTNAM BUSINESS AND OTHER
CONNECTIONS
John V. Adduci Prior to July, 1993, Human Resources
Assistant Vice President Manager, First Security Services, 80
Main St., Reading, MA 01867
Gail S. Attridge Prior to November, 1993, International
Vice President Analyst, Keystone Custodian Funds,
200 Berkley Street, Boston, MA 02116
James E. Babcock Prior to June, 1994, Interest
Assistant Vice President Supervisor, Salomon Brothers, Inc.
7 World Trade Center, New York, NY
10048
Prior to June, 1993, Audit Manager,
Coopers & Lybrand, One Sylvan Way,
Parsipanny, NJ 07054
Robert K. Baumbach Prior to August, 1994, Vice President
Vice President and Analyst, Keystone Custodian
funds, 200 Berkely St., Boston, MA
02110
Sharon A. Berka Prior to January, 1994, Vice
Vice President President - Compensation Manager,
BayBanks, Inc., 175 Federal Street,
Boston, MA 02110
Edward P. Bousa Prior to October, 1992, Vice President
Senior Vice President and Portfolio Manager, Fidelity
Investments, 82 Devonshire St.,
Boston, MA 02109
Michael F. Bouscaren Prior to May, 1994, President and
Senior Vice President Chairman of the Board of Directors
at Salomon Series Funds, Inc. and a
Director of Salomon Brothers Asset
Management, 7 World Trade Center,
New York, NY 10048
Brett Browchuk Prior to April, 1994, Managing
Managing Director Director, Fidelity Investments, 82
Devonshire St., Boston, MA 02109
Carolyn S. Bunten Prior to July, 1993, Assistant Trader,
Assistant Vice President Scudder Stevens & Clark, Inc., 175
Federal St., Boston, MA 02110
Andrea Burke Prior to August, 1994, Vice President
Vice President and Portfolio Manager, Back Bay
Advisors, 399 Boylston St., Boston,
MA 02116
John M. Burton Prior to June, 1994, Manager --
Assistant Vice President Marketing Asset Management Pension
Services, The Travelers, Inc., 1
Tower Square, Hartford, CT 06183
Patricia A. Carey Prior to May, 1993, Research Analyst,
Assistant Vice President John Hancock Financial Services, 100
Clarendon St., Boston, MA 02116
Peter Carman Prior to August, 1993, Chief
Senior Managing Director Investment Officer, Chairman, U.S.
Equity Investment Policy Committee,
Member of Board of Directors,
Sanford C. Bernstein & Co., Inc.,
767 Fifth Avenue, New York, NY 10153
Steven Cheshire Prior to January, 1994, Assistant
Vice President Vice President, Wellington
Management, 75 State Street, Boston,
MA 02109
Anna Coppola Prior to May, 1993, Associate,
Assistant Vice President Heidrick & Struggles, One Post
Office Square, Boston, MA 02109
Kathleen Crews Prior to February, 1993, Assistant
Assistant Vice President Vice President, Alliance Capital
Management, L.P., 1345 Avenue of
the Americas, New York, NY 10105
York, NY
Kenneth L. Daly Prior to September, 1993, Vice
Senior Vice President President, Fidelity Investments,
82 Devonshire St., Boston, MA 02109
<PAGE>
John A. DeTore Prior to January, 1994, Director of
Managing Director Quantitative Portfolio Management,
Wellington Management, 75 State
Street, Boston, Ma 02109
Michael G. Dolan Prior to February, 1994, Senior
Assistant Vice President Financial Analyst, General Electric
Company, 1000 Western Ave., Lynn, MA
01905
Joseph Eagleeye Prior to August, 1994, Associate,
Assistant Vice President David Taussig & Associates, 424
University Ave., Sacremento, CA
95813
Richard B. England Prior to December, 1992, Investment
Senior Vice President Officer, Aetna Equity Investors,
151 Farmington Avenue, Hartford,
CT, 06156
Jonathan H. Francis Prior to March, 1993, President,
Senior Vice President J.H. Francis & Co., N. Pheasant
Lane, Westport, CT 06880
James F. Giblin Prior to April, 1993, Managing
Senior Vice President Director, CIGNA Corp. Investments,
Inc., 900 Cottage Grove Rd.
Bloomfield, CT 06152
Thomas C. Goggins Prior to June, 1993, Portfolio
Vice President Manager, Transamerica Investment
Services, 1150 South Olive Street,
Los Angeles, CA 90015
Mark D. Goodwin Prior to May, 1994, Manager, Audit &
Assistant Vice President Operations Analysis, Mitre
Corporation, 202 Burlington Rd.,
Bedford, MA 01730
Stephen Gorman Prior to July, 1994, Financial
Assistant Vice President Analyst, Boston Harbor Trust
Company, 100 Federal St., Boston, MA
02110
Daniel J. Grim Prior to May 1993, Consultant,
Vice President Connie Lee, 2445 M Street N.W.,
Washington, D.C. 20037;
Chief Operating Officer, Boardwalk,
Inc., Minocqua, WI 54548
<PAGE>
Billy P. Han Prior to December, 1992, Vice
Vice President President, Scudder, Stevens & Clark,
Inc., 160 Federal Street, Boston, MA
02110
Deborah R. Healy Prior to June, 1994, Senior Equity
Senior Vice President Trader, Fidelity Management &
Research Company, 82 Devonshire St.,
Boston, MA 02109
Lisa Heitman Prior to July, 1994, Securities
Analyst, Lord, Abbett & Company, 767
Fifth Ave., New York, NY 10153
Michael F. Hotchkiss Prior to May, 1994, Vice President,
Vice President Massachusetts Financial Services,
500 Boylston St., Boston, MA 02116
Walter Hunnewell, Jr. Prior to April, 1994, Managing
Vice President Director, Veronis, Suhler &
Associates, 350 Park Avenue, New
York, NY 10022
Stephon A. Jackson Prior to December, 1992, nalyst,
Assistant Vice President Arco Investment Management Co.,
515 South Flower Street,
Los Angeles, CA 91030
Jeffrey L. Knight Prior to March, 1993, Teacher,
Vice President Greater Newburyport Educational
Collaborative, Newburyport, MA 01950
Jeffrey J. Kobylarz Prior to May, 1993, Credit Analyst,
Vice President Dean Witter Reynolds, Inc.,
Two World Trade Center,
New York, NY 10048
D. William Kohli Prior to September, 1994, Executive
Senior Vice President Vice President and Co-Director of
Global Bond Managment; Prior to
1993, Portfolio Manager, Franklin
Advisors/Templeton Investment
Counsel, 777 Mariners Island Blvd.,
San Mateo, CA 94404
<PAGE>
Karen R. Korn Prior to June, 1994, Vice President,
Vice President Assistant to the President, Designs,
Inc. 1244 Boylston St., Chestnut
Hill, MA 02167
Prior to March, 1993, Vice President,
Paine Webber, Inc., 265 Franklin
St., Boston, MA 02110
Bruce M. Landers Prior to February, 1993, Manager,
Assistant Vice President Purchasing, Vicor Coproration, 23
Frontage Road, Andover, MA 01810
Lawrence J. Lasser Director, Marsh & McLennan Companies,
President, Director Inc., 1221 Avenue of the Americas,
and Chief Executive New York, NY 10020
Officer Director, INROADS/Central New England,
Inc., 99 Bedford St., Boston,
MA 02111
John A. Libertine, Jr. Prior to December, 1992, Tax Manager,
Assistant Vice President Coopers & Lybrand, One Post Office
Square, Boston, MA 02109
Jeff Lindsay Prior to April, 1994, Vice President
Vice President and Board Member, Strategic
Portfolio Management, 900 Ashwood
Parkway, Suite 290, Atlanta, GA
30338
Robert A. Madore Prior to October, 1992, Senior Vice
Vice President President and Portfolio Manager,
Fiduciary Captial Management, Inc.
51 Sherman Hill Rd., Woodbury,
CT 06798
Frederick S. Marius Prior to September, 1992, Associate
Assistant Vice President Attorney at Skadden Arps, One
Associate Counsel Beacon St., Boston, MA 02109
Michael Martino Prior to January, 1994, Executive
Senior Vice President Vice President and Chief Investment
Officer until 1992; Senior Vice
President and Portfolio Manager from
1990 to 1992, Back Bay Advisors, 399
Boylston St, Boston, MA 02116
Andrew S. Matteis Prior to March, 1993, Vice President,
Vice President Fitch Investors Service, One
State Street Plaza, New York,
NY 10004
Susan McCormack Prior to May, 1994, Associate
Vice President Investment Banker, Merrill Lynch &
Co., 350 South Grand Ave., Suite
2830, Los Angeles, CA 90071
Michael J. Mufson Prior to June, 1993, Senior Equity
Vice President Analyst, Stein Roe & Farnham,
One South Wacker Drive, Chicago, Il
60606
Warren S. Naphtal Prior to January, 1994, Managing
Senior Vice President Director, Continental Bank, 231
So. Lasalle St., Chicago, IL 60697
Jeffrey W. Netols Prior to February, 1993, Portfolio
Senior Vice President Analyst, Associated Bank,
200 N. Adams, Greenbay, WI 54307
Patrick C. O'Donnell, Jr. Prior to May, 1994, President,
Managing Director Exeter Research, Inc., 163 Water
Street, Exeter, New Hampshire, 03833
Brian O'Keefe Prior to December, 1993, Vice
Vice President President - Foreign Exchange
Trader, Bank of Boston, 100 Federal
Street, Boston, MA 02109
Pat G. Patel Prior to April, 1993, Regional
Vice President Manager, Zacks Investment Research,
155 N. Wacker Drive, Chicago,
IL 60606
Margaret Pietropaolo Prior to January, 1994, Data Base/
Assistant Vice President Production Analyst, Wellington
Management, 75 State Street, Boston,
MA 02109
George Putnam Chairman and Director, Putnam Mutual
Chairman and Director Funds Corp.
Director, The Boston Company, Inc.,
One Boston Place, Boston, MA 02108
Director, Boston Safe Deposit and
Trust Company, One Boston Place,
Boston, MA 02108
Director, Freeport-McMoRan, Inc., 200
Park Avenue, New York, NY 10166
Director, General Mills, Inc., 9200
Wayzata Boulevard, Minneapolis,
MN 55440
Director, Houghton Mifflin Company,
One Beacon Street, Boston, MA 02108
Director, Marsh & McLennan Companies,
Inc., 1221 Avenue of the Americas,
New York, NY 10020
Director, Rockefeller Group, Inc.,
1230 Avenue of the Americas,
New York, NY 10020
Christopher A. Ray Prior to December, 1992, Vice
Vice President President and Portfolio Manager at
Scudder, Stevens & Clark, Inc., 160
Federal Street, Boston, MA 02110
Mark J. Siegel Prior to June, 1993, Vice President,
Vice President Salomon Brothers International,
Ltd., Victoria Plaza, 111 Buckingham
Palace Road, London SW1W 0SB,
England
Joanne Soja Prior to June, 1993, Managing
Senior Vice President Director/Portfolio Manager,
Chancellor Capital Management,
153 East 53rd Street, New York, NY
10002
George W. Stairs Prior to July, 1994, Equity Research
Vice President Analyst, ValueQuest Limited,
Roundy's Hill, Marblehead, MA 01945
Hillary F. Till Prior to May, 1994, Fixed-Income
Vice President Deritive Trader, Bank of Boston,
100 Federal Street, Boston, MA 02109
Prior to December, 1993, Equity
Analyst, Harvard Management Company,
600 Atlantic St., Boston, MA 02109
Bonnie L. Troped Prior to May, 1993, Assistant Vice
Vice President President/Director of Corporate
Events, The Boston Company, One
Boston Place, Boston, MA 02108
Elizabeth A. Underhill Prior to August, 1994, Vice President
Vice President and Senior Equity Analyst, State
Street Bank and Trust Company, 225
Franklin St., Boston, MA 02110
Charles C. Van Vleet Prior to August, 1994, Vice President
Senior Vice President and Fixed-Income Manager, Alliance
Capital Management, 1345 Avenue of
the Americas, New York, NY 10105
Michael R. Weinstein Prior to March, 1994, Management
Vice President Consultant, Arthur D. Little, Acorn
Park, Cambridge, MA 02140
Item 29. Principal Underwriter
(a) Putnam Mutual Funds Corp. is the principal underwriter for
each of the following investment companies, including the
Registrant:
Putnam Adjustable Rate U.S. Government Fund, Putnam American
Government Income Fund, Putnam Arizona Tax Exempt Income Fund,
Putnam Asia Pacific Growth Fund, Putnam Asset Allocation Funds,
Putnam Balanced Government Fund, Putnam California Tax Exempt
Income Trust, Putnam California Tax Exempt Money Market Fund,
Putnam Capital Appreciation Fund, Putnam Capital Growth and
Income Fund, Putnam Capital Manager Trust, Putnam Convertible
Income-Growth Trust, Putnam Corporate Asset Trust, Putnam
Diversified Equity Trust, Putnam Diversified Income Trust, Putnam
Dividend Growth Fund, Putnam Equity Income Fund, Putnam Europe
Growth Fund, Putnam Federal Income Trust, Putnam Florida Tax
Exempt Income Fund, The George Putnam Fund of Boston, Putnam
Global Governmental Income Trust, Putnam Global Growth Fund,
Putnam Growth Fund, The Putnam Fund for Growth and Income, Putnam
Health Sciences Trust, Putnam High Yield Trust, Putnam High Yield
Advantage Fund, Putnam Income Fund, Putnam Intermediate Tax
Exempt Income Fund, Putnam Investors Fund, Putnam Managed Income
Trust, Putnam Massachusetts Tax Exempt Income Fund II, Putnam
Michigan Tax Exempt Income Fund II, Putnam Minnesota Tax Exempt
Income Fund II, Putnam Money Market Fund, Putnam Municipal Income
Fund, Putnam Natural Resources Fund, Putnam New Jersey Tax Exempt
Income Fund, Putnam New Opportunities Fund, Putnam New York Tax
Exempt Income Fund, Putnam New York Tax Exempt Money Market Fund,
Putnam New York Tax Exempt Opportunities Fund, Putnam Ohio Tax
Exempt Income Fund II, Putnam OTC Emerging Growth Fund, Putnam
Overseas Growth Fund, Putnam Pennsylvania Tax Exempt Income Fund,
Putnam Research Analyst Fund, Putnam Tax-Free Income Trust,
Putnam Tax Exempt Income Fund, Putnam Tax Exempt Money Market
Fund, Putnam U.S. Government Income Trust, Putnam Utilities
Growth and Income Fund, Putnam Vista Fund, Putnam Voyager Fund
(b) The directors and officers of the Registrant's principal
underwriter are:<PAGE>
<TABLE>
<CAPTION>
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
<C> <C> <C>
John V. Adduci Assistant Vice President None
Christopher S. Alpaugh Vice President None
Paulette C. Amisano Vice President None
Ronald J. Anwar Vice President None
Karen M. Apatow Assistant Vice President None
Steven E. Asher Senior Vice President None
Georgette M. Bacca Vice President None
Ira G. Baron Senior Vice President None
John L. Bartlett Senior Vice President None
Steven M. Beatty Vice President None
Matthew F. Beaudry Vice President None
Robert A. Benish Vice President None
John J. Bent Vice President None
Sharon A. Berka Vice President None
James R. Besher Vice President None
Suzanne J. Bessett Vice President None
Maureen L. Boisvert Vice President None
Keith R. Bouchard Vice President None
Leslee R. Bresnahan Vice President None
James D. Brockelman Senior Vice President None
Scott C. Brown Vice President None
Gail Buckner Senior Vice President None
Robert W. Burke Senior Managing Director None
Richard P. Busher Vice President None
Ellen S. Callahan Assistant Vice President None
William A. Campagna Senior Vice President None
Charles A. Carey Assistant Vice President None
Patricia A. Cartwright Assistant Vice President None
Christopher D. Caton Assistant Vice President None
Stephen J. Chaput Assisant Vice President None
Daniel J. Church Vice President None
James E. Clinton Assistant Vice President None
Kathleen M. Collman Managing Director None
Mark L. Coneeny Vice President None
Donald A. Connelly Senior Vice President None
Anna Coppola Assistant Vice President None
F. Nicholas Corvinus Senior Vice President None
Kenneth L. Daly Senior Vice President None
Edward H. Dane Assistant Vice President None
Nancy M. Days Assistant Vice President None
Daniel J. Delianedis Vice President None
J. Thomas Depres Senior Vice President None
Michael G. Dolan Assistant Vice President None
Scott M. Donaldson Vice President None
Emily J. Durbin Assistant Vice President None
David B. Edlin Senior Vice President None
James M. English Senior Vice President None
Vincent Esposito Senior Vice President None
Mary K. Farrell Assistant Vice President None
Susan H. Feldman Vice President None
Michael J. Fetcher Assistant Vice President None
Paul F. Fichera Senior Vice President None
C. Nancy Fisher Senior Vice President None
Mitchell B. Fishman Vice President None
Joseph C. Fiumara Vice President None
Patricia C. Flaherty Senior Vice President None
Judy P. Frodigh Vice President None
Samuel F. Gagliardi Vice President None
Judy S. Gates Vice President None
Richard W. Gauger Assistant Vice President None
Joseph P. Gennaco Vice President None
Steven E. Gibson Managing Director None
Mark D. Goodwin Assistant Vice President None
Robert Goodman Managing Director None
Robert G. Greenly Vice President None
Thomas W. Halloran Vice President None
Marilyn M. Hausammann Senior Vice President None
Howard W. Hawkins, III Vice President None
Deanna R. Hayes-Castro Assistant Vice President None
Paul P. Heffernan Vice President None
Susan M. Heimanson Vice President None
Bradley J. Hilsabeck Vice President None
Bess J.M. Hochstein Vice President None
Maureen A. Holmes Assistant Vice President None
William J. Hurley Senior Vice President None
Gregory E. Hyde Vice President None
Dwight D. Jacobsen Senior Vice President None
Douglas B. Jamieson Director and Senior Managing Director None
Jay M. Johnson Vice President None
Kevin M. Joyce Senior Vice President None
John P. Keating Vice President None
James J. Kilbane Vice President None
Deborah H. Kirk Senior Vice President None
Jill A. Koontz Assistant Vice President None
Howard H. Kreutzberg Senior Vice President None
Edward V. Lewandowski Senior Vice President None
Edward V. Lewandowski, Jr. Vice President None
Samuel L. Lieberman Vice President None
Rufino R. Lomba Vice President None
Maura A. Lockwood Assistant Vice President None
Robert F. Lucey Senior Managing Director None
Philip J. Lussier Managing Director None
Ann Malatos Assistant Vice President None
Renee L. Maloof Assistant Vice President None
Frederick S. Marius Assistant Vice President None
Karen E. Marotta Vice President None
Jill Maserian Vice President None
Kathleen M. McAnulty Assistant Vice President None
Anne B. McCarthy Assistant Vice President None
Mark J. McKenna Vice President None
Marla J. McDougall Assistant Vice President None
Walter S. McFarland Vice President None
Greg J. McMillan Assistant Vice President None
Robert E. McMurtrie Vice President None
Claye A. Metelmann Assistant Vice President None
J. Chris Meyer Senior Vice President None
Douglas W. Miller Vice President None
Ronald K. Mills Vice President None
Mitchell L. Moret Vice President None
Donald E. Mullen Vice President None
Brendan R. Murray Vice President None
Robert Nadherny Vice President None
Alexander L. Nelson Managing Director None
Jane M. Nickodemus Vice President None
John P. Nickodemus Vice President None
Michael C. Noonis Assistant Vice President None
Peter A. Nyhus Vice President None
Kristen P. O'Brien Vice President None
Lorie C. O'Malley Senior Vice President None
Kevin L. O'Shea Vice President None
Philip G. Padgett, Jr. Vice President None
Richard N. Pallan Senior Managing Director None
Scott A. Papes Vice President None
Cynthia O. Parr Vice President None
John D. Pataccoli Vice President None
Joseph Phoenix Vice President None
Jeffrey E. Place Senior Vice President None
Keith Plapinger Vice President None
Douglas H. Powell Vice President None
George Putnam Director Chairman & President
Susannah Psomas Vice President None
Robert B. Rowe Vice President None
Kevin A. Rowell Senior Vice President None
Thomas C. Rowley Vice President None
Deborah A. Ryan Assistant Vice President None
Charles Ruys de Perez Vice President None
Catherine A. Saunders Senior Vice President None
Robbin L. Saunders Assistant Vice President None
Karl W. Saur Vice President None
Christine A. Scordato Vice President None
Joseph W. Scott Assistant Vice President None
Kathleen G. Sharpless Senior Vice President None
John F. Sharry Managing Director None
John B. Shamburg Vice President None
Vincent P. Sheehan Vice President None
William N. Shiebler Director, Chief Executive Vice President
Officer and President
Daniel S. Shore Vice President None
Mark J. Siebold Assistant Vice President None
Gordon H. Silver Senior Managing Director Vice President
Barry Sommers Vice President None
Nicholas T. Stanojev Vice President None
Brian L. Sullivan Vice President None
Kevin J. Sullivan Vice President None
Moira A. Sullivan Vice President None
Janet C. Sweeney Vice President None
Edward M. Syring, Jr. Vice President None
James S. Tambone Senior Vice President None
B. Iris Tanner Assistant Vice President None
Louis Tasiopoulos Senior Vice President None
David S. Taylor Vice President None
John R. Telling Vice President None
Richard B. Tibbetts Senior Vice President None
Patrice M. Tirado Vice President None
Janet E. Tosi Assistant Vice President None
John C. Tredinnick Vice President None
Bonnie L. Troped Vice President None
Larry R. Unger Vice President None
Douglas J. Vander Linde Vice President None
John F. Wallin Senior Vice President None
Edward F. Whalen Vice President None
Robert J. Wheeler Senior Vice President None
John B. White Vice President None
Kirk E. Williamson Senior Vice President None
Leigh T. Williamson Vice President None
Benjamin Woloshin Vice President None
William H. Woolverton Senior Vice President and Clerk None
Timothy R. Young Vice President None
SooHee L. Zebedee Assistant Vice President None
</TABLE>
The principal business address of each person listed above is One
Post Office Square, Boston, MA 02109, except for:
Mr. Alpaugh, 5980 Richmond Highway, Alexandria, VA 22303
Mr. Anwar, 25-49 86th St. Jackson Heights, NY 11369
Mr. Baron, 31 Cala Moreya, Laguna Niguel, CA 92667
Mr. Bartlett, 7 Farifield St., Boston, MA 02116
Mr. Besher, 14000 Margaux, Town & Country, MO 63017
Ms. Besset, 1140 North LaSalle Blvd, Chicago, IL 60610
Mr. Bouchard, 18 Brice Rd., Annapolis, MD 21401
Mr. Brown, 221 East Mallord Drive, Boise, ID 83706
Ms. Buckner, 8338 Timber Trail, Pittsburgh, PA 15237
Mr. Busher, 12005 Ridge Knoll Drive, Fairfax, VA 22033
Mr. Campagna, 2179-D Lake Park Drive, Smyrna, GA 30080
Mr. Church, 4504 Sir Winston Place, Charlotte, NC 28211
Mr. Connelly, 4634 Mirada Way, Sarasota, FL 34238
Mr. Corvinus, 208 Water St., Newburyport, MA 01950
Mr. Deliandis, 206 Promontory Drive, Newport Beach, CA 92660
Mr. Edlin, 7 River Road, 305 Palmer Point, Cos Cob, CT 06807
Mr. English, 1184 Pintail Circle, Boulder, CO 80303
Mr. Goodman, 14 Clover Place, Cos Cob, CT 06807
Mr. Halloran, 978 W. Creek Lane, Westlake Village, CA 91362
Mr. Hyde, 3305 Sulky, Marietta, GA 30067
Mr. Jacobsen, 2744 Joyce Ridge Drive, Chesterfield, MO 63017
Mr. Johnson, 200 Clock Tower Place, Carmel, CA 93923
Mr. Keating, 5521 Greenville Avenue, Dallas, TX 75206
Ms. Kirk, 124 Rivermist Dr., Buffalo, NY 14202
Mr. Lewandowski, 805 Darrell Road, Hillsborough, CA 94010
Mr. Lewandowski, Jr., 2120 The Strand, Manhattan Beach, CA 90266
Mr. Lieberman, 200 Roy St., Seattle, WA 98199
Mr. McFarland, 8012 Dancing Fern Trail, Chattanooga, TN 37421
Mr. McMillan, 203 D. Zigler St., Zelienople, PA 16063
Mr. McMurtrie, 14529 Glastonbury, Detroit, MI 48223
Mr. Miller, 260 West 72nd St., New York, NY 10023
Mr. Moret, 4519 Lawn Avenue, Western Springs, IL 60558
Mr. Murray, 13 Ridge Court, Saratoga Springs, NY 12866
Mr. Nadherny, 9714 Marmount Drive, Seattle, WA 98117
Mr. and Mrs. Nickodemus, 1232 B Louden St., Cincinnati, OH 45202
Mr. Nyhus, 7203 Oak Pointe Curve, Bloomington, MN 55438
Mr. Padgett, Jr., 7709 Charleston Drive, Bethesda, MD 20817
Mr. Papes, 3102 Wood View Bridge Drive, Kansas City, KS 66103
Mr. Pataccoli, 125 41st Street, Manhattan Beach, Ca 90266
Mr. Phoenix, 1426 Asbury Avenue, Hubbard Woods, IL 60093
Mr. Place, 4211 Loch Highland Parkway, Roswell, GA 30075
Mr. Powell, 1508 Ruth Lane, Newport Beach, CA 92660
Mr. Rowe, 109 Shore Drive, Longwood, FL 32779
Mr. Rowell, 1508 Ruth Lane, Newport Beach, CA 92660
Mr. Rowley, 237 Peeke Avenue, Kirkwood, MO 63122
Ms. Saunders, 39939 Stevenson Common, Freemont, CA 94538
Mr. Shamburg, 10603 N. 100th Street, Scottsdale, AZ 85260
Mr. Sheehan, Parkway Center, 1150 Galapago, Denver, CO 80204
Mr. Shore, 2870 Pharr Court South, N.W., Atlanta, BA 30305
Mr. Sommers, 397 North Little Pour, New City, NY 10956
Mr. B. Sullivan, 777 Pinoake Road, Mt. Lebanon, PA 15243
Ms. M. Sullivan, 493 Zinfandel Lane, St. Helena, CA 94574
Ms. Sweeney, 8 Surf Street, Marblehead, MA 01945
Mr. Syring, 7540 Mandarian Dr., Boca Raton, FL 33433
Mr. Tambone, 10 Commercial Wharf, Boston, MA 02110
Mr. Tredinnick, 2995 Glenwood Drive, Boulder, CO 80301
Mr. Telling, 1995 Delaware Ave., Buffalo, NY 14216
Mr. Unger, 212 E. Broadway, New York, NY 10002
Mr. Vessels, 7 Riverview Drive, Norwalk, CT 06850
Mr. Williamson, 32 Kramer Place, Mandeville, LA 70448
Mr. White, 23 Wellington St., Arlington, MA 02174
Mr. Woloshin, 730 North Bundy Drive, Los Angeles, CA 90049
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Persons maintaining physical possession of accounts,
books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules
promulgated thereunder are Registrants' Clerk, Beverly Marcus;
Registrants' investment adviser, Putnam Investment Management,
Inc.; Registrants' principal underwriter, Putnam Mutual Funds
Corp.; Registrants' custodian, Putnam Fiduciary Trust Company
("PFTC"); and Registrants' transfer and dividend disbursing
agent, Putnam Investor Services, a division of PFTC. The address
of the Clerk, investment adviser, principal underwriter,
custodian and transfer and dividend disbursing agent,
is One Post Office Square, Boston, Massachusetts 02109.
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
Each Registrant undertakes to furnish to each
person to whom a prospectus of the Registrant is delivered a copy
of the Registrant's latest annual report to shareholders, upon
request and without charge.
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus and Statement of Additional Information constituting
parts of these Post-Effective Amendments to the Registration
Statements on Form N-1A (File No. 2-81011 for the Trust) ;
(File No. 33-17211 for the Money Market Fund) the
("Registration Statements") of our reports dated November
15, 1994, November 14, 1994, and November 8, 1994
relating to the financial statements and financial highlights
appearing in the September 30, 1994 Annual Reports of
Putnam California Tax Exempt Income Fund , Putnam California
Intermediate Tax Exempt Fund, and Putnam California Tax
Exempt Money Market Fund, respectively, which financial
statements and financial highlights are also incorporated by
reference into the Registration Statements. We also consent to
the references to us under the heading "Independent Accountants
and Financial Statements" in such Statement of Additional
Information and under the heading "Financial highlights" in such
Prospectus.
PRICE WATERHOUSE LLP
Boston, Massachusetts
Janaury 19, 1995
<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust of each
of Putnam California Tax Exempt Income Trust and
Putnam California Tax Exempt Money Market Fund is on file with
the Secretary of State of The Commonwealth of Massachusetts and
notice is hereby given that this instrument is executed on behalf
of each Registrant by an officer of each Registrant as an officer
and not individually and the obligations of or arising out of
this instrument are not binding upon any of the Trustees ,
officers or shareholders individually but are binding only
upon the assets and property of the relevant Registrant .
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940 each Registrant
certifies that it meets all of the requirements for
effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused
this Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City
of Boston, and The Commonwealth of Massachusetts, on the 20th day
of January, 1995 .
PUTNAM CALIFORNIA TAX EXEMPT
INCOME TRUST
PUTNAM CALIFORNIA TAX EXEMPT MONEY
MARKET FUND
By: Gordon H. Silver, Vice President
Pursuant to the requirements of the Securities Act of
1933, this Amendment to the Registration Statements of Putnam
California Tax Exempt Income Trust and Putnam California
Tax Exempt Money Market Fund has been signed below by the
following persons in the capacities and on the dates indicated:
SIGNATURE TITLE
George Putnam President and Chairman of the
Board; Principal Executive
Officer; Trustee
William F. Pounds Vice Chairman; Trustee
John D. Hughes Vice President; Treasurer and
Principal Financial Officer
Paul G. Bucuvalas Assistant Treasurer and
Principal Accounting Officer
Jameson A. Baxter Trustee
Hans H. Estin Trustee
John A. Hill Trustee
Elizabeth T. Kennan Trustee
Lawrence J. Lasser Trustee
Robert E. Patterson Trustee
Donald S. Perkins Trustee
George Putnam, III Trustee
A.J.C. Smith Trustee
W. Nicholas Thorndike Trustee
By: Gordon H. Silver, as
Attorney-in-Fact
January 20, 1995
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST
--------------------
AMENDED AND RESTATED AGREEMENT
AND DECLARATION OF TRUST
This AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
made at Boston, Massachusetts, this 6th day of May, 1994 and
effective as hereinafter provided, hereby amends and restates in
its entirety the Trust's amended and restated Agreement and
Declaration of Trust dated July 9, 1992.
WITNESSETH that
WHEREAS, this Trust has been formed to carry on the business
of an investment company; and
WHEREAS, the Trustees have agreed to manage all property
coming into their hands as trustees of a Massachusetts voluntary
association with transferable shares in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will
hold all cash, securities and other assets, which they may from
time to time acquire in any manner as Trustees hereunder IN TRUST
to manage and dispose of the same upon the following terms and
conditions for the pro rata benefit of the holders from time to
time of Shares in this Trust as hereinafter set forth.
ARTICLE I
Name and Definitions
NAME
Section 1. This Trust shall be known as "Putnam California
Tax Exempt Income Trust", and the Trustees shall conduct the
business of the Trust under that name or any other name as they
may from time to time determine.
<PAGE>
DEFINITIONS
Section 2. Whenever used herein, unless otherwise required
by the context or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust
established by this Agreement and Declaration of Trust, as
amended from time to time;
(b) "Trustees" refers to the Trustees of the Trust named
herein or elected in accordance with Article IV;
(c) "Shares" means the equal proportionate transferable
units of interest into which the beneficial interest in the
Trust shall be divided from time to time or, if more than
one series or class of Shares is authorized by the Trustees,
the equal proportionate transferable units into which each
series or class of Shares shall be divided from time to
time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of
1940 and the Rules and Regulations thereunder, all as
amended from time to time;
(f) The terms "Affiliated Person", "Assignment",
"Commission", "Interested Person", "Principal Underwriter"
and "Majority Shareholder Vote" (the 67% or 50% requirement
of the third sentence of Section 2(a)(42) of the 1940 Act,
whichever may be applicable) shall have the meanings given
them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Amended and
Restated Agreement and Declaration of Trust as amended or
restated from time to time;
(h) "Bylaws" shall mean the Bylaws of the Trust as amended
from time to time;
(i) The term "series" or "series of Shares" refers to the
one or more separate investment portfolios of the Trust into
which the assets and liabilities of the Trust may be divided
and the Shares of the Trust representing the beneficial
interest of Shareholders in such respective portfolios; and
(j) The term "class" or "class of Shares" refers to the
division of Shares into two or more classes as provided in
Article III, Section 1 hereof.
<PAGE>
ARTICLE II
Purpose of Trust
The purpose of the Trust is to provide investors a managed
investment primarily in securities and debt instruments.
ARTICLE III
Shares
DIVISION OF BENEFICIAL INTEREST
Section 1. The Shares of the Trust shall be issued in one
or more series as the Trustees may, without shareholder approval,
authorize. Each series shall be preferred over all other series
in respect of the assets allocated to that series. The
beneficial interest in each series shall at all times be divided
into Shares, without par value, each of which shall, except as
provided in the following sentence, represent an equal
proportionate interest in the series with each other Share of the
same series, none having priority or preference over another. The
Trustees may, without shareholder approval, divide the Shares of
any series into two or more classes, Shares of each such class
having such preferences and special or relative rights and
privileges (including conversion rights, if any) as the Trustees
may determine and as shall be set forth in the Bylaws. The
number of Shares authorized shall be unlimited. The Trustees may
from time to time divide or combine the Shares of any series or
class into a greater or lesser number without thereby changing
the proportionate beneficial interest in the series or class.
OWNERSHIP OF SHARES
Section 2. The ownership of Shares shall be recorded on the
books of the Trust or a transfer or similar agent. No
certificates certifying the ownership of Shares shall be issued
except as the Trustees may otherwise determine from time to time.
The Trustees may make such rules as they consider appropriate for
the issuance of Share Certificates, the transfer of Shares and
similar matters. The record books of the Trust as kept by the
Trust or any transfer or similar agent, as the case may be, shall
be conclusive as to who are the Shareholders of each series and
class and as to the number of Shares of each series and class
held from time to time by each Shareholder.
INVESTMENT IN THE TRUST
Section 3. The Trustees shall accept investments in the
Trust from such persons and on such terms and for such
consideration, which may consist of cash or tangible or
intangible property or a combination thereof, as they from time
to time authorize.
All consideration received by the Trust for the issue or
sale of Shares of each series, together with all income,
earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation thereof, and any
funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall irrevocably belong to the
series of Shares with respect to which the same were received by
the Trust for all purposes, subject only to the rights of
creditors, and shall be so handled upon the books of account of
the Trust and are herein referred to as "assets of" such series.
NO PREEMPTIVE RIGHTS
Section 4. Shareholders shall have no preemptive or other
right to subscribe to any additional Shares or other securities
issued by the Trust.
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
Section 5. Shares shall be deemed to be personal property
giving only the rights provided in this Declaration of Trust or
the Bylaws. Every Shareholder by virtue of having become a
Shareholder shall be held to have expressly assented and agreed
to the terms of this Declaration of Trust and the Bylaws and to
have become a party hereto. The death of a Shareholder during
the continuance of the Trust shall not operate to terminate the
same nor entitle the representative of any deceased Shareholder
to an accounting or to take any action in court or elsewhere
against the Trust or the Trustees, but only to the rights of said
decedent under this Trust. Ownership of Shares shall not entitle
the Shareholder to any title in or to the whole or any part of
the Trust property or right to call for a partition or division
of the same or for an accounting, nor shall the ownership of
Shares constitute the Shareholders partners. Neither the Trust
nor the Trustees, nor any officer, employee or agent of the Trust
shall have any power to bind personally any Shareholder, nor
except as specifically provided herein to call upon any
shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time
personally agree to pay.
ARTICLE IV
The Trustees
ELECTION
Section 1. A Trustee may be elected either by the Trustees
or by the Shareholders. There shall not be less than three
Trustees. The number of Trustees shall be fixed by the Trustees.
Each Trustee elected by the Trustees or the Shareholders shall
serve until he or she retires, resigns, is removed or dies or
until the next meeting of Shareholders called for the purpose of
electing Trustees and until the election and qualification of his
or her successor. At any meeting called for the purpose, a
Trustee may be removed by vote of two-thirds of the outstanding
Shares.
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
Section 2. The death, declination, resignation, retirement,
removal or incapacity of the Trustees, or any one of them, shall
not operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration of Trust.
POWERS
Section 3. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient
to carry out that responsibility. Without limiting the
foregoing, the Trustees may adopt Bylaws not inconsistent with
this Declaration of Trust providing for the conduct of the
business of the Trust and may amend and repeal them to the extent
that such Bylaws do not reserve that right to the Shareholders;
they may fill vacancies in or add to their number, and may elect
and remove such officers and appoint and terminate such agents as
they consider appropriate; they may appoint from their own
number, and terminate, any one or more committees consisting of
two or more Trustees, including an executive committee which may,
when the Trustees are not in session, exercise some or all of the
power and authority of the Trustees as the Trustees may
determine; they may employ one or more custodians of the assets
of the Trust and may authorize such custodians to employ
subcustodians and to deposit all or any part of such assets in a
system or systems for the central handling of securities, retain
a transfer agent or a Shareholder servicing agent, or both,
provide for the distribution of Shares by the Trust, through one
or more principal underwriters or otherwise, set record dates for
the determination of Shareholders with respect to various
matters, and in general delegate such authority as they consider
desirable to any officer of the Trust, to any committee of the
Trustees and to any agent or employee of the Trust or to any such
custodian or underwriter.
Without limiting the foregoing, the Trustees shall have
power and authority:
(a) To invest and reinvest cash, and to hold cash
uninvested;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate,
write options on and lease any or all of the assets of the
Trust;
(c) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or
property; and to execute and deliver proxies or powers of
attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power
and discretion with relation to securities or property as
the Trustees shall deem proper;
(d) To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of
securities;
(e) To hold any security or property in a form not
indicating any trust, whether in bearer, unregistered or
other negotiable form, or in the name of the Trustees or of
the Trust or in the name of a custodian, subcustodian or
other depositary or a nominee or nominees or otherwise;
(f) Subject to the provisions of Article III, Section 3, to
allocate assets, liabilities, income and expenses of the
Trust to a particular series of Shares or to apportion the
same among two or more series, provided that any liabilities
or expenses incurred by or arising in connection with a
particular series of Shares shall be payable solely out of
the assets of that series; and to the extent necessary or
appropriate to give effect to the preferences and special or
relative rights and privileges of any classes of Shares, to
allocate assets, liabilities, income and expenses of a
series to a particular class of Shares of that series or to
apportion the same among two or more classes of Shares of
that series;
(g) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation
or issuer, any security of which is or was held in the
Trust; to consent to any contract, lease, mortgage, purchase
or sale of property by such corporation or issuer, and to
pay calls or subscriptions with respect to any security held
in the Trust;
(h) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in
that connection to deposit any security with, or transfer
any security to, any such committee, depositary or trustee,
and to delegate to them such power and authority with
relation to any security (whether or not so deposited or
transferred) as the trustees shall deem proper, and to agree
to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the
Trustees shall deem proper;
<PAGE>
(i) To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any matter in controversy,
including but not limited to claims for taxes;
(j) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(k) To borrow funds;
(l) To endorse or guarantee the payment of any notes or
other obligations of any person; to make contracts of
guaranty or suretyship, or otherwise assume liability for
payment thereof; and to mortgage and pledge the Trust
property or any part thereof to secure any of or all such
obligations;
(m) To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for
the conduct of the business, including without limitation,
insurance policies insuring the assets of the Trust and
payment of distributions and principal on its portfolio
investments, and insurance policies insuring the
Shareholders, Trustees, officers, employees, agents,
investment advisers or managers, principal underwriters, or
independent contractors of the Trust individually against
all claims and liabilities of every nature arising by reason
of holding, being or having held any such office or
position, or by reason of any action alleged to have been
taken or omitted by any such person as Shareholder, Trustee,
officer, employee, agent, investment adviser or manager,
principal underwriter, or independent contractor, including
any action taken or omitted that may be determined to
constitute negligence, whether or not the Trust would have
the power to indemnify such person against such liability;
and
(n) To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and
carry out pension, profit-sharing, share bonus, share
purchase, savings, thrift and other retirement, incentive
and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a
means of providing such retirement and other benefits, for
any or all of the Trustees, officers, employees and agents
of the Trust.
The Trustees shall not in any way be bound or limited by any
present or future law or custom in regard to investments by
trustees. Except as otherwise provided herein or from time to
time in the Bylaws, any action to be taken by the Trustees may be
taken by a majority of the Trustees present at a meeting of
Trustees (a quorum being present), within or without
Massachusetts, including any meeting held by means of a
conference telephone or other communications equipment by means
of which all persons participating in the meeting can hear each
other at the same time and participation by such means shall
constitute presence in person at a meeting, or by written
consents of a majority of the Trustees then in office.
PAYMENT OF EXPENSES BY TRUST
Section 4. The Trustees are authorized to pay or to cause
to be paid out of the principal or income of the Trust, or partly
out of principal and partly out of income, as they deem fair, all
expenses, fees, charges, taxes and liabilities incurred or
arising in connection with the Trust, or in connection with the
management thereof, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of
the Trust's officers, employees, investment adviser or manager,
principal underwriter, auditor, counsel, custodian, transfer
agent, Shareholder servicing agent, and such other agents or
independent contractors and any such other expenses and charges
as the Trustees may deem necessary or proper to incur, provided,
however, that all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with a particular series of
Shares shall be payable solely out of the assets of that series.
OWNERSHIP OF ASSETS OF THE TRUST
Section 5. Title to all of the assets of each series of
Shares and of the Trust shall at all times be considered as
vested in the Trustees.
ADVISORY, MANAGEMENT AND DISTRIBUTION
Section 6. Subject to a favorable Majority Shareholder
Vote, the Trustees may, at any time and from time to time,
contract for exclusive or nonexclusive advisory and/or management
services with any corporation, trust, association or other
organization (the "Manager"), every such contract to comply with
such requirements and restrictions as may be set forth in the
Bylaws; and any such contract may contain such other terms
interpretive of or in addition to said requirements and
restrictions as the Trustees may determine, including, without
limitation, authority to determine from time to time what
investments shall be purchased, held, sold or exchanged and what
portion, if any, of the assets of the Trust shall be held
uninvested and to make changes in the Trust's investments. The
Trustees may also, at any time and from time to time, contract
with the Manager or any other corporation, trust, association or
other organization, appointing it exclusive or nonexclusive
distributor or principal underwriter for the Shares, every such
contract to comply with such requirements and restrictions as may
be set forth in the Bylaws; and any such contract may contain
such other terms interpretive of or in addition to said
requirements and restrictions as the Trustees may determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the
Trust is a shareholder, director, officer, partner, trustee,
employee, manager, adviser, principal underwriter or
distributor or agent of or for any corporation, trust,
association, or other organization, or of or for any parent
or affiliate of any organization, with which an advisory or
management contract, or principal underwriter's or
distributor's contract, or transfer, Shareholder servicing
or other agency contract may have been or may hereafter be
made, or that any such organization, or any parent or
affiliate thereof, is a Shareholder or has an interest in
the Trust, or that
(ii) any corporation, trust, association or other
organization with which an advisory or management contract
or principal underwriter's or distributor's contract, or
transfer, Shareholder servicing or other agency contract may
have been or may hereafter be made also has an advisory or
management contract, or principal underwriter's or
distributor's contract, or transfer, Shareholder servicing
or other agency contract with one or more other
corporations, trusts, associations, or other organizations,
or has other business or interests,
shall not affect the validity of any such contract or disqualify
any Shareholder, Trustee or officer of the Trust from voting upon
or executing the same or create any liability or accountability
to the Trust or its Shareholders.
ARTICLE V
Shareholders' Voting Powers and Meetings
VOTING POWERS
Section 1. Subject to the voting powers of one or more
classes of shares as set forth elsewhere in this Declaration of
Trust or in the Bylaws, the Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Article IV,
Section 1, (ii) for the removal of Trustees as provided in
Article IV, Section 1, (iii) with respect to any Manager as
provided in Article IV, Section 6, (iv) with respect to any
termination of this Trust to the extent and as provided in
Article IX, Section 4, (v) with respect to any amendment of this
Declaration of Trust to the extent and as provided in Article IX,
Section 7, (vi) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court
action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the
Trust or the Shareholders, and (vii) with respect to such
additional matters relating to the Trust as may be required by
this Declaration of Trust, the Bylaws or any registration of the
Trust with the Securities and Exchange Commission (or any
successor agency) or any state, or as the Trustees may consider
necessary or desirable. Each whole Share shall be entitled to
one vote as to any matter on which it is entitled to vote and
each fractional Share shall be entitled to a proportionate
fractional vote. Notwithstanding any other provision of this
Declaration of Trust, on any matter submitted to a vote of
Shareholders, all Shares of the Trust then entitled to vote shall
be voted in the aggregate as a single class without regard to
series or classes of shares, except (1) when required by the 1940
Act or when the Trustees shall have determined that the matter
affects one or more series or classes of Shares materially
differently, Shares shall be voted by individual series or class;
and (2) when the Trustees have determined that the matter affects
only the interests of one or more series or classes, then only
Shareholders of such series or classes shall be entitled to vote
thereon. There shall be no cumulative voting in the election of
Trustees. Shares may be voted in person or by proxy. A proxy
with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or prior
to exercise of the proxy the Trust receives a specific written
notice to the contrary from any one of them. A proxy purporting
to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger. Until
Shares of any series or class are issued, the Trustees may
exercise all rights of Shareholders and may take any action
required by law, this Declaration of Trust or the Bylaws to be
taken by Shareholders as to such series or class.
VOTING POWER AND MEETINGS
Section 2. Meetings of Shareholders of any or all series or
classes may be called by the Trustees from time to time for the
purpose of taking action upon any matter requiring the vote or
authority of the Shareholders of such series or classes as herein
provided or upon any other matter deemed by the Trustees to be
necessary or desirable. Written notice of any meeting of
Shareholders shall be given or caused to be given by the Trustees
by mailing such notice at least seven days before such meeting,
postage prepaid, stating the time, place and purpose of the
meeting, to each Shareholder at the Shareholder's address as it
appears on the records of the Trust. If the Trustees shall fail
to call or give notice of any meeting of Shareholders for a
period of 30 days after written application by Shareholders
holding at least 10% of the then outstanding Shares of all series
and classes is entitled to vote at such meeting requesting that a
meeting be called for a purpose requiring action by the
Shareholders as provided herein or in the Bylaws, then
Shareholders holding at least 10% of the then outstanding Shares
of all series and classes entitled to vote at such meeting may
call and give notice of such meeting, and thereupon the meeting
shall be held in the manner provided for herein in case of call
thereof by the Trustees.
QUORUM AND REQUIRED VOTE
Section 3. Thirty percent of Shares entitled to vote on a
particular matter shall be a quorum for the transaction of
business on that matter at a Shareholders' meeting, except that
where any provision of law or of this Declaration of Trust
permits or requires that holders of any series or class shall
vote as an individual series or class, then thirty percent of the
aggregate number of Shares of that series or class entitled to
vote shall be necessary to constitute a quorum for the
transaction of business by that series or class. Any lesser
number shall be sufficient for adjournments. Any adjourned
session or sessions may be held, within a reasonable time after
the date set for the original meeting, without the necessity of
further notice. Except when a larger vote is required by any
provision of this Declaration of Trust or the Bylaws, or by the
1940 Act, a majority of the Shares voted shall decide any
questions and a plurality shall elect a Trustee, provided that
where any provision of law or of this Declaration of Trust
permits or requires that the holders of any series or classes
shall vote as an individual series or class, then a majority of
the Shares of that series or class voted on the matter shall
decide that matter insofar as that series or class is concerned.
ACTION BY WRITTEN CONSENT
Section 4. Any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote
on the matter (or such larger proportion thereof as shall be
required by any express provision of this Declaration of Trust or
the Bylaws) consent to the action in writing and such written
consents are filed with the records of the meetings of
Shareholders. Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
ADDITIONAL PROVISIONS
Section 5. The Bylaws may include further provisions not
inconsistent with this Declaration of Trust regarding
Shareholders' voting powers, the conduct of meetings and related
matters.
<PAGE>
ARTICLE VI
Distributions, Redemptions and Repurchases
DISTRIBUTIONS
Section 1. The Trustees may each year, or more frequently
if they so determine, distribute to the Shareholders of each
series out of the assets of such series such amounts as the
Trustees may determine. Such amounts shall be distributed pro
rata to Shareholders of each series in proportion to the number
of Shares of each series held by each of them, except to the
extent otherwise required or permitted by the preferences and
special or relative rights and privileges of any classes of
Shares of that series, and any distribution to the Shareholders
of a particular class of Shares shall be made to such
Shareholders pro rata in proportion to the number of Shares of
such class held by each of them. Such distributions shall be
made in cash or Shares or a combination thereof as determined by
the Trustees. Any such distribution paid in Shares will be paid
at the net asset value thereof as determined in accordance with
the Bylaws.
REDEMPTIONS AND REPURCHASES
Section 2. The Trust shall purchase such Shares as are
offered by any Shareholder for redemption, upon the presentation
of any certificate for the Shares to be purchased, a proper
instrument of transfer and a request directed to the Trust or a
person designated by the Trust that the Trust purchase such
Shares, or in accordance with such other procedures for
redemption as the Trustees may from time to time authorize; and
the Trust will pay therefor the net asset value thereof, as next
determined in accordance with the Bylaws. Payment for said
Shares shall be made by the Trust to the Shareholder within seven
days after the date on which the request is made. The obligation
set forth in this Section 2 is subject to the provision that in
the event that any time the New York Stock Exchange is closed for
other than customary weekends or holidays, or, if permitted by
rules of the Securities and Exchange Commission, during periods
when trading on the Exchange is restricted or during any
emergency which makes it impractical for the Trust to dispose of
its investments or to determine fairly the value of its net
assets, or during any other period permitted by order of the
Securities and Exchange Commission for the protection of
investors, such obligation may be suspended or postponed by the
Trustees. The Trust may also purchase or repurchase Shares at a
price not exceeding the net asset value of such Shares in effect
when the purchase or repurchase or any contract to purchase or
repurchase is made.
<PAGE>
REDEMPTIONS AT THE OPTION OF THE TRUST
Section 3. The Trust shall have the right at its option and
at any time to redeem Shares of any Shareholder at the net asset
value thereof as determined in accordance with the Bylaws: (i) if
at such time such Shareholder owns fewer Shares than, or Shares
having an aggregate net asset value of less than, an amount
determined from time to time by the Trustees; or (ii) to the
extent that such Shareholder owns Shares of a particular series
or class of Shares equal to or in excess of a percentage of the
outstanding Shares of that series or class determined from time
to time by the Trustees; or (iii) to the extent that such
Shareholder owns Shares of the Trust representing a percentage
equal to or in excess of such percentage of the aggregate number
of outstanding Shares of the Trust or the aggregate net asset
value of the Trust determined from time to time by the Trustees.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
COMPENSATION
Section 1. The Trustees as such shall be entitled to
reasonable compensation from the Trust; they may fix the amount
of their compensation. Nothing herein shall in any way prevent
the employment of any Trustee for advisory, management, legal,
accounting, investment banking or other services and payment for
the same by the Trust.
LIMITATION OF LIABILITY
Section 2. The Trustees shall not be responsible or liable
in any event for any neglect or wrongdoing of any officer, agent,
employee, manager or principal underwriter of the trust, nor
shall any Trustee be responsible for the act or omission of any
other Trustee, but nothing herein contained shall protect any
Trustee against any liability to which he or she would otherwise
be subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his or her office.
Every note, bond, contract, instrument, certificate or
undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust or the Trustees or any of them
in connection with the Trust shall be conclusively deemed to have
been executed or done only in or with respect to their or his or
her capacity as Trustees or Trustee, and such Trustees or Trustee
shall not be personally liable thereon.
<PAGE>
ARTICLE VIII
Indemnification
TRUSTEES, OFFICERS, ETC.
Section 1. The Trust shall indemnify each of its Trustees
and officers (including persons who serve at the Trust's request
as directors, officers or trustees of another organization in
which the Trust has any interest as a shareholder, creditor or
otherwise) (hereinafter referred to as a "Covered Person")
against all liabilities and expenses, including but not limited
to amounts paid in satisfaction of judgments, in compromise or as
fines and penalties, and counsel fees reasonably incurred by any
Covered Person in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or criminal,
before any court or administrative or legislative body, in which
such Covered Person may be or may have been involved as a party
or otherwise or with which such Covered Person may be or may have
been threatened, while in office or thereafter, by reason of
being or having been such a Covered Person except with respect to
any matter as to which such Covered Person shall have been
finally adjudicated in any such action, suit or other proceeding
(a) not to have acted in good faith in the reasonable belief that
such Covered Person's action was in the best interests of the
Trust or (b) to be liable to the Trust or its Shareholders by
reason of wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such
Covered Person's office. Expenses, including counsel fees so
incurred by any such Covered Person (but excluding amounts paid
in satisfaction of judgments, in compromise or as fines or
penalties), shall be paid from time to time by the Trust in
advance of the final disposition of any such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such
Covered Person to repay amounts so paid to the Trust if it is
ultimately determined that indemnification of such expenses is
not authorized under this Article, provided, however, that either
(a) such Covered Person shall have provided appropriate security
for such undertaking, (b) the Trust shall be insured against
losses arising from any such advance payments or (c) either a
majority of the disinterested Trustees acting on the matter
(provided that a majority of the disinterested Trustees then in
office act on the matter), or independent legal counsel in a
written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a full trial type inquiry)
that there is reason to believe that such Covered Person will be
found entitled to indemnification under this Article.
<PAGE>
COMPROMISE PAYMENT
Section 2. As to any matter disposed of (whether by a
compromise payment, pursuant to a consent decree or otherwise)
without an adjudication by a court, or by any other body before
which the proceeding was brought, that such Covered Person either
(a) did not act in good faith in the reasonable belief that his
or her action was in the best interests of the Trust or (b) is
liable to the Trust or its Shareholders by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office,
indemnification shall be provided if (a) approved as in the best
interests of the Trust, after notice that it involves such
indemnification, by at least a majority of the disinterested
Trustees acting on the matter (provided that a majority of the
disinterested Trustees then in office act on the matter) upon a
determination, based upon a review of readily available facts (as
opposed to a full trial type inquiry) that such Covered Person
acted in good faith in the reasonable belief that his or her
action was in the best interests of the Trust and is not liable
to the Trust or its Shareholders by reasons of wilful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office, or (b)
there has been obtained an opinion in writing of independent
legal counsel, based upon a review of readily available facts (as
opposed to a full trial type inquiry) to the effect that such
Covered Person appears to have acted in good faith in the
reasonable belief that his or her action was in the best
interests of the Trust and that such indemnification would not
protect such Person against any liability to the Trust to which
he or she would otherwise be subject by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office. Any
approval pursuant to this Section shall not prevent the recovery
from any Covered Person of any amount paid to such Covered Person
in accordance with this Section as indemnification if such
Covered Person is subsequently adjudicated by a court of
competent jurisdiction not to have acted in good faith in the
reasonable belief that such Covered Person's action was in the
best interests of the Trust or to have been liable to the Trust
or its Shareholders by reason of wilful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of such Covered Person's office.
INDEMNIFICATION NOT EXCLUSIVE
Section 3. The right of indemnification hereby provided
shall not be exclusive of or affect any other rights to which
such Covered Person may be entitled. As used in this Article
VIII, the term "Covered Person" shall include such person's
heirs, executors and administrators and a "disinterested Trustee"
is a Trustee who is not an "interested person" of the Trust as
defined in Section 2(a)(19) of the Investment Company Act of
1940, as amended (or who has been exempted from being an
"interested person" by any rule, regulation or order of the
Commission) and against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the
same or similar grounds is then or has been pending. Nothing
contained in this Article shall affect any rights to
indemnification to which personnel of the Trust, other than
Trustees or officers, and other persons may be entitled by
contract or otherwise under law, nor the power of the Trust to
purchase and maintain liability insurance on behalf of any such
person.
SHAREHOLDERS
Section 4. In case any Shareholder or former Shareholder
shall be held to be personally liable solely by reason of his or
her being or having been a Shareholder and not because of his or
her acts or omissions or for some other reason, the Shareholder
or former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general
successor) shall be entitled to be held harmless from and
indemnified against all loss and expense arising from such
liability, but only out of the assets of the particular series of
Shares of which he or she is or was a Shareholder.
ARTICLE IX
Miscellaneous
TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE
Section 1. All persons extending credit to, contracting
with or having any claim against the Trust or a particular series
of Shares shall look only to the assets of the Trust or the
assets of that particular series of Shares for payment under such
credit, contract or claim; and neither the Shareholders nor the
Trustees, nor any of the Trust's officers, employees or agents,
whether past, present or future, shall be personally liable
therefor. Nothing in this Declaration of Trust shall protect any
Trustee against any liability to which such Trustee would
otherwise be subject by reason of wilful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officer or
officers shall give notice that this Declaration of Trust is on
file with the Secretary of State of The Commonwealth of
Massachusetts and shall recite that the same was executed or made
by or on behalf of the Trust or by them as Trustee or Trustees or
as officer or officers and not individually and that the
obligations of such instrument are not binding upon any of them
or the Shareholders individually but are binding only upon the
assets and property of the Trust, and may contain such further
recital as he or she or they may deem appropriate, but the
omission thereof shall not operate to bind any Trustee or
Trustees or officer or officers or Shareholder or Shareholders
individually.
TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
Section 2. The exercise by the Trustees of their powers and
discretions hereunder shall be binding upon everyone interested.
A Trustee shall be liable for his or her own wilful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and for nothing
else, and shall not be liable for errors of judgment or mistakes
of fact or law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this
Declaration of Trust, and shall be under no liability for any act
or omission in accordance with such advice or for failing to
follow such advice. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is required.
LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES
Section 3. No person dealing with the Trustees shall be
bound to make any inquiry concerning the validity of any
transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the
Trust or upon its order.
DURATION AND TERMINATION OF TRUST
Section 4. Unless terminated as provided herein, the Trust
shall continue without limitation of time. The Trust may be
terminated at any time by vote of Shareholders holding at least
66-2/3% of the Shares entitled to vote or by the Trustees by
written notice to the Shareholders. Any series of Shares may be
terminated at any time by vote of Shareholders holding at least
66-2/3% of the Shares of such series entitled to vote or by the
Trustees by written notice to the Shareholders of such series.
Upon termination of the Trust or of any one or more series
of Shares, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or
anticipated of the Trust or of the particular series as may be
determined by the Trustees, the Trust shall in accordance with
such procedures as the Trustees consider appropriate, reduce the
remaining assets to distributable form in cash or shares or other
securities, or any combination thereof, and distribute the
proceeds to the Shareholders of the series involved, ratably
according to the number of Shares of such series held by the
several Shareholders of such series on the date of termination,
except to the extent otherwise required or permitted by the
preferences and special or relative rights and privileges of any
classes of any series of Shares of the Trust, provided that any
distribution to the Shareholders of a particular class of any
series of Shares shall be made to such Shareholders pro rata in
proportion to the number of Shares of such class held by each of
them.
FILING OF COPIES, REFERENCES, HEADINGS
Section 5. The original or a copy of this instrument and of
each amendment hereto shall be kept at the office of the Trust
where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the
Trust with the Secretary of State of The Commonwealth of
Massachusetts and with the Boston City Clerk, as well as any
other governmental office where such filing may from time to time
be required. Anyone dealing with the Trust may rely on a
certificate by an officer of the Trust as to whether or not any
such amendments have been made and as to any matters in
connection with the Trust hereunder, and, with the same effect as
if it were the original, may rely on a copy certified by an
officer of the Trust to be a copy of this instrument or of any
such amendments. In this instrument and in any such amendment,
references to this instrument, and all expressions like "herein",
"hereof" and "hereunder", shall be deemed to refer to this
instrument as amended or affected by any such amendments.
Headings are placed herein for convenience of reference only and
shall not be taken as a part hereof or control or affect the
meaning, construction or effect of this instrument. This
instrument may be executed in any number of counterparts each of
which shall be deemed an original.
APPLICABLE LAW
Section 6. This Declaration of Trust is made in The
Commonwealth of Massachusetts, and it is created under and is to
be governed by and construed and administered according to the
laws of said Commonwealth. The Trust shall be of the type
commonly called a Massachusetts business trust, and without
limiting the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such a trust.
<PAGE>
AMENDMENTS
Section 7. This Declaration of Trust may be amended at any
time by an instrument in writing signed by a majority of the then
Trustees when authorized to do so by vote of Shareholders holding
a majority of the Shares entitled to vote, except that an
amendment which shall affect the holders of one or more series or
classes of Shares but not the holders of all outstanding series
and classes shall be authorized by vote of the Shareholders
holding a majority of the Shares entitled to vote of each series
and class affected and no vote of Shareholders of a series or
class not affected shall be required. Amendments having the
purpose of changing the name of the Trust or of supplying any
omission, curing any ambiguity or curing, correcting or
supplementing any defective or inconsistent provision contained
herein shall not require authorization by Shareholder vote.
<PAGE>
This instrument shall be effective only upon filing with the
Secretary of State of The Commonwealth of Massachusetts and may
be executed in several counterparts, each of which shall be
deemed an original, but all taken together shall constitute one
instrument.
IN WITNESS WHEREOF, the undersigned, being a majority of the
Trustees of the Trust, have hereunto set their hands and seals in
the City of Boston, Massachusetts for themselves and their
assigns, as of the day and year first above written.
/S/ George Putnam /S/ Lawrence J. Lasser
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George Putnam Lawrence J. Lasser
/S/ William F. Pounds /S/ Robert E. Patterson
- -------------------------- -------------------------
William F. Pounds Robert E. Patterson
/S/ Jameson A. Baxter /S/ Donald S. Perkins
- -------------------------- -------------------------
Jameson A. Baxter Donald S. Perkins
/S/ Hans H. Estin /S/ George Putnam, III
- -------------------------- -------------------------
Hans H. Estin George Putnam, III
/S/ John A. Hill /S/ A.J.C. Smith
- -------------------------- -------------------------
John A. Hill A.J.C. Smith
/S/ Elizabeth T. Kennan /S/ W. Nicholas Thorndike
- -------------------------- -------------------------
Elizabeth T. Kennan W. Nicholas Thorndike
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
Boston, May 6, 1994
Suffolk, ss.
Then personally appeared each of the above named Trustees of
Putnam California Tax Exempt Income Trust and acknowledged the
foregoing instrument to be their free act and deed, before me,
/S/ Anne B. McCarthy
---------------------------------
NOTARY PUBLIC
MY COMMISSION EXPIRES: 10/25/96
The address of the Trust is One Post Office Square, Boston,
Massachusetts 02109
BYLAWS
OF
PUTNAM ADJUSTABLE RATE U.S. GOVERNMENT FUND,
PUTNAM AMERICAN GOVERNMENT INCOME FUND,
PUTNAM ARIZONA TAX EXEMPT INCOME FUND,
PUTNAM ASIA PACIFIC GROWTH FUND,
PUTNAM ASSET ALLOCATION FUNDS,
PUTNAM BALANCED GOVERNMENT FUND,
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND,
PUTNAM CONVERTIBLE INCOME-GROWTH TRUST,
PUTNAM DIVERSIFIED INCOME TRUST,
PUTNAM DIVIDEND GROWTH FUND,
PUTNAM EQUITY INCOME FUND,
PUTNAM EUROPE GROWTH FUND,
PUTNAM FLORIDA TAX EXEMPT INCOME FUND,
THE GEORGE PUTNAM FUND OF BOSTON,
PUTNAM GLOBAL GOVERNMENTAL INCOME TRUST,
PUTNAM GLOBAL GROWTH FUND,
PUTNAM HEALTH SCIENCES TRUST,
PUTNAM HIGH YIELD TRUST,
PUTNAM INCOME FUND,
PUTNAM INVESTORS FUND,
PUTNAM MANAGED INCOME TRUST,
PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND II,
PUTNAM MICHIGAN TAX EXEMPT INCOME FUND II,
PUTNAM MINNESOTA TAX EXEMPT INCOME FUND II,
PUTNAM MONEY MARKET FUND,
PUTNAM MUNICIPAL INCOME FUND,
PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND,
PUTNAM NEW OPPORTUNITIES FUND,
PUTNAM NEW YORK TAX EXEMPT MONEY MARKET FUND,
PUTNAM NEW YORK TAX EXEMPT OPPORTUNITIES FUND,
PUTNAM OHIO TAX EXEMPT INCOME FUND II,
PUTNAM OTC EMERGING GROWTH FUND,
PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND,
PUTNAM RESEARCH ANALYSTS FUND,
PUTNAM TAX EXEMPT INCOME FUND,
PUTNAM TAX EXEMPT MONEY MARKET FUND,
PUTNAM TAX-FREE INCOME TRUST,
PUTNAM U.S. GOVERNMENT INCOME TRUST,
PUTNAM UTILITIES GROWTH AND INCOME FUND,
PUTNAM VISTA FUND,
PUTNAM VOYAGER FUND
(AS AMENDED THROUGH FEBRUARY 1, 1994),
PUTNAM INTERMEDIATE TAX EXEMPT FUND
(AS AMENDED THROUGH MARCH 7, 1994),
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST,
PUTNAM NEW YORK TAX EXEMPT INCOME TRUST
(AS AMENDED THROUGH APRIL 8, 1994),
PUTNAM HIGH YIELD ADVANTAGE FUND,
PUTNAM OVERSEAS GROWTH FUND
(AS AMENDED THROUGH JUNE 1, 1994),
PUTNAM FEDERAL INCOME TRUST
(AS AMENDED THROUGH JUNE 6, 1994),
PUTNAM NATURAL RESOURCES FUND
(AS AMENDED THROUGH JULY 1, 1994),
THE PUTNAM FUND FOR GROWTH AND INCOME
(AS AMENDED THROUGH JULY 7, 1994),
PUTNAM TOTAL RETURN BOND FUNDS, AND
PUTNAM GROWTH AND INCOME FUND II
(AS AMENDED THROUGH OCTOBER 5, 1994)
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1 AGREEMENT AND DECLARATION OF TRUST. These Bylaws shall
be subject to the Agreement and Declaration of Trust, as from
time to time in effect (the "Declaration of Trust"), of the
Massachusetts business trust established by the Declaration of
Trust (the "Trust").
1.2 PRINCIPAL OFFICE OF THE TRUST. The principal office of
the Trust shall be located in Boston, Massachusetts.
ARTICLE 2
MEETINGS OF TRUSTEES
2.1 REGULAR MEETINGS. Regular meetings of the Trustees may
be held without call or notice at such places and at such times
as the Trustees may from time to time determine, provided that
notice of the first regular meeting following any such
determination shall be given to absent Trustees.
2.2 SPECIAL MEETINGS. Special meetings of the Trustees may
be held at any time and at any place designated in the call of
the meeting when called by the Chairman of the Trustees, the
President or the Treasurer or by two or more Trustees, sufficient
notice thereof being given to each Trustee by the Clerk or an
Assistant Clerk or by the officer or the Trustees calling the
meeting.
2.3 NOTICE OF SPECIAL MEETINGS. It shall be sufficient
notice to a Trustee of a special meeting to send notice by mail
at least forty-eight hours or by telegram at least twenty-four
hours before the meeting addressed to the Trustee at his or her
usual or last known business or residence address or to give
notice to him or her in person or by telephone at least
twenty-four hours before the meeting. Notice of a special
meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the meeting, is
filed with the records of the meeting, or to any Trustee who
attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her. Neither notice of
a meeting nor a waiver of a notice need specify the purposes of
the meeting.
2.4 QUORUM. At any meeting of the Trustees a majority of
the Trustees then in office shall constitute a quorum. Any
meeting may be adjourned from time to time by a majority of the
votes cast upon the question, whether or not a quorum is present,
and the meeting may be held as adjourned without further notice.
2.5 NOTICE OF CERTAIN ACTIONS BY CONSENT. If in accordance
with the provisions of the Declaration of Trust any action is
taken by the Trustees by a written consent of less than all of
the Trustees, then prompt notice of any such action shall be
furnished to each Trustee who did not execute such written
consent, provided that the effectiveness of such action shall not
be impaired by any delay or failure to furnish such notice.
<PAGE>
ARTICLE 3
OFFICERS
3.1 ENUMERATION; QUALIFICATION. The officers of the Trust
shall be a Chairman of the Trustees, a President, a Treasurer, a
Clerk and such other officers, if any, as the Trustees from time
to time may in their discretion elect. The Trust may also have
such agents as the Trustees from time to time may in their
discretion appoint. The Chairman of the Trustees and the
President shall be a Trustee and may but need not be a
shareholder; and any other officer may but need not be a Trustee
or a shareholder. Any two or more offices may be held by the
same person. A Trustee may but need not be a shareholder.
3.2 ELECTION. The Chairman of the Trustees, the President,
the Treasurer and the Clerk shall be elected by the Trustees upon
the occurrence of any vacancy in any such office. Other
officers, if any, may be elected or appointed by the Trustees at
any time. Vacancies in any such other office may be filled at
any time.
3.3 TENURE. The Chairman of the Trustees, the President,
the Treasurer and the Clerk shall hold office in each case until
he or she dies, resigns, is removed or becomes disqualified.
Each other officer shall hold office and each agent shall retain
authority at the pleasure of the Trustees.
3.4 POWERS. Subject to the other provisions of these
Bylaws, each officer shall have, in addition to the duties and
powers herein and in the Declaration of Trust set forth, such
duties and powers as are commonly incident to the office occupied
by him or her as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the
Trustees may from time to time designate.
3.5 CHAIRMAN; PRESIDENT. Unless the Trustees otherwise
provide, the Chairman of the Trustees or, if there is none or in
the absence of the Chairman of the Trustees, the President shall
preside at all meetings of the shareholders and of the Trustees.
Unless the Trustees otherwise provide, the President shall be the
chief executive officer.
3.6 TREASURER. Unless the Trustees shall provide
otherwise, the Treasurer shall be the chief financial and
accounting officer of the Trust, and shall, subject to the
provisions of the Declaration of Trust and to any arrangement
made by the Trustees with a custodian, investment adviser or
manager, or transfer, shareholder servicing or similar agent, be
in charge of the valuable papers, books of account and accounting
records of the Trust, and shall have such other duties and powers
as may be designated from time to time by the Trustees or by the
President.
3.7 CLERK. The Clerk shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which
books or a copy thereof shall be kept at the principal office of
the Trust. In the absence of the Clerk from any meeting of the
shareholders or Trustees, an Assistant Clerk, or if there be none
or if he or she is absent, a temporary Clerk chosen at such
meeting shall record the proceedings thereof in the aforesaid
books.
3.8 RESIGNATIONS AND REMOVALS. Any Trustee or officer may
resign at any time by written instrument signed by him or her and
delivered to the Chairman of the Trustees, the President or the
Clerk or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some
other time. The Trustees may remove any officer elected by them
with or without cause. Except to the extent expressly provided
in a written agreement with the Trust, no Trustee or officer
resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation or
removal, or any right to damages on account of such removal.
ARTICLE 4
COMMITTEES
4.1 QUORUM; VOTING. A majority of the members of any
Committee of the Trustees shall constitute a quorum for the
transaction of business, and any action of such a Committee may
be taken at a meeting by a vote of a majority of the members
present (a quorum being present) or evidenced by one or more
writings signed by such a majority. Members of a Committee may
participate in a meeting of such Committee by means of a
conference telephone or other communications equipment by means
of which all persons participating in the meeting can hear each
other at the same time and participation by such means shall
constitute presence in person at a meeting.
ARTICLE 5
REPORTS
5.1 GENERAL. The Trustees and officers shall render
reports at the time and in the manner required by the Declaration
of Trust or any applicable law. Officers and Committees shall
render such additional reports as they may deem desirable or as
may from time to time be required by the Trustees.
ARTICLE 6
FISCAL YEAR
6.1 GENERAL. Except as from time to time otherwise
provided by the Trustees, the initial fiscal year of the Trust
shall end on such date as is determined in advance or in arrears
by the Treasurer, and subsequent fiscal years shall end on such
date in subsequent years.
ARTICLE 7
SEAL
7.1 GENERAL. The seal of the Trust shall consist of a
flat-faced die with the word "Massachusetts", together with the
name of the Trust and the year of its organization cut or
engraved thereon but, unless otherwise required by the Trustees,
<PAGE>
the seal shall not be necessary to be placed on and its absence
shall not impair the validity of, any document, instrument or
other paper executed and delivered by or on behalf of the Trust.
ARTICLE 8
EXECUTION OF PAPERS
8.1 GENERAL. Except as the Trustees may generally or in
particular cases authorize the execution thereof in some other
manner, all deeds, leases, contracts, notes and other obligations
made by the Trustees shall be signed by the President, the Vice
Chairman, a Vice President or the Treasurer and need not bear the
seal of the Trust.
ARTICLE 9
ISSUANCE OF SHARES AND SHARE CERTIFICATES
9.1 SALE OF SHARES. Except as otherwise determined by the
Trustees, the Trust will issue and sell for cash or securities
from time to time, full and fractional shares of its shares of
beneficial interest, such shares to be issued and sold at a price
of not less than the par value per share, if any, and not less
than the net asset value per share as from time to time
determined in accordance with the Declaration of Trust and these
Bylaws and, in the case of fractional shares, at a proportionate
reduction in such price. In the case of shares sold for
securities, such securities shall be valued in accordance with
the provisions for determining the value of the assets of the
Trust as stated in the Declaration of Trust and these Bylaws.
The officers of the Trust are severally authorized to take all
such actions as may be necessary or desirable to carry out this
Section 9.1.
9.2 SHARE CERTIFICATES. In lieu of issuing certificates
for shares, the Trustees or the transfer agent may either issue
receipts therefor or may keep accounts upon the books of the
Trust for the record holders of such shares, who shall in either
case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and
agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled
to a certificate stating the number of shares of each class owned
by him, in such form as shall be prescribed from time to time by
the Trustees. Such certificate shall be signed by the President
or a Vice President and by the Treasurer or an Assistant
Treasurer. Such signatures may be facsimile if the certificate
is signed by a transfer agent or by a registrar. In case any
officer who has signed or whose facsimile signature has been
placed on such certificate shall cease to be such officer before
such certificate is issued, it may be issued by the Trust with
the same effect as if he were such officer at the time of its
issue.
<PAGE>
9.3 LOSS OF CERTIFICATES. The transfer agent of the Trust,
with the approval of any two officers of the Trust, is authorized
to issue and countersign replacement certificates for the shares
of the Trust which have been lost, stolen or destroyed upon (i)
receipt of an affidavit or affidavits of loss or non-receipt and
of an indemnity agreement executed by the registered holder or
his legal representative and supported by an open penalty surety
bond, said agreement and said bond in all cases to be in form and
content satisfactory to and approved by the President or the
Treasurer, or (ii) receipt of such other documents as may be
approved by the Trustees.
9.4 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. A pledgee of
shares transferred as collateral security shall be entitled to a
new certificate if the instrument of transfer substantially
describes the debt or duty that is intended to be secured
thereby. Such new certificate shall express on its face that it
is held as collateral security, and the name of the pledgor shall
be stated thereon, who alone shall be liable as a shareholder and
entitled to vote thereon.
9.5 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The
Trustees may at any time discontinue the issuance of share
certificates and may, by written notice to each shareholder,
require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect
the ownership of shares in the Trust.
ARTICLE 10
PROVISIONS RELATING TO THE CONDUCT OF THE TRUST'S BUSINESS
10.1 CERTAIN DEFINITIONS. When used herein the following
words shall have the following meanings: "Distributor" shall mean
any one or more corporations, firms or associations which have
distributor's or principal underwriter's contracts in effect with
the Trust providing that redeemable shares issued by the Trust
shall be offered and sold by such Distributor. "Manager" shall
mean any corporation, firm or association which may at the time
have an advisory or management contract with the Trust.
10.2 LIMITATIONS ON DEALINGS WITH OFFICERS OR TRUSTEES.
The Trust will not lend any of its assets to the Distributor or
Manager or to any officer or director of the Distributor or
Manager or any officer or Trustee of the Trust, and shall not
permit any officer or Trustee or any officer or director of the
Distributor or Manager to deal for or on behalf of the Trust with
himself or herself as principal or agent, or with any
partnership, association or corporation in which he or she has a
financial interest; provided that the foregoing provisions shall
not prevent (a) officers and Trustees of the Trust or officers
and directors of the Distributor or Manager from buying, holding
or selling shares in the Trust or from being partners, officers
or directors of or otherwise financially interested in the
Distributor or the Manager; (b) purchases or sales of securities
or other property if such transaction is permitted by or is
exempt or exempted from the provisions of the Investment Company
Act of 1940 or any Rule or Regulation thereunder and if such
transaction does not involve any commission or profit to any
security dealer who is, or one or more of whose partners,
shareholders, officers or directors is, an officer or Trustee of
the Trust or an officer or director of the Distributor or
Manager; (c) employment of legal counsel, registrar, transfer
agent, shareholder servicing agent, dividend disbursing agent or
custodian who is, or has a partner, shareholder, officer or
director who is, an officer or Trustee of the Trust or an officer
or director of the Distributor or Manager; (d) sharing
statistical, research, legal and management expenses and office
hire and expenses with any other investment company in which an
officer or Trustee of the Trust or an officer or director of the
Distributor or Manager is an officer or director or otherwise
financially interested.
10.3 SECURITIES AND CASH OF THE TRUST TO BE HELD BY
CUSTODIAN SUBJECT TO CERTAIN TERMS AND CONDITIONS.
(a) All securities and cash owned by the Trust
shall be held by or deposited with one or more banks or
trust companies having (according to its last published
report) not less than $1,000,000 aggregate capital,
surplus and undivided profits (any such bank or trust
company being hereby designated as "Custodian"),
provided such a Custodian can be found ready and
willing to act; subject to such rules, regulations and
orders, if any, as the Securities and Exchange
Commission may adopt, the Trust may, or may permit any
Custodian to, deposit all or any part of the securities
owned by the Trust in a system for the central handling
of securities pursuant to which all securities of any
particular class or series of any issue deposited
within the system may be transferred or pledged by
bookkeeping entry, without physical delivery. The
Custodian may appoint, subject to the approval of the
Trustees, one or more subcustodians.
(b) The Trust shall enter into a written contract
with each Custodian regarding the powers, duties and
compensation of such Custodian with respect to the cash
and securities of the Trust held by such Custodian.
Said contract and all amendments thereto shall be
approved by the Trustees.
(c) The Trust shall upon the resignation or
inability to serve of any Custodian or upon change of
any Custodian:
(i) in case of such resignation or inability to
serve, use its best efforts to obtain a successor
Custodian;
(ii) require that the cash and securities owned
by the Trust be delivered directly to the successor
Custodian; and
(iii) in the event that no successor Custodian
can be found, submit to the shareholders, before
permitting delivery of the cash and securities owned by
the Trust otherwise than to a successor Custodian, the
question whether the Trust shall be liquidated or shall
function without a Custodian.
10.4 REPORTS TO SHAREHOLDERS. The Trust shall send to each
shareholder of record at least semi-annually a statement of the
condition of the Trust and of the results of its operations,
containing all information required by applicable laws or
regulations.
10.5 DETERMINATION OF NET ASSET VALUE PER SHARE. Net asset
value per share of each class or series of shares of the Trust
shall mean: (i) the value of all the assets properly allocable
to such class or series; (ii) less total liabilities properly
allocable to such class or series; (iii) divided by the number of
shares of such class or series outstanding, in each case at the
time of each determination. Except as otherwise determined by
the Trustees, the net asset value per share of each class or
series shall be determined no less frequently than once daily,
Monday through Friday, on days on which the New York Stock
Exchange is open for trading, at such time or times that the
Trustees set at least annually.
In valuing the portfolio investments of any class or series
of shares for the determination of the net asset value per share
of such class or series, securities for which market quotations
are readily available shall be valued at prices which, in the
opinion of the Trustees or the person designated by the Trustees
to make the determination, most nearly represent the market value
of such securities, and other securities and assets shall be
valued at their fair value as determined by or pursuant to the
direction of the Trustees, which in the case of debt obligations,
commercial paper and repurchase agreements may, but need not, be
on the basis of yields for securities of comparable maturity,
quality and type, or on the basis of amortized cost. Expenses
and liabilities of the Trust shall be accrued each day.
Liabilities may include such reserves for taxes, estimated
accrued expenses and contingencies as the Trustees or their
designates may in their sole discretion deem fair and reasonable
under the circumstances. No accruals shall be made in respect of
taxes on unrealized appreciation of securities owned unless the
Trustees shall otherwise determine.
ARTICLE 11
SHAREHOLDERS
11.1 MEETINGS. A meeting of the shareholders shall be
called by the Clerk whenever ordered by the Trustees, the
Chairman of the Trustees or requested in writing by the holder or
holders of at least one-tenth of the outstanding shares entitled
to vote at such meeting. If the Clerk, when so ordered or
requested, refuses or neglects for more than two days to call
such meeting, the Trustees, Chairman of the Trustees or the
<PAGE>
shareholders so requesting may, in the name of the Clerk, call
the meeting by giving notice thereof in the manner required when
notice is given by the Clerk.
11.2 ACCESS TO SHAREHOLDER LIST. Shareholders of record
may apply to the Trustees for assistance in communicating with
other shareholders for the purpose of calling a meeting in order
to vote upon the question of removal of a Trustee. When ten or
more shareholders of record who have been such for at least six
months preceding the date of application and who hold in the
aggregate shares having a net asset value of at least $25,000 so
apply, the Trustees shall within five business days either:
(i) afford to such applicants access to a list of
names and addresses of all shareholders as recorded on
the books of the Trust; or
(ii) inform such applicants of the approximate
number of shareholders of record and the approximate
cost of mailing material to them, and, within a
reasonable time thereafter, mail, at the applicants'
expense, materials submitted by the applicants, to all
such shareholders of record. The Trustees shall not be
obligated to mail materials which they believe to be
misleading or in violation of applicable law.
11.3 RECORD DATES. For the purpose of determining the
shareholders of any class or series of shares of the Trust who
are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to receive payment of any dividend
or of any other distribution, the Trustees may from time to time
fix a time, which shall be not more than 90 days before the date
of any meeting of shareholders or more than 60 days before the
date of payment of any dividend or of any other distribution, as
the record date for determining the shareholders of such class or
series having the right to notice of and to vote at such meeting
and any adjournment thereof or the right to receive such dividend
or distribution, and in such case only shareholders of record on
such record date shall have such right notwithstanding any
transfer of shares on the books of the Trust after the record
date; or without fixing such record date the Trustees may for any
such purposes close the register or transfer books for all or
part of such period.
11.4 PROXIES. The placing of a shareholder's name on a
proxy pursuant to telephone or electronically transmitted
instructions obtained pursuant to procedures reasonably designed
to verify that such instructions have been authorized by such
shareholder shall constitute execution of such proxy by or on
behalf of such shareholder.
ARTICLE 12
PREFERENCES, RIGHTS AND PRIVILEGES OF THE
TRUST'S CLASSES OF SHARES
12.1 GENERAL. Each class of shares of the Trust or of a
particular series of the Trust, as the case may be, will
represent interests in the same portfolio of investments of the
Trust (or that series) and be identical in all respects, except
as set forth below: (a) each class of shares shall be charged
with the expense of any Distribution Plan adopted by the Trust
pursuant to Rule 12b-1 under the Investment Company Act of 1940
with respect to such class of shares, (b) each class of shares
will be charged with any incremental shareholder servicing
expense attributable solely to such class, as determined by the
Trustees, (c) each class of shares shall be charged with any
other expenses properly allocated to such class, as determined by
the Trustees and approved by the Securities and Exchange
Commission, (d) each class of shares shall vote as a separate
class on matters which pertain to any Rule 12b-1 Distribution
Plan pertaining to such class of shares, (e) each class of shares
will have only such exchange privileges as may from time to time
be described in the Trust's prospectus with respect to such
class, (f) each class of shares shall bear such designation as
may be approved from time to time by the Trustees and (g)
reinvestments of distributions from the Trust paid with respect
to the shares of a particular class will be paid in additional
shares of such class.
12.2. CONVERSION OF CLASS B SHARES. Except as hereinafter
provided with respect to shares acquired by exchange or
reinvestment of distributions, Class B shares of the Trust will
automatically convert into Class A shares of the Trust at the end
of the month eight years after the month of purchase, or at such
earlier time as the Trustees may in their sole discretion
determine from time to time as to all Class B shares purchased on
or before such date as the Trustees may specify. Class B shares
acquired by exchange from Class B shares of another Putnam Fund
will convert into Class A shares based on the date of the initial
purchase of the Class B shares of such other Fund. Class B
shares acquired through reinvestment of distributions will
convert into Class A shares based on the date of the initial
purchase of Class B shares to which such reinvestment shares
relate. For this purpose, Class B shares acquired through
reinvestment of distributions will be attributed to particular
purchases of Class B shares in accordance with such procedures,
which may include without limitation methods of proration or
approximation, as the Trustees may in their sole discretion
determine from time to time.
ARTICLE 13
AMENDMENTS TO THE BYLAWS
13.1 GENERAL. These Bylaws may be amended or repealed, in
whole or in part, by a majority of the Trustees then in office at
any meeting of the Trustees, or by one or more writings signed by
such a majority.
NF-04F
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
Class A Shares
Trust Certificate
Account No. Certificate No. Shares
CUSIP 74645A 30 1
THIS CERTIFIES THAT
is the owner of Class A shares of
beneficial interest in Putnam California Tax Exempt Income Fund
of Putnam California Tax Exempt Income Trust, fully paid and
nonassessable, the said shares being issued, received and held
under and subject to the terms and provisions of the Agreement
and Declaration of Trust dated as of December 17, 1982, as
amended and restated May 6, 1994, establishing Putnam California
Tax Exempt Income Trust, and all amendments thereto, copies of
which are on file with the Secretary of State of The Commonwealth
of Massachusetts. The said owner by accepting this certificate
agrees to and is bound by all of the said terms and provisions.
The shares represented hereby are transferable in writing by the
owner thereof in person or by attorney upon surrender of this
certificate to the Trustees properly endorsed for transfer. This
certificate is executed on behalf of the Trustees as Trustees and
not individually and the obligations hereof are not binding upon
any of the Trustees or shareholders individually but are binding
only upon the assets and property of the Trust. This certificate
is not valid unless countersigned by the Investor Servicing
Agent.
In Witness Whereof the Trustees of Putnam California Tax
Exempt Income Trust have caused the following facsimile
signatures to be affixed to this certificate.
Dated: COUNTERSIGNED:
PUTNAM INVESTOR SERVICES
a division of Putnam Fiduciary
Trust Company
INVESTOR SERVICING AGENT
BY
FOR THE TRUSTEES AUTHORIZED SIGNATURE
a0t-28
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
Class B Shares
Trust Certificate
Account No. Certificate No. Shares
CUSIP 74645A 40 0
THIS CERTIFIES THAT
is the owner of Class B shares of
beneficial interest in Putnam California Tax Exempt Income Fund
of Putnam California Tax Exempt Income Trust, fully paid and
nonassessable, the said shares being issued, received and held
under and subject to the terms and provisions of the Agreement
and Declaration of Trust dated as of December 17, 1982, as
amended and restated May 6, 1994, establishing Putnam California
Tax Exempt Income Trust, and all amendments thereto, copies of
which are on file with the Secretary of State of The Commonwealth
of Massachusetts. The said owner by accepting this certificate
agrees to and is bound by all of the said terms and provisions.
The shares represented hereby are transferable in writing by the
owner thereof in person or by attorney upon surrender of this
certificate to the Trustees properly endorsed for transfer. This
certificate is executed on behalf of the Trustees as Trustees and
not individually and the obligations hereof are not binding upon
any of the Trustees or shareholders individually but are binding
only upon the assets and property of the Trust. This certificate
is not valid unless countersigned by the Investor Servicing
Agent.
In Witness Whereof the Trustees of Putnam California Tax
Exempt Income Trust have caused the following facsimile
signatures to be affixed to this certificate.
Dated: COUNTERSIGNED:
PUTNAM INVESTOR SERVICES
a division of Putnam Fiduciary
Trust Company
INVESTOR SERVICING AGENT
BY
FOR THE TRUSTEES AUTHORIZED SIGNATURE
a0t-28a
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
Class M Shares
Trust Certificate
Account No. Certificate No. Shares
CUSIP 74645A 50 9
THIS CERTIFIES THAT
is the owner of Class M shares of
beneficial interest in Putnam California Tax Exempt Income Fund
of Putnam California Tax Exempt Income Trust, fully paid and
nonassessable, the said shares being issued, received and held
under and subject to the terms and provisions of the Agreement
and Declaration of Trust dated as of December 17, 1982, as
amended and restated May 6, 1994, establishing Putnam California
Tax Exempt Income Trust, and all amendments thereto, copies of
which are on file with the Secretary of State of The Commonwealth
of Massachusetts. The said owner by accepting this certificate
agrees to and is bound by all of the said terms and provisions.
The shares represented hereby are transferable in writing by the
owner thereof in person or by attorney upon surrender of this
certificate to the Trustees properly endorsed for transfer. This
certificate is executed on behalf of the Trustees as Trustees and
not individually and the obligations hereof are not binding upon
any of the Trustees or shareholders individually but are binding
only upon the assets and property of the Trust. This certificate
is not valid unless countersigned by the Investor Servicing
Agent.
In Witness Whereof the Trustees of Putnam California Tax
Exempt Income Trust have caused the following facsimile
signatures to be affixed to this certificate.
Dated: COUNTERSIGNED:
PUTNAM INVESTOR SERVICES
a division of Putnam Fiduciary
Trust Company
INVESTOR SERVICING AGENT
BY
FOR THE TRUSTEES AUTHORIZED SIGNATURE
a0t-28
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST
PUTNAM CALIFORNIA INTERMEDIATE TAX EXEMPT FUND
Class A Shares
Trust Certificate
Account No. Certificate No. Shares
CUSIP 74645A 10 3
THIS CERTIFIES THAT
is the owner of Class A shares of
beneficial interest in Putnam California Intermediate Tax Exempt
Fund of Putnam California Tax Exempt Income Trust, fully paid and
nonassessable, the said shares being issued, received and held
under and subject to the terms and provisions of the Agreement
and Declaration of Trust dated as of December 17, 1982, as
amended and restated May 6, 1994, establishing Putnam California
Tax Exempt Income Trust, and all amendments thereto, copies of
which are on file with the Secretary of State of The Commonwealth
of Massachusetts. The said owner by accepting this certificate
agrees to and is bound by all of the said terms and provisions.
The shares represented hereby are transferable in writing by the
owner thereof in person or by attorney upon surrender of this
certificate to the Trustees properly endorsed for transfer. This
certificate is executed on behalf of the Trustees as Trustees and
not individually and the obligations hereof are not binding upon
any of the Trustees or shareholders individually but are binding
only upon the assets and property of the Trust. This certificate
is not valid unless countersigned by the Investor Servicing
Agent.
In Witness Whereof the Trustees of Putnam California Tax
Exempt Income Trust have caused the following facsimile
signatures to be affixed to this certificate.
Dated: COUNTERSIGNED:
PUTNAM INVESTOR SERVICES
a division of Putnam Fiduciary
Trust Company
INVESTOR SERVICING AGENT
BY
FOR THE TRUSTEES AUTHORIZED SIGNATURE
cit-28
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST
PUTNAM CALIFORNIA INTERMEDIATE TAX EXEMPT FUND
Class B Shares
Trust Certificate
Account No. Certificate No. Shares
CUSIP 74645A 20 2
THIS CERTIFIES THAT
is the owner of Class B shares of
beneficial interest in Putnam California Intermediate Tax Exempt
Fund of Putnam California Tax Exempt Income Trust, fully paid and
nonassessable, the said shares being issued, received and held
under and subject to the terms and provisions of the Agreement
and Declaration of Trust dated as of December 17, 1982, as
amended and restated May 6, 1994, establishing Putnam California
Tax Exempt Income Trust, and all amendments thereto, copies of
which are on file with the Secretary of State of The Commonwealth
of Massachusetts. The said owner by accepting this certificate
agrees to and is bound by all of the said terms and provisions.
The shares represented hereby are transferable in writing by the
owner thereof in person or by attorney upon surrender of this
certificate to the Trustees properly endorsed for transfer. This
certificate is executed on behalf of the Trustees as Trustees and
not individually and the obligations hereof are not binding upon
any of the Trustees or shareholders individually but are binding
only upon the assets and property of the Trust. This certificate
is not valid unless countersigned by the Investor Servicing
Agent.
In Witness Whereof the Trustees of Putnam California Tax
Exempt Income Trust have caused the following facsimile
signatures to be affixed to this certificate.
Dated: COUNTERSIGNED:
PUTNAM INVESTOR SERVICES
a division of Putnam Fiduciary
Trust Company
INVESTOR SERVICING AGENT
BY
FOR THE TRUSTEES AUTHORIZED SIGNATURE
cit-28a
(PORTIONS OF AGREEMENT AND DECLARATION OF TRUST
OF PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST
RELATING TO SHAREHOLDERS' RIGHTS)
ARTICLE I
NAME AND DEFINITIONS
(c) "Shares" means the equal proportionate transferable
units of interest into which the beneficial interest in the
Trust shall be divided from time to time or, if more than
one series or class of Shares is authorized by the Trustees,
the equal proportionate transferable units into which each
series or class of Shares shall be divided from time to
time;
(d) "Shareholder" means a record owner of Shares;
ARTICLE III
SHARES
DIVISION OF BENEFICIAL INTEREST
Section 1. The Shares of the Trust shall be issued in one
or more series as the Trustees may, without shareholder approval,
authorize. Each series shall be preferred over all other series
in respect of the assets allocated to that series. The
beneficial interest in each series shall at all times be divided
into Shares, without par value, each of which shall, except as
provided in the following sentence, represent an equal
proportionate interest in the series with each other Share of the
same series, none having priority or preference over another. The
Trustees may, without shareholder approval, divide the Shares of
any series into two or more classes, Shares of each such class
having such preferences and special or relative rights and
privileges (including conversion rights, if any) as the Trustees
may determine and as shall be set forth in the Bylaws. The
number of Shares authorized shall be unlimited. The Trustees may
from time to time divide or combine the Shares of any series or
class into a greater or lesser number without thereby changing
the proportionate beneficial interest in the series or class.
OWNERSHIP OF SHARES
Section 2. The ownership of Shares shall be recorded on the
books of the Trust or a transfer or similar agent. No
certificates certifying the ownership of Shares shall be issued
except as the Trustees may otherwise determine from time to time.
The Trustees may make such rules as they consider appropriate for
the issuance of Share Certificates, the transfer of Shares and
similar matters. The record books of the Trust as kept by the
Trust or any transfer or similar agent, as the case may be, shall
be conclusive as to who are the Shareholders of each series and
class and as to the number of Shares of each series and class
held from time to time by each Shareholder.
NO PREEMPTIVE RIGHTS
Section 4. Shareholders shall have no preemptive or other
right to subscribe to any additional Shares or other securities
issued by the Trust.
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
Section 5. Shares shall be deemed to be personal property
giving only the rights provided in this Declaration of Trust or
the Bylaws. Every Shareholder by virtue of having become a
Shareholder shall be held to have expressly assented and agreed
to the terms of this Declaration of Trust and the Bylaws and to
have become a party hereto. The death of a Shareholder during
the continuance of the Trust shall not operate to terminate the
same nor entitle the representative of any deceased Shareholder
to an accounting or to take any action in court or elsewhere
against the Trust or the Trustees, but only to the rights of said
decedent under this Trust. Ownership of Shares shall not entitle
the Shareholder to any title in or to the whole or any part of
the Trust property or right to call for a partition or division
of the same or for an accounting, nor shall the ownership of
Shares constitute the Shareholders partners. Neither the Trust
nor the Trustees, nor any officer, employee or agent of the Trust
shall have any power to bind personally any Shareholder, nor
except as specifically provided herein to call upon any
shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time
personally agree to pay.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
Section 1. Subject to the voting powers of one or more
classes of shares as set forth elsewhere in this Declaration of
Trust or in the Bylaws, the Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Article IV,
Section 1, (ii) for the removal of Trustees as provided in
Article IV, Section 1, (iii) with respect to any Manager as
provided in Article IV, Section 6, (iv) with respect to any
termination of this Trust to the extent and as provided in
Article IX, Section 4, (v) with respect to any amendment of this
Declaration of Trust to the extent and as provided in Article IX,
Section 7, (vi) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court
action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the
Trust or the Shareholders, and (vii) with respect to such
additional matters relating to the Trust as may be required by
this Declaration of Trust, the Bylaws or any registration of the
Trust with the Securities and Exchange Commission (or any
successor agency) or any state, or as the Trustees may consider
necessary or desirable. Each whole Share shall be entitled to
one vote as to any matter on which it is entitled to vote and
each fractional Share shall be entitled to a proportionate
fractional vote. Notwithstanding any other provision of this
Declaration of Trust, on any matter submitted to a vote of
Shareholders, all Shares of the Trust then entitled to vote shall
be voted in the aggregate as a single class without regard to
series or classes of shares, except (1) when required by the 1940
Act or when the Trustees shall have determined that the matter
affects one or more series or classes of Shares materially
differently, Shares shall be voted by individual series or class;
and (2) when the Trustees have determined that the matter affects
only the interests of one or more series or classes, then only
Shareholders of such series or classes shall be entitled to vote
thereon. There shall be no cumulative voting in the election of
Trustees. Shares may be voted in person or by proxy. A proxy
with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or prior
to exercise of the proxy the Trust receives a specific written
notice to the contrary from any one of them. A proxy purporting
to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger. Until
Shares of any series or class are issued, the Trustees may
exercise all rights of Shareholders and may take any action
required by law, this Declaration of Trust or the Bylaws to be
taken by Shareholders as to such series or class.
VOTING POWER AND MEETINGS
Section 2. Meetings of Shareholders of any or all series or
classes may be called by the Trustees from time to time for the
purpose of taking action upon any matter requiring the vote or
authority of the Shareholders of such series or classes as herein
provided or upon any other matter deemed by the Trustees to be
necessary or desirable. Written notice of any meeting of
Shareholders shall be given or caused to be given by the Trustees
by mailing such notice at least seven days before such meeting,
postage prepaid, stating the time, place and purpose of the
meeting, to each Shareholder at the Shareholder's address as it
appears on the records of the Trust. If the Trustees shall fail
to call or give notice of any meeting of Shareholders for a
period of 30 days after written application by Shareholders
holding at least 10% of the then outstanding Shares of all series
and classes is entitled to vote at such meeting requesting that a
meeting be called for a purpose requiring action by the
Shareholders as provided herein or in the Bylaws, then
Shareholders holding at least 10% of the then outstanding Shares
of all series and classes entitled to vote at such meeting may
call and give notice of such meeting, and thereupon the meeting
shall be held in the manner provided for herein in case of call
thereof by the Trustees.
<PAGE>
QUORUM AND REQUIRED VOTE
Section 3. Thirty percent of Shares entitled to vote on a
particular matter shall be a quorum for the transaction of
business on that matter at a Shareholders' meeting, except that
where any provision of law or of this Declaration of Trust
permits or requires that holders of any series or class shall
vote as an individual series or class, then thirty percent of the
aggregate number of Shares of that series or class entitled to
vote shall be necessary to constitute a quorum for the
transaction of business by that series or class. Any lesser
number shall be sufficient for adjournments. Any adjourned
session or sessions may be held, within a reasonable time after
the date set for the original meeting, without the necessity of
further notice. Except when a larger vote is required by any
provision of this Declaration of Trust or the Bylaws, or by the
1940 Act, a majority of the Shares voted shall decide any
questions and a plurality shall elect a Trustee, provided that
where any provision of law or of this Declaration of Trust
permits or requires that the holders of any series or classes
shall vote as an individual series or class, then a majority of
the Shares of that series or class voted on the matter shall
decide that matter insofar as that series or class is concerned.
ACTION BY WRITTEN CONSENT
Section 4. Any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote
on the matter (or such larger proportion thereof as shall be
required by any express provision of this Declaration of Trust or
the Bylaws) consent to the action in writing and such written
consents are filed with the records of the meetings of
Shareholders. Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
ADDITIONAL PROVISIONS
Section 5. The Bylaws may include further provisions not
inconsistent with this Declaration of Trust regarding
Shareholders' voting powers, the conduct of meetings and related
matters.
<PAGE>
ARTICLE VI
DISTRIBUTIONS, REDEMPTIONS AND REPURCHASES
DISTRIBUTIONS
Section 1. The Trustees may each year, or more frequently
if they so determine, distribute to the Shareholders of each
series out of the assets of such series such amounts as the
Trustees may determine. Such amounts shall be distributed pro
rata to Shareholders of each series in proportion to the number
of Shares of each series held by each of them, except to the
extent otherwise required or permitted by the preferences and
special or relative rights and privileges of any classes of
Shares of that series, and any distribution to the Shareholders
of a particular class of Shares shall be made to such
Shareholders pro rata in proportion to the number of Shares of
such class held by each of them. Such distributions shall be
made in cash or Shares or a combination thereof as determined by
the Trustees. Any such distribution paid in Shares will be paid
at the net asset value thereof as determined in accordance with
the Bylaws.
REDEMPTIONS AND REPURCHASES
Section 2. The Trust shall purchase such Shares as are
offered by any Shareholder for redemption, upon the presentation
of any certificate for the Shares to be purchased, a proper
instrument of transfer and a request directed to the Trust or a
person designated by the Trust that the Trust purchase such
Shares, or in accordance with such other procedures for
redemption as the Trustees may from time to time authorize; and
the Trust will pay therefor the net asset value thereof, as next
determined in accordance with the Bylaws. Payment for said
Shares shall be made by the Trust to the Shareholder within seven
days after the date on which the request is made. The obligation
set forth in this Section 2 is subject to the provision that in
the event that any time the New York Stock Exchange is closed for
other than customary weekends or holidays, or, if permitted by
rules of the Securities and Exchange Commission, during periods
when trading on the Exchange is restricted or during any
emergency which makes it impractical for the Trust to dispose of
its investments or to determine fairly the value of its net
assets, or during any other period permitted by order of the
Securities and Exchange Commission for the protection of
investors, such obligation may be suspended or postponed by the
Trustees. The Trust may also purchase or repurchase Shares at a
price not exceeding the net asset value of such Shares in effect
when the purchase or repurchase or any contract to purchase or
repurchase is made.
<PAGE>
REDEMPTIONS AT THE OPTION OF THE TRUST
Section 3. The Trust shall have the right at its option and
at any time to redeem Shares of any Shareholder at the net asset
value thereof as determined in accordance with the Bylaws: (i) if
at such time such Shareholder owns fewer Shares than, or Shares
having an aggregate net asset value of less than, an amount
determined from time to time by the Trustees; or (ii) to the
extent that such Shareholder owns Shares of a particular series
or class of Shares equal to or in excess of a percentage of the
outstanding Shares of that series or class determined from time
to time by the Trustees; or (iii) to the extent that such
Shareholder owns Shares of the Trust representing a percentage
equal to or in excess of such percentage of the aggregate number
of outstanding Shares of the Trust or the aggregate net asset
value of the Trust determined from time to time by the Trustees.
ARTICLE VIII
INDEMNIFICATION
SHAREHOLDERS
Section 4. In case any Shareholder or former Shareholder
shall be held to be personally liable solely by reason of his or
her being or having been a Shareholder and not because of his or
her acts or omissions or for some other reason, the Shareholder
or former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general
successor) shall be entitled to be held harmless from and
indemnified against all loss and expense arising from such
liability, but only out of the assets of the particular series of
Shares of which he or she is or was a Shareholder.
ARTICLE IX
MISCELLANEOUS
TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE
Section 1. All persons extending credit to, contracting
with or having any claim against the Trust or a particular series
of Shares shall look only to the assets of the Trust or the
assets of that particular series of Shares for payment under such
credit, contract or claim; and neither the Shareholders nor the
Trustees, nor any of the Trust's officers, employees or agents,
whether past, present or future, shall be personally liable
therefor. Nothing in this Declaration of Trust shall protect any
Trustee against any liability to which such Trustee would
otherwise be subject by reason of wilful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of the office of Trustee.
<PAGE>
Every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officer or
officers shall give notice that this Declaration of Trust is on
file with the Secretary of State of The Commonwealth of
Massachusetts and shall recite that the same was executed or made
by or on behalf of the Trust or by them as Trustee or Trustees or
as officer or officers and not individually and that the
obligations of such instrument are not binding upon any of them
or the Shareholders individually but are binding only upon the
assets and property of the Trust, and may contain such further
recital as he or she or they may deem appropriate, but the
omission thereof shall not operate to bind any Trustee or
Trustees or officer or officers or Shareholder or Shareholders
individually.
(PORTIONS OF BYLAWS OF
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND
RELATING TO SHAREHOLDERS' RIGHTS)
ARTICLE 9
ISSUANCE OF SHARES AND SHARE CERTIFICATES
9.1 SALE OF SHARES. Except as otherwise determined by the
Trustees, the Trust will issue and sell for cash or securities
from time to time, full and fractional shares of its shares of
beneficial interest, such shares to be issued and sold at a price
of not less than the par value per share, if any, and not less
than the net asset value per share as from time to time
determined in accordance with the Declaration of Trust and these
Bylaws and, in the case of fractional shares, at a proportionate
reduction in such price. In the case of shares sold for
securities, such securities shall be valued in accordance with
the provisions for determining the value of the assets of the
Trust as stated in the Declaration of Trust and these Bylaws.
The officers of the Trust are severally authorized to take all
such actions as may be necessary or desirable to carry out this
Section 9.1.
9.2 SHARE CERTIFICATES. In lieu of issuing certificates
for shares, the Trustees or the transfer agent may either issue
receipts therefor or may keep accounts upon the books of the
Trust for the record holders of such shares, who shall in either
case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and
agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled
to a certificate stating the number of shares of each class owned
by him, in such form as shall be prescribed from time to time by
the Trustees. Such certificate shall be signed by the President
or a Vice President and by the Treasurer or an Assistant
Treasurer. Such signatures may be facsimile if the certificate
is signed by a transfer agent or by a registrar. In case any
officer who has signed or whose facsimile signature has been
placed on such certificate shall cease to be such officer before
such certificate is issued, it may be issued by the Trust with
the same effect as if he were such officer at the time of its
issue.
<PAGE>
9.3 LOSS OF CERTIFICATES. The transfer agent of the Trust,
with the approval of any two officers of the Trust, is authorized
to issue and countersign replacement certificates for the shares
of the Trust which have been lost, stolen or destroyed upon (i)
receipt of an affidavit or affidavits of loss or non-receipt and
of an indemnity agreement executed by the registered holder or
his legal representative and supported by an open penalty surety
bond, said agreement and said bond in all cases to be in form and
content satisfactory to and approved by the President or the
Treasurer, or (ii) receipt of such other documents as may be
approved by the Trustees.
9.4 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. A pledgee of
shares transferred as collateral security shall be entitled to a
new certificate if the instrument of transfer substantially
describes the debt or duty that is intended to be secured
thereby. Such new certificate shall express on its face that it
is held as collateral security, and the name of the pledgor shall
be stated thereon, who alone shall be liable as a shareholder and
entitled to vote thereon.
9.5 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The
Trustees may at any time discontinue the issuance of share
certificates and may, by written notice to each shareholder,
require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect
the ownership of shares in the Trust.
ARTICLE 10
PROVISIONS RELATING TO THE CONDUCT OF THE TRUST'S BUSINESS
10.4 REPORTS TO SHAREHOLDERS. The Trust shall send to each
shareholder of record at least semi-annually a statement of the
condition of the Trust and of the results of its operations,
containing all information required by applicable laws or
regulations.
ARTICLE 11
SHAREHOLDERS
11.1 MEETINGS. A meeting of the shareholders shall be
called by the Clerk whenever ordered by the Trustees, the
Chairman of the Trustees or requested in writing by the holder or
holders of at least one-tenth of the outstanding shares entitled
to vote at such meeting. If the Clerk, when so ordered or
requested, refuses or neglects for more than two days to call
such meeting, the Trustees, Chairman of the Trustees or the
shareholders so requesting may, in the name of the Clerk, call
the meeting by giving notice thereof in the manner required when
notice is given by the Clerk.
<PAGE>
11.2 ACCESS TO SHAREHOLDER LIST. Shareholders of record
may apply to the Trustees for assistance in communicating with
other shareholders for the purpose of calling a meeting in order
to vote upon the question of removal of a Trustee. When ten or
more shareholders of record who have been such for at least six
months preceding the date of application and who hold in the
aggregate shares having a net asset value of at least $25,000 so
apply, the Trustees shall within five business days either:
(i) afford to such applicants access to a list of
names and addresses of all shareholders as recorded on
the books of the Trust; or
(ii) inform such applicants of the approximate
number of shareholders of record and the approximate
cost of mailing material to them, and, within a
reasonable time thereafter, mail, at the applicants'
expense, materials submitted by the applicants, to all
such shareholders of record. The Trustees shall not be
obligated to mail materials which they believe to be
misleading or in violation of applicable law.
11.3 RECORD DATES. For the purpose of determining the
shareholders of any class or series of shares of the Trust who
are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to receive payment of any dividend
or of any other distribution, the Trustees may from time to time
fix a time, which shall be not more than 90 days before the date
of any meeting of shareholders or more than 60 days before the
date of payment of any dividend or of any other distribution, as
the record date for determining the shareholders of such class or
series having the right to notice of and to vote at such meeting
and any adjournment thereof or the right to receive such dividend
or distribution, and in such case only shareholders of record on
such record date shall have such right notwithstanding any
transfer of shares on the books of the Trust after the record
date; or without fixing such record date the Trustees may for any
such purposes close the register or transfer books for all or
part of such period.
11.4 PROXIES. The placing of a shareholder's name on a
proxy pursuant to telephone or electronically transmitted
instructions obtained pursuant to procedures reasonably designed
to verify that such instructions have been authorized by such
shareholder shall constitute execution of such proxy by or on
behalf of such shareholder.
<PAGE>
ARTICLE 12
PREFERENCES, RIGHTS AND PRIVILEGES OF THE
TRUST'S CLASSES OF SHARES
12.1 GENERAL. Each class of shares of the Trust or of a
particular series of the Trust, as the case may be, will
represent interests in the same portfolio of investments of the
Trust (or that series) and be identical in all respects, except
as set forth below: (a) each class of shares shall be charged
with the expense of any Distribution Plan adopted by the Trust
pursuant to Rule 12b-1 under the Investment Company Act of 1940
with respect to such class of shares, (b) each class of shares
will be charged with any incremental shareholder servicing
expense attributable solely to such class, as determined by the
Trustees, (c) each class of shares shall be charged with any
other expenses properly allocated to such class, as determined by
the Trustees and approved by the Securities and Exchange
Commission, (d) each class of shares shall vote as a separate
class on matters which pertain to any Rule 12b-1 Distribution
Plan pertaining to such class of shares, (e) each class of shares
will have only such exchange privileges as may from time to time
be described in the Trust's prospectus with respect to such
class, (f) each class of shares shall bear such designation as
may be approved from time to time by the Trustees and (g)
reinvestments of distributions from the Trust paid with respect
to the shares of a particular class will be paid in additional
shares of such class.
12.2. CONVERSION OF CLASS B SHARES. Except as hereinafter
provided with respect to shares acquired by exchange or
reinvestment of distributions, Class B shares of the Trust will
automatically convert into Class A shares of the Trust at the end
of the month eight years after the month of purchase, or at such
earlier time as the Trustees may in their sole discretion
determine from time to time as to all Class B shares purchased on
or before such date as the Trustees may specify. Class B shares
acquired by exchange from Class B shares of another Putnam Fund
will convert into Class A shares based on the date of the initial
purchase of the Class B shares of such other Fund. Class B
shares acquired through reinvestment of distributions will
convert into Class A shares based on the date of the initial
purchase of Class B shares to which such reinvestment shares
relate. For this purpose, Class B shares acquired through
reinvestment of distributions will be attributed to particular
purchases of Class B shares in accordance with such procedures,
which may include without limitation methods of proration or
approximation, as the Trustees may in their sole discretion
determine from time to time.
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST --
PUTNAM CALIFORNIA INTERMEDIATE TAX EXEMPT FUND
MANAGEMENT CONTRACT
Management Contract dated as of May 6, 1994 between PUTNAM
CALIFORNIA TAX EXEMPT INCOME TRUST, a Massachusetts business
trust (the "Trust"), and PUTNAM INVESTMENT MANAGEMENT, INC., a
Delaware corporation (the "Manager") with respect to Putnam
California Intermediate Tax Exempt Fund, a series of the Trust
(the "Trust").
WITNESSETH:
That in consideration of the mutual covenants herein
contained, it is agreed as follows:
1. SERVICES TO BE RENDERED BY MANAGER TO FUND.
(a) The Manager, at its expense, will furnish continuously
an investment program for the Fund, will determine what
investments shall be purchased, held, sold or exchanged by the
Fund and what portion, if any, of the assets of the Fund shall be
held uninvested and shall, on behalf of the Fund, make changes in
the Fund's investments. Subject always to the control of the
Trustees of the Trust and except for the functions carried out by
the officers and personnel referred to in Section 1(d), the
Manager will also manage, supervise and conduct the other affairs
and business of the Trust and matters incidental thereto. In the
performance of its duties, the Manager will comply with the
provisions of the Agreement and Declaration of Trust and By-Laws
of the Trust and the Fund's stated investment objectives,
policies and restrictions, and will use its best efforts to
safeguard and promote the welfare of the Fund and to comply with
other policies which the Trustees may from time to time determine
and shall exercise the same care and diligence expected of the
Trustees.
(b) The Manager, at its expense, except as such expense is
paid by the Fund as provided in Section 1(d), will furnish (1)
all necessary investment and management facilities, including
salaries of personnel, required for it to execute its duties
faithfully; (2) suitable office space for the Fund; and (3)
administrative facilities, including bookkeeping, clerical
personnel and equipment necessary for the efficient conduct of
the affairs of the Fund, including determination of the Fund's
net asset value, but excluding shareholder accounting services.
Except as otherwise provided in Section 1(d), the Manager will
pay the compensation, if any, of the officers of the Trust.
<PAGE>
(c) The Manager, at its expense, shall place all orders for
the purchase and sale of portfolio investments for the Fund's
account with brokers or dealers selected by the Manager. In the
selection of such brokers or dealers and the placing of such
orders, the Manager shall use its best efforts to obtain for the
Fund the most favorable price and execution available, except to
the extent it may be permitted to pay higher brokerage
commissions for brokerage and research services as described
below. In using its best efforts to obtain for the Fund the most
favorable price and execution available, the Manager, bearing in
mind the Fund's best interests at all times, shall consider all
factors it deems relevant, including by way of illustration,
price, the size of the transaction, the nature of the market for
the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker or
dealer involved and the quality of service rendered by the broker
or dealer in other transactions. Subject to such policies as the
Trustees of the Trust may determine, the Manager shall not be
deemed to have acted unlawfully or to have breached any duty
created by this Contract or otherwise solely by reason of its
having caused the Fund to pay a broker or dealer that provides
brokerage and research services to the Manager an amount of
commission for effecting a portfolio investment transaction in
excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, if the Manager
determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Manager's overall
responsibilities with respect to the Fund and to other clients of
the Manager as to which the Manager exercises investment
discretion. The Manager agrees that in connection with purchases
or sales of portfolio investments for the Fund's account, neither
the Manager nor any officer, director, employee or agent of the
Manager shall act as a principal or receive any commission other
than as provided in Section 3.
(d) The Fund will pay or reimburse the Manager for the
compensation in whole or in part of such officers of the Trust
and persons assisting them as may be determined from time to time
by the Trustees of the Trust. The Fund will also pay or
reimburse the Manager for all or part of the cost of suitable
office space, utilities, support services and equipment
attributable to such officers and persons, as may be determined
in each case by the Trustees of the Trust. The Fund will pay the
fees, if any, of the Trustees of the Trust.
(e) The Manager shall pay all expenses incurred in
connection with the organization of the Fund and the initial
public offering and sale of its shares of beneficial interest,
provided that upon the issuance and sale of such shares to the
public pursuant to the offering, and only in such event, the Fund
shall become liable for, and to the extent requested reimburse
the Manager for, registration fees payable to the Securities and
Exchange Commission and for an additional amount not exceeding
$125,000 as its agreed share of such expenses.
(f) The Manager shall not be obligated to pay any expenses
of or for the Fund not expressly assumed by the Manager pursuant
to this Section 1 other than as provided in Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees,
officers and employees of the Trust may be a shareholder,
director, officer or employee of, or be otherwise interested in,
the Manager, and in any person controlled by or under common
control with the Manager, and that the Manager and any person
controlled by or under common control with the Manager may have
an interest in the Fund. It is also understood that the Manager
and any person controlled by or under common control with the
Manager have and may have advisory, management, service or other
contracts with other organizations and persons, and may have
other interests and business.
3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.
The Fund will pay to the Manager as compensation for the
Manager's services rendered, for the facilities furnished and for
the expenses borne by the Manager pursuant to paragraphs (a),
(b), (c) and (e) of Section 1, a fee, computed and paid quarterly
at the annual rate of:
(a) 0.60% of the first $500 million of the average net
asset value of the Fund;
(b) 0.50% of the next $500 million of such average net
asset value;
(c) 0.45% of the next $500 million of such average net
asset value; and
(f) 0.40% of any excess over $1.5 billion of such average
net asset value.
<PAGE>
Such average net asset value shall be determined by taking an
average of all of the determinations of such net asset value
during such quarter at the close of business on each business day
during such quarter while this Contract is in effect. Such fee
shall be payable for each fiscal quarter within 30 days after the
close of such quarter and shall commence accruing as of the date
of the initial issuance of shares of the Fund to the public.
The fees payable by the Fund to the Manager pursuant to this
Section 3 shall be reduced by any commissions, fees, brokerage or
similar payments received by the Manager or any affiliated person
of the Manager in connection with the purchase and sale of
portfolio investments of the Fund, less any direct expenses
approved by the Trustees incurred by the Manager or any
affiliated person of the Manager in connection with obtaining
such payments.
In the event that expenses of the Fund for any fiscal year
should exceed the expense limitation on investment company
expenses imposed by any statute or regulatory authority of any
jurisdiction in which shares of the Fund are qualified for offer
or sale, the compensation due the Manager for such fiscal year
shall be reduced by the amount of excess by a reduction or refund
thereof. In the event that the expenses of the Fund exceed any
expense limitation which the Manager may, by written notice to
the Fund, voluntarily declare to be effective subject to such
terms and conditions as the Manager may prescribe in such notice,
the compensation due the Manager shall be reduced, and, if
necessary, the Manager shall assume expenses of the Fund to the
extent required by the terms and conditions of such expense
limitation.
If the Manager shall serve for less than the whole of a
quarter, the foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT.
This Contract shall automatically terminate, without the
payment of any penalty, in the event of its assignment; and this
Contract shall not be amended unless such amendment be approved
at a meeting by the affirmative vote of a majority of the
outstanding shares of the Fund, and by the vote, cast in person
at a meeting called for the purpose of voting on such approval,
of a majority of the Trustees of the Trust who are not interested
persons of the Fund or of the Manager.
<PAGE>
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and
shall remain in full force and effect continuously thereafter
(unless terminated automatically as set forth in Section 4) until
terminated as follows:
(a) Either party hereto may at any time terminate this
Contract by not more than sixty days' nor less than thirty days'
written notice delivered or mailed by registered mail, postage
prepaid, to the other party, or
(b) If (i) the Trustees of the Trust or the shareholders by
the affirmative vote of a majority of the outstanding shares of
the Fund, and (ii) a majority of the Trustees of the Trust who
are not interested persons of the Trust or of the Manager, by
vote cast in person at a meeting called for the purpose of voting
on such approval, do not specifically approve at least annually
the continuance of this Contract, then this Contract shall
automatically terminate at the close of business on January 31,
1996 or the expiration of one year from the effective date of the
last such continuance, whichever is later.
Action by the Fund under (a) above may be taken either (i)
by vote of a majority of its Trustees, or (ii) by the affirmative
vote of a majority of the outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 will
be without the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of
a majority of the outstanding shares of the Fund" means the
affirmative vote, at a duly called and held meeting of
shareholders of the Fund, (a) of the holders of 67% or more of
the shares of the Fund present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50%
of the outstanding shares of the Fund entitled to vote at such
meeting are present in person or by proxy, or (b) of the holders
of more than 50% of the outstanding shares of the Fund entitled
to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated
person", "control", "interested person" and "assignment" shall
have their respective meanings defined in the Investment Company
Act of 1940 and the Rules and Regulations thereunder (the "1940
Act"), subject, however, to such exemptions as may be granted by
the Securities and Exchange Commission under said Act; the term
"specifically approve at least annually" shall be construed in a
manner consistent with the 1940 Act, and the Rules and
Regulations thereunder; and the term "brokerage and research
services" shall have the meaning given in the Securities Exchange
Act of 1934 and the Rules and Regulations thereunder.
7. NON-LIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Manager, or reckless disregard of
its obligations and duties hereunder, the Manager shall not be
subject to any liability to the Fund or to any shareholder of the
Fund, for any act or omission in the course of, or connected
with, rendering services hereunder.
8. OTHER AGREEMENTS.
This Contract shall in no way amend or otherwise modify the
Distributor's Contract dated May 6, 1994 between the Trust and
Putnam relating to the shares of the Trust's other series.
9. LIMITATION OF LIABILITY OF THE TRUSTEES, OFFICERS, AND
SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the
Trust is on file with the Secretary of State of The Commonwealth
of Massachusetts, and notice is hereby given that this instrument
is executed on behalf of the Trustees of the Trust as Trustees
and not individually and that the obligations of or arising out
of this instrument are not binding upon any of the Trustees,
officers or shareholders individually but are binding only upon
the assets and property of the Fund.
IN WITNESS WHEREOF, PUTNAM CALIFORNIA TAX EXEMPT INCOME
TRUST and PUTNAM INVESTMENT MANAGEMENT, INC. have each caused
this instrument to be signed in duplicate in its behalf by its
President or a Vice President thereunto duly authorized, all as
of the day and year first above written.
PUTNAM CALIFORNIA TAX EXEMPT INCOME
TRUST
/S/ Charles E. Porter
By: --------------------------------
Charles E. Porter
Executive Vice President
PUTNAM INVESTMENT MANAGEMENT, INC.
/S/ lawrence J. Lasser
By: --------------------------------
Lawrence J. Lasser
President
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST
DISTRIBUTOR'S CONTRACT
Distributor's Contract dated May 6, 1994, by and between
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST, a Massachusetts
business trust (the "Trust"), and PUTNAM MUTUAL FUNDS CORP., a
Massachusetts corporation ("Putnam").
WHEREAS, the Trust and Putnam are desirous of entering into
this agreement to provide for the distribution by Putnam of
shares of the various portfolio series of the Trust (each a
"Fund");
NOW, THEREFORE, in consideration of the mutual agreements
contained in the Terms and Conditions of Distributor's Contract
attached to and forming a part of this Contract (the "Terms and
Conditions"), the Trust hereby appoints Putnam as a distributor
of shares of the Trust, and Putnam hereby accepts such
appointment, all as set forth in the Terms and Conditions.
A copy of the Agreement and Declaration of Trust of the
Trust is on file with the Secretary of State of The Commonwealth
of Massachusetts and notice is hereby given that this instrument
is executed on behalf of the Trustees of the Trust as Trustees
and not individually, and that the obligations of or arising out
of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets
and property of the relevant Fund.
IN WITNESS WHEREOF, PUTNAM CALIFORNIA TAX EXEMPT INCOME
TRUST and PUTNAM MUTUAL FUNDS CORP. have each caused this
Distributor's Contract to be signed in duplicate in its behalf,
all as of the day and year first above written.
PUTNAM CALIFORNIA TAX EXEMPT
INCOME TRUST
/S/ Charles E. Porter
By: -----------------------------
Executive Vice President
PUTNAM MUTUAL FUNDS CORP.
/S/ William N. Shiebler
By: -----------------------------
President<PAGE>
TERMS AND CONDITIONS
OF
DISTRIBUTOR'S CONTRACT
1. RESERVATION OF RIGHT NOT TO SELL. The Trust reserves the
right to refuse at any time or times to sell hereunder any shares
of beneficial interest ("shares") of a Fund for any reason deemed
adequate by it.
2. PAYMENTS TO PUTNAM. In connection with the distribution of
shares of a Fund, Putnam will be entitled to receive: (a)
payments pursuant to any Distribution Plan and Agreement from
time to time in effect between the Trust and Putnam with respect
to such Fund or any particular class of shares of such Fund, (b)
any contingent deferred sales charges applicable to the
redemption of shares of such Fund or of any particular class of
shares of such Fund, determined in the manner set forth in the
then current Prospectus and Statement of Additional Information
of such Fund and (c) subject to the provisions of Section 3
below, any front-end sales charges applicable to the sale of
shares of such Fund or of any particular class of shares of such
Fund, less any applicable dealer discount.
3. SALES OF SHARES TO PUTNAM AND SALES BY PUTNAM. Putnam will
have the right, as principal, to sell shares of a Fund to
investment dealers against orders therefor (a) at the public
offering price (calculated as described below) less a discount
determined by Putnam, which discount shall not exceed the amount
of the sales charge referred to below, or (b) at net asset value.
Upon receipt of an order to purchase shares from an investment
dealer with whom Putnam has a Sales Contract, Putnam will
promptly purchase shares from the relevant Fund to fill such
order. The public offering price of a class of shares of a Fund
shall be the net asset value of such shares then in effect, plus
any applicable front-end sales charge determined in the manner
set forth in the then current Prospectus and Statement of
Additional Information of the Fund or as permitted by the
Investment Company Act of 1940, as amended, and the Rules and
Regulations of the Securities and Exchange Commission promulgated
thereunder. In no event shall the public offering price exceed
1000/915ths of such net asset value, and in no event shall any
applicable sales charge exceed 8 1/2% of the public offering
price. The net asset value of the shares shall be determined in
the manner provided in the Agreement and Declaration of Trust of
the Trust as then amended and when determined shall be applicable
to transactions as provided for in the then current Prospectus
and Statement of Additional Information of the relevant Fund.
Putnam will also have the right, as principal, to purchase
shares from a Fund at their net asset value and to sell such
shares to the public against orders therefor at the public
offering price or at net asset value.
Putnam will also have the right, as principal, to sell
shares at their net asset value and not subject to a contingent
deferred sales charge to such persons as may be approved by the
Trustees of the Trust, all such sales to comply with the
provisions of the Investment Company Act of 1940, as amended, and
the Rules and Regulations of the Securities and Exchange
Commission promulgated thereunder.
Putnam will also have the right, as agent for the Trust, to
sell shares at the public offering price or at net asset value to
such persons and upon such conditions as the Trustees of the
Trust may from time to time determine.
On every sale the Trust shall receive the applicable net
asset value of the shares. Putnam will reimburse the Trust for
any increased issue tax paid on account of sales charges. Upon
receipt of registration instructions in proper form and payment
for shares, Putnam will transmit such instructions to the Trust
or its agent for registration of the shares purchased.
4. SALES OF SHARES BY THE TRUST. The Trust reserves the right
to issue shares at any time directly to its shareholders as a
stock dividend or stock split and to sell shares to its
shareholders or to other persons approved by Putnam at not less
than net asset value.
5. REPURCHASE OF SHARES. Putnam will act as agent for the
Trust in connection with the repurchase of shares by the Trust
upon the terms and conditions set forth in the then current
Prospectus and Statement of Additional Information of the
relevant Fund.
6. BASIS OF PURCHASES AND SALES OF SHARES. Putnam will use its
best efforts to place shares sold by it on an investment basis.
Putnam does not agree to sell any specific number of shares.
Shares will be sold by Putnam only against orders therefor.
Putnam will not purchase shares from anyone other than the Trust
or a Fund except in accordance with Section 5, and will not take
"long" or "short" positions in shares contrary to the Agreement
and Declaration of Trust of the Trust.
7. RULES OF NASD, ETC. Putnam will conform to the Rules of
Fair Practice of the National Association of Securities Dealers,
Inc. and the sale of securities laws of any jurisdiction in which
it sells, directly or indirectly, any shares. Putnam also agrees
to furnish to the Trust sufficient copies of any agreements or
plans it intends to use in connection with any sales of shares in
adequate time for the Trust to file and clear them with the
proper authorities before they are put in use, and not to use
them until so filed and cleared.
8. PUTNAM INDEPENDENT CONTRACTOR. Putnam shall be an
independent contractor and neither Putnam nor any of its officers
or employees as such is or shall be an employee of the Trust.
Putnam is responsible for its own conduct and the employment,
control and conduct of its agents and employees and for injury to
such agents or employees or to others through its agents or
employees. Putnam assumes full responsibility for its agents and
employees under applicable statutes and agrees to pay all
employer taxes thereunder.
Putnam will maintain at its own expense insurance against
public liability in such an amount as the Trustees of the Trust
may from time to time reasonably request.
9. EXPENSES. Putnam will pay all expenses of qualifying shares
for sale under the so-called "Blue Sky" laws of any state (except
expenses of any action by the Trust relating to its Agreement and
Declaration of Trust or other matters in which the Trust has a
direct concern), and expenses of preparing, printing and
distributing advertising and sales literature (apart from
expenses of registering shares under the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
and the preparation and printing of Prospectuses and Statements
of Additional Information and reports as required by said Acts
and the direct expenses of the issue of shares, except that
Putnam will pay the cost of the preparation and printing of
Prospectuses and Statements of Additional Information and
shareholders' reports used by it and by others in the sale of
shares to the extent such cost is not paid by others).
10. INDEMNIFICATION OF TRUST. Putnam agrees to indemnify and
hold harmless the Trust and each person who has been, is, or may
hereafter be a Trustee of the Trust against expenses reasonably
incurred by any of them in connection with any claim or in
connection with any action, suit or proceeding to which any of
them may be a party, which arises out of or is alleged to arise
out of any misrepresentation or omission to state a material
fact, or out of any alleged misrepresentation or omission to
state a material fact, on the part of Putnam or any agent or
employee of Putnam or any other person for whose acts Putnam is
responsible or is alleged to be responsible unless such
misrepresentation or omission was made in reliance upon written
information furnished by the Trust. Putnam also agrees likewise
to indemnify and hold harmless the Trust and each such person in
connection with any claim or in connection with any action, suit
or proceeding which arises out of or is alleged to arise out of
Putnam's (or an affiliate of Putnam's) failure to exercise
reasonable care and diligence with respect to its services
rendered in connection with investment, reinvestment, automatic
withdrawal and other plans for shares. The term "expenses"
includes amounts paid in satisfaction of judgments or in
settlements which are made with Putnam's consent. The foregoing
rights of indemnification shall be in addition to any other
rights to which the Trust or a Trustee may be entitled as a
matter of law.
11. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT. This Contract shall automatically terminate, without
the payment of any penalty, in the event of its assignment. This
Contract may be amended only if such amendment be approved either
by action of the Trustees of the Trust or at a meeting of the
shareholders of the relevant Fund by the affirmative vote of a
majority of the outstanding shares of such Fund, and by a
majority of the Trustees of the Trust who are not interested
persons of the Trust or of Putnam by vote cast in person at a
meeting called for the purpose of voting on such approval.
12. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT. This
Contract shall take effect upon the date first above written and
shall remain in full force and effect continuously (unless
terminated automatically as set forth in Section 11) until
terminated with respect to a particular Fund:
(a) Either by the Trust or Putnam by not more
than sixty (60) days' nor less than ten (10) days'
written notice delivered or mailed by registered
mail, postage prepaid, to the other party; or
(b) If the continuance of this Contract after
January 31, 1995 is not specifically approved at
least annually by the Trustees of the Trust or the
shareholders of the relevant Fund by the affirmative
vote of a majority of the outstanding shares of such
Fund, and by a majority of the Trustees of the Trust
who are not interested persons of the Trust or of
Putnam by vote cast in person at a meeting called for
the purpose of voting on such approval.
Action by the Trust under (a) above may be taken either (i)
by vote of its Trustees or (ii) by the affirmative vote of a
majority of the outstanding shares of the relevant Fund. The
requirement under (b) above that continuance of this Contract be
"specifically approved at least annually" shall be construed in a
manner consistent with the Investment Company Act of 1940, as
amended, and the Rules and Regulations thereunder.
Termination of this Contract pursuant to this Section 12
shall be without the payment of any penalty.
13. CERTAIN DEFINITIONS. For the purposes of this Contract,
the "affirmative vote of a majority of the outstanding shares of
a Fund" means the affirmative vote, at a duly called and held
meeting of shareholders of such Fund, (a) of the holders of 67%
or more of the shares of such Fund present (in person or by
proxy) and entitled to vote at such meeting, if the holders of
more than 50% of the outstanding shares of such Fund entitled to
vote at such meeting are present in person or by proxy, or (b) of
the holders of more than 50% of the outstanding shares of such
Fund entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "interested
person" and "assignment" shall have the meanings defined in the
Investment Company Act of 1940, as amended, subject, however, to
such exemptions as may be granted by the Securities and Exchange
Commission under said Act.
s:\shared\discon.ser
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND
DISTRIBUTOR'S CONTRACT
Distributor's Contract dated May 6, 1994, by and between
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND, a Massachusetts
business trust (the "Fund"), and PUTNAM MUTUAL FUNDS CORP., a
Massachusetts corporation ("Putnam").
WHEREAS, the Fund and Putnam are desirous of entering into
this agreement to provide for the distribution by Putnam of
shares of the Fund;
NOW, THEREFORE, in consideration of the mutual agreements
contained in the Terms and Conditions of Distributor's Contract
attached to and forming a part of this Contract (the "Terms and
Conditions"), the Fund hereby appoints Putnam as a distributor of
shares of the Fund, and Putnam hereby accepts such appointment,
all as set forth in the Terms and Conditions.
A copy of the Agreement and Declaration of Trust of the Fund
is on file with the Secretary of State of The Commonwealth of
Massachusetts and notice is hereby given that this instrument is
executed on behalf of the Trustees of the Fund as Trustees and
not individually, and that the obligations of or arising out of
this instrument are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets
and property of the Fund.
IN WITNESS WHEREOF, PUTNAM CALIFORNIA TAX EXEMPT MONEY
MARKET FUND and PUTNAM MUTUAL FUNDS CORP. have each caused this
Distributor's Contract to be signed in duplicate in its behalf,
all as of the day and year first above written.
PUTNAM CALIFORNIA TAX EXEMPT
MONEY MARKET FUND
/S/ Charles E. Porter
By: -----------------------------
Executive Vice President
PUTNAM MUTUAL FUNDS CORP.
/S/ William N. Shiebler
By: -----------------------------
President<PAGE>
TERMS AND CONDITIONS
OF
DISTRIBUTOR'S CONTRACT
1. RESERVATION OF RIGHT NOT TO SELL. The Fund reserves the
right to refuse at any time or times to sell any of its shares of
beneficial interest ("shares") hereunder for any reason deemed
adequate by it.
2. PAYMENTS TO PUTNAM. In connection with the distribution of
shares of the Fund, Putnam will be entitled to receive: (a)
payments pursuant to any Distribution Plan and Agreement from
time to time in effect between the Fund and Putnam with respect
to the Fund or any particular class of shares of the Fund, (b)
any contingent deferred sales charges applicable to the
redemption of shares of the Fund or of any particular class of
shares of the Fund, determined in the manner set forth in the
then current Prospectus and Statement of Additional Information
of the Fund and (c) subject to the provisions of Section 3 below,
any front-end sales charges applicable to the sale of shares of
the Fund or of any particular class of shares of the Fund, less
any applicable dealer discount.
3. SALES OF SHARES TO PUTNAM AND SALES BY PUTNAM. Putnam will
have the right, as principal, to sell shares of the Fund to
investment dealers against orders therefor (a) at the public
offering price (calculated as described below) less a discount
determined by Putnam, which discount shall not exceed the amount
of the sales charge referred to below, or (b) at net asset value.
Upon receipt of an order to purchase Fund shares from an
investment dealer with whom Putnam has a Sales Contract, Putnam
will promptly purchase shares from the Fund to fill such order.
The public offering price of a class of shares shall be the net
asset value of such shares then in effect, plus any applicable
front-end sales charge determined in the manner set forth in the
then current Prospectus and Statement of Additional Information
of the Fund or as permitted by the Investment Company Act of
1940, as amended, and the Rules and Regulations of the Securities
and Exchange Commission promulgated thereunder. In no event
shall the public offering price exceed 1000/915ths of such net
asset value, and in no event shall any applicable sales charge
exceed 8 1/2% of the public offering price. The net asset value
of the shares shall be determined in the manner provided in the
Agreement and Declaration of Trust of the Fund as then amended
and when determined shall be applicable to transactions as
provided for in the then current Prospectus and Statement of
Additional Information of the Fund.
Putnam will also have the right, as principal, to purchase
shares from the Fund at their net asset value and to sell such
shares to the public against orders therefor at the public
offering price or at net asset value.
Putnam will also have the right, as principal, to sell
shares at their net asset value and not subject to a contingent
deferred sales charge to such persons as may be approved by the
Trustees of the Fund, all such sales to comply with the
provisions of the Investment Company Act of 1940, as amended, and
the Rules and Regulations of the Securities and Exchange
Commission promulgated thereunder.
Putnam will also have the right, as agent for the Fund, to
sell shares at the public offering price or at net asset value to
such persons and upon such conditions as the Trustees of the Fund
may from time to time determine.
On every sale the Fund shall receive the applicable net
asset value of the shares. Putnam will reimburse the Fund for
any increased issue tax paid on account of sales charges. Upon
receipt of registration instructions in proper form and payment
for shares, Putnam will transmit such instructions to the Fund or
its agent for registration of the shares purchased.
4. SALES OF SHARES BY THE FUND. The Fund reserves the right to
issue shares at any time directly to its shareholders as a stock
dividend or stock split and to sell shares to its shareholders or
to other persons approved by Putnam at not less than net asset
value.
5. REPURCHASE OF SHARES. Putnam will act as agent for the Fund
in connection with the repurchase of shares by the Fund upon the
terms and conditions set forth in the then current Prospectus and
Statement of Additional Information of the Fund.
6. BASIS OF PURCHASES AND SALES OF SHARES. Putnam will use its
best efforts to place shares sold by it on an investment basis.
Putnam does not agree to sell any specific number of shares.
Shares will be sold by Putnam only against orders therefor.
Putnam will not purchase shares from anyone other than the Fund
except in accordance with Section 5, and will not take "long" or
"short" positions in shares contrary to the Agreement and
Declaration of Trust of the Fund.
7. RULES OF NASD, ETC. Putnam will conform to the Rules of
Fair Practice of the National Association of Securities Dealers,
Inc. and the sale of securities laws of any jurisdiction in which
it sells, directly or indirectly, any shares. Putnam also agrees
to furnish to the Fund sufficient copies of any agreements or
plans it intends to use in connection with any sales of shares in
adequate time for the Fund to file and clear them with the proper
authorities before they are put in use, and not to use them until
so filed and cleared.
8. PUTNAM INDEPENDENT CONTRACTOR. Putnam shall be an
independent contractor and neither Putnam nor any of its officers
or employees as such is or shall be an employee of the Fund.
Putnam is responsible for its own conduct and the employment,
control and conduct of its agents and employees and for injury to
such agents or employees or to others through its agents or
employees. Putnam assumes full responsibility for its agents and
employees under applicable statutes and agrees to pay all
employer taxes thereunder.
Putnam will maintain at its own expense insurance against
public liability in such an amount as the Trustees of the Fund
may from time to time reasonably request.
9. EXPENSES. Putnam will pay all expenses of qualifying shares
of the Fund for sale under the so-called "Blue Sky" laws of any
state (except expenses of any action by the Fund relating to its
Agreement and Declaration of Trust or other matters in which the
Fund has a direct concern), and expenses of preparing, printing
and distributing advertising and sales literature (apart from
expenses of registering shares under the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
and the preparation and printing of Prospectuses and Statements
of Additional Information and reports as required by said Acts
and the direct expenses of the issue of shares, except that
Putnam will pay the cost of the preparation and printing of
Prospectuses and Statements of Additional Information and
shareholders' reports used by it and by others in the sale of
Fund shares to the extent such cost is not paid by others).
10. INDEMNIFICATION OF FUND. Putnam agrees to indemnify and
hold harmless the Fund and each person who has been, is, or may
hereafter be a Trustee of the Fund against expenses reasonably
incurred by any of them in connection with any claim or in
connection with any action, suit or proceeding to which any of
them may be a party, which arises out of or is alleged to arise
out of any misrepresentation or omission to state a material
fact, or out of any alleged misrepresentation or omission to
state a material fact, on the part of Putnam or any agent or
employee of Putnam or any other person for whose acts Putnam is
responsible or is alleged to be responsible unless such
misrepresentation or omission was made in reliance upon written
information furnished by the Fund. Putnam also agrees likewise
to indemnify and hold harmless the Fund and each such person in
connection with any claim or in connection with any action, suit
or proceeding which arises out of or is alleged to arise out of
Putnam's (or an affiliate of Putnam's) failure to exercise
reasonable care and diligence with respect to its services
rendered in connection with investment, reinvestment, automatic
withdrawal and other plans for shares. The term "expenses"
includes amounts paid in satisfaction of judgments or in
settlements which are made with Putnam's consent. The foregoing
rights of indemnification shall be in addition to any other
rights to which the Fund or a Trustee may be entitled as a matter
of law.
11. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT. This Contract shall automatically terminate, without
the payment of any penalty, in the event of its assignment. This
Contract may be amended only if such amendment be approved either
by action of the Trustees of the Fund or at a meeting of the
shareholders of the Fund by the affirmative vote of a majority of
the outstanding shares of the Fund, and by a majority of the
Trustees of the Fund who are not interested persons of the Fund
or of Putnam by vote cast in person at a meeting called for the
purpose of voting on such approval.
12. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT. This
Contract shall take effect upon the date first above written and
shall remain in full force and effect continuously (unless
terminated automatically as set forth in Section 11) until
terminated:
(a) Either by the Fund or Putnam by not more
than sixty (60) days' nor less than ten (10) days'
written notice delivered or mailed by registered
mail, postage prepaid, to the other party; or
(b) If the continuance of this Contract after
January 31, 1995 is not specifically approved at
least annually by the Trustees of the Fund or the
shareholders of the Fund by the affirmative vote of a
majority of the outstanding shares of the Fund, and
by a majority of the Trustees of the Fund who are not
interested persons of the Fund or of Putnam by vote
cast in person at a meeting called for the purpose of
voting on such approval.
Action by the Fund under (a) above may be taken either (i) by
vote of its Trustees or (ii) by the affirmative vote of a
majority of the outstanding shares of the Fund. The requirement
under (b) above that continuance of this Contract be
"specifically approved at least annually" shall be construed in a
manner consistent with the Investment Company Act of 1940, as
amended, and the Rules and Regulations thereunder.
Termination of this Contract pursuant to this Section 12
shall be without the payment of any penalty.
13. CERTAIN DEFINITIONS. For the purposes of this
Contract, the "affirmative vote of a majority of the outstanding
shares of the Fund" means the affirmative vote, at a duly called
and held meeting of shareholders of the Fund, (a) of the holders
of 67% or more of the shares of the Fund present (in person or by
proxy) and entitled to vote at such meeting, if the holders of
more than 50% of the outstanding shares of the Fund entitled to
vote at such meeting are present in person or by proxy, or (b) of
the holders of more than 50% of the outstanding shares of the
Fund entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "interested
person" and "assignment" shall have the meanings defined in the
Investment Company Act of 1940, as amended, subject, however, to
such exemptions as may be granted by the Securities and Exchange
Commission under said Act.
S:\shared\discon1
DEALER SALES CONTRACT
Between: PUTNAM MUTUAL FUNDS CORP. and
General Distributor of
The Putnam Family of Mutual Funds
P.O. Box 2701
Boston, MA 02208
As general distributor of The Putnam Family of Mutual Funds (the
"Funds"), we agree to sell you shares of beneficial interest
issued by the Funds (the "Shares"), subject to any limitations
imposed by any of the Funds and to confirmation by us in each
instance of such sales. By your acceptance hereof, you agree to
all of the following terms and conditions:
1. OFFERING PRICE AND FEES
The public offering price at which you may offer the Shares is
the net asset value thereof, as computed from time to time, plus
any applicable sales charge described in the then-current
Prospectus of the applicable Fund. As compensation for each sale
of Shares made by you, you will be allowed the dealer discount,
if any, on such Shares described in the then-current Prospectus
of the Fund whose Shares are sold. We reserve the right to
revise the dealer discount referred to herein upon ten days'
written notice to you. We will furnish you upon request with the
public offering prices for the Shares, and you agree to quote
such prices in connection with any Shares offered by you for
sale. Your attention is specifically called to the fact that
each sale is always made subject to confirmation by us at the
public offering price next computed after receipt of the order.
There is no sales charge or dealer discount to dealers on the
reinvestment of dividends and distributions.
In addition to the dealer discount, if any, allowed pursuant to
the foregoing provisions of this Section 1, we may, at our
expense, provide additional promotional incentives or payments to
dealers. If non-cash concessions are provided, each dealer
earning such a concession may elect to receive an amount in cash
equivalent to the cost of providing such concessions. Notice of
the availability of concessions will be given to you by us. All
dealer discounts, promotional incentives, payments and
concessions will be made by us in accordance with National
Association of Securities Dealers, Inc. ("NASD") guidelines and
rules.
<PAGE>
2. MANNER OF OFFERING,
SELLING AND PURCHASING SHARES
We have delivered to you a copy of each Fund's current Prospectus
and will provide you with such number of copies of each Fund's
Prospectus, Statement of Additional Information and shareholder
reports and of supplementary sales materials prepared by us, as
you may reasonably request. You will offer and sell the Shares
only in accordance with the terms and conditions of the current
Prospectus and Statement of Additional Information of the
applicable Fund. Neither you nor any other person is authorized
to give any information or to make any representations other than
those contained in such Prospectuses, Statements of Additional
Information and shareholder reports or in such supplementary
sales materials. You agree that you will not use any other
offering materials for the Funds without our written consent.
You hereby agree (i) to exercise your best efforts to find
purchasers for the Shares of the Funds, (ii) to furnish to each
person to whom any sale is made a copy of the then-current
Prospectus of the applicable fund, (iii) to transmit to us
promptly upon receipt any and all orders received by you, and
(iv) to pay to us the offering price, less any dealer discount to
which you are entitled, within five (5) business days of our
confirmation of your order, or such shorter time as may be
required by law. If such payment is not received within said
time period, we reserve the right, without prior notice, to
cancel the sale, or at our option to return the Shares to the
issuer for redemption or repurchase. In the latter case, we
shall have the right to hold you responsible for any loss
resulting to us. Should payment be made by check on your local
bank, liquidation of Shares may be delayed pending clearance of
your check. You agree to issue confirmations promptly for all
accepted purchase orders for accounts held in street name. You
shall make all sales subject to our confirmation. All orders are
subject to acceptance or rejection by us in our sole discretion,
and by the Funds in their sole discretion. The procedure stated
herein relating to the pricing and handling of orders shall be
subject to instructions which we may forward to you from time to
time.
3. COMPLIANCE WITH LAW
You hereby represent that you are registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended, and are
licensed and qualified as a broker-dealer or otherwise authorized
to offer and sell the Shares under the laws of each jurisdiction
in which the Shares will be offered and sold by you. You further
confirm that you are a member in good standing of the NASD and
agree to maintain such membership in good standing or, in the
alternative, you are a foreign dealer not eligible for membership
in the NASD.
You agree that in selling Shares you will comply with all
applicable laws, rules and regulations, including the applicable
provisions of the Securities Act of 1933, as amended, the
applicable rules and regulations of the NASD, and the applicable
rules and regulations of any jurisdiction in which you sell,
directly or indirectly, any Shares. You agree not to offer for
sale or sell the Shares in any jurisdiction in which the Shares
are not qualified for sale or in which you are not qualified as a
broker-dealer.
4. RELATIONSHIP WITH DEALERS
In offering and selling Shares under this Contract, you shall be
acting as principal and nothing herein shall be construed to
constitute you or any of your agents, employees or
representatives as our agent or employee, or as an agent or
employee of the Funds. As general distributor of the Funds, we
shall have full authority to take such action as we may deem
advisable in respect of all matters pertaining to the
distribution of the Shares. We shall not be under any obligation
to you, except for obligations expressly assumed by us in this
Contract.
5. TERMINATION
Either party hereto may terminate this Contract, without cause,
upon ten days' written notice to the other party. We may
terminate this Contract for cause upon the violation by you of
any of the provisions hereof, such termination to become
effective on the date such notice of termination is mailed to
you. This Contract shall terminate automatically if either Party
ceases to be a member of the NASD.
6. ASSIGNABILITY
This Contract is not assignable or transferable, except that we
may assign or transfer this Contract to any successor which
becomes general distributor of the Funds.
7. GOVERNING LAW
This Contract and the rights and obligations of the parties
hereunder shall be governed by and construed under the laws of
The Commonwealth of Massachusetts.
<PAGE>
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for
that purpose, whereupon this letter shall constitute a binding
agreement between us.
Very truly yours,
PUTNAM MUTUAL FUNDS CORP.
By: /s/William N. Shiebler
------------------------------
William N. Shiebler, President
and Chief Executive Officer
We accept and agree to the foregoing Contract as of the date set
forth below.
Dealer
----------------------------
By: ----------------------------
Authorized Signature, Title
----------------------------
----------------------------
Address
Dated ----------------------------
Please return the signed Putnam copy to Putnam Mutual Funds
Corp., P.O. Box 2701, Boston, MA 02208
NF-25.94
FINANCIAL INSTITUTION SALES CONTRACT
Between: and
PUTNAM MUTUAL FUNDS CORP.
General Distributor of
The Putnam Family of Mutual Funds
P. O. Box 2701
Boston, MA 02208
As general distributor of The Putnam Family of Mutual Funds (the
"Funds"), we agree that you will make available to your
customers, under an agency relationship with your customers,
shares of beneficial interest issued by the Funds (the "Shares"),
subject to any limitations imposed by any of the Funds and to
confirmation by us of each transaction. By your acceptance
hereof, you agree to all of the following terms and conditions:
1. OFFERING PRICES AND FEES
The public offering price at which you may make the Shares
available to your customers is the net asset value thereof, as
computed from time to time, plus any applicable sales charge
described in the then-current Prospectus of the applicable Fund.
In the case of purchases by you, as agent for your customers, of
Shares sold with a sales charge, you shall receive an agency
commission consisting of a portion of the public offering price,
determined on the same basis as the "dealer discount" described
in the then-current Prospectus of the Fund, and such other
compensation to dealers as may be described therein, which shall
be payable to you at the same time and on the same basis as the
same is paid to such dealers, consistent with applicable law,
rules and regulations. In determining the amount of any agency
commission payable to you hereunder, we reserve the right to
exclude any purchases for any accounts which we reasonably
determine are not made in accordance with the terms of the
applicable Fund Prospectus and the provisions of this Contract.
We reserve the right to revise the agency commission referred to
herein upon ten days' written notice to you. We will furnish you
upon request with the public offering prices for the Shares, and
you agree to quote such prices in connection with any Shares made
available by you as agent for your customers. Your attention is
specifically called to the fact that each purchase of Shares by
your customers is always made subject to confirmation by us at
the public offering price next computed after receipt of the
order. There is no sales charge or agency commission to you on
the reinvestment of dividends and distributions.
<PAGE>
2. MANNER OF MAKING SHARES AVAILABLE FOR PURCHASE
We will, upon request, deliver to you a copy of each Fund's then-
current Prospectus and will provide you with such number of
copies of each Fund's then-current Prospectus, Statement of
Additional Information and shareholder reports and of
supplementary sales materials prepared by us, as you may
reasonably request. It shall be your obligation to ensure that
all such information and materials are distributed to your
customers who own Shares, in accordance with securities and/or
banking law and regulations and any other applicable regulations.
Neither you nor any other person is authorized to give any
information or to make any representations other than those
contained in such Prospectuses, Statements of Additional
Information and shareholder reports or in such supplementary
sales materials. You shall not furnish or cause to be furnished
to any person, display or publish any information or materials
relating to any Fund (including, without limitation, promotional
materials and sales literature, advertisements, press releases,
announcements, statements, posters, signs or other similar
material), except such information and materials as may be
furnished to you by us or the Fund, and such other information
and materials as may be approved in writing by us.
You hereby agree:
(i) to not purchase any Shares as agent for any customer,
unless you deliver or cause to be delivered to such
customer, at or prior to the time of such purchase, a copy
of the then-current Prospectus of the applicable Fund unless
such customer has acknowledged receipt of the Prospectus of
such Fund. You hereby represent that you understand your
obligation to deliver a prospectus to customers who purchase
Shares pursuant to federal securities laws and you have
taken all necessary steps to comply with such prospectus
delivery requirements;
(ii) to transmit to us promptly upon receipt any and all
orders received by you, it being understood that no
conditional orders will be accepted;
(iii) to obtain from each customer for whom you act as agent
for the purchase of Shares any taxpayer identification
number certification and backup withholding information
required under the Internal Revenue Code of 1986, as amended
from time to time (the "Code"), and the regulations
promulgated thereunder, or other sections of the Code which
may become applicable, and to provide us or our designee
with timely written notice of any failure to obtain such
taxpayer identification number certification or information
in order to enable the implementation of any required backup
withholding in accordance with the Code and the regulations
thereunder; and
(iv) to pay to us the offering price, less any agency
commission to which you are entitled, within five (5)
business days of our confirmation of your customer's order,
or such shorter time as may be required by law. You may,
subject to our approval, remit the total public offering
price to us, and we will return to you your agency
commission. If such payment is not received within said
time period, we reserve the right, without prior notice, to
cancel the sale, or at our option to return the Shares to
the issuer for redemption or repurchase. In the latter
case, we shall have the right to hold you responsible for
any loss resulting to us. Should payment be made by local
bank check, liquidation of Shares may be delayed pending
clearance of your check.
Unless otherwise mutually agreed in writing or except as provided
below, each transaction placed by you shall be promptly confirmed
by us in writing to you, and shall be confirmed to the customer
promptly upon receipt by us of instructions from you as to such
customer. In the case of a purchase order by customer's
application, each transaction shall be promptly confirmed in
writing directly to the customer and a copy of each confirmation
shall be sent simultaneously to you. We reserve the right, at
our discretion and without notice, to suspend the sale of Shares
or withdraw entirely the sale of Shares of any or all of the
Funds. All orders are subject to acceptance or rejection by us
in our sole discretion, and by the Funds in their sole
discretion. The procedure stated herein relating to the pricing
and handling of orders shall be subject to instructions which we
may forward to you from time to time.
3. COMPLIANCE WITH LAW
You hereby represent that you are either (1) a "bank" as defined
in Section 3(a)(6) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and at the time of each transaction
in shares of the Funds, are not required to register as a broker-
dealer under the Exchange Act or regulations thereunder; or (2)
registered as a broker-dealer under the Exchange Act, a member in
good standing of the National Association of Securities Dealers,
Inc. ("NASD") and affiliated with a bank.
(a) If you are a bank, not required to register as a broker-
dealer under the Exchange Act: You further represent and warrant
to us that with respect to any sales in the United States, you
will use your best efforts to ensure that any purchase of Shares
by your customers constitutes a suitable investment for such
customers. You shall not effect any transaction in, or induce
any purchase or sale of, any Shares by means of any manipulative,
deceptive or other fraudulent device or contrivance, and shall
otherwise deal equitably and fairly with your customers with
respect to transactions in Shares of a Fund.
(b) If you are a NASD member broker-dealer affiliated with a
bank and registered under the Exchange Act: You further
represent and warrant to us that with respect to any sales in the
United States, you agree to abide by all of the applicable laws,
rules and regulations including applicable provisions of the
Securities Act of 1933, as amended, and the applicable rules and
regulations of the NASD, including, without limitation, its Rules
of Fair Practice, and the applicable rules and regulations of any
jurisdiction in which you make Shares available for sale to your
customers. You agree not to make available for sale to your
customers the Shares in any jurisdiction in which the Shares are
not qualified for sale or in which you are not qualified as a
broker-dealer. We shall have no obligation or responsibility as
to your right to make Shares of any Funds available to your
customers in any jurisdiction. You agree to notify us
immediately in the event of (i) your expulsion or suspension from
the NASD or your becoming subject to any enforcement action by
the Securities and Exchange Commission, NASD, or any other self-
regulatory organization, or (ii) your violation of any applicable
federal or state law, rule or regulation including, but not
limited to, those of the SEC, NASD or other self-regulatory
organization, arising out of or in connection with this
Agreement, or which may otherwise affect in any material way your
ability to act in accordance with the terms of this Contract.
You shall not make Shares of any Fund available to your
customers, including your fiduciary customers, except in
compliance with all federal and state laws and rules and
regulations of regulatory agencies or authorities applicable to
you, or any of your affiliates engaging in such activity, which
may affect your business practices. You confirm that you are not
in violation of any banking law or regulations as to which you
are subject.
4. RELATIONSHIP WITH CUSTOMER
With respect to any and all transactions in the Shares of any
Fund pursuant to this Contract, it is understood and agreed in
each case that: (a) you shall be acting solely as agent for the
account of your customer; (b) each transaction shall be initiated
solely upon the order of your customer; (c) we shall execute
transactions only upon receiving instructions from you acting as
agent for your customer or upon receiving instructions directly
from your customer; (d) as between you and your customer, your
customer will have full beneficial ownership of all Shares; (e)
each transaction shall be for the account of your customer and
not for your account; and (f) unless otherwise agreed in writing
we will serve as a clearing broker for you on a fully disclosed
basis, and you shall serve as the introducing agent for your
customers' accounts. Subject to the foregoing, however, and
except for Shares sold subject to a contingent deferred sales
charge, you may maintain record ownership of such customers'
Shares in an account registered in your name or the name of your
nominee, for the benefit of such customers. With respect to
Shares sold subject to a contingent deferred sales charge, you
agree not to hold shares of such Funds in an account registered
in your name or in the name of your nominee for the benefit of
certain of your customers. You understand that such Shares must
be held in a separate account for each shareholder of such Funds.
Each transaction shall be without recourse to you provided that
you act in accordance with the terms of this Agreement. You
represent and warrant to us that you will have full right, power
and authority to effect transactions (including, without
limitation, any purchases and redemptions) in Shares on behalf of
all customer accounts provided by you.
5. RELATIONSHIP WITH FINANCIAL INSTITUTION
Neither this Contract nor the performance of the services of the
respective parties hereunder shall be considered to constitute an
exclusive arrangement, or to create a partnership, association or
joint venture between you and us. In making available Shares of
the Funds under this Contract, nothing herein shall be construed
to constitute you or any of your agents, employees or
representatives as our agent or employee, or as an agent or
employee of the Funds, and you shall not make any representations
to the contrary. As general distributor of the Funds, we shall
have full authority to take such action as we may deem advisable
in respect of all matters pertaining to the distribution of the
Shares. We shall not be under any obligation to you, except for
obligations expressly assumed by us in this Contract.
6. TERMINATION
Either party hereto may terminate this Contract, without cause,
upon ten days' written notice to the other party. We may
terminate this Contract for cause upon the violation by you of
any of the provisions hereof, such termination to become
effective on the date such notice of termination is mailed to
you. If you are registered as a broker-dealer and affiliated
with a bank, this Contract shall terminate automatically if
either Party ceases to be a member of the NASD.
7. ASSIGNABILITY
This Contract is not assignable or transferable, except that we
may assign or transfer this Contract to any successor which
becomes general distributor of the Funds.
<PAGE>
8. MISCELLANEOUS
(a) All communications mailed to us should be sent to the above
address. Any notice to you shall be duly given if mailed or
delivered to you at the address specified by you below.
(b) This Contract constitutes the entire agreement and
understanding between the parties and supercedes any and all
prior agreements between the parties.
(c) This Contract and the rights and obligations of the parties
hereunder shall be governed by and construed under the laws of
The Commonwealth of Massachusetts.
Very truly yours,
PUTNAM MUTUAL FUNDS CORP.
By: ------------------------------
William N. Shiebler, President
and Chief Executive Officer
We accept and agree to the foregoing Contract as of the date
set forth below.
Financial Institution: ---------------------------
By: ----------------------------
Authorized Signature, Title
----------------------------
----------------------------
Address
Dated: ----------------------------
Please return the signed Putnam copy of this sales Contract to
Putnam Mutual Funds Corp., P. O. Box 2701, Boston, MA 02208.
NF-59.94
ROPES & GRAY
One International Place
Boston, Massachusetts 02110-2624
(617) 951-7000
January 19, 1995
Putnam California Tax Exempt Money Market Fund (the "Fund")
One Post Office Square
Boston, Massachusetts 02109
Gentlemen:
You have informed us that you propose to offer and sell from
time to time 1,689,656 of your shares of beneficial interest (the
"Shares"), for cash or securities at the net asset value per
share, determined in accordance with your Bylaws, which Shares
are in addition to your shares of beneficial interest which you
have previously offered and sold or which you are currently
offering.
We have examined copies of (i) your Agreement and
Declaration of Trust as on file at the office of the Secretary of
State of The Commonwealth of Massachusetts, which provides for an
unlimited number of authorized shares of beneficial interest, and
(ii) your Bylaws, which provide for the issue and sale by the
Fund of such Shares.
We assume that appropriate action will be taken to register
or qualify the sale of the Shares under any applicable state and
federal laws regulating offerings and sales of securities.
Based upon the foregoing, we are of the opinion that:
1. The Fund is a legally organized and validly existing
voluntary association with transferable shares of beneficial
interest under the laws of The Commonwealth of Massachusetts and
is authorized to issue an unlimited number of shares of
beneficial interest.
2. Upon the issue of any of the Shares referred to in the
first paragraph hereof for cash or securities at net asset value,
and the receipt of the appropriate consideration therefor as
provided in your Bylaws, such Shares so issued will be validly
issued, fully paid and nonassessable by the Fund.
<PAGE>
ROPES & GRAY
Putnam California Tax Exempt -2- January 19, 1995
Money Market Fund
The Fund is an entity of the type commonly known as a
"Massachusetts business trust". Under Massachusetts law,
shareholders could, under certain circumstances, be held
personally liable for the obligations of the Fund. However, the
Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Fund and requires that
notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by the Fund or its
Trustees. The Agreement and Declaration of Trust provides for
indemnification out of the property of the Fund for all loss and
expense of any shareholder of the Fund held personally liable for
the obligations of the Fund solely by reason of his being or
having been a shareholder. Thus, the risk of a shareholder's
incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund itself would be unable
to meet its obligations.
We understand that this opinion is to be used in connection
with the registration of the Shares for offering and sale
pursuant to the Securities Act of 1933, as amended, and the
provisions of Rule 24e-2 under the Investment Company Act of
1940, as amended. We consent to the filing of this opinion with
and as a part of Post-Effective Amendment No. 10 to your
Registration Statement No. 33-17211.
Very truly yours,
/S/ Ropes & Gray
Ropes & Gray
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST --
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
CLASS A DISTRIBUTION PLAN AND AGREEMENT
(As adopted July 9, 1992, and as amended on April 8, 1994)
This Plan and Agreement (the "Plan") constitutes the
Distribution Plan for the Class A shares of Putnam California Tax
Exempt Income Fund (the "Fund"), a series of Putnam California
Tax Exempt Income Trust, a Massachusetts business trust (the
"Trust"), adopted pursuant to the provisions of Rule 12b-1 under
the Investment Company Act of 1940 (the "Act") and the related
agreement between the Fund and Putnam Mutual Funds Corp. ("PMF"),
the principal underwriter of the Fund's shares. During the
effective term of this Plan, the Fund may make payments to PMF
upon the terms and conditions hereinafter set forth:
SECTION 1. The Fund may make payments to PMF, in the form
of fees or reimbursements, to compensate PMF for services
provided and expenses incurred by it for purposes of promoting
the sale of Class A shares of the Fund, reducing redemptions of
Class A shares, or maintaining or improving services provided to
Class A shareholders by PMF and investment dealers. The amount
of such payments and the purposes for which they are made shall
be determined by the Qualified Trustees (as defined below).
Payments under this Plan shall not exceed in any fiscal year the
annual rate of 0.35% of the average net asset value of the Class
A shares of the Fund, as determined at the close of each business
day during the year. A majority of the Qualified Trustees may,
at any time and from time to time, reduce the amount of such
payments, or may suspend the operation of the Plan for such
period or periods of time as they may determine.
SECTION 2. This Plan shall not take effect until:
(a) it has been approved by a vote of a majority of
the outstanding Class A shares of the Fund; and
(b) it has been approved, together with any related
agreements, by votes of the majority (or whatever greater
percentage may, from time to time, be required by Section
12(b) of the Act or the rules and regulations thereunder) of
both (i) the Trustees of the Trust, and (ii) the Qualified
Trustees of the Trust, cast in person at a meeting called
for the purpose of voting on this Plan or such agreement.
SECTION 3. This Plan shall continue in effect for a period
of more than one year after it takes effect only so long as such
continuance is specifically approved at least annually in the
manner provided for approval of this Plan in Section 2(b).
<PAGE>
SECTION 4. PMF shall provide to the Trustees of the Trust,
and the Trustees shall review, at least quarterly, a written
report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 5. This Plan may be terminated at any time by vote
of a majority of the Qualified Trustees, or by vote of a majority
of the outstanding Class A shares of the Fund.
SECTION 6. All agreements with any person relating to
implementation of this Plan shall be in writing, and any
agreement related to this Plan shall provide:
(a) that such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the
Qualified Trustees or by vote of a majority of the
outstanding Class A shares of the Fund, on not more than 60
days' written notice to any other party to the agreement;
and
(b) that such agreement shall terminate automatically
in the event of its assignment.
SECTION 7. This Plan may not be amended to increase
materially the amount of distribution expenses permitted pursuant
to Section 1 hereof without the approval of a majority of the
outstanding Class A shares of the Fund, and all material
amendments to this Plan shall be approved in the manner provided
for approval of this Plan in Section 2(b).
SECTION 8. As used in this Plan, (a) the term "Qualified
Trustees" shall mean those Trustees of the Trust who are not
interested persons of the Trust, and have no direct or indirect
financial interest in the operation of this Plan or any
agreements related to it, (b) the term "majority of the
outstanding Class A shares of the Fund" means the affirmative
vote, at a duly called and held meeting of Class A shareholders
of the Fund, (i) of the holders of 67% or more of the Class A
shares of the Fund present (in person or by proxy) and entitled
to vote at such meeting, if the holders of more than 50% of the
outstanding Class A shares of the Fund entitled to vote at such
meeting are present in person or by proxy, or (ii) of the holders
of more than 50% of the outstanding Class A shares of the Fund
entitled to vote at such meeting, whichever is less, and (c) the
terms "assignment" and "interested person" shall have the
respective meanings specified in the Act and the rules and
regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission.
<PAGE>
SECTION 9. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and notice is hereby given that
this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually, and that the obligations
of or arising out of this instrument are not binding upon any of
the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the Trust.
Executed as of April 8, 1994.
PUTNAM MUTUAL FUNDS CORP. PUTNAM CALIFORNIA TAX EXEMPT
INCOME TRUST
/s/William N. Shiebler /s/Patricia C. Flaherty
By: ---------------------- By: ------------------------
William N. Shiebler Patricia C. Flaherty
President Senior Vice President
distpl.a
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST --
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
CLASS B
DISTRIBUTION PLAN AND AGREEMENT
(As adopted January 1, 1993, and as amended on April 8, 1994)
This Plan and Agreement (the "Plan") constitutes the
Distribution Plan for the Class B shares of Putnam California Tax
Exempt Income Fund (the "Fund"), a series of Putnam California
Tax Exempt Income Trust, a Massachusetts business trust (the
"Trust"), adopted pursuant to the provisions of Rule 12b-1 under
the Investment Company Act of 1940 (the "Act") and the related
agreement between the Trust and Putnam Mutual Funds Corp.
("PMF"). During the effective term of this Plan, the Trust may
incur expenses primarily intended to result in the sale of its
Class B shares of the Fund upon the terms and conditions
hereinafter set forth:
SECTION 1. The Fund shall pay to PMF a monthly fee at the
annual rate of 1.00% of the average net asset value of the Class
B shares of the Fund, as determined at the close of each business
day during the month, to compensate PMF for services provided and
expenses incurred by it in connection with the offering of the
Fund's Class B shares, which may include, without limitation, the
payment by PMF to investment dealers of commissions on the sale
of Class B shares, as set forth in the then current Prospectus or
Statement of Additional Information of the Trust and the payment
of a service fee of up to 0.25% of such net asset value for the
purposes of maintaining or improving services provided to
shareholders by PMF and investment dealers. Such fees shall be
payable for each month within 15 days after the close of such
month. A majority of the Qualified Trustees, as defined below,
may, from time to time, reduce the amount of such payments, or
may suspend the operation of the Plan for such period or periods
of time as they may determine.
SECTION 2. This Plan shall not take effect until:
(a) it has been approved by a vote of a majority of
the outstanding Class B shares of the Fund;
(b) it has been approved, together with any related
agreements, by votes of the majority (or whatever
greater percentage may, from time to time, be
required by Section 12(b) of the Act or the rules
and regulations thereunder) of both (i) the
Trustees of the Trust, and (ii) the Qualified
Trustees of the Trust, cast in person at a meeting
called for the purpose of voting on this Plan or
such agreement; and
(c) the Fund has received the proceeds of the initial
public offering of its Class B shares.
SECTION 3. This Plan shall continue in effect for a period
of more than one year after it takes effect only so long as such
continuance is specifically approved at least annually in the
manner provided for approval of this Plan in Section 2(b).
SECTION 4. PMF shall provide to the Trustees of the Trust,
and the Trustees shall review, at least quarterly, a written
report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 5. This Plan may be terminated at any time by vote
of a majority of the Qualified Trustees or by vote of the
majority of the outstanding Class B shares of the Fund.
SECTION 6. All agreements with any person relating to
implementation of this Plan shall be in writing, and any
agreement related to this Plan shall provide:
(a) that such agreement may be terminated at any time,
without payment of any penalty, by vote of a
majority of the Qualified Trustees or by vote of a
majority of the outstanding Class B shares of the
Fund, on not more than 60 days' written notice to
any other party to the agreement; and
(b) that such agreement shall terminate automatically
in the event of its assignment.
SECTION 7. This Plan may not be amended to increase
materially the amount of distribution expenses permitted pursuant
to Section 1 hereof without the approval of a majority of the
outstanding Class B shares of the Fund and all material
amendments to this Plan shall be approved in the manner provided
for approval of this Plan in Section 2(b).
SECTION 8. As used in this Plan, (a) the term "Qualified
Trustees" shall mean those Trustees of the Trust who are not
interested persons of the Trust, and have no direct or indirect
financial interest in the operation of this Plan or any
agreements related to it, and (b) the term "majority of the
outstanding Class B shares of the Fund" means the affirmative
vote, at a duly called and held meeting of Class B shareholders
of the Fund, (i) of the holders of 67% or more of the Class B
shares of the Fund present (in person or by proxy) and entitled
to vote at such meeting, if the holders of more than 50% of the
outstanding Class B shares of the Fund entitled to vote at such
meeting are present in person or by proxy, or (ii) of the holders
of more than 50% of the outstanding Class B shares of the Fund
entitled to vote at such meeting, whichever is less, and (c) the
terms "assignment" and "interested person" shall have the
respective meanings specified in the Act and the rules and
regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission.
SECTION 9. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and notice is hereby given that
this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually, and that the obligations
of or arising out of this instrument are not binding upon any of
the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the Trust.
Executed as of April 8, 1994.
PUTNAM MUTUAL FUNDS CORP. PUTNAM CALIFORNIA TAX EXEMPT
INCOME TRUST
/s/William N. Shiebler /s/Patricia C. Flaherty
By: -------------------------- By: ------------------------
William N. Shiebler Patricia C. Flaherty
President Senior Vice President
FORM OF
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
CLASS M
DISTRIBUTION PLAN AND AGREEMENT
This Plan and Agreement (the "Plan") constitutes the
Distribution Plan for the Class M shares of Putnam California Tax
Exempt Income Fund, a Massachusetts business trust (the "Trust"),
adopted pursuant to the provisions of Rule 12b-1 under the
Investment Company Act of 1940 (the "Act") and the related
agreement between the Trust and Putnam Mutual Funds Corp.
("PMF"). During the effective term of this Plan, the Trust may
incur expenses primarily intended to result in the sale of its
Class M shares upon the terms and conditions hereinafter set
forth:
SECTION 1. The Trust shall pay to PMF a monthly fee at the
annual rate of 1.00% of the average net asset value of the Class
M shares of the Trust, as determined at the close of each
business day during the month, to compensate PMF for services
provided and expenses incurred by it in connection with the
offering of the Trust's Class M shares, which may include,
without limitation, payments by PMF to investment dealers with
respect to Class M shares, as set forth in the then current
Prospectus or Statement of Additional Information of the Trust,
including the payment of a service fee of up to 0.25% of such net
asset value for the purpose of maintaining or improving services
provided to shareholders by PMF and investment dealers. Such
fees shall be payable for each month within 15 days after the
close of such month. A majority of the Qualified Trustees, as
defined below, may, from time to time, reduce the amount of such
payments, or may suspend the operation of the Plan for such
period or periods of time as they may determine.
SECTION 2. This Plan shall not take effect until:
(a) it has been approved by a vote of a majority of the
outstanding Class M shares of the Trust;
(b) it has been approved, together with any related
agreements, by votes of the majority (or whatever greater
percentage may, from time to time, be required by Section
12(b) of the Act or the rules and regulations thereunder)
of both (i) the Trustees of the Trust, and (ii) the
Qualified Trustees of the Trust, cast in person at a
meeting called for the purpose of voting on this Plan or
such agreement; and
(c) the Trust has received the proceeds of the initial
public offering of its Class M shares.
<PAGE>
SECTION 3. This Plan shall continue in effect for a period
of more than one year after it takes effect only so long as such
continuance is specifically approved at least annually in the
manner provided for approval of this Plan in Section 2(b).
SECTION 4. PMF shall provide to the Trustees of the Trust,
and the Trustees shall review, at least quarterly, a written
report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 5. This Plan may be terminated at any time by vote
of a majority of the Qualified Trustees or by vote of the
majority of the outstanding Class M shares of the Trust.
SECTION 6. All agreements with any person relating to
implementation of this Plan shall be in writing, and any
agreement related to this Plan shall provide:
(a) that such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority
of the Qualified Trustees or by vote of a majority of
the outstanding Class M shares of the Trust, on not
more than 60 days' written notice to any other party
to the agreement; and
(b) that such agreement shall terminate automatically in
the event of its assignment.
SECTION 7. This Plan may not be amended to increase
materially the amount of distribution expenses permitted pursuant
to Section 1 hereof without the approval of a majority of the
outstanding Class M shares of the Trust and all material
amendments to this Plan shall be approved in the manner provided
for approval of this Plan in Section 2(b).
SECTION 8. As used in this Plan, (a) the term "Qualified
Trustees" shall mean those Trustees of the Trust who are not
interested persons of the Trust, and have no direct or indirect
financial interest in the operation of this Plan or any
agreements related to it, and (b) the term "majority of the
outstanding Class M shares of the Trust" means the affirmative
vote, at a duly called and held meeting of Class M shareholders
of the Trust, (i) of the holders of 67% or more of the Class M
shares of the Trust present (in person or by proxy) and entitled
to vote at such meeting, if the holders of more than 50% of the
outstanding Class M shares of the Trust entitled to vote at such
meeting are present in person or by proxy, or (ii) of the holders
of more than 50% of the outstanding Class M shares of the Trust
entitled to vote at such meeting, whichever is less, and (c) the
terms "assignment" and "interested person" shall have the
respective meanings specified in the Act and the rules and
regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission.
SECTION 9. A copy of the Agreement and Declaration of
Trust of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and notice is hereby given that
this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually, and that the obligations
of or arising out of this instrument are not binding upon any of
the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the Trust.
Executed as of October 7, 1994.
PUTNAM MUTUAL FUNDS CORP. PUTNAM CALIFORNIA TAX EXEMPT
INCOME FUND
By: By:
William N. Shiebler Charles Porter
President Executive Vice President
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST --
PUTNAM CALIFORNIA INTERMEDIATE TAX EXEMPT FUND
CLASS A DISTRIBUTION PLAN AND AGREEMENT
(As adopted May 6, 1994)
This Plan and Agreement (the "Plan") constitutes the
Distribution Plan for the Class A shares of Putnam California
Intermediate Tax Exempt Fund (the "Fund"), a series of Putnam
California Tax Exempt Income Trust, a Massachusetts business
trust (the "Trust"), adopted pursuant to the provisions of Rule
12b-1 under the Investment Company Act of 1940 (the "Act") and
the related agreement between the Trust and Putnam Mutual Funds
Corp. ("PMF"), the principal underwriter of the Fund's shares.
During the effective term of this Plan, the Fund may make
payments to PMF upon the terms and conditions hereinafter set
forth:
SECTION 1. The Fund may make payments to PMF, in the form
of fees or reimbursements, to compensate PMF for services
provided and expenses incurred by it for purposes of promoting
the sale of Class A shares of the Fund, reducing redemptions of
Class A shares, or maintaining or improving services provided to
Class A shareholders by PMF and investment dealers. The amount
of such payments and the purposes for which they are made shall
be determined by the Qualified Trustees (as defined below).
Payments under this Plan shall not exceed in any fiscal year the
annual rate of 0.35% of the average net asset value of the Class
A shares of the Fund, as determined at the close of each business
day during the year. A majority of the Qualified Trustees may,
at any time and from time to time, reduce the amount of such
payments, or may suspend the operation of the Plan for such
period or periods of time as they may determine.
SECTION 2. This Plan shall not take effect until:
(a) it has been approved by a vote of a majority of
the outstanding Class A shares of the Fund; and
(b) it has been approved, together with any related
agreements, by votes of the majority (or whatever greater
percentage may, from time to time, be required by Section
12(b) of the Act or the rules and regulations thereunder) of
both (i) the Trustees of the Trust, and (ii) the Qualified
Trustees of the Trust, cast in person at a meeting called
for the purpose of voting on this Plan or such agreement.
SECTION 3. This Plan shall continue in effect for a period
of more than one year after it takes effect only so long as such
continuance is specifically approved at least annually in the
manner provided for approval of this Plan in Section 2(b).
SECTION 4. PMF shall provide to the Trustees of the Trust,
and the Trustees shall review, at least quarterly, a written
report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 5. This Plan may be terminated at any time by vote
of a majority of the Qualified Trustees, or by vote of a majority
of the outstanding Class A shares of the Fund.
SECTION 6. All agreements with any person relating to
implementation of this Plan shall be in writing, and any
agreement related to this Plan shall provide:
(a) that such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the
Qualified Trustees or by vote of a majority of the
outstanding Class A shares of the Fund, on not more than 60
days' written notice to any other party to the agreement;
and
(b) that such agreement shall terminate automatically
in the event of its assignment.
SECTION 7. This Plan may not be amended to increase
materially the amount of distribution expenses permitted pursuant
to Section 1 hereof without the approval of a majority of the
outstanding Class A shares of the Fund, and all material
amendments to this Plan shall be approved in the manner provided
for approval of this Plan in Section 2(b).
SECTION 8. As used in this Plan, (a) the term "Qualified
Trustees" shall mean those Trustees of the Trust who are not
interested persons of the Trust, and have no direct or indirect
financial interest in the operation of this Plan or any
agreements related to it, (b) the term "majority of the
outstanding Class A shares of the Fund" means the affirmative
vote, at a duly called and held meeting of Class A shareholders
of the Fund, (i) of the holders of 67% or more of the Class A
shares of the Fund present (in person or by proxy) and entitled
to vote at such meeting, if the holders of more than 50% of the
outstanding Class A shares of the Fund entitled to vote at such
meeting are present in person or by proxy, or (ii) of the holders
of more than 50% of the outstanding Class A shares of the Fund
entitled to vote at such meeting, whichever is less, and (c) the
terms "assignment" and "interested person" shall have the
respective meanings specified in the Act and the rules and
regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission.
<PAGE>
SECTION 9. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and notice is hereby given that
this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually, and that the obligations
of or arising out of this instrument are not binding upon any of
the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the Fund.
Executed as of May 6, 1994.
PUTNAM MUTUAL FUNDS CORP. PUTNAM CALIFORNIA TAX EXEMPT
INCOME TRUST
/s/ William N. Shiebler /s/Charles E. Porter
By: ---------------------- By: ------------------------
William N. Shiebler Charles E. Porter
President Executive Vice President
S:\shared\boiler\pre-eff\cit-23a
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST --
PUTNAM CALIFORNIA INTERMEDIATE TAX EXEMPT FUND
CLASS B
DISTRIBUTION PLAN AND AGREEMENT
(As adopted May 6, 1994)
This Plan and Agreement (the "Plan") constitutes the
Distribution Plan for the Class B shares of Putnam California
Intermediate Tax Exempt Fund (the "Fund"), a series of Putnam
California Tax Exempt Income Trust, a Massachusetts business
trust (the "Trust"), adopted pursuant to the provisions of Rule
12b-1 under the Investment Company Act of 1940 (the "Act") and
the related agreement between the Trust and Putnam Mutual Funds
Corp. ("PMF"). During the effective term of this Plan, the Fund
may incur expenses primarily intended to result in the sale of
its Class B shares upon the terms and conditions hereinafter set
forth:
SECTION 1. The Fund shall pay to PMF a monthly fee at the
annual rate of up to 1.00% of the average net asset value of the
Class B shares of the Fund, as determined at the close of each
business day during the month, to compensate PMF for services
provided and expenses incurred by it in connection with the
offering of the Fund's Class B shares, which may include, without
limitation, the payment by PMF to investment dealers of
commissions on the sale of Class B shares, as set forth in the
then current Prospectus or Statement of Additional Information of
the Fund and the payment of a service fee of up to 0.25% of such
net asset value for the purposes of maintaining or improving
services provided to shareholders by PMF and investment dealers.
Such fees shall be payable for each month within 15 days after
the close of such month. A majority of the Qualified Trustees,
as defined below, may, from time to time, reduce the amount of
such payments, or may suspend the operation of the Plan for such
period or periods of time as they may determine.
SECTION 2. This Plan shall not take effect until:
(a) it has been approved by a vote of a majority of
the outstanding Class B shares of the Fund;
(b) it has been approved, together with any related
agreements, by votes of the majority (or whatever
greater percentage may, from time to time, be
required by Section 12(b) of the Act or the rules
and regulations thereunder) of both (i) the
Trustees of the Trust, and (ii) the Qualified
Trustees of the Trust, cast in person at a meeting
called for the purpose of voting on this Plan or
such agreement; and
(c) the Fund has received the proceeds of the initial
public offering of its Class B shares.
SECTION 3. This Plan shall continue in effect for a period
of more than one year after it takes effect only so long as such
continuance is specifically approved at least annually in the
manner provided for approval of this Plan in Section 2(b).
SECTION 4. PMF shall provide to the Trustees of the Trust,
and the Trustees shall review, at least quarterly, a written
report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 5. This Plan may be terminated at any time by vote
of a majority of the Qualified Trustees or by vote of the
majority of the outstanding Class B shares of the Fund.
SECTION 6. All agreements with any person relating to
implementation of this Plan shall be in writing, and any
agreement related to this Plan shall provide:
(a) that such agreement may be terminated at any time,
without payment of any penalty, by vote of a
majority of the Qualified Trustees or by vote of a
majority of the outstanding Class B shares of the
Fund, on not more than 60 days' written notice to
any other party to the agreement; and
(b) that such agreement shall terminate automatically
in the event of its assignment.
SECTION 7. This Plan may not be amended to increase
materially the amount of distribution expenses permitted pursuant
to Section 1 hereof without the approval of a majority of the
outstanding Class B shares of the Fund and all material
amendments to this Plan shall be approved in the manner provided
for approval of this Plan in Section 2(b).
SECTION 8. As used in this Plan, (a) the term "Qualified
Trustees" shall mean those Trustees of the Trust who are not
interested persons of the Trust, and have no direct or indirect
financial interest in the operation of this Plan or any
agreements related to it, and (b) the term "majority of the
outstanding Class B shares of the Fund" means the affirmative
vote, at a duly called and held meeting of Class B shareholders
of the Fund, (i) of the holders of 67% or more of the Class B
shares of the Fund present (in person or by proxy) and entitled
to vote at such meeting, if the holders of more than 50% of the
outstanding Class B shares of the Fund entitled to vote at such
meeting are present in person or by proxy, or (ii) of the holders
of more than 50% of the outstanding Class B shares of the Fund
entitled to vote at such meeting, whichever is less, and (c) the
terms "assignment" and "interested person" shall have the
respective meanings specified in the Act and the rules and
regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission.
SECTION 9. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and notice is hereby given that
this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually, and that the obligations
of or arising out of this instrument are not binding upon any of
the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the Fund.
Executed as of May 6, 1994.
PUTNAM MUTUAL FUNDS CORP. PUTNAM CALIFORNIA TAX EXEMPT
INCOME TRUST
/s/William N. Shiebler /s/Charles E. Porter
By: -------------------------- By: ------------------------
William N. Shiebler Charles E. Porter
President Executive Vice President
DEALER SERVICE AGREEMENT
Between: and
PUTNAM MUTUAL FUNDS CORP.
General Distributor of
The Putnam Family of Mutual Funds
P.O. Box 2701
Boston, MA 02208
We are pleased to inform you that, pursuant to the terms of this
Dealer Service Agreement, we are authorized to pay you service
fees in connection with the accounts of your customers that hold
shares of certain Putnam funds listed in SCHEDULE 1 that have
adopted distribution plans pursuant to Rule 12b-1 (the "12b-1
Funds"). Payment of the service fees is subject to your initial
and continuing satisfaction of the following terms and conditions
which may be revised by us from time to time:
1. QUALIFICATION REQUIREMENTS
(a) You have entered into a Sales Contract with us with respect
to the Putnam Family of Mutual Funds (the "Putnam Funds").
(b) You are the dealer of record for accounts in Putnam Funds
having an aggregate average net asset value of at least the
minimum amount set forth in SCHEDULE 2 (DEALER FIRM REQUIREMENTS)
during the period for which a service fee is to be paid. Putnam
Fund accounts are accounts in any open-end Putnam Fund, but
excluding any accounts for your firm's own retirement plans.
(c) One or more of your current employees must be the designated
registered representative(s) on accounts in Putnam Funds having
an aggregate average net asset value of at least the minimum
amount set forth in SCHEDULE 2 (REGISTERED REPRESENTATIVE
REQUIREMENTS) during the period for which a service fee is to be
paid.
(d) You will provide the following information and agree that we
will be entitled to rely on the accuracy of such information in
updating our records for determining the levels of service fees
payable to you under the terms of this Agreement. You understand
that such payments will be based solely on Putnam's records.
(i) For each Putnam Fund account registered in the
name of one of your customers, you will advise us,
preferably by electronic means, before the end of the
second month in each calendar quarter, of the Putnam
Fund account number and the registered representative's
identification, social security and branch number.
(ii) For each Putnam Fund account registered in your
name (street name accounts), you will use your best
efforts to advise us, preferably by electronic means,
before the end of the second month in each calendar
quarter, of the Putnam Fund account number, net asset
value of the account, date of valuation, and, for each
registered representative assigned to assets in the
account: the representative's identification number,
social security number, branch number, and the net
asset value of assigned assets in the account.
2. SERVICE FEES
(a) If you meet the qualification requirements set forth above
in Paragraph 1, you will be paid a service fee on assets in the
12b-1 Funds for which you are the dealer of record and which are
serviced by a registered representative of your firm meeting the
Registered Representative Requirements, if any, at the annual
rates specified in SCHEDULE 3 (excluding any accounts for your
firm's own retirement plans).
(b) You understand and agree that:
(i) all service fee payments are subject to the
limitations contained in each 12b-1 Fund's Distribution
Plan, which may be varied or discontinued at any time;
(ii) your failure to provide the services described in
Paragraph 4 below as may be amended by us from time to
time, or otherwise comply with the terms of this
Agreement, will render you ineligible to receive
service fees; and
(iii) failure of an assigned registered representative
to provide services required by this Agreement will
render that representative's accounts ineligible as
accounts on which service fees are paid.
3. PAYMENTS AND COMMUNICATIONS TO REGISTERED REPRESENTATIVES
(a) You will pass through to your registered representatives a
significant share of the service fees paid to you pursuant to
this Agreement.
(b) You will assist us in distributing to your registered
representatives periodic statements which we will have prepared
showing the aggregate average net asset value of shares in Putnam
Funds with which they are credited on our records.
<PAGE>
4. REQUIRED SERVICES
(a) You will assign one of your registered representatives to
each Putnam Fund account on your records and reassign the Putnam
Fund account should that representative leave your firm.
(b) You and your registered representatives will assist us and
our affiliates in providing the following services to
shareholders of the Putnam Funds:
(i) Maintain regular contact with shareholders in
assigned accounts and assist in answering inquiries
concerning the Putnam Funds.
(ii) Assist in distributing sales and service
literature provided by us, particularly to the
beneficial owners of accounts registered in your name
(street name accounts).
(iii) Assist us and our affiliates in the establishment
and maintenance of shareholder accounts and records.
(iv) Assist shareholders in effecting administrative
changes, such as changing dividend options, account
designations, address, automatic investment programs or
systematic investment plans.
(v) Assist in processing purchase and redemption
transactions.
(vi) Provide any other information or services as the
customer or we may reasonably request.
(c) You will support our marketing efforts by granting
reasonable requests for visits to your offices by our wholesalers
and by including all Putnam Funds on your "approved" list.
(d) Your compliance with the service requirements set forth in
this Agreement will be evaluated by us from time to time by
surveying shareholder satisfaction with service, by monitoring
redemption levels of shareholder accounts assigned to you and by
such other methods as we deem appropriate.
(e) The provisions of this Paragraph 4 may be amended by us from
time to time upon notice to you.
5. AMENDMENT
This Agreement, including any Schedule hereto, shall be deemed
amended as provided in any written notice delivered by us to you.
6. EFFECTIVE PERIOD AND TERMINATION
The provisions of this Agreement shall remain in effect for not
more than one year from the date of its execution or adoption and
thereafter for successive annual periods only so long as such
continuance is specifically approved at least annually by the
Trustees of each of the 12b-1 Funds in conformity with Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act"). This
Agreement shall automatically terminate in the event of its
assignment (as defined by the 1940 Act). In addition, this
Agreement may be terminated at any time, without the payment of
any penalty, by either party upon written notice delivered or
mailed by registered mail, postage prepaid, to the other party,
or, as provided in Rule 12b-1 under the 1940 Act, by the Trustees
of any 12b-1 Fund or by the vote of the holders of the
outstanding voting securities of any 12b-1 Fund.
7. WRITTEN REPORTS
Putnam Mutual Funds Corp. shall provide the Trustees of each of
the 12b-1 Funds, and such Trustees shall review at least
quarterly, a written report of the amounts paid to you under this
Agreement and the purposes for which such expenditures were made.
8. MISCELLANEOUS
(a) All communications mailed to us should be sent to the above
address. Any notice to you shall be duly given if mailed or
delivered to you at the address specified by you below.
(b) The provisions of this Agreement shall be governed by and
construed in accordance with the laws of The Commonwealth of
Massachusetts.
Very truly yours,
PUTNAM MUTUAL FUNDS CORP.
By: ------------------------------
William N. Shiebler, President
and Chief Executive Officer
<PAGE>
We accept and agree to the foregoing Agreement as of the date set
forth below.
Dealer: -------------------------
By: ----------------------------
Authorized Signature, Title
------------------------------
------------------------------
Address
Dated: -------------------------
Please return the signed Putnam copy of this Agreement to Putnam
Mutual Funds Corp., P.O. Box 2701, Boston, MA 02208.
<PAGE>
SCHEDULE 1: THE 12B-1 FUNDS
CATEGORY A
Putnam Convertible Income-Growth Trust (Class A)
Putnam Equity Income Fund (Class A)
Putnam Global Growth Fund (Class A)
Putnam Health Sciences Trust (Class A)
Putnam Investors Fund (Class A)
Putnam Managed Income Trust (Class A)
Putnam Natural Resources Fund (Class A)
Putnam Vista Fund (Class A)
Putnam Voyager Fund (Class A)
The George Putnam Fund of Boston (Class A)
The Putnam Fund for Growth and Income (Class A)
CATEGORY B
Putnam High Yield Trust (Class A)
Putnam Tax-Free High Yield Fund (Class B)
Putnam Tax-Free Insured Fund (Class B)
Putnam U.S. Government Income Trust (Class A)
CATEGORY C
Putnam Income Fund (Class A)
CATEGORY D
Putnam Michigan Tax Exempt Income Fund II (Class A)
Putnam Minnesota Tax Exempt Income Fund II (Class A)
Putnam Ohio Tax Exempt Income Fund II (Class A)
CATEGORY E
Putnam Municipal Income Fund (Class A)
CATEGORY F
Putnam Massachusetts Tax Exempt Income Fund II (Class A)
CATEGORY G
Putnam New York Tax Exempt Opportunities Fund (Class A)
CATEGORY H
Putnam California Tax Exempt Income Fund (Class A)
Putnam New Jersey Tax Exempt Income Fund (Class A)
Putnam New York Tax Exempt Income Fund (Class A)
Putnam Tax Exempt Income Fund (Class A)
<PAGE>
CATEGORY I
Putnam Arizona Tax Exempt Income Fund (Class A)
CATEGORY J
Putnam Florida Tax Exempt Income Fund (Class A)
Putnam Pennsylvania Tax Exempt Income Fund (Class A)
CATEGORY K
Putnam California Intermediate Tax Exempt Fund (Class A and B)
Putnam Intermediate Tax Exempt Fund (Class A and B)
Putnam New York Intermediate Tax Exempt Fund (Class A and B)
CATEGORY L
Putnam Arizona Tax Exempt Income Fund (Class B)
Putnam California Tax Exempt Income Fund (Class B)
Putnam Equity Income Fund (Class B)
Putnam Florida Tax Exempt Income Fund (Class B)
Putnam Massachusetts Tax Exempt Income Fund II (Class B)
Putnam Michigan Tax Exempt Income Fund II (Class B)
Putnam Minnesota Tax Exempt Income Fund II (Class B)
Putnam New Jersey Tax Exempt Income Fund (Class B)
Putnam New York Tax Exempt Income Fund (Class B)
Putnam New York Tax Exempt Opportunities Fund (Class B)
Putnam Ohio Tax Exempt Income Fund II (Class B)
Putnam Pennsylvania Tax Exempt Income Fund (Class B)
Putnam Tax Exempt Income Fund (Class B)
Putnam Tax-Free High Yield Fund (Class A)
Putnam Tax-Free Insured Fund (Class A)
CATEGORY M
Putnam Adjustable Rate U.S. Government Fund (Class A and B)
Putnam American Government Income Fund (Class A and B)
Putnam Asset Allocation: Balanced Portfolio (Class A, B and C)
Putnam Asset Allocation: Conservative Portfolio (Class A,B and C)
Putnam Asset Allocation: Growth Portfolio (Class A, B and C)
Putnam Asia Pacific Growth Fund (Class A and B)
Putnam Balanced Government Fund (Class A and B)
Putnam Convertible Income-Growth Trust (Class B)
Putnam Diversified Income Trust (Class A and B)
Putnam Dividend Growth Fund (Class A and B)
Putnam Equity Income Fund (Class B)
Putnam Europe Growth Fund (Class A and B)
Putnam Federal Income Trust (Class A and B)
The George Putnam Fund of Boston (Class B)
Putnam Global Governmental Income Trust (Class A and B)
Putnam Global Growth Fund (Class B)
The Putnam Fund for Growth and Income (Class B)
Putnam Health Sciences Trust (Class B)
Putnam High Yield Advantage Fund (Class A and B)
Putnam High Yield Trust (Class B)
Putnam Income Fund (Class B)
Putnam Investors Fund (Class B)
Putnam Managed Income Trust (Class B)
Putnam Municipal Income Fund (Class B)
Putnam Natural Resources Fund (Class B)
Putnam New Opportunities Fund (Class A and B)
Putnam OTC Emerging Growth Fund (Class A and B)
Putnam Overseas Growth Fund (Class A and B)
Putnam U.S. Government Income Trust (Class B)
Putnam Utilities Growth and Income Fund (Class A and B)
Putnam Vista Fund (Class B)
Putnam Voyager Fund (Class B)
SCHEDULE 2: MINIMUM ASSETS
DEALER FIRM REQUIREMENTS. The minimum aggregate average net
asset value of all accounts in Putnam Funds specified by
Paragraph 1(b) is $250,000. We will review this requirement
prior to the start of each year and inform you of any changes.
REGISTERED REPRESENTATIVE REQUIREMENTS. With respect to
Paragraph 1(c), there is no minimum asset qualification
requirement in the Putnam Funds applicable to each of your
representatives. We will review this requirement prior to the
start of each year and inform you of any changes.
SCHEDULE 3: ANNUAL SERVICE FEE RATES
Category A: 0.20% on shares acquired through December 31, 1989
(including capital appreciation on such shares)
and 0.25% on shares acquired after December 31,
1989 (including shares purchased after December
31, 1989 with reinvested distributions on any
shares).
Category B: 0.20% on shares acquired through March 31, 1990
(including capital appreciation on such shares)
and 0.25% on shares acquired after March 31, 1990
(including shares purchased after March 31, 1990
with reinvested distributions on any shares).
Category C: 0.20% on shares acquired through March 31, 1991
(including capital appreciation on such shares)
and 0.25% on shares acquired after March 31, 1991
(including shares purchased after March 31, 1991
with reinvested distributions on any shares).
Category D: 0.15% on shares outstanding as of March 9, 1992
and 0.20% on shares acquired after March 9, 1992.
Category E: 0.20% on shares outstanding as of May 7, 1992 and
0.25% on shares acquired after May 7, 1992.
Category F: 0.15% on shares outstanding as of May 11, 1992 and
0.20% on shares acquired after May 11, 1992.
Category G: 0.15% on shares outstanding as of July 13, 1992
and 0.20% on shares acquired after July 13, 1992.
Category H: 0.15% on shares outstanding as of December 31,
1992 and 0.20% on shares acquired after December
31, 1992.
Category I: 0.15% on shares outstanding as of March 5, 1993
and 0.20% on shares acquired after March 5, 1993.
Category J: 0.15% on shares outstanding as of July 8, 1993 and
0.20% on shares acquired after July 8, 1993.
Category K: 0.15% on all shares.
Category L: 0.20% on all shares.
Category M: 0.25% on all shares.
These calculations exclude until one year after purchase shares
purchased at net asset value by shareholders investing $1 million
or more and by participant-directed qualified retirement plans
sponsored by employers with more than 750 employees ("NAV
Shares"), except for shares owned by certain investors investing
$1 million or more that have made arrangements with Putnam Mutual
Funds and for whom you have waived the sales commission.
For participant-directed qualified retirement plans initially
investing less than $20 million in Putnam funds and other
investments managed by Putnam Management or its affiliates,
Putnam Mutual Funds' payments to you on NAV Shares will be 100%
of the rate stated above if average plan assets in Putnam funds
(excluding money market funds) during the quarter are less than
$20 million, 60% of the rate stated above if average plan assets
are at least $20 million but less than $30 million, and 40% of
the rate stated above if average plan assets are $30 million or
more. For all other participant-directed qualified retirement
plans purchasing NAV Shares, Putnam Mutual Funds will make
quarterly payments to you at the annual rate of 0.10% of the
average net asset value of such shares.
NF-57
9/1/94
FINANCIAL INSTITUTION
SERVICE AGREEMENT
Between: and
PUTNAM MUTUAL FUNDS CORP.
General Distributor of
The Putnam Family of Mutual Funds
P.O. Box 2701
Boston, MA 02208
We are pleased to inform you that, pursuant to the terms of this
FINANCIAL INSTITUTION SERVICE AGREEMENT, we are authorized to pay
you service fees in connection with the accounts of your
customers that hold shares of certain Putnam funds listed in
SCHEDULE 1 that have adopted distribution plans pursuant to Rule
12b-1 (the "12b-1 Funds"). Payment of the service fees is
subject to your initial and continuing satisfaction of the
following terms and conditions which may be revised by us from
time to time:
1. QUALIFICATION REQUIREMENTS
(a) You have entered into a Financial Institution Sales Contract
with us with respect to the Putnam Family of Mutual Funds (the
"Putnam Funds"), whose shares you have agreed to make available
to your customers on an agency basis.
(b) You are the financial institution of record for accounts in
Putnam Funds having an aggregate average net asset value of at
least the minimum amount set forth in SCHEDULE 2 (FINANCIAL
INSTITUTION REQUIREMENTS) during the period for which a service
fee is to be paid. Putnam Fund accounts are accounts in any
open-end Putnam Fund but excluding any accounts for your
organization's own retirement plans.
(c) One or more of your current employees must be the designated
registered representative(s) in the case of a bank affiliated
dealer, or agent representative(s) in the case of a bank (both
referred to as "representatives"), on accounts in Putnam Funds
having an aggregate average net asset value of at least the
minimum amount set forth in SCHEDULE 2 (REPRESENTATIVE
REQUIREMENTS) during the period for which a service fee is to be
paid.
(d) You will provide the following information and agree that we
will be entitled to rely on the accuracy of such information in
updating our records for determining the levels of service fees
payable to you under the terms of this Agreement. You understand
that such payments will be based solely on Putnam's records:
<PAGE>
(i) For each Putnam Fund account registered in the name of
one of your customers, you will advise us, preferably by
electronic means, before the end of the second month in each
calendar quarter, of the Putnam Fund account number and the
representative's identification number, social security
number and branch number.
(ii) For each Putnam Fund account registered in your name
(nominee name accounts), you will use your best efforts to
advise us, preferably by electronic means, before the end of
the second month in each calendar quarter, of the Putnam
Fund account number, net asset value of the account, date of
valuation, and, for each representative assigned to assets
in the account: the representative's identification number,
social security number, branch number, and net asset value
of assigned assets in the account.
2. SERVICE FEES
(a) If you meet the qualification requirements set forth above in
Paragraph 1, you will be paid, at the end of each calendar
quarter, a service fee on assets of your customers in the 12b-1
Funds for which you are the financial institution of record and
which are serviced by a representative of your organization
meeting the Representative Requirements, if any, at the annual
rates specified in SCHEDULE 3 (excluding any accounts for your
organization's own retirement plans), provided that you have
evaluated such service fees and have concluded that it is
consistent with applicable laws, rules, regulations and
regulatory interpretations for you to receive such service fees.
(b) You understand and agree that:
(i) all service fee payments are subject to the limitations
contained in each 12b-1 Fund's Distribution Plan, which may
be varied or discontinued at any time;
(ii) your failure to provide the services described in
Paragraph 4 below as may be amended by us from time to time,
or otherwise comply with the terms of this Agreement, will
render you ineligible to receive service fees; and
(iii) failure of an assigned representative to provide
services required by this Agreement will render that
representative's accounts ineligible as accounts on which
service fees are paid.
3. PAYMENTS AND COMMUNICATIONS TO REPRESENTATIVES
(a) Where consistent with applicable laws, rules, regulations and
regulatory interpretations, you will pass through to your
representatives a significant share of the service fees paid to
you pursuant to this Agreement, or you will otherwise use the
payments of service fees to advance the objective of providing
and improving service to shareholders of the Putnam Funds in a
manner specifically approved by Putnam Mutual Funds (for example,
via training courses for representatives or shareholder
seminars).
(b) You will assist us in distributing to your representatives
periodic statements which we will have prepared showing the
aggregate average net asset value of shares in Putnam Funds with
which they are credited on our records.
4. REQUIRED SERVICES
(a) You will assign one of your representatives to each Putnam
Fund account on your records and reassign the Putnam Fund account
should that representative leave your organization.
(b) You and your representatives will assist us and our
affiliates in providing the following services to shareholders of
the Putnam Funds:
(i) Maintain regular contact with shareholders in assigned
accounts and assist in answering inquiries concerning the
Putnam Funds.
(ii) Assist in distributing sales and service literature
provided by us, particularly to the beneficial owners of
accounts registered in your name (nominee name accounts).
(iii) Assist us and our affiliates in the establishment and
maintenance of shareholder accounts and records.
(iv) Assist shareholders in effecting administrative
changes, such as changing dividend options, account
designations, address, automatic investment programs or
systematic investment plans.
(v) Assist in processing purchase and redemption
transactions.
(vi) Provide any other information or services as the
customer or we may reasonably request.
(c) You will grant reasonable requests for visits to your offices
by our wholesalers and include all Putnam Funds on your menu or
list of investments made available by you to your customers.
(d) Your compliance with the service requirements set forth in
this Agreement will be evaluated by us from time to time by
surveying shareholder satisfaction with service, by monitoring
redemption levels of shareholder accounts assigned to you and by
such other methods as we deem appropriate.
(e) The provisions of this Paragraph 4 may be amended by us from
time to time upon notice to you.
5. AMENDMENT
This Agreement, including any Schedule hereto, shall be deemed
amended as provided in any written notice delivered by us to you.
6. EFFECTIVE PERIOD AND TERMINATION
The provisions of this Agreement shall remain in effect for one
year from the date of its execution or adoption and thereafter
for successive annual periods only so long as such continuance is
specifically approved at least annually by the Trustees of each
of the 12b-1 Funds in conformity with Rule 12b-1 under the
Investment Company Act of 1940 (the "1940 Act"). This Agreement
shall automatically terminate in the event of its assignment (as
defined by the 1940 Act). In addition, this Agreement may be
terminated at any time, without the payment of any penalty, by
either party upon written notice to the other party, or, as
provided in Rule 12b-1 under the 1940 Act, by the Trustees of any
12b-1 Fund or by the vote of the holders of the outstanding
voting securities of any 12b-1 Fund.
7. WRITTEN REPORTS
Putnam Mutual Funds Corp. shall provide the Trustees of each of
the 12b-1 Funds, and such Trustees shall review at least
quarterly, a written report of the amounts paid to you under this
Agreement and the purposes for which such expenditures were made.
8. COMPLIANCE WITH LAWS
With respect to the receipt of service fees under the terms of
this Agreement, you will comply with all applicable federal and
state laws and rules, and all applicable regulations and
interpretations of regulatory agencies or authorities, which may
affect your business practices, including any requirement of
written authorization or consent by your customers to your
receipt of service fees, and any requirement to provide
disclosure to your customers of such service fees.
9. MISCELLANEOUS
(a) All communications mailed to us should be sent to the above
address. Any notice to you shall be duly given if mailed or
delivered to you at the address specified by you below.
<PAGE>
(b) The provisions of this Agreement shall be governed by and
construed in accordance with the laws of The Commonwealth of
Massachusetts.
Very truly yours,
PUTNAM MUTUAL FUNDS CORP.
By: --------------------------
William N. Shiebler,
President and
Chief Executive Officer
We accept and agree to the foregoing Agreement as of the date set
forth below.
Financial Institution: --------------------------
By: --------------------------
Authorized Signature, Title
--------------------------
--------------------------
Address
Dated: --------------------------
Please return the signed Putnam copy of this Agreement to Putnam
Mutual Funds Corp., P.O. Box 2701, Boston, MA 02208.
<PAGE>
SCHEDULE 1: THE 12B-1 FUNDS
CATEGORY A
Putnam Convertible Income-Growth Trust (Class A)
Putnam Equity Income Fund (Class A)
Putnam Global Growth Fund (Class A)
Putnam Health Sciences Trust (Class A)
Putnam Investors Fund (Class A)
Putnam Managed Income Trust (Class A)
Putnam Natural Resources Fund (Class A)
Putnam Vista Fund (Class A)
Putnam Voyager Fund (Class A)
The George Putnam Fund of Boston (Class A)
The Putnam Fund for Growth and Income (Class A)
CATEGORY B
Putnam High Yield Trust (Class A)
Putnam Tax-Free High Yield Fund (Class B)
Putnam Tax-Free Insured Fund (Class B)
Putnam U.S. Government Income Trust (Class A)
CATEGORY C
Putnam Income Fund (Class A)
CATEGORY D
Putnam Michigan Tax Exempt Income Fund II (Class A)
Putnam Minnesota Tax Exempt Income Fund II (Class A)
Putnam Ohio Tax Exempt Income Fund II (Class A)
CATEGORY E
Putnam Municipal Income Fund (Class A)
CATEGORY F
Putnam Massachusetts Tax Exempt Income Fund II (Class A)
CATEGORY G
Putnam New York Tax Exempt Opportunities Fund (Class A)
CATEGORY H
Putnam California Tax Exempt Income Fund (Class A)
Putnam New Jersey Tax Exempt Income Fund (Class A)
Putnam New York Tax Exempt Income Fund (Class A)
Putnam Tax Exempt Income Fund (Class A)
<PAGE>
CATEGORY I
Putnam Arizona Tax Exempt Income Fund (Class A)
CATEGORY J
Putnam Florida Tax Exempt Income Fund (Class A)
Putnam Pennsylvania Tax Exempt Income Fund (Class A)
CATEGORY K
Putnam California Intermediate Tax Exempt Fund (Class A and B)
Putnam Intermediate Tax Exempt Fund (Class A and B)
Putnam New York Intermediate Tax Exempt Fund (Class A and B)
CATEGORY L
Putnam Arizona Tax Exempt Income Fund (Class B)
Putnam California Tax Exempt Income Fund (Class B)
Putnam Equity Income Fund (Class B)
Putnam Florida Tax Exempt Income Fund (Class B)
Putnam Massachusetts Tax Exempt Income Fund II (Class B)
Putnam Michigan Tax Exempt Income Fund II (Class B)
Putnam Minnesota Tax Exempt Income Fund II (Class B)
Putnam New Jersey Tax Exempt Income Fund (Class B)
Putnam New York Tax Exempt Income Fund (Class B)
Putnam New York Tax Exempt Opportunities Fund (Class B)
Putnam Ohio Tax Exempt Income Fund II (Class B)
Putnam Pennsylvania Tax Exempt Income Fund (Class B)
Putnam Tax Exempt Income Fund (Class B)
Putnam Tax-Free High Yield Fund (Class A)
Putnam Tax-Free Insured Fund (Class A)
CATEGORY M
Putnam Adjustable Rate U.S. Government Fund (Class A and B)
Putnam American Government Income Fund (Class A and B)
Putnam Asset Allocation: Balanced Portfolio (Class A, B and C)
Putnam Asset Allocation: Conservative Portfolio (Class A,B and C)
Putnam Asset Allocation: Growth Portfolio (Class A, B and C)
Putnam Asia Pacific Growth Fund (Class A and B)
Putnam Balanced Government Fund (Class A and B)
Putnam Convertible Income-Growth Trust (Class B)
Putnam Diversified Income Trust (Class A and B)
Putnam Dividend Growth Fund (Class A and B)
Putnam Equity Income Fund (Class B)
Putnam Europe Growth Fund (Class A and B)
Putnam Federal Income Trust (Class A and B)
The George Putnam Fund of Boston (Class B)
Putnam Global Governmental Income Trust (Class A and B)
Putnam Global Growth Fund (Class B)
The Putnam Fund for Growth and Income (Class B)
Putnam Health Sciences Trust (Class B)
Putnam High Yield Advantage Fund (Class A and B)
Putnam High Yield Trust (Class B)
Putnam Income Fund (Class B)
Putnam Investors Fund (Class B)
Putnam Managed Income Trust (Class B)
Putnam Municipal Income Fund (Class B)
Putnam Natural Resources Fund (Class B)
Putnam New Opportunities Fund (Class A and B)
Putnam OTC Emerging Growth Fund (Class A and B)
Putnam Overseas Growth Fund (Class A and B)
Putnam U.S. Government Income Trust (Class B)
Putnam Utilities Growth and Income Fund (Class A and B)
Putnam Vista Fund (Class B)
Putnam Voyager Fund (Class B)
SCHEDULE 2: MINIMUM ASSETS
FINANCIAL INSTITUTION REQUIREMENTS. The minimum aggregate
average net asset value of all accounts in Putnam Funds specified
by Paragraph 1(b) is $250,000. We will review this requirement
prior to the start of each year and inform you of any changes.
REPRESENTATIVE REQUIREMENTS. With respect to Paragraph
1(c), there is no minimum asset qualification requirement in the
Putnam Funds applicable to each of your representatives. We will
review this requirement prior to the start of each year and
inform you of any changes. We reserve the right to set a minimum
at any time.
SCHEDULE 3: ANNUAL SERVICE FEE RATES
Category A: 0.20% on shares acquired through December 31, 1989
(including capital appreciation on such shares)
and 0.25% on shares acquired after December 31,
1989 (including shares purchased after December
31, 1989 with reinvested distributions on any
shares).
Category B: 0.20% on shares acquired through March 31, 1990
(including capital appreciation on such shares)
and 0.25% on shares acquired after March 31, 1990
(including shares purchased after March 31, 1990
with reinvested distributions on any shares).
Category C: 0.20% on shares acquired through March 31, 1991
(including capital appreciation on such shares)
and 0.25% on shares acquired after March 31, 1991
(including shares purchased after March 31, 1991
with reinvested distributions on any shares).
Category D: 0.15% on shares outstanding as of March 9, 1992
and 0.20% on shares acquired after March 9, 1992.
Category E: 0.20% on shares outstanding as of May 7, 1992 and
0.25% on shares acquired after May 7, 1992.
Category F: 0.15% on shares outstanding as of May 11, 1992 and
0.20% on shares acquired after May 11, 1992.
Category G: 0.15% on shares outstanding as of July 13, 1992
and 0.20% on shares acquired after July 13, 1992.
Category H: 0.15% on shares outstanding as of December 31,
1992 and 0.20% on shares acquired after December
31, 1992.
Category I: 0.15% on shares outstanding as of March 5, 1993
and 0.20% on shares acquired after March 5, 1993.
Category J: 0.15% on shares outstanding as of July 8, 1993 and
0.20% on shares acquired after July 8, 1993.
Category K: 0.20% on all shares.
Category L: 0.25% on all shares.
These calculations exclude until one year after purchase, shares
purchased at net asset value by shareholders investing $1 million
or more and by participant-directed qualified retirement plans
sponsored by employers with more than 750 employees ("NAV
Shares"), except for shares owned by certain investors investing
$1 million or more that have made arrangements with Putnam Mutual
Funds and for whom you have waived the sales commission.
For participant-directed qualified retirement plans initially
investing less than $20 million in Putnam funds and other
investments managed by Putnam Management or its affiliates,
Putnam Mutual Funds' payments to you on NAV Shares will be 100%
of the rate stated above if average plan assets in Putnam funds
(excluding money market funds) during the quarter are less than
$20 million, 60% of the rate stated above if average plan assets
are at least $20 million but less than $30 million, and 40% of
the rate stated above if average plan assets are $30 million or
more. For all other participant-directed qualified retirement
plans purchasing NAV Shares, Putnan Mutual Funds will make
quarterly payments to you at the annual rate of 0.10% of the
average net asset value of such shares.
NF-58
9/1/94
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS
Fund name: Putnam California Tax Exempt Income Fund --
Class A Shares
Fiscal period ending: September 30, 1994
Inception date (if less than 10 years of performance):
TOTAL RETURN
Formula -- Average Annual Total Return: ERV = P(1+T)^n
n = Number of Time Periods 1 Year 5 Years 10 Years*
P = Initial Investment $1000 $1000 $1000
ERV = Ending Redeemable Value $919 $1373 $2469
T = Average Annual
Total Return -8.07% 6.55% 9.46%*
*Life of fund, if less than 10 years
YIELD
Formula:
Interest + Dividends - Expenses
2 (-------------------------------------------------- +1)(6) -1
POP x Average shares
Interest and Dividends $16,858,398
Expenses $1,885,893
Reimbursement $0
Average shares 403,611,284
NAV $8.09
Sales Charge 4.75%
POP $8.49
Yield at POP 5.30%
<PAGE>
TAX-EXEMPT EQUIVALENT YIELD
Formula: 30 day yield
--------------- = TAX EQUIVALENT YIELD
1-(Highest Individual Tax Rate)
5.30% 5.30%
- ------ = ------ = 9.86%
1-46.24% .5376%
<PAGE>
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS
Fund name: Putnam California Tax Exempt Income Fund --
Class B Shares
Fiscal period ending: September 30, 1994
Inception date (if less than 10 years of performance):
January 4, 1993
TOTAL RETURN
Formula -- Average Annual Total Return: ERV = P(1+T)^n
n = Number of Time Periods 1 Year 5 Years Life*
P = Initial Investment $1000 $ $1000
ERV = Ending Redeemable Value $913 $ $1021
T = Average Annual
Total Return -8.69% % 1.18%*
*Life of fund, if less than 10 years
YIELD
Formula:
Interest + Dividends - Expenses
2 (-------------------------------------------------- +1)(6) -1
POP x Average shares
Interest and Dividends $1,777,328
Expenses $401,611
Reimbursement $0
Average shares 42,602,651
NAV $8.08
Maximum Contingent Deferred
Sales Charge 5.0%
Yield at NAV 4.84%
<PAGE>
TAX-EXEMPT EQUIVALENT YIELD
Formula: 30 day yield
--------------- = TAX EQUIVALENT YIELD
1-(Highest Individual Tax Rate)
4.84% 4.84%
- ------ = ------ = 9.00%
1-46.24% .5376%
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS
Fund name: Putnam California Intermediate Tax Exempt --
Class A Shares
Fiscal period ending: September 30, 1994
Inception date (if less than 10 years of performance):
June 1, 1994
TOTAL RETURN
Formula -- Average Annual Total Return: ERV = P(1+T)^n
n = Number of Time Periods 1 Year 5 Years Life*
P = Initial Investment $ $ $1000
ERV = Ending Redeemable Value $ $ $966
T = Average Annual
Total Return % % -3.38%*
*Life of fund, if less than 10 years
YIELD
Formula:
Interest + Dividends - Expenses
2 (-------------------------------------------------- +1)(6) -1
POP x Average shares
Interest and Dividends $21,728
Expenses $0
Reimbursement $0
Average shares 581,143
NAV $8.35
Sales Charge 3.25%
POP $8.63
Yield at POP 5.26%
<PAGE>
TAX-EXEMPT EQUIVALENT YIELD
Formula: 30 day yield
--------------- = TAX EQUIVALENT YIELD
1-(Highest Individual Tax Rate)
5.26% 5.26%
- ------ = ------ = 9.78%
1-46.24% .5376%
<PAGE>
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS
Fund name: Putnam California Intermediate Tax Exempt Fund --
Class B Shares
Fiscal period ending: September 30, 1994
Inception date (if less than 10 years of performance):
June 1, 1994
TOTAL RETURN
Formula -- Average Annual Total Return: ERV = P(1+T)^n
n = Number of Time Periods 1 Year 5 Years 10 Years*
P = Initial Investment $ $ $1000
ERV = Ending Redeemable Value $ $ $966
T = Average Annual
Total Return % % -3.36%*
*Life of fund, if less than 10 years
YIELD
Formula:
Interest + Dividends - Expenses
2 (-------------------------------------------------- +1)(6) -1
POP x Average shares
Interest and Dividends $5,062
Expenses $0
Reimbursement $0
Average shares 134,927
NAV $8.34
Maximum Contingent Deferred
Sales Charge 3.0%
Yield at NAV 5.46%
<PAGE>
TAX-EXEMPT EQUIVALENT YIELD
Formula: 30 day yield
--------------- = TAX EQUIVALENT YIELD
1-(Highest Individual Tax Rate)
5.46% 5.46%
- ------ = ------ = 10.16%
1-46.24% .5376%
MONEY MARKET FUNDS CALC. SHEET
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS
Fund name: Putnam California Tax Exempt Money Market Fund
Fiscal periods ending: September 30, 1994
Inception date (if less than 10 years of performance):
October 26, 1987
7 DAY YIELD FORMULA - DIVIDENDS DECLARED FOR LAST 7 DAYS / 7 *365
TOTAL DIVIDENDS DECLARED
PER SHARE FOR LAST 7 DAYS:
7 DAY YIELD = 2.64%
CALCULATION OF 7 DAY EFFECTIVE YIELD
7DAY YIELD ^52.142857
( 1 + --------------------) -1
(100 * 52.142587)
7 DAY EFFECTIVE YIELD = 2.69%
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM Putnam California Tax Exempt Income Class A AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEPT-30-1994
<PERIOD-END> SEPT-30-1994
<INVESTMENTS-AT-COST> 3,526,542,145
<INVESTMENTS-AT-VALUE> 3,585,151,338
<RECEIVABLES> 66,297,438
<ASSETS-OTHER> 623,108
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,652,071,884
<PAYABLE-FOR-SECURITIES> 17,683,513
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 24,010,898
<TOTAL-LIABILITIES> 41,694,411
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,557,008,722
<SHARES-COMMON-STOCK> 403,264,434
<SHARES-COMMON-PRIOR> 403,556,293
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (583,482)
<ACCUMULATED-NET-GAINS> (5,141,132)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 59,093,365
<NET-ASSETS> 3,610,377,473
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 245,868,117
<OTHER-INCOME> 0
<EXPENSES-NET> 27,484,265
<NET-INVESTMENT-INCOME> 218,383,852
<REALIZED-GAINS-CURRENT> 15,252,213
<APPREC-INCREASE-CURRENT> (378,040,878)
<NET-CHANGE-FROM-OPS> (144,404,813)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (202,657,624)
<DISTRIBUTIONS-OF-GAINS> (10,629,107)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 50,232,378
<NUMBER-OF-SHARES-REDEEMED> (62,848,187)
<SHARES-REINVESTED> 12,323,950
<NET-CHANGE-IN-ASSETS> (199,460,660)
<ACCUMULATED-NII-PRIOR> 27,295
<ACCUMULATED-GAINS-PRIOR> (9,893,306)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 16,808,364
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 27,484,265
<AVERAGE-NET-ASSETS> 3,885,075,383
<PER-SHARE-NAV-BEGIN> 8.92
<PER-SHARE-NII> .50
<PER-SHARE-GAIN-APPREC> (.81)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.52)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.09
<EXPENSE-RATIO> .68
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM Putnam California Tax Exempt Income Class B AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 3,526,542,145
<INVESTMENTS-AT-VALUE> 3,585,151,338
<RECEIVABLES> 66,297,438
<ASSETS-OTHER> 623,108
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,652,071,884
<PAYABLE-FOR-SECURITIES> 17,683,513
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 24,010,898
<TOTAL-LIABILITIES> 41,694,411
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,557,008,722
<SHARES-COMMON-STOCK> 43,294,681
<SHARES-COMMON-PRIOR> 23,518,425
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (583,482)
<ACCUMULATED-NET-GAINS> (5,141,132)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 59,093,365
<NET-ASSETS> 3,610,377,473
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 245,868,117
<OTHER-INCOME> 0
<EXPENSES-NET> 27,484,265
<NET-INVESTMENT-INCOME> 218,383,852
<REALIZED-GAINS-CURRENT> 15,252,213
<APPREC-INCREASE-CURRENT> (378,040,878)
<NET-CHANGE-FROM-OPS> (144,404,813)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (15,701,799)
<DISTRIBUTIONS-OF-GAINS> (794,743)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 23,546,598
<NUMBER-OF-SHARES-REDEEMED> (4,825,694)
<SHARES-REINVESTED> 1,055,352
<NET-CHANGE-IN-ASSETS> (199,460,660)
<ACCUMULATED-NII-PRIOR> 27,295
<ACCUMULATED-GAINS-PRIOR> (9,893,306)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 16,808,364
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 27,484,265
<AVERAGE-NET-ASSETS> 3,885,075,383
<PER-SHARE-NAV-BEGIN> 8.91
<PER-SHARE-NII> .45
<PER-SHARE-GAIN-APPREC> (.81)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.47)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.08
<EXPENSE-RATIO> 1.32
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM Putnam California Intermediate Tax Exempt Fund Class A AND
IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 8,279,584
<INVESTMENTS-AT-VALUE> 8,234,744
<RECEIVABLES> 357,422
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 3,420
<TOTAL-ASSETS> 8,595,586
<PAYABLE-FOR-SECURITIES> 1,263,178
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16,845
<TOTAL-LIABILITIES> 1,280,023
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,382,610
<SHARES-COMMON-STOCK> 694,519
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (281)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (23,238)
<ACCUM-APPREC-OR-DEPREC> (43,528)
<NET-ASSETS> 7,315,563
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 60,726
<OTHER-INCOME> 0
<EXPENSES-NET> 734
<NET-INVESTMENT-INCOME> 59,992
<REALIZED-GAINS-CURRENT> (23,238)
<APPREC-INCREASE-CURRENT> (43,528)
<NET-CHANGE-FROM-OPS> (6,774)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (52,147)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 736,864
<NUMBER-OF-SHARES-REDEEMED> 47,797
<SHARES-REINVESTED> 5,334
<NET-CHANGE-IN-ASSETS> 7,313,563
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,129
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 15,676
<AVERAGE-NET-ASSETS> 2,960,162
<PER-SHARE-NAV-BEGIN> 8.50
<PER-SHARE-NII> 0.14
<PER-SHARE-GAIN-APPREC> (0.15)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.14)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.35
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM Putnam California Intermediate Tax Exempt Fund Class B AND
IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 8,279,584
<INVESTMENTS-AT-VALUE> 8,234,744
<RECEIVABLES> 357,422
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 3,420
<TOTAL-ASSETS> 8,595,586
<PAYABLE-FOR-SECURITIES> 1,263,178
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16,845
<TOTAL-LIABILITIES> 1,280,023
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,382,610
<SHARES-COMMON-STOCK> 182,096
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (281)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (23,238)
<ACCUM-APPREC-OR-DEPREC> (43,528)
<NET-ASSETS> 7,315,563
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 60,726
<OTHER-INCOME> 0
<EXPENSES-NET> 734
<NET-INVESTMENT-INCOME> 59,992
<REALIZED-GAINS-CURRENT> (23,238)
<APPREC-INCREASE-CURRENT> (43,528)
<NET-CHANGE-FROM-OPS> (6,774)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (8,126)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 217,739
<NUMBER-OF-SHARES-REDEEMED> 36,072
<SHARES-REINVESTED> 312
<NET-CHANGE-IN-ASSETS> 7,313,563
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,129
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 15,676
<AVERAGE-NET-ASSETS> 594,429
<PER-SHARE-NAV-BEGIN> 8.50
<PER-SHARE-NII> 0.12
<PER-SHARE-GAIN-APPREC> (0.16)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.12)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.34
<EXPENSE-RATIO> 0.12
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM Putnam California Tax Exempt Money Market Class A AND IS
QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<INVESTMENTS-AT-COST> 44,017,902
<INVESTMENTS-AT-VALUE> 44,017,902
<RECEIVABLES> 961,158
<ASSETS-OTHER> 59,099
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 45,038,159
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 239,387
<TOTAL-LIABILITIES> 239,387
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 44,798,772
<SHARES-COMMON-STOCK> 44,798,772
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 44,798,772
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,223,828
<OTHER-INCOME> 0
<EXPENSES-NET> 327,339
<NET-INVESTMENT-INCOME> 896,489
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 896,489
<NET-CHANGE-FROM-OPS> 896,489
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (896,489)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 125,528,473
<NUMBER-OF-SHARES-REDEEMED> (126,928,129)
<SHARES-REINVESTED> 834,320
<NET-CHANGE-IN-ASSETS> (565,336)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 217,108
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 327,339
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .0192
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.0192)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
