PROSPECTUS
FEBRUARY 28,
1997 , as revised
October 30, 1997
The Putnam Fund for Growth and Income
Class A, B and M shares
INVESTMENT STRATEGY: GROWTH AND INCOME
This prospectus explains concisely what you should know before
investing in The Putnam Fund for Growth and Income (the "fund").
Please read it carefully and keep it for future reference. You
can find more detailed information in the February 28, 1997
statement of additional information (the "SAI"), as amended from
time to time. For a free copy of the SAI or other information,
call Putnam Investor Services at 1-800-225-1581. The SAI has
been filed with the Securities and Exchange Commission (the
"Commission") and is incorporated into this prospectus by
reference. The Commission maintains a Web site
(http:\\www.sec.gov) that contains the SAI, material incorporated
by reference into this prospectus and the SAI, and other
information regarding registrants that file electronically with
the Commission.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND INVOLVE RISK, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
BOSTON * LONDON * TOKYO
<PAGE>
ABOUT THE FUND
Expenses summary
.................................................................
This section describes the sales charges, management fees, and
annual operating expenses that apply to various classes of the
fund's shares. Use it to help you estimate the impact of
transaction costs and recurring expenses on your
investment over time.
Financial highlights
.................................................................
Study this table to see, among other things, how the fund
performed each year for the past 10 years or since it began
investment operations if it has been in operation for less than
10 years.
Objectives
.................................................................
Read this section to make sure the fund's objectives are
consistent with your own.
How the fund pursues its objectives
.................................................................
This section explains in detail how the fund seeks its investment
objectives.
How performance is shown
.................................................................
This section describes and defines the measures used to assess
fund performance. All data are based on past investment results
and do not predict future performance.
How the fund is managed
.................................................................
Consult this section for information about the fund's management,
allocation of its expenses, and how it purchases and
sells securities .
Organization and history
.................................................................
In this section, you will learn when the fund was introduced, how
it is organized, how it may offer shares, and who its Trustees
are.
<PAGE>
ABOUT YOUR INVESTMENT
Alternative sales arrangements
.................................................................
Read this section for descriptions of the classes of shares this
prospectus offers and for points you should consider when making
your choice.
How to buy shares
.................................................................
This section describes the ways you may purchase shares and tells
you the minimum amounts required to open various types of
accounts. It explains how sales charges are determined and how
you may become eligible for reduced sales charges .
Distribution plans
.................................................................
This section tells you what distribution fees are charged against
each class of shares.
How to sell shares
.................................................................
In this section you can learn how to sell fund shares, either
directly to the fund or through an investment dealer.
How to exchange shares
.................................................................
Find out in this section how you may exchange fund shares for
shares of other Putnam funds. The section also explains how
exchanges can be made without sales charges and the conditions
under which sales charges may be required.
How the fund values its shares
.................................................................
This section explains how the fund determines the value of its
shares.
How the fund makes distributions to shareholders; tax
information
.................................................................
This section describes the various options you have in choosing
how to receive fund dividends. It also discusses the tax status
of the payments and counsels you to seek specific advice about
your own situation.
ABOUT PUTNAM INVESTMENTS, INC.
Read this section to learn more about the companies that provide
marketing, investment management, and shareholder account
services to Putnam funds and their shareholders.<PAGE>
About the fund
EXPENSES SUMMARY
Expenses are one of several factors to consider when investing.
The following table summarizes your maximum transaction costs
from investing in the fund and expenses based on the most recent
fiscal year. The examples show the cumulative expenses
attributable to a hypothetical $1,000 investment over specified
periods.
Class A Class B Class M
shares shares shares
Shareholder transaction
expenses
Maximum sales charge
imposed on purchases
(as a percentage of
offering price) 5.75% NONE* 3.50%*
Deferred sales charge 5.0% in the first
(as a percentage year, declining
of the lower of to 1.0% in the
original purchase sixth year, and
price or redemption eliminated
proceeds) NONE** thereafter NONE
Annual fund operating expenses
(as a percentage of average net assets)
Total fund
Management 12b-1 Other operating
fees fees expenses expenses
- ---------- ----- -------------------
Class A 0.44% 0.25% 0.23% 0.92%
Class B 0.44% 1.00% 0.24% 1.68%
Class M 0.44% 0.75% 0.25% 1.44%
The table is provided to help you understand the expenses of
investing and your share of fund operating expenses. The
expenses shown in the table do not reflect the application of
credits that reduce fund expenses.
<PAGE>
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:
1 3 5 10
year years years years
Class A $66 $85 $105 $164
Class B $67 $83 $111 $178***
Class B (no redemption) $17 $53 $91 $178***
Class M $49 $79 $111 $201
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.
* The higher 12b-1 fees borne by class B and class M shares
may cause long-term shareholders to pay more than the
economic equivalent of the maximum permitted front-end sales
charge on class A shares.
** A deferred sales charge of up to 1.00% is assessed on
certain redemptions of class A shares that were purchased
without an initial sales charge. See "How to buy shares --
Class A shares."
*** Reflects conversion of class B shares to class A shares
(which pay lower ongoing expenses) approximately eight
years after purchase. See "Alternative sales arrangements."
FINANCIAL HIGHLIGHTS
The following table presents per share financial information for
class A, B and M shares. This information has been derived from
the fund's financial statements, which have been audited and
reported on by the independent accountants. The "Report of
independent accountants" and financial statements included in the
fund's annual report to shareholders for the 1996 fiscal year are
incorporated by reference into this prospectus. The fund's
annual report, which contains additional unaudited performance
information, is available without charge upon request.
<PAGE>
Financial highlights (For a share outstanding throughout
the period)
<TABLE><CAPTION>
May 1, 1995
April 27, 1992
(commencement
(commencement
Year endedof operations)
of operations) Year ended
October 31 to October 31 Year ended
October 31 to October 31 October 31
1996 1995 1996 1995
1994 1993 1992 1996 1995
Class M
Class B Class A
<S> <C> <C> <C> <C>
<C> <C> <C> <C> <C>
Net asset value,
beginning of period $15.74 $14.24 $15.63 $13.56
$14.18 $12.88 $12.69 $15.77 $13.65
Investment operations
Net investment income .35 .15(d) .30 .35(d)
.35 .31(d) .18(d) .43 .46(d)
Net realized and
unrealized gain
(loss) on investments 3.18 1.53 3.17 2.46
(.09) 1.89 .26 3.19 2.50
Total from investment
operations 3.53 1.68 3.47 2.81
.26 2.20 .44 3.62 2.96
Distributions to share-
holders:
From net investment income (.34) (.18) (.28)
(.30) (.34) (.44) (.25) (.40)(.40)
From net realized gain
on investments (.72) -- (.72)
(.44) (.54) (.46) -- (.72)(.44)
Total distributions (1.06) (.18) (1.00) (.74)
(.88) (.90) (.25) (1.12) (.84)
Net asset value, end
of period $18.21 $15.74 $18.10 $15.63
$13.56 $14.18 $12.88 $18.27 $15.77
Total investment
return at net asset
value (%) (a) 23.31 11.88* 23.04 21.91
2.01 17.86 3.47* 23.89 23.00
Net assets, end of
period (in thousands) $132,453 $21,100 $8,692,163
$5,089,359 $3,318,858 $1,819,793 $288,121$11,403,813$7,859,496
Ratio of expenses to
average net assets (%)(b) 1.44 .66* 1.68
1.64 1.70 1.68 .97* .92 .89
Ratio of net
investment income to
average net assets (%) 2.02 1.12* 1.84 2.42
2.42 2.27 1.15* 2.59 3.20
Portfolio turnover (%) 41.26 58.40 41.26 58.40
48.76 64.02 66.63 41.26 58.40
Average commission rate$0.0524 $0.0524
$0.0524
paid(c)
See page 8 for notes to Financial highlights.
/TABLE
<PAGE>
<TABLE><CAPTION>
Year ended October
31
1994 1993 1992 1991 1990 1989 1988
1987
Class A
<C> <C> <C> <C> <C> <C> <C>
<C>
$14.26 $12.92 $12.82 $10.87 $12.65 $11.37
$11.86 $13.79
.44 .43 .48 .54 .60 .72 .44
.58
(.08) 1.88 .65 2.46 (1.01) 1.37 1.22
.07
.36 2.31 1.13 3.00 (.41) 2.09 1.66
.65
(.43) (.51) (.54) (.62) (.62) (.60) (.68)
(.65)
(.54)(.46) (.49) (.43) (.75) (.21) (1.47)
(1.93)
(.97) (.97) (1.03) (1.05) (1.37) (.81) (2.15)
(2.58)
$13.65 $14.26 $12.92 $12.82 $10.87 $12.65 $11.37
$11.86
2.74 18.75 9.53 28.71 (3.98) 19.15 18.20
3.14
$6,009,174$5,214,239$3,517,199$2,688,047$1,922,814 $1,893,190
$1,656,058
$1,537,545
.95 .93 1.07 .95 .89 .72 .72 .64
3.18 3.18 3.72 4.45 5.01 6.00 3.99 4.12
48.76 64.02 66.63 77.06 81.33 103.31 86.47 143.38
<PAGE>
* Not annualized.
(a) Total investment return assumes dividend reinvestment and
does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the
period ended October 31, 1995 and thereafter, includes amounts paid
through expense offset arrangements. Prior period ratios exclude
these amounts.
(c) Average commission rate paid on security trades is
required for fiscal periods beginning on or after September 1, 1995.
(d) Per share net investment income has been determined on
the basis of the weighted average number of shares outstanding during
the period.
</TABLE>
OBJECTIVES
The Putnam Fund for Growth and Income seeks capital growth and
current income. The fund is designed for investors seeking a
diversified portfolio offering the opportunity for capital growth
while also providing current income. The fund is not intended to
be a complete investment program, and there is no assurance it
will achieve its objectives.
HOW THE FUND PURSUES ITS OBJECTIVES
Basic investment strategy
The fund invests primarily in common stocks that offer potential
for capital growth, current income, or both. The fund may also
purchase corporate bonds, notes and debentures, preferred stocks,
convertible securities (both debt securities and preferred
stocks) or U.S. government securities, if Putnam Investment
Management, Inc., the fund's investment manager ("Putnam
Management"), determines that their purchase would help further
the fund's investment objectives. The types of securities held
by the fund may vary from time to time in light of the fund's
investment objectives, changes in interest rates, and economic
and other factors. The fund may also hold a portion of its
assets in cash or money market instruments.
Alternative investment strategies
At times Putnam Management may judge that conditions in the
securities markets make pursuing the fund's basic investment
strategy inconsistent with the best interests of its
shareholders. At such times, Putnam Management may temporarily
use alternative strategies that are primarily designed to
reduce fluctuations in the value of fund assets.
In implementing these defensive strategies, the fund may invest
without limit in debt securities or preferred stocks, or any
other securities Putnam Management considers consistent with such
defensive strategies.
It is impossible to predict when, or for how long, these
alternative strategies will be used.
Foreign investments
The fund may invest in securities of foreign issuers that are
not actively traded in U.S. markets. These foreign investments
involve certain special risks described below.
Foreign securities are normally denominated and traded in
foreign currencies . As a result, the value of the fund's
foreign investments and the value of its shares may be
affected favorably or unfavorably by changes in currency
exchange rates relative to the U.S. dollar. The
fund may engage in a variety of foreign currency exchange
transactions in connection with its foreign investments,
including transactions involving futures contracts, forward
contracts and options.
Investments in foreign securities may subject the fund to
other risks as well. For example, there may be less information
publicly available about a foreign issuer than about a U.S.
issuer, and foreign issuers are not generally subject to
accounting, auditing and financial reporting standards and
practices comparable to those in the United States. The
securities of some foreign issuers are less liquid and at times
more volatile than securities of comparable U.S. issuers.
Foreign brokerage commissions and other fees are also generally
higher than in the United States. Foreign settlement procedures
and trade regulations may involve certain risks (such as delay in
payment or delivery of securities or in the recovery of the
fund's assets held abroad) and expenses not present in the
settlement of investments in U.S. markets.
In addition, the fund's investments in foreign securities may
be subject to the risk of nationalization or expropriation of
assets, imposition of currency exchange controls or restrictions
on the repatriation of foreign currency, confiscatory taxation,
political or financial instability and diplomatic developments
which could affect the value of the fund's investments in certain
foreign countries. Dividends or interest on, or proceeds from
the sale of, foreign securities may be subject to foreign
withholding taxes, and special U.S. tax considerations may apply.
Legal remedies available to investors in certain foreign
countries may be more limited than those available with respect
to investments in the United States or in other foreign
countries. The laws of some foreign countries may limit the
fund's ability to invest in securities of certain issuers
organized under the laws of those foreign countries.
The risks described above are typically increased in connection
with investments in less developed and developing nations, which
are sometimes referred to as "emerging markets." For example,
political and economic structures in these countries may be in
their infancy and developing rapidly, causing instability. High
rates of inflation or currency devaluations may adversely affect
the economies and securities markets of such countries.
Investments in emerging markets may be considered speculative.
The fund expects that its investments in foreign securities
generally will not exceed 20% of its total assets, although the
fund's investments in foreign securities may exceed this amount
from time to time. Certain of the foregoing risks may also apply
to some extent to securities of U.S. issuers that are denominated
in foreign currencies or that are traded in foreign markets, or
securities of U.S. issuers having significant foreign operations.
<PAGE>
For more information about foreign securities and the risks
associated with investment in such securities, see the SAI.
Portfolio turnover
The length of time the fund has held a particular security is not
generally a consideration in investment decisions. A change in
the securities held by the fund is known as "portfolio turnover."
As a result of the fund's investment policies, under certain
market conditions its portfolio turnover rate may be higher than
that of other mutual funds.
Portfolio turnover generally involves some expense, including
brokerage commissions or dealer markups and other transaction
costs in connection with the sale of securities and
reinvestment in other securities. These transactions may result
in realization of taxable capital gains. Portfolio turnover
rates are shown in the section "Financial highlights."
Risk factors
Investments in fixed-income securities. The fund may invest in
both higher-rated and lower-rated fixed-income securities, and is
not subject to investment limitations based on credit ratings.
Like those of other fixed-income securities, the values of lower-
rated fixed-income securities fluctuate in response to changes in
interest rates. A decrease in interest rates will generally
result in an increase in the value of fund assets. Conversely,
during periods of rising interest rates, the value of fund assets
will generally decline. The values of lower-rated securities
generally fluctuate more than those of higher-rated securities.
Securities in the lower rating categories may, depending on the
rating, have large uncertainties or major risk exposure to
adverse conditions. The rating services' descriptions of
securities in the various rating categories, including the
speculative characteristics of securities in the lower rating
categories, are set forth in the SAI.
The securities in the lower rating categories are subject to
greater risk that adverse changes in the financial condition of
their issuers, or in general economic conditions, or both, or an
unanticipated rise in interest rates, may impair the ability of
their issuers to make payments of interest and principal. In
addition, under such circumstances the values of such securities
may be more volatile, and the markets for such securities may be
less liquid, than those for higher-rated securities, and the fund
may as a result find it more difficult to determine the fair
value of such securities. When the fund invests in securities in
the lower rating categories, the achievement of the fund's goals
is more dependent on Putnam Management's ability than would be
the case if the fund were investing in securities in the higher
rating categories.
The fund at times may invest in so-called "zero-coupon" bonds and
"payment-in-kind" bonds. Zero-coupon bonds are issued at a
significant discount from their principal amount and pay interest
only at maturity rather than at intervals during the life of the
security. Payment-in-kind bonds allow the issuer, at its option,
to make current interest payments on the bonds either in cash or
in additional bonds. Both zero-coupon bonds and payment-in-kind
bonds allow an issuer to avoid the need to generate cash to meet
current interest payments. Accordingly, such bonds may involve
greater credit risks than bonds paying interest in cash
currently. The values of zero-coupon bonds and payment-in-kind
bonds are also subject to greater fluctuation in response to
changes in market interest rates than bonds that pay interest in
cash currently.
Even though such bonds do not pay current interest in cash, the
fund nonetheless is required to accrue interest income on these
investments and to distribute the interest income on a current
basis. Thus, the fund could be required at times to liquidate
other investments in order to satisfy its distribution
requirements.
Certain investment grade securities in which the fund may invest
share some of the risk factors discussed above with respect to
lower-rated securities.
For additional information regarding the risks associated with
investing in securities in the lower rating categories, see the
SAI.
Futures and options
The fund may buy and sell stock index futures contracts. An
"index future" is a contract to buy or sell units of a particular
stock index at an agreed price on a specified future date.
Depending on the change in value of the index between the time
the fund enters into and terminates an index futures transaction,
the fund realizes a gain or loss. In addition to or as an
alternative to purchasing or selling index futures, the fund may
buy and sell call and put options on index futures or stock
indexes. The fund may engage in index futures and options
transactions for hedging purposes and for nonhedging purposes,
such as to adjust its exposure to relevant markets or as a
substitute for direct investment.
The use of index futures and related options involves certain
special risks. Futures and options transactions involve costs
and may result in losses.
Certain risks arise from the possibility of imperfect
correlations among movements in the prices of financial futures
and options purchased or sold by the fund, of the underlying
stock index and, in the case of hedging transactions, of the
securities that are the subject of the hedge. The successful use<PAGE>
of the
strategies described above further depends on Putnam Management's
ability
to forecast market movements correctly.
Other risks arise from the potential inability to close out
index futures or options positions. There can be no assurance
that a liquid secondary market will exist for any index future or
option at any particular time. The fund's ability to terminate
option positions established in the over-the-counter market may
be more limited than for exchange-traded options and may also
involve the risk that securities dealers participating in such
transactions would fail to meet their obligations to the fund.
Certain provisions of the Internal Revenue Code and certain
regulatory requirements may limit the use of index futures and
options transactions.
For a more detailed explanation of index futures and
options transactions, including the risks associated with them,
see the SAI.
Other investment practices
The fund may also engage in the following investment practices,
each of which involves certain special risks. The SAI contains
more detailed information about these practices, including
limitations designed to reduce these risks.
Options. The fund may seek to increase its current return by
writing covered call and put options on securities it owns or in
which it may invest. The fund receives a premium from writing a
call or put option, which increases the return if the option
expires unexercised or is closed out at a net profit.
When the fund writes a call option, it gives up the opportunity
to profit from any increase in the price of a security above the
exercise price of the option; when it writes a put option, it
takes the risk that it will be required to purchase a security
from the option holder at a price above the current market price
of the security. The fund may terminate an option that it has
written prior to its expiration by entering into a closing
purchase transaction in which it purchases an option having the
same terms as the option written.
The fund may also buy and sell put and call options, including
combinations of put and call options on the same underlying
security. The use of these strategies may be limited by
applicable law.
Securities loans, repurchase agreements and forward commitments.
The fund may lend portfolio securities amounting to not more than
25% of its assets to broker-dealers and may enter into repurchase
agreements on up to 25% of its assets. These transactions must
be fully collateralized at all times. The fund may also purchase
securities for future delivery, which may increase its overall
investment exposure and involves a risk of loss if the value of
the securities declines prior to the settlement date. These
transactions involve some risk if the other party should default
on its obligation and the fund is delayed or prevented from
recovering the collateral or completing the transaction.
Diversification
The fund is a "diversified" investment company under the
Investment Company Act of 1940. This means that with respect to
75% of its total assets, the fund may not invest more than 5% of
its total assets in the securities of any one issuer (except U.S.
government securities). The remaining 25% of its total assets is
not subject to this restriction. To the extent the fund invests
a significant portion of its assets in the securities of a
particular issuer, it will be subject to an increased risk of
loss if the market value of such issuer's securities declines.
Derivatives
Certain of the instruments in which the fund may invest, such as
futures contracts, options and forward contracts, are considered
to be "derivatives." Derivatives are financial instruments whose
value depends upon, or is derived from, the value of an
underlying asset, such as a security or an index. Further
information about these instruments and the risks involved in
their use is included elsewhere in this prospectus and in the
SAI.
Limiting investment risk
Specific investment restrictions help to limit investment risks
for the fund's shareholders. These restrictions prohibit the
fund , with respect to 75% of its total assets, from
acquiring more than 10% of the voting securities of any one
issuer.* They also prohibit the fund from investing more than:
(a) (with respect to 75% of its total assets) 5% of its total
assets in securities of any one issuer other than the U.S.
government;*
(b) 25% of its total assets in any one industry
( securities of the U.S. government, its agencies or
instrumentalities are not considered to represent any
industry); * or
(c) 15% of its net assets in any combination of securities that
are not readily marketable, securities restricted as to
resale (excluding securities determined by the Trustees (or the
person designated by the Trustees to make such determinations) to
be readily marketable), and repurchase agreements
maturing in more than seven days.
Restrictions marked with an asterisk (*) above are summaries of
fundamental investment policies. See the SAI for the full text
of these policies and other fundamental investment policies.
Except as otherwise noted, all percentage limitations described
in this prospectus and the SAI will apply at the time an
investment is made, and will not be considered violated unless an
excess or deficiency occurs or exists immediately after and as a
result of such investment. Except for investment policies
designated as fundamental in this prospectus or the SAI, the
investment policies described in this prospectus and in the SAI
are not fundamental policies. The Trustees may change any non-
fundamental investment policy without shareholder approval. As a
matter of policy, the Trustees would not materially change the
fund's investment objectives without shareholder approval.
HOW PERFORMANCE IS SHOWN
Fund advertisements may, from time to time, include performance
information. "Yield" for each class of shares is calculated by
dividing the annualized net investment income per share during a
recent 30-day period by the maximum public offering price per
share of the class on the last day of that period.
Yield is based on the price of the shares, including the maximum
initial sales charge in the case of class A and class M shares,
but does not reflect any contingent deferred sales charge in the
case of class B shares.
"Total return" for the one-, five- and ten-year periods (or for
the life of a class, if shorter) through the most recent calendar
quarter represents the average annual compounded rate of return
on an investment of $1,000 in the fund invested at the maximum
public offering price (in the case of class A and class M shares)
or reflecting the deduction of any applicable contingent deferred
sales charge (in the case of class B shares). Total return may
also be presented for other periods or based on investment at
reduced sales charge levels. Any quotation of investment
performance not reflecting the maximum initial sales charge or
contingent deferred sales charge would be reduced if the sales
charge were used.
All data are based on past investment results and do not predict
future performance. Investment performance, which will vary, is
based on many factors, including market conditions, portfolio
composition, fund operating expenses and the class of
shares the investor purchases. Investment performance also often
reflects the risks associated with the fund's investment
objectives and policies. These factors should be considered when
comparing the fund's investment results with those of other
mutual funds and other investment vehicles.
Quotations of investment performance for any period when an
expense limitation was in effect will be greater than if the
limitation had not been in effect. Fund performance may be
compared to that of various indexes. See the SAI.
HOW THE FUND IS MANAGED
The Trustees are responsible for generally overseeing the conduct
of fund business. Subject to such policies as the Trustees may
determine, Putnam Management furnishes a continuing investment
program for the fund and makes investment decisions on its
behalf. Subject to the control of the Trustees, Putnam
Management also manages the fund's other affairs and business.
The fund pays Putnam Management a quarterly fee for these
services based on average net assets. See "Expenses summary" and
the SAI.
The following officers of Putnam Management have had primary
responsibility for the day-to-day management of the fund's
portfolio since the years stated below:
Business experience
Year (at least 5 years)
------- -------------------------
Anthony I. Kreisel 1993 Employed as an investment
Managing Director professional by Putnam
Management since 1986.
David L. King 1993 Employed as an investment
Senior Vice President professional by Putnam
Management since 1983.
Hugh H. Mullin 1996 Employed as an investment
Senior Vice President professional by Putnam
Management since 1986.
Sheldon N. Simon 1997 Employed as an investment
Senior Vice President professional by Putnam
Management since 1984.
The fund pays all expenses not assumed by Putnam Management,
including Trustees' fees, auditing, legal, custodial, investor
servicing and shareholder reporting expenses, and payments under
its distribution plans (which are in turn allocated to the
relevant class of shares). The fund also reimburses Putnam
Management for the compensation and related expenses of certain
fund officers and their staff who provide administrative
services. The total reimbursement is determined annually by the
Trustees.
Putnam Management places all orders for purchases and sales of
fund securities. In selecting broker-dealers, Putnam Management
may consider research and brokerage services furnished to it and
its affiliates. Subject to seeking the most favorable price and
execution available, Putnam Management may consider sales of
fund shares (and, if permitted by law, shares of
the other Putnam funds) as a factor in the selection of broker-
dealers.
ORGANIZATION AND HISTORY
The Putnam Fund for Growth and Income is a Massachusetts business
trust organized on October 1, 1957. A copy of the Agreement and
Declaration of Trust, which is governed by Massachusetts law, is
on file with the Secretary of State of The Commonwealth of
Massachusetts.
The fund is an open-end, diversified management investment
company with an unlimited number of authorized shares of
beneficial interest which may be divided without shareholder
approval into two or more classes of shares having such
preferences and special or relative rights and privileges as the
Trustees determine. Only class A, B and M shares are offered by
this prospectus. The fund may also offer other classes of shares
with different sales charges and expenses. Because of these
different sales charges and expenses, the investment performance
of the classes will vary. For more information, including your
eligibility to purchase any other class of shares, contact your
investment dealer or Putnam Mutual Funds (at 1-800-225-1581).
Each share has one vote, with fractional shares voting
proportionally. Shares of all classes will vote together as a
single class except when otherwise required by law or as
determined by the Trustees. Shares are freely transferable, are
entitled to dividends as declared by the Trustees, and, if the
fund were liquidated, would receive the net assets of the fund.
The fund may suspend the sale of shares at any time and may
refuse any order to purchase shares. Although the fund is not
required to hold annual meetings of its shareholders,
shareholders holding at least 10% of the outstanding shares
entitled to vote have the right to call a meeting to elect or
remove Trustees, or to take other actions as provided in the
Agreement and Declaration of Trust.
The fund's Trustees: George Putnam,* Chairman. President of the
Putnam funds. Chairman and Director of Putnam Management and
Putnam Mutual Funds Corp. ("Putnam Mutual Funds"). Director,
Marsh & McLennan Companies, Inc.; William F. Pounds, Vice
Chairman. Professor of Management, Alfred P. Sloan School of
Management, Massachusetts Institute of Technology; Jameson Adkins
Baxter, President, Baxter Associates, Inc.; Hans H. Estin, Vice
Chairman, North American Management Corp.; John A. Hill, Chairman
and Managing Director, First Reserve Corporation; Ronald J.
Jackson, Former Chairman, President and Chief Executive Officer
of Fisher-Price, Inc. , Trustee of Salem Hospital and the
Peabody Essex Museum; Elizabeth T. Kennan, President Emeritus and
Professor, Mount Holyoke College; Lawrence J. Lasser,* Vice
President of the Putnam funds. President, Chief Executive
Officer and Director of Putnam Investments, Inc. and Putnam
Management. Director, Marsh & McLennan Companies, Inc.; Robert
E. Patterson, Executive Vice President and Director of
Acquisitions, Cabot Partners Limited Partnership; Donald S.
Perkins,* Director of various corporations, including Cummins
Engine Company, Lucent Technologies, Inc., Springs Industries,
Inc. and Time Warner Inc.; George Putnam, III,* President, New
Generation Research, Inc.; A.J.C. Smith,* Chairman and Chief
Executive Officer, Marsh & McLennan Companies, Inc. ; W. Thomas
Stephens, President and Chief Executive Officer of MacMillan
Bloedel Ltd. Director of Mail-Well Inc., Qwest Communications,
The Eagle Picher Trust and New Centuries Energies ; and W.
Nicholas Thorndike, Director of various corporations and
charitable organizations, including Data General Corporation,
Bradley Real Estate, Inc. and Providence Journal Co. Also,
Trustee of Massachusetts General Hospital and Eastern Utilities
Associates. The Trustees are also Trustees of the other Putnam
funds. Those marked with an asterisk (*) are or may be deemed to
be "interested persons" of the fund, Putnam Management or Putnam
Mutual Funds.
About Your Investment
ALTERNATIVE SALES ARRANGEMENTS
Class A shares. If you purchase class A shares you
will generally pay a sales charge at the time of
purchase and, as a result, will not have to
pay any charges when you redeem the shares. If you
purchase class A shares at net asset value , you may have
to pay a contingent deferred sales charge ("CDSC") when
you redeem the shares . Certain purchases of class A shares
qualify for reduced sales charges. Class A shares pay
lower 12b-1 fees than class B and class M shares. See
"How to buy shares -- Class A shares" and "Distribution plans."
Class B shares. If you purchase class B shares, you will not
pay an initial sales charge, but you may have to pay a
CDSC if you redeem the shares within six years . Class B
shares also pay a higher 12b-1 fee than class A and class
M shares. Class B shares automatically convert into class A
shares, based on relative net asset value, approximately eight
years after purchase. For more information about the conversion
of class B shares, including information about how shares
acquired through reinvestment of distributions are treated
and certain circumstances under which class B shares
may not convert into class A shares, see the SAI . Class B
shares provide an investor the benefit of putting all of the
investor's dollars to work from the time the investment is made.
Until conversion, class B shares will have a higher expense ratio
and pay lower dividends than class A and class M shares because
of the higher 12b-1 fee. See "How to buy shares -- Class B
shares" and "Distribution plans."
Class M shares. If you purchase class M shares , you
will generally pay a sales charge at the time of purchase
that is lower than the sales charge you would pay for
class A shares. Certain purchases of class M shares qualify for
reduced sales charges. Class M shares pay 12b-1
fees that are lower than class B shares but higher
than class A shares. You will not have to pay any charges
when you redeem class M shares, but class M shares will not
convert into any other class of shares. See "How to buy shares -
- - Class M shares" and "Distribution plans."
Which class is best for you? Which class of shares
provides the most suitable investment for you
depends on a number of factors, including the amount you
intend to invest and how long you intend to hold the shares. If
your intended purchase qualifies for reduced sales
charges , you might consider class A or class M shares.
If you prefer not to pay a sales charge at the
time of purchase, you might consider class B shares. Orders
for class B shares for $250,000 or more will be treated as orders
for class A shares or declined. For more information about these
sales arrangements, consult your investment dealer or Putnam
Investor Services. Shares may only be exchanged for shares of
the same class of another Putnam fund. See "How to exchange
shares."
HOW TO BUY SHARES
You can open a fund account with as little as $500 and make
additional investments at any time with as little as $50. You
can buy fund shares three ways - through most investment dealers,
through Putnam Mutual Funds (at 1-800-225-1581), or through a
systematic investment plan. If you do not have a dealer, Putnam
Mutual Funds can refer you to one.
Buying shares through Putnam Mutual Funds. Complete an order
form and write a check for the amount you wish to invest, payable
to the fund. Return the completed form and check to Putnam
Mutual Funds, which will act as your agent in purchasing shares
.
Buying shares through systematic investing. You can make regular
investments of $25 or more per month through automatic deductions
from your bank checking or savings account. Application forms
are available from your investment dealer or through Putnam
Investor Services.
Shares are sold at the public offering price based on the net
asset value next determined after Putnam Investor Services
receives your order. In most cases, in order to receive that
day's public offering price, Putnam Investor Services must
receive your order before the close of regular trading on the New
York Stock Exchange. If you buy shares through your investment
dealer, the dealer must receive your order before the close of
regular trading on the New York Stock Exchange to receive that
day's public offering price.
Class A shares
The public offering price of class A shares is the net asset
value plus a sales charge that varies depending on the size of
your purchase. The fund receives the net asset value. The sales
charge is allocated between your investment dealer and Putnam
Mutual Funds as shown in the following table, except when Putnam
Mutual Funds, in its discretion, allocates the entire amount to
your investment dealer.
<PAGE>
Sales charge Amount of
as a percentage of: sales charge
------------------- reallowed to
Net dealers as a
Amount of transaction amount Offering percentage of
at offering price ($) invested price offering price
- -----------------------------------------------------------------
Under 50,000 6.10% 5.75% 5.00%
50,000 but under 100,000 4.71 4.50 3.75
100,000 but under 250,000 3.63 3.50 2.75
250,000 but under 500,000 2.56 2.50 2.00
500,000 but under 1,000,000 2.04 2.00 1.75
--------------------------------------------------------------
- ---
No initial sales charge applies to purchases
of class A shares of $1 million or more or to purchases by
employer-sponsored retirement plans that have at
least 200 eligible employees. However, a CDSC of 1.00% or
0.50% is imposed on redemptions of these shares within the first
or second year, respectively, after purchase, unless the
dealer of record waived its commission with Putnam
Mutual Funds' approval, or unless the purchaser is a class A
qualified benefit plan (a retirement plan for which Putnam
Fiduciary Trust Company or its affiliates provide recordkeeping
or other services in connection with the purchase of class A
shares).
Class A qualified benefit plans may also purchase class A shares
with no initial sales charge. However, except as stated below, a
CDSC of 0.75% of the total amount redeemed (1.00% in the case of
plans for which Putnam Mutual Funds and its affiliates do
not act as trustee or recordkeeper) is imposed on redemptions of
these shares if, within two years of a plan's initial purchase of
class A shares, it redeems 90% or more of its cumulative
purchases. Thereafter, such a plan is no longer liable for any
CDSC. The two-year CDSC applicable to class A qualified benefit
plans for which Putnam Mutual Funds or its
affiliates serve as trustee or recordkeeper ("full service
plans") is 0.50% of the total amount redeemed for full service
plans that initially invest at least $5 million but less than
$10 million in Putnam funds and other investments
managed by Putnam Management or its affiliates ("Putnam
Assets"), and is 0.25% of the total amount redeemed for full
service plans that initially invest at least $10 million but less
than $20 million in Putnam Assets. Class A qualified benefit
plans that initially invest at least $20 million in Putnam
Assets, or whose dealer or record has, with Putnam Mutual Funds'
approval, waived its commission or agreed to refund its
commission to Putnam Mutual Funds in the event a CDSC
would otherwise be applicable, are not subject to any CDSC.
A class A qualified benefit plan participating in a
"multi-fund" program approved by Putnam Mutual Funds may include
amounts invested in other mutual funds participating in such
program for purposes of determining whether the plan may purchase
class A shares at net asset value. These investments will also
be included for purposes of the discount privileges and programs
described elsewhere in this prospectus and in the SAI.
As described in the SAI, Putnam Mutual Funds pays the dealer
of record a commission of up to 1% on sales to class A qualified
benefit plans. Putnam Mutual Funds pays dealers of record
commissions on sales of class A shares of $1 million or more and
sales of class A shares to employer-sponsored retirement plans
that have at least 200 eligible employees and that are not class
A qualified benefit plans based on an investor's cumulative
purchases during the one-year period beginning with the date of
the initial purchase at net asset value. Each subsequent one-
year measuring period for these purposes will begin with the
first net asset value purchase following the end of the prior
period. Such commissions are paid at the rate of 1.00% of the
first $3 million of shares purchased, 0.50% of the next $47
million and 0.25% thereafter.
Class B shares
Class B shares are sold without an initial sales charge, although
a CDSC will be imposed if you redeem shares within a specified
period after purchase, as shown in the table below.
Year 1 2 3 4 5 6 7+
- -------------------------------------------------------------
Charge 5% 4% 3% 3% 2% 1% 0%
Putnam Mutual Funds pays a sales commission equal to 4.00% of
the amount invested to dealers who sell class B shares. These
commissions are not paid on exchanges from other Putnam funds or
on sales to investors exempt from the CDSC.
Class M shares
The public offering price of class M shares is the net asset
value plus a sales charge that varies depending on the size of
your purchase. The fund receives the net asset value. The sales
charge is allocated between your investment dealer and Putnam
Mutual Funds as shown in the following table, except when Putnam
Mutual Funds, at its discretion, allocates the entire amount to
your investment dealer.<PAGE>
Sales charge Amount of
as a percentage of: sales charge
------------------- reallowed to
Net dealers as a
Amount of transaction amount Offering percentage of
at offering price ($) invested price offering price
- -----------------------------------------------------------------
Under 50,000 3.63% 3.50% 3.00%
50,000 but under 100,000 2.56 2.50 2.00
100,000 but under 250,000 1.52 1.50 1.00
250,000 but under 500,000 1.01 1.00 1.00
500,000 and above NONE NONE NONE
--------------------------------------------------------------
- -
- ---
Class M qualified benefit plans (retirement plans for which
Putnam Fiduciary Trust Company or its affiliates provide recordkeeping
or other services in connection with the purchase of class M
shares) and members of qualified groups may
purchase class M shares without a sales charge.
General
You may be eligible to buy fund shares at reduced sales charges
or to sell fund shares without a CDSC .
Consult your investment dealer or Putnam Mutual Funds for details
about Putnam's combined purchase privilege, cumulative quantity
discount, statement of intention, group sales plan, employer-
sponsored retirement plans and other plans. Descriptions are
also included in the order form and in the SAI.
The fund may sell class A, class B and class M shares at net
asset value without an initial sales charge or a CDSC to current and
retired Trustees (and their families), current and retired
employees (and their families) of Putnam Management and
affiliates, registered representatives and other employees (and
their families) of broker-dealers having sales agreements with
Putnam Mutual Funds, employees (and their families) of financial
institutions having sales agreements with Putnam Mutual Funds (or
otherwise having an arrangement with a broker-dealer or financial
institution with respect to sales of fund shares), financial
institution trust departments investing an aggregate of $1
million or more in Putnam funds, clients of certain administrators of
tax-qualified plans, tax-qualified plans when proceeds from
repayments of loans to participants are invested (or reinvested)
in Putnam funds, "wrap accounts" for the benefit of clients of
broker-dealers, financial institutions or financial planners
adhering to certain standards established by Putnam Mutual
Funds , and investors meeting certain requirements who sold
shares of certain Putnam closed-end funds pursuant to a tender
offer by the closed-end fund.
In addition, the fund may sell shares at net asset value without
an initial sales charge or a CDSC in connection with the
acquisition by the fund of assets of an investment company or
personal holding company. The CDSC will be waived on redemptions
of shares arising out of the death or post-purchase disability of
a shareholder or settlor of a living trust account, and on
redemptions in connection with certain withdrawals from IRA or
other retirement plans. Up to 12% of the value of shares subject
to a systematic withdrawal plan may also be redeemed each year
without a CDSC. The SAI contains additional information about
purchasing shares at reduced sales charges.
In determining whether a CDSC is payable on any redemption,
shares not subject to any charge will be redeemed first, followed
by shares held longest during the CDSC period. Any CDSC will be
based on the lower of the shares' cost and net asset value. For
this purpose, the amount of any increase in a share's value above
its initial purchase price is not regarded as a share exempt from
the CDSC. Thus, when you redeem a share that has appreciated in
value during the CDSC period, a CDSC is assessed on its initial
purchase price. Shares acquired by reinvestment of distributions
may be redeemed without a CDSC at any time. For information on
how sales charges are calculated if you exchange your shares, see
"How to exchange shares." Putnam Mutual Funds receives the
entire amount of any CDSC you pay. See the SAI for more information
about the CDSC.
Shareholders of other Putnam funds may be entitled to exchange
their shares for, or reinvest distributions from their funds in,
fund shares at net asset value.
If you are considering redeeming shares or transferring shares to
another person shortly after purchase, you should pay for those
shares with a certified check to avoid any delay in redemption or
transfer. Otherwise, payment may be delayed until the purchase
price of those shares has been collected or, if you redeem by
telephone, until 15 calendar days after the purchase date. To
eliminate the need for safekeeping, certificates will not be
issued for your shares unless you request them.
Putnam Mutual Funds will from time to time, at its expense,
provide additional promotional incentives or payments to dealers
that sell shares of the Putnam funds. These incentives or
payments may include payments for travel expenses, including
lodging, incurred in connection with trips taken by invited
registered representatives and their guests to locations within
and outside the United States for meetings or seminars of a
business nature. In some instances, these incentives or payments
may be offered only to certain dealers who have sold or may sell
significant amounts of shares. Certain dealers may not sell all
classes of shares.
<PAGE>
DISTRIBUTION PLANS
The fund has adopted distribution plans to compensate Putnam
Mutual Funds for services provided and expenses incurred by it as
principal underwriter of fund shares, including the payments to
dealers mentioned below. The plans provide for payments by
the fund to Putnam Mutual Funds at the annual rates (expressed
as a percentage of average net assets) of up to 0.35% on class A
shares and 1.00% on class B and class M shares. The Trustees
currently limit payments on class A and class M shares to
0.25% and 0.75% of average net assets, respectively .
Putnam Mutual Funds compensates qualifying dealers
(including, for this purpose, certain financial institutions)
for sales of shares and the maintenance of shareholder
accounts.
Putnam Mutual Funds makes quarterly payments to dealers at the
annual rate of 0.20% of the average net asset value of class
A shares for shares outstanding as of December 31, 1989 and
0.25% of the average net asset value for class A shares acquired after
that date (including shares acquired through reinvestment of
distributions) for which such dealers are designated as the
dealer of record , except that payments to dealers for shares
held by class A qualified benefit plans are made at reduced
rates, as described in the SAI. No payments are made during the
first year after purchase on shares purchased
at net asset value by shareholders investing $1 million or more or
by employer-sponsored retirement plans that have at least 200
eligible employees or that are class A qualified benefit plans,
unless the shareholder has made arrangements with Putnam
Mutual Funds and the dealer of record has waived the sales
commission.
Putnam Mutual Funds makes quarterly payments to
dealers at the annual rates of 0.25% and 0.65% of
the average net asset value of class B and class M shares,
respectively, for which such dealers are designated
as the dealer of record.
Putnam Mutual Funds may suspend or modify its
payments to dealers. The payments are also subject to
the continuation of the relevant distribution plan, the terms of
service agreements between dealers and Putnam Mutual Funds, and
any applicable limits imposed by the National Association of
Securities Dealers, Inc.
HOW TO SELL SHARES
You can sell your shares to the fund any day the New York Stock
Exchange is open, either directly to the fund or through your
investment dealer. The fund will only redeem shares for which it
has received payment.
Selling shares directly to your fund. Send a signed letter of
instruction or stock power form to Putnam Investor Services,
along with any certificates that represent shares you want to sell.
The price you will receive is the next net asset value calculated
after the fund receives your request in proper form less any
applicable CDSC. In order to receive that day's net asset value,
Putnam Investor Services must receive your request before the
close of regular trading on the New York Stock Exchange.
If you sell shares having a net asset value of $100,000 or more,
the signatures of registered owners or their legal
representatives must be guaranteed by a bank, broker-dealer or certain other
financial institutions. See the SAI for more information about
where to obtain a signature guarantee. Stock power forms are
available from your investment dealer, Putnam Investor Services
and many commercial banks.
If you want your redemption proceeds sent to an address other
than your address as it appears on Putnam's records, a signature
guarantee is required. Putnam Investor Services usually requires
additional documentation for the sale of shares by a corporation,
partnership, agent or fiduciary, or a surviving joint owner.
Contact Putnam Investor Services for details.
Your fund generally sends you payment for your shares the
business day after your request is received. Under unusual circumstances,
the fund may suspend redemptions, or postpone payment for more
than seven days, as permitted by federal securities law.
You may use Putnam's Telephone Redemption Privilege to redeem
shares valued up to $100,000 unless you have notified Putnam
Investor Services of an address change within the preceding 15
days. Unless you indicate otherwise on the account
application, Putnam Investor Services will be authorized to act
upon redemption and transfer instructions received by telephone
from you , or any person claiming to act as your
representative, who can provide Putnam Investor Services with
your account registration and address as it appears on
Putnam Investor Services' records.
Putnam Investor Services will employ these and other reasonable
procedures to confirm that instructions communicated by telephone
are genuine; if it fails to employ reasonable procedures, Putnam
Investor Services may be liable for any losses due to
unauthorized or fraudulent instructions. For information, consult Putnam
Investor Services.
During periods of unusual market changes and shareholder
activity, you may experience delays in contacting Putnam Investor Services
by telephone. In this event, you may wish to submit a written
redemption request, as described above, or contact your
investment dealer, as described below. The Telephone Redemption Privilege
is not available if you were issued certificates for shares that
remain outstanding. The Telephone Redemption Privilege may be
modified or terminated without notice.
Selling shares through your investment dealer. Your dealer must
receive your request before the close of regular trading on the
New York Stock Exchange to receive that day's net asset value.
Your dealer will be responsible for furnishing all necessary
documentation to Putnam Investor Services, and may charge you for
its services.
HOW TO EXCHANGE SHARES
You can exchange your shares for shares of the same class of
certain other Putnam funds at net asset value. Not all Putnam
funds offer all classes of shares. If you exchange shares
subject to a CDSC, the transaction will not be subject to the CDSC.
However, when you redeem the shares acquired through the
exchange, the redemption may be subject to the CDSC, depending upon when
you originally purchased the shares. The CDSC will be
computed using the schedule of any fund into or from which you
have exchanged your shares that would result in your paying the
highest CDSC applicable to your class of shares. For purposes of
computing the CDSC, the length of time you have owned your shares
will be measured from the date of original purchase and will not
be affected by any exchange.
To exchange your shares, simply complete an Exchange
Authorization Form and send it to Putnam Investor Services. The form is
available from Putnam Investor Services. For federal income tax
purposes, an exchange is treated as a sale of shares and
generally results in a capital gain or loss. A Telephone Exchange
Privilege is currently available for amounts up to $500,000. Putnam
Investor Services' procedures for telephonic transactions are
described above under "How to sell shares." The Telephone
Exchange Privilege is not available if you were issued
certificates for shares that remain outstanding. Ask your
investment dealer or Putnam Investor Services for prospectuses of
other Putnam funds. Shares of certain Putnam funds are not
available to residents of all states.
The exchange privilege is not intended as a vehicle for
short-term trading. Excessive exchange activity may interfere with
portfolio management and have an adverse effect on all shareholders. In
order to limit excessive exchange activity and in other circumstances where
Putnam Management or the Trustees believe doing so would be in the best
interests of your fund, the fund reserves the right to revise or terminate
the exchange privilege, limit the amount or number of exchanges or reject any
exchange. Consult Putnam Investor Services before requesting an exchange.
See the SAI to find out more about the exchange privilege.
HOW THE FUND VALUES ITS SHARES
The fund calculates the net asset value of a share of each class
by dividing the total value of its assets, less liabilities, by
the number of its shares outstanding. Shares are valued as of
the close of regular trading on the New York Stock Exchange each day
the Exchange is open.
Portfolio securities for which market quotations are readily
available are valued at market value. Short-term investments
that will mature in 60 days or less are valued at amortized cost,
which approximates market value. All other securities and assets are
valued at their fair value following procedures approved by the
Trustees.
HOW THE FUND MAKES DISTRIBUTIONS TO SHAREHOLDERS; TAX INFORMATION
The fund distributes any net investment income at least quarterly
and any net capital gains at least annually.
Distributions from net capital gains are made after
applying any available capital loss carryovers. Distributions
paid on class A shares will generally be greater than those paid
on class B and class M shares because expenses attributable to
class B and class M shares will generally be higher.
You can choose from three distribution options:
- - Reinvest all distributions in additional shares without a
sales charge;
- - Receive distributions from net investment income in cash
while reinvesting capital gains distributions in
additional
shares without a sales charge; or
- - Receive all distributions in cash.
You can change your distribution option by notifying Putnam
Investor Services in writing. If you do not select an option
when you open your account, all distributions will be reinvested. All
distributions not paid in cash will be reinvested in shares of
the class on which the distributions are paid. You will receive a
statement confirming reinvestment of distributions in additional
fund shares (or in shares of other Putnam funds for
Dividends Plus accounts) promptly following the quarter in which
the reinvestment occurs.
If a check representing a fund distribution is not cashed within
a specified period, Putnam Investor Services will notify you that
you have the option of requesting another check or reinvesting
the distribution . If Putnam Investor Services does not
receive your election, the distribution will be reinvested in the
fund. Similarly, if correspondence sent by the fund or Putnam
Investor Services is returned as "undeliverable," fund
distributions will automatically be reinvested in the fund or in
another Putnam fund.
The fund intends to qualify as a "regulated investment company"
for federal income tax purposes and to meet all other
requirements necessary for it to be relieved of federal taxes on income and
gains it distributes to shareholders. The fund will distribute
substantially all of its ordinary income and capital gain net
income on a current basis.
Fund distributions will be taxable to you as ordinary income to
the extent derived from the fund's investment income and net
short-term gains (that is, net gains from securities held for not
more than a year). Distributions designated by the fund as
deriving from net gains on securities held for more than one year
but not more than 18 months and from net gains on securities held
for more than 18 months will be taxable to you as such,
regardless of how long you have held the shares. Distributions
will be taxable as described above whether received in cash or in
shares through the reinvestment of distributions.
Early in each calendar year Putnam Investor Services will
notify you of the amount and tax status of distributions paid to
you for the preceding year.
The foregoing is a summary of certain federal income tax
consequences of investing in the fund. You should consult your
tax adviser to determine the precise effect of an investment in
the fund on your particular tax situation (including possible
liability for state and local taxes).
About Putnam Investments, Inc.
Putnam Management has been managing mutual funds since 1937.
Putnam Mutual Funds is the principal underwriter of the fund and
of other Putnam funds. Putnam Fiduciary Trust Company is the
custodian of the fund. Putnam Investor Services, a division of
Putnam Fiduciary Trust Company, is the investor servicing and
transfer agent for the fund.
Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust
Company are subsidiaries of Putnam Investments, Inc., which is
wholly owned by Marsh & McLennan Companies, Inc., a
publicly-owned holding company whose principal businesses are
international insurance and reinsurance brokerage, employee
benefit consulting and investment management.
<PAGE>
Make the most of your Putnam privileges
The following services are available to you as a Putnam mutual
fund shareholder.
SYSTEMATIC INVESTMENT PLAN Invest as much as you wish ($25 or
more) on any business day of the month except for the 29th, 30th,
or 31st. The amount you choose will be automatically
transferred each month from your checking or savings
account.
SYSTEMATIC WITHDRAWAL Make regular withdrawals of $50 or more
monthly, quarterly, or semiannually from your Putnam mutual
fund account valued at $10,000 or more. Your automatic
withdrawal may be made on any business day of the month except
for the 29th, 30th, or 31st.
SYSTEMATIC EXCHANGE Transfer assets automatically from one
Putnam account to another on a regular, prearranged basis. There is no
additional charge for this service.
FREE EXCHANGE PRIVILEGE Exchange money between Putnam funds in
the same class of shares without charge. The exchange privilege
allows you to adjust your investments as your objectives change.
A signature guarantee is required for exchanges of more than
$500,000 and shares of all Putnam funds may not be available to
all investors.
Investors may not maintain, within the same fund, simultaneous
plans for systematic investment or exchange (into the fund) and
systematic withdrawal or exchange (out of the fund). These
privileges are subject to change or termination.
For more information about any of these services and privileges,
call your investment advisor or a Putnam customer service
representative toll free at 1-800-225-1581.
<PAGE>
Putnam Family of Funds*
PUTNAM GROWTH FUNDS
Putnam Asia Pacific Growth Fund
Putnam Capital Appreciation Fund
Putnam Diversified Equity Trust
Putnam Emerging Markets Fund
Putnam Europe Growth Fund
Putnam Global Growth Fund
Putnam Global Natural Resources Fund
Putnam Growth Opportunities Fund
Putnam Health Sciences Trust
Putnam International Growth Fund
Putnam International New Opportunities Fund
Putnam International Voyager Fund
Putnam Investors Fund
Putnam New Opportunities Fund++
Putnam OTC & Emerging Growth Fund+
Putnam Vista Fund
Putnam Voyager Fund
Putnam Voyager Fund II
PUTNAM GROWTH AND INCOME FUNDS
Putnam Balanced Retirement Fund
Putnam Convertible Income-Growth Trust
Putnam Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Putnam Growth and Income Fund II
Putnam International Growth and Income Fund
Putnam New Value Fund
Putnam Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
Putnam American Government Income Fund
Putnam Diversified Income Trust
Putnam Diversified Income Trust II
Putnam Federal Income Trust
Putnam Global Governmental Income Trust
Putnam High Yield Advantage Fund
Putnam High Yield Total Return Fund
Putnam High Yield Trust++
Putnam Income Fund
Putnam Intermediate U.S. Government Income Fund
Putnam Preferred Income Fund
Putnam U.S. Government Income Trust
PUTNAM TAX-FREE INCOME FUNDS
Putnam Municipal Income Fund
Putnam Tax Exempt Income Fund
Putnam Tax-Free High Yield Fund
Putnam Tax-Free Insured Fund
Putnam State tax-free income funds+++
Arizona, California, Florida, Massachusetts, Michigan,
Minnesota, New Jersey, New York, Ohio, and Pennsylvania
LIFESTAGE(SM) FUNDS
Putnam Asset Allocation Funds -- three investment portfolios that
spread your money across a variety of stocks, bonds, and money
market investments seeking to help maximize your return and
reduce your risk.
The three portfolios:
Balanced Portfolio
Conservative Portfolio
Growth Portfolio
PUTNAM MONEY MARKET FUNDS **
Putnam Money Market Fund
Putnam California Tax Exempt Money Market Fund
Putnam New York Tax Exempt Money Market Fund
Putnam Tax Exempt Money Market Fund
*As of 9/30/97 .
+Formerly Putnam OTC Emerging Growth Fund .
++New investments restricted; se your financial advisor for
details.
+++Not available in all states.
**Investments in money market funds are neither insured nor
guaranteed by the U.S. government. These funds are managed to
maintain a steady net asset value of $1.00 per share, although
there is no assurance this net asset value will be maintained in
the future.
Please call your financial advisor or Putnam Mutual Funds
to obtain a prospectus for any Putnam fund. It contains more
complete information, including charges and expenses. Read it
carefully before you invest or send money.
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THE PUTNAM FUND FOR GROWTH AND INCOME
One Post Office Square
Boston, MA 02109
FUND INFORMATION:
INVESTMENT MANAGER
Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
INVESTOR SERVICING AGENT
Putnam Investor Services
Mailing Address:
P.O. Box 41203
Providence, RI 02940-1203
CUSTODIAN
Putnam Fiduciary Trust Company
One Post Office Square
Boston, MA 02109
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110
PUTNAMINVESTMENTS
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581
