[H&M Final]
[Translation]
SECURITIES REGISTRATION STATEMENT
PUTNAM U.S. GOVERNMENT INCOME TRUST
SECURITIES REGISTRATION STATEMENT
To: Minister of Finance
Filing
Date of SRS: November 18, 1997
Filing
Date of the Amendment to SRS:
November 28, 1997
Name of the Registrant Trust: PUTNAM U.S. GOVERNMENT
INCOME TRUST
Name and Official Title of Trustees: George Putnam
William F. Pounds
Jameson A. Baxter
Hans H. Estin
John A. Hill
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin, III
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas
Thorndike
Address of Principal Office: 2 Liberty Square
Boston, Massachusetts
02109
U. S. A.
Name and Title of Registration Agent: Harume Nakano
Attorney-at-Law
Signature [Harume Nakano]_
(Seal)
Ken
Miura
Attorney-at-Law
Signature [Ken Miura]_____
(Seal)
Address or Place of Business Kasumigaseki Building,
25th Floor
2-5,
Kasumigaseki 3-chome
Chiyoda-ku, Tokyo
Name of Liaison Contact: Harume Nakano
Ken Miura
Attorneys-at-Law
Place of Liaison Contact: Hamada & Matsumoto
Kasumigaseki Building, 25th
Floor 2-5,
Kasumigaseki 3-chome
Chiyoda-ku, Tokyo
Phone Number: 03-3580-3377
- ii -
Public Offering or Sale for Registration
Name of the Fund Making Public PUTNAM U.S. GOVERNMENT
INCOME TRUST
Offering or Sale of Foreign
Investment Fund Securities:
Type and Aggregate Amount of Up to 76.93 million Class M
Shares
Foreign Investment Fund Securities Up to the total
amount aggregating the
to be Publicly Offered or Sold:amounts calculated by
multiplying the respective net
asset value per Class M Share by
the respective number of Class M
Shares in respect of 76.93
million Class M Shares
(The
maximum amount expected to be
sold is 1 billion U.S. dollars
(Yen121.1 billion).
Note 1: U.S.$ amount is translated into Japanese Yen at the
rate of U.S.$l.00=Yen121.10 the mean of the exchange rate
quotations by The Bank of Tokyo-Mitsubishi, Ltd. for
buying and selling spot dollars by telegraphic transfer
against yen on 30th September, 1997.
Note 2: The maximum amount expected to be sold is an amount
calculated by multiplying the net asset value per Class M
Share as of 30th September, 1997 (U.S.$13.00) by 76.93
million Class M Shares for convenience.
Places where a copy of this Securities Registration
Statement is available for Public Inspection
Not applicable.
(Total number of pages of this Securities Registration
Statement in Japanese is
95 including front and back pages.)
C O N T E N T S
Japanese This
OriginalEnglish
Translation
PART I. INFORMATION CONCERNING SECURITIES 1 1
PART II. INFORMATION CONCERNING ISSUER 4 5
I. DESCRIPTION OF THE FUND 4 5
l. GENERAL INFORMATION 4 5
2. INVESTMENT POLICY 8 10
3. MANAGEMENT STRUCTURE 13 18
4. INFORMATION CONCERNING THE EXERCISE
OF RIGHTS BY SHAREHOLDERS, ETC. 22 31
5. STATUS OF INVESTMENT FUND 25 35
II. OUTLINE OF THE FUND 27 39
III. OUTLINE OF THE OTHER RELATED COMPANIES 61 70
IV. FINANCIAL CONDITION OF THE FUND 63 72
V. SUMMARY OF INFORMATION CONCERNING
FOREIGN INVESTMENT TRUST SECURITIES 154 78
VI. MISCELLANEOUS 154 78
PART III. SPECIAL INFORMATION 155 79
I. OUTLINE OF THE SYSTEM OF INVESTMENT
TRUSTS IN MASSACHUSETTS 155 79
II. FINANCIAL CONDITIONS OF THE INVESTMENT
MANAGEMENT COMPANY 161 86
III. FORM OF FOREIGN INVESTMENT
FUND SECURITIES 185 86
PART I. INFORMATION CONCERNING
SECURITIES
1. NAME OF FUND: PUTNAM
U.S. GOVERNMENT INCOME TRUST
(hereinafter referred to as the
"Fund")
2. NATURE OF FOREIGN Four
classes of shares (Class A
shares, Class INVESTMENT FUND
SECU-B
shares, Class M shares and Class
Y shares)
RITIES CERTIFICATES:
Registered shares without par
value In
Japan, Class M Shares
(hereinafter referred to as the
"Shares") are for public
offering. No rating has been
acquired.
3. NUMBER OF SHARES TO Up to
76.93 million Shares
BE OFFERED FOR SALE
(IN JAPAN)
4. TOTAL AMOUNT OF Up to
the total amount aggregating the
OFFERING PRICE:
amounts calculated by
multiplying the respective net
asset value per Share by the
respective number of Shares in
respect of 76.93 million Shares
(The maximum amount expected to
be sold is 1 billion U.S.
dollars (Yen121.1 billion).
Note 1: The maximum amount expected to be sold is the
amount calculated, for convenience, by multiplying
the net asset value per Share as of 30th September,
1997 ($13.00) by the number of Shares to be offered
(76.93 million).
Note 2: Dollar amount is translated for convenience at
the rate of $1.00=Yen121.10 (the mean of the exchange
rate quotations by The Bank of Tokyo-Mitsubishi,
Ltd. for buying and selling spot dollars by
telegraphic transfer against yen on 30th September,
1997). The same applies hereinafter.
Note 3: In this document, money amounts and percentages
have been rounded. Therefore, there are cases in
which the amount of the "total column" is not equal
to the aggregate amount. Also, translation into yen
is made simply by multiplying the corresponding
amount by the conversion rate specified and rounded
up when necessary. As a result, in this document,
there are cases in which Japanese yen figures for
the same information differ from each other.
5. ISSUE PRICE: The Net
Asset Value per Share next
calculated on a Fund Business
Day after the application for
purchase is received by the
Fund.
Note:A "Fund Business Day" means a day on which the New
York Stock Exchange is open for business.
6. SALES CHARGE: The
sales charge in Japan shall be
3% of the amount obtained by
deduction of the amount
equivalent to 3% of the public
offering price from such price
(hereinafter referred to as the
"Sales Price"). Any amount,
which is over the net asset
value, of the Sales Price shall
be retained by Putnam Mutual
Funds Corp., principal
underwriter of the Fund.
The
public offering price means the
amount calculated by dividing
the net asset value by (1-
0.0325) and rounded to three
decimal places.
7. MINIMUM AMOUNT OR The
minimum amount for purchase of
NUMBER OF SHARES Shares
is 100 shares and in integral
FOR SUBSCRIPTION:
multiples of 100 shares.
8. PERIOD OF SUBSCRIPTION: From:
December 4, 1997 (Thursday)
To:
June 3, 1998 (Wednesday)
Provided that the subscription
is handled only on a Fund
Business Day and a business day
when securities companies are
open for business in Japan.
9. DEPOSIT FOR SUBSCRIPTION:
None.
10. PLACE OF SUBSCRIPTION: Kokusai
Securities Co., Ltd.
(hereinafter referred to as "
Kokusai")
Tokyo
Sumitomo Twin Building, East
27-1,
Shinkawa 2-chome Chuo-ku, Tokyo
Note:The subscription is handled at the head office and
the branch offices in Japan of the above-mentioned
securities company.
11. DATE AND PLACE
Investors shall pay the Issue
Price and Sales
OF PAYMENT: Charge
to Kokusai within 4 business
days in Japan from the day when
Kokusai confirms the execution
of the order (the "Trade Day")
(see page 18).
The
total issue price for each
Application Day will be
transferred by Kokusai to the
account of the Fund at Putnam
Fiduciary Trust Company, the
transfer agent, within 3 Fund
Business Days (hereinafter
referred to as "Payment Date")
from (and including) the
Application Day.
12. OUTLINE OF UNDERWRITING, ETC.:
(A) Kokusai undertakes to make a public offering of 76.93
million Shares in accordance with an agreement dated
November 25, 1997 with Putnam Mutual Funds Corp. in
connection with the sale of the Shares in Japan.
(B) During the public offering period, Kokusai will execute
or forward the purchase orders and repurchase requests of
the Shares received directly or indirectly through other
Handling Securities Companies to the Fund.
(C) The Fund has appointed Kokusai as the Agent Securities
Company in Japan.
Note:"The Agent Securities Company" shall mean a
securities company which, under a contract made with
a foreign issuer of investment securities, makes
public the net asset value per Share and submits or
forwards the financial reports or other documents to
the Japan Securities Dealers Association ("JSDA")
and other handling securities companies (the
"Handling Securities Companies") rendering such
other services.
13. MISCELLANEOUS:
(A) Method of Subscription:
Investors who subscribe to Shares shall enter into
with a Handling Securities Company an agreement
concerning transactions of foreign securities. A
Handling Securities Company shall provide to the
investors a Contract Concerning a Foreign Securities
Transactions Account ("Account Contract") and the
investors shall submit to the Handling Securities Company
an application for requesting the opening of a
transactions account under the Contract. The
subscription amount shall be paid in yen in principle and
the yen exchange rate shall be the exchange rate which
shall be based on the foreign exchange rate quoted in the
Tokyo Foreign Exchange Market on the Trade Day of each
subscription and which shall be determined by such
Handling Securities Company.
The subscription amount shall be paid in dollars to
the account of the Fund with Putnam Fiduciary Trust
Company as custodian for the Fund by Kokusai on the
Payment Date.
(B) Expenses summary:
Expenses are one of several factors to consider when
investing. The following table summarizes an investor's
maximum transaction costs from investing in class M
shares of the Fund and expenses incurred in respect of
class M shares in the most recent fiscal year. The
example shows the cumulative expenses attributable to a
hypothetical $1,000 investment in class M shares over the
specified periods.
Shareholder transaction expenses
Maximum sales charge imposed on purchases
(as a percentage of public offering price) 3.25%
Deferred sales charge None
Annual Fund operating expenses
(as a percentage of average net assets)
Management fees 0.42%
12b-1 fees 0.50%
Other expenses 0.22%
Total Fund operating expenses 1.14%
The table is provided to help you understand the
expenses of investing in class M shares of the Fund and
of your share of the operating expenses. The expenses
shown in the table do not reflect the application of
credits that reduce certain Fund expenses.
Example
An investment of $1,000 would incur the following
expenses, assuming 5% annual return and redemption at the
end of each period.
One year $44
3 years $68
5 years $93
10 years $167
The example does not represent past or future
expense levels. Actual expenses may be greater or less
than those shown. U.S. federal regulations require the
example to assume a 5% annual return, but actual annual
return varies.
(C) Offerings other than in Japan:
Shares are simultaneously offered in the United
States of America.
PART II. INFORMATION CONCERNING ISSUER
I. DESCRIPTION OF THE FUND
1. GENERAL INFORMATION
(A) Outline of Laws Regulating the Fund in the Jurisdiction
Where Established:
(1) Name of the Fund: Putnam U.S. Government Income
Trust (the "Fund")
(2) Form of the Fund
Putnam U.S. Government Income Trust is a
Massachusetts business trust organized on November 1,
1983. A copy of the Agreement and Declaration of Trust,
which is governed by Massachusetts law, is on file with
the Secretary of State of The Commonwealth of
Massachusetts.
The Fund is an open-end, diversified management
investment company with an unlimited number of authorized
shares of beneficial interest which may be divided
without shareholder approval into two or more classes of
shares having such preferences and special or relative
rights and privileges as the Trustees determine. The
Fund's shares are not currently divided into any series.
Only the Fund's class M shares are currently offered in
Japan. The Fund may also offer in the United States of
America other classes of shares with different sales
charges and expenses. Because of these different sales
charges and expenses, the investment performance of the
classes will vary.
Each share has one vote, with fractional shares
voting proportionally. Shares of all classes will vote
together as a single class except when otherwise required
by law or as determined by the Trustees. Shares are
freely transferable, are entitled to dividends as
declared by the Trustees, and, if the Fund were
liquidated, would receive the net assets of the Fund.
The Fund may suspend the sale of shares at any time and
may refuse any order to purchase shares. Although the
Fund is not required to hold annual meetings of its
shareholders, shareholders holding at least 10% of the
outstanding shares entitled to vote have the right to
call a meeting to elect or remove Trustees, or to take
other actions as provided in the Agreement and
Declaration of Trust.
If a shareholder owns fewer shares than the minimum
set by the Trustees (presently 20 shares), the Fund may
choose to redeem the shareholders' shares. Shareholders
will receive at least 30 days' written notice before the
Fund redeems shareholders' shares, and shareholders may
purchase additional shares at any time to avoid a
redemption. The Fund may also redeem shares if
shareholders own shares above a maximum amount set by the
Trustees. There is presently no maximum, but the
Trustees may, at any time, establish one which could
apply to both present and future shareholders.
(3) Governing Laws
The Fund was created under, and is subject to, the
laws of the Commonwealth of Massachusetts. The sale of
the Fund's shares is subject to, among other things, the
Securities Act of 1933, as amended, and certain state
securities laws. The Fund also attempts to qualify each
year and elect to be taxed as a regulated investment
company under the United States Internal Revenue Code of
1986, as amended.
The following is a broad outline of certain of the
principal statutes regulating the operations of the Fund
in the U.S.:
a. Massachusetts General Laws, Chapter 182 -
Voluntary Associations and Certain Trusts
Chapter 182 provides in part as follows:
A copy of the declaration of trust must be filed
with the Secretary of State of the Commonwealth of
Massachusetts and with the Clerk of the City of
Boston. Any amendment of the declaration of trust
must be filed with the Secretary and the Clerk
within thirty days after the adoption of such
amendment.
A trust must annually file with the Secretary of
State on or before June 1 a report providing the
name of the trust, its address, number of shares
outstanding and the names and addresses of its
trustees.
Penalties may be assessed against the trust for
failure to comply with certain of the provisions of
Chapter 182.
b. Investment Company Act of 1940
The Investment Company Act of 1940, as amended
(the "1940 Act"), in general, requires investment
companies to register as such with the U.S.
Securities and Exchange Commission (the "SEC"), and
to comply with a number of substantive regulations
of their operations. The 1940 Act requires an
investment company, among other things, to provide
periodic reports to its shareholders.
c. Securities Act of 1933
The Securities Act of 1933, as amended (the
"1933 Act"), regulates many sales of securities. The
Act, among other things, imposes various
registration requirements upon sellers of securities
and provides for various liabilities for failures to
comply with its provisions or in respect of other
specified matters.
d. Securities Exchange Act of 1934
The Securities Exchange Act of 1934, as amended
(the "1934 Act"), regulates a variety of matters
involving, among other things, the secondary trading
of securities, periodic reporting by the issuers of
securities, and certain of the activities of
transfer agents and brokers and dealers.
e. The Internal Revenue Code
The Fund intends to qualify as a "regulated
investment company" for federal income tax purposes
and to meet all other requirements necessary for it
to be relieved of federal taxes on income and gains
it distributes to shareholders.
f. Other laws
The Fund is subject to the provisions of other
laws, rules, and regulations applicable to the Fund
or its operations, such as, for example, various
state laws regarding the sale of the Fund's shares.
(B) Outline of the Supervisory Authorities
Among the regulatory authorities having jurisdiction
over the Fund or certain of its operations are the SEC
and state regulatory agencies or authorities.
a. The SEC has broad authority to oversee the
application and enforcement of the federal
securities laws, including the 1940 Act, the 1933
Act, and the 1934 Act, among others, to the Fund.
The 1940 Act provides the SEC broad authority to
inspect the records of investment companies, to
exempt investment companies or certain practices
from the provisions of the Act, and otherwise to
enforce the provisions of the Act.
b. State authorities typically have broad
authority to regulate the offering and sale of
securities to their residents or within their
jurisdictions and the activities of brokers,
dealers, or other persons directly or indirectly
engaged in related activities.
(C) Objects and Basic Nature of the Fund:
The Fund seeks as high a level of current income as
Putnam Investment Management, Inc. believes is consistent
with preservation of capital. In seeking this objective,
the Fund invests exclusively in securities backed by the
full faith and credit of the United States and repurchase
agreements and forward commitments with respect to these
securities. The Fund is not intended to be a complete
investment program, and there is no assurance it will
achieve its objective.
(D) History of the Fund:
November 1, 1983:
Organization of the Fund as a
Massachusetts business trust.
Adoption of the Agreement and
Declaration of Trust.
January 10, 1992:
Adoption of the Amended and
Restated Agreement and
Declaration of Trust.
(E) Affiliated Companies of the Fund:
Names and related business of the affiliated
companies of the Fund are as follows:
(1) Putnam Investment Management, Inc. ("Investment
Management Company") renders investment management
services to the Fund.
(2) Putnam Fiduciary Trust Company (the "Custodian"
and "Investor Servicing Agent") acts as Custodian
and Investor Servicing Agent.
(3) Putnam Mutual Funds Corp. ("Principal
Underwriter") engages in providing marketing
services to the Fund.
(4) Kokusai Securities Co., Ltd. ("Distributor in
Japan" and "Agent Securities Company") engages in
forwarding the purchase or repurchase orders for the
Shares in Japan and also acts as the agent
securities company.
2. INVESTMENT POLICY
(A) Basic Policy for Investment and Objects of Investment:
The Fund seeks as high a level of current income as
Investment Management Company believes is consistent with
preservation of capital. In seeking this objective, the
Fund invests exclusively in securities backed by the full
faith and credit of the United States and repurchase
agreements and forward commitments with respect to these
securities. The Fund is not intended to be a complete
investment program, and there is no assurance it will
achieve its objective.
Basic investment strategy
The Fund invests exclusively in securities backed by
the full faith and credit of the United States ("US.
Government Securities") and repurchase agreements and
forward commitments with respect to U.S. Government
Securities.
U.S. Government Securities include:
- U.S. Treasury bills, notes and bonds. These
obligations, issued directly by the U.S. Treasury, have
maturities of less than one year for bills, of one to
nine years for notes, and of 10 to 30 years for bonds.
- Obligations guaranteed by the U.S. Treasury. These
include obligations of varying maturities issued or
guaranteed by certain agencies and instrumentalities of
the U.S. government, such as mortgage participation
certificates guaranteed by the Government National
Mortgage Association ("GNMA") and Federal Housing
Administration debentures, for which the U.S. Treasury
unconditionally guarantees payment of principal and
interest.
Selection of investments
Investment Management Company buys and sells
securities for the Fund to maximize current income to the
extent it believes is consistent with preservation of
capital. Potential capital gains resulting from possible
changes in interest rates will not be a major
consideration. Investment Management Company may take
full advantage of the entire range of maturities offered
by U.S. Government Securities and may adjust the average
maturity of the Fund's portfolio from time to time
depending on its assessment of relative yields available
on U.S. Government Securities of different maturities and
its expectations of future changes in interest rates.
Thus, at certain times the average maturity of the
portfolio may be relatively short (from under one year to
five years, for example) and at other times may be
relatively long (more than 10 years, for example).
The Fund may invest in all types of U.S. Government
Securities. Under current market conditions, Investment
Management Company anticipates that the Fund will invest
a significant portion of its assets in mortgage
participation certificates guaranteed by GNMA, popularly
referred to as "Ginnie Maes." These certificates
represent partial ownership interests in a pool of
mortgage loans which are individually insured by the
Federal Housing Administration or the Farmers Home
Administration or guaranteed by the Veterans
Administration. The Fund will only invest in Ginnie Maes
of the "modified pass-through" type, which are guaranteed
as to timely payment of principal and interest by GNMA
and are backed by the full faith and credit of the United
States.
From time to time the Fund may invest in
collateralized mortgage obligations ("CMOs") and certain
stripped mortgage-backed securities. CMOs generally
represent a participation in, or are secured by, a pool
of mortgage loans. The CMOs in which the Fund may invest
are limited to U.S. Government Securities, such as CMOs
issued by GNMA. Stripped mortgage-backed securities are
usually structured with two classes that receive
different portions of the interest and principal
distributions on a pool of mortgage loans. The Fund may
invest in both the interest-only or "IO" class and the
principal-only or "PO" class.
Risk factors
Market risk. U.S. Government Securities are considered
among the safest of fixed-income investments, but their
values, like those of other debt securities, will
fluctuate with changes in interest rates. Changes in the
value of portfolio securities will not affect interest
income from those securities but will be reflected in the
Fund's net asset value. Thus, a decrease in interest
rates will generally result in an increase in the value
of Fund shares. Conversely, during periods of rising
interest rates, the value of Fund shares will generally
decline. The magnitude of these fluctuations will
generally be greater when the Fund's average maturity is
longer. Because of their added safety, the yields
available from U.S. Government Securities are generally
lower than the yields available from comparable corporate
debt securities.
Prepayment risk. Mortgage-backed securities have yield
and maturity characteristics corresponding to the
underlying mortgage loans. Unlike traditional debt
securities, which may pay a fixed rate of interest until
maturity when the entire principal amount comes due,
payments on certain mortgage-backed securities include
both interest and a partial payment of principal.
Besides the scheduled repayment of principal, payments of
principal may result from the voluntary prepayment,
refinancing, or foreclosure of the underlying mortgage
assets.
Mortgage-backed securities are less effective than
other types of securities as a means of "locking in"
attractive long-term interest rates. One reason is the
need to reinvest prepayments of principal; another is the
possibility of significant unscheduled prepayments
resulting from declines in interest rates. These
prepayments would have to be reinvested at lower rates.
As a result, these securities may have less potential for
capital appreciation during periods of declining interest
rates than other securities of comparable maturities,
although they may have a similar risk of decline in
market value during periods of rising interest rates.
Prepayments may require reinvestment of principal under
less attractive terms. Prepayments may also
significantly shorten the effective maturities of these
securities, especially during periods of declining
interest rates. Conversely, during periods of rising
interest rates, a reduction in prepayments may increase
the effective maturities of these securities, subjecting
them to a greater risk of decline in market value in
response to rising interest rates than traditional debt
securities, and, therefore, potentially increasing the
volatility of the Fund.
Prepayments may cause losses on securities purchased
at a premium. At times, some of the mortgage-backed
securities in which the Fund may invest will have higher
than market interest rates and therefore will be
purchased at a premium above their par value.
Unscheduled prepayments, which are made at par, will
cause the Fund to experience a loss equal to any
unamortized premium.
CMOs. CMOs are issued with a number of classes or series
that have different maturities and that may represent
interests in some or all of the interest or principal on
the underlying collateral. Payment of interest or
principal on some classes or series of CMOs may be
subject to contingencies or some classes or series may
bear some or all of the risk of default on the underlying
mortgages. CMOs of different classes or series are
generally retired in sequence as the underlying mortgage
loans in the mortgage pool are repaid. If enough
mortgages are repaid ahead of schedule, the classes or
series of a CMO with the earliest maturities generally
will be retired prior to their maturities. Thus, the
early retirement of particular classes or series of a CMO
would have the same effect as the prepayment of mortgages
underlying other mortgage-backed securities. Conversely,
slower than anticipated prepayments can extend the
effective maturities of CMOs' subjecting them to a
greater risk of decline in market value in response to
rising interest rates than traditional debt securities,
and, therefore, potentially increasing the volatility of
the Fund.
Stripped mortgage-backed securities. The yield to
maturity on an IO or PO class of stripped mortgage-backed
securities is extremely sensitive not only to changes in
prevailing interest rates but also to the rate of
principal payments (including prepayments) on the
underlying assets. A rapid rate of principal prepayments
may have a measurably adverse effect on the Fund's yield
to maturity to the extent it invests in IOs. If the
assets underlying the IOs experience greater than
anticipated prepayments of principal, the Fund may fail
to recoup fully its initial investment in these
securities. Conversely, POs tend to increase in value if
prepayments are greater than anticipated and decline if
prepayments are slower than anticipated.
In either event, the secondary market for stripped
mortgage-backed securities may be more volatile and less
liquid than that for other mortgage-backed securities,
potentially limiting the Fund's ability to buy or sell
those securities at any particular time.
The overall amount of GNMA guarantees_and therefore
the amount of Ginnie Maes that can be issued_is limited
by Congress. When these limits are reached, GNMA must
suspend the issuance of guarantees until Congress raises
the limit. Such a suspension would not ordinarily have
an immediate effect on the supply of Ginnie Maes because
of the existence of GNMA guarantees already made but not
yet issued in the form of Ginnie Maes. If Congressional
action in raising the guarantee limit were unduly
delayed, however, the supply of Ginnie Maes could be
adversely affected.
Investments in premium securities
At times, the Fund may invest in securities bearing
coupon rates higher than prevailing market rates. Such
"premium" securities are typically purchased at prices
greater than the principal amounts payable on maturity.
The Fund does not amortize the premium paid for
these securities in calculating its net investment
income. As a result, the purchase of premium securities
provides a higher level of investment income
distributable to shareholders on a current basis than if
the Fund purchased securities bearing current market
rates of interest. Because the value of premium
securities tends to approach the principal amount as they
approach maturity (or call price in the case of
securities approaching their first call date), the
purchase of such securities may increase the risk of
capital loss if such securities are held to maturity (or
first call date).
During a period of declining interest rates, many of
the Fund's portfolio investments will likely bear coupon
rates that are higher than the current market rates,
regardless of whether the securities were originally
purchased at a premium. These securities would generally
carry premium market values that would be reflected in
the net asset value of Fund shares. As a result, an
investor who purchases Fund shares during such periods
would initially receive higher taxable monthly
distributions (derived from the higher coupon rates
payable on the Fund's investments) than might be
available from alternative investments bearing current
market interest rates, but the investor 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
the Fund, investors may find it useful to compare the
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. Under some circumstances, a substantial portion
of the
Fund's investments in US. Government Securities will take
the form of contracts with broker-dealers for future
delivery (but not beyond 120 days) of US. Government
Securities, or "forward commitments." Pending delivery
of the securities, the Fund maintains in a segregated
account liquid assets in an amount sufficient to pay the
purchase price. The Fund may sell its interest in a
forward commitment rather than take delivery, and may
reinvest the proceeds in another forward commitment. The
Fund's use of forward commitments may increase its
overall investment exposure and involves a risk of loss
if the value of the securities declines prior to the
settlement date or if the broker-dealer fails to deliver
after the value of the securities has risen.
Portfolio turnover
The length of time the Fund has held a particular
security is not generally a consideration in investment
decisions. A change in the securities held by the Fund
is known as "portfolio turnover" As a result of the
Fund's investment policies, under certain market
conditions its portfolio turnover rate may be higher than
that of other mutual funds.
Portfolio turnover generally involves some expense,
including brokerage commissions or dealer markups and
other transaction costs in connection with the sale of
securities and reinvestment in other securities. These
transactions may result in realization of taxable capital
gains. Portfolio turnover rates are shown in the section
"Financial Condition of the Fund - Financial Statements -
Financial highlights."
Other investment practices
The Fund may also engage to a limited extent in the
following investment practices, each of which involves
certain special risks. Notwithstanding these other
investment practices, it is the policy of the Fund that
at least 65% of its investment income will be derived
from interest on U.S. Government Securities.
Securities loans and repurchase agreements. The Fund may
lend portfolio securities amounting to not more than 25%
of its assets to broker-dealers and may enter into
repurchase agreements on up to 25% of its assets. These
transactions must be fully collateralized at all times,
but involve some risk if the other party should default
on its obligation and the Fund is delayed or prevented
from recovering the collateral.
The Fund's investment objective and its policy of
investing exclusively in US. Government Securities and
repurchase agreements and forward commitments with
respect to such securities are fundamental policies which
may not be changed without shareholder approval. Except
for these policies and certain investment policies
designated as fundamental below, the investment policies
described herein are not fundamental policies. The
Trustees may change any nonfundamental investment
policies without shareholder approval.
Derivatives
Certain of the instruments in which the Fund may
invest, such as forward commitments and CMOs, are
considered to be "derivatives." Derivatives are
financial instruments whose value depends upon, or is
derived from, the value of an underlying asset, such as a
security or an index.
(B) Restrictions of Investment:
Except as otherwise specifically designated, the
investment restrictions described in this Securities
Registration Statement and the Japanese prospectus are
not fundamental investment restrictions. The Trustees
may change any non-fundamental restrictions without
shareholder approval. As fundamental investment
restrictions, which may not be changed without a vote of
a majority of the outstanding voting securities, the Fund
may not and will not:
(1) Borrow money in excess of 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 which are secured by or represent
interests in real estate.
(4) Purchase or sell commodities or commodity contracts.
(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, or by lending its portfolio securities
(6) With respect to 75% of its total assets, invest in
the securities of any issuer if, immediately after such
investment, more than 5% of the total assets of the fund
(taken at current value) would be invested in the
securities of such issuer; provided that this limitation
does not apply to obligations issued or guaranteed as to
interest or principal by the U.S. government or its
agencies or instrumentalities.
(7) With respect to 75% of its total assets, acquire
more than 10% of the outstanding voting securities of any
issuer.
(8) Purchase securities (other than securities of the
U.S. government, its agencies or instrumentalities) if,
as a result of such purchase, more than 25% of the Fund's
total assets would be invested in any one industry.
(9) Purchase or sell options, or puts, calls, straddles,
spreads or combinations thereof, except that the Fund may
write covered call options with respect to any part or
all of its portfolio securities and enter into closing
purchase transactions with respect to such options.
(10) Issue any class of securities which is senior
to the Fund's shares of beneficial interest, except for
permitted borrowings.
Fundamental restrictions 6, 7 and 8 are by their
terms inapplicable to U.S. Government Securities and
consequently are not expected to have any significant
effect on the operations of the Fund, since it is the
Fund's fundamental policy to invest exclusively in U.S.
Government Securities and repurchase agreements and
forward commitments with respect to such securities.
Although certain of the Fund's fundamental
investment restrictions permit it to borrow money to a
limited extent, it does not currently intend to do so and
did not do so last year.
The Investment Company Act of 1940 provides that a
"vote of a majority of the outstanding voting securities"
of the Fund means the affirmative vote of the lesser of
(1) more than 50% of the outstanding shares of the Fund,
or (2) 67% or more of the shares present at a meeting if
more than 50% of the outstanding shares of the Fund are
represented at the meeting in person or by proxy.
It is contrary to the Fund's present policy, which may be
changed without shareholder approval, to:
(1) Invest in (a) securities which are not readily
marketable, (b) securities restricted as to resale
(excluding securities determined by the Trustees of the
Fund (or the person designated by the Trustees of the
Fund to make such determinations) to be readily
marketable), and (c) repurchase agreements maturing in
more than seven days, 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) Write covered call options with respect to any part
or all of its portfolio securities.
In addition, the Fund will, so long as shares of the
Fund are being offered for sale by the Fund in Japan,
comply with the following standards of selection of the
Japan Securities Dealers Association.
1. The Fund may not make short sales of securities or
maintain a short position for the account of the Fund
unless at all times when a short position is open it owns
an equal amount of such securities or owns securities
which, without payment of any further consideration, are
convertible into or exchangeable for securities of the
same issue as, and equal in amount to, the securities
sold short;
2. The Fund may not invest in securities of any issuer
if, immediately after such investment, more than 5% of
the total assets of the Fund (taken at current value)
would be invested in the securities of such issuer,
provided that this limitation does not apply to
obligations issued or guaranteed as to interest or
principal by the U.S. government or its agencies or
instrumentalities;
3. The Fund may not acquire more than 10% of the
outstanding voting securities of any issuer or may not
acquire more than 15% of the outstanding voting
securities of any issuer together with other mutual funds
managed by Investment Management Company;
4. The Fund may not invest in the securities of other
registered open-end investment funds or companies, except
as they may be acquired as part of a merger,
consolidation or acquisition of assets;
5. The Fund may not invest more than 10% of the net
assets of the Fund in securities which are not traded on
an official stock exchange or other regulated market,
operating regularly and being recognized and open to the
public (which shall include, without limitation, the
National Association of Securities Dealers Automated
Quotation System). This restriction shall not be
applicable to bonds determined by Investment Management
Company to be liquid and for which a market price
(including a dealer quotation) is generally obtainable or
determinable.
If any violation of the foregoing standards occurs,
the Fund will, promptly after discovery of the violation,
take such action as may be necessary to cause the
violation to cease, which shall be the only obligation of
the Fund and the only remedy in respect of the violation.
Although the Fund is permitted under its investment
policies to invest without limit in so-called "interest-
only" (IO) and "principal-only" (PO) classes of mortgage-
backed securities, the Fund has no present intention of
investing more than 15% of its net assets in such
securities.
All percentage limitations on investments (other
than pursuant to non-fundamental restriction (1)) 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.
(C) Distribution Policy:
The Fund distributes net investment income monthly
and any net realized capital gains at least annually.
Distributions from net capital gains are made after
applying any available capital loss carryovers. A
capital loss carryover is currently available. The Fund
normally pays distributions around the 20th of each month
to investors who hold shares as of 10th day of each
month, although these dates are subject to change. The
payment to Japanese investors may be made until the end
of each month by Kokusai.
3. MANAGEMENT STRUCTURE
(A) Outline of Management of Assets, etc.:
A. Valuation of assets:
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
U.S. holidays: New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, the
Fourth of July, Labor Day, Thanksgiving and Christmas.
The Fund determines net asset value as of the close of
regular trading on the Exchange, currently 4:00 p.m.
However, equity options held by the Fund are priced as of
the close of trading at 4:10 p.m., and futures contracts
on U.S. government and other fixed-income securities and
index options held by the Fund are priced as of their
close of trading at 4:15 p.m.
Securities for which market quotations are readily
available are valued at prices which, in the opinion of
Investment Management Company, most nearly represent the
market values of such securities. Currently, such prices
are determined using the last reported sale price or, if
no sales are reported (as in the case of some securities
traded over-the-counter), the last reported bid price,
except that certain securities are valued at the mean
between the last reported bid and asked prices. Short-
term investments having remaining maturities of 60 days
or less are valued at amortized cost, which approximates
market value. All other securities and assets are valued
at their fair value procedures approved by the Trustees.
Liabilities are deducted from the total, and the
resulting amount is divided by the number of shares of
the class outstanding.
Reliable market quotations are not considered to be
readily available for long-term corporate bonds and
notes, certain preferred stocks, tax-exempt securities,
and certain foreign securities. These investments are
valued at fair value on the basis of valuations furnished
by pricing services, which determine valuations for
normal, institutional-size trading units of such
securities using methods based on market transactions for
comparable securities and various relationships between
securities which are generally recognized by
institutional traders.
If any securities held by the Fund are restricted as
to resale, Investment Management Company determines their
fair value using 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 using procedures approved by the
Trustees.
B. Management Fee, etc.:
(1) Management Fee:
(a) Management and Agent Securities Company Fees
Under a Management Contract dated July 8, 1994,
the Fund pays a quarterly fee to Investment
Management Company 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 0.57% of the first $500 million of average net
assets, 0.475% of the next $500 million, 0.4275% of
the next $500 million and 0.38% thereafter.
For the fiscal years ending on September 30,
1997, 1996 and 1995 the Fund paid $15,502,934,
$18,073,706 and $19,359,542, respectively as a
management fee.
(b) Custodian Fee and Charges of the Investor
Servicing Agent
Putnam Fiduciary Trust Company, the Fund's
Custodian, shall be entitled to receive, out of the
assets of the Fund, reasonable compensation for its
services and expenses as Custodian, as agreed from
time to time between the Fund and the Custodian, not
including fees paid by the Custodian to any sub-
custodian, payable monthly based on the average
daily total net assets of the Fund during the
relevant month. Any reasonable disbursements and
out-of-pocket expenses (including without limitation
telephone, telex, cable and postage expenses)
incurred by the Custodian, and any custody charges
of banks and financial institutions to whom the
custody of assets of the Fund is entrusted, will be
borne by the Fund.
The Fund will pay to Putnam Investor Services, a
division of Putnam Fiduciary Trust Company, the
Fund's Investor Servicing Agent, such fee, out of
the assets of the Fund, as is mutually agreed upon
in writing from time to time, in the amount, at the
time and in the manner of payment mutually agreed.
For the fiscal year ending on September 30,
1997, the Fund paid $6,884,036 as a custodian fee
and investor servicing agent fee.
(c) Fee on Class M Distribution Plan
The Class M distribution plan provides for
payments by the Fund to Putnam Mutual Funds Corp. at
the annual rate of up to 1.00% of average net assets
attributable to Class M shares. The Trustees
currently limit payments under the Class M plan to
the annual rate of 0.50% of such assets.
Putnam Mutual Funds Corp. makes quarterly
payments to Kokusai and other dealers at an annual
rate of 0.40% of the average net asset value of
Class M shares attributable to shareholders for whom
Kokusai and other dealers are designated as the
dealer of record.
Payments under the plan are intended to
compensate Putnam Mutual Funds Corp. for services
provided and expenses incurred by it as principal
underwriter of the Fund's shares, including the
payments to dealers mentioned above. Putnam Mutual
Funds Corp. may suspend or modify such payments to
dealers.
For the fiscal year ending September 30, 1997,
the Fund paid fees under the distribution plan of
$5,710,948, $13,744,900 and $35,185 for Class A
shares, Class B shares and Class M shares,
respectively.
(d) Other Expenses:
The Fund pays all expenses not assumed by
Investment Management Company, including Trustees'
fees, auditing, legal, custodial, investor servicing
and shareholder reporting expenses, and payments
under its distribution plans (which are in turn
allocated to the relevant class of shares). The
Fund also reimburses Investment Management Company
for the compensation and related expenses of certain
Fund officers and their staff who provide
administrative services. The total reimbursement is
determined annually by the Trustees and was $35,594
for Fiscal 1997.
Each Trustee receives a fee for his or her
services. Each Trustee also receives fees for
serving as Trustee of other Putnam funds. The
Trustees periodically review their fees to assure
that such fees continue to be appropriate in light
of their responsibilities as well as in relation to
fees paid to trustees of other mutual fund
complexes. The Trustees meet monthly over a two-day
period, except in August. The Compensation
Committee, which consists solely of Trustees not
affiliated with the Investment Management Company
and is responsible for recommending Trustee
compensation, estimates that Committee and Trustee
meeting time together with the appropriate
preparation requires the equivalent of at least
three business days per Trustee meeting. The
following table shows the year each Trustee was
first elected a Trustee of the Putnam funds, the
fees paid to each Trustee by the Fund for fiscal
1997 and the fees paid to each Trustee by all of the
Putnam funds during calendar 1996:
COMPENSATION TABLE
Pension on Estimated Total
Aggregate retirement annual benefits
compensation
compensation benefits accruedfrom
all from all
from the as part of Putnam funds Putnam
Trustees/Year fund (1) fund expenses (2) upon
retirement (3) funds (4)
Jameson A. Baxter/1994$3,915 $1,315 $85,646 $172,291
Hans H. Estin/1972 3,873 4,257 85,646 171,291
John A. Hill/1985 (5) 3,895 1,592 85,646 170,791
Ronald J. Jackson/1996 (5)(6) 3,915 232 85,646
94,807
Paul L. Joskow/1997 (7) - - - -
Elizabeth T. Kennan/19923,877 2,745 85,646 171,291
Lawrence J. Lasser/1992 *3,841 2,059 85,646 169,791
John H. Mullin, III/1997 (7) - - - -
Robert E. Patterson/19843,915 1,275 85,646 182,291
Donald S. Perkins/1982 *3,915 4,631 85,646 170,291
William F. Pounds/1971 (8)4,6294,375 98,146 197,291
George Putnam/1957 * 3,897 4,883 85,646 171,291
George Putnam, III/1984 *3,879 839 85,646 171,291
A.J.C. Smith/1986 * 3,800 2,849 85,646 169,791
W. Thomas Stephens/1997 (9) 267 - - -
W. Nicholas Thorndike/19923,9153,944 85,646 181,291
(1) Includes an annual retainer and an attendance fee
for each meeting attended.
(2) The Trustees approved a Retirement Plan for Trustees
of the Putnam funds on October 1, 1996. Prior to
that date, voluntary retirement benefits were paid
to certain retired Trustees.
(3) Assumes that each Trustee retires at the normal
retirement date. Estimated benefits for each
Trustee are based on Trustee fee rates in effect
during calendar 1996.
(4) As of December 31, 1996, there were 96 funds in the
Putnam family.
(5) Includes compensation deferred pursuant to a Trustee
Compensation Deferral Plan. The total amounts of
deferred compensation payable by the Fund to Mr.
Hill and Mr. Jackson as of September 30, 1996 were
$8,158 and $1,781, respectively, including income
earned on such amounts.
(6) Elected as a Trustee in May 1996.
(7) Elected as a Trustee in November 1997.
(8) Includes additional compensation for service as Vice
Chairman of the Putnam funds.
(9) Elected as a Trustee in September 1997.
* Is or may be deemed to be an "interested person," as
defined in the Investment Company Act of 1940, of
the Fund, Investment Management Company or Putnam
Mutual Funds Corp.
Under a Retirement Plan for Trustees of the
Putnam funds (the "Plan") each Trustee who retires
with at least five years of service as a Trustee of
the funds is entitled to receive an annual
retirement benefit equal to one-half of the average
annual compensation paid to such Trustee for the
last three years of service prior to retirement.
This retirement benefit is payable during a
Trustee's lifetime, beginning the year following
retirement, for a number of years equal to such
Trustee's years of service. A death benefit is also
available under the Plan which assures that the
Trustee and his or her beneficiaries will receive
benefit payments for the lesser of an aggregate
period of (i) ten years or (ii) such Trustee's total
years of service.
The Plan Administrator (a committee comprised of
Trustees who are not "interested persons" of the
Fund, as defined in the Investment Company Act of
1940) may terminate or amend the Plan at any time,
but no termination or amendment will result in a
reduction in the amount of benefits (i) currently
being paid to a Trustee at the time of such
termination or amendment, or (ii) to which a current
Trustee would have been entitled had he or she
retired immediately prior to such termination or
amendment.
Investment Management Company places all orders
for purchases and sales of Fund securities. In
selecting broker-dealers, Investment Management
Company may consider research and brokerage services
furnished to it and its affiliates. Subject to
seeking the most favorable price and execution
available, Investment Management Company may
consider sales of Fund shares (and, if permitted by
law, of the other Putnam Funds) as a factor in the
selection of broker-dealers. During fiscal 1995,
1996 and 1997, the Fund paid $0, $28,699 and $28,500
in brokerage commissions, respectively. During
fiscal 1996 the Fund did not pay any fee to brokers
and dealers to recognize research, statistical and
quotation services provided to Investment Management
Company and its affiliates.
For the fiscal year ending on September 30,
1997, the Fund paid $20,483,534 in total other
expenses, including payments under its distribution
plans, but excluding management fees, investor
servicing agent expenses and custodian expenses.
C. Sales, Repurchases and Custody:
(1) Sales of Shares:
a. Sales in the United States
Investors residing in the United States can open
a Fund account with as little as $500 and make
additional investments at any time with as little as
$50. They can buy Fund shares three ways - through
most investment dealers, through Putnam Mutual Funds
Corp. or through a systematic investment plan.
Buying shares through Putnam Mutual Funds Corp.
Complete an order form and write a check for the
amount shareholders wish to invest, payable to the
Fund. Return the completed form and check to Putnam
Mutual Funds Corp., which will act as investor's
agent in purchasing shares.
Buying shares through systematic investing.
Investors can make regular investments of $25 or
more per month through automatic deductions from
investor's bank checking or savings account.
Application forms are available from investor's
investment dealer or through Investor Servicing
Agent.
Shares are sold at the public offering price
based on the net asset value next determined after
Investor Servicing Agent receives a shareholder's
order. In most cases, in order to receive that day's
public offering price, Investor Servicing Agent must
receive a shareholder's order before the close of
regular trading on the New York Stock Exchange. If
shareholders buy shares through their investment
dealer, the dealer must receive the shareholders'
orders before the close of regular trading on the
New York Stock Exchange to receive that day's public
offering price.
U.S. Offering Price and Sales Charges
The public offering price of class M shares is
the net asset value plus a sales charge that varies
depending on the size of investor's purchase. The
Fund receives the net asset value. The sales charge
is allocated between an investor's investment dealer
and Putnam Mutual Funds Corp. as shown in the
following table, except when Putnam Mutual Funds
Corp., and its discretion, allocates the entire
amount to the investor's investment dealer.
Sales charge as
Amount of sales
a percentage of:
charge reallowed
Net to dealers as
a
Amount of transactionamount Offering percentage
of
at offering price ($) invested price
offering price
Under 50,000 3.36 % 3.25 %
3.00 %
50,000 but under 100,000 2.30 % 2.25 %
2.00 %
100,000 but under 250,000 1.52 % 1.50 %
1.25 %
250,000 but under 500,000 1.01 % 1.00 %
1.00 %
500,000 and above None None None
Class M qualified benefit plans (retirement
plans for which Putnam Fiduciary Trust Company or
its affiliates provide recordkeeping or other
services in connection with the purchase of Class M
shares) and members of qualified groups may also
purchase Class M shares without a sales charge.
An investor may be eligible to buy class M
shares at reduced sales charges. For fiscal 1996
and 1997, Putnam Mutual Funds Corp. received $69,481
and $25,529, respectively, in sales charges for
Class M shares, of which it retained $6,928 and
$2,522, respectively.
b. Sales in Japan
In Japan, Shares of the Fund are offered on any
Business Day and any business day of securities
company in Japan during the Subscription Period
mentioned in "8. Period of Subscription, Part I
Information concerning Securities" of a securities
registration statement pursuant to the terms set
forth in "Part I. Information concerning Securities"
of the relevant securities registration statement.
A Handling Securities Company shall provide to the
investors a Contract Concerning a Foreign Securities
Transactions Account (the "Contract") and receive
from such investors an application for requesting
the opening of a transactions account under the
Contract. The purchase shall be made in the minimum
investment amount of 100 shares and in integral
multiples of 100 shares.
The issue price for Shares during the
Subscription period shall be, in principle, the Net
Asset Value per Share next calculated on the day on
which the Fund has received such application. The
Trade Day in Japan is the day when the Handling
Securities Company confirms the execution of the
order (ordinarily the business day in Japan next
following the placement of orders), and the payment
and delivery shall be made on the fourth Business
Day after and including the Trade Day. The sales
charge in Japan shall be 3% of the amount obtained
by deduction of the amount equivalent to 3% of the
public offering price from such price (hereinafter
referred to as the "Sales Price"). Any amount,
which is over the net asset value, of the Sales
Price shall be retained by Putnam Mutual Fund Corp.,
principal underwriter of the Fund. The public
offering price means the amount calculated by
dividing the net asset value by (1- 0.0325) and
rounded to three decimal places.
The Investors having entrusted a Handling
Securities Company with safekeeping of the
certificates for Fund shares will receive a
certificate of safekeeping in exchange for the
purchase price. In such case payment shall be made
in yen in principle and the applicable exchange rate
shall be the exchange rate which shall be based on
the foreign exchange rate quoted in the Tokyo
Foreign Exchange Market on the Trade Day and which
shall be determined by such Handling Securities
Company. The payment may be made in dollars to the
extent that the Handling Securities Companies can
agree.
In addition, Handling Securities Companies in
Japan who are members of the Japan Securities
Dealers' Association cannot continue sales of the
Shares in Japan when the net assets of the Fund are
less than Yen500,000,000 or the Shares otherwise cease
to comply with the "Standards of Selection of
Foreign Investment Fund Securities" established by
the Association.
(2) Repurchase of Shares:
a. Repurchase in the United States
A shareholder can sell his shares to the Fund
any day the New York Stock Exchange is open, either
directly to the Fund or through his investment
dealer. The Fund will only redeem shares for which
it has received payment.
Selling shares directly to the Fund. A
shareholder must send a signed letter of instruction
or stock power form to Investor Servicing Agent,
along with any certificates that represent shares a
shareholder wants to sell. The price a shareholder
will receive is the next net asset value calculated
after the Fund receives the shareholder's request in
proper form. In order to receive that day's net
asset value, Investor Servicing Agent must receive a
shareholder's request before the close of regular
trading on the New York Stock Exchange.
If a shareholder sells 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.
If a shareholder wants his redemption proceeds
sent to an address other than his address as it
appears on records of the Investor Servicing Agent,
a signature guarantee is required. Investor
Servicing Agent usually requires additional
documentation for the sale of shares by a
corporation, partnership, agent or fiduciary, or a
surviving joint owner.
The Fund generally sends shareholders payment
for shareholders' shares the business day after
shareholders' request is received. Under unusual
circumstances, the Fund may suspend repurchase, or
postpone payment for more than seven days, as
permitted by U.S. securities law.
A shareholder may use Investor Servicing Agent's
Telephone Redemption Privilege to redeem shares
valued up to $100,000 unless he has notified
Investor Servicing Agent of an address change within
the preceding 15 days. Unless an investor indicates
otherwise on the account application, Investor
Servicing Agent will be authorized to act upon
redemption and transfer instructions received by
telephone from a shareholder, or any person claiming
to act as his representative, who can provide
Investor Servicing Agent with his account
registration and address as it appears on Investor
Servicing Agent's records.
Investor Servicing Agent will employ these and
other reasonable procedures to confirm that
instructions communicated by telephone are genuine;
if it fails to employ reasonable procedures,
Investor Servicing Agent may be liable for any
losses due to unauthorized or fraudulent
instructions.
During periods of unusual market changes and
shareholder activity, a shareholder may experience
delays in contacting Investor Servicing Agent by
telephone. In this event, the shareholder may wish
to submit a written redemption request, as described
above, or contact shareholders' investment dealer.
The Telephone Redemption Privilege is not available
if the shareholder was issued certificates for
shares that remain outstanding. The Telephone
Redemption Privilege may be modified or terminated
without notice.
Selling shares through investment dealers. A
shareholder's dealer must receive shareholders'
request before the close of regular trading on the
New York Stock Exchange to receive that day's net
asset value. A shareholder's dealer will be
responsible for furnishing all necessary
documentation to Investor Servicing Agent, and may
charge a shareholder for its services.
b. Repurchase in Japan
Shareholders in Japan may at any time request
repurchase of their Shares. Repurchase requests in
Japan may be made to Investor Servicing Agent
through the Handling Securities Company on a Fund
Business Day that is business day of securities
companies in Japan without a contingent deferred
sales charge. The repurchase shall be made is
integral multiples of 1 shares.
The price a shareholder in Japan will receive is
the next net asset value calculated after the Fund
receives the repurchase request from Kokusai,
provided the request is received before the close of
regular trading on the New York Stock Exchange. The
payment of the price shall be made in yen through
the Handling Securities Companies pursuant to the
Contracts or, if the Handling Securities Companies
agree, in dollars. The payment for repurchase
proceeds shall be made on the fourth business day of
securities companies in Japan after and including
the Trade Day.
(3) Suspension of Repurchase:
The Fund may suspend shareholders' right of
redemption, or postpone payment for more than seven
days, if the New York Stock Exchange is closed for
other than customary weekends or holidays, or if
permitted by the rules of the U.S. 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 U.S. Securities and
Exchange Commission for protection of investors.
(4) Custody of Shares:
Share certificates shall be held by Shareholders
at their own risk.
The custody of the Share certificates (if
issued) representing Shares sold to Japanese
Shareholders shall, unless otherwise instructed by
the Shareholder, be held, in the name of the
custodian, by the custodian of Kokusai.
Certificates of custody for the Shares shall be
delivered by the Handling Securities Companies to
the Japanese Shareholders.
D. Miscellaneous:
(1) Duration and Liquidation:
Unless terminated, the Fund shall continue
without limitation of time. The Fund 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 of the Fund by written
notice to the Shareholders.
(2) Accounting Year:
The accounts of the Fund will be closed each
year on 30th September.
(3) Authorized Shares:
There is no prescribed authorized number of
Shares, and Shares may be issued from time to time.
(4) Agreement and Declaration of Trust:
Originals or copies of the Agreement and
Declaration of Trust, as amended, are maintained in
the office of the Fund and are made available for
public inspection for the Shareholders. Originals
or copies of the Agreement and Declaration of Trust,
as amended, are on file in the United States with
the Secretary of State of The Commonwealth of
Massachusetts and with the Clerk of the City of
Boston.
The Agreement and 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 Fund 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.
In Japan, material changes in the Agreement and
Declaration of Trust shall be published or notice
thereof shall be sent to the Japanese Shareholders.
(5) Issue of Warrants, Subscription Rights, etc.:
The Fund may not grant privileges to purchase
shares of the Fund to shareholders or investors by
issuing warrants, subscription rights or options, or
other similar rights.
(6) How Performance Is Shown:
Fund advertisements may, from time to time,
include performance information. "Yield" 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 on the
last day of that period.
For purposes of calculating yield, net
investment income is calculated in accordance with
U.S. Securities and Exchange Commission regulations
and may differ from net investment income as
determined for tax purposes. U.S. Securities and
Exchange Commission 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.
Yield is based on the price of the shares,
including the maximum initial sales charge.
"Total return" for the one-, five- and ten-year
periods (or for the life of the Fund, if shorter)
through the most recent calendar quarter represents
the average annual compounded rate of return on an
investment of $1,000 in the Fund invested at the
maximum public offering price. Total return may
also be presented for other periods or based on
investment at reduced sales charge levels. Any
quotation of investment performance not reflecting
the maximum initial sales charge or contingent
deferred sales charge would be reduced if the sales
charge were used. For the one-year, five-year and
ten-year periods ended September 30, 1997, the
average annual total return for Class M shares of
the Fund was 5.86%, 4.89% and 7.54%, respectively.
Returns for Class M shares reflect the deduction of
the current maximum initial sales charge of 3.25%
for Class M shares. Returns shown for Class M
shares for periods prior to February 6, 1995 are
derived from the historical performance of Class A
shares, adjusted to reflect both the deduction of
the initial sales charge and the higher operating
expenses applicable to Class M shares. The 30-day
yield for the Class M shares of the Fund for the
period ended September 30, 1997 was 5.92%.
All data are based on past investment results
and do not predict future performance. Investment
performance, which will vary, is based on many
factors, including market conditions, portfolio
composition, Fund operating expenses and the class
of shares the investor purchases. Investment
performance also often reflects the risks associated
with the Fund's investment objective and policies.
These factors should be considered when comparing
the Fund's investment results with 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. Fund performance may be compared to that of
various indexes.
(B) Outline of Disclosure System:
(1) Disclosure in U.S.A.:
(i) Disclosure to shareholders
In accordance with the Investment Company Act of
1940, the Fund is required to send to its
shareholders annual and semi-annual reports
containing financial information.
(ii)Disclosure to the SEC
The Fund has filed a registration statement with
the SEC on Form N-1A; the Fund updates that
registration statement periodically in accordance
with the Investment Company Act of 1940.
(2) Disclosure in Japan:
a. Disclosure to the Supervisory Authority:
When the Fund intends to offer the Shares
amounting to more than 500 million yen in Japan, it
shall submit to the Minister of Finance of Japan
securities registration statements together with the
copies of the Agreement and Declaration of the Fund
and the agreements with major related companies as
attachments thereto. The said documents are made
available for public inspection for investors and
any other persons who desire at the Ministry of
Finance.
The Handling Securities Companies of the Shares
shall deliver to the investors prospectuses the
contents of which are substantially identical to
Part I and Part II of the securities registration
statements. For the purpose of disclosure of the
financial conditions, etc., the Trustees shall
submit to the Minister of Finance of Japan
securities reports within 6 months of the end of
each fiscal year, semi-annual reports within 3
months of the end of each semi-annual period and
extraordinary reports from time to time when changes
occur as to material subjects of the Fund. These
documents are available for public inspection for
the investors and any other persons who desire at
the Ministry of Finance.
b. Disclosure to Japanese Shareholders:
The Japanese Shareholders will be notified of
the material facts which would change their
position, including material amendments to the
Agreement and Declaration of Trust of the Fund, and
of notices from the Trustees, through the Handling
Securities Companies.
The financial statements shall be sent to the
Japanese Shareholders through the Handling
Securities Companies or the summary thereof shall be
carried in daily newspapers.
(C) Restrictions on Transactions with Interested Parties:
Portfolio securities of the Fund may not be
purchased from or sold or loaned to any Trustee of the
Fund, Putnam Investment Management, Inc., acting as
investment adviser of the Fund, or any affiliate thereof
or any of their directors, officers, or employees, or any
major shareholder thereof (meaning a shareholder who
holds to the actual knowledge of Investment Management
Company, on his own account whether in his own or other
name (as well as a nominee's name), 10% or more of the
total issued outstanding shares of such a company) acting
as principal or for their own account unless the
transaction is made within the investment restrictions
set forth in the Fund's prospectus and statement of
additional information and either (i) at a price
determined by current publicly available quotations
(including a dealer quotation) or (ii) at competitive
prices or interest rates prevailing from time to time on
internationally recognized securities markets or
internationally recognized money markets (including a
dealer quotation).
4. INFORMATION CONCERNING THE EXERCISE OF RIGHTS BY
SHAREHOLDERS, ETC.
(A) Rights of Shareholders and Procedures for Their Exercise:
Shareholders must register their shares in their own
name in order to exercise directly their rights as
Shareholders. Therefore, the Shareholders in Japan who
entrust the custody of their Shares to the Handling
Securities Company cannot exercise directly their
Shareholder rights, because their Shares are registered
in the name of the custodian. Shareholders in Japan may
have the Handling Securities Companies exercise their
rights on their behalf in accordance with the Contract
with the Handling Securities Companies.
Shareholders in Japan who do not entrust the custody
of their Shares to the Handling Securities Companies may
exercise their rights in accordance with their own
arrangement under their own responsibility.
The major rights enjoyed by Shareholders are as
follows:
(i) Voting rights
Each share has one vote, with fractional shares
voting proportionally. Shares of each class will
vote together as a single class except when
otherwise required by law or as determined by the
Trustees. Although the Fund is not required to hold
annual meetings of its shareholders, shareholders
holding at least 10% of the outstanding shares
entitled to vote have the right to call a meeting to
elect or remove Trustees, or to take other actions
as provided in the Agreement and Declaration of
Trust.
(ii)Repurchase rights
Shareholders are entitled to request repurchase
of Shares at their Net Asset Value at any time.
(iii) Rights to receive dividends
Shareholders are entitled to receive any
distribution from net investment income monthly and
any net realized capital gains at least annually.
Distributions from capital gains are made after
applying any available capital loss carryovers.
Shareholders may choose three distribution
options, though investors in Japan may only choose
the last alternative.
- Reinvest all distributions in additional
shares without a sales charge;
- Receive distributions from net investment
income in cash while reinvesting capital gains
distributions in additional shares without a sales
charge; or
- Receive all distributions in cash.
(iv)Right to receive distributions upon dissolution
Shareholders of the Fund are entitled to receive
distributions upon dissolution in proportion to the
number of shares then held by them, except as
otherwise required.
(v) Right to inspect accounting books and the like
Shareholders are entitled to inspect the
Agreement and Declaration of Trust, the accounting
books at the discretion of the Court and the minutes
of any shareholders' meetings.
(vi)Right to transfer shares
Shares are transferable without restriction except
as limited by applicable law.
(vii) Rights with respect to the U.S.
registration statement
If, under the 1933 Act, there is any false
statement concerning any important matter in the
U.S. Registration Statement, or any omission of any
statement of important matters to be stated therein
or not to cause any misunderstanding, shareholders
are generally entitled to institute a lawsuit,
against the person who had signed the relevant
Registration Statement, the trustee of the issuer
(or any person placed in the same position) at the
time of filing such Statement, any person involved
in preparing such Statement or any subscriber of the
relevant shares.
(B) Tax Treatment of Shareholders in Japan:
The tax treatment of Shareholders in Japan shall be
as follows:
(1) The distributions to be made by the Fund will be
treated as distributions made by a domestic investment
trust.
a. The distributions to be made by the Fund to
Japanese individual shareholders will be subject to
separate taxation from other income (i.e.
withholding of income tax at the rate of 15% and
withholding of local taxes at the rate of 5% in
Japan). In this case, no report concerning
distributions will be filed with the Japanese tax
authorities.
b. The distributions to be made by the Fund to
Japanese corporate shareholders will be subject to
withholding of income tax at the rate of 15% and to
withholding of local taxes at the rate of 5% in
Japan. In certain cases, the Handling Securities
Companies will prepare a report concerning
distributions and file such report with the Japanese
tax authorities.
c. Net investment returns such as dividends, etc.
and distributions of short-term net realized capital
gain, among distributions on Shares of the Fund,
will be, in principle, subject to withholding of U.
S. federal income tax at the rate of 15% and the
amount obtained after such deduction will be paid in
Japan.
Distributions of long-term net realized capital
gain will not be subject to withholding of U. S.
federal income tax and the full amount thereof will
be paid in Japan. The amount subject to withholding
of U. S. federal income tax may be deducted from the
tax levied on a foreign entity in Japan.
The Japanese withholding tax imposed on
distributions as referred to in a. and b. above will
be collected by way of so-called "difference
collecting method." In this method only the
difference between the amount equivalent to 20% of
the distributions before U.S. withholding tax and
the amount of U.S. withholding tax withheld in the
U.S. will be collected in Japan.
(2) The provisions of Japanese tax laws giving the
privilege of a certain deduction from taxable income to
corporations, which may apply to dividends paid by a
domestic corporation, shall not apply.
(3) Capital gains and losses arising from purchase and
repurchase of the Shares shall be treated in the same way
as those arising from purchase and sale of a domestic
investment trust. The distribution of the net
liquidation assets shall be also treated in the same way
as those arising from liquidation of a domestic
investment trust.
(4) The Japanese securities transaction tax will not be
imposed so far as the transactions concerned are
conducted outside Japan. Such tax, however, is
applicable to dealers' transactions for their own account
and to privately negotiated transactions conducted in
Japan.
(C) Foreign Exchange Control in U.S.A.:
In U.S.A., there are no foreign exchange control
restrictions on remittance of dividends, repurchase
money, etc. of the Shares to Japanese Shareholders.
(D) Agent in Japan:
Hamada & Matsumoto
Kasumigaseki Building, 25th Floor
2-5, Kasumigaseki 3-chome
Chiyoda-ku, Tokyo
The foregoing law firm is the true and lawful agent
of the Fund to represent and act for the Fund in Japan
for the purpose of;
(1) the receipt of any and all communications, claims,
actions, proceedings and processes as to matters
involving problems under the laws and the rules and
regulations of the JSDA and
(2) representation in and out of court in connection
with any and all disputes, controversies or differences
regarding the transactions relating to the public
offering, sale and repurchase in Japan of the Shares of
the Fund.
The agent for the registration with the Japanese
Minister of Finance of the initial public offering
concerned as well as for the continuous disclosure is
each of the following persons:
Harume Nakano
Ken Miura
Attorneys-at-law
Hamada & Matsumoto
Kasumigaseki Building, 25th Floor
2-5, Kasumigaseki, 3-chome
Chiyoda-ku, Tokyo
(E) Jurisdiction:
Limited only to litigation brought by Japanese
investors regarding transactions relating to (D)(2)
above, the Fund has agreed that the following court has
jurisdiction over such litigation and the Japanese law is
applicable thereto:
Tokyo District Court
1-4, Kasumigaseki 1-chome
Chiyoda-ku, Tokyo
5. STATUS OF INVESTMENT FUND
(A) Diversification of Investment Portfolio
Note:Investment ration is calculated by dividing each
asset at its market value by the total Net Asset
Value of the Fund. The same applies hereinafter.
(B) Results of Past Operations
(1) Record of Changes in Net Assets (Class M Shares)
Record of changes in net assets at the end of the
following fiscal years and at the end of each month
within one year prior to the end of September, 1997 is as
follows:
(Note) Operations of Class M Shares were commenced on
February 6, 1995.
(2) Record of Distributions Paid
(Note) Record of distribution paid from February 1995 to
September 1997 are as follows:
(C) Record of Sales and Repurchases
Record of sales and repurchases during the following
fiscal years and number of outstanding Shares of the Fund as
of the end of such Fiscal Years are as follows:
Number of Number of Number of
Shares Sold Shares Outstanding
Repurchased Shares
1st Fiscal 217,478 16,150 201,328
Year (0) (0) (0)
(2/6/94-
9/30/95)
2nd Fiscal 509,261 226,315 484,274
Year (0) (0) (0)
(10/1/95-
9/30/96)
3rd Fiscal 702,884 583,426 603,732
Year (0) (0) (0)
(10/1/96-
9/30/97)
Note: The number of Shares sold, repurchased and
outstanding in the parentheses represents those sold,
repurchased and outstanding in Japan. The Share will be
sold in Japan from December 4, 1997.
II. OUTLINE OF THE FUND
1. Fund
(A) Law of Place of Incorporation
The Fund is a Massachusetts business trust organized
in Massachusetts, U.S.A. on November 1, 1983.
Chapter 182 of the Massachusetts General Laws
prescribes the fundamental matters in regard to the
operations of certain business trusts constituting
voluntary associations under that chapter.
The Fund is an open-end, diversified management
company under the Investment Company Act of 1940.
(B) Outline of the Supervisory Authority
Refer to I - l (B) Outline of the Supervisory
Authority.
(C) Purpose of the Fund
The purpose of the Fund is to provide investors a
managed investment primarily in securities, debt
instruments and other instruments and rights of a
financial character.
(D) History of the Fund
November 1, 1983:
Organization of the Fund as a
Massachusetts business trust.
Adoption of the Agreement and
Declaration of Trust.
January 10, 1992:
Adoption of the Amended and
Restated Agreement and
Declaration of Trust.
(E) Amount of Capital Stock
Not applicable.
(F) Structure of the management of the Fund
The Trustees are responsible for generally
overseeing the conduct of the Fund's business. The
Agreement and Declaration of Trust provides that they
shall have all powers necessary or convenient to carry
out that responsibility. The number of Trustees is fixed
by the Trustees and may not be less than three. A
Trustee may be elected either by the Trustees or by the
shareholders. At any meeting called for the purpose, a
Trustee may be removed by vote of two-thirds of the
outstanding shares of the Fund. 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.
The Trustees of the Fund are authorized by the
Agreement and Declaration of Trust to issue shares of the
Fund in one or more series, each series being preferred
over all other series in respect of the assets allocated
to that series. The Trustees may, without shareholder
approval, divide the shares of any series into two or
more classes, with such preferences and special or
relative rights and privileges as the Trustees may
determine.
Under the Agreement and Declaration of Trust the
shareholders shall have power, as and to the extent
provided therein, to vote only (i) for the election of
Trustees, to the extent provided therein (ii) for the
removal of Trustees, to the extent provided therein (iii)
with respect to any investment adviser, to the extent
provided therein (iv) with respect to any termination of
the Fund, to the extent provided therein (v) with respect
to certain amendments of the Agreement and Declaration of
Trust, (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 Fund or the shareholders, and
(vii) with respect to such additional matters relating to
the Fund as may be required by the Agreement and
Declaration of Trust, the Bylaws of the Fund, or any
registration of the Fund with the U.S. Securities and
Exchange Commission (or any successor agency) or any
state, or as the Trustees may consider necessary or
desirable. Certain of the foregoing actions may, in
addition, be taken by the Trustees without vote of the
shareholders of the Fund.
On any matter submitted to a vote of shareholders,
all shares of the Fund then entitled to vote are voted in
the aggregate as a single class without regard to series
or classes of shares, except (1) when required by the
Investment Company Act of 1940, as amended, or when the
Trustees hall have determined that the matter affects one
or more series or classes of shares materially
differently, share are voted by individual series or
class; and (2) when the Trustees have determined that the
matter affects on the interests of one or more series or
classes, then only shareholders of such series or classes
are entitled to vote thereon. There is no cumulative
voting.
Meetings of shareholders may 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 the meeting. Written notice of any
meeting of shareholders must be given by mailing the
notice at least seven days before the meeting. Thirty
percent of shares entitled to vote on a particular matter
is a quorum for the transaction of business on that
matter at a shareholders' meeting, except that, where any
provision of law or of the Agreement and Declaration of
Trust permits or requires that holders of any series or
class vote as an individual series or class, then thirty
percent of the aggregate number of shares of that series
or class entitled to vote are necessary to constitute a
quorum for the transaction of business by that series or
class. For the purpose of determining the shareholders
of any class or series of shares who are entitled to vote
or act at any meeting, or who are entitled to receive
payment of any dividend or other distribution, the
Trustees are authorized to fix record dates, which may
not be more then 90 days before the date of any meeting
of shareholders or more than 60 days before the date of
payment of any dividend or other distribution.
The Trustees are authorized by the Agreement and
Declaration of Trust to adopt Bylaws not inconsistent
with the Agreement and Declaration of Trust providing for
the conduct of the business of the Fund. The Bylaws
contemplate that the Trustees shall elect a Chairman of
the Trustees, the President, the Treasurer, and the Clerk
of the Fund, and that other officers, if any, may be
elected or appointed by the Trustees at any time. The
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.
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. 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 or
to give notice to him or her in person or by telephone at
least twenty-four hours before the meeting.
At any meeting of Trustees, a majority of the
Trustees then in office shall constitute a quorum.
Except as otherwise provided in the Agreement and
Declaration of Trust or Bylaws, any action to be taken by
the Trustees may be taken by a majority of the Trustees
present at a meeting (a quorum being present), or by
written consents of a majority of the Trustees then in
office.
Subject to a favorable majority shareholder vote (as
defined in the Agreement and Declaration of Trust),
the
Trustees may contract for exclusive or nonexclusive
advisory and/or management services with any corporation,
trust, association, or other organization.
The Agreement and Declaration of Trust contains
provisions for the indemnification of Trustees, officers,
and shareholders of the Fund under the circumstances and
on the terms specified therein.
The Fund may be terminated at any time by vote of
shareholders holding at least two-thirds 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 two-
thirds of the shares of such series entitled to vote or
by the Trustees by written notice to the shareholders of
such series.
The foregoing is a general summary of certain
provisions of the Agreement and Declaration of Trust and
Bylaws of the Fund, and is qualified in its entirety by
reference to each of those documents.
(G) Information Concerning Major Shareholders
Not applicable.
(H) Information Concerning Directors, Officers and Employees
(1) Trustees and Officers of the Fund
(as of September 30, 1997)
Shares
Name Office and Resume Owned
Title
George Putnam Chairman and present: Chairman and 10,712
President Director of .779
Putnam Management
and Putnam Mutual
Funds Corp.
Director, Marsh &
McLennan
Companies, Inc.
William F. Vice present: Professor of
Pounds Chairman Management, 1,283.522
Alfred P. Sloan
School of
Management,
Massachusetts
Institute of
Technology
Jameson Adkins Trustee present: President,
Baxter Baxter 127.120
Associates, Inc.
Hans H. Estin Trustee present: Vice Chairman,
North American 175.540
Management Corp.
John A. Hill Trustee present: Chairman and
Managing 469.744
Director, First
Reserve
Corporation
Ronald J. Trustee present: Former
Jackson Chairman, 129.500
President and
Chief Executive
Officer of Fisher-
Price, Inc.,
Trustee of Salem
Hospital and the
Peabody Essex
Museum
Paul. L. Trustee present: Professor of 0 *
Joskow Economics and
Management and
Head of the
Department of
Economics at the
Massachusetts
Institute of
Technology
Elizabeth T. Trustee present: President
Kennan Emeritus and 434.897
Professor, Mount
Holyoke College
Lawrence J. Trustee and present: President,
Lasser Vice Chief Executive 144.605
President Officer and
Director of
Putnam
Investments, Inc.
and the
Investment
Management
Company
Director, Marsh &
McLennan
Companies, Inc.
John H. Trustee present: Chairman and 0 *
Mullin, III Chief Executive
Officer of
Ridgeway Farm,
Robert E. Trustee present: Executive Vice
Patterson President and 918.448
Director of
Acquisitions,
Cabot Partners
Limited
Partnership
Donald S. Trustee present: Director of
Perkins various 1,182.076
corporations,
including Cummins
Engine Company,
Lucent
Technologies,
Inc., Springs
Industries, Inc.
and Time Warner
Inc.
George Putnam, Trustee present: President, New
III Generation 2,081.712
Research, Inc.
A.J.C. Smith Trustee present: Chairman and
Chief Executive 659.138
Officer, Marsh &
McLennan
Companies, Inc.
W. Thomas Trustee present: President and 0
Stephens Chief Executive
Officer of
MacMillian
Bloedel Ltd.,
Director of Mail-
well Inc., Qwest
Communications,
The Eagle Picher
Trust and New
Century Energies
W. Nicholas Trustee present: Director of 0
Thorndike various
corporations and
charitable
organizations,
including Data
General
Corporation,
Bradley Real
Estate, Inc. and
Providence
Journal Co.
Trustee of
Massachusetts
General Hospital
and Eastern
Utilities
Associations
Charles E. Executive present: Managing 0
Porter Vice Director of
President Putnam
Investments, Inc.
and the
Investment
Management
Company
Patricia C. Senior Vice present: Senior Vice 0
Flaherty President President of
Putnam
Investments, Inc.
and the
Investment
Management
Company
William N. Vice present: Director and 0
Shiebler President Senior Managing
Director of
Putnam
Investments, Inc.
President and
Director of
Putnam Mutual
Funds
Gordon H. Vice present: Director and 0
Silver President Senior Managing
Director of
Putnam
Investments, Inc.
and the
Investment
Management
Company
Paul M. O'Neil Vice present: Vice President 0
President of Putnam
Investments, Inc.
and the
Investment
Management
Company
John D. Hughes Vice present Senior Vice 0
President President of the
and Investment
Treasurer Management
Company
Beverly Marcus Clerk and N/A 0
Assistant
Treasurer
Gary N. Coburn Vice present Senior 0
President Managing Director
of Putnam
Investments, Inc.
and the
Investment
Management
Company
John R. Verani Vice present Senior Vice 0
President President of
Putnam
Investment, Inc.
and the
Investment
Management
Company
Kenneth J. Vice present Senior Vice 0
Taubes President President of
Putnam
Investments, Inc.
and Putnam
Management
William J. Vice present Managing 0
Curtin President Director of
Putnam
Investments, Inc.
and the
Investment
Management
Company
* A trustee of the Fund on November 6, 1997 and therefore
did not own any shares of the Fund as of September 30,
1997.
(2) Employees of the Fund
The Fund does not have any employees.
(I) Description of Business and Outline of Operation
The Fund may carry out any administrative and
managerial act, including the purchase, sale,
subscription and exchange of any securities, and the
exercise of all rights directly or indirectly pertaining
to the Fund's assets. The Fund has retained Putnam
Investment Management, Inc., the investment adviser, to
render investment advisory services, and Putnam Fiduciary
Trust Company, to hold the assets of the Fund in custody
and act as Investor Servicing Agent.
(J) Miscellaneous
(1) Changes of Trustees and Officers
Trustees may be removed or replaced by, among
other things, a resolution adopted by a vote of two-
thirds of the outstanding shares at a meeting called
for the purpose. In the event of vacancy, the
remaining Trustees may fill such vacancy by
appointing for the remaining term of the predecessor
Trustee such other person as they in their
discretion shall see fit. The Trustees may add to
their number as they consider appropriate. The
Trustees may elect and remove officers as they
consider appropriate.
(2) Amendment to the Agreement and Declaration of Trust
Generally, approval of shareholders is required
to amend the Agreement and Declaration of Trust,
except for certain matters such as change of name,
curing any ambiguity or curing any defective or
inconsistent provision.
(3) Litigation and Other Significant Events
Nothing which has or which would have a material
adverse effect on the Fund has occurred which has
not been disclosed. The fiscal year end of the Fund
is September 30. The Fund is established for an
indefinite period and may be dissolved at any time
by vote of the shareholders holding at least two-
thirds of the shares entitled to vote or by the
Trustees by written notice to shareholders.
2. Putnam Investment Management, Inc. (Investment Management
Company)
(A) Law of Place of Incorporation
Putnam is incorporated under the General Corporation Law
of The Commonwealth of Massachusetts, U.S.A. Its
investment advisory business is regulated under the
Investment Advisers Act of 1940.
Under the Investment Advisers Act of 1940, an investment
adviser means, with certain exceptions, any person who,
for compensation, engages in the business of advising
others, either directly or through publications or
writings, as to the value of securities or as to the
advisability of investing in, purchasing or selling
securities, or who, for compensation and as part of a
regular business, issues analyses or reports concerning
securities. Investment advisers under the Act may not
conduct their business unless they are registered with
the SEC.
(B) Outline of the Supervisory Authority
Investment Management Company is registered as an
investment adviser under the Investment Advisers Act of
1940.
(C) Purpose of the Company
Investment Management Company's sole business is
investment management, which includes the buying,
selling, exchanging and trading of securities of all
descriptions on behalf of mutual funds in any part of the
world.
(D) History of the Company
Investment Management Company is one of America's oldest
and largest money management firms. Investment
Management Company'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. Investment Management
Company has been managing mutual funds since 1937.
Today, the firm serves as the Investment Management
Company for the funds in the Putnam Family, with over
$176 billion in assets in over 8 million shareholder
accounts at the end of September, 1997. 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 as well as shareholder
and custody services to the Putnam Funds.
Putnam Investment Management Inc., Putnam Mutual Funds
and Putnam Fiduciary Trust Company are subsidiaries of
Putnam Investments, Inc., which is a subsidiary of Marsh
& McLennan Companies, Inc., a publicly-owned holding
company whose principal businesses are international
insurance and reinsurance brokerage, employee benefit
consulting and investment management.
(E) Amount of Capital Stock (as of the end of September,
1997)
1. Amount of Capital (issued capital stock at par
value):
Common Stock 1,000 shares at $1 par value
2. Number of authorized shares of capital stock:
Common Stock 1,000 shares
3. Number of outstanding shares of capital stock:
Common Stock 1,000 shares
4. Amount of capital (for the purposes of this Item,
"Amount of Capital" means total stockholders' equity
for the past five years:
Amount of Capital
Year (Total Stockholders' Equity)
End of 1992 $42,618,341
End of 1993 $49,847,760
End of 1994 $48,149,491
End of 1995 $45,521,351
End of 1996 $45,817,658
(F) Structure of the Management of the Company
Investment Management Company is ultimately managed by
its Board of Directors, which is elected by its
shareholders.
Each fund managed by Investment Management Company is
managed by one or more portfolio managers. These
managers, in coordination with analysts who research
specific securities and other members of the relevant
investment group (in the case of the Fund, Investment
Management Company's Fixed Income Investments Group),
provide a continuous investment program for the Fund and
place all orders for the purchase and sale of portfolio
securities.
The investment performance and portfolio of each Fund is
overseen by its Board of Trustees, a majority of whom are
not affiliated with Investment Management Company. The
Trustees meet 11 times a year and review the performance
of each fund with its manager at least quarterly.
In selecting portfolio securities for the Fund,
Investment Management Company looks for securities that
represent attractive values based on careful issue-by-
issue credit analysis and hundreds of onsite visits and
other contacts with issuers every year. Investment
Management Company is one of the largest managers of high
yield and other debt securities in the United States.
The following officer of Investment Management Company
has had primary responsibility for the day-to-day
management of the Fund's portfolio since the years stated
below:
(as of the end of September, 1997)
Names Year Business Experience
(at least 5 years)
Michael Martino 199 Employed as an investment professional by
4 Putnam Management since January 1994.
Prior to January, 1994, he was employed by
Back Bay Advisors in the positions of
Executive Vice President and Chief
Investment Officer from 1992 to 1994, and
Senior Vice President and Senior Portfolio
Manager prior to 1992
(G) Information Concerning Major Stockholders
As of the end of September, 1997, all the outstanding
shares of capital stock of Investment Management Company
were owned by Putnam Investments, Inc. See subsection D
above.
(H) Information Concerning Officers and Employees
The following table lists the names of various officers
and directors of Investment Management Company and their
respective positions with Investment Management Company.
For each named individual, the table lists: (i) any other
organizations (excluding other Investment Management
Company's funds) with which the officer and/or director
has recently had or has substantial involvement; and (ii)
positions held with such organization:
List of Officers and Directors of Putnam Investment
Management, Inc.
( as of September
30,
1997)
Position with
Putnam
Name Investment Other Business Affiliation
Management,
Inc.
Putnam, Chairman Chairman of Putnam Mutual
George Funds Corp.
Lasser, President and
Lawrence Director
J.
Silver, Director and Putnam Fiduciary Trust
Gordon H. Senior Company
Managing Senior Administrative
Director Officer and Director of
Putnam Mutual Funds Corp.
Burke, Director and Senior Managing Director of
Robert W. Senior Putnam Mutual Funds Corp.
Managing
Director
Coburn, Senior
Gary N. Managing
Director
Ferguson, Senior
Ian C. Managing
Director
Spiegel, Director and Senior Managing Director of
Steven Senior Putnam Mutual Funds Corp.
Managing
Director
Anderson, Managing
Blake E. Director
Bankart, Managing
Alan J. Director
Bogan, Managing
Thomas Director
Browchuk, Managing
Brett Director
Collman, Managing Managing Director of Putnam
Kathleen Director Mutual Funds Corp.
M.
Curtin, Managing
William Director
J.
D'Alelio, Managing
Edward H. Director
DeTore, Managing Managing Director of Putnam
John A. Director Fiduciary Trust Company
Durgarian Managing Director and Managing
, Karnig Director Director of Putnam Fiduciary
H. Trust Company
Esteves, Senior
Irene M. Managing
Director
Hurley, Managing Managing Director of Putnam
William Director Mutual Funds Corp.
J.
Jacobs, Managing
Jerome J. Director
Kearney, Managing Managing Director of Putnam
Mary E. Director Mutual Funds Corp.
Kohli, D. Managing
William Director
Kreisel, Managing
Anthony Director
I.
Landes, Managing
William Director
J.
Maloney, Managing
Kevin J. Director
Martino, Managing
Michael Director
Maxwell, Managing
Scott M. Director
McGue, Managing
William Director
F.
McMullen, Managing
Carol C. Director
Miller, Managing
Daniel L. Director
Montgomer Managing
y, Director
Kenneth
Morgan Managing Managing Director of Putnam
Jr., John Director Fiduciary Trust Company
J.
O'Donnell Managing
Jr., C. Director
Patrick
Peacher, Managing
Stephen Director
C.
Porter, Managing
Charles Director
E.
Reilly, Managing
Thomas V. Director
Scott, Managing Managing Director of Putnam
Justin M. Director Fiduciary Trust Company
Talanian, Managing Managing Director of Putnam
John C. Director Mutual Funds Corp.
Woolverto Managing Managing Director of Putnam
n, Director Mutual Funds Corp.
William
H.
Asher, Senior Vice Senior Vice President of
Steven E. President Putnam Mutual Funds Corp.
Baumback, Senior Vice
Robert K. President
Beck, Senior Vice
Robert R. President
Bousa, Senior Vice
Edward P. President
Bresnahan Senior Vice Senior Vice President of
, Leslee President Putnam Mutual Funds Corp.
R.
Burns, Senior Vice
Cheryl A. President
Cassaro, Managing
Joseph A. Director
Chapman, Senior Vice
Susan President
Cotner, Senior Vice
Beth C. President
Curran, Senior Vice Senior Vice President of
J. Peter President Putnam Mutual Funds Corp.
Dalferro, Senior Vice
John R. President
Daly, Senior Vice Senior Vice President of
Kenneth President Putnam Mutual Funds Corp.
L.
England, Senior Vice
Richard President
B.
Fitzgeral Senior Vice
d, President
Michael
T.
Flaherty, Senior Vice Senior Vice President of
Patricia President Putnam Mutual Funds Corp.
C.
Francis, Senior Vice
Jonathan President
H.
Frucci, Senior Vice Senior Vice President of
Richard President Putnam Fiduciary Trust
M. Company
Fullerton Senior Vice Senior Vice President of
, Brian President Putnam Mutual Funds Corp.
J.
Gillis, Managing
Roland Director
Goodwin, Senior Vice
Kim C. President
Grant, J. Senior Vice Senior Vice President of
Peter President Putnam Fiduciary Trust
Company
Grim, Senior Vice
Daniel J. President
Haagensen Senior Vice
, Paul E. President
Halperin, Senior Vice
Matthew President
C.
Han, Senior Vice
Billy P. President
Healey, Senior Vice
Deborah President
R.
Joseph, Senior Vice
Joseph P. President
Joyce, Senior Vice Senior Vice President of
Kevin M. President Putnam Mutual Funds Corp.
Kamshad, Senior Vice
Omid President
Kay, Senior Vice Clerk, Director and Senior
Karen R. President Vice President of Putnam
Fiduciary Trust Company
King, Managing
David L. Director
Kirson, Senior Vice
Steven L. President
Leichter, Senior Vice
Jennifer President
E.
Lindsey, Senior Vice
Jeffrey President
R.
Lukens, Senior Vice
James W. President
Manning, Senior Vice
Howard K. President
Matteis, Senior Vice
Andrew S. President
McAuley, Senior Vice
Alexander President
J.
McDonald, Senior Vice
Richard President
E.
Meehan, Senior Vice
Thalia President
Mikami, Senior Vice
Darryl President
Mockard, Senior Vice
Jeanne L. President
Morgan, Senior Vice
Kelly A. President
Mufson, Senior Vice
Michael President
J.
Mullin, Senior Vice
Hugh H. President
Netols, Senior Vice Senior Vice President of
Jeffrey President Putnam Fiduciary Trust
W. Company
Nguyen, Senior Vice
Triet M. President
Paine, Senior Vice
Robert M. President
Pohl, Senior Vice
Charles President
G.
Pollard, Senior Vice
Mark D. President
Powers, Senior Vice
Neil J. President
Quinton, Senior Vice
Keith P. President
Ray, Senior Vice
Christoph President
er A.
Reeves, Senior Vice
William President
H.
Regan, Senior Vice
Anthony President
W.
Rosalanko Senior Vice
, Thomas President
J.
Ruys de Senior Vice Senior Vice President of
Perez, President Putnam Fiduciary Trust
Charles Company
A.
Schwister Senior Vice Senior Vice President of
, Jay E. President Putnam Fiduciary Trust
Company
Senter, Senior Vice Senior Vice President of
Max S. President Putnam Fiduciary Trust
Company
Simon, Senior Vice
Sheldon President
N.
Smith Senior Vice
Jr., Leo President
J.
Smith, Senior Vice
Margaret President
D.
Storkerso Senior Vice Senior Vice President of
n, John President Putnam Fiduciary Trust
K. Company
Strumpf, Senior Vice
Casey President
Sullivan, Senior Vice
Roger R. President
Swanberg, Senior Vice
Charles President
H.
Swift, Senior Vice
Robert President
Taubes, Senior Vice Senior Vice President of
Kenneth President Putnam Fiduciary Trust
J. Company
Thomas, Senior Vice
David K. President
Thomsen, Senior Vice Senior Vice President of
Rosemary President Putnam Fiduciary Trust
H. Company
Tibbetts, Senior Vice Senior Vice President of
Richard President Putnam Mutual Funds Corp.
B.
Till, Senior Vice
Hilary F. President
Van Senior Vice
Vleet, President
Charles
C.
Verani, Senior Vice Senior Vice President of
John R. President Putnam Fiduciary Trust
Company
Weinstein Senior Vice
, Michael President
R.
Weiss, Senior Vice
Man President
vuel
Schultz, Senior Vice
Mitchell President
D.
Wheeler, Senior Vice
Diane President
D.F.
Wyke, Senior Vice
Richard President
P.
Zukowski, Senior Vice
Gerald S. President
Haslett, Managing
Thomas R. Director
Zieff, Managing
William Director
Svensson, Senior Vice
Lisa A. President
Waldman, Senior Vice
David L. President
Atkin, Senior Vice
Michael President
J.
Bakshi, Senior Vice
Manjit S. President
Bamford, Senior Vice
Dolores President
Snyder
Cronin, Senior Vice Senior Vice President of
Kevin M. President Putnam Fiduciary Trust
Company
Holding, Senior Vice
Pamela President
Kobylarz, Senior Vice
Jeffrey, President
J.
Koontz, Senior Vice Senior Vice President of
Jill A. President Putnam Mutual Funds Corp.
Korn, Senior Vice
Karen A. President
Kuenstner Senior Vice
, Deborah President
F.
Madore, Senior Vice Senior Vice President of
Robert A. President Putnam Fiduciary Trust
Company
Malloy, Senior Vice
Julie M. President
Minn, Senior Vice
Seung, H. President
Oler, Senior Vice
Stephen President
S.
Perry, Senior Vice
William President
Peters, Senior Vice
Carmel President
Santos, Senior Vice Senior Vice President of
David J. President Putnam Fiduciary Trust
Company
Scordato, Senior Vice Senior Vice President of
Christine President Putnam Mutual Funds Corp.
A.
Silk, Senior Vice
David M. President
Stairs, Senior Vice
George W. President
Troped, Senior Vice Senior Vice President of
Bonnie L. President Putnam Mutual Funds Corp.
Whalen, Senior Vice Senior Vice President of
Edward F. President Putnam Mutual Funds Corp.
Yogg, Senior Vice
Michael President
R.
(I) Summary of Business Lines and Business Operation
Investment Management Company is engaged in the business
of providing investment management and investment
advisory services to mutual funds. As of the end of
September, 1997, Investment Management Company managed,
advised, and/or administered the following 99 funds and
fund portfolios (having an aggregate net asset value of
approximately $ 176.28 billion):
As of the
end of September, 1997
Name Month/D Principa Total Net
ate/ l Net Asset
Year Characte Asset Value
Establi ristics Value per
shed ($ share
millio ($)
n)
The George Putnam Fund 11/5/37 Open/Equ 2,672. 18.93
of Boston; A ity 0
The George Putnam Fund 4/24/92 Open/Equ 940.0 18.81
of Boston; B ity
The George Putnam Fund 12/1/94 Open/Equ 362.1 18.96
of Boston; M ity
The George Putnam Fund 1/1/94 Open/Equ 10.4 18.81
of Boston; Y ity
Putnam Arizona Tax 1/30/91 Open/Bon 13.5 9.20
Exempt Income Fund; A d
Putnam Arizona Tax 7/15/93 Open/Bon 29.4 9.19
Exempt Income Fund; B d
Putnam Arizona Tax 7/3/95 Open/Bon 0.6 9.21
Exempt Income Fund; M d
Putnam American 3/1/85 Open/Bon 1,554. 8.65
Government Income Fund; d 6
A
Putnam American 5/20/94 Open/Bon 2.8 8.35
Government Income Fund; d
B
Putnam American 2/14/95 Open/Bon 1.2 8.66
Government Income Fund; d
M
Putnam Asia Pacific 2/20/91 Open/Equ 530.1 13.57
Growth Fund; A ity
Putnam Asia Pacific 6/1/93 Open/Equ 202.0 13.34
Growth Fund; B ity
Putnam Asia Pacific 2/1/95 Open/Equ 10.8 13.46
Growth Fund; M ity
Putnam Asset Allocation: 2/7/94 Open/Bal 680.2 12.28
Balanced Portfolio; A anced
Putnam Asset Allocation: 2/11/94 Open/Bal 442.0 12.23
Balanced Portfolio; B anced
Putnam Asset Allocation: 9/1/94 Open/Bal 70.7 12.18
Balanced Portfolio; C anced
Putnam Asset Allocation: 2/6/95 Open/Bal 44.2 12.27
Balanced Portfolio; M anced
Putnam Asset Allocation: 7/14/94 Open/Bal 232.0 12.29
Balanced Portfolio; Y anced
Putnam Asset Allocation: 2/7/94 Open/Bal 295.6 10.62
Conservative Portfolio; anced
A
Putnam Asset Allocation: 2/18/94 Open/Bal 138.5 10.58
Conservative Portfolio; anced
B
Putnam Asset Allocation: 9/1/94 Open/Bal 29.1 10.56
Conservative Portfolio; anced
C
Putnam Asset Allocation: 2/7/95 Open/Bal 12.7 10.59
Conservative Portfolio; anced
M
Putnam Asset Allocation: 7/14/94 Open/Bal 18.8 10.62
Conservative Portfolio; anced
Y
Putnam Asset Allocation: 2/8/94 Open/Bal 485.5 13.64
Growth Portfolio; A anced
Putnam Asset Allocation: 2/16/94 Open/Bal 357.1 13.47
Growth Portfolio; B anced
Putnam Asset Allocation: 9/1/94 Open/Bal 68.4 13.38
Growth Portfolio; C anced
Putnam Asset Allocation: 2/1/95 Open/Bal 34.4 13.49
Growth Portfolio; M anced
Putnam Asset Allocation: 7/14/94 Open/Bal 233.4 13.72
Growth Portfolio; Y anced
Putnam Balanced 4/19/85 Open/Bal 595.1 11.72
Retirement Fund; A anced
Putnam Balanced 2/1/94 Open/Bal 79.5 11.64
Retirement Fund; B anced
Putnam Balanced 3/17/95 Open/Bal 8.2 11.68
Retirement Fund; M anced
Putnam California Tax 4/29/83 Open/Bon 3,089. 8.70
Exempt Income Fund; A d 4
Putnam California Tax 1/4/93 Open/Bon 573.4 8.70
Exempt Income Fund; B d
Putnam California Tax 2/14/95 Open/Bon 13.9 8.70
Exempt Income Fund; M d
Putnam VT Asia Pacific 5/1/95 Open/Equ 12.9 10.93
Growth Fund ity
Putnam VT Diversified 9/15/93 Open/Bon 183.1 10.51
Income Fund d
Putnam VT Global Growth 5/1/90 Open/Equ 1,726. 19.39
Fund ity 2
Putnam VT Global Asset 2/1/88 Open/Bal 949.2 18.77
Allocation Fund anced
Putnam VT Growth and 2/1/88 Open/Bal 1,940. 14.17
Income Fund anced 4
Putnam VT High Yield 2/1/88 Open/Bon 970.9 13.43
Fund d
Putnam VT Money Market 2/1/88 Open/Bon 420.8 1.00
Fund d
Putnam VT New 5/2/94 Open/Equ 2,466. 21.12
Opportunities Fund ity 4
Putnam VT U.S. 2/1/88 Open/Bon 762.0 12.94
Government and High d
Quality Bond Fund
Putnam VT Utilities 5/1/92 Open/Bal 720.1 15.11
Growth and Income Fund anced
Putnam VT Voyager Fund 2/1/88 Open/Equ 4,405. 38.64
ity 5
Putnam Capital 8/5/93 Open/Equ 843.9 22.29
Appreciation Fund; A ity
Putnam Capital 11/2/94 Open/Equ 883.0 22.03
Appreciation Fund; B ity
Putnam Capital 1/22/96 Open/Equ 65.0 22.08
Appreciation Fund; M ity
Putnam Convertible 6/29/72 Open/Bal 1,185. 23.87
Income-Growth Trust; A anced 3
Putnam Convertible 7/15/93 Open/Bal 258.6 23.67
Income-Growth Trust; B anced
Putnam Convertible 3/13/95 Open/Bal 14.5 23.74
Income-Growth Trust; M anced
Putnam Diversified 7/1/94 Open/Equ 250.1 14.40
Equity Trust; A ity
Putnam Diversified 7/2/94 Open/Equ 308.5 14.26
Equity Trust; B ity
Putnam Diversified 7/3/95 Open/Equ 22.6 14.32
Equity Trust; M ity
Putnam Diversified 10/3/88 Open/Bon 2,105. 12.70
Income Trust; A d 5
Putnam Diversified 3/1/93 Open/Bon 2,367. 12.65
Income Trust; B d 9
Putnam Diversified 12/1/94 Open/Bon 512.4 12.67
Income Trust; M d
Putnam Diversified 7/11/96 Open/Bon 19.7 12.70
Income Trust ; Y d
Putnam Equity Income 6/15/77 Open/Bal 838.1 15.98
Fund; A anced
Putnam Equity Income 9/13/93 Open/Bal 441.2 15.91
Fund; B anced
Putnam Equity Income 12/2/94 Open/Bal 46.9 15.91
Fund; M anced
Putnam Europe Growth 9/7/90 Open/Equ 404.2 20.52
Fund; A ity
Putnam Europe Growth 2/1/94 Open/Equ 323.3 20.05
Fund; B ity
Putnam Europe Growth 12/1/94 Open/Equ 19.5 20.37
Fund; M ity
Putnam Florida Tax 8/24/90 Open/Bon 234.3 9.36
Exempt Income Fund; A d
Putnam Florida Tax 1/4/93 Open/Bon 63.1 9.35
Exempt Income Fund; B d
Putnam Florida Tax 5/1/95 Open/Bon 1.5 9.35
Exempt Income Fund; M d
Putnam Federal Income 6/2/86 Open/Bon 367.7 10.12
Trust; A d
Putnam Federal Income 6/6/94 Open/Bon 11.6 10.08
Trust; B d
Putnam Federal Income 4/12/95 Open/Bon 0.9 10.12
Trust; M d
Putnam Global 6/1/87 Open/Bon 321.9 13.96
Governmental Income d
Trust; A
Putnam Global 2/1/94 Open/Bon 41.9 13.93
Governmental Income d
Trust; B
Putnam Global 3/17/95 Open/Bon 2.5 13.91
Governmental Income d
Trust; M
Putnam Global Growth 9/1/67 Open/Equ 2,230. 12.99
Fund; A ity 5
Putnam Global Growth 4/27/92 Open/Equ 1,804. 12.58
Fund; B ity 9
Putnam Global Growth 3/1/95 Open/Equ 46.8 12.89
Fund; M ity
Putnam Global Growth 6/15/94 Open/Equ 50.4 13.17
Fund; Y ity
Putnam Growth and Income 1/5/95 Open/Bal 1,025. 15.07
Fund II; A anced 3
Putnam Growth and Income 1/5/95 Open/Bal 1,224. 14.98
Fund II; B anced 6
Putnam Growth and Income 1/5/95 Open/Bal 150.2 15.01
Fund II; M anced
The Putnam Fund for 11/6/57 Open/Bal 17,049 21.91
Growth and Income; A anced .4
The Putnam Fund for 4/27/92 Open/Bal 14,011 21.69
Growth and Income; B anced .0
The Putnam Fund for 5/1/95 Open/Bal 347.4 21.81
Growth and Income; M anced
The Putnam Fund for 6/15/94 Open/Bal 463.7 21.93
Growth and Income; Y anced
Putnam High Yield 3/25/86 Open/Bon 1,392. 10.08
Advantage Fund; A d 9
Putnam High Yield 5/16/94 Open/Bon 1,052. 10.04
Advantage Fund; B d 0
Putnam High Yield 12/1/94 Open/Bon 1,540. 10.07
Advantage Fund; M d 8
Putnam High Yield Trust; 2/14/78 Open/Bon 3,326. 13.17
A d 7
Putnam High Yield Trust; 3/1/93 Open/Bon 1,251. 13.12
B d 3
Putnam High Yield Trust; 7/3/95 Open/Bon 23.7 13.16
M d
Putnam Health Sciences 5/28/82 Open/Equ 1,833. 60.11
Trust; A ity 2
Putnam Health Sciences 3/1/93 Open/Equ 637.6 58.69
Trust; B ity
Putnam Health Sciences 7/3/95 Open/Equ 26.9 39.71
Trust; M ity
Putnam Income Fund; A 11/1/54 Open/Bon 1,270. 7.14
d 6
Putnam Income Fund; B 3/1/93 Open/Bon 396.1 7.11
d
Putnam Income Fund; M 12/14/9 Open/Bon 197.7 7.11
4 d
Putnam Income Fund; Y 2/12/94 Open/Bon 142.5 7.15
d
Putnam Intermediate U.S. 2/16/93 Open/Bon 133.5 4.89
Government Income Fund; d
A
Putnam Intermediate U.S. 2/16/93 Open/Bon 65.2 4.89
Government Income Fund; d
B
Putnam Intermediate U.S. 4/3/95 Open/Bon 6.0 4.90
Government Income Fund; d
M
Putnam International New 1/3/95 Open/Equ 873.5 13.60
Opportunities Fund; A ity
Putnam International New 7/21/95 Open/Equ 1,079. 13.45
Opportunities Fund; B ity 7
Putnam International New 7/21/95 Open/Equ 91.8 13.51
Opportunities Fund; M ity
Putnam Investors Fund; A 12/1/25 Open/Equ 1,856. 11.99
ity 8
Putnam Investors Fund; B 3/1/93 Open/Equ 333.8 11.61
ity
Putnam Investors Fund; M 12/2/94 Open/Equ 30.8 11.85
ity
Putnam Investors Fund; Y 11/30/9 Open/Equ 21.2 12.01
6 ity
Putnam Massachusetts Tax 10/23/8 Open/Bon 286.7 9.53
Exempt Income Fund; A 9 d
Putnam Massachusetts Tax 7/15/93 Open/Bon 92.8 9.52
Exempt Income Fund; B d
Putnam Massachusetts Tax 5/12/95 Open/Bon 2.3 9.52
Exempt Income Fund; M d
Putnam Michigan Tax 10/23/8 Open/Bon 144.3 9.30
Exempt Income Fund; A 9 d
Putnam Michigan Tax 7/15/93 Open/Bon 36.5 9.29
Exempt Income Fund; B d
Putnam Michigan Tax 4/17/95 Open/Bon 1.0 9.30
Exempt Income Fund; M d
Putnam Minnesota Tax 10/23/8 Open/Bon 101.9 9.12
Exempt Income Fund; A 9 d
Putnam Minnesota Tax 7/15/93 Open/Bon 38.7 9.09
Exempt Income Fund; B d
Putnam Minnesota Tax 4/3/95 Open/Bon 1.5 9.12
Exempt Income Fund; M d
Putnam Money Market 10/1/76 Open/Bon 2,038. 1.00
Fund; A d 8
Putnam Money Market 4/27/92 Open/Bon 402.4 1.00
Fund; B d
Putnam Money Market 12/8/94 Open/Bon 53.9 1.00
Fund; M d
Putnam Municipal Income 5/22/89 Open/Bon 816.5 9.17
Fund; A d
Putnam Municipal Income 1/4/93 Open/Bon 488.0 9.16
Fund; B d
Putnam Municipal Income 12/1/94 Open/Bon 13.0 9.17
Fund; M d
Putnam New Jersey Tax 2/20/90 Open/Bon 227.0 9.22
Exempt Income Fund; A d
Putnam New Jersey Tax 1/4/93 Open/Bon 87.4 9.21
Exempt Income Fund; B d
Putnam New Jersey Tax 5/1/95 Open/Bon 0.7 9.22
Exempt Income Fund; M d
Putnam New York Tax 9/2/83 Open/Bon 1,757. 9.02
Exempt Income Fund; A d 9
Putnam New York Tax 1/4/93 Open/Bon 227.5 9.00
Exempt Income Fund; B d
Putnam New York Tax 4/10/95 Open/Bon 2.0 9.02
Exempt Income Fund; M d
Putnam New York Tax 11/7/90 Open/Bon 166.4 9.10
Exempt Opportunities d
Fund; A
Putnam New York Tax 2/1/94 Open/Bon 56.2 9.09
Exempt Opportunities d
Fund; B
Putnam New York Tax 2/10/95 Open/Bon 2.4 9.08
Exempt Opportunities d
Fund; M
Putnam Global Natural 7/24/80 Open/Equ 249.8 22.82
Resources Fund; A ity
Putnam Global Natural 2/1/94 Open/Equ 151.3 22.57
Resources Fund; B ity
Putnam Global Natural 7/3/95 Open/Equ 9.3 22.76
Resources Fund; M ity
Putnam New Opportunities 8/31/90 Open/Equ 8,351. 49.62
Fund; A ity 1
Putnam New Opportunities 3/1/93 Open/Equ 6,998. 47.98
Fund; B ity 0
Putnam New Opportunities 12/1/94 Open/Equ 381.9 48.93
Fund; M ity
Putnam New Opportunities 7/19/94 Open/Equ 307.6 50.03
Fund; Y ity
Putnam Ohio Tax Exempt 10/23/8 Open/Bon 185.0 9.18
Income Fund; A 9 d
Putnam Ohio Tax Exempt 7/15/93 Open/Bon 50.7 9.17
Income Fund; B d
Putnam Ohio Tax Exempt 4/3/95 Open/Bon 1.2 9.18
Income Fund; M d
Putnam OTC & Emerging 11/1/82 Open/Equ 2,434. 17.22
Growth Fund; A ity 2
Putnam OTC & Emerging 7/15/93 Open/Equ 1,239. 16.58
Growth Fund; B ity 8
Putnam OTC & Emerging 12/2/94 Open/Equ 201.5 16.94
Growth Fund; M ity
Putnam OTC & Emerging 7/12/96 Open/Equ 110.3 17.30
Growth Fund; Y ity
Putnam International 2/28/91 Open/Equ 993.9 18.69
Growth Fund; A ity
Putnam International 6/1/94 Open/Equ 690.5 18.39
Growth Fund; B ity
Putnam International 12/1/94 Open/Equ 81.4 18.57
Growth Fund; M ity
Putnam International 7/12/96 Open/Equ 107.9 18.73
Growth Fund; Y ity
Putnam Pennsylvania Tax 7/21/89 Open/Bon 189.9 9.43
Exempt Income Fund; A d
Putnam Pennsylvania Tax 7/15/93 Open/Bon 81.5 9.42
Exempt Income Fund; B d
Putnam Pennsylvania Tax 7/3/95 Open/Bon 1.1 9.44
Exempt Income Fund; M d
Putnam Preferred Income 1/4/84 Open/Bon 115.4 9.00
Fund; A d
Putnam Preferred Income 4/20/95 Open/Bon 7.9 8.98
Fund; M d
Putnam Tax - Free Income 9/20/93 Open/Bon 213.1 15.35
Trust d
Tax - Free High Yield
Fund; A
Putnam Tax - Free Income 9/9/85 Open/Bon 336.6 15.37
Trust d
Tax - Free High Yield
Fund B
Putnam Tax - Free Income 12/29/9 Open/Bon 1.3 15.35
Trust 4 d
Tax - Free High Yield
Fund M
Putnam Tax - Free Income 9/30/93 Open/Bon 613.5 14.46
Trust d
Tax - Free Insured Fund;
A
Putnam Tax - Free Income 9/9/85 Open/Bon 1,391. 14.47
Trust d 5
Tax - Free Insured Fund;
B
Putnam Tax - Free Income 6/1/95 Open/Bon 17.8 14.46
Trust d
Tax - Free Insured Fund;
M
Putnam Tax Exempt Income 12/31/7 Open/Bon 2,074. 9.12
Fund; A 6 d 4
Putnam Tax Exempt Income 1/4/93 Open/Bon 245.6 9.12
Fund; B d
Putnam Tax Exempt Income 2/16/95 Open/Bon 8.3 9.14
Fund; M d
Putnam Tax Exempt Money 10/26/8 Open/Bon 92.4 1.00
Market Fund 7 d
Putnam U.S. Government 2/8/84 Open/Bon 2,153. 13.01
Income Trust; A d 7
Putnam U.S. Government 4/27/92 Open/Bon 1,292. 12.96
Income Trust; B d 7
Putnam U.S. Government 2/6/95 Open/Bon 7.9 13.00
Income Trust; M d
Putnam U.S. Government 4/11/94 Open/Bon 6.1 13.00
Income Trust; Y d
Putnam Utilities Growth 11/19/9 Open/Bal 644.0 12.49
and Income Fund; A 0 anced
Putnam Utilities Growth 4/27/92 Open/Bal 661.6 12.44
and Income Fund; B anced
Putnam Utilities Growth 3/1/95 Open/Bal 9.6 12.48
and Income Fund; M anced
Putnam Vista Fund; A 6/3/68 Open/Equ 2,747. 12.91
ity 8
Putnam Vista Fund; B 3/1/93 Open/Equ 1,300. 12.45
ity 4
Putnam Vista Fund; M 12/1/94 Open/Equ 104.8 12.72
ity
Putnam Vista Fund; Y 3/28/95 Open/Equ 250.9 13.01
ity
Putnam Voyager Fund II; 4/14/93 Open/Equ 517.2 19.21
A ity
Putnam Voyager Fund II; 10/2/95 Open/Equ 477.6 18.92
B ity
Putnam Voyager Fund II; 10/2/95 Open/Equ 55.4 19.03
M ity
Putnam Voyager Fund; A 4/1/96 Open/Equ 11,637 20.09
ity .3
Putnam Voyager Fund; B 4/27/92 Open/Equ 5,964. 19.12
ity 6
Putnam Voyager Fund; M 12/1/94 Open/Equ 224.3 19.79
ity
Putnam Voyager Fund; Y 4/1/94 Open/Equ 1,094. 20.32
ity 0
Putnam California 11/27/9 Closed/B 87.1 18.90
Investment Grade 2 ond
Municipal Trust
Putnam Convertible 6/29/95 Closed/B 106.9 28.86
Opportunities and Income ond
Trust
Putnam Dividend Income 9/28/89 Closed/B 125.5 11.60
Fund ond
Putnam High Income 7/9/87 Closed/B 140.6 10.50
Convertible and Bond ond
Fund
Putnam Intermediate 6/2788 Closed/B 534.6 8.31
Government Income Trust ond
Putnam Investment Grade 10/26/8 Closed/B 387.9 18.82
Municipal Trust 9 ond
Putnam Investment Grade 11/27/9 Closed/B 253.1 18.95
Municipal Trust II 2 ond
Putnam Investment Grade 11/29/9 Closed/B 63.3 15.79
Municipal Trust III 3 ond
Putnam Managed High 6/25/93 Closed/B 111.8 14.89
Yield Trust ond
Putnam Managed Municipal 2/24/89 Closed/B 629.3 13.73
Income Trust ond
Putnam Master Income 12/28/8 Closed/B 497.2 9.36
Trust 7 ond
Putnam Master 4/29/88 Closed/B 337.7 8.79
Intermediate Income ond
Trust
Putnam Municipal 5/28/93 Closed/B 346.7 21.46
Opportunities Trust ond
Putnam New York 11/27/9 Closed/B 49.9 17.53
Investment Grade 2 ond
Municipal Trust
Putnam Premier Income 2/29/88 Closed/B 1,254. 8.94
Trust ond 2
Putnam Tax - Free Heath 6/29/92 Closed/B 205.3 14.87
Care Fund ond
Putnam American 10/2/95 Open/Equ 78.1 13.18
Renaissance Fund; A ity
Putnam Diversified 2/19/95 Open/Bon 49.0 8.78
Income Trust II; A d
Putnam Diversified 2/19/96 Open/Bon 70.5 8.78
Income Trust II; B d
Putnam Diversified 2/19/96 Open/Bon 8.2 8.78
Income Trust II; M d
Putnam Equity Fund 97 12/30/9 Open/Equ N/A N/A
6 ity
Putnam High Yield Total 1/1/97 Open/Bon 12.9 9.22
Return Fund; A d
Putnam High Yield Total 1/1/97 Open/Bon 14.7 9.20
Return Fund; B d
Putnam High Yield Total 1/1/97 Open/Bon 1.7 9.22
Return Fund; M d
Putnam VT International 1/1/97 Open/Bal 181.5 12.32
Growth and Income anced
Putnam VT International 1/1/97 Open/Equ 109.4 10.97
New Opportunities Fund ity
Putnam VT International 1/1/97 Open/Equ 127.9 12.21
Growth Fund ity
Putnam Balanced Fund 10/2/95 Open/Bal 2.8 11.92
anced
Putnam Emerging Markets 10/2/95 Open/Equ 49.6 10.94
Fund; A ity
Putnam Emerging Markets 10/2/95 Open/Equ 42.4 11.54
Fund; B ity
Putnam Emerging Markets 10/2/95 Open/Equ 4.7 11.56
Fund; M ity
Putnam California Tax 10/26/8 Open 45.1 1.00
Exempt Money Market Fund 7
Putnam High Yield 5/25/89 Closed 246.3 11.31
Municipal Trust
Putnam New York Tax 10/26/8 Open 38.1 1.00
Exempt Money Market Fund 7
Putnam International 8/1/96 Open 254.3 11.43
Growth and Income Fund;
A
Putnam International 8/1/96 Open 261.9 11.38
Growth and Income Fund;
B
Putnam International 8/1/96 Open 26.4 11.41
Growth and Income Fund;
M
Putnam Research Fund 10/2/95 Open 11.0 13.85
Putnam New Value Fund; 1/3/95 Open 447.6 14.90
A
Putnam New Value Fund; 2/26/96 Open 431.7 14.86
B
Putnam New Value Fund; 2/26/96 Open 48.9 14.87
M
Putnam Global Growth and 1/3/95 Open 2.9 12.50
Income Fund
Putnam International 12/28/9 Open 3.9 10.34
Fund 5
Putnam Japan Fund 12/28/9 Open 2.8 6.45
5
Putnam International 12/28/9 Open 47.2 12.30
Voyager Fund; A 5
Putnam International 10/30/9 Open 39.8 12.23
Voyager Fund; B 6
Putnam International 10/30/9 Open 4.5 12.25
Voyager Fund; M 6
Putnam VT New Value Fund 1/2/97 Open 166.1 12.20
Putnam VT Vista Fund 1/2/97 Open 137.3 12.34
(J) Miscellaneous
1. Election and Removal of Directors
Directors of Investment Management Company are
elected to office or removed from office by vote of
either stockholders or directors, in accordance with
Articles of Organization and By-Laws of Investment
Management Company.
2. Election and Removal of Officers
Officers are elected by the Board of Directors. The
Board of Directors may remove any officer without cause.
3. Supervision by SEC of Changes in Directors and
Certain Officers
Investment Management Company files certain reports
with the SEC in accordance with Sections 203 and 204 of
the Investment Advisers Act of 1940, which reports list
and provide certain information relating to directors
and officers of Investment Management Company.
Under Section 9 (b) of the Investment Company Act of
1940 SEC may prohibit the directors and officers from
remaining in office, if SEC will judge that such
directors and officers have willfully violated any
provision of the federal securities law.
4. Amendment to the Articles of Organization, Transfer
of Business and Other Important Matters.
a. Articles of Organization of Investment
Management Company may be amended, under the
General Corporation Law of The Commonwealth of
Massachusetts, by appropriate shareholders'
vote.
b. Under the General Corporation Law of The
Commonwealth of Massachusetts, transfer of
business requires a vote of 2/3 of the
stockholders entitled to vote thereon.
c. Investment Management Company has no direct
subsidiaries.
5. Litigation, etc.
There are no known facts, such as legal proceedings,
which are expected to materially affect the Fund and/or
Investment Management Company within the six-month period
preceding the filing of this Registration Statement.
III. OUTLINE OF THE OTHER RELATED COMPANIES
(A) Putnam Fiduciary Trust Company (the Transfer Agent,
Shareholder Service Agent and Custodian)
(1) Amount of Capital
U.S.$37,573,000 as of the end of September, 1997
(2) Description of Business
Putnam Fiduciary Trust Company is a Massachusetts
trust company and is a wholly-owned subsidiary of
Putnam Investments, Inc., parent of Putnam. Putnam
Fiduciary Trust Company has been providing paying
agent and shareholder service agent services to
mutual funds, including the Fund, since its
inception and custody services since 1990.
(3) Outline of Business Relationship with the Fund
Putnam Fiduciary Trust Company provides transfer
agent services, shareholder services and custody
services to the Fund.
(B) Putnam Mutual Funds Corp. (the Principal Underwriter)
(1) Amount of Capital
U.S.$164,408,000 as of the end of September, 1997
(2) Description of Business
Putnam Mutual Funds Corp. is the Principal
Underwriter of the shares of Putnam Funds including
the Fund.
(3) Outline of Business Relationship with the Fund
Putnam Mutual Funds Corp. engages in providing
marketing services to the Fund.
(C) Kokusai Securities Co., Ltd. (Distributor in Japan and
Agent Securities Company)
(1) Amount of Capital
Yen55.5 billion as of the end of September, 1997
(2) Description of Business
Kokusai is a diverisified securities company in
Japan. Also, it engages in handling the sales and
repurchase of the Fund Units as the Designated
Securities Company for the investment trust funds of
Kokusai Investment Trust Management Co., Ltd., and
as the Underwriting Company and the Agent Securities
Company for Korea Sunrise Fund, Fresh Korea Fund,
Keystone Bond Fund '95, Keystone Bond Fund II '95,
Keystone Bond Fund III '95, Keystone Global Trust -
Keystone Bond Fund IV '95, International Bond Index
Fund, Fidelity Special Growth Fund, ACM
International Healthcare Fund, European and Asian
Fund, Putnam High Yield Advantage Fund, ACM American
Growth Portfolio, ACM Global Growth Trend Portfolio,
Keystone Small Company Growth Fund S-4, Asia Network
Growth Fund and Keystone Global Oppourtunities Fund
and as the Underwriting Company for AGF Growth
Equity Fund Limited, G.T. Investment Fund, Sci/Tech
S.A. and Morgan Stanley Money Market Family.
(3) The Company acts as a Distributor in Japan and Agent
Securities Company for the Fund in connection with
the offering of shares in Japan.
(D) Capital Relationships
100% of the shares of Putnam Investment Management,
Inc. are held by Putnam Investments, Inc.
(E) Interlocking Directors and Auditors
Names and functions of officers of the Fund who also
are officers of the related companies are as follows:
( as of the
filing
date)
Name of Investment Transfer Agent
Officer Management and
or Fund Company Shareholder
Trustee Service Agent
George Chairman, Chairman and None
Putnam Trustee and Director
President
Charles Executive Vice Managing None
E. Porter President Director
Patricia Senior Vice Senior Vice None
C. President and President
Flaherty Treasurer
Lawrence Trustee and President and None
J. Lasser Vice President CEO
Gordon H. Vice President Senior Director
Silver Managing
Director
Gary N. Vice President Senior None
Coburn Managing
Director
John R. Vice President Senior Vice None
Verani President
Paul M. Vice President Vice President None
O'Neil
Michael Vice President Managing None
Martino Director
William Vice President Managing None
J. Curtin Director
David L. Vice President Managing None
Waldman Director
IV. FINANCIAL CONDITION OF THE FUND
1. FINANCIAL STATEMENTS
[Omitted, in Japanese version, financial statements of
the Fund and Japanese translations thereof are
incorporated here]
Financial highlights
The following table presents per share financial
information for class M shares. This information has
been audited and reported on by the Fund's independent
accountants. Financial statements included in the Fund's
annual report to shareholders for the 1996 fiscal year
are presented in their entirety on in this SRS. The
Fund's annual report is available without charge upon
request.
Financial highlights (For a share outstanding throughout the
period)
February 6, 1995
(commencement of
Year ended operations) to
September 30 September 30
1997 1996 1995
Class M
Net asset value, beginning of period $12.63 $12.96 $12.29
Investment operations
Net investment income .80 .82 + .61
Net realized and unrealized gain (loss) on investments .35
(.32) .66
Total from investment operations 1.15 .50 1.27
Less distributions:
From net investment income (.78) (.78) (.55)
In excess of net investment income
_ _ _
From net realized gain on investments
_ _ _
From return of capital
_ (.05) (.05)
Total distributions (.78) (.83) (.60)
Net asset value, end of period $13.00 $12.63 $12.96
Total investment return at net asset value (%) (a) 9.393.99
10.54 *
Net assets, end of period (in thousands) $7,850 $6,116$2,
609
Ratio of expenses to average net assets (%) (b) 1.14 1.14
.79 *
Ratio of net investment income to average net assets (%) 6.32
6.37 4.14 *
Portfolio turnover (%) 125.80 138.97 195.45
* Not annualized.
+ Per share net investment income has been determined on
the basis of the weighted average number of shares
outstanding during the period.
(a) Total investment return assumes dividend reinvestment and
does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the year
ended September 30, 1995 and thereafter, includes amounts
paid through expense offset arrangements. Prior period
ratios exclude these amounts.
[The following financial documents are omitted here.]
Statement of assets and liabilities September 30, 1996
Statement of operations Year ended September 30, 1996
Statement of changes in net assets
Financial highlights (For a share outstanding throughout the
period)
Notes to financial statements September 30, 1996
Portfolio of investments owned September 30, 1996
Statement of assets and liabilities September 30, 1995
Statement of operations Year ended September 30, 1995
Statement of changes in net assets
Financial highlights (For a share outstanding throughout the
period)
Notes to financial statements September 30, 1995
Report of independent accountants For the fiscal year ended
September 30, 1996
Report of independent accountants For the year ended
September 30, 1995
Statement of assets and liabilities March 31, 1997
(unaudited)
Statement of operations Period ended March 31, 1997
(unaudited)
Statement of changes in net assets
Financial highlights (For a share outstanding throughout the
period)
Notes to financial statements March 31, 1997 (unaudited)
Portfolio of investments owned March 31, 1997 (unaudited)
2. CONDITION OF THE FUND
(a) Statement of Net Assets
(b) Names of Major Portfolio Holdings other than Equity Shares
<TABLE> <CAPTION>
<S> <C> <C> <C> <C>
<C> <C> <C> <C>
As of the end of September, 1997
U.S. Inves
Dollar t-
Inter Par
Acquisit Current ment
Kind of est Value
ion
Name of Securities Issue Maturity Rate (1,000)
curr Cost Value Ratio
(%)
ency (%)
1. GNMA U.S. 2001-2027 71/2 838,911
USD 810,074, 856,224, 24.80
Government
958 289
2. GNMA U.S. 2022-2027 7 626,596
USD 626,709, 627,980, 18.19
Government
555 612
3. GNMA U.S. 2001-2027 8 557,431
USD 568,406, 580,374, 16.81
Government
620 629
4. GNMA U.S. 2004-2027 81/2 372,329
USD 385,877, 391,693, 11.34
Government
001 671
5. U.S. Treasury Note U.S. 8/15/2007 61/8 150,000
USD 148,212, 150,070, 4.35
Treasury
891 500
6. GNMA U.S. 2004-2025 9 129,561
USD 132,580, 139,406, 4.04
Government
223 888
7. GNMA U.S. 2009-2023 91/2 102,141
USD 109,589, 110,716, 3.21
Government
821 399
8. US Treasury Note U.S. 5/15/2002 71/2 100,000
USD 108,929, 105,984, 3.07
Treasury
690 000
9. US Treasury Note U.S. 7/31/2002 6 100,000
USD 99,304,6 100,000, 2.90
Treasury
88 000
10. US Treasury Note U.S. 9/30/1998 6 60,000
USD 60,262,5 60,196,8 1.74
Treasury
00 00
11. GNMA U.S. 2023-2025 61/2 59,715
USD 57,801,6 58,585,9 1.70
Government
84 83
12. GNMA - Midgets U.S. 2001-2009 8 50,274
USD 51,254,2 52,222,5 1.51
Government
46 88
13. GNMA U.S. 2010-2021 101/2 26,838
USD 29,969,6 30,003,4 0.87
Government
11 13
14. GNMa - Midgets U.S. 2001-2008 9 14,911
USD 15,948,6 15,642,6 0.45
Government
03 48
15. GNMA U.S. 2010-2019 111/2 3,249
USD 3,665,19 3,751,81 0.11
Government
4 4
61090980
16. GNMA U.S. 2013-2019 11 2,931
USD 3,237,86 3,356,06 0.10
Government
1 4
17. GNMA - GPM U.S. 2013-2016 111/4 1,745
USD 1,893,07 1,923,52 0.06
Government
1 3
18. GNMA - GPM U.S. 2016-2019 91/4 1,597
USD 1,576,37 1,682,91 0.05
Government
7 3
19. GNMA - GPM U.S. 2009-2010 10 1,354
USD 1,370,74 1,514,19 0.04
Government
4 9
20. GNMA U.S. 2013-2015 13.5 1,172
USD 1,324,63 1,411,77 0.04
Government
0 5
21. GNMA U.S. 2010-2015 13 1,066
USD 1,157,75 1,272,52 0.04
Government
3 7
22. GNMA U.S. 2021 10 1,145
USD 2,622,18 1,263,34 0.04
Government
6 1
23. GNMA - GPM U.S. 2013-2015 123/4 1,036
USD 1,107,65 1,187,80 0.03
Government
1 0
24. GNMA - GPM U.S. 2013-2015 121/4 899
USD 969,787 1,019,26 0.03
Government
6
25. GNMA U.S. 2014-2016 12 551
USD 617,543 647,957 0.02
Government
26. GNMA U.S. 2010-2015 121/2 508
USD 538,820 599,257 0.02
Government
27. GNMA - GPM U.S. 2016-2020 101/4 506
USD 541,236 553,649 0.02
Government
28. GNMA U.S. 2011-2013 15 247
USD 270,003 302,646 0.00
Government
29. GNMA - GPM U.S. 2015-2016 103/4 234
USD 248,163 259,538 0.00
Government
30. GNMA U.S. 2011-2015 14 180
USD 189,719 216,997 0.00
Government
20.
0.00
21.
0.00
</TABLE>
V. SUMMARY OF INFORMATION CONCERNING FOREIGN INVESTMENT
TRUST SECURITIES
1. Transfer of the Shares
The transfer agent for the registered share
certificates is Putnam Fiduciary Trust Company, P.O.Box
41203, Providence, RI 02940-1203, U. S. A.
The Japanese investors who entrust the custody of
their shares to a Handling Securities Company shall have
their shares transferred under the responsibility of such
company, and the other investors shall make their own
arrangements.
No fee is chargeable for the transfer of shares.
2. The Closing Period of the Shareholders' Book
No provision is made.
3. There are no annual shareholders' meetings. Special
shareholders' meeting may be held from time to time
as
required by the Agreement and Declaration of Trust and
the Investment Company Act of 1940.
4. No special privilege is granted to Shareholders.
The acquisition of Shares by any person may be
restricted.
VI. MISCELLANEOUS
(1) The ornamental design is used in cover page of the
Japanese Prospectus.
(2) The following must be set forth in the Prospectus.
Outline of the Prospectus will be included at the
beginning of the Prospectus, summarizing the content of
Part I., Information on the securities, "I. Descriptions
of the Fund", "III. Outline of Other Related Companies"
and "IV. Finanacial Condition of the Fund" in Part II,
Information on the Issuer, of the SRS.
(3) Summarized Preliminary Prospectus will be used.
Attached document (Summarized Preliminary Prospectus)
will be used pursuant to the below, as the document
(Summarized Preliminary Prospectus) as set forth at Item
1.(1)(b), of Article 12 of the Ordinance Concerning the
Disclosure of the Content, etc. of the Specified
Securities.
For information of the achievement, the average of the
annual yield calculated in respect of immediately
preceding seven days and/or any one month may be added in
percentage up to one decimal places (rounding down to
second decimal places).
PART III. SPECIAL INFORMATION
I. OUTLINE OF THE SYSTEM OF INVESTMENT TRUSTS IN
MASSACHUSETTS
Below is an outline of certain general information about open-
end U.S. investment companies. This outline is not intended
to provide comprehensive information about such investment
companies or the various laws, rules or regulations applicable
to them, but provides only a brief summary of certain
information which may be of interest to investors. The
discussion below is qualified in its entirely by the complete
registration statement of the fund and the full text of any
referenced statutes and regulations.
I. Massachusetts Business Trusts
A. General Information
Many investment companies are organized as
Massachusetts business trusts. A Massachusetts business
trust is organized pursuant to a declaration of trust,
setting out the general rights and obligations of the
shareholders, trustees, and other related parties.
Generally, the trustees of the trust oversee its
business, and its officers and agents manage its day-to-
day affairs.
Chapter 182 of the Massachusetts General Laws
applies to certain "voluntary associations", including
many Massachusetts business trusts. Chapter 182 provides
for, among other things, the filing of the declaration of
trust with the Secretary of State of the Commonwealth of
Massachusetts and the filing by the trust of an annual
statement regarding, among other things, the number of
its shares outstanding and the names and addresses of its
trustees.
B. Shareholder Liability
Under Massachusetts law, shareholders could, under
certain circumstances, be held personally liable for the
obligations of a trust. Typically, a declaration of
trust disclaims shareholder liability for acts or
obligations of the trust and provides for indemnification
out of trust property for all loss and expense of any
shareholder held personally liable for the obligations of
a trust. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is
limited to circumstances in which a particular trust
would be unable to meet its obligations.
II. United States Investment Company Laws and Enforcement
A. General
In the United States, pooled investment management
arrangements which offer shares to the public are
governed by a variety of federal statutes ant
regulations. Most mutual funds are subject to these
laws. Among the more significant of these statutes are:
1. Investment Company Act of 1940
The Investment Company Act of 1940, as amended
(the "1940 Act"), in general, requires investment
companies to register as such with the U.S.
Securities and Exchange Commission (the "SEC"), and
to comply with a number of substantive regulations
of their operations. The 1940 Act requires an
investment company, among other things, to provide
periodic reports to its shareholders.
2. Securities Act of 1933
The Securities Act of 1933, as amended (the
"1933 Act"), regulates many sales of securities.
The Act, among other things, imposes various
registration requirements upon sellers of securities
and provides for various liabilities for failures to
comply with its provisions or in respect of other
specified matters.
3. Securities Exchange Act of 1934
The Securities Exchange Act of 1934, as amended
(the "1934 Act"), regulates a variety of matters
involving, among other things, the secondary trading
of securities, periodic reporting by the issuers of
securities, and certain of the activities of
transfer agents and brokers and dealers.
4. The Internal Revenue Code
An investment company is an entity subject to
federal income taxation under the Internal Revenue
Code. However, under the Code, an investment
company may be relieved of federal taxes on income
and gains it distributes to shareholders if it
qualifies as a "regulated investment company" under
the Code for federal income tax purposes and meets
all other necessary requirements.
5. Other laws
The Fund is subject to the provisions of other
laws, rules, and regulations applicable to the Fund
or its operations, such as, for example, various
state laws regarding the sale of the Fund's shares.
B. Outline of the Supervisory Authorities
Among the regulatory authorities having jurisdiction
over the Fund or certain of its operations are the SEC
and state regulatory agencies or authorities.
1. The SEC has broad authority to oversee the
application and enforcement of the federal
securities laws, including the 1940 Act, the 1933
Act, and the 1934 Act, among others, to the Fund.
The 1940 Act provides the SEC broad authority to
inspect the records of investment companies, to
exempt investment companies or certain practices
from the provisions of the Act, and otherwise to
enforce the provisions of the Act.
2. State authorities typically have broad authority
to regulate the offering and sale of securities to
their residents or within their jurisdictions and
the activities of brokers, dealers, or other persons
directly or indirectly engaged in related
activities.
B. Offering Shares to the Public
An investment company ("investment company" or fund)
offering its shares to the public must meet a number of
requirements, including, among other things, registration
as an investment company under the 194o Act; registration
of the sale of its shares under the 1933 Act;
registration of the fund, the sale of its shares, or
both, with state securities regulators; delivery of a
current prospectus to current or prospective investors;
and so forth. Many of these requirements must be met not
only at the time of the original offering of the fund's
shares, but compliance must be maintained or updated from
time to time throughout the life of the fund.
C. Ongoing Requirements
Under U.S. law, a fund is subject to numerous
ongoing requirements, including, but not limited to;
1. Updating its registration statement if it
becomes materially inaccurate or misleading;
2. Annual update of its registration statement;
3. Filing semi-annual and annual financial reports
with the SEC and distributing them to shareholders;
4. Annual trustee approval of investment advisory
arrangements, distribution plans, underwriting
arrangements, errors and omissions/director and
officer liability insurance, foreign custody
arrangements, and auditors;
5. Maintenance of a code of ethics; and
6. Periodic board review of certain fund
transactions, dividend payments, and payments under
a fund's distribution plan.
III. Management of a Fund
The board of directors or trustees of a fund are
responsible for generally overseeing the conduct of a fund's
business. The officers and agents of a fund are generally
responsible for the day-to-day operations of a fund. The
trustees and officers of a fund may or may not receive a fee
for their services.
The investment adviser to a fund is typically responsible
for implementing the fund's investment program. The adviser
typically receives a fee for its services based on a
percentage of the net assets of a fund. Certain rules govern
the activities of investment advisers and the fees they may
charge. In the United States, investment advisers to
investment companies must be registered under the Investment
Advisers Act of 1940, as amended.
IV. Share Information
A. Valuation
Shares of a fund are generally sold at the net asset
value next determined after an order is received by a
fund, plus any applicable sales charges. A fund normally
calculates its net asset value per share by dividing the
total value of its assets, less liabilities, by the
number of its shares outstanding. Shares are typically
valued as of the close of regular trading on the New York
Stock Exchange (4:00) each day the Exchange is open.
B. Redemption
Shareholders may generally sell shares of a fund to
that fund any day the fund is open for business at the
net asset value next computed after receipt of the
shareholders' order. Under unusual circumstances, a fund
may suspend redemptions, or postpone payment for more
than seven says, if permitted by U.S. securities laws. A
fund may charge redemption fees as described in its
prospectus.
C. Transfer agency
The transfer agent for a fund typically processes
the transfer of shares, redemption of shares, and payment
and/or reinvestment of distributions.
V. Shareholder Information, Rights and Procedures for the
Exercise of Such Rights
A. Voting Rights
Voting rights vary from fund to fund. In the case
of many funds organized as Massachusetts business trusts,
shareholders are entitled to vote on the election of
trustees, approval of investment advisory agreements,
underwriting agreements, and distribution plans (or
amendments thereto), certain mergers or other business
combinations, and certain amendments to the declaration
of trust. Shareholder approval is also required to
modify or eliminate a fundamental investment policy.
B. Dividends
Shareholders are typically entitled to receive
dividends when and if declared by a fund's trustees. In
declaring dividends, the trustees will normally set a
record date, and all shareholders of record on that date
will be entitled to receive the dividend paid.
C. Dissolution
Shareholders would normally be entitled to receive
the net assets of a fund which were liquidated in
accordance with the proportion of the fund's outstanding
shares he owns.
D. Transferability
Shares of a fund are typically transferable without
restriction.
E. Right to Inspection
Shareholders of a Massachusetts business trust have
the right to inspect the records of the trust as provided
in the declaration of trust or as otherwise provided by
applicable law.
VI. U.S. Tax Matters
The Fund intends to qualify each year as a regulated
investment company under Subchapter M of the United States
Internal Revenue Code of 1986, as amended (the "Code").
As a regulated investment company qualifying to have its
tax liability determined under Subchapter M, the Fund will not
be subject to U.S. federal income tax on any of its net
investment income or net realized capital gains that are
distributed to its shareholders. In addition, as a
Massachusetts business trust, the Fund under present
Massachusetts law is not subject to any excise or income taxes
in Massachusetts.
In order to qualify as a "regulated investment company",
the Fund must, among other things, (a) derive at least 90% of
its gross income from dividends, interest, payments with
respect to certain securities loans, and gains from the sale
of stock, securities and foreign currencies, or other income
(including but not limited to gains from options, futures, or
forward contracts) derived with respect to its business of
investing in such stock, securities, or currencies; (b)
distribute with respect to each taxable year at least 90% of
the sum of its taxable net investment income, its net tax-
exempt income, and the excess, if any, of its net short-term
capital gains over net long-term capital losses for such year;
(c) diversify its holdings so that, at the close of each
quarter of its taxable year, (i) at least 50% of the value of
its total assets consists of cash, cash items, U.S. Government
Securities, securities of other regulated investment companies
and other securities limited generally with respect to any one
issuer to not more than 5% of the total assets of the Fund and
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.
In addition, until the start of the Fund's first tax year
beginning after August 5, 1997, the Fund must 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 in order to
qualify as a regulated investment company.
If the Fund qualifies as a regulated investment company
that is accorded special tax treatment, the Fund will not be
subject to federal income tax on income paid to its
shareholders in the form of dividends (including capital gain
dividends).
If the Fund failed to qualify as a regulated investment
company accorded special tax treatment in any taxable year,
the Fund would be subject to tax on its taxable income at
corporate rates, and all distributions from earnings and
profits, including any distributions of net tax-exempt income
and net long-term capital gains, would be taxable to
shareholders as ordinary income. In addition, the Fund could
be required to recognize unrealized gains, pay substantial
taxes and interest and make substantial distributions before
requalifying as a regulated investment company that is
accorded special tax treatment.
If the Fund fails to distribute in a calendar year
substantially all of its ordinary income for such year and
substantially all of its capital gain net income for the one-
year period ending October 31 (or later if the Fund is
permitted so to elect and so elects), plus any retained amount
from the prior year, the Fund will be subject to a 4% excise
tax on the undistributed amounts. A dividend paid to
shareholders by the Fund in January of a year generally is
deemed to have been paid by the Fund on December 31 of the
preceding year, if the dividend was declared and payable to
shareholders of record on a date in October, November or
December of that preceding year. The Fund intends generally
to make distributions sufficient to avoid imposition of the 4%
excise tax.
Fund distributions will be taxable to shareholders as
ordinary income, except that any distributions designated by
the Fund as deriving from net gains on securities held for
more than one year but not more than 18 months and from net
gains on securities held for more than 18 months will be
taxable as such, regardless of how long a shareholder has held
shares in the Fund. Distributions will be taxable as
described above whether received in cash or in shares through
the reinvestment of distributions. Shareholders who are not
subject to U.S. federal income tax on their income generally
will not have to pay such tax on amounts distributed to them.
Distributions from capital gains are made after applying
any available capital loss carryovers.
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.
Investment by the Fund in "passive foreign investment
companies" could subject the Fund to a U.S. federal income tax
or other charge on the proceeds from the sale of its
investment in such a company; however, this tax can be avoided
by making an election to mark such investments to market
annually or to treat the passive foreign investment company as
a "qualified electing fund".
A "passive foreign investment company" is any foreign
corporation: (i) 75 percent or more of the income of which for
the taxable year is passive income, or (ii) the average
percentage of the assets of which (generally by value, but by
adjusted tax basis in certain cases) that produce or are held
for the production of passive income is at least 50 percent.
Generally, passive income for this purpose means dividends,
interest (including income equivalent to interest), royalties,
rents, annuities, the excess of gains over losses from certain
property transactions and commodities transactions, and
foreign currency gains. Passive income for this purpose does
not include rents and royalties received by the foreign
corporation from active business and certain income received
from related persons.
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, any loss realized upon a taxable
disposition of shares held for six months or less will be
treated as long-term, rather than short-term, to the extent of
any long-term capital gain distributions received by the
shareholder with respect to the shares. All or a portion of
any loss realized upon a taxable disposition of Fund shares
will be disallowed if other shares of the Fund are purchased
within 30 days before or after the disposition. In such a
case, the basis of the newly purchased shares will be adjusted
to reflect the disallowed loss.
Special tax ruled 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 the Fund as an investment through
such plans and the precise effect of an investment on their
particular tax situation.
The Fund generally is required to withhold and remit to
the U.S. Treasury 31% of the taxable dividends and other
distributions paid to any individual shareholder who fails to
furnish the Fund with a correct taxpayer identification number
(TIN), who has under-reported dividends or interest income, or
who fails to certify to the fund that he or she is not subject
to such withholding. Shareholders who fail to furnish their
correct 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.
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.
The foregoing is a general and abbreviated summary of the
applicable provisions of the Code and related regulations
currently in effect. For the complete provisions, reference
should be made to the pertinent Code sections and regulations.
The Code and regulations are subject to change by legislative
or administrative actions. Dividends and distributions also
may be subject to state taxes. Shareholders are urged to
consult their tax advisers regarding specific questions as to
U.S. federal, state or local taxes. The foregoing discussion
relates solely to U.S. federal income tax law. Non-U.S.
investors should consult their tax advisers concerning the tax
consequences of ownership of shares of the fund, including the
possibility that distributions may be subject to a 30% United
States withholding tax (or a reduced rate of withholding
provided by treaty), the possibility that a non-U.S. investor
may be subject to U.S. tax on capital gain distributions and
gains realized upon the sale of fund shares if the investor is
present in the United States for more than 182 days during the
taxable year (and certain other conditions apply), or the
possibility that a non-U.S. investor may be subject to U.S.
tax on income from the fund that is "effectively connected"
with a U.S. trade or business carried on by such an investor.
Shareholders residing in Japan should consult "Tax Treatment
of Shareholders in Japan", above.
VII. Important Participants in Offering of Mutual Fund Shares
A. Investment Company
Certain pooled investment vehicles qualify as
investment companies under the 1940 Act. There are open-
end investment companies (those which offer redeemable
securities) and closed-end investment companies (any
others).
B. Investment Adviser/Administrator
The investment adviser is typically responsible for
the implementation of an investment company's investment
program. It, or another affiliated or unaffiliated
entity, may also perform certain record keeping and
administrative functions.
C. Underwriter
An investment company may appoint one or more
principal underwriters for its shares. The activities of
such a principally underwriter are generally governed by
a number of legal regimes, including, for example, the
1940 Act, the 1933 Act, the 1934 Act, and state laws.
D. Transfer Agent
A transfer agent performs certain bookkeeping, data
processing, and administrative services pertaining to the
maintenance of shareholder accounts. A transfer agent
may also handle the payment of any dividends declared by
the trustees of a fund.
E. Custodian
A custodian's responsibilities may include, among
other things, safeguarding and controlling a fund's cash
and securities, handling the receipt and delivery of
securities, and collecting interest and dividends on a
fund's investments.
II. FINANCIAL CONDITIONS OF THE INVESTMENT MANAGEMENT COMPANY
[Omitted, in Japanese version, financial statements of
the Investment Management Company and Japanese
translations thereof are incorporated here.]
III. FORM OF FOREIGN INVESTMENT FUND SECURITIES
Main items to be set forth on the share certificate of
the Fund (if issued) are as follows:-
(1) Front
a. Name of the Fund
b. Number of shares represented
c. Signatures of the Chairman and Transfer Agent
d. Description stating that the Declaration of Trust
applies to shareholders and assignees therefrom
(2) Back
a. Space for endorsement
b. Description concerning delegation of transfer agency
