GEORGE PUTNAM FUND OF BOSTON, DEF 14A, 1996-05-02

GEORGE PUTNAM FUND OF BOSTON
DEF 14A, 1996-05-02

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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
----
Filed by the Registrant / X /
----
----
Filed by a Party other than the Registrant / /
----
CHECK THE APPROPRIATE BOX:
----
/ / Preliminary Proxy Statement
- ----
----
/ / Preliminary Additional Materials
- ----
----
/ X / Definitive Proxy Statement
- ----
----
/ / Definitive Additional Materials
- ----
----
/ / Soliciting Material Pursuant to Sec. 240.14a-11(e) or
- ---- Sec. 240.14a-12

THE GEORGE PUTNAM FUND OF BOSTON
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)

PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
----
/ x / $125 per Exchange Act Rules 0-11(c)(1)(ii),
- ---- 14a-6(i)(1), or 14a-6(i)(2).
----
/ / $500 per each party to the controversy pursuant
- ---- to Exchange Act Rule 14a-6(i)(3).
----
/ / Fee computed on table below per Exchange Act Rules
- ---- 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which
transaction applies:

(2) Aggregate number of securities to which
transaction applies:

(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11:

(4) Proposed maximum aggregate value of transaction:

----
/ / Check box if any part of the fee is offset as provided
- ---- by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed: <PAGE>
IMPORTANT INFORMATION
FOR SHAREHOLDERS IN
THE GEORGE PUTNAM FUND OF BOSTON

THE DOCUMENT YOU HOLD IN YOUR HANDS CONTAINS YOUR PROXY STATEMENT
AND PROXY CARD. A PROXY CARD IS, IN ESSENCE, A BALLOT. WHEN YOU
VOTE YOUR PROXY, IT TELLS US HOW TO VOTE ON YOUR BEHALF ON
IMPORTANT ISSUES RELATING TO YOUR FUND. IF YOU COMPLETE AND SIGN
THE PROXY, WE'LL VOTE IT EXACTLY AS YOU TELL US. IF YOU SIMPLY
SIGN THE PROXY, WE'LL VOTE IT IN ACCORDANCE WITH THE TRUSTEES'
RECOMMENDATIONS ON PAGES 6 AND 7 .

WE URGE YOU TO SPEND A COUPLE OF MINUTES WITH THE PROXY
STATEMENT, FILL OUT YOUR PROXY CARD, AND RETURN IT TO US. WHEN
SHAREHOLDERS DON'T RETURN THEIR PROXIES IN SUFFICIENT NUMBERS, WE
HAVE TO INCUR THE EXPENSE OF FOLLOW-UP SOLICITATIONS, WHICH CAN
COST YOUR FUND MONEY.

WE WANT TO KNOW HOW YOU WOULD LIKE TO VOTE AND WELCOME YOUR
COMMENTS. PLEASE TAKE A FEW MOMENTS WITH THESE MATERIALS AND
RETURN YOUR PROXY TO US.

(PUTNAM LOGO APPEARS HERE)
BOSTON * LONDON * TOKYO
<PAGE>
TABLE OF CONTENTS

A Message from the Chairman. . . . . . . . . . . . . . . . . . . . . . . .1

Notice of Shareholder Meeting. . . . . . . . . . . . . . . . . . . 3

Trustees' Recommendations. . . . . . . . . . . . . . . . . . . . . 6

PROXY CARD ENCLOSED

If you have any questions, please contact us at the special toll-
free number we have set up for you (1-800-225-1581) or call your
financial adviser.
<PAGE>
A MESSAGE FROM THE CHAIRMAN

(Photograph of George Putnam appears here)

Dear Shareholder:

I am writing to you to ask for your vote on important questions
that affect your investment in your fund. While you are, of
course, welcome to join us at your fund's meeting, most
shareholders cast their vote by filling out and signing the
enclosed proxy. We are asking for your vote on these matters:

1. ELECTING TRUSTEES TO OVERSEE YOUR FUND;

2. RATIFYING THE SELECTION BY THE TRUSTEES OF THE INDEPENDENT
AUDITORS OF YOUR FUND FOR ITS CURRENT FISCAL YEAR;

3 . APPROVING A NEW MANAGEMENT CONTRACT BETWEEN YOUR FUND
AND PUTNAM INVESTMENT MANAGEMENT, INC., INCLUDING AN
INCREASE IN THE MANAGEMENT FEE PAYABLE BY YOUR FUND.

4. Approving a number of changes to your fund's
fundamental investment restrictions, including the
elimination of certain of these restrictions.

A word about the management fee increase. A fee increase is
proposed only after a great deal of thought and analysis on the
part of the Trustees. For several years the Trustees have been
carefully studying the management fees, investment performance,
and expense ratios of each of the Putnam funds and also major
competing funds. This comprehensive review resulted in
recommendations for fee increases for some funds and decreases
for others. After giving careful consideration to your
fund's superior investment performance in recent years, the
Trustees are recommending the approval of a new management fee
which conforms to the fees of similar Putnam funds.

The new management fee will result in an increase of $0.20
in annual expenses for each $100 invested. Your Trustees believe
that this increase, the first since 1988, will provide Putnam
Investment Management, Inc. with a fee that is fair and
reasonable when compared with the fees paid to other high-quality
fund managers. We encourage you to support the Trustees'
recommendations.

Although we would like very much to have each shareholder attend
their fund's meeting, we realize this is not possible. Whether
or not you plan to be present, we need your vote. We urge you to
complete, sign, and return the enclosed proxy card promptly. A
postage-paid envelope is enclosed.

I'm sure that you, like most people, lead a busy life and are
tempted to put this proxy aside for another day. Please don't.
When shareholders don't return their proxies, their fund may have
to incur the expense of follow-up solicitations. All
shareholders benefit from the speedy return of proxies.

Your vote is important to us. We appreciate the time and
consideration that I am sure you will give this important matter.
If you have questions about the proposals, contact your financial
adviser or call a Putnam customer service representative
at
1-800-225-1581.

Sincerely yours,

(signature of George Putnam)
George Putnam, Chairman

<PAGE>
THE GEORGE PUTNAM FUND OF BOSTON
NOTICE OF A MEETING OF SHAREHOLDERS

THIS IS THE FORMAL AGENDA FOR YOUR FUND'S SHAREHOLDER MEETING.
IT TELLS YOU WHAT MATTERS WILL BE VOTED ON AND THE TIME AND PLACE
OF THE MEETING, IF YOU CAN ATTEND IN PERSON.

To the Shareholders of The George Putnam Fund of Boston:

A Meeting of Shareholders of your fund will be held on July 11,
1996 at 2:00 p.m., Boston time, on the eighth floor of One Post
Office Square, Boston, Massachusetts, to consider the following:

1. ELECTING TRUSTEES. SEE PAGE 9 .

2. RATIFYING THE SELECTION BY THE TRUSTEES OF THE INDEPENDENT
AUDITORS OF YOUR FUND FOR ITS CURRENT FISCAL YEAR. SEE
PAGE 25.

3. APPROVING A NEW MANAGEMENT CONTRACT BETWEEN YOUR
FUND AND PUTNAM INVESTMENT MANAGEMENT, INC., INCLUDING
AN INCREASE IN THE MANAGEMENT FEE PAYABLE BY THE FUND.
SEE PAGE 25.

4.A. Approving an amendment to the fund's Agreement and
Declaration of Trust with respect to the fund's permitted
investments. See page 34.

4.B. Approving an amendment to the fund's Agreement and
Declaration of Trust with respect to diversification of
investments. See page 35 .

4.C. Approving an amendment to the
fund's Agreement and Declaration of Trust with
respect to investments in issuers that have been
in operation for less than three years. See page
37 .

4.D. Approving an amendment to the
fund's Agreement and Declaration of Trust with
respect to the purchase of certain illiquid
securities. See page 39.

4.E. Approving an amendment to the fund's
Agreement and Declaration of Trust with respect to
investments in securities of issuers in which
management of the fund or Putnam Investment
Management , Inc. owns securities. See page
41 .

4.F. Approving an amendment to the
fund's Agreement and Declaration of Trust with
respect to owning 10% of the securities of a
single issuer. See page 42 .

4.G. Approving an amendment to the
fund's fundamental investment restrictions with
respect to investments in real estate. See
page 44.

4.H. Approving an amendment to the fund's
Agreement and Declaration of Trust with respect to
margin transactions. See page 46.

4.I. Approving an amendment to the fund's
fundamental investment restriction with respect to
making loans by purchasing securities. See page 47.

4.J. APPROVING AN AMENDMENT TO THE FUND'S
AGREEMENT AND DECLARATION OF TRUST WITH RESPECT TO
MAKING LOANS THROUGH REPURCHASE AGREEMENTS AND
SECURITIES LOANS. SEE PAGE 48.

4.K. APPROVING AN AMENDMENT TO THE FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION WITH RESPECT TO CONCENTRATION
OF ITS ASSETS. SEE PAGE 50.

4.L. APPROVING AN AMENDMENT TO THE FUND'S AGREEMENT AND
DECLARATION OF TRUST WITH RESPECT TO PLEDGING ASSETS. SEE
PAGE 51.

4.M. APPROVING AN AMENDMENT TO THE FUND'S AGREEMENT AND
DECLARATION OF TRUST AND THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH RESPECT TO BORROWING. SEE PAGE 53.

4.N. APPROVING AN AMENDMENT TO THE FUND'S AGREEMENT AND
DECLARATION OF TRUST AND THE ELIMINATION OF THE FUND'S
FUNDAMENTAL INVESTMENT RESTRICTIONS WITH RESPECT TO SHORT
SALES. SEE PAGE 55.

4.O. APPROVING THE ELIMINATION OF THE FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION PROHIBITING THE FUND FROM
INVESTING IN INVESTMENT COMPANIES IF PROHIBITED BY GERMAN
LAW. SEE PAGE 57 .

5. TRANSACTING OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING.
<PAGE>
By the Trustees

George Putnam, Chairman
William F. Pounds, Vice Chairman

Jameson A. Baxter Donald S. Perkins
Hans H. Estin George Putnam, III
John A. Hill Eli Shapiro
Elizabeth T. Kennan A.J.C. Smith
Lawrence J. Lasser W. Nicholas Thorndike
Robert E. Patterson

WE URGE YOU TO MARK, SIGN, DATE, AND MAIL THE ENCLOSED PROXY IN
THE POSTAGE-PAID ENVELOPE PROVIDED SO YOU WILL BE REPRESENTED AT
THE MEETING.

April 24 , 1996
<PAGE>
PROXY STATEMENT

THIS DOCUMENT WILL GIVE YOU THE INFORMATION YOU NEED TO VOTE ON
THE MATTERS LISTED ON THE PREVIOUS PAGE. MUCH OF THE INFORMATION
IN THE PROXY STATEMENT IS REQUIRED UNDER RULES OF THE SECURITIES
AND EXCHANGE COMMISSION (SEC); SOME OF IT IS TECHNICAL. IF THERE
IS ANYTHING YOU DON'T UNDERSTAND, PLEASE CONTACT US AT OUR
SPECIAL TOLL-FREE NUMBER, 1-800-225-1581, OR CALL YOUR FINANCIAL
ADVISER.

WHO IS ASKING FOR MY VOTE?

THE ENCLOSED PROXY IS SOLICITED BY THE TRUSTEES OF THE GEORGE
PUTNAM FUND OF BOSTON for use at the Meeting of Shareholders of
the fund to be held on July 11, 1996, and, if your fund's meeting
is adjourned, at any later meetings, for the purposes stated in
the Notice of Meeting (see previous page).

HOW DO YOUR FUND'S TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE ON
THESE PROPOSALS?

The Trustees recommend that you vote

1. FOR THE ELECTION OF ALL NOMINEES;

2. FOR SELECTING PRICE WATERHOUSE LLP AS THE INDEPENDENT
AUDITORS OF YOUR FUND;

3. FOR APPROVAL OF THE NEW MANAGEMENT CONTRACT,
INCREASING THE FEES PAYABLE TO PUTNAM INVESTMENT
MANAGEMENT, INC.;

4.A. FOR AMENDING THE FUND'S AGREEMENT AND DECLARATION OF TRUST
WITH RESPECT TO THE FUND'S PERMITTED INVESTMENTS;

4.B. FOR AMENDING THE FUND'S AGREEMENT AND DECLARATION OF
TRUST WITH RESPECT TO DIVERSIFICATION OF INVESTMENTS;

4.C. FOR AMENDING THE FUND'S AGREEMENT AND
DECLARATION OF TRUST WITH RESPECT TO INVESTMENTS
IN ISSUERS THAT HAVE BEEN IN OPERATION FOR LESS
THAN THREE YEARS;

4.D. FOR AMENDING THE FUND'S AGREEMENT AND
DECLARATION OF TRUST WITH RESPECT TO THE PURCHASE
OF CERTAIN ILLIQUID SECURITIES;

4.E. FOR AMENDING THE FUND'S AGREEMENT AND
DECLARATION OF TRUST WITH RESPECT TO INVESTMENTS
IN SECURITIES OF ISSUERS IN WHICH MANAGEMENT OF
THE FUND OR PUTNAM INVESTMENT
MANAGEMENT , INC. OWNS SECURITIES;

4.F. FOR AMENDING THE FUND'S AGREEMENT AND
DECLARATION OF TRUST WITH RESPECT TO OWNING 10% OF
THE SECURITIES OF A SINGLE ISSUER;

4.G. FOR AMENDING THE FUND'S FUNDAMENTAL
INVESTMENT RESTRICTIONS WITH RESPECT TO
INVESTMENTS IN REAL ESTATE;

4.H. FOR AMENDING THE FUND'S AGREEMENT AND
DECLARATION OF TRUST WITH RESPECT TO MARGIN
TRANSACTIONS;

4.I. FOR AMENDING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH RESPECT TO MAKING LOANS BY PURCHASING
SECURITIES;

4.J. FOR AMENDING THE FUND'S AGREEMENT AND
DECLARATION OF TRUST WITH RESPECT TO MAKING LOANS
THROUGH REPURCHASE AGREEMENTS AND SECURITIES
LOANS;

4.K. FOR AMENDING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH RESPECT TO CONCENTRATION OF ITS
ASSETS;

4.L. FOR AMENDING THE FUND'S AGREEMENT AND DECLARATION OF TRUST
WITH RESPECT TO PLEDGING ASSETS;

4.M. FOR AMENDING THE FUND'S AGREEMENT AND DECLARATION OF TRUST
AND THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO BORROWING;

4.N. FOR AMENDING THE FUND'S AGREEMENT AND DECLARATION OF TRUST
AND ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTIONS WITH RESPECT TO SHORT SALES; AND

4.O. FOR ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION PROHIBITING THE FUND FROM INVESTING IN
INVESTMENT COMPANIES IF PROHIBITED BY GERMAN
LAW .

WHO IS ELIGIBLE TO VOTE?

Shareholders of record at the close of business on April 12,
1996, are entitled to be present and to vote at the meeting or
any adjourned meeting. The Notice of Meeting, the proxy, and the
Proxy Statement have been mailed to shareholders of record on or
about May 6 , 1996.

Each share is entitled to one vote. Shares represented by duly
executed proxies will be voted in accordance with shareholders'
instructions. If you sign the proxy, but don't fill in a vote,
your shares will be voted in accordance with the Trustees'
recommendations. If any other business is brought before the
meeting, your shares will be voted at the Trustees' discretion.

THE PROPOSALS

1. ELECTION OF TRUSTEES

WHO ARE THE NOMINEES FOR TRUSTEES?

The Nominating Committee of the Trustees recommends that the
number of Trustees be fixed at thirteen and that you vote for the
election of the nominees described below. Each nominee is
currently a Trustee of your fund and of the other Putnam funds.

The Nominating Committee of the Trustees consists solely of
Trustees who are not "interested persons" (as defined in the
Investment Company Act of 1940) of your fund or of Putnam
Investment Management, Inc., your fund's investment manager
("Putnam Management").

JAMESON ADKINS BAXTER
[INSERT PICTURE]

Ms. Baxter, age 52, is the President of Baxter Associates, Inc.,
a management and financial consulting firm which she founded in
1986. During that time, she was also a Vice President and
Principal of the Regency Group, Inc., and a Consultant to First
Boston Corporation, both of which are investment banking firms.
From 1965 to 1986, Ms. Baxter held various positions in
investment banking and corporate finance at First Boston.

Ms. Baxter currently also serves as a Director of Banta
Corporation, Avondale Federal Savings Bank, and ASHTA Chemicals,
Inc. She is also the Chairman Emeritus of the Board of Trustees
of Mount Holyoke College, having previously served as Chairman
for five years and as a Board member for thirteen years; an
Honorary Trustee and past President of the Board of Trustees of
the Emma Willard School; and Chair of the Board of Governors of
Good Shepherd Hospital. Ms. Baxter is a graduate of Mount
Holyoke College.

HANS H. ESTIN
[INSERT PICTURE]

Mr. Estin, age 67, is a Chartered Financial Analyst and the Vice
Chairman of North American Management Corp., a registered
investment adviser serving individual clients and their families.
Mr. Estin currently also serves as a Director of The Boston
Company, Inc., a registered investment adviser which provides
administrative and investment management services to mutual funds
and other institutional investors, and Boston Safe Deposit and
Trust Company; a Corporation Member of Massachusetts General
Hospital; and a Trustee of New England Aquarium. He previously
served as the Chairman of the Board of Trustees of Boston
University and is currently active in various other civic
associations, including the Boys & Girls Clubs of Boston, Inc.
Mr. Estin is a graduate of Harvard College and holds honorary
doctorates from Merrimack College and Boston University.

JOHN A. HILL
[INSERT PICTURE]

Mr. Hill, age 54, is the Chairman and Managing Director of First
Reserve Corporation, a registered investment adviser investing in
companies in the world-wide energy industry on behalf of
institutional investors.

Prior to acquiring First Reserve in 1983, Mr. Hill held executive
positions with several investment advisory firms and held various
positions with the Federal government, including Associate
Director of the Office of Management and Budget and Deputy
Administrator of the Federal Energy Administration.

Mr. Hill currently also serves as a Director of Snyder Oil
Corporation, an exploration and production company which he
founded, Maverick Tube Corporation, a manufacturer of structural
steel, pipe and well casings, PetroCorp Incorporated, an
exploration and production company, Weatherford Enterra, Inc., an
oil field service company, various private companies controlled
by First Reserve Corporation, and various First Reserve Funds.
He is also a Member of the Board of Advisors of Fund Directions.
He is currently active in various business associations,
including the Economic Club of New York, and lectures on energy
issues in the United States and Europe. Mr. Hill is a graduate
of Southern Methodist University.

ELIZABETH T. KENNAN
[INSERT PICTURE]

Ms. Kennan, age 58, is President Emeritus and Professor of Mount
Holyoke College. From 1978 through June 1995, she was President
of Mount Holyoke College. From 1966 to 1978, she was on the
faculty of Catholic University, where she taught history and
published numerous articles.

Ms. Kennan currently also serves as a Director of NYNEX
Corporation, a telecommunications company, Northeast Utilities,
the Kentucky Home Life Insurance Companies, and Talbots, a
women's clothing retailer. She also serves as a Member of The
Folger Shakespeare Library Committee. She is currently active in
various educational and civic associations, including the
Committee on Economic Development and the Council on Foreign
Relations. Ms. Kennan is a graduate of Mount Holyoke College,
the University of Washington and St. Hilda College at Oxford
University and holds several honorary doctorates.

LAWRENCE J. LASSER*
[INSERT PICTURE]

Mr. Lasser, age 53, is the Vice President of your fund and the
other Putnam funds. He has been the President, Chief Executive
Officer and a Director of Putnam Investments, Inc. and Putnam
Management since 1985, having begun his career there in 1969.

Mr. Lasser currently also serves as a Director of Marsh &
McLennan Companies, Inc., the parent company of Putnam
Management, and INROADS/Central New England, Inc., a job market
internship program for minority high school and college students.
He is a Member of the Board of Overseers of the Museum of
Science, the Museum of Fine Arts and the Isabella Stewart Gardner
Museum in Boston. He is also a Trustee of the Beth Israel
Hospital and Buckingham, Browne and Nichols School. Mr. Lasser
is a graduate of Antioch College and Harvard Business School.

ROBERT E. PATTERSON
[INSERT PICTURE]

Mr. Patterson, age 51, is the Executive Vice President and
Director of Acquisitions of Cabot Partners Limited Partnership, a
registered investment adviser which manages real estate
investments for institutional investors. Prior to 1990, he was
the Executive Vice President of Cabot, Cabot & Forbes Realty
Advisors, Inc., the predecessor company of Cabot Partners. Prior
to that, he was a Senior Vice President of the Beal Companies, a
real estate management, investment and development company. He
has also worked as an attorney and held various positions in
state government, including the founding Executive Director of
the Massachusetts Industrial Finance Agency.

Mr. Patterson currently also serves as Chairman of the Joslin
Diabetes Center and as a Director of Brandywine Trust Company.
Mr. Patterson is a graduate of Harvard College and Harvard Law
School.

DONALD S. PERKINS*
[INSERT PICTURE]

Mr. Perkins, age 69, is the retired Chairman of the Board of
Jewel Companies, Inc., a diversified retailer, where among other
roles he served as President, Chief Executive Officer and
Chairman of the Board from 1965 to 1980. He currently also
serves as a Director of various other public corporations,
including AON Corp., an insurance company, Cummins Engine
Company, Inc., an engine and power generator equipment
manufacturer and assembler, Current Assets L.L.C., a corporation
providing financial staffing services, Illinova and Illinois
Power Co., Inland Steel Industries, Inc., LaSalle Street Fund,
Inc., a real estate investment trust, Lucent Technologies
Inc., Springs Industries, Inc., a textile manufacturer, and
Time Warner, Inc., one of the nation's largest media
conglomerates. He previously served as a director of several
other major public corporations, including Corning Glass Works,
Eastman Kodak Company, Firestone Tire & Rubber Company and Kmart
Corporation.

Mr. Perkins currently also serves as a Trustee and Vice Chairman
of Northwestern University and as a Trustee of the Hospital
Research and Education Trust. He is currently active in various
civic and business associations, including the Business Council
and the Civic Committee of the Commercial Club of Chicago, of
which he is the founding Chairman. Mr. Perkins is a graduate of
Yale University and Harvard Business School and holds an honorary
Doctorate from Loyola University of Chicago.

WILLIAM F. POUNDS
[INSERT PICTURE]

Dr. Pounds, age 68, is the Vice Chairman of your fund and of the
other Putnam funds. He has been a Professor of Management at the
Alfred P. Sloan School of Management at the Massachusetts
Institute of Technology since 1961 and served as Dean of that
School from 1966 to 1980. He previously served as Senior Advisor
to the Rockefeller Family and Associates and was a past Chairman
of Rockefeller & Co., Inc., a registered investment adviser which
manages Rockefeller family assets, and Rockefeller Trust Company.

Dr. Pounds currently also serves as a Director of IDEXX
Laboratories, Inc. , EG&G, Inc., Perseptive Biosystems,
Inc., Management Sciences For Health, Inc. and Sun Company, Inc.
He is also a Trustee of the Museum of Fine Arts in Boston; an
Overseer of WGBH Educational Foundation, and a Fellow of The
American Academy of Arts and Sciences. He previously served as a
director of Fisher-Price, Inc., a major toy manufacturer and
General Mills, Inc., a major manufacturer and distributor of food
products. Dr. Pounds is a graduate of Carnegie Mellon
University.
<PAGE>
GEORGE PUTNAM*
[INSERT PICTURE]

Mr. Putnam, age 69, is the Chairman and President of your fund
and of the other Putnam funds. He is the Chairman and a Director
of Putnam Management and Putnam Mutual Funds Corp. and a director
of Marsh & McLennan, their parent company. Mr. Putnam is the son
of the founder of the Putnam funds and Putnam Management and has
been employed in various capacities by Putnam Management since
1951, including Chief Executive Officer from 1961 to 1973. He is
a former Overseer and Treasurer of Harvard University; a past
Chairman of the Harvard Management Company; and a Trustee
Emeritus of Wellesley College and Bradford College.

Mr. Putnam currently also serves as a Director of The Boston
Company, Inc., Boston Safe Deposit and Trust Company, Freeport-
McMoRan, Inc., Freeport Copper and Gold, Inc., McMoRan Oil and
Gas, Inc., mining and natural resources companies, General Mills,
Inc., a major manufacturer of food products, Houghton Mifflin
Company, a major publishing company, and Rockefeller Group, Inc.,
a real estate manager. He is also a Trustee of Massachusetts
General Hospital, McLean Hospital, Vincent Memorial Hospital,
WGBH Educational Foundation, the Museum of Fine Arts and the
Museum of Science in Boston; the New England Aquarium, an
Overseer of Northeastern University; and a Fellow of The American
Academy of Arts and Sciences. Mr. Putnam is a graduate of
Harvard College and Harvard Business School and holds honorary
doctorates from Bates College and Harvard University.

GEORGE PUTNAM, III*
[INSERT PICTURE]

Mr. Putnam, age 44, is the President of New Generation Research,
Inc., a publisher of financial advisory and other research
services relating to bankrupt and distressed companies, and New
Generation Advisers, Inc., a registered investment adviser which
provides advice to private funds specializing in investments in
such companies. Prior to founding New Generation in 1985, Mr.
Putnam was an attorney with the Philadelphia law firm Dechert
Price & Rhoads.

Mr. Putnam currently also serves as a Director of the
Massachusetts Audubon Society. He is also a Trustee of the Sea
Education Association and St. Mark's School and an Overseer of
the New England Medical Center. Mr. Putnam is a graduate of
Harvard College, Harvard Business School and Harvard Law School.
<PAGE>
ELI SHAPIRO
[INSERT PICTURE]

Dr. Shapiro, age 79, is the Alfred P. Sloan Professor of
Management, Emeritus at the Alfred P. Sloan School of Management
at the Massachusetts Institute of Technology, having served on
the faculty of the Sloan School for eighteen years. He
previously was also on the faculty of Harvard Business School,
The University of Chicago School of Business and Brooklyn
College. During his academic career, Dr. Shapiro authored
numerous publications concerning finance and related topics. He
previously served as the President and Chief Executive of the
National Bureau of Economic Research and also provided economic
and financial consulting services to various clients.

Dr. Shapiro is also a past Director of many companies,
including Nomura Dividend Income Fund, Inc., a privately held
registered investment company managed by Putnam
Management , Reece Corporation, a sewing machine
manufacturer, Commonwealth Mortgage, Dexter Corporation, a
manufacturer of plastics and related products, Avis Corporation,
a car rental company, Connecticut Bank and Trust Company,
Connecticut National Gas Corporation, the Federal Home Loan Bank
of Boston, where he served as Chairman from 1977 to 1989,
Travelers' Corporation, an insurance company, and Norlin
Corporation, a musical instrument manufacturer; and a past
Trustee of Mount Holyoke College and the Putnam funds (from 1984
to 1989).

Dr. Shapiro is a Fellow of The American Academy of Arts and
Sciences and is active in various professional and civic
associations, including the American Economic Association, the
American Finance Association and the Council on Foreign
Relations. Dr. Shapiro is a graduate of Brooklyn College and
Columbia University.

A.J.C. SMITH*
[INSERT PICTURE]

Mr. Smith, age 62, is the Chairman and Chief Executive Officer of
Marsh & McLennan Companies, Inc. He has been employed by Marsh &
McLennan and related companies in various capacities since 1961.
Mr. Smith is a Director of the Trident Corp., and he also serves
as a Trustee of the Carnegie Hall Society, the Central Park
Conservancy, The American Institute for Chartered Property
Underwriters, and is a Founder of the Museum of Scotland Society.
He was educated in Scotland and is a Fellow of the Faculty of
Actuaries in Edinburgh, a Fellow of the Canadian Institute of
Actuaries, a Fellow of the Conference of Actuaries in Public
Practice, an Associate of the Society of Actuaries, a Member of
the American Academy of Actuaries, the International Actuarial
Association and the International Association of Consulting
Actuaries.

W. NICHOLAS THORNDIKE**
[INSERT PICTURE]

Mr. Thorndike, age 63, serves as a Director of various
corporations and charitable organizations, including Data General
Corporation, a computer and high technology company, Bradley Real
Estate, Inc., a real estate investment firm, Providence Journal
Co., a newspaper publisher and owner of television stations, and
Courier Corporation, a book binding and printing company. He is
also a Trustee of Eastern Utilities Associates, Massachusetts
General Hospital, where he previously served as chairman and
president, and Northeastern University.

Prior to December 1988, he was the Chairman of the Board and
Managing Partner of Wellington Management Company/Thorndike,
Doran, Paine & Lewis, a registered investment adviser which
manages mutual funds and institutional assets. He also
previously served as a Trustee of the Wellington Group of Funds
(now The Vanguard Group) and was the Chairman and a Director of
Ivest Fund, Inc. Mr. Thorndike is a graduate of Harvard College.

- ----------------------------

* Nominees who are or may be deemed to be "interested persons"
(as defined in the Investment Company Act of 1940) of your
fund, Putnam Management, and Putnam Mutual Funds Corp.
("Putnam Mutual Funds"), the principal underwriter for all
the open-end Putnam funds and an affiliate of Putnam
Management. Messrs. Putnam, Lasser, and Smith are deemed
"interested persons" by virtue of their positions as
officers or shareholders of your fund, or directors of
Putnam Management, Putnam Mutual Funds, or Marsh & McLennan
Companies, Inc., the parent company of Putnam Management and
Putnam Mutual Funds. Mr. George Putnam, III, Mr. Putnam's
son, is also an "interested person" of your fund, Putnam
Management, and Putnam Mutual Funds. Mr. Perkins may be
deemed to be an "interested person" of your fund because of
his service as a director of a certain publicly held company
that includes registered broker-dealer firms among its
subsidiaries. Neither your fund nor any of the other Putnam
funds currently engages in any transactions with such firms
except that certain of such firms act as dealers in the
retail sale of shares of certain Putnam funds in the
ordinary course of their business. The balance of the
nominees are not "interested persons."

** In February 1994 Mr. Thorndike accepted appointment as a
successor trustee of certain private trusts in which he has
no beneficial interest. At that time he also became
Chairman of the Board of two privately owned corporations
controlled by such trusts, serving in that capacity until
October 1994. These corporations filed voluntary petitions
for relief under Chapter 11 of the U.S. Bankruptcy Code in
August 1994.

Except as indicated above, the principal occupations and business
experience of the nominees for the last five years have been with
the employers indicated, although in some cases they have held
different positions with those employers. Except for Dr. Shapiro
and Ms. Baxter, all the nominees were elected by the shareholders
in September 1993. Ms. Baxter and Dr. Shapiro were elected by
the other Trustees in January 1994 and April 1995, respectively.
As indicated above, Dr. Shapiro also previously served as a
Trustee of the Putnam funds from 1984 to 1989. The 13 nominees
for election as Trustees at the shareholder meeting of your fund
who receive the greatest number of votes will be elected Trustees
of your fund. The Trustees serve until their successors are
elected and qualified. Each of the nominees has agreed to serve
as a Trustee if elected. If any of the nominees is unavailable
for election at the time of the meeting, which is not
anticipated, the Trustees may vote for other nominees at their
discretion, or the Trustees may recommend that the shareholders
fix the number of Trustees at less than 13 for your fund.

WHAT ARE THE TRUSTEES' RESPONSIBILITIES?

Your fund's Trustees are responsible for the general oversight of
your fund's business and for assuring that your fund is managed
in the best interests of its shareholders. The Trustees
periodically review your fund's investment performance as well as
the quality of other services provided to your fund and its
shareholders by Putnam Management and its affiliates, including
administration, custody, distribution and investor servicing. At
least annually, the Trustees review the fees paid to Putnam
Management and its affiliates for these services and the overall
level of your fund's operating expenses. In carrying out these
responsibilities, the Trustees are assisted by an independent
administrative staff and by your fund's auditors and legal
counsel, which are selected by the Trustees and are independent
of Putnam Management and its affiliates.

DO THE TRUSTEES HAVE A STAKE IN YOUR FUND?

The Trustees believe it is important that each Trustee have a
significant investment in the Putnam funds. The Trustees
allocate their investments among the more than 99 Putnam funds
based on their own investment needs. The Trustees' aggregate
investments in the Putnam funds total over $45 million.
The table below lists each Trustee's current investments in the
fund and in the Putnam funds as a group.<PAGE>
<TABLE>
<CAPTION>
SHARE OWNERSHIP BY TRUSTEES

YEAR FIRST NUMBER OF
ELECTED AS NUMBER OF SHARES OF
TRUSTEE OF SHARES OF THE ALL PUTNAM
THE PUTNAM FUND OWNED FUNDS OWNED
TRUSTEES FUNDS AS OF 3/15/96* AS OF 3/15/96**
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Jameson A. Baxter 1994 606 303,417
Hans H. Estin 1972 653 346,438
John A. Hill 1985 1,295 1,358,924
Elizabeth T. Kennan 1992 134 314,395
Lawrence J. Lasser 1992 79,162 8,864,380
Robert E. Patterson 1984 657 737,582
Donald S. Perkins 1982 4,709 2,126,688
William F. Pounds 1971 19,573 4,706,601
George Putnam 1957 386,816(1) 20,996,054
George Putnam, III 1984 1,707 3,405,083
Eli Shapiro 1995+ -- 926,071
A.J.C. Smith 1986 601 1,090,348
W. Nicholas Thorndike 1992 135 743,637
- ------------------------------------------------------------------------------------------

* Except as noted below, each Trustee has sole investment power and sole voting
power with respect to his or her shares of the fund.
** These holdings do not include shares of Putnam money market funds.
+ Dr. Shapiro previously served as a Trustee of the Putnam funds from 1984 to 1989.
(1) Mr. Putnam has sole investment power and shared voting power with respect to
306,111 of these shares which are held for his individual
account in the Putnam Investments, Inc. Profit Sharing Retirement Plan.

As of March 15, 1996, the Trustees and officers of the fund owned a total of 579,458
shares of the fund, comprising less than 1% of its outstanding shares on that date. A
total of 352,753 of these shares are held by certain "interested" Trustees and officers of
your fund and Putnam Management in their Putnam Investments, Inc. Profit Sharing
Retirement Plan accounts. Each individual accountholder has sole investment
power and shared voting power with respect to his/her account.
<PAGE>
WHAT ARE SOME OF THE WAYS IN WHICH THE TRUSTEES REPRESENT
SHAREHOLDER INTERESTS?

The Trustees believe that, as substantial investors in the Putnam
funds, their interests are closely aligned with those of
individual shareholders. Among other ways, the Trustees seek to
represent shareholder interests:

by carefully reviewing your fund's investment performance
on an individual basis with your fund's managers;

by also carefully reviewing the quality of the various
other services provided to the funds and their
shareholders by Putnam Management and its affiliates;

by discussing with senior management of Putnam Management
steps being taken to address any performance
deficiencies;

by reviewing the fees paid to Putnam Management to ensure
that such fees remain reasonable and competitive with
those of other mutual funds, while at the same time
providing Putnam Management sufficient resources to
continue to provide high quality services in the future;

by monitoring potential conflicts between the funds and
Putnam Management and its affiliates to ensure that the
funds continue to be managed in the best interests of
their shareholders;

by also monitoring potential conflicts among funds to
ensure that shareholders continue to realize the benefits
of participation in a large and diverse family of funds.

HOW OFTEN DO THE TRUSTEES MEET?

The Trustees meet each month (except August) over a two-day
period to review the operations of your fund and of the other
Putnam funds. A portion of these meetings is devoted to meetings
of various Committees of the board which focus on particular
matters. These include: the Contract Committee, which reviews
all contractual arrangements with Putnam Management and its
affiliates; the Communication and Service Committee, which
reviews the quality of services provided by your fund's investor
servicing agent, custodian and distributor; the Pricing,
Brokerage and Special Investments Committee, which reviews
matters relating to valuation of securities, best execution,
brokerage costs and allocations and new investment techniques;
the Audit Committee, which reviews accounting policies and the
adequacy of internal controls and supervises the engagement of
the funds' auditors; the Compensation, Administration and Legal
Affairs Committee, which reviews the compensation of the Trustees
and their administrative staff and supervises the engagement of
the funds' independent counsel; and the Nominating Committee,
which is responsible for selecting nominees for election as
Trustees.

Each Trustee generally attends at least two formal committee
meetings during such monthly meeting of the Trustees. During
1995, the average Trustee participated in approximately 40
committee and board meetings. In addition, the Trustees meet in
small groups with Chief Investment Officers and Portfolio
Managers to review recent performance and the current investment
climate for selected funds. These meetings ensure that each
fund's performance is reviewed in detail at least twice a year.
The Contract Committee typically meets on several additional
occasions during the year to carry out its responsibilities.
Other Committees, including an Executive Committee, may also meet
on special occasions as the need arises.

WHAT ARE THE TRUSTEES PAID FOR THEIR SERVICES?

Your fund pays each Trustee a fee for his or her services. Each
Trustee also receives fees for serving as Trustee of the other
Putnam funds. The Trustees periodically review their fees to
assure that such fees continue to be appropriate in light of
their responsibilities as well as in relation to fees paid to
trustees of other mutual fund complexes. The fees paid to each
Trustee by your fund and by all of the Putnam funds are shown
below:
<PAGE>
COMPENSATION TABLE

Total
Aggregate compensation
compensation from all
Trustees from the fund* Putnam funds**
- --------------------------------------------------------------
Jameson A. Baxter $2,769 $150,854
Hans H. Estin 2,769 150,854
John A. Hill*** 2,753 149,854
Elizabeth T. Kennan 2,737 148,854
Lawrence J. Lasser 2,769 150,854
Robert E. Patterson 2,800 152,854
Donald S. Perkins 2,769 150,854
William F. Pounds 2,784 149,854
George Putnam 2,769 150,854
George Putnam, III 2,769 150,854
Eli Shapiro**** 695 95,372
A.J.C. Smith 2,727 149,854
W. Nicholas Thorndike 2,800 152,854
-----------------------------------------------------------------
- -
* Includes an annual retainer and an attendance fee for each
meeting attended.

** Reflects total payments received from all Putnam funds in the
most recent calendar year. As of December 31, 1995, there were
99 funds in the Putnam family.

*** Includes compensation deferred pursuant to a Trustee
Compensation Deferral Plan. The total amount of deferred
compensation payable to Mr. Hill by all Putnam funds as of
December 31, 1995 was $51,141, including income earned on such
amounts.

*** *
Elected as a Trustee in April 1995. For the calendar year
ended December 31, 1994, Dr. Shapiro received $38,577 in
retirement benefits from the Putnam funds in respect of his
prior service as a Trustee from 1984 to 1989, which benefits
terminated at the end of 1994.

Your fund's Trustees have approved Retirement Guidelines for
Trustees of the Putnam funds. These guidelines provide generally
that a Trustee who retires after reaching age 72 and who has at
least 10 years of continuous service will be eligible to receive a
retirement benefit from each Putnam fund for which he or she served
as a Trustee. The amount and form of such benefit is subject to
determination annually by the Trustees and, unless otherwise
determined by the Trustees, will be an annual cash benefit payable
for life equal to one-half of the Trustee retainer fees paid by each
fund at the time of retirement. Several retired Trustees are
currently receiving benefits pursuant to the Guidelines and it is
anticipated that the current Trustees will receive similar benefits
upon their retirement. A Trustee who retired in calendar 1995 and
was eligible to receive benefits under these Guidelines would have
received an annual benefit of $66,749, based upon the aggregate
retainer fees paid by the Putnam funds for such year. The Trustees
reserve the right to amend or terminate such Guidelines and the
related payments at any time, and may modify or waive the foregoing
eligibility requirements when deemed appropriate.

For additional information about your fund, including further
information about its Trustees and officers, please see "Further
Information About Your Fund," on page 61 .

PUTNAM INVESTMENTS

Putnam Investment Management, Inc. and its affiliates, Putnam Mutual
Funds, the principal underwriter for shares of your fund and Putnam
Fiduciary Trust Company, your fund's investor servicing agent and
custodian, are wholly owned by Putnam Investments, Inc., One Post
Office Square, Boston, Massachusetts 02109, a holding company that
is in turn wholly owned by Marsh & McLennan Companies, Inc., which
has executive offices at 1166 Avenue of the Americas, New York, New
York 10036. Marsh & McLennan Companies, Inc., and its operating
subsidiaries are professional services firms with insurance and
reinsurance brokering, consulting, and investment management
businesses.

2. SELECTION OF INDEPENDENT AUDITORS

Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts,
independent accountants, has been selected by the Trustees as
auditors of your fund for the current fiscal year. Among the
country's preeminent accounting firms, this firm also serves as the
auditor for approximately half of the other funds in the Putnam
family. It was selected primarily on the basis of its expertise as
auditors of investment companies, the quality of its audit services,
and the competitiveness of the fees charged for these services.

A majority of the votes on the matter is necessary to ratify the
selection of auditors. A representative of the independent auditors
is expected to be present at the meeting to make statements and to
respond to appropriate questions.

3 . APPROVAL OF A NEW MANAGEMENT CONTRACT

The Trustees of your fund recommend that shareholders approve a new
management contract with Putnam Management, which provides for an
increase in the management fees payable by the fund to Putnam
Management. The proposed contract, which is attached as Exhibit A,
is identical in all substantive respects to the existing contract,
except as noted below. Further information about both the current
and proposed management contract, the termination and renewal
procedures, the services provided by Putnam Management and its
affiliates, and information concerning brokerage and related matters
can be found under "Additional Information Relating to
Management Contract Approval" on page 63 .

WHAT DO MANAGEMENT FEES PAY FOR?

Management fees pay Putnam Management for the services it provides
in conducting the day-to-day operations of the fund. These include
providing the personnel, equipment, and office facilities necessary
for the management of the fund's investment portfolio, determining
the fund's daily net asset value, maintaining the accounts and
records of the fund, preparation of reports to shareholders,
compliance with regulatory requirements, and general administration
of the fund's affairs.

WHY DID PUTNAM MANAGEMENT RECOMMEND A NEW MANAGEMENT FEE SCHEDULE TO
THE TRUSTEES?

In recent years, Putnam Management has noted a general increase in
the complexity of the investment process and in the competition for
talented investment personnel. Putnam Management recommended the
new management fee schedule to help ensure that Putnam Management
receives fees for its services that are competitive with fees paid
to high-quality investment managers by other mutual funds. Putnam
Management believes that maintaining competitive management fees
will, over the longer term, enable it to continue to provide high-
quality management services to your fund and to the other funds in
the Putnam group. Putnam Management also notes that your fund's
current management fee schedule has not been increased since 1988
and is lower than the fees paid to managers of competitive funds.

HOW DID YOUR FUND'S TRUSTEES ARRIVE AT THE PROPOSED MANAGEMENT FEE?

Several years ago, the Trustees undertook a comprehensive review of
the management fees paid by the Putnam funds. This review was
conducted largely through the Contract Committee of the Trustees,
which consists solely of independent Trustees who have no financial
interest in Putnam Management. As a result of this review, the
Trustees and Putnam Management reached agreement on a system of
model fee schedules for the various types of funds in the Putnam
group. These model fee schedules have now been implemented for most
of the Putnam funds. The proposed new fee schedule for the fund is
identical to that which has been implemented for many other Putnam
funds.

The Trustees and Putnam Management also reached a general
understanding that these model fee schedules should be implemented
for a particular fund only following consideration of the fund's
comparative investment performance and expense levels. After
reviewing comparative data on competitive funds and noting, among
other things, the fund's strong relative performance, the Trustees
concluded that it would be appropriate to implement a model fee
schedule for your fund at this time. The Trustees have
indicated that they will continue to look closely at the fund's
comparative performance and expense levels in their future annual
reviews of the fund's management contract.

WHAT FACTORS DID THE TRUSTEES CONSIDER?

The Trustees placed primary emphasis upon the nature and quality of
the services being provided by Putnam Management, including, in
particular, the strong relative investment performance of the fund
in recent years. In this regard, the Trustees also considered the
relative complexity of managing the fund, and a comparison of recent
management fees and other expenses paid by the fund with
those of similar funds managed by other investment advisers.

The Trustees also considered, among other things, information
provided by Putnam Management regarding the profitability of its
current and proposed management fee arrangements with the fund
(without regard to costs incurred by Putnam Management and its
affiliates in connection with the marketing of shares), the benefits
to Putnam Management and its affiliates resulting from the fact that
affiliates of Putnam Management currently serve as shareholder
servicing agent, distributor, and custodian for each of the Putnam
funds pursuant to separate contractual arrangements, and Putnam
Management's placing of portfolio transactions to recognize research
and brokerage services.

Information about certain of the factors considered by the Trustees
is set forth below and in the section "Additional Information
Relating to Management Contract Approval" on page 63 .

Following consideration of these and the other factors described
above, the Trustees of your fund, including all of the independent
Trustees, unanimously approved the proposed new contract.

HOW HAS THE GEORGE PUTNAM FUND OF BOSTON PERFORMED?

As part of any decision regarding management fees, shareholders
should consider how the fund has performed. The chart that
follows shows how $10,000 invested in The George Putnam Fund of
Boston class A shares (with dividends reinvested) would have grown
to $33,035 over a ten-year period. Performance data in the chart
does not reflect the deduction of the maximum sales charge of
5.75%.
<PAGE>
GROWTH OF A $10,000 INVESTMENT
(INSERT MOUNTAIN GRAPH HERE)

PLOT POINTS: 7/31/85 10,000
7/31/86 12,919
7/31/87 16,101
7/31/88 15,237
7/31/89 18,642
7/31/90 19,735
7/31/91 21,961
7/31/92 24,965
7/31/93 27,122
7/31/94 28,060
7/31/95 33,035

Annual average total return as of 7/31/95

Class A shares at NAV

10 years 12.69%
5 years 10.85%
3 years 9.79%
1 year 17.73%

CLASS M SHARES AT NAV

Life (since 12/1/94) 18.52%

CLASS B SHARES NO REDEMPTION REDEMPTION
- -------------------------------------------------------------
Life (since 4/27/92) 9.82% 9.08%
1 year 16.87% 11.87%

Performance assumes reinvestment of distributions at net asset
value, represents past results, and does not account for taxes or
for payments under the fund's class A distribution plan before its
inception in 1990. Investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost.

The annual average total return for class A shares
for the one-, three-, five- and ten-year periods ended July 31, 1995
was 11.00%, 7.64%, 9.54% and 12.02%, respectively, adjusted to
reflect the deduction of the maximum sales charge of 5.75%. Class B
share performance shown above reflects the maximum contingent
deferred sales charge of 5% for 1 year and 3% for life of class if
shares were redeemed on July 31, 1995. The total
return for class M shares through July 31, 1995 since inception of
the class on December 1, 1994 was 14.40% , adjusted to reflect
the deduction of the maximum sales charge of 3.50%. The
annual average total return for class Y shares
through July 31, 1995 for the one-year period and since inception of
the class on April 4, 1994 was 18.00% and 16.35 % ,
respectively.

HOW HAS THE GEORGE PUTNAM FUND OF BOSTON PERFORMED IN COMPARISON TO
SIMILAR FUNDS?

Another way of evaluating the performance of your fund is to compare
it to other growth and income funds. In reviewing the fund's
relative performance, your Trustees and Putnam Management compare it
to other funds with similar investment objectives and strategies.
When evaluated in that group, the total return of the class A shares
of the fund ranked in the top 9% of 147 such funds for
the twelve months ended December 31, 1995, in the top 14% of
81 such funds for the three years ended December 31, 1995 and
in the top 34% of 52 such funds for the five years
ended December 31, 1995.

WHAT IS THE EFFECT OF THE NEW MANAGEMENT FEE SCHEDULE?

Under the new management contract, the annual management fee paid by
your fund to Putnam Management would be increased as follows:

Existing Fee Proposed Fee
-----------------------------------------------------------------
- -

FIRST $100 MILLION 0.60% FIRST $500 MILLION 0.65%
NEXT $100 MILLION 0.50% NEXT $500 MILLION 0.55%
NEXT $300 MILLION 0.40% NEXT $500 MILLION 0.50%
NEXT $500 MILLION 0.325% NEXT $5 BILLION 0.45%
OVER $1.0 BILLION 0.30% NEXT $5 BILLION 0.425%
NEXT $5 BILLION 0.405%
NEXT $5 BILLION 0.39%
THEREAFTER 0.38%

Based on net assets of the fund at January 31, 1996 of
$1,841,786,936, the effective annual management fee rate under the
proposed fee schedule would be 0.55% as compared to 0.35% under the
existing schedule. This represents an increase of $0.20 in annual
expenses for each $100 invested in the fund. The new management fee
schedule, like the old, provides for lower management fee rates as
the fund's assets increase.

For its fiscal year ended July 31, 1995, the fund paid management
fees to Putnam Management of $4,618,445. If the proposed new
management contract had been in effect for the year, the fund would
have paid fees of $7,155,742, which is an increase of 55%.

The following tables summarize the expenses incurred by the fund in
the most recent fiscal year and restates these expenses on a pro
forma basis, reflecting the implementation of the proposed fee
schedule.
<PAGE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

(ACTUAL)

TOTAL FUND
MANAGEMENT 12B-1 OTHER OPERATING
FEES FEES EXPENSES EXPENSES
- ---------- ----- -------------------

Class A 0.38% 0.25% 0.28% 0.91%
Class B 0.38% 1.00% 0.28% 1.66%
Class M 0.38% 0.75% 0.28% 1.41%

(PRO FORMA)

TOTAL FUND
MANAGEMENT 12B-1 OTHER OPERATING
FEES FEES EXPENSES EXPENSES
- ---------- ----- -------------------

Class A 0.58% 0.25% 0.28% 1.11%
Class B 0.58% 1.00% 0.28% 1.86%
Class M 0.58% 0.75% 0.28% 1.61%

EXAMPLES

Your investment of $1,000 would incur the following expenses,
assuming 5% annual return and, except as indicated, redemption at
the end of each period:

(ACTUAL)

1 3 5 10

year years years years
---------------------------------------------------------------

CLASS A $66 $85 $105 $163
CLASS B $67 $82 $110 $177*
CLASS B (NO REDEMPTION) $17 $52 $90 $177*
CLASS M $49 $78 $109 $198

<PAGE>
(PRO FORMA)

1 3 5 10

year years years years
--------------------------------------------------------------

CLASS A $68 $91 $115 $185
CLASS B $69 $88 $121 $198*
CLASS B (NO REDEMPTION) $19 $58 $101 $198*
CLASS M $51 $84 $120 $219

The examples do not represent past or future expense levels. Actual
expenses may be greater or less than those shown. Federal
regulations require the examples to assume a 5% annual return, but
actual annual return varies.

* Reflects conversion of class B shares to class A shares
(which pay lower ongoing expenses) approximately eight years
after purchase.

ARE THERE ANY OTHER PROPOSED CHANGES?

The only other substantive changes in the new management contract
relate to the payment by the fund of the compensation and related
expenses of certain officers of the fund.

The existing contract requires the fund to reimburse Putnam
Management for the compensation and related expenses of the fund's
Vice Chairman and such other officers of the fund and their
assistants as the Trustees of the fund may determine. Since January
1, 1992, the administrative duties previously performed by the
office of Vice Chairman have been divided among various other
officers of the fund. As a result, the new contract provides for
the payment by the fund of the compensation and related expenses of
such officers of the fund and their assistants as the Trustees may
determine.

WHAT PERCENTAGE OF SHAREHOLDERS' VOTES ARE REQUIRED TO PASS THE
PROPOSAL?

Approval of the new management contract will require the "yes" vote
of a "majority of the outstanding voting securities" of the fund, as
provided in the Investment Company Act of 1940. For this purpose,
this means the "yes" 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 the meeting, if more than 50% of the outstanding shares
are present at the meeting in person or by proxy. If the
shareholders do not approve the new contract, the existing
management contract will continue in effect.

THE TRUSTEES BELIEVE THAT THE PROPOSED NEW MANAGEMENT FEE IS FAIR
AND REASONABLE AND IN THE BEST INTERESTS OF THE SHAREHOLDERS OF THE
FUND. ACCORDINGLY, THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE
FOR APPROVAL OF THE PROPOSED NEW CONTRACT.

4. PROPOSALS

4.A.-O.

As described in the following proposals, the Trustees are
recommending that shareholders approve a number of changes to the
fund's fundamental investment restrictions, including the
elimination of certain restrictions. Generally, the purpose of
these proposed changes is to increase the fund's investment
flexibility and to bring the fund's policies more in line with those
of many other Putnam funds.

These changes largely reflect the elimination of certain restrictive
policies which were required at one time by various state securities
authorities but which are no longer required under current
regulations. Many of the restrictions that are proposed to be
changed are incorporated in the fund's Agreement and Declaration of
Trust (the "Declaration of Trust") and, as a result, may only be
modified by vote of a majority of the fund's outstanding shares.
This voting requirement is stricter than that imposed by the
Investment Company Act of 1940, as amended (the "1940 Act"). The
higher voting threshold required by the Declaration of the Trust may
impose greater proxy solicitation costs on the fund in the event
that it becomes necessary or desirable to revise these restrictions
in the future. As a result, as indicated below, the Trustees are
also recommending that all of these restrictions be removed from the
Declaration of Trust.

The adoption of any of these proposals is not contingent on the
adoption of any other proposal.

4.A. AMENDING THE AGREEMENT AND DECLARATION OF TRUST WITH RESPECT
TO THE FUND'S PERMITTED INVESTMENTS

The Trustees are recommending that the Declaration of Trust be
amended to give the fund broader authority to make investments. The
proposed changes would bring the fund's Declaration of Trust more in
line with that of most other Putnam
funds.

The proposed amended paragraph of Article V of the Declaration of
Trust is set forth below. Additions are shown in ((BOLDFACE)) and
deletions are shown in //italics//. The section of the paragraph
regarding repurchase agreements and securities loans is proposed to
be eliminated by proposal
4.J.
below, and will only be eliminated if
that proposal is approved. The fund's ability to pledge its assets
and to borrow are proposed to be modified by proposals 4.L. and
4.M., respectively.

Section 4. The Trustees shall have full power and
authority ((TO INVEST IN, PURCHASE, SELL, AND
OTHERWISE ENGAGE IN TRANSACTIONS WITH RESPECT TO,
SECURITIES, DEBT INSTRUMENTS AND OTHER PROPERTY,
INSTRUMENTS AND RIGHTS OF A FINANCIAL CHARACTER, AND
TO ENGAGE IN BORROWINGS AND TO PLEDGE OR OTHERWISE
ENCUMBER THE ASSETS OF THE TRUST. THE TRUSTEES ALSO
SHALL HAVE FULL POWER AND AUTHORITY TO EXERCISE ANY
RIGHTS OF OWNERSHIP WITH RESPECT TO ANY OF THE
FOREGOING))//[to buy and invest the funds in their
hands in bonds, stocks, voting trust certificates,
notes, certificates of indebtedness, acceptances,
certificates of interest, call loans, commercial
paper, repurchase agreements with respect to not more
than 25% of the Trust's total assets, financial
futures contacts, options on financial futures
contracts and on securities indices, and any
negotiable instruments however named or described,
except as specifically limited in this Section 4, and
to make loans of its portfolio securities with respect
to not more than 25% of the Trust's total assets. The
Trustees shall have full power and authority to write
call options traded on a national securities exchange
on securities which the Fund owns and it may purchase
options to close out call options written by the
Fund.]// The Trustees shall not in any
((WAY))//[wise]// be bound or limited by any present
or future law or custom in regard to trust investments
but shall have full authority and power to make any
and all investments //[within the above limitations]//
which they in their uncontrolled discretion may deem
proper to accomplish the purposes of the Trust.

Putnam Management recommended the proposed changes to provide the
fund with maximum investment flexibility. For example, the
amendments would clarify that the fund may purchase and sell options
to the fullest extent permitted by law. If the amendments are
approved, the fund will, of course, continue to be limited in its
investments by its investment objective and policies, the 1940 Act
and applicable state securities laws.

REQUIRED VOTE. Approval of the proposal requires the affirmative
vote of the majority of the outstanding shares of the fund.

4.B.
AMENDING THE FUND'S AGREEMENT AND DECLARATION OF TRUST WITH
RESPECT TO DIVERSIFICATION OF INVESTMENTS

The Trustees are recommending that the Declaration of Trust be
amended and revise the fund's fundamental investment restriction
relating to the diversification of its investments to grant the fund
the maximum investment flexibility permitted by the 1940 Act. Under
the 1940 Act, the fund, as a diversified fund, generally may not,
with respect to 75% of its total assets, invest more than 5% of its
total assets in the securities of any one issuer (except U.S.
government securities). The remaining 25% of the fund's total
assets is not subject to this restriction.

The fund's current investment restriction is more restrictive, and
states that:

"The Trustees shall be limited in the purchase of securities
or obligations to an investment which shall not exceed five
percent (5%) of the liquidating value of the Trust property
at the time of such investment ...
The
above limitations
shall not apply, however, to investments in government or
municipal securities or obligations."

The proposed amended fundamental investment restriction is set forth
below.

"The fund may not ...

With respect to 75% of its total assets, invest in the
securities of any issuer if, immediately after such investment,
more than 5% of the total assets of the fund (taken at current
value) would be invested in the securities of such issuer;
provided that this limitation does not apply to obligations
issued or guaranteed as to interest or principal by the U.S.
government or its agencies or instrumentalities."

If the proposed change is approved, the fund will be able to invest
up to 25% of its total assets in securities of any one issuer. The
amended restriction would continue to exclude from its limitations
U.S. government securities, but not municipal securities, which
cannot be excluded from such limitations under current law.
Following the amendment, the fund would continue to be a diversified
investment company for purposes of the 1940 Act.

The proposed amendment will enable the fund to invest a greater
percentage of its assets in the securities of issuers Putnam
Management believes offer the potential for capital growth, current
income or both. However, during times when Putnam Management
invests a higher percentage of the fund's assets in one or more
issuers, the value of the fund's shares may fluctuate more widely
than the value of shares of a portfolio investing in a larger number
of issuers.

In connection with these proposed changes, the Trustees are also
recommending that the Declaration of Trust be amended to remove this
restriction. Currently, the affirmative vote of a majority of the
fund's outstanding shares is required to change this investment
restriction. Once removed from the Declaration of Trust, the
restriction may be modified or eliminated by the fund with the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares of
the fund present at the meeting if more than 50% of the outstanding
shares of the fund are present at the meeting in person or by proxy.

REQUIRED VOTE. Approval of the proposal requires the affirmative
vote of the majority of the outstanding shares of the fund.
<PAGE>
4.C.
AMENDING THE FUND'S AGREEMENT AND DECLARATION OF TRUST WITH
RESPECT TO INVESTMENTS IN ISSUERS THAT HAVE BEEN IN OPERATION
FOR LESS THAN THREE YEARS

The Trustees are recommending that the Declaration of Trust be
amended to eliminate the fund's fundamental investment restriction
which limits the fund's investments in issuers with limited
operating histories, which are sometimes referred to as "unseasoned
issuers." The current restriction states as follows:

"nor shall the Trustees invest more than five percent (5%) of
the liquidating value of the Trust property in the securities
of any issuer that together with any predecessor thereof has
been in continuous operation for less than three (3) years [,
and in equity securities of issuers for which market
quotations are not readily available (but excluding from such
5% securities the disposition of which is restricted by
federal securities laws)...."]

The section of the restriction in brackets is proposed to be
eliminated by proposal 4.D. below.

Certain state securities laws in the past required this restriction,
and the restriction is currently required by only one state but is
not required to be a fundamental policy. If this proposal is
approved, the Trustees intend to replace this restriction with a
substantially similar non-fundamental investment restriction to
comply with the remaining state's requirement. Following such
amendment, the fund will, consistent with this state's requirement,
be able to invest up to 5% of its assets in the securities of
unseasoned issuers without regard to its investments in equity
securities for which market quotations are not readily available.
The restriction will exempt certain U.S. government securities from
its limitations to provide the fund maximum flexibility.

The new non-fundamental restriction is set forth below.

"The fund may not ...

Invest in securities of an issuer which, together with any
predecessors, controlling persons, general partners and
guarantors, have a record of less than three years'
continuous business operation or relevant business
experience, if, as a result, the aggregate of such
investments would exceed 5% of the value of the fund's net
assets; provided, however, that this restriction shall not
apply to any obligations of the U.S. government or its
instrumentalities or agencies."

Putnam Management recommended to the Trustees making this policy
non-fundamental to provide the fund with maximum flexibility to
modify or eliminate the policy if no longer required under state
law. If the restriction were no longer required, the Trustees could
change or eliminate the restriction to increase the fund's
investment flexibility without the need for further shareholder
approval.

If the restriction were eliminated in the future, the fund would
have the ability to invest in companies which have been in operation
for less than three years. This would include start-up companies
and other companies with limited operating histories, many of which
would have relatively small equity market capitalizations (e.g.,
under $1 billion). Although these companies may provide greater
opportunities for capital growth, they also involve greater risk.
These companies often have limited product lines, markets or
financial resources. They may trade less frequently and in limited
volume, and only in the over-the-counter market or on a regional
securities exchange. As a result, the securities of these companies
may fluctuate in value more than those of larger, more established
companies.

REQUIRED VOTE. Approval of the proposal requires the affirmative
vote of the majority of the outstanding shares of the fund.

4.D.
AMENDING THE FUND'S AGREEMENT AND DECLARATION OF TRUST WITH
RESPECT TO THE PURCHASE OF CERTAIN ILLIQUID SECURITIES

The Trustees are recommending that the Declaration of Trust be
amended to eliminate the fundamental investment restriction which
limits the fund's investments in equity securities for which market
quotations are not readily available. The current restriction
states as follows:

"nor shall the Trustees invest more than five percent (5%) of
the liquidating value of the Trust property [in the
securities of any issuer that together with any predecessor
thereof has been in continuous operation for less than three
(3) years, and] in equity securities of issuers for which
market quotations are not readily available (but excluding
from such 5% securities the disposition of which is
restricted by federal securities laws)...."

The section of the restriction in brackets is proposed to be
eliminated by proposal 4.C. above.

Putnam Management recommended to the Trustees eliminating this
fundamental restriction because it believes the restriction is no
longer necessary in light of current regulatory requirements. The
Staff of the Securities and Exchange Commission ("SEC") currently
takes the position that an illiquid security is a security which is
not readily marketable. This Staff position is contained in the
fund's current non-fundamental investment restriction on illiquid
securities, which prohibits the fund from investing more than 15% of
its net assets in (a) securities which are not readily marketable,
(b) securities restricted as to resale (excluding securities
determined by the Trustees or their designees to be readily
marketable), and (c) repurchase agreements maturing in more than
seven days. Unlike the current fundamental investment restriction,
this non-fundamental investment restriction applies to all types of
investments, not just equity securities, and by not being limited to
securities for which market quotations are not readily available,
also includes other types of illiquid investments, such as
repurchase agreements.

Putnam Management believes that the fund may benefit from the added
flexibility of having the fund's policy with respect to illiquid
securities contained in a single non-fundamental investment
restriction. In the future, the fund will be able to respond more
quickly to legal, regulatory and market developments regarding
illiquid securities because further shareholder approval would not
be required to bring the policy in line with these developments.

If the proposed change is approved, the fund, to the extent
consistent with its current non-fundamental restriction, will be
able to invest a greater percentage of its assets in equity
securities for which market quotations are not readily available.
Investments in these securities may make it more difficult for the
fund to determine the fair value of such securities for purposes of
computing the fund's net asset value.

REQUIRED VOTE. Approval of the proposal requires the affirmative
vote of the majority of the outstanding shares of the fund.

4.E.
AMENDING THE FUND'S AGREEMENT AND DECLARATION OF TRUST WITH
RESPECT TO INVESTMENTS IN SECURITIES OF ISSUERS IN WHICH
MANAGEMENT OF THE FUND OR PUTNAM MANAGEMENT OWNS SECURITIES

The Trustees are recommending that the Declaration of Trust be
amended to eliminate the fundamental investment restriction which
prevents the fund from investing in the securities of issuers in
which management of the fund or Putnam Management owns a certain
percentage of securities. The current restriction states that:

"The Trustees shall not invest in or retain in the portfolio
of the Trust the securities of any issuer if officers and
Trustees of the Trust and officers and directors of the
Managers ... who beneficially own more than one-half of one
percent (1/2 of 1%) of the shares or securities of that
issuer together own more than five percent (5%)...."

"The fund may not ...

Invest in securities of any issuer, if, to the knowledge of
the fund, officers and Trustees of the fund and officers and
directors of Putnam Management who beneficially own more than
0.5% of the securities of that issuer together own more than
5% of such securities."

Putnam Management recommended to the Trustees making this policy
non-fundamental to provide the fund with maximum flexibility to
modify or eliminate the policy if no longer required under state
law. If the restriction were no longer required, the Trustees could
eliminate the restriction to increase the fund's investment
flexibility without the need for further shareholder approval.

If the restriction were eliminated, the fund would be able to invest
in the securities of any issuer without regard to ownership in such
issuer by management of the fund or Putnam Management, except to the
extent prohibited by the fund's investment objective and policies
and the 1940 Act.

REQUIRED VOTE. Approval of the proposal requires the affirmative
vote of the majority of the outstanding shares of the fund.

4.F.
AMENDING THE FUND'S AGREEMENT DECLARATION OF TRUST WITH
RESPECT TO OWNING 10% OF THE SECURITIES OF A SINGLE ISSUER

The Trustees are recommending that the fund's fundamental investment
restriction with respect to investment in the securities of a single
issuer be revised to grant the fund the maximum flexibility
permitted under the 1940 Act. The 1940 Act prohibits a diversified
fund such as the fund from investing, with respect to 75% of its
total assets, in the securities of an issuer if as a result it would
own more than 10% of the outstanding voting securities of that
issuer. The fund's current investment restriction, which is more
restrictive than the 1940 Act, states that:

"The Trustees ... shall be further limited to an investment
in any one corporation or association of not exceeding ten
percent (10%) of the stock or securities or ten percent (10%)
of the outstanding voting securities or ten percent (10%) of
the securities of any class of such corporation or
association. The above limitations shall not apply, however,
to investments in government or municipal securities or
obligations."

The proposed amended fundamental investment restriction is set forth
below.

"The fund may not ...

With respect to 75% of its total assets, acquire more than
10% of the outstanding voting securities of any issuer."

Putnam Management recommended the proposed change to the Trustees
because it believes that the fund's current restriction is overbroad
and unnecessarily restrictive. Putnam Management believes that
limiting this restriction to voting securities and 75% of the fund's
total assets will enhance investment flexibility. Putnam Management
has advised the Trustees that the current restriction could prevent
the fund from investing in certain opportunities to the fullest
extent that Putnam Management believes would best serve the fund's
investment objective.

The amendment removes any restriction on the amount of an issuer's
securities or class of securities that the fund may purchase,
although the fund will only be able to purchase more than 10% of the
voting securities of an issuer with respect to 25% of its total
assets. To the extent the fund individually or with other funds and
accounts managed by Putnam Management or its affiliates owns all or
a major portion of the outstanding securities of a particular issuer
(or of a particular class of an issuer's securities), under adverse
market or economic conditions or in the event of adverse changes in
the financial condition of the issuer the fund could find it more
difficult to sell these securities when Putnam Management believes
it advisable to do so, or may be able to sell the securities only at
prices lower than if they were more widely held. In addition,
certain of the companies in which the fund may invest a greater
portion of its assets following the amendment could have relatively
small equity market capitalizations (e.g., under $1 billion). Such
companies often have limited product lines, markets or financial
resources. They may trade less frequently and in limited volume,
and only in the over-the-counter market or on a regional securities
exchange. As a result, the securities of these companies may
fluctuate in value more than those of larger, more established
companies. Under such circumstances, it may also be more difficult
to determine the fair value of such securities for purposes of
computing the fund's net asset value.

In connection with this proposed change, the Trustees also are
recommending that the Declaration of Trust be amended to remove the
restriction. Currently, the affirmative vote of a majority of the
fund's outstanding shares is required to change this restriction.
Once removed from the Declaration of Trust, the restriction may be
modified or eliminated by the fund with the affirmative vote of the
lesser of (1) more than 50% of the outstanding shares of the fund,
or (2) 67% or more of the shares of the fund present at a meeting if
more than 50% of the outstanding shares of the fund are present at
the meeting in person or by proxy.

REQUIRED VOTE. Approval of the proposal requires the affirmative
vote of the majority of the outstanding shares of the fund.

4.G.
AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTIONS WITH
RESPECT TO INVESTMENTS IN REAL ESTATE

The Trustees are recommending that the fund's fundamental investment
restrictions relating to investments in real estate be revised to
grant the fund the maximum flexibility in light of current
regulatory requirements.

In connection with this proposal, the Trustee's are recommending
that the fund's fundamental restriction which prohibits the fund
from investing in certain companies which invest in real estate be
eliminated. The relevant restriction states that "[t]he fund will
not invest in real estate investment trusts or limited partnerships
whose purpose is to acquire real estate solely for investment
purposes in accordance with principles of diversification." The
fund originally adopted this restriction at the request of German
regulatory authorities in connection with the fund's offering of its
shares in Germany. Since the fund no longer offers its shares in
Germany, Putnam Management has recommended to the Trustees that the
restriction be eliminated. If the restriction is removed, the fund
will be able to freely invest in real estate investment trusts and
limited partnerships, as long as such investments are otherwise
consistent with the fund's investment objective and policies and
state securities laws. This policy is consistent with that of most
other Putnam funds.

Also in connection with this proposal, the Trustees are recommending
that the fund's remaining fundamental investment restriction with
respect to investments in real estate be amended. This restriction
currently states that the fund may not "[i]nvest in real estate, but
it may purchase securities of companies which invest in real
estate."

The proposed amended fundamental investment restriction is set forth
below.

"The fund may not ...

Purchase or sell real estate, although it may purchase
securities of issuers which deal in real estate, securities
which are secured by interests in real estate, and securities
which represent interests in real estate, and it may acquire
and dispose of real estate or interests in real estate
acquired through the exercise of its rights as a holder of
debt obligations secured by real estate or interests
therein."

The proposed amendment expands the range of real estate-related
investments available to the fund. The fund would continue to be
permitted to invest in companies which invest in real estate, but
would also be permitted to invest in securities which represent
interests in real estate and securities secured by real estate. In
addition, the fund would be able to own real estate directly as a
result of the exercise of its rights in connection with debt
obligations it owns.

To the extent the fund invests in real estate-related securities, it
will be subject to the risks associated with the real estate market.
These risks may include declines in the value of real estate,
changes in general or local economic conditions, overbuilding,
difficulty in completing construction, increased competition,
changes in zoning laws, increases in property taxes and operating
expenses, and variations in rental income. Generally, increases in
interest rates will increase the costs of obtaining financing, which
may result in a decrease in the value of such investments.

REQUIRED VOTE. Approval of the proposal requires the affirmative
vote of the majority of the outstanding shares of the fund.

4.H.
AMENDING THE FUND'S AGREEMENT AND DECLARATION OF TRUST WITH
RESPECT TO MARGIN TRANSACTIONS

The Trustees are recommending that the Declaration of Trust be
amended to eliminate the fundamental investment restriction with
respect to margin transactions. The current restriction states as
follows:

"nor shall the Trustees engage in any operations for the
account of the Trust generally or technically known as ...
marginal transactions ... provided further, that the Trust
may make margin payments in connection with transactions in
financial futures contracts or related options."

"The fund may not...

Purchase securities on margin, except such short-term credits
as may be necessary for the clearance of purchases and sales
of securities, and except that it may make margin payments in
connection with financial futures contracts or options."

Putnam Management recommended to the Trustees making this
fundamental investment restriction non-fundamental to provide the
fund with maximum flexibility to modify or eliminate the policy if
no longer required under state law. If the restriction were no
longer required, the Trustees could eliminate the restriction to
increase the fund's investment flexibility without the need for
further shareholder approval. However, the fund's potential use of
margin transactions beyond transactions in financial futures and
options and for the clearance of purchases and sales of securities,
including the use of margin in ordinary securities transactions, is
generally limited by the current position taken by the Staff of the
SEC that margin transactions with respect to securities are
prohibited under Section 18 of the 1940 Act because they create
senior securities. "Margin transactions" involve the purchase of
securities with money borrowed from a broker, with cash or eligible
securities being used as collateral against the loan. The fund's
ability to engage in margin transactions is also limited by its
investment policies, which permit the fund to borrow money in
limited circumstances and only from banks.

REQUIRED VOTE. Approval of the proposal requires the affirmative
vote of the majority of the outstanding shares of the fund.

4.I.
AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO MAKING LOANS BY PURCHASING SECURITIES

The Trustees are recommending that the fund's fundamental investment
restriction relating to making loans be revised to permit the fund
to purchase debt obligations as long as such investment is
consistent with the fund's investment objective and policies. The
proposed amendment would replace the current exception contained in
the restriction, which states that the fund may not "[l]oan money,
except by purchases of securities of corporations or associations
and certain government securities...."

The proposed amended fundamental investment restriction is set forth
below. The section of the restriction in brackets is shown as
proposed to be amended by proposal 4.J. below.

"The fund may not ...

Make loans, except by purchase of debt obligations in which
the fund may invest consistent with its investment policies,
[by entry into repurchase agreements, or by lending its
portfolio securities.]"

Putnam Management recommended the amendment to the Trustees because
it believes that the increased investment flexibility will assist
the fund in achieving its investment objective. Putnam Management
believes that the current policy is overly broad and unnecessarily
restrictive and could, for example, be read to prevent the fund from
purchasing certain government securities. Following the amendment,
the fund could invest in any type of debt obligation issued by any
type of issuer, including those issued by corporations,
partnerships, and government issuers, as long as such investment was
consistent with the fund's investment objective and policies.

REQUIRED VOTE. Approval of the proposal requires the affirmative
vote of the majority of the outstanding shares of the fund.

4.J.
AMENDING THE FUND'S AGREEMENT AND DECLARATION OF TRUST WITH
RESPECT TO MAKING LOANS THROUGH REPURCHASE AGREEMENTS AND
SECURITIES LOANS

The Trustees are recommending that the fund's fundamental investment
restrictions with respect to repurchase agreements and securities
loans be revised to remove the asset limitations on the fund's
ability to enter into such transactions. These current restrictions
state that:

"The Trustees shall have full power and authority to buy and
invest the funds in their hands in ... repurchase agreements
with respect to not more than 25% of the Trust's total assets
... and to make loans of its portfolio securities with
respect to not more than 25% of the Trust's total assets."

The proposed amended fundamental investment restriction is set forth
below. The section of the restriction in brackets is shown as
proposed to be amended by proposal 4.I. above.

"The fund may not ...

Make loans, except [by purchase of debt obligations in which
the fund may invest consistent with its investment policies,]
by entering into repurchase agreements, or by lending its
portfolio securities."

Following the amendment, the fund may, consistent with its
investment objective and policies, enter into repurchase agreements
and securities loans without limit. Putnam Management recommended
this amendment to the Trustees because it believes that the
increased investment flexibility will assist the fund in achieving
its investment objective. Putnam Management believes that
repurchase agreements and securities loans often offer opportunities
for increased investment return. When the fund enters into a
REPURCHASE AGREEMENT, it typically purchases a security for a
relatively short period (usually not more than one week), which the
seller agrees to repurchase at a fixed time and price, representing
the fund's cost plus interest. When the fund enters into a
SECURITIES LOAN, it lends certain of its portfolio securities to
broker-dealers or other parties and typically receives an interest
payment in return. These transactions must be fully collateralized
at all times, and involve some risk to the fund if the other party
should default on its obligation. If the other party in these
transactions should become involved in bankruptcy or insolvency
proceedings, it is possible that the fund may be treated as an
unsecured creditor and be required to return the underlying
collateral to the other party's estate.

In connection with these proposed changes, the Trustees are also
recommending that the Declaration of Trust be amended to remove
these restrictions. Currently, the affirmative vote of a majority
of the fund's outstanding shares is required to change these
restrictions. Once removed from the Declaration of Trust, the
restrictions may be modified or eliminated by the fund with the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares of
the fund present at a meeting if more than 50% of the outstanding
shares of the fund are present at the meeting in person or by proxy.

REQUIRED VOTE. Approval of the proposal requires the affirmative
vote of the majority of the outstanding shares of the fund.

4.K. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO CONCENTRATION OF ITS ASSETS

The Trustees are recommending that the fund's fundamental investment
restriction regarding concentration of its assets be revised to make
it clear that the fund may invest more than 25% of its total assets
in the securities of the U.S. government, its agencies or
instrumentalities. The current restriction states that the fund may
not "[c]oncentrate more than 25% of the fund's assets in any one
industry."

The proposed amended fundamental restriction, which makes certain
other clarifying changes, is set forth below.

"The fund may not ...

Purchase securities (other than securities of the U.S.
government, its agencies or instrumentalities) if, as
a result of such purchase, more than 25% of the fund's
total assets would be invested in any one industry."

Putnam Management recommended this amendment to the Trustees to make
it clear that the fund may invest in the securities of the U.S.
government or its agencies or instrumentalities without regard to
the 25% limit. Putnam Management believes that the current
restriction does not prevent the fund from investing in such
securities without limit, because the SEC takes the position that
government issuers, including agencies and instrumentalities of a
governmental issuer, are not members of any industry. However, to
avoid any ambiguity in the future, Putnam Management believes that
this clarification should be made at this time.

REQUIRED VOTE. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at
the meeting if more than 50% of the outstanding shares of the fund
are present at the meeting in person or by proxy.

4.L. AMENDING THE FUND'S AGREEMENT AND DECLARATION OF TRUST WITH
RESPECT TO PLEDGING ASSETS

The Trustees are recommending that the Declaration of Trust be
amended to eliminate the restriction which limits the fund's ability
to pledge its assets. The restriction is currently required by only
one state's securities laws but is not required to be a fundamental
policy. The current restriction states that the Trustees shall have
full power and authority:

"[to borrow money for the purposes of this Trust but
only if in the opinion of the Trustees such borrowing
is made temporarily for extraordinary or emergency
purposes, with or without collateral security and,]
whenever in their judgment necessary, to pledge,
mortgage, charge or hypothecate or otherwise encumber
not over 15% of the gross assets of the Trust taken at
cost as security for any loan or loans ... For
purposes of this restriction, collateral arrangements
with respect to margin for financial futures contracts
or related options are not deemed to be a pledge or
encumbrance of assets."

The section of the restriction in brackets is proposed to be
eliminated by proposal 4.M. below.

If the proposal is approved, the Trustees intend to replace this
limitation on pledging assets with the following non-fundamental
investment restriction to comply with the remaining state's
requirement.

"The fund may not . . .

Pledge, hypothecate, mortgage or otherwise encumber its
assets in excess of 33 1/3% of its total assets (taken at
cost) in connection with permitted borrowings."

This proposal would increase the fund's ability to pledge assets to
up to one-third of its total assets. Putnam Management recommended
this proposal to the Trustees because it believes that the fund's
current limits on pledging may conflict with the fund's ability to
borrow money for certain purposes. This conflict arises because
banks may require borrowers such as the fund to pledge assets in
order to collateralize the amount borrowed. Often, these collateral
requirements are for amounts larger than the principal amount of the
loan. If the fund needed to borrow the maximum amount permitted by
its policies (currently 10% of its total assets), it might be
possible that a bank would require collateral in excess of 15% of
the fund's total assets. Therefore, the limit on pledging assets
may have the effect of reducing the amount that the fund may borrow
in these situations. In addition, the proposed non-fundamental
restriction only restricts the fund in connection with pledges of
assets with respect to borrowings; other activities, such as asset
pledges in connection with certain forward commitments, which could
be deemed to be pledges or other encumbrances, will not be limited.

Putnam Management recommended making this policy non-fundamental to
provide the fund with maximum flexibility to modify or eliminate the
policy if no longer required under state law. If the restriction
were no longer required, the Trustees could eliminate the
restriction to increase the fund's investment flexibility without
the need for further shareholder approval.

Pledging assets does entail certain risks. To the extent that the
fund pledges its assets, the fund may have less flexibility in
liquidating its assets. If a large portion of the fund's assets was
involved, the fund's ability to meet redemption requests or other
obligations could be delayed.

REQUIRED VOTE. Approval of the proposal requires the affirmative
vote of the majority of the outstanding shares of the fund.

4.M. AMENDING THE AGREEMENT AND DECLARATION OF TRUST AND THE FUND'S
FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO BORROWING

The Trustees are recommending that the Declaration of Trust be
amended to eliminate the restriction with respect to borrowing. The
current restriction states that the Trustees shall have full power
and authority:

"to borrow money for the purposes of this Trust but only
if in the opinion of the Trustees such borrowing is made
temporarily for extraordinary or emergency purposes, with
or without collateral security [and, whenever in their
judgment necessary, to pledge, mortgage, charge or
hypothecate or otherwise encumber not over 15% of the
gross assets of the Trust taken at cost as security for
any loan or loans]; provided, however, that no loan shall
be made which when added to the amount of the then
outstanding loans, except those to be paid or refunded
therefrom, shall cause the aggregate amount of such loans
to exceed ten percent (10%) of the gross assets of the
Trust taken at cost at the time of the loan."

The section of the restriction in brackets is proposed to be
eliminated by proposal 4.L. above.

In connection with this proposal, the Trustees also are recommending
amending the fund's fundamental investment restriction with respect
to borrowing contained in its Statement of Additional Information.
The current restriction states that the fund may not:

"Borrow money, although borrowing up to 10% of the fund's
net assets (taken at cost) is permitted for emergency
purposes but not for investment. (The fund may borrow
only from banks and immediately after any such borrowing
there must be an asset coverage (total assets of the fund
including the amount borrowed less liabilities other than
such borrowings) of at least 300% of the amount of all
borrowings. In the event that, due to market decline or
other reasons, such asset coverage should at any time fall
below 300%, the fund is required within three days, not
including Sundays and holidays, to reduce the amount of
its borrowings to the extent necessary to cause the asset
coverage of such borrowings to be at least 300%. If this
should happen, the fund may have to sell securities at a
time when it would be disadvantageous to do so.)"

If this proposal is approved, the Trustees intend to replace these
two restrictions with the following fundamental investment
restriction:

"The fund may not . . .

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."

If the proposal is approved, the fund would continue to be able to
borrow only from banks with respect to up to 10% of its total
assets. The amendment expands the circumstances under which the
fund may borrow, but only to enable the fund to meet redemptions and
for extraordinary or, as is currently permitted, emergency purposes.
Although the restriction will no longer contain an asset coverage
requirement, the fund will still be obligated to meet the asset
coverage requirements of the 1940 Act. Putnam Management
recommended this proposal because it believes that expanding the
fund's ability to borrow in limited circumstances could enhance the
fund's ability and flexibility to meet certain of its obligations,
including redemptions. In addition, Putnam Management believes that
by removing the asset coverage requirement from the restriction, the
fund will be able to respond more quickly to legal or regulatory
developments regarding asset coverage because further shareholder
approval would not be required to bring the policy in line with
these developments.

Currently, the affirmative vote of a majority of the fund's
outstanding shares is required to amend the Declaration of Trust and
to change this investment restriction. Once this restriction is
removed from the Declaration of Trust, it may be modified or
eliminated by the fund with the affirmative vote of the lesser of
(1) more than 50% of the outstanding shares of the fund, or (2) 67%
or more of the shares of the fund present at the meeting if more
than 50% of the outstanding shares of the fund are present at the
meeting in person or by proxy.

REQUIRED VOTE. Approval of the proposal requires the affirmative
vote of the majority of the outstanding shares of the fund.

4.N.
AMENDING THE FUND'S AGREEMENT AND DECLARATION OF TRUST AND
ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTIONS WITH
RESPECT TO SHORT SALES

The Trustees are recommending that the Declaration of Trust be
amended to eliminate the fundamental investment restriction with
respect to short sales. The current restriction is required under
certain state securities laws but is not required to be a
fundamental policy. The current restriction states as follows:

"nor shall the Trustees engage in any operations for the
account of the Trust generally or technically known as short
sales ... provided that such limitation shall not prevent any
sale of securities by the Trust where the Trust owns at the
time of such sale securities equivalent in kind and amount to
those sold or where the Trust owns at the time of such sale
securities convertible into securities equivalent in kind and
amount to those sold...."

The fund's Statement of Additional Information also contains a
fundamental investment restriction which does not allow the fund to
engage in short sales, which the Trustees are also recommending be
eliminated as part of this proposal.

If this proposal is approved, the Trustees intend to replace these
two restrictions with the following non-fundamental restriction:

"The fund may not ...

Make short sales of securities or maintain a short position for
the account of the fund unless at all times when a short
position is open it owns an equal amount of such securities or
owns securities which, without payment of any further
consideration, are convertible into or exchangeable for
securities of the same issue as, and in equal amount to, the
securities sold short."

Under the proposed new non-fundamental restriction, the fund would
only be permitted to enter into short sales in cases where the fund
owns or has the right to acquire at no added cost securities
identical to those sold short (an investment technique known as a
short sale "against the box.") The fund would not be permitted to
engage in short sales other than short sales against the box.

Putnam Management recommended to the Trustees making this policy
non-fundamental to provide the fund with maximum flexibility to
modify or eliminate the policy if no longer required under state
law. If the restriction were no longer required, the Trustees could
change or remove the restriction to increase the fund's investment
flexibility without the need for further shareholder approval.

In a typical short sale, the fund borrows securities from a broker
that it anticipates will decline in value in order to sell to a
third party. The fund becomes obligated to return securities of the
same issue and quantity at some future date, and realizes a loss to
the extent the securities increase in value and a profit to the
extent the securities decline in value (after including any
associated costs). Since the value of securities can increase
without limit, the fund could potentially realize losses with
respect to short sales that are not "against the box" that are
greater than the value of the securities at the time sold short.
The fund would collateralize its short position by delivering to the
broker an amount equal to the proceeds of the short sale and an
additional margin amount as required by law. In addition, if such
non-fundamental investment restriction is modified or removed and
the fund engages in short sales other than short sales "against the
box", current SEC rules would require the fund to maintain in a
segregated account cash, U.S. government securities or other liquid
high grade debt obligations equal to the current market value of the
securities sold short minus the margin amount delivered to the
broker. The value of the segregated account would be marked to
market daily to reflect any changes in value of the fund's short
position.

REQUIRED VOTE. Approval of the proposal requires the affirmative
vote of the majority of the outstanding shares of the fund.

4.O.
ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
PROHIBITING THE FUND FROM INVESTING IN INVESTMENT COMPANIES IF
PROHIBITED BY GERMAN LAW

The fund's fundamental investment restrictions currently prohibit
the fund from investing in the securities of investment companies if
prohibited by German law. The fund originally adopted this
restriction at the request of German regulatory authorities in
connection with the fund's offering of its shares in Germany. The
relevant restriction states that the fund "will not invest in the
securities of other investment companies, including unit investment
trusts, in contravention of the German Foreign Investment Law
(AuslandInvestmentGesetz)." Since the fund no longer offers its
shares in Germany, Putnam Management has recommended to the Trustees
that the restriction be eliminated.

The fund's current non-fundamental investment restriction that also
limits its investments in investment companies will not be affected
by this proposal. Under that restriction, the fund may not
"[i]nvest in the securities of any other registered open-end
investment companies, except as they may be acquired as part of a
merger or consolidation or acquisition of assets or by purchases in
the open market involving only customary broker's commissions."
The 1940 Act also contains limitations on the fund's ability to
invest in other investment companies.

REQUIRED VOTE. Approval of the this proposal requires the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares of
the fund present at the meeting if more than 50% of the outstanding
shares of the fund are present at the meeting in person or by
proxy.

FURTHER INFORMATION ABOUT VOTING AND THE SHAREHOLDER MEETING

QUORUM AND METHODS OF TABULATION. Thirty percent of the shares
entitled to vote -- present in person or represented by proxy --
constitutes a quorum for the transaction of business with respect to
any proposal at the meeting (unless otherwise noted in the proxy
statement). Shares represented by proxies that reflect abstentions
and "broker non-votes" (i.e., shares held by brokers or nominees as
to which (i) instructions have not been received from the beneficial
owners or the persons entitled to vote and (ii) the broker or
nominee does not have the discretionary voting power on a particular
matter) will be counted as shares that are present and entitled to
vote on the matter for purposes of determining the presence of a
quorum. Votes cast by proxy or in person at the meeting will be
counted by persons appointed by your fund as tellers for the
meeting.

The tellers will count the total number of votes cast "for" approval
of the proposals for purposes of determining whether sufficient
affirmative votes have been cast. With respect to the election of
Trustees and selection of auditors, neither abstentions nor broker
non-votes have any effect on the outcome of the proposal. With
respect to any other proposals, abstentions and broker non-votes
have the effect of a negative vote on the proposal.

OTHER BUSINESS. The Trustees know of no other business to be
brought before the meeting. However, if any other matters properly
come before the meeting, it is their intention that proxies that do
not contain specific restrictions to the contrary will be voted on
such matters in accordance with the judgment of the persons named as
proxies in the enclosed form of proxy.

SIMULTANEOUS MEETINGS. The meeting of shareholders of your fund is
called to be held at the same time as the meetings of shareholders
of certain of the other Putnam funds. It is anticipated that all
meetings will be held simultaneously. If any shareholder at the
meeting objects to the holding of a simultaneous meeting and moves
for an adjournment of the meeting to a time promptly after the
simultaneous meetings, the persons named as proxies will vote in
favor of such adjournment.

SOLICITATION OF PROXIES. In addition to soliciting proxies by mail,
Trustees of your fund and employees of Putnam Management, Putnam
Fiduciary Trust Company, and Putnam Mutual Funds may solicit proxies
in person or by telephone. Your fund may also arrange to have votes
recorded by telephone. The telephone voting procedure is designed
to authenticate shareholders' identities, to allow shareholders to
authorize the voting of their shares in accordance with their
instructions and to confirm that their instructions have been
properly recorded. Your fund has been advised by counsel that these
procedures are consistent with the requirements of applicable law.
If these procedures were subject to a successful legal challenge,
such votes would not be counted at the meeting. Your fund is
unaware of any such challenge at this time. Shareholders would be
called at the phone number Putnam Investments has in its records for
their accounts, and would be asked for their Social Security number
or other identifying information. The shareholders would then be
given an opportunity to authorize proxies to vote their shares at
the meeting in accordance with their instructions. To ensure that
the shareholders' instructions have been recorded correctly, they
will also receive a confirmation of their instructions in the mail.
A special toll-free number will be available in case the information
contained in the confirmation is incorrect.

Your fund's Trustees have adopted a general policy of maintaining
confidentiality in the voting of proxies. Consistent with this
policy, your fund may solicit proxies from shareholders who have not
voted their shares or who have abstained from voting.

Persons holding shares as nominees will upon request be reimbursed
for their reasonable expenses in soliciting instructions from their
principals. Your fund has retained at its expense Tritech Services,
Four Corporate Place, Corporate Park 287, Piscataway, New Jersey
08854, to aid in the solicitation instructions for nominee accounts,
for a fee not to exceed $7,500 plus reasonable out-of-pocket
expenses for mailing and phone costs. Your fund has also retained
D. F. King & Co., Inc., 77 Water Street, New York, New York 10005,
to aid in the solicitation instructions for registered accounts for
a fee not to exceed $12,500 plus reasonable out-of-pocket
expenses.

REVOCATION OF PROXIES. Proxies, including proxies given by
telephone, may be revoked at any time before they are voted by a
written revocation received by the Clerk of your fund, by properly
executing a later-dated proxy or by attending the meeting and voting
in person.

DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS FOR SUBSEQUENT MEETINGS
OF SHAREHOLDERS. Your fund's Agreement and Declaration of Trust
does not provide for annual meetings of shareholders, and your fund
does not currently intend to hold such a meeting in 1997.
Shareholder proposals for inclusion in the proxy statement for any
subsequent meeting must be received by your fund within a reasonable
period of time prior to any such meeting.

ADJOURNMENT. If sufficient votes in favor of any of the proposals
set forth in the Notice of the Meeting are not received by the time
scheduled for the meeting, the persons named as proxies may propose
adjournments of the meeting for a period or periods of not more than
60 days in the aggregate to permit further solicitation of proxies
with respect to any of such proposals. Any adjournment will require
the affirmative vote of a majority of the votes cast on the question
in person or by proxy at the session of the meeting to be adjourned.
The persons named as proxies will vote in favor of such adjournment
those proxies which they are entitled to vote in favor of such
proposals. They will vote against any such adjournment those
proxies required to be voted against such proposals. Your
fund pays the costs of any additional solicitation and of any
adjourned session. Any proposals for which sufficient favorable
votes have been received by the time of the meeting may be acted
upon and considered final regardless of whether the meeting is
adjourned to permit additional solicitation with respect to any
other proposal.

FINANCIAL INFORMATION. YOUR FUND WILL FURNISH, WITHOUT CHARGE, TO
YOU UPON REQUEST A COPY OF THE FUND'S ANNUAL REPORT FOR ITS MOST
RECENT FISCAL YEAR, AND A COPY OF ITS SEMIANNUAL REPORT FOR ANY
SUBSEQUENT SEMIANNUAL PERIOD. SUCH REQUESTS MAY BE DIRECTED TO
PUTNAM INVESTOR SERVICES, P.O. BOX 41203, PROVIDENCE, RI 02940-1203
OR 1-800-225-1581.

FURTHER INFORMATION ABOUT YOUR FUND

LIMITATION OF TRUSTEE LIABILITY. The Agreement and Declaration of
Trust of your fund provides that the fund will indemnify its
Trustees and officers against liabilities and expenses incurred in
connection with litigation in which they may be involved because of
their offices with the fund, except if it is determined in the
manner specified in the Agreement and Declaration of Trust that they
have not acted in good faith in the reasonable belief that their
actions were in the best interests of the fund or that such
indemnification would relieve any officer or Trustee of any
liability to the fund or its shareholders arising by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties. Your fund, at its expense, provides
liability insurance for the benefit of its Trustees and officers.

AUDIT AND NOMINATING COMMITTEES. The voting members of the Audit
Committee of your fund include only Trustees who are not "interested
persons" of the fund or by reason of any affiliation with Putnam
Investments and its affiliates. The Audit Committee currently
consists of Messrs. Estin (Chairman), Perkins (without vote),
Putnam, III (without vote), Shapiro, Smith (without vote), and Ms.
Kennan. The Nominating Committee consists only of Trustees who are
not "interested persons" of your fund or Putnam Management. The
Nominating Committee currently consists of Dr. Pounds and Ms. Kennan
(Co-chairpersons), Ms. Baxter, and Messrs. Estin, Hill, Patterson,
Shapiro, and Thorndike.

OFFICERS AND OTHER INFORMATION. In addition to George Putnam and
Lawrence J. Lasser, the officers of your fund are as follows:

Year first
elected to
Name (age) Office office
- -----------------------------------------------------------------
Charles E. Porter (57) Executive Vice President 1989
Patricia C. Flaherty (49) Senior Vice President 1993
John D. Hughes (61) Senior Vice President
& Treasurer 1987
Gordon H. Silver (48) Vice President 1990
Peter Carman (54) Vice President 1994
Brett C. Browchuk (33) Vice President 1994
Thomas V. Reilly (49) Vice President 1984
Edward P. Bousa* (37) Vice President 1994
Rosemary H. Thomsen* (35) Vice President 1995
Kenneth J. Taubes* (36) Vice President 1994
William N. Shiebler** (54) Vice President 1991
John R. Verani (56) Vice President 1987
Paul M. O'Neil (42) Vice President 1992
Beverly Marcus (51) Clerk 1981
- -----------------------------------------------------------------
* One of the fund's portfolio managers
** President of Putnam Mutual Funds

All of the officers of your fund are employees of Putnam Management
or its affiliates. Because of their positions with Putnam
Management or its affiliates or their ownership of stock of Marsh &
McLennan Companies, Inc., the parent corporation of Putnam
Management and Putnam Mutual Funds, Messrs. Putnam, George Putnam,
III, Lasser and Smith (nominees for Trustees of your fund), as well
as the officers of your fund, will benefit from the management fees,
distribution fees, underwriting commissions, custodian fees, and
investor servicing fees paid or allowed by the fund.
<PAGE>
ADDITIONAL INFORMATION RELATING TO MANAGEMENT CONTRACT APPROVAL

FURTHER INFORMATION ABOUT PUTNAM INVESTMENT MANAGEMENT, INC. AND ITS
PROPOSED MANAGEMENT CONTRACT. Putnam Management and its affiliates,
Putnam Mutual Funds, the principal underwriter for shares of your
fund, and Putnam Fiduciary Trust Company, your fund's investor
servicing agent and custodian, are wholly owned by Putnam
Investments, Inc., One Post Office Square, Boston, Massachusetts
02109, a holding company that is in turn wholly owned by Marsh &
McLennan Companies, Inc., which has executive offices at 1166 Avenue
of the Americas, New York, New York 10036. Marsh & McLennan
Companies, Inc., and its operating subsidiaries are professional
services firms with insurance and reinsurance brokering, consulting
and investment management businesses.

The directors of Putnam Management are George Putnam, Lawrence J.
Lasser, and Gordon H. Silver. Mr. Lasser is the principal executive
officer of Putnam Management. The principal occupations of Messrs.
Putnam, Lasser, and Silver are as officers and directors of Putnam
Management and certain of its corporate affiliates. The address of
Putnam Management and the business address of the directors and
officers of Putnam Management is One Post Office Square, Boston,
Massachusetts 02109.

In addition to the services it provides to your fund, Putnam
Management acts as investment adviser or subadviser of other
publicly owned investment companies having differing investment
objectives. For the names of such funds having investment
objectives similar to those of your fund and the current rates of
Putnam Management's annual fees as adviser or subadviser of such
funds, see Exhibit B in this Proxy Statement.

Putnam Management is also affiliated with The Putnam Advisory
Company, Inc., which together with its subsidiaries furnishes
investment advice to domestic and foreign institutional clients and
mutual funds. Another affiliate, Putnam Fiduciary Trust Company,
provides investment advice to institutional clients under its
banking and fiduciary powers. The advisory fees charged by such
firms to their institutional clients are generally at lower rates
than those charged to the Putnam funds. The services performed and
responsibilities assumed by these firms for such clients are,
however, not as extensive as those performed or assumed by Putnam
Management for the Putnam funds.

Some officers and directors of Putnam Management, including some who
are officers of your fund, serve as officers or directors of some of
these affiliates. Putnam Management may also enter into other
businesses.

THE MANAGEMENT CONTRACT. Putnam Management serves as investment
manager of your fund pursuant to a Management Contract. The
management fee payable under the Contract is described above in
Proposal 3. The fees paid to Putnam Management in the most recent
fiscal year are shown below.

Under the Contract, subject to such policies as the Trustees may
determine, Putnam Management, at its expense, furnishes continuously
an investment program for your fund and makes investment decisions
on behalf of your fund. Subject to the control of the Trustees,
Putnam Management manages, supervises, and conducts the other
affairs and business of your fund, furnishes office space and
equipment, provides bookkeeping and clerical services (including
determination of your fund's net asset value, but excluding
shareholder accounting services) and places all orders for the
purchase and sale of your fund's portfolio securities. Putnam
Management may place fund portfolio transactions with broker-dealers
that furnish Putnam Management, without cost to it, certain
brokerage and research services of value to Putnam Management and
its affiliates in advising your fund and other clients. In so
doing, Putnam Management may cause your fund to pay greater
brokerage commissions than it might otherwise pay.

Your fund also pays, or reimburses Putnam Management for, the
compensation and related expenses of certain officers of your fund
and their assistants. Currently, your fund reimburses Putnam
Management for a portion of the compensation and related expenses of
certain officers of your fund who provide certain administrative
services to your fund and the other Putnam funds, each of which
bears an allocated share of the costs. The aggregate amount of all
such payments and reimbursements is determined annually by the
Trustees, and the amount paid in the most recent fiscal year is set
forth below. Putnam Management pays all other salaries of officers
of your fund. Your fund pays all expenses not assumed by Putnam
Management including, without limitation, auditing, legal,
custodial, investor servicing agent, and shareholder reporting
expenses.

The Contract provides that Putnam Management shall not be subject to
any liability to your fund or to any shareholder of your fund for
any act or omission in the course of or connected with rendering
services thereunder in the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of its obligations
and duties.

The Contract may be terminated without penalty upon 30 days' written
notice by Putnam Management, by the Trustees, or by the affirmative
vote of the holders of a "majority of the outstanding voting
securities" of the fund (as defined in the Investment Company Act of
1940). It may be amended only by an affirmative vote of the holders
of a majority of the outstanding voting securities of your fund and
by a majority of the Trustees who are not "interested persons" of
your fund or Putnam Management.

The Contract will terminate automatically if it is assigned, or
unless its continuance is approved at least annually by either the
Trustees or shareholders of the fund and in either case by a
majority of the Trustees who are not "interested persons" of Putnam
Management or your fund.
<PAGE>
PAYMENTS TO AFFILIATES OF PUTNAM MANAGEMENT. Putnam Mutual Funds is
the principal underwriter of shares of your fund and of the other
continuously offered Putnam funds. Putnam Fiduciary Trust Company
is your fund's investor servicing agent and custodian. The amount
of sales charges retained by Putnam Mutual Funds and the investor
servicing fees and custodian fees paid to Putnam Fiduciary Trust
Company in your fund's most recent fiscal year are set forth below.

Under its class A Distribution Plan, your fund may make payments to
Putnam Mutual Funds at the annual rate of up to 0.35% of the average
net assets of the fund attributable to class A shares. At present,
payments under the Plan are limited to the annual rate of 0.25% of
average net assets. Under its class B and class M Distribution
Plans, your fund compensates Putnam Mutual Funds at the annual rate
of up to 1.00% of average net assets attributable to class B shares
and class M shares, as the case may be, although for class M shares,
a limit of 0.75% of average net assets is currently in effect.

Payments under the plans compensate Putnam Mutual Funds for services
provided and expenses incurred by it in promoting the sale of shares
of your fund, reducing redemptions or maintaining or improving
services provided to shareholders by Putnam Mutual Funds or by
dealers. The fees paid to Putnam Mutual Funds under the plans in
your fund's most recent fiscal year are set forth in "Further
information about your fund." A substantial portion of payments
made to Putnam Mutual Funds under these plans is used to pay or
reimburse Putnam Mutual Funds for payment of service fees paid to
investment dealers for their ongoing services to shareholders.

ASSETS AND SHARES OUTSTANDING OF YOUR FUND
AS OF MARCH 29, 1996
---------------------------------------------------------------

Net assets $1,975,561,290

Class A shares outstanding
and authorized to vote 87,369,658 shares

Class B shares outstanding
and authorized to vote 22,547,620 shares

Class M shares outstanding
and authorized to vote 2,009,977 shares

Class Y shares outstanding
and authorized to vote 12,687,745 shares

Persons beneficially owning more than 5%
of the fund's class A shares None

Persons beneficially owning more than 5%
of the fund's class B shares None

Persons beneficially owning more than 5%
of the fund's class M shares None

PERSONS BENEFICIALLY OWNING MORE THAN 5%
OF THE FUND'S CLASS Y SHARES : PUTNAM FIDUCIARY TRUST
COMPANY, 859 WILLARD STREET, QUINCY, MASSACHUSETTS,
02269; OWNED 10,871,131 SHARES REPRESENTING 85.4% OF THE
OUTSTANDING CLASS Y SHARES, ACTING AS TRUSTEE OR AGENT
FOR VARIOUS PENSION PLANS.

For the Fiscal Year Ended July 31, 1995

MANAGEMENT CONTRACT
- --------------------------------------------------------------
The management contract dated
December 21, 1988, was approved by the
shareholders on December 8, 1988 and
was last approved by the Trustees on
January 4, 1996.

Management fee
paid to Putnam Management $4,618,445

Reimbursement paid by your fund to Putnam
Management for compensation and related expenses
including employee benefit plan contributions
for your fund's Executive Vice President
(Charles E. Porter), Senior Vice President
(Patricia C. Flaherty), Clerk (Beverly Marcus),
and their assistants $31,254

PAYMENTS TO AFFILIATES
- --------------------------------------------------------------
Sales charges on sales of class A shares
retained by Putnam Mutual Funds
after payments to selling broker-dealers $299,871

Sales charges on sales of class M shares
retained by Putnam Mutual Funds
after payments to selling broker-dealers $9,902

Deferred sales charges on class A share
redemptions retained by Putnam Mutual Funds $6,203

Deferred sales charges on class B share
redemptions retained by Putnam Mutual Funds $388,691

Payments under Class A Distribution Plan
to Putnam Mutual Funds $2,395,857

Payments under Class B Distribution
Plan to Putnam Mutual Funds $1,784,739

Payments under Class M Distribution Plan
to Putnam Mutual Funds $13,891

Investor servicing and custodian fees
paid to Putnam Fiduciary Trust Company
(before application of credits, if any) $4,226,254
EXHIBIT A

This exhibit provides the management contract and the proposed
additions and deletions. The existing additions are indicated by
the ((BOLDFACE)) and deletions are indicated by //italics//.

THE GEORGE PUTNAM FUND OF BOSTON

MANAGEMENT CONTRACT

Management Contract dated as of //December 21, 1988// ((JULY ,
1996)) between The George Putnam Fund of Boston, a Massachusetts
business trust (the "Fund"), and //THE// PUTNAM ((INVESTMENT))
MANAGEMENT //COMPANY//, INC., a //Delaware// ((MASSACHUSETTS))
corporation (the "Manager").

WITNESSETH:

That in consideration of the mutual covenants herein contained,
it is agreed as follows:

1. SERVICES TO BE RENDERED BY MANAGER TO FUND.

(a) The Manager, at its expense, will furnish continuously an
investment program for the Fund, will determine what //securities//
((INVESTMENTS)) shall be purchased, held, sold or exchanged by the
Fund and what portion, if any, of the assets of the Fund shall be
held uninvested and shall, on behalf of the Fund, make changes in
the Fund's investments. Subject always to the control of the
Trustees of the Fund and except for the functions carried out by the
officers and personnel referred to in Section 1(d), the Manager will
also manage, supervise and conduct the other affairs and business of
the Fund and matters incidental thereto. In the performance of its
duties, the Manager will comply with the provisions of the Agreement
and Declaration of Trust and By-laws of the Fund and its stated
investment objectives, policies and restrictions, and will use its
best efforts to safeguard and promote the welfare of the Fund and to
comply with other policies which the Trustees may from time to time
determine //,// and shall exercise the same care and diligence
expected of the Trustees.

(b) The Manager, at its expense, except as such expense is
paid by the Fund as provided in Section 1(d), will furnish (1) all
necessary investment and management facilities, including salaries
of personnel, required for it to execute its duties faithfully; (2)
suitable office space for the Fund; and (3) administrative
facilities, including bookkeeping, clerical personnel and equipment
necessary for the efficient conduct of the affairs of the Fund,
including determination of the Fund's net asset value, but excluding
shareholder accounting services. Except as otherwise provided in
Section 1(d), the Manager will pay the compensation, if any, of the
officers of the Fund.

(c) The Manager, at its expense, shall place all orders for
the purchase and sale of portfolio investments for the Fund's
account with brokers or dealers selected by the Manager. In the
selection of such brokers or dealers and the placing of such orders,
the Manager shall use its best efforts to obtain for the Fund the
most favorable price and execution available, except to the extent
it may be permitted to pay higher brokerage commissions for
brokerage and research services as described below. In using its
best efforts to obtain for the Fund the most favorable price and
execution available, the Manager, bearing in mind the Fund's best
interests at all times, shall consider all factors it deems
relevant, including by way of illustration, price, the size of the
transaction, the nature of the market for the security, the amount
of the commission, the timing of the transaction taking into account
market prices and trends, the reputation, experience and financial
stability of the broker or dealer involved and the quality of
service rendered by the broker or dealer in other transactions.
Subject to such policies as the Trustees ((OF THE FUND)) may
determine, the Manager shall not be deemed to have acted unlawfully
or to have breached any duty created by this Contract or otherwise
solely by reason of its having caused the Fund to pay a broker or
dealer that provides brokerage and research services to the Manager
an amount of commission for effecting a portfolio investment
transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if the
Manager determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Manager's overall
responsibilities with respect to the Fund and to other clients of
the Manager as to which the Manager exercises investment discretion.
The Manager agrees that in connection with purchases or sales of
portfolio investments for the Fund's account, neither the Manager or
any officer, director, employee or agent of the Manager shall act as
a principal or receive any commission other than as provided in
Section 3.

(d) The Fund will pay or reimburse the Manager for //(i)// the
compensation //of the Vice Chairman// ((IN WHOLE OR IN PART OF SUCH
OFFICERS)) of the Fund and //of// persons assisting //him in this
office, as// ((THEM AS MAY BE)) determined from time to time by the
Trustees of the Fund //, (ii) the compensation in whole or in// ((.
THE FUND WILL ALSO PAY OR REIMBURSE THE MANAGER FOR ALL OR)) part of
//such other officers of the Fund and persons assisting them as may
be determined from time to time by the Trustees of the Fund, and
(iii)// the cost of suitable office space, utilities, support
services and equipment //of the Vice Chairman// ((ATTRIBUTABLE TO
SUCH OFFICERS)) and persons //assisting him and//, as ((MAY BE))
determined //from time to time// ((IN EACH CASE)) by the Trustees of
the Fund //, all or a part of such costs attributable to the other
officers and persons assisting them whose compensation is paid in
whole or in part by the Fund//. The Fund will pay the fees, if any,
of the Trustees of the Fund.

(e) The Manager shall not be obligated to pay any expenses of
or for the Fund not expressly assumed by the Manager pursuant to
this Section 1 other than as provided in Section 3.
<PAGE>
2. OTHER AGREEMENTS, ETC.

It is understood that any of the shareholders, Trustees,
officers and employees of the Fund may be a shareholder, director,
officer or employee of, or be otherwise interested in, the Manager,
and in any person controlled by or under common control with the
Manager, and that the Manager and any person controlled by or under
common control with the Manager may have an interest in the Fund.
It is also understood that the Manager and //persons// ((ANY
PERSON)) controlled by or under common control with the Manager have
and may have advisory, management ((,)) service or other contracts
with other organizations and persons, and may have other interests
and business.

3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.

The Fund will pay to the Manager as compensation for the
Manager's services rendered, for the facilities furnished and for
the expenses borne by the Manager pursuant to paragraphs (a), (b),
(c) and (e) of Section 1, a fee, computed and paid quarterly at the
annual rate of:

(a) //0.6%// ((0.65%)) of the first //$100// (($500)) million
of the average net asset value of the Fund;

(b) //0.5%// ((0.55%)) of the next //$100// (($500)) million
of such average net asset value;

(d) //0.325%// ((0.45%)) of the next //$500 million// (($5
BILLION)) of such average net asset value;

//and
(e) 0.3% of any amount over $1//

(((E) 0.425% OF THE NEXT $5 BILLION OF SUCH AVERAGE
NET ASSET VALUE ;

(F) 0.405% OF THE NEXT $5 BILLION OF SUCH AVERAGE NET ASSET
VALUE;

(G) 0.39% OF THE NEXT $5 BILLION OF SUCH AVERAGE NET ASSET
VALUE; AND

(H) 0.38% OF ANY AMOUNT THEREAFTER)).
<PAGE>
Such average net asset value shall be determined by taking an
average of all of the determinations of such net asset value during
such quarter at the close of business on each business day during
such quarter while this Contract is in effect. Such fee shall be
payable for each fiscal quarter within 30 days after the close of
such quarter.

The fees payable by the Fund to the Manager pursuant to this
Section 3 shall be reduced by any commissions, fees, brokerage or
similar payments received by the Manager or any affiliated person of
the Manager in connection with the purchase and sale of portfolio
investments of the Fund, less any direct expenses approved by the
Trustees incurred by the Manager or any affiliated person of the
Manager in connection with obtaining such payments.

In the event that expenses of the Fund for any fiscal year
should exceed the expense limitation on investment company expenses
imposed by any statute or regulatory authority of any jurisdiction
in which shares of the Fund are qualified for offer and sale, the
compensation due the Manager for such fiscal year shall be reduced
by the amount of such excess by a reduction or refund thereof.

If the Manager shall serve for less than the whole of a
quarter, the foregoing compensation shall be prorated.

4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT.

This Contract shall automatically terminate, without the
payment of any penalty, in the event of its assignment; and this
Contract shall not be amended unless such amendment be approved at a
meeting by the affirmative vote of a majority of the outstanding
shares of the Fund, and by the vote, cast in person at a meeting
called for the purpose of voting on such approval, of a majority of
the Trustees of the Fund who are not interested persons of the Fund
or of the Manager.

5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.

This Contract shall become effective upon its execution, and
shall remain in full force and effect continuously thereafter
(unless terminated automatically as set forth in Section 4) until
terminated as follows:

(a) Either party hereto may at any time terminate this Contract
by not more than sixty days' nor less than thirty days' written
notice delivered or mailed by registered mail, postage prepaid, to
the other party, or

(b) If (i) the Trustees of the Fund or the shareholders by the
affirmative vote of a majority of the outstanding shares of the
Fund, and (ii) a majority of the Trustees of the Fund who are not
interested persons of the Fund or of the Manager, by vote cast in
person at a meeting called for the purpose of voting on such
approval, do not specifically approve at least annually the
continuance of this Contract, then this Contract shall automatically
terminate at the close of business on //January 31, 1990 or // ((THE
SECOND ANNIVERSARY OF ITS EXECUTION, OR UPON)) the expiration of one
year from the effective date of the last such continuance, whichever
is later.

Action by the Fund under (a) above may be taken either (i) by
vote of a majority of its Trustees, or (ii) by the affirmative vote
of a majority of the outstanding shares of the Fund.

Termination of this Contract pursuant to this Section 5 will be
without the payment of any penalty.

6. CERTAIN DEFINITIONS.

For the purposes of this Contract, the "affirmative vote of a
majority of the outstanding shares of the Fund" means the
affirmative vote, at a duly called and held meeting of shareholders
of the Fund, (a) of the holders of 67% or more of the shares of the
Fund present (in person or by proxy) and entitled to vote at such
meeting, if the holders of more than 50% of the outstanding shares
of the Fund entitled to vote at such meeting are present in person
or by proxy, or (b) of the holders of more than 50% of the
outstanding shares of the Fund entitled to vote at such meeting,
whichever is less.

For the purposes of this Contract, the terms "affiliated
person", "control", "interested person" and "assignment" shall have
their respective meanings defined in the Investment Company Act of
1940 (((THE "1940 ACT"))) and the Rules and Regulations thereunder,
subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act; the term
"specifically approve at least annually" shall be construed in a
manner consistent with the //Investment Company Act of// 1940
((ACT,)) and the Rules and Regulations thereunder; and the term
"brokerage and research services" shall have the meaning given in
the Securities Exchange Act of 1934 and the Rules and Regulations
thereunder.

7. NONLIABILITY OF MANAGER.

In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Manager, or reckless disregard of its
obligations and duties hereunder, the Manager shall not be subject
to any liability to the Fund or to any shareholder of the Fund, for
any act or omission in the course of, or connected with, rendering
services hereunder.
<PAGE>
8. TERMINATION OF PRIOR CONTRACT.

This Contract shall become effective as of its date, and
supersedes the Management Contract dated //November 5, 1982//
((DECEMBER 21, 1988)).

9. LIMITATION OF LIABILITY OF THE TRUSTEES ((, OFFICERS)) AND
SHAREHOLDERS.

A copy of the Agreement and Declaration of Trust of the Fund is
on file with the Secretary of ((STATE OF)) The Commonwealth of
Massachusetts, and notice is hereby given that this instrument is
executed on behalf of the Trustees of the Fund as Trustees and not
individually and that the obligations of ((OR ARISING OUT OF)) this
instrument are not binding upon any of the Trustees ((, OFFICERS))
or shareholders individually but are binding only upon the assets
and property of the Fund.

IN WITNESS WHEREOF, THE GEORGE PUTNAM FUND OF BOSTON and
//THE// PUTNAM ((INVESTMENT)) MANAGEMENT //COMPANY//, INC. have
caused this instrument to be signed in duplicate //in// ((ON)) its
behalf by its President or a Vice President thereunto duly
authorized, all as of the day and year first above written.

THE GEORGE PUTNAM FUND OF BOSTON

By: --------------------------------

//THE// PUTNAM ((INVESTMENT)) MANAGEMENT
//COMPANY//, INC.

By: --------------------------------

<PAGE>
EXHIBIT B

MANAGEMENT FEE RATE NAME OF FUND
(BASED ON AVERAGE NET ASSETS) (NET ASSETS AS OF MARCH 29, 1996)

0.65% of the first $500 million Putnam Balanced Retirement
of average net assets, 0.55% of Fund ($504,336,866)
the next $500 million, 0.50%
of the next $500 million, 0.45%
of any excess over $1.5 billion

0.65% of the first $500 million Putnam Convertible Income-Growth
of average net assets, 0.55% Trust ($945,584,420)
of the next $500 million, 0.50%
of the next $500 million, and
0.45% of any excess over $1.5
billion

0.75% of the first $100 million Putnam Equity Income Fund
of average net assets, 0.65% of ($562,355,765)
the next $100 million, 0.55% of
the next $300 million, 0.50% of
the next $1 billion, 0.45% of the
next $1 billion, and 0.40% of any
excess over $2.5 billion

Proposed to be changed to 0.65%
of the first $500 million of
average net assets, 0.55% of the
next $500 million, 0.50% of the
next $500 million, 0.45% of the
next $5 billion, 0.425% of the
next $5 billion, 0.405% of the
next $5 billion, 0.39% of the
next $5 billion, and 0.38%
thereafter

0.65% of the first $500 million The Putnam Fund for Growth
of average net assets, 0.55% and Income
($16,450,325,286)
of the next $500 million, 0.50%
of the next $500 million, 0.45% Putnam Growth and Income Fund II
of the next $5 billion, 0.425% ($821,639,347)
of the next $5 billion, 0.405%
of the next $5 billion, 0.39% Putnam Investment Funds:
of the next $5 billion, and Putnam Balanced Fund
0.38% thereafter ($2,104,239)

<PAGE>

PUTNAMINVESTMENTS
THE PUTNAM FUNDS

One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581<PAGE>

PUTNAMINVESTMENTS

THIS IS YOUR PROXY CARD.

PLEASE VOTE THIS PROXY, SIGN IT BELOW, AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED. YOUR VOTE IS IMPORTANT.

HAS YOUR ADDRESS CHANGED?
Please use this form to notify us of any change in address or
telephone number or to provide us with your comments. Detach this
form from the proxy ballot and return it with your signed proxy in
the enclosed envelope.

Street
- --------------------------------------------------------------------

City State Zip
- --------------------------------------------------------------------

Telephone
- -------------------------------------------------------------------

DO YOU HAVE ANY COMMENTS?

- --------------------------------------------------------------------

DEAR SHAREHOLDER:

Your vote is important. Please help us to eliminate the expense of
follow-up mailings by signing and returning this proxy as soon as
possible. A postage-paid envelope is enclosed for your convenience.

THANK YOU!

PLE ASE FOLD AT PERFORATION BEFORE DETACHING
- --------------------------------------------------------------------
<PAGE>
Proxy for a meeting of shareholders, July 11, 1996, for THE
GEORGE PUTNAM FUND OF BOSTON.

THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF THE FUND.

The undersigned shareholder hereby appoints George Putnam, Hans H.
Estin, and Robert E. Patterson, and each of them separately,
proxies, with power of substitution, and hereby authorizes them to
represent and to vote, as designated below, at the meeting of
shareholders of The George Putnam Fund of Boston on July 11, 1996,
at 2:00 p.m., Boston time, and at any adjournments thereof, all of
the shares of the fund that the undersigned shareholder would be
entitled to vote if personally present.

IF YOU COMPLETE AND SIGN THE PROXY, WE'LL VOTE IT EXACTLY AS YOU
TELL US. IF YOU SIMPLY SIGN THE PROXY, IT WILL BE VOTED FOR
ELECTING TRUSTEES AS SET FORTH IN PROPOSAL 1 AND FOR PROPOSALS 2,
3 AND 4A.-O . IN THEIR DISCRETION, THE PROXIES WILL
ALSO BE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS THAT MAY COME
BEFORE THE MEETING.

NOTE:If you have questions on any of the proposals, please call
1-800-225-1581.

PLEASE BE SURE TO SIGN AND DATE THIS PROXY.

Please sign your name exactly as it appears on this card. If you
are a joint owner, each of you should sign. When signing as
executor, administrator, attorney, trustee, or guardian, or as
custodian for a minor, please give your full title as such. If you
are signing for a corporation, please sign the full corporate name
and indicate the signer's office. If you are a partner, sign in the
partnership name.

- --------------------------------------------------------------------
Shareholder sign here Date

- --------------------------------------------------------------------
Co-owner sign here Date

PLEASE FOLD AT PERFORATION BEFORE DETACHING
- --------------------------------------------------------------------

<PAGE>
THE TRUSTEES RECOMMEND A VOTE FOR ELECTING ALL OF THE NOMINEES FOR
TRUSTEES AND FOR THE PROPOSALS LISTED BELOW:

PLEASE MARK YOUR CHOICES / X / IN BLUE OR BLACK INK

1. PROPOSAL TO ELECT TRUSTEES
The nominees for Trustees are: J.A. Baxter, H.H. Estin, J.A.
Hill, E.T. Kennan, L.J. Lasser, R.E. Patterson, D.S. Perkins,
W.F. Pounds, G. Putnam, G. Putnam, III, E. Shapiro, A.J.C.
Smith, W.N. Thorndike.

TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE OF THE
NOMINEES, WRITE THOSE NOMINEES' NAMES BELOW:

--------------------------------------------------------------

/ / FOR electing all the nominees
(EXCEPT AS MARKED TO THE CONTRARY BELOW.)

/ / WITHHOLD authority to vote for all
nominees

-------------------------------------------------------------
PROPOSAL TO:

2. RATIFY THE SELECTION FOR AGAINST
ABSTAIN
OF PRICE WATERHOUSE / / / / / /
LLP AS INDEPENDENT
AUDITORS.

3. APPROVE A NEW FOR AGAINST ABSTAIN
MANAGEMENT CONTRACT / / / / / /
INCREASING THE FEES
PAYABLE TO PUTNAM
INVESTMENT MANAGEMENT, INC.

4.A. AMEND THE FUND'S FOR AGAINST ABSTAIN
AGREEMENT AND / / / / / /
DECLARATION OF TRUST
WITH RESPECT TO THE
FUND'S PERMITTED
INVESTMENTS.

4.B. AMEND THE FUND'S FOR AGAINST ABSTAIN
AGREEMENT AND / / / / / /
DECLARATION OF TRUST
WITH RESPECT TO
DIVERSIFICATION OF
INVESTMENTS.
<PAGE>
4.C. AMEND THE FUND'S FOR AGAINST
ABSTAIN
AGREEMENT AND / / / / / /
DECLARATION OF TRUST
WITH RESPECT TO
INVESTMENTS IN ISSUERS
THAT HAVE BEEN IN
OPERATION FOR LESS THAN
THREE YEARS.

4.D. AMEND THE FUND'S FOR AGAINST
ABSTAIN
AGREEMENT AND / / / / / /
DECLARATION OF TRUST
WITH RESPECT TO THE
PURCHASE OF CERTAIN
ILLIQUID SECURITIES.

4.E. AMEND THE FUND'S FOR AGAINST
ABSTAIN
AGREEMENT AND / / / / / /
DECLARATION OF TRUST
WITH RESPECT TO
INVESTMENTS IN
SECURITIES OF ISSUERS
IN WHICH MANAGEMENT OF
THE FUND OR PUTNAM
INVESTMENT MANAGEMENT , INC.
OWNS SECURITIES.

4.F. AMEND THE FUND'S FOR AGAINST
ABSTAIN
AGREEMENT AND / / / / / /
DECLARATION OF TRUST
WITH RESPECT TO OWNING
10% OF THE SECURITIES
OF A SINGLE ISSUER.

4.G. AMEND THE FUND'S FOR AGAINST
ABSTAIN
FUNDAMENTAL / / / / / /
INVESTMENT RESTRICTIONS
WITH RESPECT TO
INVESTMENTS IN REAL
ESTATE.

4.H. AMEND THE FUND'S FOR AGAINST
ABSTAIN
AGREEMENT AND / / / / / /
DECLARATION OF TRUST
WITH RESPECT TO MARGIN
TRANSACTIONS.

4.I. AMEND THE FUND'S FOR AGAINST
ABSTAIN
FUNDAMENTAL INVESTMENT / / /
/ / /
RESTRICTION WITH RESPECT
TO MAKING LOANS BY
PURCHASING SECURITIES.
<PAGE>
4.J. AMEND THE FUND'S FOR AGAINST
ABSTAIN
AGREEMENT AND / / / / / /
DECLARATION OF TRUST
WITH RESPECT TO MAKING
LOANS THROUGH REPURCHASE
AGREEMENTS AND SECURITIES
LOANS.

4.K. AMEND THE FUND'S FOR AGAINST
ABSTAIN
FUNDAMENTAL INVESTMENT / / /
/ / /
RESTRICTION WITH RESPECT
TO CONCENTRATION OF ASSETS.

4.L. AMEND THE FUND'S FOR AGAINST ABSTAIN
AGREEMENT AND DECLARATION / / / / / /
OF TRUST WITH RESPECT TO
PLEDGING ASSETS.

4.M. AMEND THE FUND'S FOR AGAINST ABSTAIN
AGREEMENT AND DECLARATION / / / / / /
OF TRUST AND THE FUND'S
FUNDAMENTAL INVESTMENT
RESTRICTION WITH RESPECT
TO BORROWING.

4.N. AMEND THE FUND'S FOR AGAINST ABSTAIN
AGREEMENT AND DECLARATION / / / / / /
OF TRUST AND ELIMINATE
THE FUNDS'S FUNDAMENTAL
INVESTMENT RESTRICTIONS
WITH RESPECT TO SHORT SALES.

4.O. ELIMINATE THE FUND'S FOR AGAINST ABSTAIN
FUNDAMENTAL INVESTMENT / / / / / /
RESTRICTION PROHIBITING
THE FUND FROM INVESTING IN
INVESTMENT COMPANIES IF
PROHIBITED BY GERMAN LAW.

</TABLE>