July 8, 1996
Q & A for shareholders calling regarding proposed changes to
fundamental investment restrictions
1. I understand that Putnam has been sending out proxies
to shareholders that include proposals to change some of the
funds' fundamental investment restrictions. Why is Putnam
doing this?
The purpose of these proposed changes is to
standardize the investment restrictions of the
Putnam funds where appropriate and, in certain
cases, to increase the funds' investment
flexibility. In addition, many of these changes
amend or eliminate unnecessarily cumbersome and
outdated requirements. Standardized investment
restrictions will help Putnam Management to more
easily monitor each fund's compliance with its
investment policies.
2. Will these changes affect the funds' objectives or
basic investment strategies?
The proposed changes will not change the funds'
investment objective or basic investment
strategies. Rather, they will allow the portfolio
management team more flexibility in choosing
investments to meet those objectives and
strategies. Putnam has always been a strong
proponent of "truth in labelling," meaning that
the funds aim for a clear level of risk and return
and that the funds are managed in accordance with
the funds' policies and objectives. This will not
affect that guiding principle in any way.
3. When were these investment restrictions implemented?
Fundamental investment restrictions are adopted at
the time a fund is organized. Many of the Putnam
funds were organized twenty years ago or more
(almost 60 years ago in the case of The George
Putnam Fund). Many of the proposed changes
reflect the elimination of restrictive policies
that were required at one time by various state
securities authorities but that are no longer
required under current regulations. In other
words, if the fund was being organized now, these
restrictions would no longer be required.
4. Will this affect the costs to the fund?
It is possible that the adoption of the proposed
changes may result in some reduction in costs to
the fund over the longer term because it should
help lower the costs relating to monitoring and
compliance with investment restrictions over the
complex of Putnam funds once the funds have more
uniform restrictions.
5. Are other firms also proposing removal of investment
restrictions?
Many other fund complexes, faced with the same
outdated sets of investment restrictions, have
already proposed, or are in the process of
proposing, similar changes to their funds'
fundamental investment restrictions.
