[Translation]
SECURITIES REGISTRATION STATEMENT
(for NAV Sale)
SECURITIES REPORT
(the Fourth Term)
From: November 1, 1997
To: October 31, 1998
AMENDMENT TO SECURITIES REGISTRATION STATEMENT
(for NAV Sale)
PUTNAM INCOME FUND
SECURITIES REGISTRATION STATEMENT
PUTNAM INCOME FUND
SECURITIES REGISTRATION STATEMENT
To: Director of Kanto Local Finance Bureau
Filing Date: March 16, 1999
(As amended on March 26, 1999)
Name of the Registrant Fund: PUTNAM INCOME FUND
Name of Trustees: George Putnam
John A. Hill
William F. Pounds
Jameson A. Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin, III
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
Address of Principal Office: One Post Office Square
Boston, Massachusetts 02109
U. S. A.
Name and Title of Registration Agent: Harume Nakano
Attorney-at-Law
Signature [Harume Nakano]
(Seal)
Ken Miura
Attorney-at-Law
Signature [Ken Miura]
(Seal)
Address or Place of Business Kasumigaseki Building, 25th Floor
2-5, Kasumigaseki 3-chome
Chiyoda-ku, Tokyo
Name of Liaison Contact: Harume Nakano
Ken Miura
Attorneys-at-Law
Place of Liaison Contact: Hamada & Matsumoto
Kasumigaseki Building, 25th Floor
2-5, Kasumigaseki 3-chome
Chiyoda-ku, Tokyo
Phone Number: 03-3580-3377
- ii -
Public Offering or Sale for Registration
Name of the Fund Making Public PUTNAM INCOME FUND
Offering or Sale of Foreign
Investment Fund Securities:
Type and Aggregate Amount of Up to 276.4 million Class M Shares
Foreign Investment Fund Securities Up to the total amount obtained by
to be Publicly Offered or Sold: aggregating the respective net asset value
per Class M Share in respect of 276.4
million Class M Shares
(The maximum amount expected to be sold
is 1,909.92 million U.S. dollars
(yen 222.22 billion).
Note 1: U.S.$ amount is translated into Japanese Yen at the rate
of U.S.$l.00=yen116.35 the mean of the exchange rate quotations by
The Bank of Tokyo-Mitsubishi, Ltd. for buying and selling spot
dollars by telegraphic transfer against yen on January 29, 1999.
Note 2: The maximum amount expected to be sold is an amount
calculated by multiplying the net asset value per Class M Share as
of January 29, 1999 (U.S.$6.91) by 276.4 million Class M Shares
for convenience.
Places where a copy of this Securities Registration
Statement is available for Public Inspection
Not applicable.
(Total number of pages of this Securities Registration Statement
in Japanese is 8 including front and back pages.)
C O N T E N T S
Japanese This
Original English
Translation
PART I. INFORMATION CONCERNING SECURITIES 1 1
PART II. INFORMATION CONCERNING ISSUER 4 7
I. DESCRIPTION OF THE FUND 4 7
II. OUTLINE OF THE FUND 4 7
III. OUTLINE OF THE OTHER RELATED COMPANIES 4 7
IV. FINANCIAL CONDITIONS OF THE FUND 4 7
V. SUMMARY OF INFORMATION CONCERNING
FOREIGN INVESTMENT FUND SECURITIES 4 7
VI. MISCELLANEOUS 4 7
PART III. SPECIAL INFORMATION 6 9
I. OUTLINE OF THE SYSTEM OF INVESTMENT
TRUSTS IN MASSACHUSETTS 6 9
II. FINANCIAL CONDITIONS OF THE INVESTMENT
MANAGEMENT COMPANY 12 17
III. FORM OF FOREIGN INVESTMENT
FUND SECURITIES 12 17
PART I. INFORMATION CONCERNING SECURITIES
1. NAME OF FUND: PUTNAM INCOME FUND
(hereinafter referred to as the "Fund")
2. NATURE OF FOREIGN Four classes of shares (Class A shares,
INVESTMENT FUND SECU- Class B shares, Class M shares and Class Y
RITIES CERTIFICATES: shares)
Registered shares without par value
In Japan, only Class M shares
(hereinafter referred to as the "Shares")
are publicly offered.
No rating has been acquired.
3. NUMBER OF SHARES TO Up to 276.4 million Shares
BE OFFERED FOR SALE
(IN JAPAN)
4. TOTAL AMOUNT OF Up to the total amount obtained by aggregating
OFFERING PRICE: the respective net asset value
per Share in respect of 276.4 million Shares
(The maximum amount expected to be
sold is 1,909.92 million U.S. dollars
(yen 222.22 billion)).
Note 1: The maximum amount expected to be sold is the amount
calculated, for convenience, by multiplying the net asset value
per Share as of January 29, 1999 ($6.91) by the number of Shares
to be offered (276.4 million).
Note 2: Dollar amount is translated for convenience at the rate
of $1.00=yen116.35 (the mean of the exchange rate quotations by The
Bank of Tokyo-Mitsubishi, Ltd. for buying and selling spot dollars
by telegraphic transfer against yen on January 29, 1999). The
same applies hereinafter.
Note 3: In this document, money amounts and percentages have
been rounded. Therefore, there are cases in which the amount of
the "total column" is not equal to the aggregate amount. Also,
translation into yen is made simply by multiplying the
corresponding amount by the conversion rate specified and rounded
up when necessary. As a result, in this document, there are cases
in which Japanese yen figures for the same information differ from
each other.
5. ISSUE PRICE: The Net Asset Value per Share next
calculated on a Fund Business Day after the application for
purchase is received by the Fund.
Note: A "Fund Business Day" means a day on which the New York
Stock Exchange is open for business.
6. SALES CHARGE: The sales charge in Japan shall be
3% of the amount obtained by deduction of the amount equivalent to
3% of the public offering price from such price (hereinafter
referred to as the "Sales Price"). Any amount, which is over the
net asset value, of the Sales Price shall be retained by Putnam
Mutual Funds Corp., principal underwriter of the Fund.
The public offering price means the
amount calculated by dividing the net asset value by (1- 0.0325),
and rounded to three decimal places.
7. MINIMUM AMOUNT OR The minimum amount for purchase of
NUMBER OF SHARES Shares is 200 shares and shares may be
FOR SUBSCRIPTION: purchased in integral multiples of 100 shares.
8. PERIOD OF SUBSCRIPTION: From: April 1, 1999 (Thursday)
To: September 30, 1999 (Thursday)
Provided that the subscription is
handled only on a Fund Business Day and a business day when
securities companies are open for business in Japan.
9. DEPOSIT FOR SUBSCRIPTION: None.
10. PLACE OF SUBSCRIPTION: Kankaku Securities Co., Ltd.
(hereinafter referred to as "Kankaku" or "Distributor")
Shibusawa City Place A., 13-16, Nihonbashi-Kayaba-cho 1-chome, Chuo-ku, Tokyo
Note: The subscription is handled at the head office and the
branch offices in Japan of the above-mentioned company.
11. DATE AND PLACE Investors shall pay the Issue Price and Sales
OF PAYMENT: Charge to Kankaku within 4 business
days in Japan from the day when Kankaku confirms the execution of
the order (the "Trade Day") (see page 18 of the Securities Report
mentioned below).
The total issue price for each
Application Day will be transferred by Kankaku to the account of
the Fund at Putnam Fiduciary Trust Company, the transfer agent,
within 3 Fund Business Days (hereinafter referred to as "Payment
Date") from (and including) the Application Day.
12. OUTLINE OF UNDERWRITING, ETC.:
(A) Kankaku undertakes to make a public offering of 276.4 million
Shares in accordance with an agreement dated 18th August, 1997
with Putnam Mutual Funds Corp. in connection with the sale of the
Shares in Japan.
(B) During the public offering period, Kankaku will execute or
forward purchase orders and repurchase requests for the Shares
received directly or indirectly through other Sales Handling
Companies (hereinafter referred to, together with Distributor, as
" Sales Handling Companies") to the Fund.
Note: Sales Handling Company means a securities agent company
and/or registration agent financial institution which shall
conclude the agreement with a distributor concerning agency
business of units of the Fund, acts as agent for a distributor for
subscription or redemption of shares from investors and
subscription money from investors or payment of redemption
proceeds to investors, etc.
(C) The Fund has appointed Kankaku as the Agent Company in Japan.
Note: "The Agent Company" shall mean company which, under a
contract made with a foreign issuer or a local underwriter of
investment securities, makes public the net asset value per Share
and submits or forwards the financial reports or other documents
to the Japan Securities Dealers Association ("JSDA") and Sales
Handling Companies rendering such other services.
13. MISCELLANEOUS:
(A) Method of Subscription:
Investors who subscribe to Shares shall enter into with
the Sales Handling Company an agreement concerning transactions of
foreign securities. the Sales Handling Company shall provide to
the investors a Contract Concerning a Foreign Securities
Transactions Account and other prescribed contracts (collectively
the "Account Contract") and the investors submit to the Handling
Securities Company an application for requesting the opening of a
transactions account under the Account Contract. The subscription
amount shall be paid in yen in principal and the yen exchange rate
shall be the exchange rate which shall be based on the foreign
exchange rate quoted in the Tokyo Foreign Exchange Market on the
Trade Day of each subscription and which shall be determined by
such Sales Handling Company.
The subscription amount shall be paid in dollars to the
account of the Fund with Putnam Fiduciary Trust Company as
custodian for the Fund by Kankaku on the Payment Date.
(B) PERFORMANCE INFORMATION
The following information provides some indication of
the fund's risks. The chart shows year-to-year changes in the
performance of the Fund's class M shares. The table following the
chart compares the Fund's performance to that of a broad measure
of market performance. Of course, the Fund's past performance is
not an indication of future performance.
Calendar year total returns for class M shares
1989 11.63%
1990 3.86%
1991 17.81%
1992 9.59%
1993 11.75%
1994 -3.57%
1995 19.185
1996 3.87%
1997 8.10%
1998 3.45%
Performance figures in the bar chart do not reflect the
impact of sales charges. If they did, performance would be less
than that shown. During the periods shown in the bar chart, the
highest return for a quarter was 6.32 % (quarter ending [6/30/95])
and the lowest return for a quarter was -2.74% (quarter ending
[3/31/94]).
Average Annual Total Returns (for periods ending 12/31/98)
Past 1 year Past 5 years Past 10 years
Class M 0.05% 5.26% 8.01%
Lehman Brothers
Aggregate Bond Index 8.69% 7.27% 9.26%
Unlike the bar chart, this performance information reflects
the impact of sales charges. Class M share performance reflects
the current maximum initial sales charges. For periods before the
inception of class M shares (12/14/94), performance information
shown for those classes is based on the performance of the fund's
class A shares (not offered in Japan), adjusted to reflect the
appropriate sales charge (in the table) and the higher 12b-1 fees
paid by class M shares. The Fund's performance is compared to the
Lehman Brothers Aggregate Bond Index, an unmanaged index of
investment-grade bonds.
(C) FEES AND EXPENSES
This table summarizes the fees and expenses investors
may pay if they invest in the fund. Expenses are based on the
fund's last fiscal year.
Shareholder Fees (fees paid directly from their investment)
Class M
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentageof the offering price) 3.25%
Maximum Deferred Sales Charge (Load) (as a
percentage of the original purchase price or
redemption proceeds, whichever is lower) NONE
Annual Fund Operating Expenses (expenses that are deducted
from fund assets)
Total annual fund
Management fees 12b-1 fees Other expenses operating expenses
Class M 0.50% 0.50% 0.27% 1.27%
(D) EXAMPLE
This example translates the "total annual fund operating
expenses" shown in the preceding table into dollar amounts. By
doing this, investors can more easily compare the cost of
investing in the Fund to the cost of investing in other mutual
funds. The example makes certain assumptions. It assumes that
investors invest $10,000 in the fund for the time periods shown
and then redeem all shares at the end of those periods. It also
assumes a 5% return on investor's investment each year and that
the Fund's operating expenses remain the same. The example is
hypothetical; actual costs and returns may be higher or lower.
1 year 3 years 5 years 10 years
Class M $450 $715 $999 $1,809
(E) Offerings other than in Japan:
Shares are simultaneously offered in the United States of America.
PART II. INFORMATION CONCERNING ISSUER
I. DESCRIPTION OF THE FUND
The description in this item is the same as the description
in I. DESCRIPTION OF THE FUND of the Securities Report set forth
below (the Securities Report mentioned below, from page 1 to page
29)
II. OUTLINE OF THE FUND
The description in this item is the same as the description
in II. OUTLINE OF THE FUND of the Securities Report set forth
below (Ditto, from page 30 to page 58)
III. OUTLINE OF THE OTHER RELATED COMPANIES
The description in this item is same as the description in
III. OUTLINE OF THE OTHER RELATED COMPANIES of the Securities
Report set forth below (Ditto, from page 59 to page 60)
IV. FINANCIAL CONDITIONS OF THE FUND
The description in this item is same as the description in
IV. FINANCIAL CONDITIONS OF THE FUND of the Securities Report set
forth below (Ditto, from page 61 to page 177)
V. SUMMARY OF INFORMATION CONCERNING FOREIGN INVESTMENT FUND
SECURITIES
The description in this item is same as the description in V.
SUMMARY OF INFORMATION CONCERNING FOREIGN INVESTMENT FUND
SECURITIES of the Securities Report set forth below (Ditto, page
199)
VI. MISCELLANEOUS
1. The following documents concerning the Fund have been filed
with Director of Kanto Local Finance Bureau of the Ministry of
Finance of Japan.
July 31, 1998: Semi-annual Report (during the Fourth term)
Amendment to Securities Registration Statement
September 14, 1998: Securities Registration Statement
September 25, 1998: Amendment to Securities Registration Statement
2. (1) The ornamental design is used in cover page of the
Japanese Prospectus.
(2) The following must be set forth in the Prospectus.
Outline of the Prospectus will be included at the beginning
of the Prospectus, summarizing the content of Part I., Information
on the securities, "I. Descriptions of the Fund", "III. Outline of
Other Related Companies" and "IV. Financial Condition of the Fund"
in Part II, Information on the Issuer, of the SRS.
(3) Summarized Preliminary Prospectus will be used.
Attached document (Summarized Preliminary Prospectus) will be
used pursuant to the below, as the document (Summarized
Preliminary Prospectus) as set forth at Item 1.(1)(b), of Article
12 of the Ordinance Concerning the Disclosure of the Content, etc.
of the Specified Securities.
For information of the achievement, the average of the annual
yield calculated in respect of immediately preceding seven days
and/or any one month may be added in percentage up to one decimal
places (rounding down to second decimal places).
PART III. SPECIAL INFORMATION
I. OUTLINE OF THE SYSTEM OF INVESTMENT TRUSTS IN MASSACHUSETTS
Below is an outline of certain general information about open-end
U.S. investment companies. This outline is not intended to
provide comprehensive information about such investment companies
or the various laws, rules or regulations applicable to them, but
provides only a brief summary of certain information which may be
of interest to investors. The discussion below is qualified in
its entity by the complete registration statement of the fund and
the full text of any referenced statutes and regulations.
I. Massachusetts Business Trusts
A. General Information
Many investment companies are organized as Massachusetts
business trusts. A Massachusetts business trust is organized
pursuant to a declaration of trust, setting out the general rights
and obligations of the shareholders, trustees, and other related
parties. Generally, the trustees of the trust oversee its
business, and its officers and agents manage its day-to-day
affairs.
Chapter 182 of the Massachusetts General Laws applies to
certain "voluntary associations", including many Massachusetts
business trusts. Chapter 182 provides for, among other things,
the filing of the declaration of trust with the Secretary of State
of the Commonwealth of Massachusetts and the filing by the trust
of an annual statement regarding, among other things, the number
of its shares outstanding and the names and addresses of its
trustees.
B. Shareholder Liability
Under Massachusetts law, shareholders could, under
certain circumstances, be held personally liable for the
obligations of a trust. Typically, a declaration of trust
disclaims shareholder liability for acts or obligations of the
trust and provides for indemnification out of trust property for
all loss and expense of any shareholder held personally liable for
the obligations of a trust. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which a particular trust would be
unable to meet its obligations.
II. United States Investment Company Laws and Enforcement
A. General
In the United States, pooled investment management
arrangements which offer shares to the public are governed by a
variety of federal statutes and regulations. Most mutual funds
are subject to these laws. Among the more significant of these
statutes are:
1. Investment Company Act of 1940
The Investment Company Act of 1940, as amended (the
"1940 Act"), in general, requires investment companies to register
as such with the U.S. Securities and Exchange Commission (the
"SEC"), and to comply with a number of substantive regulations of
their operations. The 1940 Act requires an investment company,
among other things, to provide periodic reports to its
shareholders.
2. Securities Act of 1933
The Securities Act of 1933, as amended (the "1933 Act"),
regulates many sales of securities. The Act, among other things,
imposes various registration requirements upon sellers of
securities and provides for various liabilities for failures to
comply with its provisions or in respect of other specified
matters.
3. Securities Exchange Act of 1934
The Securities Exchange Act of 1934, as amended (the
"1934 Act"), regulates a variety of matters involving, among other
things, the secondary trading of securities, periodic reporting by
the issuers of securities, and certain of the activities of
transfer agents and brokers and dealers.
4. The Internal Revenue Code
An investment company is an entity subject to federal
income taxation under the Internal Revenue Code. However, under
the Code, an investment company may be relieved of federal taxes
on income and gains it distributes to shareholders if it qualifies
as a "regulated investment company" under the Code for federal
income tax purposes and meets all other necessary requirements.
5. Other laws
The Fund is subject to the provisions of other laws,
rules, and regulations applicable to the Fund or its operations,
such as, for example, various state laws regarding the sale of the
Fund's shares.
B. Outline of the Supervisory Authorities
Among the regulatory authorities having jurisdiction
over the Fund or certain of its operations are the SEC and state
regulatory agencies or authorities.
1. The SEC has broad authority to oversee the application
and enforcement of the federal securities laws, including the 1940
Act, the 1933 Act, and the 1934 Act, among others, to the Fund.
The 1940 Act provides the SEC broad authority to inspect the
records of investment companies, to exempt investment companies or
certain practices from the provisions of the Act, and otherwise to
enforce the provisions of the Act.
2. State authorities typically have broad authority to
regulate the activities of brokers, dealers, or other persons
directly or indirectly engaged in activities related to the
offering and sale of securities to their residents or within their
jurisdictions.
C. Offering Shares to the Public
An investment company ("investment company" or fund)
offering its shares to the public must meet a number of
requirements, including, among other things, registration as an
investment company under the 1940 Act; registration of the sale of
its shares under the 1933 Act; registration of the fund, the sale
of its shares, or both, with state securities regulators; delivery
of a current prospectus to current or prospective investors; and
so forth. Many of these requirements must be met not only at the
time of the original offering of the fund's shares, but compliance
must be maintained or updated from time to time throughout the
life of the fund.
D. Ongoing Requirements
Under U.S. law, a fund that continuously offers its
shares is subject to numerous ongoing requirements, including, but
not limited to;
1. Updating its prospectus if it becomes materially
inaccurate or misleading;
2. Annual update of its registration statement;
3. Filing semi-annual and annual financial reports with the
SEC and distributing them to shareholders;
4. Annual trustee approval of investment advisory
arrangements, distribution plans, underwriting arrangements,
errors and omissions/director and officer liability insurance,
foreign custody arrangements, and auditors;
5. Maintenance of a code of ethics; and
6. Periodic board review of certain fund transactions,
dividend payments, and payments under a fund's distribution plan.
III. Management of a Fund
The board of directors or trustees of a fund are responsible
for generally overseeing the conduct of a fund's business. The
officers and agents of a fund are generally responsible for the
day-to-day operations of a fund. The trustees and officers of a
fund may or may not receive a fee for their services.
The investment adviser to a fund is typically responsible for
implementing the fund's investment program. The adviser typically
receives a fee for its services based on a percentage of the net
assets of a fund. Certain rules govern the activities of
investment advisers and the fees they may charge. In the United
States, investment advisers to investment companies must be
registered under the Investment Advisers Act of 1940, as amended.
IV. Share Information
A. Valuation
Shares of a fund are generally sold at the net asset
value next determined after an order is received by a fund, plus
any applicable sales charges. A fund normally calculates its net
asset value per share by dividing the total value of its assets,
less liabilities, by the number of its shares outstanding. Shares
are typically valued as of the close of regular trading on the New
York Stock Exchange (4:00 p.m., New York time) each day the
Exchange is open.
B. Redemption
Shareholders may generally sell shares of a fund to that
fund any day the fund is open for business at the net asset value
next computed after receipt of the shareholders' order. Under
unusual circumstances, a fund may suspend redemptions, or postpone
payment for more than seven says, if permitted by U.S. securities
laws. A fund may charge redemption fees as described in its
prospectus.
C. Transfer agency
The transfer agent for a fund typically processes the
transfer of shares, redemption of shares, and payment and/or
reinvestment of distributions.
V. Shareholder Information, Rights and Procedures for the
Exercise of Such Rights
A. Voting Rights
Voting rights vary from fund to fund. In the case of
many funds organized as Massachusetts business trusts,
shareholders are entitled to vote on the election of trustees,
approval of investment advisory agreements, underwriting
agreements, and distribution plans (or amendments thereto),
certain mergers or other business combinations, and certain
amendments to the declaration of trust. Shareholder approval is
also required to modify or eliminate a fundamental investment
policy.
B. Dividends
Shareholders are typically entitled to receive dividends
when and if declared by a fund's trustees. In declaring
dividends, the trustees will normally set a record date, and all
shareholders of record on that date will be entitled to receive
the dividend paid.
C. Dissolution
Shareholders would normally be entitled to receive the
net assets of a fund which were liquidated in accordance with the
proportion of the fund's outstanding shares he owns.
D. Transferability
Shares of a fund are typically transferable without
restriction.
E. Right to Inspection
Shareholders of a Massachusetts business trust have the
right to inspect the records of the trust as provided in the
declaration of trust or as otherwise provided by applicable law.
VI. U.S. Tax Matters
The Fund intends to qualify each year as a regulated
investment company under Subchapter M of the United States
Internal Revenue Code of 1986, as amended (the "Code").
As a regulated investment company qualifying to have its tax
liability determined under Subchapter M, the Fund will not be
subject to U.S. federal income tax on any of its net investment
income or net realized capital gains that are distributed to its
shareholders. In addition, as a Massachusetts business trust, the
Fund under present Massachusetts law is not subject to any excise
or income taxes in Massachusetts.
In order to qualify as a "regulated investment company" and
to receive the favorable tax treatment accorded regulated
investment companies and their shareholders, the Fund must, among
other things, (a) derive at least 90% of its gross income from
dividends, interest, payments with respect to certain securities
loans, and gains from the sale of stock, securities and foreign
currencies, or other income (including but not limited to gains
from options, futures, or forward contracts) derived with respect
to its business of investing in such stock, securities, or
currencies; (b) distribute with respect to each taxable year at
least 90% of the sum of its taxable net investment income, its net
tax-exempt income, and the excess, if any, of its net short-term
capital gains over net long-term capital losses for such year; (c)
diversify its holdings so that, at the close of each quarter of
its taxable year, (i) at least 50% of the value of its total
assets consists of cash, cash items, U.S. Government Securities,
securities of other regulated investment companies and other
securities limited generally with respect to any one issuer to not
more than 5% of the total assets of the Fund and not more than 10%
of the outstanding voting securities of such issuer, and (ii) not
more than 25 % of the value of its assets is invested in the
securities (other than those of the U.S. Government or other
regulated investment companies) of any one issuer or of two or
more issuers which the Fund controls and which are engaged in the
same, similar or related trades or businesses.
If the Fund qualifies as a regulated investment company that
is accorded special tax treatment, the Fund will not be subject to
federal income tax on income paid to its shareholders in the form
of dividends (including capital gain dividends).
If the Fund failed to qualify as a regulated investment
company accorded special tax treatment in any taxable year, the
Fund would be subject to tax on its taxable income at corporate
rates, and all distributions from earnings and profits, including
any distributions of net tax-exempt income and net long-term
capital gains, would be taxable to shareholders as ordinary
income. In addition, the Fund could be required to recognize
unrealized gains, pay substantial taxes and interest and make
substantial distributions before requalifying as a regulated
investment company that is accorded special tax treatment.
If the Fund fails to distribute in a calendar year
substantially all of its ordinary income for such year and
substantially all of its capital gain net income for the one-year
period ending October 31 (or later if the Fund is permitted so to
elect and so elects), plus any retained amount from the prior
year, the Fund will be subject to a 4% excise tax on the
undistributed amounts. A dividend paid to shareholders by the
Fund in January of a year generally is deemed to have been paid by
the Fund on December 31 of the preceding year, if the dividend was
declared and payable to shareholders of record on a date in
October, November or December of that preceding year. The Fund
intends generally to make distributions sufficient to avoid
imposition of the 4% excise tax.
Fund distributions will be taxable to shareholders as
ordinary income, except that any distributions designated by the
Fund as deriving from net gains on securities held for more than
one year will be taxable as such, regardless of how long a
shareholder has held shares in the Fund. Distributions will be
taxable as described above whether received in cash or in shares
through the reinvestment of distributions. Shareholders who are
not subject to U.S. federal income tax on their income generally
will not have to pay such tax on amounts distributed to them.
Distributions from capital gains are made after applying any
available capital loss carryovers.
The Fund's transactions in non-U.S. currencies, non-U.S.
currency-denominated debt securities and certain non-U.S. currency
options, futures contracts and forward contracts (and similar
instruments) may give rise to ordinary income or loss to the
extent such income or loss results from fluctuations in the value
of the non-U.S. currency concerned.
Investment by the Fund in "passive non-U.S. investment
companies" could subject the Fund to a U.S. federal income tax or
other charge on the proceeds from the sale of its investment in
such a company; however, this tax can be avoided by making an
election to mark such investments to market annually or to treat
the passive non-U.S. investment company as a "qualified electing
fund".
A "passive non-U.S. investment company" is any non-U.S.
corporation: (i) 75 percent or more of the income of which for the
taxable year is passive income, or (ii) the average percentage of
the assets of which (generally by value, but by adjusted tax basis
in certain cases) that produce or are held for the production of
passive income is at least 50 percent. Generally, passive income
for this purpose means dividends, interest (including income
equivalent to interest), royalties, rents, annuities, the excess
of gains over losses from certain property transactions and
commodities transactions, and non-U.S. currency gains. Passive
income for this purpose does not include rents and royalties
received by the non-U.S. corporation from active business and
certain income received from related persons.
The Fund's investment in securities issued at a discount and
certain other obligations will (and investments in securities
purchased at a discount may) require the Fund to accrue and
distribute income not yet received. In order to generate
sufficient cash to make the requisite distributions, the Fund may
be required to sell securities in its portfolio that it otherwise
would have continued to hold.
The sale, exchange or redemption of Fund shares may give rise
to a gain or loss. In general, any gain or loss realized upon a
taxable disposition of shares will be treated as long-term capital
gain or loss if the shares have been held for more than 12 months,
and otherwise as short-term capital gain or loss. However, any
loss realized upon a taxable disposition of shares held for six
months or less will be treated as long-term, rather than short-
term, to the extent of any long-term capital gain distributions
received by the shareholder with respect to the shares. All or a
portion of any loss realized upon a taxable disposition of Fund
shares will be disallowed if other shares of the Fund are
purchased within 30 days before or after the disposition. In such
a case, the basis of the newly purchased shares will be adjusted
to reflect the disallowed loss.
Special tax rules apply to investments through defined
contribution plans and other tax-qualified plans. Shareholders
should consult their tax adviser to determine the suitability of
shares of the Fund as an investment through such plans and the
precise effect of an investment on their particular tax situation.
The Fund generally is required to withhold and remit to the
U.S. Treasury 31% of the taxable dividends and other distributions
paid to any individual shareholder who fails to furnish the Fund
with a correct taxpayer identification number (TIN), who has under-
reported dividends or interest income, or who fails to certify to
the fund that he or she is not subject to such withholding.
Shareholders who fail to furnish their correct TIN are subject to
a penalty of $50 for each such failure unless the failure is due
to reasonable cause and not wilful neglect. An individual's
taxpayer identification number is his or her social security
number.
The Internal Revenue Service recently revised its regulations
affecting the application to foreign investors of the back-up
withholding and withholding tax rules described above. The new
regulations generally will be effective for payment made after
December 31, 1999 (although transition rules will apply). In some
circumstances, the new rules will increase the certification and
filing requirements imposed on foreign investors in order to
qualify for exemption from the 31% back-up withholding tax rates
under income tax treaties. Foreign investors in a fund should
consult their tax advisors with respect to the potential
application of these new regulations.
Non-U.S. investors should consult their tax advisers
concerning the tax consequences of ownership of shares of the
fund, including the possibility that distributions may be subject
to a 30% United States withholding tax (or a reduced rate of
withholding provided by treaty), the possibility that a non-U.S.
investor may be subject to U.S. tax on capital gain distributions
and gains realized upon the sale of fund shares if the investor is
present in the United States for more than 182 days during the
taxable year (and certain other conditions apply), or the
possibility that a non-U.S. investor may be subject to U.S. tax on
income from the fund that is "effectively connected" with a U.S.
trade or business carried on by such an investor. Shareholders
residing in Japan should consult "Tax Treatment of Shareholders in
Japan"on page 38 of the Annual Report.
The foregoing is a general and abbreviated summary of the
applicable provisions of the Code and related regulations
currently in effect. For the complete provisions, reference
should be made to the pertinent Code sections and regulations.
The Code and regulations are subject to change by legislative or
administrative actions. Dividends and distributions also may be
subject to foreign state or local taxes. Shareholders are urged
to consult their tax advisers regarding specific questions as to
U.S. federal, state or local taxes. The foregoing discussion
relates solely to U.S. federal income tax law.
VII. Important Participants in Offering of Mutual Fund Shares
A. Investment Company
Certain pooled investment vehicles qualify as investment
companies under the 1940 Act. There are open-end investment
companies (those which offer redeemable securities) and closed-end
investment companies (any others).
B. Investment Adviser/Administrator
The investment adviser is typically responsible for the
implementation of an investment company's investment program. It,
or another affiliated or unaffiliated entity, may also perform
certain record keeping and administrative functions.
C. Underwriter
An investment company may appoint one or more principal
underwriters for its shares. The activities of such a principal
underwriter are generally governed by a number of legal regimes,
including, for example, the 1940 Act, the 1933 Act, the 1934 Act,
and state laws.
D. Transfer Agent
A transfer agent performs certain bookkeeping, data
processing, and administrative services pertaining to the
maintenance of shareholder accounts. A transfer agent may also
handle the payment of any dividends declared by the trustees of a
fund.
E. Custodian
A custodian's responsibilities may include, among other
things, safeguarding and controlling a fund's cash and securities,
handling the receipt and delivery of securities, and collecting
interest and dividends on a fund's investments.
II. FINANCIAL CONDITION OF THE INVESTMENT MANAGEMENT COMPANY
The description in this item is same as the description in
II. FINANCIAL CONDITION OF THE INVESTMENT MANAGEMENT COMPANY of
the Securities Report set forth below (Ditto, from page 178 to
page 198)
III. FORM OF FOREIGN INVESTMENT FUND SECURITIES
Main items to be set forth on the share certificate of the
Fund (if issued) are as follows:-
(1) Front
a. Name of the Fund
b. Number of shares represented
c. Signatures of the Chairman and Transfer Agent
d. Description stating that the Declaration of Trust applies to
shareholders and assignees therefrom
(2) Back
a. Space for endorsement
b. Description concerning delegation of transfer agency
SECURITIES REPORT
(the Fourth Term)
From: November 1, 1997
To: October 31, 1998
PUTNAM INCOME FUND
SECURITIES REPORT
(the Fourth Term)
From: November 1, 1997
To: October 31, 1998
To: Director of Kanto Local Finance Bureau
Filing Date : March 16, 1999
(As amended on March 26, 1999)
Name of the Registrant Fund: PUTNAM INCOME FUND
Name of Trustees: George Putnam
John A. Hill
William F. Pounds
Jameson A. Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin, III
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
Address of Principal Office: One Post Office Square
Boston, Massachusetts 02109
U. S. A.
Name and Title of Registration Agent: Harume Nakano
Attorney-at-Law
Signature [Harume Nakano]
(Seal)
Ken Miura
Attorney-at-Law
Signature [Ken Miura]
(Seal)
Address or Place of Business Kasumigaseki Building, 25th Floor
2-5, Kasumigaseki 3-chome
Chiyoda-ku, Tokyo
Name of Liaison Contact: Harume Nakano
Ken Miura
Attorneys-at-Law
Place of Liaison Contact: Hamada & Matsumoto
Kasumigaseki Building, 25th Floor
2-5, Kasumigaseki 3-chome
Chiyoda-ku, Tokyo
Phone Number: 03-3580-3377
- ii -
Places where a copy of this Securities Report is available for
Public Inspection
Not applicable.
(Total number of pages of this Securities Report in Japanese is
102 including the front page)
C O N T E N T S
Japanese This
Original English
Translation
I. DESCRIPTION OF THE FUND 1 1
1. GENERAL INFORMATION 1 1
2. INVESTMENT POLICY 6 7
3. MANAGEMENT STRUCTURE 13 14
4. INFORMATION CONCERNING THE EXERCISE
OF RIGHTS BY SHAREHOLDERS, ETC. 23 28
5. STATUS OF INVESTMENT PORTFOLIO 26 32
II. OUTLINE OF THE FUND 30 35
III. OUTLINE OF THE OTHER RELATED COMPANIES 59 71
IV. FINANCIAL CONDITIONS OF THE FUND 61 73
V. FINANCIAL CONDITIONS OF THE INVESTMENT
MANAGEMENT COMPANY 178 79
(translated from the English source: omitted in English
Translation)
VI. SUMMARY OF INFORMATION CONCERNING
FOREIGN INVESTMENT FUND SECURITIES 199 79
VII. REFERENCE INFORMATION 200 79
Note 1: The exchange rate of U.S. Dollars ("dollar" or "$")
into Japanese Yen is yen116.35 for one U.S. Dollar, which is the
actual middle point between the selling and buying currency rate
by telegraphic transfer on the January 29, 1999 quoted by The Bank
of Tokyo-Mitsubishi, Ltd. The same applies hereinafter.
Note 2: In this report, money amounts and percentages have
been rounded. Therefore, there are cases in which the amount for
the "total" column is not equal to the aggregate amount. Also,
conversion into other currencies is done simply by multiplying the
corresponding amount by the conversion rate specified and rounded
up when necessary. As a result, in this report, there are cases
in which figures for the same information differ from each other.
Note 3: In this report, "fiscal year" refers to the year
from November 1 to October 31 of the following year. However, the
first fiscal year refers to a period from December 14, 1994
(Incorporation of the Fund) to October 31, 1995.
I. DESCRIPTION OF THE FUND
1. GENERAL INFORMATION
(A) Outline of Laws Regulating the Fund in the Jurisdiction Where
Established:
(1) Name of the Fund: Putnam Income Fund (the "Fund")
(2) Form of the Fund
Putnam Income Fund is a Massachusetts business trust
organized on August 13, 1982 as the successor to The Putnam Income
Fund, Inc., a Massachusetts corporation organized on October 13,
1954. A copy of the Agreement and Declaration of Trust, which is
governed by Massachusetts law, is on file with the Secretary of
State of The Commonwealth of Massachusetts.
The Fund is an open-end, diversified management
investment company with an unlimited number of authorized shares
of beneficial interest which may be divided without shareholder
approval into two or more classes of shares having such
preferences and special or relative rights and privileges as the
Trustees determine. The Fund's shares are not currently divided
into any series. Only the Fund's class M shares are currently
offered in Japan. The Fund also offers other classes of shares
with different sales charges and expenses in the United States of
America. Because of these different sales charges and expenses,
the investment performance of the classes will vary.
Each share has one vote, with fractional shares voting
proportionally. Shares of all classes will vote together as a
single class except when otherwise required by law or as
determined by the Trustees. Shares are freely transferable, are
entitled to dividends as declared by the Trustees, and, if the
Fund were liquidated, would receive the net assets of the Fund.
The Fund may suspend the sale of shares at any time and may refuse
any order to purchase shares. Although the Fund is not required
to hold annual meetings of its shareholders, shareholders holding
at least 10% of the outstanding shares entitled to vote have the
right to call a meeting to elect or remove Trustees, or to take
other actions as provided in the Agreement and Declaration of
Trust.
If a shareholder owns fewer shares than the minimum set
by the Trustees (presently 20 shares), the Fund may choose to
redeem the shareholders' shares. Shareholders will receive at
least 30 days' written notice before the Fund redeems
shareholders' shares, and shareholders may purchase additional
shares at any time to avoid a redemption. The Fund may also
redeem shares if shareholders own shares above a maximum amount
set by the Trustees. There is presently no maximum, but the
Trustees may, at any time, establish one which could apply to both
present and future shareholders.
YEAR 2000 ISSUES. The Fund could be adversely affected
if the computer systems used by Putnam Investment Management Inc.
(the "Investment Management Company) and the Fund's other service
providers do not properly process and calculate the date-related
information relating to the end of this century and the beginning
of the next. While year 2000-related computer problems could have
a negative effect on the Fund, both in its operations and in its
investments. Putnam Management is working to avoid such problems
and to obtain assurances from service providers that they are
taking similar steps. No assurances, though, can be provided that
the Fund will not be adversely impacted by these matters.
(3) Governing Laws
The Fund was created under, and is subject to, the laws
of the Commonwealth of Massachusetts. The sale of the Fund's
shares is subject to, among other things, the Securities Act of
1933, as amended, and certain state securities laws. The Fund
also attempts to qualify each year and elect to be taxed as a
regulated investment company under the U.S. Internal Revenue Code
of 1986, as amended.
The following is a broad outline of certain of the
principal statutes regulating the operations of the Fund in the
U.S.:
a. Massachusetts General Laws, Chapter 182 - Voluntary
Associations and Certain Trusts
Chapter 182 provides in part as follows:
A copy of the declaration of trust must be filed with
the Secretary of State of the Commonwealth of Massachusetts and
with the Clerk of the City of Boston. Any amendment of the
declaration of trust must be filed with the Secretary and the
Clerk within thirty days after the adoption of such amendment.
A trust must annually file with the Secretary of State
on or before June 1 a report providing the name of the trust, its
address, number of shares outstanding and the names and addresses
of its trustees.
Penalties may be assessed against the trust for failure
to comply with certain of the provisions of Chapter 182.
b. Investment Company Act of 1940
The Investment Company Act of 1940, as amended (the
"1940 Act"), in general, requires investment companies to register
as such with the U.S. Securities and Exchange Commission (the
"SEC"), and to comply with a number of substantive regulations of
their operations. The 1940 Act requires an investment company,
among other things, to provide periodic reports to its
shareholders.
c. Securities Act of 1933
The Securities Act of 1933, as amended (the "1933 Act"),
regulates many sales of securities. The Act, among other things,
imposes various registration requirements upon sellers of
securities and provides for various liabilities for failures to
comply with its provisions or in respect of other specified
matters.
d. Securities Exchange Act of 1934
The Securities Exchange Act of 1934, as amended (the
"1934 Act"), regulates a variety of matters involving, among other
things, the secondary trading of securities, periodic reporting by
the issuers of securities, and certain of the activities of
transfer agents and brokers and dealers.
e. The Internal Revenue Code of 1986
The Fund intends to qualify as a "regulated investment
company" for federal income tax purposes and to meet all other
requirements necessary for it to be relieved of federal taxes on
income and gains it distributes to shareholders.
f. Other laws
The Fund is subject to the provisions of other laws,
rules, and regulations applicable to the Fund or its operations,
such as, for example, various state laws regarding the sale of the
Fund's shares.
(B) Outline of the Supervisory Authorities
Among the regulatory authorities having jurisdiction
over the Fund or certain of its operations are the SEC and state
regulatory agencies or authorities.
a. The SEC has broad authority to oversee the
application and enforcement of the federal securities laws,
including the 1940 Act, the 1933 Act, and the 1934 Act, among
others, to the Fund. The 1940 Act provides the SEC broad
authority to inspect the records of investment companies, to
exempt investment companies or certain practices from the
provisions of the Act, and otherwise to enforce the provisions of
the Act.
b. State authorities typically have broad authority to
regulate the offering and sale of securities to their residents or
within their jurisdictions and the activities of brokers, dealers,
or other persons directly or indirectly engaged in related
activities.
(C) Objects and Basic Nature of the Fund:
GOAL
The Fund seeks high current income consistent with what
the Investment Management Company believes to be prudent risk.
MAIN INVESTMENT STRATEGIES-CORPORATE AND U.S. GOVERNMENT
FIXED-INCOME SECURITIES
The Fund will normally invest mostly in bonds and other
debt securities, and, to a lesser degree, in preferred stocks.
These investments are commonly known as fixed-income securities.
The Fund's investments are generally long- or intermediate-term
(with maturities of more than three years). The Fund's
investments in fixed-income securities generally include:
- - corporate bonds and notes, including both investment grade
and high-yielding, lower-rated, higher-risk securities ("junk
bonds"), issued mainly by U.S. companies, and
- - U.S. government securities, including debt obligations issued
by the U.S. government, its agencies and instrumentalities.
The Fund generally invests significantly in mortgage-
backed investments, which represent participations in, or are
secured by, mortgage loans. The Fund's mortgage-backed
investments may include collateralized mortgage obligations (CMOs)
and stripped mortgage-backed securities (strips). Some of these
investments will not be guaranteed as to principal and interest by
the U.S. government, its agencies or instrumentalities.
MAIN RISKS
The main risks that could adversely affect the value of
this Fund's shares and the total return on investors' investment
include
- - The risk that movements in the securities markets will reduce
the value of the Fund's investments.
- - The risk that rising interest rates will cause the value of
the Fund's debt investments to fall. Interest rate risk is
generally highest for investments with long maturities and the
Fund expects that its investments will normally be weighted
towards longer maturities.
- - The risk that the issuers of the Fund's investments or the
mortgagor's who are repaying the mortgages underlying the Fund's
investments, will fail to make timely payments of interest and
principal or will default. This credit risk is higher for
corporate debt than for U.S. government debt and is higher still
for debt of below investment-grade quality. BECAUSE THE FUND
INVESTS IN JUNK BONDS, THIS RISK IS HEIGHTENED FOR THE FUND.
INVESTORS SHOULD CAREFULLY CONSIDER THE RISKS ASSOCIATED WITH AN
INVESTMENT IN THE FUND.
- - The risk that mortgages underlying the Fund's investments may
be prepaid faster than expected during periods of falling interest
rates. This might force the Fund to reinvest the proceeds from
prepayments in investments offering a lower yield. With respect
to these investments, the Fund therefore might not benefit from
any increase in value as a result of declining interest rates.
Similarly, rising interest rates may reduce the rate of
prepayments. This would effectively extend the Fund's maturity
and increase its interest rate risk at times when that is least
desirable - during periods of rising interest rates.
The Investors can lose money by investing in the Fund.
The Fund may not achieve its goals, and is not intended as a
complete investment program. An investment in the Fund is NOT a
deposit of a bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
(D) History of the Fund:
October 13, 1954: Organization of the Fund as a
Massachusetts corporation.
August 13, 1982: Organization of the Fund as a
Massachusetts business trust.
Adoption of the Agreement and
Declaration of Trust.
April 7, 1989: Adoption of the Amended and
Restated Agreement and Declaration of Trust.
(E) Affiliated Companies of the Fund:
Names and related business of the affiliated companies
of the Fund are as follows:
(1) Putnam Investment Management, Inc. ("Investment
Management Company") renders investment management services to the
Fund.
(2) Putnam Fiduciary Trust Company (the "Custodian" and
"Investor Servicing Agent") acts as Custodian and Investor
Servicing Agent.
(3) Putnam Mutual Funds Corp. ("Principal Underwriter")
engages in providing marketing services to the Fund.
(4) Kankaku Securities Co., Ltd. ("Distributor in Japan" and
"Agent Company") engages in forwarding the purchase or repurchase
orders for the Shares in Japan and also acts as the agent company.
Related Companies of the Fund
Fund
Putnam Income Fund
Investor Servicing Agreement
Trustees
(Agreement and Declaration of Trust)
Distribution Agreement Custodian Agreement
Principal Underwriter Custodian Investor
Servicing Agent
Putnam Mutual Funds Corp. Putnam Fiduciary Trust Co.
(acts as distributor) (acts as custodian and
investor servicing agent of
the Fund)
Japan Dealer Sales Agreement
Agent Company Management Contract
Agreement
Distributor in Japan Investment Management Co.
Agent Company
Kanakaku Securities Co., Ltd. Putnam Investment Management, Inc.
(forwarding of sales in Japan and (acts as investment management of
rendering of service as agent company) the Fund and investment adviser
concerning the Fund's assets)
2. INVESTMENT POLICY
(A) Basic Policy for Investment and Objectives of Investment:
Any investment carries with it some level of risk that
generally reflects its potential for reward. The Fund pursues its
goal by investing mainly in fixed-income securities. The
Investment Management Company will consider, among other things,
credit, interest rate and prepayment risks as well as general
market conditions when deciding whether to buy or sell
investments. The Fund mainly invests in:
CORPORATE OBLIGATIONS. These investments include,
- - investment grade and high-yielding, lower-rated, higher-risk
fixed-income securities mainly issued by U.S. companies, and rated
at the time of purchase at least B (or its equivalent) by a U.S.
nationally recognized securities rating agency, or if unrated,
determined by the Investment Management Company of comparable
quality.
- - mortgage-backed investments (including CMOs and strips) of
private issuers.
U.S. GOVERNMENT AND AGENCY INVESTMENTS . These investments
include,
- - U.S. Treasury bills, notes and bonds.
- - Obligations backed by the U.S. Treasury. These include
obligations issued or guaranteed by certain agencies and
instrumentalities of the U.S. government that are backed by the
full faith and credit of the U.S. government, such as mortgage
participation certificates guaranteed by Government National
Mortgage Association (GNMA, commonly known as "Ginnie Mae") and
Federal Housing Administration debentures.
- - Obligations backed by a U.S. federal agency or U.S. government-
sponsored entity. These include obligations issued or guaranteed
by certain agencies and government-sponsored entities that are
supported only by the credit of such agency or entity, such as
Federal National Mortgage Association (FNMA, commonly known as
"Fannie Mae") bonds and Federal Home Loan Bank debt.
The Fund's mortgage-backed investments may also include CMOs
and strips, issued or guaranteed by the U.S. government, it's
agencies or instrumentalities.
The yields available from U.S. government securities are
generally lower than the yields available from comparable
corporate debt securities.
A description of the risks associated with the Fund's main
investment strategies follows.
INTEREST RATE RISK. The values of fixed income investments
usually rise and fall in response to changes in interest rates.
Declining interest rates will generally raise the value of
existing fixed-income investments, and rising interest rates will
generally lower the value of existing fixed-income investments.
Changes in the values of fixed income investments usually will not
affect the amount of income the Fund receives from them, but will
affect the value of the Fund's shares. Interest rate risk is
often greater for investments with longer maturities and the Fund
expects that its portfolio will normally be weighted towards
longer maturities.
The Fund may invest in so-called "premium" investments
offering interest rates higher than prevailing market rates. In
addition, during times of declining interest rates, many of the
Fund's investments may offer interest rates that are higher than
current market rates, regardless of whether the Fund bought them
at a premium. When the Fund holds premium investments,
shareholders are likely to receive higher dividends (but will bear
a greater risk that the value of the Fund's shares will fall) than
they would if the Fund held investments offering current market
rates of interest. Premium investments involve a greater risk of
loss, because their values tend to decline over time.
Investors may find it useful to compare the Fund's yield,
which excludes the effect of premium securities, with its current
dividend rate, which does not exclude that effect.
CREDIT RISK. Investors normally expect to be compensated in
proportion to the risk they are assuming. Thus, fixed income
investments of companies with relatively weaker credit prospects
usually offer higher yields than those of companies with better
credit prospects. Higher-rated investments generally offer lower
credit risk (the risk that the issuer will fail to make timely
payments of interest and principal), but not necessarily lower
interest rate risk. The value of a higher-rated investment still
fluctuates in response to changes in interest rates.
The Fund may invest substantially in debt investments
rated, at the time of purchase, no lower than B (or its
equivalent) by a U.S. nationally recognized securities rating
agency, and unrated investments that the Investment Management
Company determines are of comparable quality. The Fund will not
necessarily sell an investment if its rating is reduced. A
reduction in an investment's rating will generally cause its value
to decline.
Securities rated B (and comparable unrated securities)
are predominately speculative and have large uncertainties or
major exposures to adverse business, financial, or economic
conditions. Securities rated lower than Baa or BBB (and
comparable unrated securities) are commonly referred to as "junk
bonds."
The lower ratings of these investments reflect a greater
possibility that the issuers may be unable to make timely payments
of interest and principal and thus default. There may be an
increased risk of default in adverse economic conditions. If this
happens, or is perceived as more likely to happen, the values of
those investments will usually be more volatile. A default or
expected default could also make it difficult for the Fund to sell
the investments at prices approximating the values the Fund had
previously placed on them. Because junk bonds are traded mainly
by institutions, they usually have a limited market, which may at
times make it difficult for the Fund to establish their fair
value.
Credit ratings are based largely on the issuing company's
historical financial condition and the rating agencies' investment
analysis at the time of issuance. The rating assigned to any
particular investment does not necessarily reflect the issuing
company's current financial condition and does not reflect an
assessment of an investment's volatility or liquidity.
Although the Investment Management Company considers credit
ratings in making investment decisions, it performs its own
investment analysis and does not rely only on ratings assigned by
the rating agencies. When the Fund buys debt of a company with
poor credit prospects, the achievement of the Fund's goals depends
more on the Investment Management Company's ability to analyze
credit risk than would be the case if the Fund were buying debt of
a company with better credit prospects.
Although U.S. government investments are generally
considered to have the least credit risk, they are not completely
free of credit risk. While certain U.S. government securities,
such as U.S. Treasury obligations and Gennie Mae certificates, are
backed by the full faith and credit of the U.S. government, other
securities in which the Fund may invest are subject to varying
degrees of credit risk. The credit risks of these securities
include the creditworthiness of the issuer and, in the case of
mortgage-backed securities, the ability of the underlying
mortgagors or other borrowers to meet their obligations. In
addition, the values of these investments will still fluctuate in
response to changes in interest rates.
PREPAYMENT RISK. Traditional debt investments typically pay a
fixed rate of interest until maturity, when the entire principal
amount is due. By contrast, payments on mortgage-backed
investments typically include both interest and a partial payment
of principal. Principal may also be prepaid voluntarily, or as a
result of refinancing or foreclosure. The Fund may have to invest
the proceeds from prepaid investments under less attractive terms
and at lower yields.
Prepayments are particularly common during periods of
declining interest rates, when property owners seek to refinance
their mortgages at more favorable terms; the reverse is true
during periods of rising interest rates.
Mortgage-backed investments are therefore less likely to
increase in value during periods of declining interest rates than
other debt of comparable maturities. In addition, they have a
higher risk of decline in value during periods of rising interest
rates because declining prepayment rates effectively increase the
average maturity of the Fund's investments (and, therefore, its
sensitivity to changes in interest rates) at times when that is
least desirable. These investments can increase the volatility of
the Fund.
Certain securities held by the Fund may permit the
issuer at its option to "call," or redeem, its securities. If an
issuer were to redeem securities held by the Fund during a time of
declining interest rates, the Fund may not be able to reinvest the
proceeds in securities providing the same investment return as the
securities redeemed.
CMOS AND STRIPS. CMOs are issued with a number of classes
(sometimes called series) that have different maturities and may
represent interests in some or all of the interest or principal in
the underlying mortgage pool. Strips usually have two classes,
which receive different portions of payments of either interest
(the interest-only, or "IO" class) or principal (the principal-
only or "PO" class) of underlying mortgages. The Fund may buy
both IOs and POs.
Different classes of CMOs may be subject to higher
degrees of interest rate risk, credit risk and/or prepayment risk.
The yields and values of IOs and POs are extremely sensitive to
changes in interest rates and in the rate of principal payments
and prepayments on the underlying mortgages. IOs tend to lose
value if the rate of principal payments and prepayments increases,
while POs tend to lose value if principal payments and prepayments
decrease. The market for strips is generally more volatile and
limited than for other mortgaged-backed investments, which may at
times make it difficult to buy or sell strips.
NON-U.S. INVESTMENTS. The Fund may invest in U.S. dollar
denominated fixed-income securities of non-U.S. issuers including
Yankee bonds. Non-U.S. investments involve certain special risks.
For example, their values may drop in response to unfavorable
political and legal developments, unreliable or untimely
information, and economic and financial instability. In addition,
the liquidity of these investments may be more limited than U.S.
investments, which means the Fund may at times be unable to sell
them at desirable prices. Non-U.S. settlement procedures may also
involve additional risks. These risks are generally greater in
the case of "emerging markets" that typically have less developed
legal and financial systems.
Certain of these risks may also apply to some extent to
U.S. investments that are denominated in non-U.S. currencies or
that are traded in non-U.S. markets, or to securities of U.S.
companies that have significant non-U.S. operations.
DERIVATIVES. The Fund may engage in a variety of transactions
using "derivatives," such as futures, options, warrants, forwards
and swap contracts. Derivatives are financial instruments whose
value depends upon, or is derived from, the value of something
else, such as one or more underlying investments, indexes or
currencies. Derivatives may be traded on organized exchanges, or
in individually negotiated transactions with other parties (these
are known as "over-the-counter"). The Fund may use derivatives
both for hedging and non-hedging purposes. Although the
Investment Management Company has the flexibility to use these
strategies, it may choose not to for a variety of reasons, even
under very volatile market conditions.
Derivatives involve special risks and cost and may
result in losses to the Fund. The successful use of derivatives
requires sophisticated management and the Fund will depend on the
Investment Management Company's ability to analyze and manage
derivatives transactions. The prices of derivatives may move in
unexpected ways, especially in abnormal market conditions. Some
derivatives are "leveraged" and therefore may magnify or otherwise
increase investment losses to the Fund. The Fund's use of
derivatives may also increase the amount of taxes payable by
shareholders.
Other risks arise from the potential inability to
terminate or sell derivatives positions. A liquid secondary
market may not always exist for the Fund's derivatives positions
at any time. In fact, many over-the-counter instruments will not
be liquid. Over-the-counter instruments also involve the risk
that the other party will not meet its obligations to the Fund.
FREQUENT TRADING. The Fund may buy or sell investments
relatively often, which involves higher brokerage commissions and
other expenses, and may increase the amount of taxes payable by
shareholders.
OTHER INVESTMENTS. In addition to the main investment
strategies described above, the Fund may also make other types of
investments, such as investments in asset-backed securities and
equity securities and therefore may be subject to other risks.
ALTERNATIVE STRATEGIES. At times the Investment Management
Company may judge that market conditions make pursuing the Fund's
investment strategies inconsistent with the best interest of its
shareholders. The Investment Management Company then may
temporarily use alternative strategies, including investing solely
in money market instruments mainly designed to limit the Fund's
losses. Although the Investment Management Company has the
flexibility to use these strategies, it may choose not to for a
variety of reasons, even in very volatile market conditions.
These strategies may cause the Fund to miss out on investment
opportunities, and may prevent the Fund from achieving its goal.
CHANGES IN POLICIES. The Fund's Trustees may change the
Fund's goal, investment strategies and other policies without
shareholder approval, except as otherwise indicated.
(B) Restrictions of Investment:
Except for the investment restrictions designated as
fundamental below, the investment restrictions described in this
Securities Registration Statement and the Japanese prospectus are
not fundamental investment restrictions. The Trustees may change
any non-fundamental restrictions without shareholder approval. As
fundamental investment restrictions, which may not be changed
without a vote of a majority of the outstanding voting securities,
the Fund may not and will not:
(1) 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.
(2) With respect to 75% of its total assets, acquire more
than 10% of the outstanding voting securities of any issuer.
(3) Borrow money in excess of 10% of its total assets (taken
at cost) and then only as a temporary measure for extraordinary or
emergency purposes and 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.)
(4) 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.
(5) 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.
(6) Purchase or sell commodities or commodity contracts,
except that the Fund may purchase and sell financial futures
contracts and options and may enter into foreign currency exchange
transactions and other financial transactions not involving
physical commodities.
(7) Underwrite securities issued by other persons except to
the extent that, in connection with the disposition of its
portfolio investments, it may be deemed to be an underwriter under
certain federal securities laws.
(8) Purchase securities (other than securities of the U.S.
government, its agencies or instrumentalities), if, as a result of
such purchase, more than 25% of the Fund's total assets would be
invested in any one industry.
Although certain of the Fund's fundamental investment
restrictions permit it to borrow money to a limited extent, the
Fund does not currently intend to do so and did not do so last
year.
The Investment Company Act of 1940 provides that a "vote
of a majority of the outstanding voting securities" of the Fund
means the affirmative vote of the lesser of (1) more than 50% of
the outstanding Fund shares, or (2) 67% or more of the shares
present at a meeting if more than 50% of the outstanding Fund
shares are represented at the meeting in person or by proxy.
It is contrary to the Fund's present policy, which may
be changed without shareholder approval, to:
(1) Invest in (a) securities which are not readily
marketable, (b) securities restricted as to resale (excluding
securities determined by the Trustees of the Fund (or the person
designated by the Trustees of the Fund to make such
determinations) to be readily marketable), and (c) repurchase
agreements maturing in more than seven days, if, as a result, more
than 15% of the Fund's net assets (taken at current value) would
be invested in securities described in (a), (b) and (c) above.
In addition, the Fund will, so long as shares of the
Fund are being offered for sale by the Fund in Japan, comply with
the following standards of selection of the Japan Securities
Dealers Association:
(1) The Fund will not invest more than 15% of its net assets in
securities that are not traded on an official stock exchange or
other regulated market, including , without limitation, the
National Association of Securities Dealers Automated Quotation
System (this restriction shall not be applicable to securities
determined by the Investment Management Company to be liquid and
for which a market price (including a dealer quotation) is
generally obtainable or determinable);
(2) The Fund will not borrow money in excess of 10% of the value
of its total assets;
(3) The Fund will not make short sales of securities in excess of
the Fund's net asset value; and
(4) The Fund will not, together with other mutual funds managed by
the Investment Management Company, acquire more than 50% of the
outstanding voting securities of any issuer.
If any violation of the foregoing standards occurs, the
Fund will, promptly after discovery of the violation, take such
action as may be necessary to cause the violation to cease, which
shall be the only obligation of the Fund and the only remedy in
respect of the violation.
Although the Fund is permitted under its investment
policies to invest without limit in so-called "interest-only" (IO)
and "principal-only" (PO) classes of mortgage-backed securities,
the Fund has no present intention of investing more than 15% of
its net assets in such securities.
All percentage limitations on investments (other than
pursuant to the non-fundamental restriction (1)) will apply at the
time of the making of an investment and shall not be considered
violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment.
(C) Distribution Policy:
The Fund distributes net investment income monthly and
any net realized capital gains at least annually. The payment to
Japanese investors may be made by the end of each month by
Kankaku.
3. MANAGEMENT STRUCTURE
(A) Outline of Management of Assets, etc.:
A. Valuation of assets:
The Fund determines the net asset value per share of
each class of shares once each day the New York Stock Exchange
(the "Exchange") is open. Currently, the Exchange is closed
Saturdays, Sundays and the following U.S. holidays: New Year's
Day, Rev. Dr. Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, the Fourth of July, Labor Day, Thanksgiving
and Christmas. The Fund determines net asset value as of the
close of regular trading on the Exchange, currently 4:00 p.m., New
York time. However, equity options held by the Fund are priced as
of the close of trading at 4:10 p.m., New York time, and futures
contracts on U.S. government and other fixed-income securities and
index options held by the Fund are priced as of their close of
trading at 4:15 p.m., New York time.
Securities for which market quotations are readily
available are valued at prices which, in the opinion of Investment
Management Company, most nearly represent the market values of
such securities. Currently, such prices are determined using the
last reported sale price or, if no sales are reported (as in the
case of some securities traded over-the-counter), the last
reported bid price. Short-term investments having remaining
maturities of 60 days or less are valued at amortized cost, which
approximates market value. All other securities and assets are
valued at their fair value following procedures approved by the
Trustees. Liabilities are deducted from the total, and the
resulting amount is divided by the number of shares of the class
outstanding.
Reliable market quotations are not considered to be
readily available for long-term corporate bonds and notes, certain
preferred stocks, tax-exempt securities, and certain non-
U.S.securities. These investments are valued at fair value on the
basis of valuations furnished by pricing services, approved by the
Trustees which determine valuations for normal, institutional-size
trading units of such securities using methods based on market
transactions for comparable securities and various relationships
between securities which are generally recognized by institutional
traders.
If any securities held by the Fund are restricted as to
resale, Investment Management Company determines their fair value
using procedures approved by the Trustees. The fair value of such
securities is generally determined as the amount which the Fund
could reasonably expect to realize from an orderly disposition of
such securities over a reasonable period of time. The valuation
procedures applied in any specific instance are likely to vary
from case to case. However, consideration is generally given to
the financial position of the issuer and other fundamental
analytical data relating to the investment and to the nature of
the restrictions on disposition of the securities (including any
registration expenses that might be borne by the Fund in
connection with such disposition). In addition, specific factors
are also generally considered, such as the cost of the investment,
the market value of any unrestricted securities of the same class,
the size of the holding, the prices of any recent transactions or
offers with respect to such securities and any available analysts'
reports regarding the issuer.
Generally, trading in certain securities (such as non-
U.S.securities) is substantially completed each day at various
times prior to the close of the Exchange. The values of these
securities used in determining the net asset value of the Fund's
shares are computed as of such times. Also, because of the amount
of time required to collect and process trading information as to
large numbers of securities issues, the values of certain
securities (such as convertible bonds, U.S. government securities,
and tax-exempt securities) are determined based on market
quotations collected earlier in the day at the latest practicable
time prior to the close of the Exchange. Occasionally, events
affecting the value of such securities may occur between such
times and the close of the Exchange which will not be reflected in
the computation of the Fund's net asset value. If events
materially affecting the value of such securities occur during
such period, then these securities will be valued at their fair
value using procedures approved by the Trustees.
B. Management Fee, etc.:
(1) Management Fee:
(a) Management and Agent Company Fees
Under a Management Contract dated April 6, 1995, the
Fund pays a quarterly fee to Investment Management Company based
on the average net assets of the Fund, as determined at the close
of each business day during the quarter, at an annual rate of
0.65% 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.
For the fiscal years ending on October 31, 1998, 1997
and 1996 the Fund paid $16,143,721, $9,469,339 and $8,111,205 ,
respectively, as a management fee.
(b) Custodian Fee and Charges of the Investor Servicing
Agent
Putnam Fiduciary Trust Company, the Fund's Custodian,
shall be entitled to receive, out of the assets of the Fund,
reasonable compensation for its services and expenses as
Custodian, as agreed from time to time between the Fund and the
Custodian, not including fees paid by the Custodian to any sub-
custodian, payable monthly based on the average daily total net
assets of the Fund during the relevant month. Any reasonable
disbursements and out-of-pocket expenses (including without
limitation telephone, telex, cable and postage expenses) incurred
by the Custodian, and any custody charges of banks and financial
institutions to whom the custody of assets of the Fund is
entrusted, will be borne by the Fund.
The Fund will pay to Putnam Investor Services, a
division of Putnam Fiduciary Trust Company, the Fund's Investor
Servicing Agent, such fee, out of the assets of the Fund, as is
mutually agreed upon in writing from time to time, in the amount,
at the time and in the manner of payment mutually agreed.
For the fiscal year ending on October 31, 1998, the Fund
paid $7,634,568 as a custodian fee and investor servicing agent
fee.
(c) Fee under Class M Distribution Plan
The Class M distribution plan provides for payments by
the Fund to Putnam Mutual Funds Corp. at the annual rate of up to
1.00% of average net assets attributable to Class M shares. The
Trustees currently limit payments under the Class M plan to the
annual rate of 0.50% of such assets.
Putnam Mutual Funds Corp. makes quarterly payments to
Kankaku and other dealers at an annual rate of 0.40% of the
average net asset value of Class M shares attributable to
shareholders for whom Kankaku and other dealers are designated as
the dealer of record.
Payments under the plan are intended to compensate
Putnam Mutual Funds Corp. for services provided and expenses
incurred by it as principal underwriter of the Fund's shares,
including the payments to dealers mentioned above. Putnam Mutual
Funds Corp. may suspend or modify such payments to dealers.
For the fiscal year ending on October 31, 1998, the Fund
paid fees under the distribution plan of $5,706,912 for Class M
shares.
(d) Other Expenses:
The Fund pays all expenses not assumed by Investment
Management Company, including Trustees' fees, auditing, legal,
custodial, investor servicing and shareholder reporting expenses,
and payments under its distribution plans (which are in turn
allocated to the relevant class of shares). The Fund also
reimburses Investment Management Company for the compensation and
related expenses of certain Fund officers and their staff who
provide administrative services. The total reimbursement is
determined annually by the Trustees and was $31,867 for fiscal
1998.
Each Trustee receives a fee for his or her services.
Each Trustee also receives fees for serving as Trustee of other
Putnam funds. The Trustees periodically review their fees to
assure that such fees continue to be appropriate in light of their
responsibilities as well as in relation to fees paid to trustees
of other mutual fund complexes. The Trustees meet monthly over a
two-day period, except in August. The Compensation Committee,
which consists solely of Trustees not affiliated with the
Investment Management Company and is responsible for recommending
Trustee compensation, estimates that Committee and Trustee meeting
time together with the appropriate preparation requires the
equivalent of at least three business days per Trustee meeting.
The following table shows the year each Trustee was first elected
a Trustee of the Putnam funds, the fees paid to each Trustee by
the Fund for fiscal 1998 and the fees paid to each Trustee by all
of the Putnam funds during calendar 1998:
<TABLE><CAPTION>
COMPENSATION TABLE
<S> <C> <C> <C> <C>
Pension on Estimated Total
Aggregate retirement annual benefits compensation
compensation benefits accrued from all from all
from the as part of Putnam funds Putnam
Trustees/Year fund (1) fund expenses upon retirement (2) funds(3)
Jameson A. Baxter/1994 (4) $2,253 $487 $95,000 $207,000
Hans H. Estin/1972 1,968 947 95,000 182,500
John A. Hill/1985 (4) (5) 1,945 355 115,000 200,500
Ronald J. Jackson/1996 (4) 2,178 258 95,000 200,500
Paul L. Joskow/1997 (7) * 1,948 35 95,000 180,500
Elizabeth T. Kennan/1992 2,178 512 95,000 200,500
Lawrence J. Lasser/1992 * 1,923 383 95,000 178,000
John H. Mullin, III/1997 1,948 54 95,000 180,500
Robert E. Patterson/1984 1,957 284 95,000 181,500
Donald S. Perkins/1982 * 1,968 1,023 95,000 182,500
William F. Pounds/1971 (5) 2,349 1,064 115,000 215,000
George Putnam/1957 * 1,934 1,083 95,000 179,500
George Putnam, III/1984 * 1,957 187 95,000 181,500
A.J.C. Smith/1986 * 1,887 638 95,000 176,000
W. Thomas Stephens/1997 (4) 1,951 50 95,000 181,500
W. Nicholas Thorndike/1992 1,968 735 95,000 182,500
</TABLE>
(1) Includes an annual retainer and an attendance fee for each
meeting attended.
(2) Assumes that each Trustee retires at the normal retirement
date. Estimated benefits for each Trustee are based on Trustee
fee rates in effect during calendar 1997.
(3) As of December 31, 1998, there were 113 funds in the Putnam
family.
(4) Includes compensation deferred pursuant to a Trustee
Compensation Deferral Plan. The total amounts of deferred
compensation payable by the Fund to Ms. Baxter, Mr. Hill, Mr.
Jackson, Mr. Joskow, Mr. Mullin and Mr. Stephens as of October 31,
1998 were $6,688, $8,205, $5,462, $1,701, $1,728 and $2,150,
respectively, including income earned on such amounts.
(5) Includes additional compensation for service as Vice Chairman
of the Board of Trustees.
* Is or may be deemed to be an "interested person," as defined
in the Investment Company Act of 1940 of the Fund, Investment
Management Company or Putnam Mutual Funds Corp.
Under a Retirement Plan for Trustees of the Putnam funds
(the "Plan") each Trustee who retires with at least five years of
service as a Trustee of the funds is entitled to receive an annual
retirement benefit equal to one-half of the average annual
compensation paid to such Trustee for the last three years of
service prior to retirement. This retirement benefit is payable
during a Trustee's lifetime, beginning the year following
retirement, for a number of years equal to such Trustee's years of
service. A death benefit is also available under the Plan which
assures that the Trustee and his or her beneficiaries will receive
benefit payments for the lesser of an aggregate period of (i) ten
years or (ii) such Trustee's total years of service.
The Plan Administrator (a committee comprised of
Trustees who are not "interested persons" of the Fund, as defined
in the Investment Company Act of 1940) may terminate or amend the
Plan at any time, but no termination or amendment will result in a
reduction in the amount of benefits (i) currently being paid to a
Trustee at the time of such termination or amendment, or (ii) to
which a current Trustee would have been entitled had he or she
retired immediately prior to such termination or amendment.
Investment Management Company places all orders for
purchases and sales of Fund securities. In selecting broker-
dealers, Investment Management Company may consider research and
brokerage services furnished to it and its affiliates. Subject to
seeking the most favorable price and execution available,
Investment Management Company may consider sales of Fund shares
(and, if permitted by law, of the other Putnam Funds) as a factor
in the selection of broker-dealers. During fiscal 1996, 1997 and
1998, the Fund paid $27,784, $575,163 and $242,846, in brokerage
commissions, respectively. During fiscal 1998 the Fund paid $0 on
transactions with an aggregate principal value of $0 (0% of
transactions) to brokers and dealers to recognize research,
statistical and quotation services provided to Investment
Management Company and its affiliates.
For the fiscal year ending on October 31, 1998, the Fund
paid $14,687,136 in total other expenses, including payments under
its distribution plans, but excluding management fees, investor
servicing agent expenses and custodian expenses.
C. Sales, Repurchases and Custody:
(1) Sales of Shares:
a. Sales in the United States
Investors residing in the United States can open a Fund
account with as little as $500 and make additional investments at
any time with as little as $50. The Fund sells its shares at the
offering price, which is the NAV plus any applicable sales charge.
Investors' financial advisor or Putnam Investor Services generally
must receive investor's completed buy order before the close of
regular trading on the exchange for investors' shares to be bought
at that day's offering price.
? THROUGH A FINANCIAL ADVISOR Investors' advisor will be
responsible for furnishing all necessary documents to Putnam
Investor Services, and may charge investors for his or her
services.
? THROUGH SYSTEMATIC INVESTING Investors can make regular
investments of $25 or more per month through automatic deductions
from investors' bank checking or savings account. Application
forms are available through investors' advisor or Putnam Investor
Services at 1-800-225-1581.
Investors may also complete an order form and write a
check for the amount investors wish to invest, payable to the
Fund. Return the check and completed form to Putnam Mutual Funds
Corp.
The Fund may periodically close to new purchases of
shares or refuse any order to buy shares if the Fund determines
that doing so would be in the best interests of the Fund and its
shareholders.
CLASS M SHARES
- Initial sales charge of up to 3.25%
- Lower sales charges for larger investments of $50,000 or
more
- No deferred sales charge
- Lower annual expenses, and higher dividends, than Class
B shares because of lower 12b-1 fee
- Higher annual expenses, and lower dividends, than Class
A shares because of higher 12b-1 fee
- No conversion to Class A shares, so future 12b-1 fee
does not decrease
INITIAL SALES CHARGES FOR CLASS M SHARES
Class M sales charge
as a percentage of:
Amount of purchase Net amount Offering
at offering price ($) invested price *
Under 50,000 3.36% 3.25%
50,000 but under 100,000 2.30 2.25
100,000 but under 250,000 1.52 1.50
250,000 but under 500,000 1.01 1.00
500,000 but under 1,000,000 None None
1,000,000 and above None None
* Offering price includes sales charge.
DISTRIBUTION (12B-1) PLANS. The Fund has adopted
distribution plans to pay for the marketing of Fund shares and for
services provided to shareholders. The plans provide for payments
at annual rates (based on average net assets) of up to 1.00% on
Class M shares. Because these fees are paid out of the Fund's
assets on an ongoing basis, they will increase the cost of
investors' investment. The higher fees for Class M may cost
investors more than paying the initial sales charge for Class A
shares. Because Class M shares, unlike Class B shares, do not
convert to Class A shares, Class M shares may cost investors more
over time than Class B shares.
An investor may be eligible to buy class M shares at
reduced sales charges. For fiscal 1997 and 1998, Putnam Mutual
Funds Corp. received $11,521,976 and $55,023,123, respectively, in
sales charges for Class M shares, of which it retained $963,584
and $4,512,426, respectively.
b. Sales in Japan
In Japan, Shares of the Fund are offered on any Business
Day and any business day of securities company in Japan during the
Subscription Period mentioned in "Section 8. Period of
Subscription, Part I Information concerning Securities" of a
securities registration statement pursuant to the terms set forth
in "Part I. Information concerning Securities" of the relevant
securities registration statement. A Sales Handling Company shall
provide to the investors a Contract Concerning a Foreign
Securities Transactions Account and other prescribed contracts
(the "Account Contract") and receive from such investors an
application for requesting the opening of a transactions account
under the Account Contract. Purchase may be made in the minimum
investment amount of 200 shares and in integral multiples of 100
shares.
The issue price for Shares during the Subscription
period shall be, in principal, the Net Asset Value per Share next
calculated on the day on which the Fund has received such
application. The Trade Day in Japan is the day when the Sales
Handling Company confirms the execution of the order (ordinarily
the business day in Japan next following the placement of orders),
and payment and delivery shall be made on the fourth Business Day
after and including the Trade Day. The sales charge in Japan shall
be 3% of the amount obtained by deduction of the amount equivalent
to 3% of the public offering price from such price (hereinafter
referred to as the "Sales Price"). Any amount, which is over the
net asset value, of the Sales Price shall be retained by Putnam
Mutual Fund Corp., principal underwriter of the Fund. The public
offering price means the amount calculated by dividing the net
asset value by (1- 0.0325) and rounded to three decimal places.
Investors having entrusted a Sales Handling Company with
safekeeping of the certificates for Fund shares will receive a
certificate of safekeeping in exchange for the purchase price. In
such case payment shall be made in yen in principal and the
applicable exchange rate shall be the exchange rate determined by
such Sales Handling Compny to be based on the foreign exchange
rate quoted in the Tokyo Foreign Exchange Market on the Trade Day.
The payment may be made in dollars to the extent that the Sales
Handling Companies can agree.
In addition, Sales Handling Companies in Japan who are
members of the Japan Securities Dealers' Association cannot
continue sales of the Shares in Japan when the net assets of the
Fund are less than yen100,000,000 or the Shares otherwise cease to
comply with the "Standards of Selection of Foreign Investment Fund
Securities" in the "Regulations Concerning the Transactions of
Foreign Securities" established by the Association.
(2) Repurchase of Shares:
a. Repurchase in the United States
Investors residing in the U.S. can sell investors'
shares back to the Fund any day the New York Stock Exchange is
open, either through investors' financial advisor or directly to
the Fund. Payment for redemptions may be delayed until the Fund
collects the purchase price of shares, which may take up to 15
calendar days after the purchase date.
? SELLING SHARES THROUGH INVESTORS' FINANCIAL ADVISOR.
Investors' advisor must receive investors' request in proper form
before the close of regular trading on the New York Stock Exchange
for investors to receive that day's NAV, less any applicable
deferred sales charge. Investors' advisor will be responsible for
furnishing all necessary documents to Putnam Investor Services on
a timely basis and may charge investors for his or her services.
? SELLING SHARES DIRECTLY TO THE FUND. Putnam Investor
Services must receive investors' request in proper form before the
close of regular trading on the New York Stock Exchange in order
to receive that day's NAV, less any applicable sales charge.
By mail. Send a signed letter of instruction to Putnam
Investor Services. If investors have certificates for the shares
investors want to sell, investors must include them along with
completed stock power forms.
By telephone. Investors may use Putnam's Telephone
Redemption Privilege to redeem shares valued at less than $100,000
unless investors have notified Putnam Investor Services of an
address change within the preceding 15 days. Unless investors
indicate otherwise on the account application, Putnam Investor
Services will be authorized to accept redemption and transfer
instructions received by telephone.
The Telephone Redemption Privilege is not available if
there are certificates for investors' shares. The Telephone
Redemption Privilege may be modified or terminated without notice.
? ADDITIONAL DOCUMENTS. If investors
? sell shares with a value of $100,000 or more,
? want redemption proceeds sent to an address other than
investors' address as it appears on Putnam's records, or
? have notified Putnam of a change in address within the
preceding 15 days,
the signatures of registered owners or their legal
representatives must be guaranteed by a bank, broker-dealer or
certain other financial institutions. Stock power forms are
available from investors' financial advisor, Putnam Investor
Services and many commercial banks.
Putnam Investor Services usually requires additional
documents for the sale of shares by a corporation, partnership,
agent or fiduciary, or a surviving joint owner. Contact Putnam
Investor Services for details.
? WHEN WILL THE FUND PAY INVESTORS? The Fund generally
sends investors payment for investors' shares the business day
after investors' request is received. Under unusual
circumstances, the Fund may suspend redemptions, or postpone
payment for more than seven days as permitted by federal
securities laws.
? REDEMPTION BY THE FUND. If investors own fewer shares
than the minimum set by the Trustees (presently 20 shares), the
Fund may redeem investors' shares without investors' permission
and send investors the proceeds. The Fund may also redeem shares
if investors own shares more than a maximum amount set by the
Trustees. There is presently no maximum, but the Trustees could
set a maximum that applies to both present and future
shareholders.
b. Repurchase in Japan
Shareholders in Japan may at any time request repurchase
of their Shares. Repurchase requests in Japan may be made to
Investor Servicing Agent through the Sales Handling Company on a
Fund Business Day that is business day of securities companies in
Japan without a contingent deferred sales charge. Repurchases
(other than repurchases of all of an investor's Fund Shares) shall
be made only in integral multiples of 100 shares.
The price a shareholder in Japan will receive is the
next net asset value calculated after the Fund receives the
repurchase request from Kankaku. The price shall be paid in yen
through the Sales Handling Companies pursuant to the Contracts or,
if the Sales Handling Companies agree, in dollars. Payment for
repurchase proceeds shall generally be made on the fourth business
day of securities companies in Japan after and including the Trade
Day.
(3) Suspension of Repurchase:
The Fund may suspend shareholders' right of redemption,
or postpone payment for more than seven days, if the New York
Stock Exchange is closed for other than customary weekends or
holidays, or if permitted by the rules of the U.S. Securities and
Exchange Commission during periods when trading on the Exchange is
restricted or during any emergency which makes it impracticable
for the Fund to dispose of its securities or to determine fairly
the value of its net assets, or during any other period permitted
by order of the U.S. Securities and Exchange Commission for
protection of investors.
(4) Custody of Shares:
Share certificates shall be held by Shareholders at their own risk.
The custody of the Share certificates (if issued)
representing Shares sold to Japanese Shareholders shall, unless
otherwise instructed by the Shareholder, be held, in the name of
the custodian, by the custodian of Kankaku. Certificates of
custody for the Shares shall be delivered by the Sales Handling
Companies to the Japanese Shareholders.
D. Miscellaneous:
(1) Duration and Liquidation:
Unless terminated, the Fund shall continue without
limitation of time. The Fund may be terminated at any time by
vote of Shareholders holding at least 66 2/3% of the Shares
entitled to vote or by the Trustees of the Fund by written notice
to the Shareholders.
(2) Accounting Year:
The accounts of the Fund will be closed each year on 31st October.
(3) Authorized Shares:
There is no prescribed authorized number of Shares, and
Shares may be issued from time to time.
(4) Agreement and Declaration of Trust:
Originals or copies of the Agreement and Declaration of
Trust, as amended, are maintained in the office of the Fund and
are made available for public inspection for the Shareholders.
Originals or copies of the Agreement and Declaration of Trust, as
amended, are on file in the United States with the Secretary of
State of The Commonwealth of Massachusetts and with the Clerk of
the City of Boston.
The Agreement and Declaration of Trust may be amended at
any time by an instrument in writing signed by a majority of the
then Trustees when authorized to do so by vote of Shareholders
holding a majority of the Shares entitled to vote, except that an
amendment which shall affect the holders of one or more series or
classes of Shares but not the holders of all outstanding series
and classes shall be authorized by vote of the Shareholders
holding a majority of the Shares entitled to vote of each series
and class affected and no vote of Shareholders of a series or
class not affected shall be required. Amendments having the
purpose of changing the name of the Fund or of supplying any
omission, curing any ambiguity or curing, correcting or
supplementing any defective or inconsistent provision contained
herein shall not require authorization by Shareholder vote.
In Japan, material changes in the Agreement and
Declaration of Trust shall be published and notice thereof shall
be sent to the Japanese Shareholders.
(5) Issue of Warrants, Subscription Rights, etc.:
The Fund may not grant privileges to purchase shares of
the Fund to shareholders or investors by issuing warrants,
subscription rights or options, or other similar rights.
(6) How Performance Is Shown:
FUND ADVERTISEMENTS MAY, FROM TIME TO TIME, INCLUDE
PERFORMANCE INFORMATION. "Yield" is calculated by dividing the
annualized net investment income per share during a recent 30-day
period by the maximum public offering price per share on the last
day of that period.
For purposes of calculating yield, net investment income
is calculated in accordance with U.S. Securities and Exchange
Commission regulations and may differ from net investment income
as determined for financial reporting purposes. U.S. Securities
and Exchange Commission regulations require that net investment
income be calculated on a "yield-to-maturity" basis, which has the
effect of amortizing any premiums or discounts in the current
market value of fixed-income securities. The current dividend
rate is based on net investment income as determined for tax
purposes, which may not reflect amortization in the same manner.
Yield is based on the price of the shares, including the
maximum initial sales charge.
"Total return" for the one-, five- and ten-year periods
(or for the life of the Fund, if shorter) through the most recent
calendar quarter represents the average annual compounded rate of
return on an investment of $1,000 in the Fund invested at the
maximum public offering price. Total return may also be presented
for other periods or based on investment at reduced sales charge
levels. Any quotation of investment performance not reflecting
the maximum initial sales charge or contingent deferred sales
charge would be reduced if the sales charge were used. For the
one-year, five-year and ten-year periods ended October 31, 1998,
the average annual total return for Class M shares of the Fund was
- -0.77%, 4.75% and 7.78%, respectively. Returns for Class M shares
reflect the deduction of the current maximum initial sales charge
of 3.25% for Class M shares. Returns shown for Class M shares for
periods prior to December 14, 1994 are derived from the historical
performance of Class A shares, adjusted to reflect both the
deduction of the initial sales charge and the higher operating
expenses applicable to Class M shares. The 30-day yield for the
Class M shares of the Fund for the period ended October 31, 1998
was 5.69%.
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 which class of
shares the investor purchases. Investment performance also often
reflects the risks associated with the Fund's investment objective
and policies. These factors should be considered when comparing
the Fund's investment results with those of other mutual funds and
other investment vehicles.
Quotations of investment performance for any period when
an expense limitation was in effect will be greater than if the
limitation had not been in effect. Fund performance may be
compared to that of various indexes.
(B) Outline of Disclosure System:
(1) Disclosure in U.S.A.:
(i) Disclosure to shareholders
In accordance with the Investment Company Act of 1940,
the investment fund is required to send to its shareholders annual
and semi-annual reports containing financial information.
(ii) Disclosure to the SEC
The investment fund has filed a registration statement
with the SEC on Form N-1A; the Fund updates that registration
statement periodically in accordance with the Investment Company
Act of 1940.
(2) Disclosure in Japan:
a. Disclosure to the Supervisory Authority:
(i) Disclosure Required under the Securities and Exchange Law:
When the Fund intends to offer the Shares amounting to
more than certain amount in Japan, it shall submit to the Director
of Kanto Local Finance Bureau of the Ministry of Finance of Japan
securities registration statements together with the copies of the
Agreement and Declaration of the Fund and the agreements with
major related companies as attachments thereto. The said
documents are made available for public inspection for investors
and any other persons who desire at Kanto Local Finance Bureau of
the Ministry of Finance.
The Sales Handling Companies of the Shares shall deliver
to the investors prospectuses the contents of which are
substantially identical to Part I and Part II of the securities
registration statements. For the purpose of disclosure of the
financial conditions, etc., the Trustees shall submit to the
Director of Kanto Local Finance Bureau of the Ministry of Finance
of Japan securities reports within 6 months of the end of each
fiscal year, semi-annual reports within 3 months of the end of
each semi-annual period and extraordinary reports from time to
time when changes occur as to material subjects of the Fund.
These documents are available for public inspection for the
investors and any other persons who desire at Kanto Local Finance
Bureau of the Ministry of Finance.
(ii) Notifications, etc. under the Law Concerning
Securities Investment Trusts and Securities Investment Companies
Prior to offering of Shares for sale, the Management
Company must file in advance the prescribed matters on the Fund
with the Commissioner of Financial Supervisory Agent under the Law
Concerning Securities Investment Trusts and Securities Investment
Companies (the Law No.198, 1951) (hereinafter referred to the
"Investment Trusts Law"). In addition, if the Management Company
amends the Management Regulations of the Fund, it must file in
advance such amendment and the details thereof with the
Commissioner of Financial Supervisory Agent. Further, the
Management Company must prepare the Management Report on the
prescribed matters concerning the assets of the Fund under the
Investment Trusts Law immediately after the end of each
calculation period of the Fund and must file such Report with the
Commissioner of Financial Supervisory Agent.
b. Disclosure to Japanese Shareholders:
If the Management Company makes any amendment to the
Management Regulations of the Fund, the substance of which is
important, it must give in advance public notice concerning its
intention to make such amendment and the substance of such
amendment at least 30 days prior to such amendment, and must
deliver the written documents containing the above matters to the
unitholders known in Japan. Provided, however, that if the said
written documents are delivered to all the unitholders in Japan,
the relevant public notice is not required to be given.
The Japanese Shareholders will be notified of the
material facts which would change their position and of notices
from the Trustees, through the Sales Handling Companies.
The above-described Management Report on the Fund will
be sent to the unitholders known in Japan.
(C) Restrictions on Transactions with Interested Parties:
Portfolio securities of the Fund may not be purchased
from or sold or loaned to any Trustee of the Fund, Putnam
Investment Management, Inc., acting as investment adviser of the
Fund, or any affiliate thereof or any of their directors,
officers, or employees, or any major shareholder thereof (meaning
a shareholder who holds to the actual knowledge of Investment
Management Company, on his own account whether in his own or other
name (as well as a nominee's name), 10% or more of the total
issued outstanding shares of such a company) acting as principal
or for their own account unless the transaction is made within the
investment restrictions set forth in the Fund's prospectus and
statement of additional information and either (i) at a price
determined by current publicly available quotations (including a
dealer quotation) or (ii) at competitive prices or interest rates
prevailing from time to time on internationally recognized
securities markets or internationally recognized money markets
(including a dealer quotation).
4. INFORMATION CONCERNING THE EXERCISE OF RIGHTS BY
SHAREHOLDERS, ETC.
(A) Rights of Shareholders and Procedures for Their Exercise:
Shareholders must register their shares in their own
name in order to exercise directly their rights as Shareholders.
Therefore, the Shareholders in Japan who entrust the custody of
their Shares to the Sales Handling Company cannot exercise
directly their Shareholder rights, because their Shares are
registered in the name of the custodian. Shareholders in Japan
may have the Sales Handling Companies exercise their rights on
their behalf in accordance with the Account Agreement with the
Sales Handling Companies.
Shareholders in Japan who do not entrust the custody of
their Shares to the Sales Handling Companies may exercise their
rights in accordance with their own arrangement under their own
responsibility.
The major rights enjoyed by Shareholders are as follows:
(i) Voting rights
Each share has one vote, with fractional shares voting
proportionally. Shares of each class will vote together as a
single class except when otherwise required by law or as
determined by the Trustees. Although the Fund is not required to
hold annual meetings of its shareholders, shareholders holding at
least 10% of the outstanding shares entitled to vote have the
right to call a meeting to elect or remove Trustees, or to take
other actions as provided in the Agreement and Declaration of
Trust.
(ii) Repurchase rights
Shareholders are entitled to request repurchase of
Shares at their Net Asset Value at any time.
(iii) Rights to receive dividends
Shareholders generally receive any distribution from net
investment income monthly and any net realized capital gains at
least annually. Distributions from capital gains are made after
applying any available capital loss carryovers.
Shareholders may choose three distribution options,
although investors in Japan may only choose the last alternative.
- Reinvest all distributions in additional shares
without a sales charge;
- Receive distributions from net investment income in
cash while reinvesting capital gains distributions in additional
shares without a sales charge; or
- Receive all distributions in cash.
(iv) Right to receive distributions upon dissolution
Shareholders are entitled to receive distributions upon
dissolution in proportion to the number of shares then held by
them, except as otherwise required.
(v) Right to inspect accounting books and the like
Shareholders are entitled to inspect the Agreement and
Declaration of Trust, the accounting books at the discretion of
the Court and the minutes of any shareholders' meetings.
(vi) Right to transfer shares
Shares are transferable without restriction except as
limited by applicable law.
(vii) Rights with respect to the U.S. registration statement
If, under the 1933 Act, there is, at any time it became
effective, any false statement concerning any material fact in the
U.S. registration statement, or any omission of any statement of
material fact required to be stated therein or necessary in order
to make the statements made therein not misleading, shareholders
are generally entitled to institute a lawsuit, against the person
who had signed the relevant Registration Statement, the trustees
of the issuer (or any person placed in the same position), any
person involved in preparing such Statement or any underwriter of
the relevant shares.
(B) Tax Treatment of Shareholders in Japan:
The tax treatment of Shareholders in Japan shall be as follows:
(1) The distributions to be made by the Fund will be treated
as distributions made by a domestic investment trust.
a. The distributions to be made by the Fund to Japanese
individual shareholders will be subject to separate taxation from
other income (i.e. withholding of income tax at the rate of 15%
and withholding of local taxes at the rate of 5% in Japan). In
this case, no report concerning distributions will be filed with
the Japanese tax authorities.
b. The distributions to be made by the Fund to Japanese
corporate shareholders will be subject to withholding of income
tax at the rate of 15% and to withholding of local taxes at the
rate of 5% in Japan. In certain cases, the Paying Handling
Companies will prepare a report concerning distributions and file
such report with the Japanese tax authorities.
c. Net investment returns such as dividends, etc. and
distributions of short-term net realized capital gain, among
distributions on Shares of the Fund, will be, in principle,
subject to withholding of U.S. federal income tax at the rate of
15% and the amount obtained after such deduction will be paid in
Japan.
Distributions of long-term net realized capital gain
will not be subject to withholding of U.S. federal income tax and
the full amount thereof will be paid in Japan. The amount subject
to withholding of U.S. federal income tax may be deducted from the
tax levied on a foreign entity in Japan.
The Japanese withholding tax imposed on distributions as
referred to in a. and b. above will be collected by way of so-
called "difference collecting method". In this method only the
difference between the amount equivalent to 20% of the
distributions before U.S. withholding tax and the amount of U.S.
withholding tax withheld in the U.S. will be collected in Japan.
(2) The provisions of Japanese tax laws giving the privilege
of a certain deduction from taxable income to corporations, which
may apply to dividends paid by a domestic corporation, shall not
apply.
(3) Capital gains and losses arising from purchase and
repurchase of the Shares shall be treated in the same way as those
arising from purchase and sale of a domestic investment trust.
The distribution of the net liquidation assets shall be also
treated in the same way as those arising from liquidation of a
domestic investment trust.
(4) The Japanese securities transaction tax will not be
imposed so far as the transactions concerned are conducted outside
Japan. Such tax, however, is applicable to dealers' transactions
for their own account and to privately negotiated transactions
conducted in Japan.
(C) Foreign Exchange Control in the United States:
In the United States, there are no foreign exchange
control restrictions on remittance of dividends, repurchase money,
etc. of the Shares to Japanese Shareholders.
(D) Agent in Japan:
Hamada & Matsumoto
Kasumigaseki Building, 25th Floor
2-5, Kasumigaseki 3-chome
Chiyoda-ku, Tokyo
The foregoing law firm is the true and lawful agent of
the Fund to represent and act for the Fund in Japan for the
purpose of;
(1) the receipt of any and all communications, claims,
actions, proceedings and processes as to matters involving
problems under the laws and the rules and regulations of the JSDA
and
(2) representation in and out of court in connection with
any and all disputes, controversies or differences regarding the
transactions relating to the public offering, sale and repurchase
in Japan of the Shares of the Fund.
The agent for the registration with the Director of
Kanto Local Finance Bureau of the Ministry of Finance of Japan of
the continuous disclosure is each of the following persons:
Harume Nakano
Ken Miura
Attorneys-at-law
Hamada & Matsumoto
Kasumigaseki Building, 25th Floor
2-5, Kasumigaseki, 3-chome
Chiyoda-ku, Tokyo
(E) Jurisdiction:
Limited only to litigation brought by Japanese investors
regarding transactions relating to (D)(2) above, the Fund has
agreed that the following court has jurisdiction over such
litigation and the Japanese law is applicable thereto:
Tokyo District Court
1-4, Kasumigaseki 1-chome
Chiyoda-ku, Tokyo
5. Status of the Invesment Portfolio
(A) Diversification of Investment Portfolio:
(As of January 31, 1999)
Types of Assets Name of Country Total U.S. Dollars Investment Ratio (%)
Corporate Bonds United States 1,505,589,026 40.24
Canada 67,215,411 1.80
Norway 35,676,877 0.95
Netherlands 7,778,560 0.21
Israel 7,753,640 0.21
United Kingdom 7,083,625 0.19
Japan 6,199,872 0.17
Bermuda 1,935,500 0.05
Mexico 1,707,750 0.05
Finland 1,553,273 0.04
Indonesia 846,600 0.02
Greece 576,000 0.02
Philippines 523,440 0.01
Sub-total 1,644,439,574 43.96
US Government
Obligations United States 1,412,581,203 37.76
Collateralized
Mortgage Obligations United States 351,028,426 9.38
Foreign Government
Bonds United Kingdom 21,878,397 0.58
Canada 8,787,495 0.23
Bermuda 1,297,500 0.03
Cayman Islands 994,700 0.03
Sub-total 32,958,092 0.87
Units United States 96,509 0.00
Colombia 84,552 0.00
Sub-total 181,061 0.00
Preferred Stock United States 30,689,241 0.82
Convertible Bonds United States 3,166,975 0.09
Common stock United States 571,548 0.02
Convertible
Preferred Stocks United States 666,312 0.02
Warrants United States 413,119 0.01
Ireland 17,550 0.00
Sub-total 430,669 0.01
Cash, Deposit and
Other Assets (After
deduction of liabilities) 264,425,014 7.07
Total 3,741,138,115 100.00
(Net Asset Value) (yen435,281 million)
Note: Investment ratio is calculated by dividing each asset at
its market value by the total Net Asset Value of the Fund.
The same applies hereinafter.
(B) Results of Past Operations
(1) Record of Changes in Net Assets (Class M Shares)
Record of changes in net assets at the end of the
following fiscal years and at the end of each month within one
year prior to the end of January, 1999 is as follows:
Total Net Asset Value Net Asset Value per Share
Dollar Yen
(thousands) (millions) Dollar Yen
1st Fiscal Year 7,673 893 7.04 819.10
(October 31, 1995)
2nd Fiscal Year 19,937 2,203 6.99 813.29
(October 31, 1996)
3rd Fiscal Year 368,297 42,851 7.11 827.25
(October 31, 1997)
4th Fiscal Year 1,188,620 138,296 6.84 759.83
(October 31, 1998)
1998 End of February 1,248,556 145,269 7.07 822.59
March 1,451,337 168,863 7.08 823.76
April 1,567,883 182,423 7.08 823.76
May 1,616,553 188,084 7.09 824.92
June 1,245,899 144,960 7.09 824.92
July 1,168,672 135,975 7.06 821.43
August 1,033,740 120,276 6.90 802.82
September 1,114,479 129,670 6.99 813.29
October 1,188,620 138,296 6.84 795.83
November 1,274,104 148,242 6.90 802.82
December 1,369,567 159,349 6.88 800.49
1999 End of January 1,523,223 177,227 6.91 803.98
(Note) Operations of Class M Shares were commenced on December 14, 1994.
(2) Record of Distributions Paid
Amount of Dividend
Period paid per Share
1st Fiscal Year
(12/14/94-10/31/95) $0.43 Yen50
2nd Fiscal Year
(11/1/95-10/31/96) $0.45 Yen52
3rd Fiscal Year
(11/1/96-10/31/97) $0.47 Yen55
4th Fiscal Year
(11/1/97-10/31/98) $0.46 Yen54
(Note) Record of distribution paid from November 1997 to January 1999
are as follows:
Dividend
Month/Year Dollar Yen
1997 End of November 0.036 4.189
December 0.036 4.189
1998 End of January 0.036 4.189
February 0.036 4.189
March 0.036 4.189
April 0.036 4.189
May 0.036 4.189
June 0.035 4.072
July 0.035 4.072
August 0.035 4.072
September 0.036 4.189
October 0.036 4.189
November 0.036 4.189
December 0.036 4.189
1999 End of January 0.036 4.189
February 0.034 3.956
(C) Record of Sales and Repurchases
Record of sales and repurchases during the following
fiscal years and number of outstanding Shares of the Fund as of
the end of such Fiscal Years are as follows:
Number of Numbers of Shares Number of
Shares Sold Repurchased Outstanding Shares
1st Fiscal Year
(12/14/94-10/31/95) 1,163,283 73,164 1,090,119
(0) (0) (0)
2nd Fiscal Year
(11/1/95-10/31/96) 2,435,804 816,055 2,709,868
(0) (0) (0)
3rd Fiscal Year
(11/1/96-10/31/97) 50,402,587 1,311,388 51,801,067
(47,615,400) (54,400) (47,561,000)
4th Fiscal Year
(11/1/97-10/31/98) 233,377,001 111,298,763 173,879,305
(230,066,900) (109,664,400) (167,963,500)
Note: The Share will be sold in Japan from August 27, 1997.
II. OUTLINE OF THE FUND
1. Fund
(A) Law of Place of Incorporation
The Fund is a Massachusetts business trust organized in
Massachusetts, U.S.A. on August 13, 1982 as the successor to The
Putnam Income Fund, Inc., a Massachusetts corporation formed on
October 13, 1954.
Chapter 182 of the Massachusetts General Laws prescribes
the fundamental matters in regard to the operations of certain
business trusts constituting voluntary associations under that
chapter.
The Fund is an open-end, diversified management company
under the Investment Company Act of 1940.
(B) Outline of the Supervisory Authority
Refer to I - l (B) Outline of the Supervisory Authority.
(C) Purpose of the Fund
The purpose of the Fund is to provide investors a
managed investment primarily in securities, debt instruments and
other instruments and rights of a financial character.
(D) History of the Fund
October 13, 1954: Organization of the Fund as a
Massachusetts corporation.
August 13, 1982: Organization of the Fund as a
Massachusetts business trust. Adoption of the Agreement and
Declaration of Trust.
April 7, 1989: Adoption of the Amended and
Restated Agreement and Declaration of Trust.
(E) Amount of Capital Stock
Not applicable.
(F) Structure of the management of the Fund
The Trustees are responsible for generally overseeing
the conduct of the Fund's business. The Agreement and Declaration
of Trust provides that they shall have all powers necessary or
convenient to carry out that responsibility. The number of
Trustees is fixed by the Trustees and may not be less than three.
A Trustee may be elected either by the Trustees or by the
shareholders. At any meeting called for the purpose, a Trustee
may be removed by vote of two-thirds of the outstanding shares of
the Fund. Each Trustee elected by the Trustees or the
shareholders shall serve until he or she retires, resigns, is
removed, or dies or until the next meeting of shareholders called
for the purpose of electing Trustees and until the election and
qualification of his or her successor.
The Trustees of the Fund are authorized by the Agreement
and Declaration of Trust to issue shares of the Fund in one or
more series, each series being preferred over all other series in
respect of the assets allocated to that series. The Trustees may,
without shareholder approval, divide the shares of any series into
two or more classes, with such preferences and special or relative
rights and privileges as the Trustees may determine.
Under the Agreement and Declaration of Trust the
shareholders shall have power, as and to the extent provided
therein, to vote only (i) for the election of Trustees, to the
extent provided therein (ii) for the removal of Trustees, to the
extent provided therein (iii) with respect to any investment
adviser, to the extent provided therein (iv) with respect to any
termination of the Fund, to the extent provided therein (v) with
respect to certain amendments of the Agreement and Declaration of
Trust, (vi) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court
action, proceeding, or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Fund
or the shareholders, and (vii) with respect to such additional
matters relating to the Fund as may be required by the Agreement
and Declaration of Trust, the Bylaws of the Fund, or any
registration of the Fund with the U.S. Securities and Exchange
Commission (or any successor agency) or any state, or as the
Trustees may consider necessary or desirable. Certain of the
foregoing actions may, in addition, be taken by the Trustees
without vote of the shareholders of the Fund.
On any matter submitted to a vote of shareholders, all
shares of the Fund then entitled to vote are voted in the
aggregate as a single class without regard to series or classes of
shares, except (1) when required by the Investment Company Act of
1940, as amended, or when the Trustees shall have determined that
the matter affects one or more series or classes of shares
materially differently, share are voted by individual series or
class; and (2) when the Trustees have determined that the matter
affects on the interests of one or more series or classes, then
only shareholders of such series or classes are entitled to vote
thereon. There is no cumulative voting.
Meetings of shareholders may be called by the Clerk
whenever ordered by the Trustees, the Chairman of the Trustees, or
requested in writing by the holder or holders of at least one-
tenth of the outstanding shares entitled to vote at the meeting.
Written notice of any meeting of shareholders must be given by
mailing the notice at least seven days before the meeting. Thirty
percent of shares entitled to vote on a particular matter is a
quorum for the transaction of business on that matter at a
shareholders' meeting, except that, where any provision of law or
of the Agreement and Declaration of Trust permits or requires that
holders of any series or class vote as an individual series or
class, then thirty percent of the aggregate number of shares of
that series or class entitled to vote are necessary to constitute
a quorum for the transaction of business by that series or class.
For the purpose of determining the shareholders of any class or
series of shares who are entitled to vote or act at any meeting,
or who are entitled to receive payment of any dividend or other
distribution, the Trustees are authorized to fix record dates,
which may not be more then 90 days before the date of any meeting
of shareholders or more than 60 days before the date of payment of
any dividend or other distribution.
The Trustees are authorized by the Agreement and
Declaration of Trust to adopt Bylaws not inconsistent with the
Agreement and Declaration of Trust providing for the conduct of
the business of the Fund. The Bylaws contemplate that the
Trustees shall elect a Chairman of the Trustees, the President,
the Treasurer, and the Clerk of the Fund, and that other officers,
if any, may be elected or appointed by the Trustees at any time.
The Bylaws may be amended or repealed, in whole or in part, by a
majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees
may from time to time determine. It shall be sufficient notice to
a Trustee of a special meeting to send notice by mail at least
forty-eight hours or by telegram at least twenty-four hours before
the meeting or to give notice to him or her in person or by
telephone at least twenty-four hours before the meeting.
At any meeting of Trustees, a majority of the Trustees
then in office shall constitute a quorum. Except as otherwise
provided in the Agreement and Declaration of Trust or Bylaws, any
action to be taken by the Trustees may be taken by a majority of
the Trustees present at a meeting (a quorum being present), or by
written consents of a majority of the Trustees then in office.
Subject to a favorable majority shareholder vote (as
defined in the Agreement and Declaration of Trust), the Trustees
may contract for exclusive or nonexclusive advisory and/or
management services with any corporation, trust, association, or
other organization.
The Agreement and Declaration of Trust contains
provisions for the indemnification of Trustees, officers, and
shareholders of the Fund under the circumstances and on the terms
specified therein.
The Fund may be terminated at any time by vote of
shareholders holding at least two-thirds of the shares entitled to
vote or by the trustees by written notice to the shareholders.
Any series of shares may be terminated at any time by vote of
shareholders holding at least two-thirds of the shares of such
series entitled to vote or by the Trustees by written notice to
the shareholders of such series.
The foregoing is a general summary of certain provisions
of the Agreement and Declaration of Trust and Bylaws of the Fund,
and is qualified in its entirety by reference to each of those
documents.
(G) Information Concerning Major Shareholders
Not applicable.
(H) Information Concerning Directors, Officers and Employees
(1) Trustees and Officers of the Fund (as of January 31, 1999)
Name Office and Title Resume Shares Owned
George Putnam Chairman and President present: Chairman 0
and Director of Putnam
Management and Putnam
Mutual Funds Corp.
Director, Marsh &
McLennan Companies, Inc.
William F. Pounds Vice Chairman present: Professor 29,524.390
Emeritus of Management,
Alfred P. Sloan School
of Management, Massachusetts
Institute of Technology.
Jameson Adkins Baxter Trustee present: President, 947.332
Baxter Associates, Inc.
Hans H. Estin Trustee present: Vice Chairman, 373.926
North American Management Corp.
John A. Hill Vice Chairman present: Chairman and 661.681
Managing Director, First
Reserve Corporation.
Ronald J. Jackson Trustee present: Former Chairman, 435.441
President and Chief Executive
Officer of Fisher-Price, Inc.,
Trustee of Salem Hospital
and the Peabody Essex Museum
Paul. L. Joskow Trustee present: Professor of 148.705
Economics and Management
and former Chairman of
the Department of Economics
at the Massachusetts
Institute of Technology,
Director, New England Electric
System, State Farm Indemnity
Company and Whitehead Institute
for Biomedical Reserach
Elizabeth T. Kennan Trustee present: President 251.763
Emeritus and Professor,
Mount Holyoke College
Lawrence J. Lasser Trustee and Vice President present: President, 162.591
Chief Executive Officer
and Director of
Putnam Investments, Inc. and
the Investment Management Company
Director, Marsh &
McLennan Companies, Inc.
John H. Mullin, III Trustee present: Chairman and
Chief Executive Officer
of Ridgeway Farm,
Director of ACX Technologies,
Inc., Alex Brown Realty, Inc.
and The Liberty Corporation 757.286
Robert E. Patterson Trustee present: President and
Trustee of Cabot Industrial
Trust and Trustee of the
SEA Education Association 1,052.052
Donald S. Perkins Trustee present: Director of various
corporations, including Cummins
Engine Company, Lucent Technologies,
Inc., Nanophase Technologies,
Inc. and Springs
Industries, Inc. 9,758.753
George Putnam, III Trustee present: President, New
Generation Research, Inc. 4,271.880
A.J.C. Smith Trustee present: Chairman and Chief
Executive Officer, Marsh &
McLennan Companies, Inc. 243.175
W. Thomas Stephens Trustee present: President and Chief
Executive Officer of MacMillian
Bloedel Ltd., Director of
Mail-well Inc., Qwest Communications,
The Eagle Picher Trust and
New Century Energies 109.959
W. Nicholas Thorndike Trustee present: Director of various
corporations and charitable
organizations, including Data
General Corporation, Bradley Real
Estate, Inc. and Providence
Journal Co. Trustee of Cabot
Industrial Trust, Massachusetts
General Hospital and Eastern
Utilities Associations 162.591
Charles E. Porter Executive Vice President present: Managing Director of
Putnam Investments, Inc.
and Putnam Investment Management 0.0
Patricia C. Flaherty Senior Vice President present: Senior Vice President
of Putnam Investments,
Inc. and Putnam Investment
Management 0.0
Gordon H. Silver Vice President present: Director and Senior
Managing Director of Putnam
Investments, Inc. and Putnam
Investment Management 0.0
John D. Hughes Vice President and Treasurer present: Senior Vice
President of Putnam
Investment Management 0.0
Beverly Marcus Clerk and Assistant Treasurer N/A 0.0
Ian C. Ferguson Vice President present: Senior Managing
Director of Putnam Investments, Inc. and
Putnam Investment Management 0.0
John R. Verani Vice President present: Senior Vice
President of Putnam
Investment, Inc. and
Putnam Investment Management 0.0
Stephen Oristaglio Vice President present: Managing Director
of Putnam Investments, Inc. and Putnam
Investment Management 0.0
Edward H. D'Alelio Vice President present: Managing Director
of Putnam Investments, Inc. and Putnam
Investment Management 0.0
Kevin M. Cronin Vice President present: Managing Director of
Putnam Investments, Inc. and Putnam
Investment Management 0.0
Krishna K. Mcmani Vice President present: Managing Director
of Putnam Investments, Inc.
and Putnam Investment Management 0.0
* A trustee of the Fund on November 6, 1997 and therefore did
not own any shares of the Fund as of September 30, 1997.
(2) Employees of the Fund
The Fund does not have any employees.
(I) Description of Business and Outline of Operation
The Fund may carry out any administrative and managerial
act, including the purchase, sale, subscription and exchange of
any securities, and the exercise of all rights directly or
indirectly pertaining to the Fund's assets. The Fund has retained
Putnam Investment Management, Inc., the investment adviser, to
render investment advisory services and Putnam Fiduciary Trust
Company, to hold the assets of the Fund in custody and act as
Investor Servicing Agent.
(J) Miscellaneous
(1) Changes of Trustees and Officers
Trustees may be removed or replaced by, among other
things, a resolution adopted by a vote of two-thirds of the
outstanding shares at a meeting called for the purpose. In the
event of vacancy, the remaining Trustees may fill such vacancy by
appointing for the remaining term of the predecessor Trustee such
other person as they in their discretion shall see fit. The
Trustees may add to their number as they consider appropriate.
The Trustees may elect and remove officers as they consider
appropriate.
(2) Amendment to the Agreement and Declaration of Trust
Generally, approval of shareholders is required to amend
the Agreement and Declaration of Trust, except for certain matters
such as change of name, curing any ambiguity or curing any
defective or inconsistent provision.
(3) Litigation and Other Significant Events
Nothing which has or which would have a material adverse
effect on the Fund has occurred which is required to be disclosed
and has not been disclosed. The fiscal year end of the Fund is
October 31. The Fund is established for an indefinite period and
may be dissolved at any time by vote of the shareholders holding
at least two-thirds of the shares entitled to vote or by the
Trustees by written notice to shareholders.
2. Putnam Investment Management, Inc. (Investment Management
Company)
(A) Law of Place of Incorporation
Putnam is incorporated under the General Corporation Law of
The Commonwealth of Massachusetts, U.S.A. Its investment advisory
business is regulated under the Investment Advisers Act of 1940.
Under the Investment Advisers Act of 1940, an investment
adviser means, with certain exceptions, any person who, for
compensation, engages in the business of advising others, either
directly or through publications or writings, as to the value of
securities or as to the advisability of investing in, purchasing
or selling securities, or who, for compensation and as part of a
regular business, issues analyses or reports concerning
securities. Investment advisers under the Act may not conduct
their business unless they are registered with the SEC.
(B) Outline of the Supervisory Authority
Investment Management Company is registered as an investment
adviser under the Investment Advisers Act of 1940.
(C) Purpose of the Company
Investment Management Company's sole business is investment
management, which includes the buying, selling, exchanging and
trading of securities of all descriptions on behalf of mutual
funds in any part of the world.
(D) History of the Company
Investment Management Company is one of America's oldest and
largest money management firms. Investment Management Company's
staff of experienced portfolio managers and research analysts
selects securities and constantly supervises the fund's portfolio.
By pooling an investor's money with that of other investors, a
greater variety of securities can be purchased than would be the
case individually: the resulting diversification helps reduce
investment risk. Investment Management Company has been managing
mutual funds since 1937. Today, the firm serves as the Investment
Management Company for the funds in the Putnam Family, with over
$228 billion in assets and nearly 9 million shareholder accounts
at January 31, 1999. An affiliate, The Putnam Advisory Company,
Inc., manages domestic and foreign institutional accounts and
mutual funds, including the accounts of many Fortune 500
companies. Another affiliate, Putnam Fiduciary Trust Company,
provides investment advice to institutional clients under its
banking and fiduciary powers as well as shareholder and custody
services to the Putnam Funds.
Putnam Investment Management Inc., Putnam Mutual Funds and
Putnam Fiduciary Trust Company are subsidiaries of Putnam
Investments, Inc., which is located at One Post Office Square,
Boston, Massachusetts 02109 and except for a minority state owned
by employees, is 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.
(E) Amount of Capital Stock (as of January 31, 1999)
1. Amount of Capital (issued capital stock at par value):
Common Stock 1,000 shares at $1 par value
2. Number of authorized shares of capital stock:
Common Stock 1,000 shares
3. Number of outstanding shares of capital stock:
Common Stock 1,000 shares
4. Amount of capital (for the purposes of this Item, "Amount of
Capital" means total stockholders' equity for the past five years:
Amount of Capital
Year (Total Stockholders' Equity)
End of 1994 $48,149,491
End of 1995 $45,521,351
End of 1996 $45,817,658
End of 1997 $48,617,160
End of 1998 $425,782,007
(F) Structure of the Management of the Company
Investment Management Company is ultimately managed by its
Board of Directors, which is elected by its shareholders.
Each fund managed by Investment Management Company is managed
by one or more portfolio managers. These managers, in
coordination with analysts who research specific securities and
other members of the relevant investment group (in the case of the
Fund, Investment Management Company's Fixed Income Investments
Group), provide a continuous investment program for the Fund and
place all orders for the purchase and sale of portfolio
securities.
The investment performance and portfolio of each Fund is
overseen by its Board of Trustees, a majority of whom are not
affiliated with Investment Management Company. The Trustees meet
11 times a year and review the performance of each fund with its
manager at least quarterly.
In selecting portfolio securities for the Fund, Investment
Management Company looks for securities that represent attractive
values based on careful issue-by-issue credit analysis and
hundreds of onsite visits and other contacts with issuers every
year. Investment Management Company is one of the largest
managers of high yield and other debt securities in the United
States.
The following officers of Investment Management Company have
had primary responsibility for the day-to-day management of the
Fund's portfolio since the years stated below. Their experience
as portfolio managers or investment analysts over at least the
last five years is also shown:
(as of January 31, 1999)
Manager Since Experience
Kevin M. Cronin
Managing Director 1998 Employed by Putnam Management since 1997.
Prior to February 1997, Mr. Cronin was
employed at MFS Investment Management.
Krishna K. Mcmani
Managing Director 1998 Employed by Putnam Management since 1998.
Prior to September 1998, Mr. Mcmani
was employed at Morgan Stanley & Co..
(G) Information Concerning Major Stockholders
As of the end of January, 1999, all the outstanding shares of
capital stock of Investment Management Company were owned by
Putnam Investments, Inc. See subsection D above.
(H) Information Concerning Officers and Employees
The following table lists the names of various officers and
directors of Investment Management Company and their respective
positions with Investment Management Company. For each named
individual, the table lists: (i) any other organizations
(excluding other Investment Management Company's funds) with
which the officer and/or director has recently had or has
substantial involvement; and (ii) positions held with such
organization:
List of Officers and Directors of Putnam Investment Management, Inc.
(as of January 31, 1999)
Name Position with Putnam
Investment
Management, Inc. Other Business Affiliation
1 Putnam, George Chairman Director of Putnam Mutual Funds Corp.
2Lasser, Lawrence J. President and Director, CEO
3Silver, Gordon H. Director and Senior Managing Director
Director of Putnam Fiduciary Trust Company and Senior Managing
Director of Putnam Mutual Funds Corp.
4Burke, Robert W. Senior Managing Director
Senior Managing Director of Putnam Mutual Funds Corp.
5Coburn, Gary N. Senior Managing Director
6Collman, Kathleen M.
Senior Managing Director
Senior Managing Director of Putnam Mutual Funds Corp.
7Ferguson, Ian C. Senior Managing Director
8Regan, Anthony W. Senior Managing Director
9 Spiegel, Steven Senior Managing Director
Senior Managing Director of Putnam Mutual Funds Corp.
10 Anderson, Blake E. Managing Director
11 Antill, Jennifer Managing Director
12 Beck, Robert R. Managing Director
13Browchuk, BrettManaging Director
14Cassaro, Joseph A. Managing Director
15 Cotner, C. Beth Managing Director
16 Cronin, Kevin M. Managing Director
Managing Director of Putnam Fiduciary Trust Company
17 D'Alelio, Edward H. Managing Director
18 Daly, Kenneth L. Managing Director
Managing Director of Putnam Mutual Funds Corp.
19 DeTore, John A. Managing Director
Managing Director of Putnam Fiduciary Trust Company
20 Durgarian, Karnig H. Managing Director and Chief Financial Officer
Director and Managing Director of Putnam Fiduciary Trust Company
21 Esteves, Irene M. Managing Director and Chief Financial Officer
Treasurer of Putnam Fiduciary Trust Company
22 Gillis, Roland Managing Director
23 Haslett, Thomas R. Managing Director
24 Hurley, William J. Managing Director
Managing Director and CFO of Putnam Mutual Funds Corp.
25 Jacobs, Jerome J. Managing Director
26 Joseph, Joseph P. Managing Director
27 Kamshad, Omid Managing Director
28 King, David L. Managing Director
Managing Director of Putnam Mutual Funds Corp.
29 Kohli, D. William Managing Director
30 Kreisel, Anthony I. Managing Director
31 Kuenstner, Deborah F. Managing Director
32 Landes, William J. Managing Director
33 Leichter, Jennifer Managing Director
34 Maloney, Kevin J. Managing Director
35 Martino, Michael Managing Director
Managing Director of Putnam Fiduciary Trust Company
36 Maxwell, Scott M. Managing Director
37 McGue, William F. Managing Director
38 McMullen, Carol C. Managing Director
39 Mcmani, Krisha Managing Director
40 Miller, Daniel L. Managing Director
41 Morgan Jr., John J. Managing Director
Managing Director of Putnam Fiduciary Trust Company
42 Oristaglio, Stephen Managing Director
43Peacher, Stephen C. Managing Director
44Porter, Charles E. Managing Director
45 Reilly, Thomas V. Managing Director
46 Schultz, Mitchell D. Managing Director
Managing Director of Putnam Mutual Funds Corp.
47 Scott, Justin M. Managing Director
Managing Director of Putnam Fiduciary Trust Company
48 Shadek Jr., Edward T. Managing Director
Managing Director of Putnam Fiduciary Trust Company
49 Starr, Loren
Managing Director
Managing Director of Putnam Mutual Funds Corp.
50 Swift, Robert
Managing Director
51 Talanian, John C.
Managing Director
Managing Director of Putnam Mutual Funds Corp.
52 Tibbetts, Richard B.
Managing Director
Managing Director of Putnam Mutual Funds Corp.
53 Waldman, David L.
Managing Director
54 Wetlaufer, Eric
Managing Director
55 Woolverton, William H.
Managing Director
Managing Director of Putnam Mutual Funds Corp.
56 Zieff, William E.
Managing Director
57 Arends, Michael K.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
58 Asher, Steven E.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp. and Senior Vice
President of Putnam Fiduciary Trust Company
59 Atkin, Michael J.
Senior Vice President
60 Attridge, Gail S.
Senior Vice President
Senior Vice President of Putnam Fiduciary Trust Company
61 Augustine, Jeffrey B.
Senior Vice President
62 Bakshi, Manjit S.
Senior Vice President
63 Bamford, Dolores Snyder
Senior Vice President
64 Baumbach, Robert K.
Senior Vice President
65 Berka, Sharon A.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
66 Block, Richard L.
Senior Vice President
67 Boselli, John A.
Senior Vice President
68 Bousa, Edward P.
Senior Vice President
69 Bresnahan, Leslee R.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
70 Burke, Andrea
Senior Vice
President
71 Burns, Cheryl A.
Senior Vice President
72 Byrne, Joshua L.
Senior Vice President
73 Callahan, Ellen S.
Senior Vice President
74 Carlson, David G.
Senior Vice President
75 Chrostowski, Louis F.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
76 Curran, Peter J.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
77 Dalferro, John R.
Senior Vice President
78 Derbyshire, Ralph C.
Senior Vice President
79 England, Richard B.
Senior Vice President
80 Farrell, Deborah S.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
81 Finch, Edward R.
Senior Vice President
82 Flaherty, Patricia C.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
83 Fontana, Forrest N.
Senior Vice President
84 Francis, Jonathan H.
Senior Vice President
85 Frost, Karen T.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
86 Frucci, Richard M.
Senior Vice President
Senior Vice President of Putnam Fiduciary Trust Company
87 Fullerton, Brian J.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
88Grant, Peter J.
Senior Vice President
Senior Vice President of Putnam Fiduciary Trust Company
89Graviere, Patrice
Senior Vice President
90Grim, Daniel J.
Senior Vice President
91Haagensen, Paul E.
Senior Vice President
92 Hadden, Peter J.
Senior Vice President
93 Halperin, Matthew C.
Senior Vice President
94Healey, Deborah R.
Senior Vice President
95 Holding, Pamela
Senior Vice President
96Hotchkiss, Michael F.
Senior Vice President
97Kaufman, Jeffrey
Senior Vice President
98 Kay, Karen R.
Senior Vice President
Clerk, Director and Senior Vice President of Putnam Fiduciary
Trust Company and Senior Vice President of Putnam Mutual Funds
Corp.
99 Kirson, Steven L.
Senior Vice President
100 Knight, Jeffrey L.
Senior Vice President
101 Koontz, Jill A.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
102 Korn, Karen R.
Senior Vice President
103 Lannum III, Coleman N.
Senior Vice President
104 Lindsey, Jeffrey R.
Senior Vice President
105 Lomba, Rufino R.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
106 MacElwee, Jones, Elizabeth M.
Senior Vice President
107 Madore, Robert A.
Senior Vice President
Senior Vice President of Putnam Fiduciary Trust Company
108 Malloy, Julie M.
Senior Vice President
109 Marrkand, Paul E.
Senior Vice President
110 Matteis, Andrew S.
Senior Vice President
111 McDonald, Richard E.
Senior Vice President
112 Meehan, Thalia
Senior Vice President
113 Mehta, Sandeep
Senior Vice President
114 Miller, William H.
Senior Vice President
115 Mockard, Jeanne L.
Senior Vice President
116 Morgan, Kelly A.
Senior Vice President
117 Mufson, Michael J.
Senior Vice President
118 Mullen, Donald E.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
119 Mullin, Hugh H.
Senior Vice President
120 Netols, Jeffrey W.
Senior Vice President
Senior Vice President of Putnam Fiduciary Trust Company
121 Oler, Stephen S.
Senior Vice President
122 Paine, Robert M.
Senior Vice President
123 Parker, Margery C.
Senior Vice President
124 Perry, William
Senior Vice President
125 Peters, Carmel
Senior Vice President
126 Petralia, Randolph S.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
127 Plapinger, Keith
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
128 Pohl, Charles G.
Senior Vice President
129 Pollard, Mark D.
Senior Vice President
130 Prusko, James M.
Senior Vice President
Senior Vice President of Putnam Fiduciary Trust Company
131 Quistberg, Paul T.
Senior Vice President
132 Ray, Christopher A.
Senior Vice President
133 Reeves, William H.
Senior Vice President
135 Rogers, Kevin J.
Senior Vice President
136 Ruys de Perez, Charles A.
Senior Vice President
Senior Vice President of Putnam Fiduciary Trust Company and Senior
Vice President of Putnam Mutual Funds Corp.
137 Santos, David J.
Senior Vice President
Senior Vice President of Putnam Fiduciary Trust Company
138 Santosus, Anthony C.
Senior Vice President
139 Schwister, Jay E.
Senior Vice President
Senior Vice President of Putnam Fiduciary Trust Company
140 Scordato, Christine A.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
141 Sievert, Jean I.
Senior Vice President
142 Simon, Sheldon N.
Senior Vice President
143 Simozar, Saied
Senior Vice President
144 Smith Jr., Leo J.
Senior Vice President
145 Smith, Margaret D.
Senior Vice President
146 Spatz, Erin J.
Senior Vice President
147 Stack, Michael P.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
148 Stairs, George W.
Senior Vice President
149 Strumpf, Casey
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
150 Sugimoto, Toshifumi
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
151 Sullivan, Roger R.
Senior Vice President
152 Svensson, Lisa H.
Senior Vice President
153 Swanberg, Charles H.
Senior Vice President
154 Thomsen, Rosemary H.
Senior Vice President
Senior Vice President of Putnam Fiduciary Trust Company
155 Troped, Bonnie L.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
156 Verani, John R.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
157 Walsh, Francis P.
Senior Vice President
158 Warren, Paul C.
Senior Vice President
159 Weinstein, Michael R.
Senior Vice President
160 Weiss, Manuel
Senior Vice President
161 Whalen, Edward F.
Senior Vice President
Senior Vice President of Putnam Mutual Funds Corp.
162 Wheeler, Diane D.F.
Senior Vice President
163 Wyke, Richard P.
Senior Vice President
164 Yogg, Michael R.
Senior Vice President
165 Zukowski, Gerald S.
Senior Vice President
(I) Summary of Business Lines and Business Operation
Investment Management Company is engaged in the business of
providing investment management and investment advisory services
to mutual funds. As of January 31, 1999, Investment Management
Company managed, advised, and/or administered the following 113
funds and fund portfolios (having an aggregate net asset value of
approximately $228.45 billion):
<TABLE><CAPTION>
(As of January 31, 1999)
<S> <C> <C> <C> <C>
Name Month/Date/ Principal Total Net Net Asset
Year Established Chara. Asset Value Value per
($ million) Share ($)
1The George Putnam Fund of Boston; A 11/5/37 Open/Equity 3822.28 18.22
2The George Putnam Fund of Boston; B 4/24/92 Open/Equity 1494.05 18.06
3The George Putnam Fund of Boston; M 12/1/94 Open/Equity 284.64 18.06
4The George Putnam Fund of Boston; Y 1/1/94 Open/Equity 535.50 18.25
5Putnam American Government Income Fund; A 3/1/85 Open/Bond 1450.70 9.00
6Putnam American Government Income Fund; B 5/20/94 Open/Bond 104.51 8.97
7Putnam American Government Income Fund; M 2/14/95 Open/Bond 4.05 9.02
8Putnam Asia Pacific Growth Fund; A 2/20/91 Open/Equity 121.94 9.13
9Putnam Asia Pacific Growth Fund; B 6/1/93 Open/Equity 113.32 8.97
10Putnam Asia Pacific Growth Fund; M 2/1/95 Open/Equity 6.74 9.06
11Putnam Asia Pacific Fund II 3/23/98 Open/Equity 1.91 7.35
12Putnam Asset Allocation: Balanced Portfolio; A 2/7/94 Open/Balanced 1025.18 12.25
13Putnam Asset Allocation: Balanced Portfolio; B 2/11/94 Open/Balanced 564.75 12.18
14Putnam Asset Allocation:Balanced Portfolio; C 9/1/94 Open/Balanced 113.13 12.11
15Putnam Asset Allocation: Balanced Portfolio; M 2/6/95 Open/Balanced 67.22 12.22
16Putnam Asset Allocation: Balanced Portfolio; Y 7/14/94 Open/Balanced 282.75 12.26
17Putnam Asset Allocation : Conservative Portfolio; A 2/7/94 Open/Balanced 412.34 10.56
18Putnam Asset Allocation : Conservative Portfolio; B 2/18/94 Open/Balanced 183.22 10.52
19Putnam Asset Allocation : Conservative Portfolio; C 9/1/94 Open/Balanced 55.99 10.49
20Putnam Asset Allocation : Conservative Portfolio; M 2/7/95 Open/Balanced 22.47 10.53
21Putnam Asset Allocation : Conservative Portfolio; Y 7/14/94 Open/Balanced 47.22 10.57
22Putnam Asset Allocation: Growth Portfolio; A 2/8/94 Open/Balanced 752.65 13.98
23Putnam Asset Allocation: Growth Portfolio; B 2/16/94 Open/Balanced 472.51 13.82
24Putnam Asset Allocation: Growth Portfolio; C 9/1/94 Open/Balanced 106.97 13.72
25Putnam Asset Allocation: Growth Portfolio; M 2/1/95 Open/Balanced 63.25 13.83
26Putnam Asset Allocation: Growth Portfolio; Y 7/14/94 Open/Balanced 264.53 14.05
27Putnam Arizona Tax Exempt Income Fund; A 1/30/91 Open/Bond 116.52 9.44
28Putnam Arizona Tax Exempt Income Fund; B 7/15/93 Open/Bond 34.14 9.42
29Putnam Arizona Tax Exempt Income Fund; M 7/3/95 Open/Bond 0.51 9.47
30Putnam Balanced Fund 10/2/95 Open/Balanced 3.79 12.52
31Putnam Balanced Retirement Fund; A 4/19/85 Open/Balanced 669.77 10.90
32Putnam Balanced Retirement Fund; B 2/1/94 Open/Balanced 170.31 10.81
33Putnam Balanced Retirement Fund; M 3/17/95 Open/Balanced 13.73 10.85
34Putnam California Investment Grade Municipal Trust 11/27/92 Closed/Bond 72.55 15.75
35Putnam California Tax Exempt Income Fund; A 4/29/83 Open/Bond 3077.11 8.85
36Putnam California Tax Exempt Income Fund; B 1/4/93 Open/Bond 661.65 8.85
37Putnam California Tax Exempt Income Fund; M 2/14/95 Open/Bond 21.18 8.84
38Putnam California Tax Exempt Money Market Fund 10/26/87 Open/Bond 32.86 1.00
39Putnam Capital Opportunities Fund; A 8/5/93 Open/Equity 53.71 8.02
40Putnam Capital Opportunities Fund; B 11/2/94 Open/Equity 73.48 8.01
41Putnam Capital Opportunities Fund; M 1/22/96 Open/Equity 4.72 8.02
42Putnam Capital Appreciation Fund; A 8/5/93 Open/Equity 1539.13 23.23
43Putnam Capital Appreciation Fund; B 11/2/94 Open/Equity 1711.08 22.98
44Putnam Capital Appreciation Fund; M 1/22/96 Open/Equity 113.99 23.02
45Putnam Convertible Opportunity and Income Trust 6/29/95 Closed/Bond 87.46 23.56
46Putnam Convertible Income-Growth Trust; A 6/29/72 Open/Balanced 1064.98 19.89
47Putnam Convertible Income-Growth Trust; B 7/15/93 Open/Balanced 303.47 19.67
48Putnam Convertible Income-Growth Trust; M 3/13/95 Open/Balanced 18.38 19.77
49Putnam Diversified Equity Trust; A 7/1/94 Open/Equity 316.36 14.15
50Putnam Diversified Equity Trust; B 7/2/94 Open/Equity 395.36 13.92
51Putnam Diversified Equity Trust; M 7/3/95 Open/Equity 30.68 14.00
52Putnam Dividend Income Fund 9/28/89 Closed/Bond 124.74 11.52
53Putnam Diversified Income Trust; A 10/3/88 Open/Bond 1827.83 11.51
54Putnam Diversified Income Trust; B 3/1/93 Open/Bond 2081.29 11.46
55Putnam Diversified Income Trust; M 12/1/94 Open/Bond 1040.00 11.47
56Putnam Diversified Income Trust ; Y 7/11/96 Open/Bond 15.62 11.52
57Putnam Emerging Markets Fund; A 10/2/95 Open/Equity 34.89 7.00
58Putnam Emerging Markets Fund; B 10/2/95 Open/Equity 25.05 6.96
59Putnam Emerging Markets Fund; M 10/2/95 Open/Equity 2.07 6.98
60Putnam Equity Fund 98 12/30/97 Open/Equity 6.11 11.44
61Putnam Equity Income Fund; A 6/15/77 Open/Balanced 1141.35 15.76
62Putnam Equity Income Fund; B 9/13/93 Open/Balanced 658.14 15.66
63Putnam Equity Income Fund; M 12/2/94 Open/Balanced 62.37 15.67
64Putnam Europe Growth Fund; A 9/7/90 Open/Equity 934.77 22.17
65Putnam Europe Growth Fund; B 2/1/94 Open/Equity 817.49 21.65
66Putnam Europe Growth Fund; M 12/1/94 Open/Equity 140.92 21.97
67Putnam Florida Tax Exempt Income Fund; A 8/24/90 Open/Bond 246.49 9.57
68Putnam Florida Tax Exempt Income Fund; B 1/4/93 Open/Bond 82.48 9.57
69Putnam Florida Tax Exempt Income Fund; M 5/1/95 Open/Bond 1.85 9.56
70Putnam Global Natural Resources Fund; A 7/24/80 Open/Equity 153.56 15.09
71Putnam Global Natural Resources Fund; B 2/1/94 Open/Equity 106.74 14.88
72Putnam Global Natural Resources Fund; M 7/3/95 Open/Equity 5.49 15.02
73Putnam Global Equity Fund 5/6/98 Open/Equity 3.18 12.23
74Putnam Global Growth and Income Fund; A 1/3/95 Open/Equity 27.08 13.10
75Putnam Global Growth and Income Fund; B 1/3/95 Open/Equity 20.91 13.02
76Putnam Global Growth and Income Fund; M 1/3/95 Open/Equity 2.23 13.05
77Putnam Global Governmental Income Trust; A 6/1/87 Open/Bond 249.00 12.99
78Putnam Global Governmental Income Trust; B 2/1/94 Open/Bond 36.72 12.95
79Putnam Global Governmental Income Trust; M 3/17/95 Open/Bond 226.30 12.93
80Putnam Global Growth Fund; A 9/1/67 Open/Equity 3487.37 12.97
81Putnam Global Growth Fund; B 4/27/92 Open/Equity 2051.12 12.49
82Putnam Global Growth Fund; M 3/1/95 Open/Equity 64.86 12.88
83Putnam Global Growth Fund; Y 6/15/94 Open/Equity 88.13 13.17
84Putnam Growth and Income Fund II; A 1/5/95 Open/Balanced 1287.76 14.21
85Putnam Growth and Income Fund II; B 1/5/95 Open/Balanced 1529.73 14.09
86Putnam Growth and Income Fund II; M 1/5/95 Open/Balanced 173.67 14.14
87The Putnam Fund for Growth and Income; A 11/6/57 Open/Balanced 21088.84 20.82
88The Putnam Fund for Growth and Income; B 4/27/92 Open/Balanced 16364.59 20.54
89The Putnam Fund for Growth and Income; M 5/1/95 Open/Balanced 464.75 20.69
90The Putnam Fund for Growth and Income; Y 6/15/94 Open/Balanced 911.59 20.85
91Putnam Growth Fund 5/1/98 Open/Equity 2.53 10.41
92Putnam Growth Opportunities; A 10/2/95 Open/Equity 682.13 21.24
93Putnam Growth Opportunities; B 8/1/97 Open/Equity 763.01 21.02
94Putnam Growth Opportunities; M 8/1/97 Open/Equity 56.90 21.10
95Putnam High Income Convertible and Bond Fund 7/9/87 Closed/Bond 116.08 8.55
96Putnam High Yield Advantage Fund; A 3/25/86 Open/Bond 1202.40 8.24
97Putnam High Yield Advantage Fund; B 5/16/94 Open/Bond 1006.42 8.21
98Putnam High Yield Advantage Fund; M 12/1/94 Open/Bond 926.04 8.23
99Putnam High Yield Total Return Fund; A 1/1/97 Open/Bond 50.18 7.51
100Putnam High Yield Total Return Fund; B 1/1/97 Open/Bond 58.07 7.44
101Putnam High Yield Total Return Fund; M 1/1/97 Open/Bond 3.75 7.45
102Putnam High Quality Bond Fund; A 6/2/86 Open/Bond 339.53 10.20
103Putnam High Quality Bond Fund; B 6/6/94 Open/Bond 42.74 10.16
104Putnam High Quality Bond Fund; M 4/12/95 Open/Bond 2.74 10.21
105Putnam High Yield Fund II; A 12/31/97 Open/Bond 456.79 7.88
106Putnam High Yield Fund II; B 12/31/97 Open/Bond 651.93 7.88
107Putnam High Yield Fund II; M 12/31/97 Open/Bond 35.59 7.88
108Putnam High Yield Trust; A 2/14/78 Open/Bond 2657.56 10.90
109Putnam High Yield Trust; B 3/1/93 Open/Bond 916.14 10.85 \
110Putnam High Yield Trust; M 7/3/95 Open/Bond 18.20 10.90
111Putnam Health Sciences Trust; A 5/28/82 Open/Equity 2984.13 63.77
112Putnam Health Sciences Trust; B 3/1/93 Open/Equity 2063.97 61.29
113Putnam Health Sciences Trust; M 7/3/95 Open/Equity 90.92 62.82
114Putnam High Yield Municipal Trust 5/25/89 Closed/Bond 203.62 9.24
115Putnam Income Fund; A 11/1/54 Open/Bond 1445.39 6.95
116Putnam Income Fund; B 3/1/93 Open/Bond 514.65 6.91
117Putnam Income Fund; M 12/14/94 Open/Bond 1523.22 6.91
118Putnam Income Fund; Y 2/12/94 Open/Bond 257.92 6.95
119Putnam Intermediate U.S. Government Income Fund; A 2/16/93 Open/Bond 228.36 5.00
120Putnam Intermediate U.S. Government Income Fund; B 2/16/93 Open/Bond 140.23 5.01
121Putnam Intermediate U.S. Government Income Fund; M 4/3/95 Open/Bond 10.19 5.01
122Putnam Intermediate U.S. Government Income Fund; Y 10/1/97 Open/Bond 119.78 5.00
123Putnam International Fund 12/28/95 Open/Equity 4.57 10.99
124Putnam International Growth and Income Fund; A 8/1/96 Open/Equity 409.47 11.10
125Putnam International Growth and Income Fund; B 8/1/96 Open/Equity 401.86 11.02
126Putnam International Growth and Income Fund; M 8/1/96 Open/Equity 34.15 11.07
127Putnam International Growth Fund; A 2/18/91 Open/Equity 2370.93 20.02
128Putnam International Growth Fund; B 6/1/94 Open/Equity 1530.16 19.68
129Putnam International Growth Fund; M 12/1/94 Open/Equity 168.85 19.89
130Putnam International Growth Fund; Y 7/12/96 Open/Equity 162.36 20.08
131Putnam International New Opportunities Fund; A 1/3/95 Open/Equity 768.08 13.82
132Putnam International New Opportunities Fund; B 7/21/95 Open/Equity 958.83 13.52
133Putnam International New Opportunities Fund; M 7/21/95 Open/Equity 74.86 13.65
134Putnam International Voyager Fund; A 12/28/95 Open/Equity 120.37 14.04
135Putnam International Voyager Fund; B 10/30/96 Open/Equity 96.15 13.94
136Putnam International Voyager Fund; M 10/30/96 Open/Equity 11.02 13.99
137Putnam Investment Grade Municipal Trust 10/26/89 Closed/Bond 250.46 12.00
138Putnam Investment Grade Municipal Trust II 11/27/92 Closed/Bond 190.04 14.23
139Putnam Investment Grade Municipal Trust III 11/29/93 Closed/Bond 54.18 13.52
140Putnam Investors Fund; A 12/1/95 Open/Equity 4751.05 15.53
141Putnam Investors Fund; B 3/1/93 Open/Equity 1984.86 14.88
142Putnam Investors Fund; M 12/2/94 Open/Equity 149.63 15.25
143Putnam Investors Fund; Y 1/7/97 Open/Equity 356.86 15.57
144Putnam Japan Fund 12/28/95 Open/Equity 2.12 5.59
145Putnam Latin America Fund 3/23/98 Open/Equity 1.18 4.47
146Putnam Massachusetts Tax Exempt Income Fund; A 10/23/89 Open/Bond 305.93 9.69
147Putnam Massachusetts Tax Exempt Income Fund; B 7/15/93 Open/Bond 119.94 9.68
148Putnam Massachusetts Tax Exempt Income Fund; M 12/2/94 Open/Bond 3.42 9.68
149Putnam Master Income Trust 4/29/88 Closed/Bond 444.57 8.37
150Putnam Managed High Yield Trust 6/25/93 Closed/Bond 93.58 12.47
151Putnam Michigan Tax Exempt Income Fund; A 10/23/89 Open/Bond 148.19 9.39
152Putnam Michigan Tax Exempt Income Fund; B 7/15/93 Open/Bond 46.32 9.38
153Putnam Michigan Tax Exempt Income Fund; M 4/17/95 Open/Bond 1.72 9.39
154Putnam Minnesota Tax Exempt Income Fund; A 10/23/89 Open/Bond 104.39 9.26
155Putnam Minnesota Tax Exempt Income Fund; B 7/15/93 Open/Bond 49.74 9.23
156Putnam Minnesota Tax Exempt Income Fund; M 4/3/95 Open/Bond 1.42 9.26
157Putnam Managed Municipal Income Trust 2/24/89 Closed/Bond 453.88 9.80
158Putnam Money Market Fund; A 10/1/76 Open/Bond 2934.12 1.00
159Putnam Money Market Fund; B 4/27/92 Open/Bond 707.12 1.00
160Putnam Money Market Fund; M 12/8/94 Open/Bond 85.97 1.00
161Putnam Master Intermediate Income Trust 4/29/88 Closed/Bond 804.27 8.04
162Putnam Municipal Income Fund; A 5/22/89 Open/Bond 826.65 9.39
163Putnam Municipal Income Fund; B 1/4/93 Open/Bond 511.17 9.38
164Putnam Municipal Income Fund; M 12/1/94 Open/Bond 15.62 9.39
165Putnam Municipal Opportunities Trust 5/28/93 Closed/Bond 230.91 14.29
166Putnam New Opportunities Fund; A 8/31/90 Open/Equity 11177.36 61.50
167Putnam New Opportunities Fund; B 3/1/93 Open/Equity 8236.26 58.74
168Putnam New Opportunities Fund; M 12/1/94 Open/Equity 474.22 60.18
169Putnam New Opportunities Fund; Y 7/19/94 Open/Equity 695.64 62.26
170Putnam New Value Fund; A 1/3/96 Open/Equity 399.86 13.92
171Putnam New Value Fund; B 2/26/96 Open/Equity 408.64 13.80
172Putnam New Value Fund; M 2/26/96 Open/Equity 40.13 13.86
173Putnam New Jersey Tax Exempt Income Fund; A 2/20/90 Open/Bond 219.50 9.42
174Putnam New Jersey Tax Exempt Income Fund; B 1/4/93 Open/Bond 102.08 9.41
175Putnam New Jersey Tax Exempt Income Fund; M 5/1/95 Open/Bond 0.94 9.42
176Putnam New York Investment Grade Municipal Trust 11/27/92 Closed/Bond 40.59 14.26
177Putnam New York Tax Exempt Income Fund; A 9/2/83 Open/Bond 1616.83 9.04 178
Putnam New York Tax Exempt Income Fund; B 1/4/93 Open/Bond 232.13 9.02
179Putnam New York Tax Exempt Income Fund; M 4/10/95 Open/Bond 2.30 9.04
180Putnam New York Tax Exempt Money Market Fund 10/26/87 Open/Bond 39.50 1.00
181Putnam New York Tax Exempt Opportunities Fund; A 11/7/90 Open/Bond 165.93 9.25
182Putnam New York Tax Exempt Opportunities Fund; B 2/1/94 Open/Bond 70.09 9.24
183Putnam New York Tax Exempt Opportunities Fund; M 2/10/95 Open/Bond 2.53 9.23
184Putnam Ohio Tax Exempt Income Fund; A 10/23/89 Open/Bond 187.36 9.22
185Putnam Ohio Tax Exempt Income Fund; B 7/15/93 Open/Bond 57.26 9.21
186Putnam Ohio Tax Exempt Income Fund; M 4/3/95 Open/Bond 2.02 9.22
187Putnam OTC & Emerging Growth Fund; A 11/1/82 Open/Equity 2680.36 18.44
188Putnam OTC & Emerging Growth Fund; B 7/15/93 Open/Equity 1337.00 17.56
189Putnam OTC & Emerging Growth Fund; M 12/2/94 Open/Equity 272.69 18.00
190Putnam OTC & Emerging Growth Fund; Y 7/12/96 Open/Equity 105.78 18.59
191Putnam Pennsylvania Tax Exempt Income Fund; A 7/21/89 Open/Bond 187.54 9.35
192Putnam Pennsylvania Tax Exempt Income Fund; B 7/15/93 Open/Bond 98.68 9.34
193Putnam Pennsylvania Tax Exempt Income Fund; M 7/3/95 Open/Bond 2.65 9.35
194Putnam Preferred Income Fund; A 1/4/84 Open/Bond 117.57 8.87
195Putnam Preferred Income Fund; M 4/20/95 Open/Bond 13.09 8.84
196Putnam Premier Income Trust 2/29/95 Closed/Bond 1129.16 8.03
197Putnam Research Fund; A 10/2/95 Open/Equity 272.86 15.81
198Putnam Research Fund; B 6/15/98 Open/Equity 278.92 15.74
199Putnam Research Fund; M 6/15/98 Open/Equity 25.87 15.76
200Putnam Strategic Income Fund; A 2/19/95 Open/Bond 76.50 7.77
201Putnam Strategic Income Fund; B 2/19/96 Open/Bond 120.61 7.77
202Putnam Strategic Income Fund; M 2/19/96 Open/Bond 9.33 7.76
203Putnam Tax Exempt Income Fund; A 12/31/76 Open/Bond 1954.86 9.26
204Putnam Tax Exempt Income Fund; B 1/4/93 Open/Bond 247.68 9.26
205Putnam Tax Exempt Income Fund; M 2/16/95 Open/Bond 10.23 9.28
206Putnam Tax Exempt Money Market Fund 10/26/87 Open/Bond 77.16 1.00
207Putnam Tax - Free Health Care Fund 6/29/92 Closed/Bond 205.82 14.91
208Putnam Tax - Free Income Trust
Tax - Free High Yield Fund; A 9/20/93 Open/Bond 1072.91 14.73
209Putnam Tax - Free Income Trust
Tax - Free High Yield Fund B 9/9/85 Open/Bond 938.32 14.75
210Putnam Tax - Free Income Trust
Tax - Free High Yield Fund M 12/29/94 Open/Bond 22.37 14.73
211Putnam Tax - Free Income Trust
Tax - Free Insured Fund; A 9/30/93 Open/Bond 245.74 15.55
212Putnam Tax - Free Income Trust
Tax - Free Insured Fund; B 9/9/85 Open/Bond 358.45 15.57
213Putnam Tax - Free Income Trust
Tax - Free Insured Fund; M 6/1/95 Open/Bond 2.47 15.54
214Putnam U.S. Core Fund 5/1/98 Open/Equity 2.60 10.21
215Putnam U.S. Government Income Trust; A 2/8/84 Open/Bond 2081.53 13.13
216Putnam U.S. Government Income Trust; B 4/27/92 Open/Bond 1284.45 13.07
217Putnam U.S. Government Income Trust; M 2/6/95 Open/Bond 156.61 13.11
218Putnam U.S. Government Income Trust; Y 4/11/94 Open/Bond 12.08 13.13
219Putnam Utilities Growth and Income Fund; A 11/19/90 Open/Balanced 878.21 13.63
220Putnam Utilities Growth and Income Fund; B 4/27/92 Open/Balanced 704.31 13.55
221Putnam Utilities Growth and Income Fund; M 3/1/95 Open/Balanced 14.44 13.61
222Putnam Value Fund 5/1/98 Open/Balanced 2.06 8.47
223Putnam Vista Fund; A 6/3/68 Open/Equity 3634.75 13.68
224Putnam Vista Fund; B 3/1/93 Open/Equity 1738.77 12.97
225Putnam Vista Fund; M 12/1/94 Open/Equity 142.19 13.35
226Putnam Vista Fund; Y 3/28/95 Open/Equity 328.84 13.87
227Putnam Voyager Fund II; A 4/14/93 Open/Equity 798.75 23.95
228Putnam Voyager Fund II; B 10/2/95 Open/Equity 739.68 23.34
229Putnam Voyager Fund II; M 10/2/95 Open/Equity 89.00 23.57
230Putnam Voyager Fund; A 4/1/96 Open/Equity 16311.25 23.02
231Putnam Voyager Fund; B 4/27/92 Open/Equity 8257.86 21.51
232Putnam Voyager Fund; M 12/1/94 Open/Equity 357.40 22.47
233Putnam Voyager Fund; Y 4/1/94 Open/Equity 1773.10 23.40
234Putnam VT Asia Pacific Growth Fund; A 5/1/95 Open/Equity 90.10 8.25
235Putnam VT Asia Pacific Growth Fund; B 4/30/98 Open/Equity 0.15 8.25
236Putnam VT Diversified Income Fund; A 9/15/93 Open/Bond 669.34 10.55
237Putnam VT Diversified Income Fund; B 4/6/98 Open/Bond 2.46 10.54
238Putnam VT Global Asset Allocation Fund; A 2/1/88 Open/Balanced 1032.02 19.31
239Putnam VT Global Asset Allocation Fund; B 4/30/98 Open/Balanced 1.56 19.32
240Putnam VT George Putnam Fund; A 4/30/98 Open/Equity 130.88 10.37
241Putnam VT George Putnam Fund; B 4/30/98 Open/Equity 2.69 10.37
242Putnam VT Global Growth Fund; A 5/1/90 Open/Equity 2061.05 21.14
243Putnam VT Global Growth Fund; B 4/30/98 Open/Equity 1.11 21.13
244Putnam VT Growth and Income Fund; A 2/1/88 Open/Balanced 10090.51 29.24
245Putnam VT Growth and Income Fund; B 4/6/98 Open/Balanced 9.95 29.21
246Putnam VT U.S. Government and High Quality Bond Fund; A 2/1/88 Open/Bond 1020.00 13.86
247Putnam VT U.S. Government and High Quality Bond Fund; B 4/30/98 Open/Bond 2.75 13.85
248Putnam VT High Yield Fund; A 2/1/88 Open/Bond 1041.19 11.87
249Putnam VT High Yield Fund; B 4/30/98 Open/Bond 2.49 11.87
250Putnam VT Health and Sciences Fund; A 4/30/98 Open/Equity 150.56 10.90
251Putnam VT Health and Sciences Fund; B 4/30/98 Open/Equity 2.45 10.89
252Putnam VT International Growth and Income; A 1/1/97 Open/Balanced 304.21 12.25
253Putnam VT International Growth and Income; B 4/6/98 Open/Balanced 1.03 12.25
254Putnam VT International New Opportunities Fund; A 1/1/97 Open/Equity 139.98 12.32
255Putnam VT International New Opportunities Fund; B 4/30/98 Open/Equity 0.12 12.31
256Putnam VT International Growth Fund; A 1/1/97 Open/Equity 338.71 14.07
257Putnam VT International Growth Fund; B 4/30/98 Open/Equity 1.57 14.06
258Putnam VT Investors Fund; A 4/30/98 Open/Equity 289.99 12.20
259Putnam VT Investors Fund; B 4/30/98 Open/Equity 3.55 12.19
260Putnam VT Money Market Fund; A 2/1/88 Open/Bond 604.28 1.00
261Putnam VT Money Market Fund; B 4/30/98 Open/Bond 5.28 1.00
262Putnam VT New Opportunities Fund; A 5/2/94 Open/Equity 3791.89 27.43
263Putnam VT New Opportunities Fund; B 4/30/98 Open/Equity 1.76 27.41
264Putnam VT New Value Fund; A 1/2/97 Open/Equity 262.34 12.44
265Putnam VT New Value Fund; B 4/30/98 Open/Equity 0.54 12.43
266Putnam VT OTC & Emerging Growth Fund; A 4/30/98 Open/Equity 33.43 10.94
267Putnam VT OTC & Emerging Growth Fund; B 4/30/98 Open/Equity 0.75 10.94
268Putnam VT Research A 10/1/98 Open/Equity 31.00 12.45
269Putnam VT Research B 10/1/98 Open/Equity 0.29 12.45
270Putnam VT Utilities Growth and Income Fund; A 5/1/92 Open/Balanced 995.22 17.72
271Putnam VT Utilities Growth and Income Fund; B 4/30/98 Open/Balanced 1.96 17.72
272Putnam VT Vista Fund; A 1/2/97 Open/Equity 330.67 15.43
273Putnam VT Vista Fund; B 4/30/98 Open/Equity 1.07 15.43
274Putnam VT Voyager Fund; A 2/1/88 Open/Equity 6093.39 48.19
275Putnam VT Voyager Fund; B 4/30/98 Open/Equity 5.46 48.15
</TABLE>
(J) Miscellaneous
1. Election and Removal of Directors
Directors of Investment Management Company are elected
to office or removed from office by vote of either stockholders or
directors, in accordance with Articles of Organization and By-Laws
of Investment Management Company.
2. Election and Removal of Officers
Officers are elected by the Board of Directors. The
Board of Directors may remove any officer without cause.
3. Supervision by SEC of Changes in Directors and Certain
Officers
Investment Management Company files certain reports with
the SEC in accordance with Sections 203 and 204 of the Investment
Advisers Act of 1940, which reports list and provide certain
information relating to directors and officers of Investment
Management Company.
Under Section 9 (b) of the Investment Company Act of
1940 SEC may prohibit the directors and officers from remaining in
office, if SEC will judge that such directors and officers have
willfully violated any provision of the federal securities law.
4. Amendment to the Articles of Organization, Transfer of
Business and Other Important Matters.
a. Articles of Organization of Investment Management Company may
be amended, under the General Corporation Law of The Commonwealth
of Massachusetts, by appropriate shareholders' vote.
b. Under the General Corporation Law of The Commonwealth of
Massachusetts, transfer of business requires a vote of 2/3 of the
stockholders entitled to vote thereon.
c. Investment Management Company has no direct subsidiaries.
5. Litigation, etc.
There are no known facts, such as legal proceedings,
which are expected to materially affect the Fund and/or Investment
Management Company within the six-month period preceding the
filing of this Registration Statement.
III. OUTLINE OF THE OTHER RELATED COMPANIES
(A) Putnam Fiduciary Trust Company (the Transfer Agent,
Shareholder Service Agent and Custodian)
(1) Amount of Capital
U.S.$32,578,770 (approximately yen3.8 billion) as of January 31, 1999
(2) Description of Business
Putnam Fiduciary Trust Company is a Massachusetts trust
company and is a wholly-owned subsidiary of Putnam Investments,
Inc., parent of Putnam. Putnam Fiduciary Trust Company has been
providing paying agent and shareholder service agent services to
mutual funds, including the Fund, since its inception and custody
services since 1990.
(3) Outline of Business Relationship with the Fund
Putnam Fiduciary Trust Company provides transfer agent
services, shareholder services and custody services to the Fund.
(B) Putnam Mutual Funds Corp. (the Principal Underwriter)
(1) Amount of Capital
U.S.$116,101,386 (approximately yen13.5 billion) as of the end
of January, 1999
(2) Description of Business
Putnam Mutual Funds Corp. is the Principal Underwriter of the
shares of Putnam Funds including the Fund.
(3) Outline of Business Relationship with the Fund
Putnam Mutual Funds Corp. engages in providing marketing
services to the Fund.
(C) Kankaku Securities Co., Ltd. (Distributor in Japan and Agent
Company)
(1) Amount of Capital
yen51.1 billion as of January 31, 1999
(2) Description of Business
Kankaku Securities Co., Ltd. is a diversified securities
company in Japan. Kankaku Securities Co., Ltd. engages in
handling the sales and redemptions of the fund shares for 4
offering foreign investment funds.
(3) The Company acts as a Distributor in Japan and Agent Company
for the Fund in connection with the offering of shares in Japan.
(D) Capital Relationships
100% of the shares of Putnam Investment Management, Inc.
are held by Putnam Investments, Inc.
(E) Interlocking Directors and Auditors
Names and functions of officers of the Fund who also are
officers of the related companies are as follows:
(as of January 31, 1999)
Name of Investment Transfer Agent and
Officer or Management Shareholder Service
Trustee Fund Company Agent
George Putnam Chairman, Trustee
and President Chairman and Director None
Charles E. Porter Executive Vice
President Managing Director None
Patricia C. Flaherty Senior Vice
President Senior Vice President None
John D. Hughes Senior Vice President
and Treasurer Senior Vice President None
Lawrence J. Lasser Trustee and
Vice President President and CEO None
Gordon H. Silver Vice President
Senior Managing Director Director
Ian C. Ferguson Vice President Senior Managing Director None
Edward H. D'Alelio Vice President Managing Director None
Stephen Oristaglio Vice President Managing Director None
Kevin M. Cronin Vice President Managing Director None
Krishna K. Mcmani Vice President Managing Director None
IV. FINANCIAL CONDITIONS OF THE FUND
1. FINANCIAL STATEMENTS
[Omitted, in Japanese version, financial statements of the
Fund and Japanese translations thereof are incorporated here]
FINANCIAL HIGHLIGHTS
The following table presents per share financial
information for class M shares. This information has been audited
and reported on by the Fund's independent accountants. Financial
statements included in the Fund's annual report to shareholders
for the 1998 fiscal year are presented in their entirety in this
SRS. The Fund's annual report is available without charge upon
request.
FINANCIAL HIGHLIGHTS (For a share outstanding throughout the period)
FOR THE PERIOD DEC. 14, 1994
(COMMENCEMENT OF OPERATION)
TO OCTOBER 31
Year ended
October 31
1998 1997 1996 1995
CLASS M
NET ASSET VALUE, BEGINNING OF PERIOD $7.11 $6.99 $7.04 $6.50
INVESTMENT OPERATIONS
Net investment income .47(c) .43 .44 .43
Net realized and unrealized gain (loss) on investments (.28) .16 (.04) .54
TOTAL FROM INVESTMENT OPERATIONS .19 .59 .40 .97
LESS DISTRIBUTIONS:
From net investment income (.39) (.43) (.45) (.43)
In excess of net investment - - - -
From net realized gain on (.04) (.04) - -
From return of capital (.03) - - -
TOTAL DISTRIBUTIONS (.46) (.47) (.45) (.43)
NET ASSET VALUE, END OF PERIOD $6.84 $7.11 $6.99 $7.04
TOTAL INVESTMENT RETURN AT NET ASSET VALUE (%) (A) 2.58 8.74 5.92 15.43*
NET ASSETS, END OF PERIOD (in thousands) $1,188,620 $368,297 $18,937 $7,673
Ratio of expenses to average net assets (%) (b) 1.27 1.42 1.42 1.19*
Ratio of net investment income to average net assets (%) 6.53 5.76 6.28 5.17*
Portfolio turnover (%) 257.12 265.71 213.46 169.29
* 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 years
ended October 31, 1995 and thereafter, includes amounts paid
through expense offset arrangements. Prior period ratios exclude
these amounts.
(c) Per share net investment income has been determined on the
basis of the weighted average number of shares outstanding during
the period.
[The following financial documents are omitted here.]
[Statement of assets and liabilities October 31, 1998
Statement of operations Year ended October 31, 1998
Statement of changes in net assets
Financial highlights (For a share outstanding throughout the period)
Notes to financial statements October 31, 1998
Portfolio of investments owned October 31, 1998]
Statement of assets and liabilities October 31, 1997
Statement of operations Year ended October 31, 1997
Statement of changes in net assets
Financial highlights (For a share outstanding throughout the period)
Notes to financial statements October 31, 1997
Portfolio of investments owned October 31, 1997
Statement of assets and liabilities April 30, 1998 (unaudited)
Statement of operations Six months ended April 30, 1998 (unaudited)
Statement of changes in net assets
Financial highlights (For a share outstanding throughout the period)
Notes to financial statements April 30, 1998 (unaudited)
Portfolio of investments owned April 30, 1998 (unaudited)
2. CONDITION OF THE FUND
(a) Statement of Net Assets
(As of January 31, 1999)
$ Yen
(in thousands)
a. Total Assets 4,310,104,243 501,480,629
b. Total Liabilities 568,966,128 66,199,209
c. Total Net Assets 3,741,138,115 435,281,420
(a-b)
d. Total Number of Shares
Outstanding
Class A. 208,093,640 Shares
Class B. 74,513,409 Shares
Class M. 220,519,314 Shares
Class Y. 37,085,121 Shares
e. Net Asset Value
per Share (c/d)
Class A. $6.95 Yen808.63
Class B. $6.91 Yen803.98
Class M. $6.91 Yen803.98
Class Y. $6.95 Yen808.63
(b) Names of Major Portfolio Holdings other than Equity
Shares (Top 30 Holdings)
<TABLE><CAPTION>
(As of January 31, 1999)
U.S. Dollar Invest-
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kind of Interest Par Value Acquisition Current ment
Name of Securities Issue Maturity Rate (%) 1,000 currency Cost Value Ratio(%)
1.GNMA U.S. Government 2023-2028 7 186,602 USD 189,007,595 191,152,468 5.11
2.U.S. Treasury Notes U.S. Government 2028 5 1/2 141,202 USD 129,856,423 148,063,005 3.96
3.U.S. Treasury Notes U.S. Government 2003 4 1/4 136,375 USD 222,034,586 134,734,409 3.60
4.FNMA U.S. Government 2012-2013 6 111,765 USD 112,132,758 112,183,959 3.00
5.FNMA U.S. Government 2024-2029 6 1/2 140,031 USD 140,335,525 110,130,306 2.94
6.GNMA U.S. Government 2024-2029 6 1/2 128,642 USD 129,726,688 96,329,515 2.57
7.GNMA U.S. Government 2024-2028 7 83,380 USD 85,412,438 85,412,964 2.28
8.U.S. Treasury Notes U.S. Government 2003 5 1/4 53,515 USD 55,416,557 54,961,510 1.47
9.U.S. Treasury Notes U.S. Government 2008 4 3/4 44,490 USD 82,788,051 44,844,585 1.20
10.GNMA U.S. Government 2023-2028 8 37,459 USD 38,982,304 39,027,569 1.04
11.FNMA TBA U.S. Government 2029 6 1/2 37,920 USD 22,972,050 38,263,555 1.02
12.FHLMC U.S. Government 2004 35,000 USD 34,942,387 35,035,000 0.94
13.FHLMC U.S. Government 2010-2011 5 1/2 34,736 USD 32,098,642 34,350,946 0.92
14.GNMA TBA U.S. Government 2029 6 1/2 33,425 USD 33,421,005 33,801,031 0.90
15. TC1 Communications Inc Corporate Bonds 2015 8 3/4 26,575 USD 33,618,999 33,744,404 0.90
16.Criimi Mae Commerical Mortgage Trust U.S. Government 2011 7 4,500 USD 33,491,945 33,508,125 0.90
17.Viacom, Inc. sr. notes Corporate Bonds 2005 7 3/4 30,215 USD 31,865,667 33,151,596 0.89
18.Commercial Mortgage Acceptance Corp. U.S. Government 2007 6 4/7 28,790 USD 29,151,131 30,153,027 0.81
19.GNMA U.S. Government 2023-2029 8 28,829 USD 29,953,659 30,032,831 0.80
20.American General Institute 144A Corporate Bonds 2046 8 1/8 25,090 USD 27,724,861 29,520,894 0.79
21.News America Holdings, Inc. Corporate Bonds 2045 7 3/4 26,635 USD 27,295,547 29,367,218 0.78
22.FNMA U.S. Government 2024-2026 6 1/2 28,994 USD 28,973,830 28,895,388 0.77
23.GMAC Commercial Mortgage Securities Inc. U.S. Government 2008 6 3/7 26,219 USD 26,948,786 27,274,581 0.73
24.U.S. Treasury Notes U.S. Government 2028 5 1/4 23,940 USD 22,522,001 24,527,248 0.66
25.LCI International, Inc. sr. notes Corporate Bonds 2007 7 1/4 23,845 USD 24,200,629 24,144,493 0.65
26.Commercial Mortgage Acceptance Corp. U.S. Government 2008 6.03 23,000 USD 23,168,906 23,262,344 0.62
27.GNMA U.S. Government 2028 9 1/2 21,135 USD 22,838,893 23,043,637 0.62
28.GNMA TBA U.S. Government 2029 6 1/2 22,720 USD 22,972,050 22,975,600 0.61
29.General Motors Acceptance Corp. sr. Corporate Bonds 2009 5 6/7 22,120 USD 22,098,624 22,341,200 0.60
30.BHAC Senior Mortgage Foreign Bonds 2003 3 4/9 13,350 GBR 21,500,014 21,878,397 0.58
</TABLE>
V. FINANCIAL CONDITIONS OF THE INVESTMENT MANAGEMENT COMPANY
(translated from the English source: omitted in English Translation)
VI. SUMMARY OF INFORMATION CONCERNING FOREIGN INVESTMENT FUND
SECURITIES
1. Transfer of the Shares
The transfer agent for the registered share certificates
is Putnam Fiduciary Trust Company, P.O.Box 41203, Providence, RI
02940-1203, U. S. A.
The Japanese investors who entrust the custody of their
shares to a Sales Handling Company shall have their shares
transferred under the responsibility of such company, and the
other investors shall make their own arrangements.
No fee is chargeable for the transfer of shares.
2. The Closing Period of the Shareholders' Book
No provision is made.
3. There are no annual shareholders' meetings. Special
shareholders' meeting may be held from time to time as required by
the Agreement and Declaration of Trust and the Investment Company
Act of 1940.
4. No special privilege is granted to Shareholders.
The acquisition of Shares by any person may be restricted.
VII. REFERENCE INFORMATION
The following documents concerning the Fund have been filed
with Director of Kanto Local Finance Bureau of the Ministry of
Finance of Japan.
July 31, 1998: Semi-annual Report (during the Fourth term)
Amendment to Securities Registration Statement
September 14, 1998: Securities Registration Statement
September 25, 1998: Amendment to Securities Registration Statement
AMENDMENT TO SECURITIES REGISTRATION STATEMENT
(NAV Sale)
PUTNAM INCOME FUND
To: Director of Kanto Local Finance Bureau
Filing Date : March 16, 1999
Name of the Registrant Fund: PUTNAM INCOME FUND
Name of Trustees: George Putnam
John A. Hill
William F. Pounds
Jameson A. Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin, III
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
Address of Principal Office: One Post Office Square
Boston, Massachusetts 02109
U.S.A.
Name and Title of Registration Agent: Harume Nakano
Attorney-at-Law
Signature [Harume Nakano]
(Seal)
Ken Miura
Attorney-at-Law
Signature [Ken Miura]
(Seal)
Address or Place of Business Kasumigaseki Building, 25th Floor
2-5, Kasumigaseki 3-chome
Chiyoda-ku, Tokyo
Name of Liaison Contact: Harume Nakano
Ken Miura
Attorneys-at-Law
Place of Liaison Contact: Hamada & Matsumoto
Kasumigaseki Building, 25th Floor
2-5, Kasumigaseki 3-chome
Chiyoda-ku, Tokyo
Phone Number: 03-3580-3377
- ii -
Public Offering or Sale for Registration
Name of the Fund Making Public PUTNAM INCOME FUND
Offering or Sale of Foreign
Investment Fund Securities:
Type and Aggregate Amount of Up to 276.4 million Class M Shares
Foreign Investment Fund Securities Up to the total amount obtained by
to be Publicly Offered or Sold: aggregating the respective net asset value
per Class M Share in respect of 276.4
million Class M Shares
(The maximum amount expected to be sold
is 1,909.92 million U.S. dollars
(yen 222.22 billion).
Note 1: U.S.$ amount is translated into Japanese Yen at the rate
of U.S.$l.00=yen116.35 the mean of the exchange rate quotations by
The Bank of Tokyo-Mitsubishi, Ltd. for buying and selling spot
dollars by telegraphic transfer against yen on January 29, 1999.
Note 2: The maximum amount expected to be sold is an amount
calculated by multiplying the net asset value per Class M Share as
of January 29, 1999 (U.S.$6.91) by 276.4 million Class M Shares
for convenience.
Places where a copy of this Amendment to Securities Registration
Statement is available for Public Inspection
Not applicable.
(Total number of pages of this Amendment to Securities
Registration Statement in Japanese is 2 including front and back pages.)
I. REASON FOR FILING THIS AMENDMENT TO SECURITIES REGISTRATION
STATEMENT:
This statement purports to amend and update the relevant
information of the Securities Registration Statement ("SRS") filed
on September 14, 1998 due to the fact that the aforementioned
Securities Report was filed today.
The exchange rates used in this statement to translate the
amended amounts of foreign currencies are different from those
used before these amendments, as the latest exchange rates are
used in this statement.
II. CONTENTS OF THE AMENDMENTS (the page numbers refer to those
of the Japanese original)
PART II. INFORMATION CONCERNING ISSUER
(page 4 of the original Japanese SRS)
The following matters in the original Japanese SRS are
amended to have the same contents as those provided in the
following items of the aforementioned Securities Report:
Before amendment After amendment
[Original Japanese SRS] [Aforementioned Annual Securities
Report]
I. DESCRIPTION OF THE FUND I. DESCRIPTION OF THE FUND
(the aforementioned Securities Report,
from page 1 to page 29)
II. OUTLINE OF THE FUND II. OUTLINE OF THE FUND (Ditto,
from page 30 to page 58)
III. OUTLINE OF THE OTHER III. OUTLINE OF THE OTHER
RELATED COMPANIES RELATED COMPANIES (Ditto, from
page 59 to page 60)
IV. FINANCIAL CONDITIONS OF IV. FINANCIAL CONDITIONS OF
THE FUND THE FUND (Ditto, from page 61 to
page 177)
V. SUMMARY OF INFORMATION VI. SUMMARY OF INFORMATION
CONCERNING FOREIGN CONCERNING FOREIGN
INVESTMENT FUND SECURITIES INVESTMENT FUND SECURITIES
(Ditto, page 199)
VI. MISCELLANEOUS VII. REFERENCE INFORMATION (Ditto,
from page 200)
Note 1: U.S.$ amount is translated into Japanese Yen at the
rate of U.S.$1 = yen116.35, the mean of the exchange rate quotations
at The Bank of Tokyo-Mitsubishi, Ltd. for buying and selling spot
dollars by telegraphic transfer against yen on January 29, 1999,
for convenience.
Note 2: In this document, money amounts and percentages
have been rounded. Therefore, there are cases in which the amount
of the "total column" is not equal to the aggregate amount. Also,
translation into yen is made simply by multiplying the
corresponding amount by the conversion rate specified and rounded
up when necessary. As a result, in this document, there are cases
in which Japanese yen figures for the same information differ from
each other.
Note 3: In this Report, "fiscal year" refers to a year from
November 1 to October 31 of the following year.
PART III. SPECIAL INFORMATION
(Ditto, page 208)
II. FINANCIAL CONDITIONS OF THE INVESTMENT MANAGEMENT COMPANY
of the Original SRS is ammended to to have the same contents as
those provided in V. FINANCIAL CONDITIONS OF THE INVESTMENT
MANAGEMENT COMPANY of the aforementioned Securities Report:
