PUTNAM CAPITAL MANAGER TRUST /MA/, 485APOS, 1996-02-29

PUTNAM CAPITAL MANAGER TRUST /MA/
485APOS, 1996-02-29

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As filed with the Securities and Exchange Commission on
February 29, 1996

Registration No. 33-17486
811-5346
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
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Pre-Effective Amendment No. / /
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Post-Effective Amendment No. 11 / X /
and ----
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X /
ACT OF 1940 ----
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Amendment No. 12 / X /
(Check appropriate box or boxes) ----

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PUTNAM CAPITAL MANAGER TRUST
(Exact name of registrant as specified in charter)

One Post Office Square, Boston, Massachusetts 02109
(Address of principal executive offices)

Registrant's Telephone Number, including Area Code
(617) 292-1000
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It is proposed that this filing will become effective
(check appropriate box)

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/ / immediately upon filing pursuant to paragraph (b)
- ----
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/ / on (date) pursuant to paragraph (b)
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/ / 60 days after filing pursuant to paragraph (a)(1)
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/ / on (date) pursuant to paragraph (a)(1)
- ---- <PAGE>
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/ / 75 days after filing pursuant to paragraph (a)(2)
- ----
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/ X / on May 1, 1996 pursuant to paragraph (a)(2) of
Rule 485.
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If appropriate, check the following box:

----
/ / this post-effective amendment designates a new
- ---- effective date for a previously filed post-effective
amendment.
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JOHN R. VERANI, Vice President
PUTNAM CAPITAL MANAGER TRUST
One Post Office Square
Boston, Massachusetts 02109
(Name and address of agent for service)
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Copy to:
JOHN W. GERSTMAYR, Esquire
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
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The Registrant has registered an indefinite number or amount of
securities under the Securities Act of 1933 pursuant to Rule 24f-2. A Rule
24f-2 notice for the fiscal year ended December 31, 1995 is not
required because, in accordance with Instruction B.5 to Form 24f-2, the
Registrant sold no shares pursuant to Rule 24f-2 with respect to which fees
are required to be paid in such fiscal year .<PAGE>
PUTNAM CAPITAL MANAGER TRUST

CROSS REFERENCE SHEET

(as required by Rule 481(a))

Part A

N-1A Item No. Location

1. Cover Page . . . . . . . . . . . .Cover page

2. Synopsis . . . . . . . . . . . . .Omitted

3. Condensed Financial
Information . . . . . . . . . . . . .Financial highlights; How
performance is shown

4. General Description of
Registrant . . . . . . . . . . . . . .The Trust; Investment
objectives and policies
; Common investment
policies and techniques;
Organization and history

5. Management of the Fund . . . . . .How the Trust is managed;
Organization and history;
About Putnam Investments, Inc.

5A. Management's Discussion. . . . . . . . .(Contained in the
annual
of Fund Performance report of the
Registrant)

6. Capital Stock and Other
Securities . . . . . . . . . . . . . .Cover page ; Sales and
redemptions; How the Trust
values its shares; How
distributions are made; tax
information; Organization and
history

7. Purchase of Securities Being
Offered . . . . . . . . . . . . . . .The Trust; Sales and
redemptions; How the Trust
values its shares;
Organization and history

8. Redemption or Repurchase . . . . .Cover page ; Sales and
redemptions; How the Trust
values its shares;
Organization and history

9. Pending Legal Proceedings . . . .Not applicable<PAGE>

Part B

N-1A Item No. Location

10. Cover Page . . . . . . . . . . . .Cover page

11. Table of Contents . . . . . . . .Cover page

12. General Information and
History . . . . . . . . . . . . . . .Organization and history
(Part A)

13. Investment Objectives and
Policies . . . . . . . . . . . . . . . Investment objectives and
policies; Investment
restrictions; Portfolio
turnover

14. Management of the
Registrant . . . . . . . . . . . . . .Management

15. Control Persons and Principal. . Management
Holders of Securities

16. Investment Advisory and Other. . Management ;
Custodian; . . . . . . . . . . . . . . . . .
Sevices Independent accountants and
financial statements

17. Brokerage Allocation . . . . . . .Management

18. Capital Stock and Other
Securities . . . . . . . . . . . . . .Management ;
Determination of . . . . . . . . . . . . . .
net asset value; Suspension of redemptions; Shareholder
liability

19. Purchase, Redemption and Pricing of
Securities Being
Offered . . . . . . . . . . . . . . .Sales and redemptions
(Part . . . . . . . . . . . . . . . . . . .
A); Management ; Determination of net asset value;
Suspension of redemptions

20. Tax Status . . . . . . . . . . . .How the Trust makes
distributions to
shareholders ; tax
information (Part A); Taxes

21. Underwriter . . . . . . . . . . .Management

22. Calculation of Performance
Data . . . . . . . . . . . . . . . . .How performance is shown (Part
A); Investment
performance of the
Trust (Standard performance
measures)

23. Financial Statements . . . . . . . . . .Independent accountants and
financial statements
<PAGE>
Part C

Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.

<PAGE>

PROSPECTUS - MAY 1, 1996

Putnam Capital Manager Trust (the "Trust") offers shares of beneficial
interest in separate investment portfolios (collectively, the
"funds") for purchase by separate accounts of various insurance
companies. The funds , which have different investment objectives
and policies, offered by this prospectus are: PCM Asia Pacific
Growth Fund, PCM Diversified Income Fund, PCM Global Asset Allocation Fund,
PCM Global Growth Fund, PCM Growth and Income Fund, PCM High Yield Fund,
PCM Money Market Fund, PCM New Opportunities Fund, PCM U.S. Government and
High Quality Bond Fund, PCM Utilities Growth and Income Fund and PCM
Voyager Fund.

An investment in PCM Money Market Fund is neither insured nor guaranteed by
the U.S. government. There can be no assurance that PCM Money Market Fund
will be able to maintain a stable net asset value of $1.00 per share.

PCM High Yield Fund invests primarily in, and PCM Diversified Income Fund
may invest significantly in, lower-rated bonds, commonly known as "junk
bonds." Investments of this type are subject to a greater risk of loss of
principal and non-payment of interest. Investors should carefully assess
the risks associated with an investment in either fund .

This prospectus explains concisely what you should know before
investing in the Trust and should be read in conjunction with the
prospectus for the separate account of the variable annuity or
variable life insurance product that accompanies this prospectus .
Please read it carefully and keep it for future reference. Investors can
find more detailed information about the Trust in the May 1, 1996
statement of additional information (the "SAI") , as amended from time
to time. For a free copy of the SAI , call Putnam Investor Services
at 1-800-521-0538. The SAI has been filed with the Securities and
Exchange Commission and is incorporated into this prospectus by
reference.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY, AND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.

SHARES OF THE FUNDS ARE PRESENTLY AVAILABLE AND ARE BEING MARKETED
EXCLUSIVELY AS A POOLED FUNDING VEHICLE FOR VARIABLE ANNUITY CONTRACT AND
VARIABLE LIFE INSURANCE POLICY SEPARATE ACCOUNTS OF VARIOUS INSURANCE
COMPANIES.<PAGE>
What you need to know

ABOUT THE TRUST

Financial highlights
Study this table to see, among other things, how the funds in the Trust
have performed since their inception.

The Trust
This section explains the Trust's relationship to various annuity and
variable life insurance policies and advises prospective investors to read
the prospectus issued by the relevant insurance company for information
about the annuity or insurance policy.

Investment objectives and policies of the funds
Each of the Trust's funds is managed according to its own specific
investment objective or objectives. Read this section to make sure a
fund's objectives are consistent with your own.

Common investment policies and techniques
Certain investment policies and techniques apply to all funds using them.
This section defines, describes, and explains these policies and
techniques.

How performance is shown
This section describes and defines the measures used to assess the Trust's
performance. All data are based on the Trust's past investment results and
do not predict future performance.

How the Trust is managed
Consult this section for information about the Trust's management,
allocation of the Trust's expenses, and how purchases and sales of
securities are made for the Trust.

Organization and history
In this section, you will learn when the Trust was introduced, how it is
organized, how it may offer shares, and who its Trustees are.
<PAGE>
ABOUT YOUR INVESTMENT

Sales and redemptions
This section describes the terms under which shares may be purchased and
redeemed.

How the Trust values its shares
This section explains how the Trust determines the value of its shares.

How the Trust makes distributions to shareholders; tax
information
This section describes the various options you have in choosing how to
receive dividends from the Trust. It also discusses the federal tax status
of the payments and counsels shareholders to seek specific advice about
their own situation.

Financial information
This section informs you that each year you will receive semiannual and
annual reports of the funds and the Trust

ABOUT PUTNAM INVESTMENTS, INC.

Read this section to learn more about the companies that provide the
marketing, investment management, and shareholder account services to
Putnam funds and their shareholders.

APPENDIX
Securities ratings
<PAGE>
About the Trust

FINANCIAL HIGHLIGHTS

The following tables present per share financial information
for the life of each fund . This information has been audited and
reported on by the Trust's independent accountants. The " Report of
independent accountants" and financial statements included in the
Trust's annual report to shareholders for the 1995 fiscal
year are incorporated by reference into this prospectus. The
Trust's annual report , which contains additional unaudited
performance information, is available without charge upon request.
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
(For a share outstanding throughout the period)

Investment Operations Less
Net Distributions
Realized and From From
Net Unrealized Total from Net Net Realized
Year (period) Net Asset Value Investment Gain (Loss) on Investment Investment Gain on
ended Beginning of Period Income Investments Operations Income Investments
<S> <C> <C> <C> <C> <C> <C>
PCM Voyager Fund
December 31, 1994 $22.41 $.07 $.14 $.21 $(.05) $(.37)
December 31, 1993 19.21 .04 3.50 3.54 (.07) (.27)
December 31, 1992 17.94 .07 1.72 1.79 (.08) (.44)
December 31, 1991(a) 12.58 .11 5.61 5.72 (.12) (.24)
December 31, 1990 13.00 .18 (.45) (.27) (.06) (.09)
December 31, 1989 10.30 .12 3.20 3.32 (.16) (.46)
December 31, 1988*(a) 10.00 .13 .17 .30 - -

PCM Global Growth Fund
December 31, 1994 $13.68 $.13 $(.26) $(.13) $(.05) $(.02)
December 31, 1993 10.48 .08 3.28 3.36 (.16) -
December 31, 1992 10.61 .10 (.14) (.04) (.09) -
December 31, 1991 9.32 .11 1.28 1.39 (.10) -
December 31, 1990** 10.00 .11 (.79) (.68) - -

PCM Growth and Income Fund
December 31, 1994 $17.38 $.50 $(0.48) $.02 $(.38) $(.58)
December 31, 1993 15.93 .38 1.83 2.21 (.39) (.37)
December 31, 1992 15.33 .39 1.04 1.43 (.42) (.41)
December 31, 1991 13.51 .43 2.09 2.52 (.53) (.17)
December 31, 1990 13.41 .55 (.29) .26 (.05) (.11)
December 31, 1989 12.00 .45 2.04 2.49 (.60) (.48)
December 31, 1988*(a) 10.00 .42 1.58 2.00 - -
<PAGE>
PCM Global Asset Allocation Fund
December 31, 1994 $14.29 $.35 $(.71) $(.36) $(.29) $(.43)
December 31, 1993 12.92 .30 1.87 2.17 (.55) (.25)
December 31, 1992 12.77 .35 .41 .76 (.42) (.19)
December 31, 1991 11.28 .45 1.64 2.09 (.54) (.06)
December 31, 1990 11.26 .54 (.52) .02 - -
December 31, 1989 10.68 .56 1.10 1.66 (.88) (.15)
December 31, 1988*(a) 10.00 .53 .15 .68 - -

PCM High Yield Fund
December 31, 1994 $12.53 $1.05 $(1.17) $(.12) $(.79) $(.14)
December 31, 1993 11.17 .73 1.37 2.10 (.74) -
December 31, 1992 10.12 1.26 .59 1.85 (.80) -
December 31, 1991 7.91 .85 2.47 3.32 (1.11) -
December 31, 1990 9.15 1.30 (2.20) (.90) (.34) -
December 31, 1989 10.76 1.12 (1.37) (.25) (1.36) -
December 31, 1988*(a) 10.00 1.04(b) (.28) .76 - -

PCM U.S. Government and
High Quality Bond Fund
December 31, 1994 $13.53 $.81 $(1.24) $(.43) $(.66) $(.22)
December 31, 1993 12.85 .63 .78 1.41 (.61) (.12)
December 31, 1992 12.57 .60 .28 .88 (.54) (.06)
December 31, 1991 11.36 .56 1.31 1.87 (.66) -
December 31, 1990 10.82 .71 .08 .79 (.22) (.03)
December 31, 1989 10.28 .62 .78 1.40 (.79) (.07)
December 31, 1988*(a) 10.00 .66 (.38) .28 - -

PCM Money Market Fund
December 31, 1994 $1.00 $.0377 $ - $.0377 $(.0377) $ -
December 31, 1993 1.00 .0276 - .0276 (.0276) -
December 31, 1992 1.00 .0352 - .0352 (.0352) -
December 31, 1991 1.00 .0575 .0001 .0576 (.0575) (.0001)
December 31, 1990 1.00 .0770 - .0770 (.0770) -
December 31, 1989 1.00 .0859 - .0859 (.0859) -
December 31, 1988* 1.00 .0575 - .0575 (.0575) -

PCM Utilities Growth
and Income Fund
December 31, 1994 $12.00 $.60 $(1.44) $(.84) $(.35) $(.12)
December 31, 1993 10.71 .30 1.13 1.43 (.12) (.02)
December 31, 1992*** 10.00 .15(b) .56 .71 - -

PCM Diversified Income Fund
December 31, 1994 $10.23 $.61 $(1.04) $(.43) $(.06) $-
December 31, 1993**** 10.00 .06 .17 .23 - -

PCM New Opportunities Fund
December 31, 1994***** $10.00 $- $.82 $.82 $- $-

<PAGE>
Ratio of
Less Total Net Net
Distributions Net Asset Investment Assets, Ratio of Investment
In Excess of From Value, Return at End of Expenses to Income to
Realized Gain Paid-in Total End of Net Asset Period (in Average Net Average Net Portfolio
on Investments Capital Distributions Period Value(%)(c)thousands) Assets(%) Assets(%) Turnover(%)
<C> <C> <C> <C> <C> <C> <C> <C> <C>
$- $- $(.42) $22.20 1.04 $1,026,972 .71 .40 62.44
- - (.34) 22.41 18.70 675,198 .66 .33 55.85
- - (.52) 19.21 10.36 317,225 .75 .56 48.17
- - (.36) 17.94 46.09 156,741 .81 .78 55.04
- - (.15) 12.58 (2.03) 48,414 .88 1.58 93.65
- - (.62) 13.00 32.38 39,998 .82 1.93 91.82
- - - 10.30 2.98(d) 7,981 1.35(d) 1.44(d) 103.99(d)

$- $- $(.07) $13.48 (0.96) $669,821 .77 1.21 41.55
- - (.16) 13.68 32.40 352,786 .75 1.38 47.00
- - (.09) 10.48 (.36) 86,854 .85 1.82 59.68
- - (.10) 10.61 15.01 40,183 .99 2.01 48.67
- - - 9.32 (6.80)(d) 13,203 .99(d) 2.35(d) 18.07(d)

$- $- $(.96) $16.44 0.35 $1,907,380 .62 3.64 46.43
- - (.76) 17.38 14.27 1,407,382 .64 3.49 62.63
- - (.83) 15.93 9.75 641,508 .69 3.79 39.58
- - (.70) 15.33 19.05 325,861 .72 4.37 37.94
- - (.16) 13.51 1.96 155,942 .75 5.02 49.39
- - (1.08) 13.41 21.30 100,335 .74 5.73 73.40
- - - 12.00 19.89(d) 26,205 .92(d) 4.08(d) 37.94(d)

$(.02) $- $(.74) $13.19 (2.50) $414,223 .76 3.19 150.21
- - (.80) 14.29 17.48 297,307 .72 3.28 192.48
- - (.61) 12.92 6.29 134,667 .79 3.84 141.87
- - (.60) 12.77 19.02 82,071 .87 4.55 77.31
- - - 11.28 .18 51,792 .88 5.31 52.97
- (.05) (1.08) 11.26 16.08 40,200 .88 6.16 95.97
- - - 10.68 6.76(d) 26,202 1.17(d) 5.55(d) 183.11(d)

<PAGE>
$(.02) $- $(.95) $11.46 (.94) $327,119 .74 9.79 62.09
- - (.74) 12.53 19.57 291,737 .67 9.88 85.59
- - (.80) 11.17 18.98 118,804 .71 11.53 84.24
- - (1.11) 10.12 44.83 42,823 .92 12.64 104.62
- - (.34) 7.91 (9.98) 18,915 .93 13.81 86.05
- - (1.36) 9.15 (2.65) 27,511 .84 12.59 65.44
- - - 10.76 7.56(d) 19,506 .94(b)(d) 10.99(b)(d) 64.25(d)

$- $- $(.88) $12.22 (3.23) $640,458 .67 6.24 118.34
- - (.73) 13.53 11.28 735,386 .64 6.16 94.01
- - (.60) 12.85 7.49 435,906 .70 6.98 45.82
- - (.66) 12.57 17.28 229,306 .74 7.57 59.29
- - (.25) 11.36 7.51 98,549 .76 8.24 32.70
- - (.86) 10.82 14.06 61,765 .76 8.32 27.81
- - - 10.28 2.78(d) 28,406 .87(d) 7.04(d) 41.41(d)

$- $- $(.0377) $1.00 3.82 $244,064 .55 3.90 -
- - (.0276) 1.00 2.79 129,329 .42 2.77 -
- - (.0352) 1.00 3.57 105,694 .48 3.49 -
- - (.0576) 1.00 5.92 78,568 .50 5.74 -
- - (.0770) 1.00 7.98 77,892 .53 7.67 -
- - (.0859) 1.00 8.88 24,975 .63 8.62 -
- - (.0575) 1.00 5.84(d) 14,001 .71(d) 6.70(d) -

$(.01) $- $(.48) $10.68 (7.02) $384,169 .68 5.23 84.88
- - (.14) 12.00 13.42 443,281 .69 5.02 50.79
- - - 10.71 7.10(d) 83,522 .64(b)(d) 3.43(b)(d) 19.29(d)

$ - $- $(.06) $9.74 (4.23) $215,935 .80 7.60 165.17
- - - 10.23 2.30(d) 80,449 .28(d) 1.45(d) 40.83(d)

$- $- $- $10.82 8.20(d) $68,592 .47(d)(b) .03(d)(b) 32.77(d)

<PAGE>
(a) Per share net investment income has been determined on the basis of the weighted average number of shares
outstanding during the period.
(b) Reflects an expense limitation in effect during the period. As a result of expense limitations, expenses
of PCM High Yield Fund for the period ended December 31, 1988 reflect a reduction of less than $.01 per
share, and expenses of PCM Utilities Growth and Income Fund for the period ended December 31, 1992 reflect
a reduction of less than $.01 per share and expenses of PCM New Opportunities Fund for the period ended
December 31, 1994 reflect a reduction of less than $0.02 per share.
(c) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(d) Not annualized.
* For the period February 1, 1988 (commencement of operations) to December 31, 1988.
** For the period May 1, 1990 (commencement of operations) to December 31, 1990.
*** For the period May 4, 1992 (commencement of operations) to December 31, 1992.
**** For the period September 15, 1993 (commencement of operations) to December 31, 1993.
***** For the period May 2, 1994 (commencement of operations) to December 31, 1994

</TABLE> <PAGE>
THE TRUST

The Trust is designed to serve as a funding vehicle for insurance separate
accounts associated with variable annuity contracts and variable life
insurance policies. The Trust presently serves as the funding vehicle for
variable annuity contracts and variable life insurance policies offered by
separate accounts of various insurance companies. You should consult the
prospectus issued by the relevant insurance company for more information
about a separate account. Shares of the Trust are offered to these
separate accounts through Putnam Mutual Funds Corp. ("Putnam Mutual
Funds"), the principal underwriter for the Trust.

INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS

Each fund of the Trust has its own investment objective or
objectives which it pursues through its own investment policies as
described below. The particular objectives and policies of
the funds can be expected to affect the return of each fund
and the degree of market and financial risk to which each fund is
subject. For more information about the investment strategies employed by
the funds , see "Common investment policies and techniques." The
investment objectives and policies of each fund may, unless
otherwise specifically stated, be changed by the Trustees without a
vote of the shareholders. As a matter of policy, the Trustees would not
materially change the investment objective or objectives of a fund
without shareholder approval. The funds are not intended to be a
complete investment program, and there is no assurance that any
fund will achieve its objective or objectives.

Additional portfolios with differing investment objectives and
policies may be created from time to time for use as funding
vehicles for insurance company separate accounts or for other insurance
products. In addition, the Trustees may, subject to any necessary
regulatory approvals, eliminate any fund or divide any fund
into two or more classes of shares with such special or relative rights and
privileges as the Trustees may determine.
Glossary

The following terms are frequently used in this prospectus . Many of
these terms are explained in greater detail under "Common investment
policies and techniques."

"Putnam Management" -- Putnam Investment Management, Inc., the Trust's
investment manager

"S&P" -- Standard & Poor's

"Moody's" -- Moody's Investors Service, Inc.

"U.S. government securities " -- debt securities issued or
guaranteed by the U.S. government, by various of its agencies, or by
various instrumentalities established or sponsored by the U.S. government.
Certain U.S. government securities , including U.S. Treasury bills,
notes and bonds, mortgage participation certificates guaranteed by Ginnie
Mae, and Federal Housing Administration debentures, are supported by the
full faith and credit of the United States. Other U.S. government
securities issued or guaranteed by federal agencies or government-
sponsored enterprises are not supported by the full faith and credit of the
United States. These securities include obligations supported by the right
of the issuer to borrow from the U.S. Treasury, such as obligations of
Federal Home Loan Banks, and obligations supported only by the credit of
the instrumentality, such as Fannie Mae bonds.

"CMOs" -- collateralized mortgage obligations

"Ginnie Mae" -- Government National Mortgage Association

"Fannie Mae" -- Federal National Mortgage Association

"Freddie Mac" -- Federal Home Loan Mortgage Corporation

PCM ASIA PACIFIC GROWTH FUND

PCM Asia Pacific Growth Fund's investment objective is to seek capital
appreciation. In seeking capital appreciation, the fund will invest
primarily in securities of companies located in Asia and in the Pacific
Basin. The fund's investments will normally include common stocks,
preferred stocks, securities convertible into common stocks or preferred
stocks, and warrants to purchase common stocks or preferred stocks. The
fund may also invest to a lesser extent in debt securities and other
types of investments if Putnam Management believes they would help achieve
the fund's objective. The fund may also hold a portion of
its assets in cash and money market instruments.

The fund may invest in securities of issuers located in any country
in Asia or the Pacific Basin where Putnam Management believes there is
potential for above-average capital appreciation. Such countries may
include, for example, Australia, Hong Kong, India, Indonesia, Japan, Korea,
Malaysia, New Zealand, the People's Republic of China, the Philippines,
Singapore, Taiwan and Thailand.

It is anticipated that under normal market conditions the fund will
invest at least 85% of its assets in securities of companies located in
Asia and in the Pacific Basin which Putnam Management believes have
potential for capital appreciation. The fund will consider an
issuer of securities to be located in Asia or in the Pacific Basin if it is
organized under the laws of a country in Asia or the Pacific Basin and has
a principal office in a country in Asia or the Pacific Basin, if it derives
50% or more of its total revenues from business in Asia or the Pacific
Basin, or if its equity securities are traded principally on a securities
exchange in Asia or the Pacific Basin. It is anticipated that under normal
circumstances the fund will invest at least 65% of its assets
in securities of issuers meeting at least one of the first two criteria
described in the preceding sentence. For a discussion of the risks
associated with foreign investing, see "Common investment policies and
techniques -- Foreign investments."

The fund will not limit its investments to any particular type of
company. The fund may invest in companies, large or small, whose
earnings are believed to be in a relatively strong growth trend, or in
companies in which significant further growth is not anticipated but whose
securities are thought to be undervalued. It may invest in small and
relatively less well-known companies. These companies , which typically
have equity market capitalizations below $1 billion, may present
greater opportunities for capital appreciation, but may also involve
greater risk. They may have limited product lines, markets or financial
resources, or may depend on a limited management group. Their securities
may trade less frequently and in limited volume , and only in the over-
the-counter market or on a regional securities exchange . As a result,
these securities may fluctuate in value more than securities of larger,
more established companies.

Debt securities in which the fund may invest will generally be rated
at the time of purchase at least Baa by Moody's or BBB by S&P, or, if
unrated, determined by Putnam Management to be of comparable quality and
in any event the fund will not invest in debt securities rated
below than Baa by Moody's or BBB by S&P (commonly known as
"junk bonds"), or, if unrated, determined by Putnam Management to be of
comparable quality if, as a result , more than 5% of the
fund's assets would be invested in such securities. Debt
securities rated Baa or BBB have speculative characteristics and adverse
economic conditions may lead to a weakened capacity to pay interest and
repay principal.

The fund will not necessarily dispose of a security if its rating is
reduced below its rating at the time of purchase, although Putnam
Management will monitor the investment to determine whether continued
investment in the security will assist in meeting the fund's
investment objective.

The fund may engage in defensive strategies when Putnam Management
judges that conditions in the securities markets make pursuing the
fund's basic investment strategy inconsistent with the best
interests of the fund's shareholders. When pursuing such defensive
strategies, the fund may invest without limit in securities
primarily traded in U.S. markets. See "Common investment policies and
techniques" below for a discussion of these strategies. The fund
may also engage in foreign currency exchange transactions and in
transactions in futures and options, enter into repurchase agreements, loan
its portfolio securities and purchase securities for future delivery. See
"Common investment policies and techniques" below for a discussion of these
securities and types of transactions and the risks associated with them.

PCM Asia Pacific Growth Fund will generally be managed in a style similar
to that of Putnam Asia Pacific Growth Fund.

PCM DIVERSIFIED INCOME FUND

PCM Diversified Income Fund seeks high current income consistent with
capital preservation. The fund pursues its investment objective by
allocating its investments among the following three sectors of the
fixed - income securities markets:

* a U.S. Government Sector, consisting primarily of debt obligations of the
U.S. government, its agencies and instrumentalities;

* a High Yield Sector, consisting of high-yielding, lower-rated, higher
risk U.S. and foreign fixed - income securities (commonly known
as "junk bonds"); and

* an International Sector, consisting of obligations of foreign
governments, their agencies and instrumentalities, and other fixed -
income securities denominated in foreign currencies.

Putnam Management believes that diversifying the fund's investments
among these sectors, as opposed to investing exclusively in any one
sector, will better enable the fund to preserve capital while
pursuing its objective of high current income. Historically, the markets
for U.S. government securities , high yielding corporate fixed -
income securities, and debt securities of foreign issuers have tended
to behave independently and have at times moved in opposite directions.
For example, U.S. government securities have generally been affected
negatively by inflationary concerns resulting from increased economic
activity. High-yield corporate fixed - income securities, on the
other hand, have generally benefitted from increased economic activity due
to improvement in the credit quality of corporate issuers. The reverse has
generally been true during periods of economic decline. Similarly, U.S.
government securities have often been negatively affected by a
decline in the value of the dollar against foreign currencies, while the
bonds of foreign issuers held by U.S. investors have generally benefitted
from such decline. Putnam Management believes that, when financial markets
exhibit such a lack of correlation, a pooling of investments among these
markets may produce greater preservation of capital over the long term than
would be obtained by investing exclusively in any one of the markets.

<PAGE>
Putnam Management will determine the amount of assets to be allocated to
each of the three market sectors in which the fund will invest based
on its assessment of the returns that can be achieved from a portfolio
which is invested in all three sectors. In making this determination,
Putnam Management will rely in part on quantitative analytical techniques
that measure relative risks and opportunities of each market sector based
on current and historical market data for each sector, as well as on its
own assessment of economic and market conditions. Putnam Management will
continuously review this allocation of assets and make such adjustments as
it deems appropriate, although there are no fixed limits on allocations
among sectors, including investments in the High Yield Sector. Because of
the importance of sector diversification to the fund's investment
policies, Putnam Management expects that a substantial portion of the
fund's assets will normally be invested in each of the three market
sectors. The fund's assets allocated to each of these market
sectors will be managed in accordance with particular investment policies,
which are summarized below. The fund may engage in defensive
strategies when Putnam Management judges that conditions in the securities
markets make pursuing the fund's basic investment strategy
inconsistent with the best interests of the fund's shareholders.
When pursuing such defensive strategies, the fund may invest without
limit in securities primarily traded in U.S. markets. See "Common
investment policies and techniques" below for a discussion of these
strategies.

The fund may invest in premium securities, engage in foreign
currency exchange transactions, transactions in futures and options, enter
into repurchase agreements, loan its portfolio securities and purchase
securities for future delivery. See "Common investment policies and
techniques" below for a discussion of these securities and types of
transactions and the risks associated with them. The fund may also
hold a portion of its assets in cash and money market instruments.

PCM Diversified Income Fund will generally be managed in a style similar to
that of Putnam Diversified Income Trust.

U.S. Government Sector

The fund will invest assets allocated to the U.S. Government Sector
primarily in U.S. government securities . In purchasing
securities for the U.S. Government Sector, Putnam Management may take full
advantage of the entire range of maturities of U.S. government
securities and may adjust the average maturity of the investments held
in the portfolio from time to time, depending on its assessment of relative
yields of securities of different maturities and its expectations of future
changes in interest rates. Under normal market conditions, the fund
will invest at least 20% of its net assets in U.S. government
securities and at least 65% of the assets allocated to the U.S.
Government Sector will be invested in U.S. government securities .

The fund may invest assets allocated to the U.S. Government Sector
in a variety of debt securities, including asset-backed and mortgage-backed
securities, such as CMOs and certain stripped mortgage-backed
securities, that are issued by private U.S. issuers. For a description of
these securities, and the risks associated with them, see "Common
investment policies and techniques -- Mortgage-backed and asset-backed
securities."

With respect to assets allocated to the U.S. Government Sector, the
fund will only invest in privately issued debt securities that are
rated at the time of purchase at least A by Moody's or S&P, or in unrated
securities that Putnam Management determines are of comparable quality.
The fund will not necessarily dispose of a security if its rating is
reduced below these levels , although Putnam Management will monitor
the investment to determine whether continued investment in the security
will assist in meeting the fund's investment objective.

Risk factors. U.S. government securities are considered among the
safest of fixed - income investments. Because of this added safety,
the yields available from U.S. government securities are generally
lower than the yields available from corporate debt securities, but their
values, like those of other debt securities, will fluctuate with changes in
interest rates. Changes in the value of portfolio securities will not
affect investment income from those securities, but will affect the
fund's net asset value. Thus, a decrease in interest rates
will generally result in an increase in the value of such
securities. Conversely, during periods of rising interest rates, the
value of such securities will generally decline. The magnitude of
these fluctuations will generally be greater for securities with longer
maturities.

While certain U.S. government securities, such as U.S. Treasury
obligations and Ginnie 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 risk of
default , depending upon, among other things , the
creditworthiness of the issuer and the ability of the borrower , or, in
the case of mortgage-backed securities, the mortgagor, to meet its
obligations.

High Yield Sector

The fund will invest assets allocated to the High Yield Sector
primarily in high yielding, lower-rated, higher risk U.S. and foreign
corporate fixed - income securities, including debt securities,
convertible securities and preferred stocks. As discussed below, however,
under certain circumstances the fund may invest all or any part of
the High Yield Sector portfolio in higher-rated and unrated fixed -
income securities. The fund will not necessarily invest in the
highest yielding securities available if in Putnam Management's opinion the
differences in yield are not sufficient to justify the higher risks
involved.

The High Yield Sector may invest in any security which is rated, at the
time of purchase, at least Caa as determined by Moody's or CCC as
determined by S&P or in any unrated security which Putnam Management
determines is at least of comparable quality, although up to 5% of the net
assets of the fund may be invested in securities rated below such
quality, or in unrated securities which Putnam Management determines are of
comparable quality. Securities rated below Caa by Moody's or CCC by S&P
are of poor standing and may be in default. The fund will not
necessarily dispose of a security if its rating is reduced below its rating
at the time of purchase, although Putnam Management will monitor the
investment to determine whether continued investment in the security will
assist in meeting the fund's investment objective. The rating
services' descriptions of these rating categories, including the
speculative characteristics of the lower categories, are included in the
Appendix to this prospectus .

Rated securities, Unrated securities of
as percentage ofcomparable quality, as
Rating net assets percentage of net assets
- ------ ------------- --------
"AAA" 42.51% --
"AA" 15.92% --
"A" 0.38% --
"BBB" 0.21% --
"BB" 9.45% 1.19%
"B" 20.22% 0.94%
"CCC" 3.31% 0.04
"D" -- 0.01
------ -----
92.00% 2.18%
====== =====

For a description of the risks associated with investments in fixed -
income securities, including lower-rated fixed - income
securities, see "Common investment policies and techniques --Lower-rated
and other fixed - income securities."

The fund may invest assets allocated to the High Yield Sector in
participations and assignments of fixed and floating rate loans made by
financial institutions to governmental or corporate borrowers. In addition
to the more general investment considerations applicable to fixed -
income investments, participations and assignments involve the risk
that the institution's insolvency could delay or prevent the flow of
payments on the underlying loan to the fund. The fund may
have limited rights to enforce the terms of the underlying loan, and the
liquidity of loan participations and assignments may be limited.

The fund may also invest assets allocated to the High Yield Sector
in lower-rated securities of foreign corporate and governmental issuers
denominated either in U.S. dollars or in foreign currencies. For a
discussion of the risks associated with foreign investing, see "Common
investment policies and techniques -- Foreign investments."
International Sector

The fund will invest the assets allocated to the International
Sector in debt obligations and other fixed - income securities
denominated in non-U.S. currencies. These securities include:

* debt obligations issued or guaranteed by foreign national,
provincial, state, or other governments with taxing authority, or
by their agencies or instrumentalities;

* debt obligations of supranational entities (described below); and

* debt obligations and other fixed - income securities of
foreign and U.S. corporate issuers.

When investing in the International Sector, the fund will purchase
only debt securities of issuers whose long-term debt obligations are rated
A or better at the time of purchase by Moody's or S&P or that are unrated
securities that Putnam Management determines are of
comparable quality. The fund will not necessarily dispose of a
security if its rating is reduced below its rating at the time of purchase,
although Putnam Management will monitor the investment to determine whether
continued investment in the security will assist in meeting the
fund's investment objective. The fund may, however, make
investments in international debt securities rated below A with respect to
assets allocated to the High Yield Sector.

In the past, yields available from securities denominated in foreign
currencies have often been higher than those of securities denominated in
U.S. dollars. Although the fund has the flexibility to invest in
any country where Putnam Management sees potential for high income, it
presently expects to invest primarily in securities of issuers in
industrialized Western European countries (including Scandinavian
countries) and in Canada, Japan, Australia, and New Zealand. Putnam
Management will consider expected changes in foreign currency exchange
rates in determining the anticipated returns of securities denominated in
foreign currencies.

The obligations of foreign governmental entities, including supranational
issuers, have various kinds of government support. Obligations of foreign
governmental entities include obligations issued or guaranteed by national,
provincial, state or other governments with taxing power or by their
agencies. These obligations may or may not be supported by the full faith
and credit of a foreign government.

Supranational entities include international organizations designated or
supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Steel and Coal Community, the
Asian Development Bank, and the Inter-American Development Bank. The
governmental members or "stockholders" usually make initial capital
contributions to the supranational entity and in many cases are committed
to make additional capital contributions if the supranational entity is
unable to repay its borrowing. Each supranational entity's lending
activities are limited to a percentage of its total capital (including
"callable capital" contributed by members at the entity's call), reserves,
and net income.

For a discussion of the risks associated with foreign investments, see
"Common investment policies and techniques --Foreign investments."

PCM GLOBAL ASSET ALLOCATION FUND

The investment objective of PCM Global Asset Allocation Fund is to seek a
high level of long-term total return consistent with preservation of
capital. By seeking total return, the fund seeks to increase the
value of the shareholder's investment through both capital appreciation and
investment income. "Total return" includes interest and dividend income,
net of expenses, and realized and unrealized capital gains and losses on
securities. The fund invests in a wide variety of equity and
fixed - income securities both of U.S. and foreign issuers. The
fund's portfolio may include securities in the following four
investment categories, which in the judgment of Putnam Management represent
large, well - differentiated classes of securities with distinctive
investment characteristics:

U.S. Equities
International Equities
U.S. Fixed Income
International Fixed Income

The amount of fund assets assigned to each investment category will
be reevaluated by Putnam Management at least quarterly based on Putnam
Management's assessment of the relative market opportunities and risks of
each investment category taking into account various economic and market
factors.

The fund may engage in defensive strategies when Putnam Management
judges that conditions in the securities markets make pursuing the
fund's basic investment strategy inconsistent with the best
interests of the fund's shareholders. When pursuing such defensive
strategies, the fund may invest without limit in securities
primarily traded in U.S. markets. See "Common investment policies and
techniques" below for a discussion of these strategies. The fund
may invest in premium securities, engage in foreign currency exchange
transactions and transactions in futures and options, enter into repurchase
agreements, loan its portfolio securities and purchase securities for
future delivery. See "Common investment policies and techniques" below for
a discussion of these securities and types of transactions and the risks
associated with them. The fund may also hold a portion of its
assets in cash and money market instruments.

The portion of the fund's assets invested in each investment
category will be managed as a separate investment portfolio in accordance
with that category's particular investment objectives and policies,
independently of the fund's overall objective. The following is a
description of the investment objectives and policies of each investment
category:

U.S. Equities. The objective of the U.S. Equities category is to seek both
capital growth and, to a lesser extent, current income through equity
securities. This category's portfolio will include equity securities
selected primarily to provide one or more of the following factors: growth
in value, capital protection and dependable income. Investments will be
made in companies , large or small , whose earnings are
believed to be in a relatively strong growth trend or whose securities are
thought to be undervalued. It may invest in small and relatively less
well-known companies. Investing in these companies may present greater
opportunities for capital appreciation, but also may involve greater
risk. They may have limited product lines, markets or financial resources,
or may depend on a limited management group. Their securities may trade
less frequently and in limited volume , and only in the over-the-counter
market or on a regional securities exchange . As a result, these
securities may fluctuate in value more than securities of larger, more
established companies.

International Equities. The objective of the International Equities
category is to seek capital appreciation. This category's portfolio will
be invested in securities principally traded in foreign securities markets.
These securities will primarily be common stocks or securities convertible
into common stocks. Investments will be made in companies , large or
small , whose earnings are believed to be in a relatively strong
growth trend or whose securities are thought to be undervalued. These
companies may present greater opportunity for capital appreciation, but
also may involve greater risk. They may have limited product lines,
markets or financial resources, or may depend on a limited management
group. Their securities may trade less frequently and in limited volume.
As a result, these securities may fluctuate in value more than securities
of larger, more established companies. For a discussion of the risks
associated with foreign investments, see "Common investment policies and
techniques -- Foreign investments."

U.S. Fixed Income. The objective of the U.S. Fixed Income category is to
seek high current income through a portfolio of fixed - income
securities which in the judgment of Putnam Management does not involve
undue risk to principal or income. The U.S. Fixed Income category may
invest in any fixed - income securities Putnam Management considers
appropriate, including U.S. government securities , debt securities,
mortgage-backed and asset-backed securities, convertible securities and
preferred stocks of non-governmental issuers.

Whereas certain U.S. government securities in which the fund may invest,
such as U.S. Treasury obligations and Ginnie Mae certificates, are
supported by the full faith and credit of the United States, other
fixed - income securities in which the fund may invest are
subject to varying degrees of risk of default depending upon, among other
factors, the creditworthiness of the issuer and the ability of the
borrower , or, in the case of mortgage-backed securities the
mortgagor, to meet its obligations. While the credit risks presented
by differing types of fixed - income securities vary, the values of
all fixed - income securities change as interest rates fluctuate.

For a description of the risks associated with investments in mortgage-
backed and asset-backed securities, see "Common investment policies and
techniques -- Mortgage-backed and asset-backed securities."

International Fixed Income. The investment objective of the International
Fixed Income category is to seek high current income by investing
principally in debt securities denominated in foreign currencies which are
issued by foreign governments and governmental or supranational agencies.
This category may also invest in other privately issued debt securities,
convertible securities and preferred stocks principally traded in foreign
securities markets. For a discussion of the risks associated with
foreign investments, see "Common investment policies and techniques --
Foreign investments."

General. Putnam Management will adjust the percentage of the fund's
assets in each investment category from time to time based upon its market
outlook and its analysis of longer-term trends. The fund may from
time to time invest in all or any one of the investment categories as
Putnam Management may consider appropriate in response to changing market
conditions.

The fund will not purchase fixed-income securities rated at the time of
purchase lower than Caa by Moody's or CCC by S&P, or, if unrated,
determined by Putnam Management to be of comparable quality, if, as a
result more than 5% of the fund's total assets would be invested in
securities of that quality. In addition, the fund will not purchase fixed-
income securities rated at the time of purchase below Baa by Moody's or BBB
by S&P, or, if unrated, determined to be of comparable quality by Putnam
Management if, as a result, more than 35% of the fund's portfolio's total
assets would be invested in securities of that quality. The fund will not
necessarily dispose of a security if its rating is reduced below its rating
at the time of purchase, although Putnam Management will monitor the
investment to determine whether continued investment in the security will
assist in meeting the fund's investment objective.

For a description of the risks of investing in fixed-income securities,
including lower-rated fixed-income securities (commonly known as "junk
bonds"), see "Common investment policies and techniques -- Lower-rated and
other fixed-income securities."

PCM GLOBAL GROWTH FUND

PCM Global Growth Fund seeks capital appreciation. The fund is
designed for investors seeking above-average capital growth
potential through a globally diversified portfolio of common stocks.
Dividend and interest income is only an incidental consideration. In
seeking capital appreciation, the fund follows a global investment
strategy of investing primarily in common stocks traded in securities
markets located in a number of foreign countries and in the United States.
The fund may at times invest up to 100% of its assets in securities
principally traded in securities markets outside the United States, and
will under normal market conditions invest at least 65% of its assets in at
least three different countries, one of which may be the United States.
The fund may hold a portion of its assets in cash and money market
instruments.

The fund will not limit its investments to any particular type of
company. It may invest in companies, large or small, whose earnings are
believed to be in a relatively strong growth trend, or in companies in
which significant further growth is not anticipated but the securities
of which are thought to be undervalued . It may invest in small
and relatively less well-known companies. Investing in these
companies may present greater opportunities for capital
appreciation, but may also involve greater risk. They may
have limited product lines, markets or financial resources, or may depend
on a limited management group. Their securities may trade less frequently
and in limited volume , and only in the over-the-counter market or on a
regional securities exchange . As a result, these securities may
fluctuate in value more than securities of larger, more established
companies.

Putnam Management believes that the securities markets of many nations move
relatively independently of one another, because business cycles and other
economic or political events that influence one country's securities
markets may have little effect on securities markets in other countries.
By investing in a globally diversified portfolio, Putnam Management
attempts to reduce the risks associated with investing in the economy of
only one country. The countries which Putnam Management believes offer
attractive opportunities for investment may change from time to time.

Foreign investments can involve risks, however, that may not be present in
domestic securities. For a discussion of the risks associated with foreign
investments, see "Common investment policies and techniques -- Foreign
investments."

The fund may also engage in foreign currency exchange transactions
and transactions in futures and options, enter into repurchase agreements,
loan its portfolio securities and purchase securities for future delivery.
See "Common investment policies and techniques" below for a discussion of
these securities and types of transactions and the risks associated with
them. The fund may engage in defensive strategies when Putnam
Management judges that conditions in the securities markets make pursuing
the fund's basic investment strategy inconsistent with the best
interests of the fund's shareholders. When pursuing such defensive
strategies, the fund may invest without limit in securities
primarily traded in U.S. markets. See "Common investment policies and
techniques" below for a discussion of these strategies.

PCM Global Growth Fund will generally be managed in a style similar to that
of Putnam Global Growth Fund.
<PAGE>
PCM GROWTH AND INCOME FUND

PCM Growth and Income Fund seeks capital growth and current income as its
investment objectives. The fund invests primarily in common stocks
that offer potential for capital growth, current income, or both. The
fund may also purchase corporate bonds, notes and debentures,
preferred stocks or convertible securities (both debt securities and
preferred stocks) or U.S. government securities, if Putnam Management
determines that their purchase would help further the fund's
investment objectives. The types of securities held by the fund may
vary from time to time in light of the fund's investment objectives,
changes in interest rates , and economic and other factors. The
fund may engage in defensive strategies when Putnam Management
judges that conditions in the securities markets make pursuing the
fund's basic investment strategy inconsistent with the best
interests of the fund's shareholders. See "Common investment
policies and techniques" below for a discussion of these strategies.

The fund may invest up to 20% of its assets in securities
principally traded in foreign markets. For a discussion of the risks
associated with foreign investments, see "Common investment policies and
techniques -- Foreign investments." The fund may invest in both
higher-rated and lower-rated fixed-income securities. The risks associated
with fixed - income securities, including lower-rated fixed -
income securities (commonly known as "junk bonds"), are discussed below
under "Common investment policies and techniques -- Lower-rated and other
fixed - income securities."

The fund may hold a portion of its assets in cash and money
market instruments. The fund may also engage in foreign currency
exchange transactions and transactions in futures and options, enter into
repurchase agreements, loan its portfolio securities and purchase
securities for future delivery. See "Common investment policies and
techniques" below for a discussion of these securities and types of
transactions and the risks associated with them.

PCM Growth and Income Fund will generally be managed in a style similar to
that of The Putnam Fund for Growth and Income.

PCM HIGH YIELD FUND

The primary investment objective of PCM High Yield Fund is to seek high
current income. Capital growth is a secondary objective when consistent
with high current income.

The fund seeks high current income by investing primarily in
high-yielding, lower-rated fixed-income securities (commonly known
as "junk bonds") , constituting a portfolio which Putnam Management
believes does not involve undue risk to income or principal. Normally, at
least 80% of the fund's assets will be invested in debt securities,
convertible securities or preferred stocks that are consistent with its
primary investment objective of high current income. The fund's
remaining assets may be held in cash or money market instruments, or
invested in common stocks and other equity securities. The fund may
invest up to 20% of its assets in foreign securities. For a discussion of
the risks associated with foreign investments, see "Common investment
policies and techniques -- Foreign investments." The fund may also
invest in premium securities, engage in foreign currency exchange
transactions, enter into repurchase agreements, loan its portfolio
securities and purchase securities for future delivery. See "Common
investment policies and techniques" below for a discussion of these
securities and types of transactions and the risks associated with them.
The fund may engage in defensive strategies when Putnam Management
judges that conditions in the securities markets make pursuing the
fund's basic investment strategy inconsistent with the best
interests of the fund's shareholders. See "Common investment
policies and techniques" below for a discussion of these strategies.

The fund seeks its secondary objective of capital growth, when
consistent with its primary objective of high current income, by investing
in securities which may be expected to appreciate in value as a result of
declines in long-term interest rates or to favorable developments affecting
the business or prospects of the issuer which may improve the issuer's
financial condition and credit rating. Putnam Management believes that
such opportunities for capital appreciation often exist in the securities
of smaller capitalization companies which have the potential for
significant growth.

The fund may generally invest in any security which is rated, at the
time of purchase, at least Caa by Moody's or CCC by S&P, or
in any unrated security which Putnam Management determines is of comparable
quality. The fund will not necessarily dispose of a security when
its rating is reduced below its rating at the time of purchase, although
Putnam Management will monitor the investment to determine whether
continued investment in the security will assist in meeting the
fund's investment objectives. Securities rated below
Baa by Moody's and BBB by S&P are considered to be of poor
standing and predominantly speculative. The fund may invest up to
15% of its assets in securities rated below Caa by Moody's or CCC by S&P,
including securities in the lowest rating category of each rating agency,
or in unrated securities Putnam Management determines are of comparable
quality. Such securities may be in default and are generally regarded by
the rating agencies as having extremely poor prospects of ever
attaining any real investment standing. For a discussion of the risks
associated with investments in fixed - income securities, including
lower-rated fixed - income securities, see "Common investment policies
and techniques -- Lower-rated and other fixed - income securities."

The table below shows the percentages of fund assets invested during
fiscal 1995 in securities assigned to the various rating categories
by S&P , or, if unrated by S&P, assigned to comparable rating categories
by Moody's, and in unrated securities determined by Putnam Management
to be of comparable quality.
<PAGE>
Rated securities, Unrated securities of
as percentage ofcomparable quality, as
Rating net assets percentage of net assets
------ -------------- --- ------------------------
"AAA" -- --
"AA" -- --
"A" -- 0.03%
"BBB" 3.97% --
"BB" 22.79% 7.50%
"B" 47.13% 2.35%
"CCC" 6.66% 1.22%
"CC" -- --
"C" -- --
"D" 0.29% --
----- - ----
80.84% 11.10%
===== =====

The fund may invest in participations and assignments of fixed and
floating rate loans made by financial institutions to governmental or
corporate borrowers. In addition to the more general investment
considerations applicable to fixed - income investments,
participations and assignments involve the risk that the institution's
insolvency could delay or prevent the flow of payments on the underlying
loan to the fund. The fund may have limited rights to
enforce the terms of the underlying loan, and the liquidity of loan
participations and assignments may be limited.

PCM High Yield Fund will generally be managed in a style similar to that of
Putnam High Yield Advantage Fund.

PCM MONEY MARKET FUND

PCM Money Market Fund seeks as high a rate of current income as Putnam
Management believes is consistent with preservation of capital and
maintenance of liquidity. It is designed for investors seeking current
income with stability of principal.

The fund invests in a portfolio of high-quality money market
instruments. Examples of these instruments include:

* bank certificates of deposit (CDs): negotiable certificates
issued against funds deposited in a commercial bank for a definite
period of time and earning a specified return.

* bankers' acceptances: negotiable drafts or bills of exchange,
which have been "accepted" by a bank, meaning, in effect, that the
bank has unconditionally agreed to pay the face value of the
instrument on maturity.

* prime commercial paper: high-grade, short-term obligations issued
by banks, corporations and other issuers.

* corporate obligations: high-grade, short-term corporate
obligations other than prime commercial paper.

* municipal obligations: high-grade, short-term municipal
obligations.

* U.S. government securities : marketable securities issued
or guaranteed as to principal and interest by the U.S. government
or by its agencies or instrumentalities.

* repurchase agreements: with respect to U.S. Treasury or U.S.
government agency obligations.

The fund will invest only in high-quality securities that Putnam
Management believes present minimal credit risk. High-quality securities
are securities rated at the time of acquisition in one of the two highest
categories by at least two nationally recognized rating services (or, if
only one rating service has rated the security, by that service) or if the
security is unrated, judged to be of equivalent quality by Putnam
Management. The fund will maintain a dollar-weighted average
maturity of 90 days or less and will not invest in securities with
remaining maturities of more than 397 days. The fund may invest in
variable or floating rate securities which bear interest at rates subject
to periodic adjustment or which provide for periodic recovery of principal
on demand. Under certain conditions, these securities may be deemed to
have remaining maturities equal to the time remaining until the next
interest adjustment date or the date on which principal can be recovered on
demand. The fund follows investment and valuation policies designed
to maintain a stable net asset value of $1.00 per share. There is no
assurance that the fund will be able to maintain a stable net asset
value of $1.00 per share.

The fund may invest in bank certificates of deposit and bankers'
acceptances issued by banks having deposits in excess of $2 billion (or the
foreign currency equivalent) at the close of the last calendar year.
Should the Trustees decide to reduce this minimum deposit requirement,
shareholders will be notified and this prospectus supplemented.

Considerations of liquidity and preservation of capital mean that the
fund may not necessarily invest in money market instruments paying
the highest available yield at a particular time. Consistent with its
investment objective, the fund will attempt to maximize yields by
portfolio trading and by buying and selling portfolio investments in
anticipation of or in response to changing economic and money market
conditions and trends. The fund will also invest to take advantage
of what Putnam Management believes to be temporary disparities in yields of
different segments of the high-grade money market or among particular
instruments within the same segment of the market. These policies, as well
as the relatively short maturity of obligations purchased by the
fund , may result in frequent changes in the fund's portfolio.
The fund does not usually pay brokerage commissions in connection
with the purchase or sale of portfolio securities. See "Management
-- Portfolio Transactions --Brokerage and research services" in the
SAI for a discussion of underwriters' commissions and dealers'
spreads involved in the purchase and sale of portfolio securities.

<PAGE>
The portfolio of the fund will be affected by general changes in
interest rates resulting in increases or decreases in the value of the
obligations held by the fund . The value of the securities in the
fund's portfolio can be expected to vary inversely to changes in
prevailing interest rates. Withdrawals by shareholders could require the
sale of portfolio investments at a time when such a sale might not
otherwise be desirable.

The fund may invest without limit in the banking industry when, in
the opinion of Putnam Management, the yield, marketability and availability
of investments meeting the fund's quality standards in that industry
justify any additional risks associated with the concentration of the
fund's assets in that industry. The fund , however, will
invest more than 25% of its assets in the personal credit institution or
business credit institution industries only when, to Putnam Management's
knowledge, the yields then available on securities issued by companies in
such industries and otherwise suitable for investment by the fund
exceed the yields then available on securities issued by companies in the
banking industry and otherwise suitable for investment by the fund .

The fund may invest without limit in U.S. dollar-denominated
commercial paper of foreign issuers and in bank certificates of deposits
and bankers' acceptances payable in U.S. dollars and issued by foreign
banks (including U.S. branches of foreign banks) or by foreign branches of
U.S. banks. These investments subject the fund to investment risks
different from those associated with domestic investments. For a
discussion of the risks associated with foreign investments, See "Common
investment policies and techniques -- Foreign investments."

The fund may also lend its portfolio securities. For a discussion
of this strategy and the risks associated with it, see "Common investment
policies and techniques" below.

PCM Money Market Fund will generally be managed in a style similar to that
of Putnam Money Market Fund.

PCM NEW OPPORTUNITIES FUND

PCM New Opportunities Fund seeks long-term capital appreciation. The
fund seeks its objective by investing principally in common
stocks of companies in sectors of the economy which Putnam Management
believes possess above-average long-term growth potential. The fund
will generally invest in companies which Putnam Management identifies as
offering the best prospects for long-term growth within a particular
sector. Current dividend income is only an incidental consideration. The
fund invests primarily in common stocks, but may also purchase
convertible bonds, convertible preferred stocks, warrants, preferred stocks
and debt securities if Putnam Management believes they would help achieve
the fund's objective of capital appreciation. The fund may
invest up to 20% of its assets in foreign securities. For a discussion of
the risks associated with foreign investing, see "Common investment
policies and techniques -- Foreign investments." The fund may also
engage in foreign currency exchange transactions and transactions in
futures and options, enter into repurchase agreements, loan its portfolio
securities and purchase securities for future delivery. See "Common
investment policies and techniques" below for a discussion of these
securities and types of transactions and the risks associated with them.
The fund may also hold a portion of its assets in cash and money
market instruments. The fund may engage in defensive strategies
when Putnam Management judges that conditions in the securities markets
make pursuing the fund's basic investment strategy inconsistent with
the best interests of the fund's shareholders. See "Common
investment policies and techniques" below for a discussion of these
strategies.

The sectors of the economy which offer above-average growth potential will
change over time. At present, Putnam Management has identified the
following sectors of the economy as having an above-average growth
potential over the next three to five years:

Personal Communications - long distance telephone, cellular
telephone, paging, personal communication networks;

Media/Entertainment - cable television system operators, cable
television network programmers, film entertainment providers, theme
park operators, casino operators , radio and television
stations ;

Medical Technology/Cost-Containment - home and outpatient care,
medical device companies, biotechnology, health care information
services;

Environmental Services - solid waste disposal, hazardous waste
disposal, remediation services, environmental testing;

Applied/Advanced Technology - database software, application
software, entertainment software, networking software, computer
systems integrators, information services companies ,
semiconductors ;

Personal Financial Services - specialty insurance companies, credit
card issuers, and other consumer-oriented financial services
companies; and

Value-oriented Consuming - retailers, restaurants, hotel chains and
travel companies able to provide quality products or services at lower
prices or offering greater perceived value than competitors.

In addition, the fund may also invest a portion of its assets in
securities of companies that, although not in any of the sectors described
above, are expected to experience above-average growth.

The sectors described above represent Putnam Management's current judgment
of the sectors of the economy which offer the most attractive growth
opportunities. The fund will not necessarily be invested in each of
the seven market sectors at all times. Such sectors are likely to change
over time and may include a variety of industries. Subject to the
fund's investment restrictions, the fund may invest up to
one-half of its assets in any one particular sector.

The fund will invest in securities which Putnam Management believes
offer above-average long-term growth opportunities. As a result of the
fund's long-term investment strategy, it is possible that the
fund's total return over certain periods may be less than that of
other equity investment vehicles.

The fund seeks to invest in companies that offer above-average
growth prospects in their particular sector of the economy, without regard
to the companies' size. Companies in the fund's portfolio
will range from small, rapidly growing companies to larger, well-
established firms. It may invest in small and relatively less well-
known companies. Investing in these companies may present greater
opportunities for capital appreciation, but also may involve greater risk.
They may have limited product lines, markets or financial
resources, or may depend on a limited management group. Their
securities may trade less frequently and in limited volume, and only in the
over-the-counter market or on a regional securities exchange. As a result,
these securities may fluctuate in value more than securities of larger,
more established companies.

The fund will normally emphasize investments in particular economic
sectors. Although the fund will not invest more than 25% of its
assets in any one industry, the fund's emphasis on particular
sectors of the economy may make the value of the fund's shares more
susceptible to any single economic, political or regulatory development
than the shares of an investment company which is more widely diversified.
As a result, the fund's shares may fluctuate in value more
than the shares of such an investment company.

PCM New Opportunities Fund will generally be managed in a style similar to
that of Putnam New Opportunities Fund.
<PAGE>
PCM U.S. GOVERNMENT AND HIGH QUALITY BOND FUND

PCM U.S. Government and High Quality Bond Fund seeks current income
consistent with preservation of capital. The fund invests primarily
in U.S. government securities and in other debt obligations rated at
least A by Moody's or S&P at the time of investment, or, if not rated,
determined by Putnam Management to be of comparable quality. For a more
detailed description of security ratings, see the Appendix to this
prospectus. The fund will not necessarily dispose of a
security if its rating is reduced below its rating at the time of purchase,
although Putnam Management will monitor the investment to determine whether
continued investment in the security will assist in meeting the
fund's investment objective.

Putnam Management will allocate the fund's assets between U.S.
government securities and other high quality bonds, depending on its
assessment of market conditions and the relative investment returns
available from such securities. The fund will not, however, make
any investment, if, as a result, less than 25% of the value of its assets
would be invested in U.S. government securities. The fund may also
invest up to 10% of its assets in foreign securities. For a discussion of
the risks associated with foreign investments, see "Common investment
policies and techniques -- Foreign investments." The fund may also
invest in premium securities, engage in foreign currency exchange
transactions and transactions in futures and options, enter into repurchase
agreements, loan its portfolio securities and purchase securities for
future delivery. See "Common investment policies and techniques" below for
a discussion of these strategies and the risks associated with them. The
fund may also hold a portion of its assets in cash and money market
instruments. The fund may engage in defensive strategies when
Putnam Management judges that conditions in the securities markets make
pursuing the fund's basic investment strategy inconsistent with the
best interests of the fund's shareholders. See "Common investment
policies and techniques" below for a discussion of these strategies.

Putnam Management may take full advantage of the entire range of maturities
of U.S. government securities and other high quality bonds and may
adjust the average maturity of the fund's portfolio from time to
time, depending on its assessment of relative yields on securities of
different maturities and expectations of future changes in interest rates.
Thus, at certain times the average maturity of the portfolio may be
relatively short (less than one year to five years, for example) and at
other times may be relatively long (more than 10 years, for example).

<PAGE>
The fund may also invest in high quality mortgage-backed and asset-
backed securities. For a description of these securities, and the risks
associated with them, see "Common investment policies and techniques --
Mortgage-backed and asset-backed securities."

U.S. government securities and other high quality bonds do not
involve the degree of credit risk associated with investments in lower
quality fixed - income securities, although, as a result, the yields
available from U.S. government securities and other high quality
bonds are generally lower than the yields available from many other
fixed - income securities. Like other fixed - income securities,
however, the values of U.S. government securities and other high
quality bonds change as interest rates fluctuate. Fluctuations in the
value of the fund's securities will not affect interest income on
securities already held by the fund , but will be reflected in the
fund's net asset value. Since the magnitude of these fluctuations
generally will be greater at times when the fund's average maturity
is longer, under certain market conditions the fund may invest in
short-term investments yielding lower current income rather than investing
in higher yielding longer-term securities.

PCM UTILITIES GROWTH AND INCOME FUND

The investment objective of PCM Utilities Growth and Income Fund is to seek
capital growth and current income. The fund concentrates its
investments in securities issued by companies in the public utilities
industries.

The fund will seek its objective by investing under normal
circumstances at least 65% of its total assets in equity and debt
securities of companies in the public utilities industries. Equity
securities in which the fund may invest include common stocks,
preferred stocks, securities convertible into common stocks or preferred
stocks, and warrants to purchase common or preferred stocks. Debt
securities in which the fund may invest will be rated at the time of
purchase at least Baa by Moody's or BBB by S&P or will be of
comparable quality as determined by Putnam Management. The fund may
invest in debt and equity securities of issuers in other industries if
Putnam Management believes they will help achieve the fund's
objective. Companies in the public utilities industries include companies
engaged in the manufacture, production, generation, transmission, sale or
distribution of electric or gas energy or other types of energy and
companies engaged in telecommunications, including telephone, telegraph,
satellite, microwave and other communications media (but not companies
engaged in public broadcasting or cable television). Putnam Management
deems a particular company to be in the public utilities industries if at
the time of investment Putnam Management determines that at least 50% of
the company's assets, revenues or profits are derived from one or more of
those industries.

The portion of the fund's assets invested in equity securities and
in debt securities will vary from time to time in light of the
fund's investment objective, changes in interest rates, and economic
and other factors. Although the fund expects that in the near term
it will invest substantial portions of its assets in both equity securities
and in debt securities, the fund may invest all of its assets in
either equity or debt securities. The fund may hold a portion of
its assets in cash and money market instruments.

The fund may invest up to 25% of its assets in securities
principally traded in foreign markets. For a discussion of the risks
associated with foreign investments, see "Common investment policies and
techniques -- Foreign investments." The fund may also engage in
foreign currency exchange transactions and transactions in futures and
options, enter into repurchase agreements, loan its portfolio securities
and purchase securities for future delivery. See "Common investment
policies and techniques" below for a discussion of these securities and
types of transactions and the risks associated with them. The fund
may engage in defensive strategies when Putnam Management judges that
conditions in the securities markets make pursuing the fund's basic
investment strategy inconsistent with the best interests of the
fund's shareholders. See "Common investment policies and
techniques" below for a discussion of these strategies.

Since the fund's investments are concentrated in the
utilities industries, the value of its shares can be expected to change in
light of factors affecting those industries, and may fluctuate more widely
than the value of shares of a portfolio that invests in a broader range of
industries. Many utility companies, especially electric, gas and other
energy-related utility companies, have historically been subject to risks
of increase in fuel and other operating costs, changes in interest rates on
borrowings for capital improvement programs, changes in applicable laws and
regulations, changes in technology which may render existing plants,
equipment or products obsolete, the effects of energy conservation and
operating constraints, and increased costs and delays associated with
compliance with environmental regulations. In particular, regulatory
changes with respect to nuclear and conventionally-fueled power generating
facilities could increase costs or impair the ability of utility companies
to operate such facilities or obtain adequate return on invested capital.
Generally, prices charged by utilities are regulated in the United States
and in foreign countries with the intention of protecting the public while
ensuring that utility companies earn a return sufficient to allow them to
attract capital in order to grow and continue to provide appropriate
services. There can be no assurance that such pricing policies or rates of
return will continue in the future.

In recent years, regulatory changes in the United States have increasingly
allowed utility companies to provide services and products outside their
traditional geographic areas and lines of business, creating new areas of
competition within the utilities industries. This trend toward
deregulation and the emergence of new entrants have caused non-regulated
providers of utility services to become a significant part of the utilities
industries. Putnam Management believes that the emergence of competition
and deregulation will result in certain utility companies being able to
earn more than their traditional regulated rates of return, while others
may be forced to defend their core business from increased competition and
may be less profitable. Although Putnam Management seeks to take advantage
of favorable investment opportunities that may arise from these structural
changes, there can be no assurance that the fund will benefit from
any such changes.

Investments in securities rated BBB or Baa have speculative
characteristics, and changes in economic conditions or other circumstances
are more likely to lead to a weakened capacity of the issuer to make
principal and interest payments than would likely be the case with
investments in securities with higher credit ratings. The fund will
not necessarily dispose of a security when its rating is reduced below its
rating at the time of purchase, although Putnam Management will monitor the
investment to determine whether continued investment in the security would
serve the fund's investment objective.

The fund is "non-diversified." This means that it may invest its
assets in a limited number of issuers. In order to qualify as a
"regulated investment company" under the Internal Revenue Code (See
"How the trust makes distributions to shareholders; tax information"
below), the fund generally may not invest more than 25% of its
total assets in obligations of any one issuer other than U.S.
government securities and, with respect to 50% of its total assets,
the fund may not invest more than 5% of its total assets in the
securities of any one issuer (except U.S. government securities).
Thus the fund may invest up to 25% of its total assets in the
securities of each of any two issuers. Because of the limited number of
issuers in the public utilities industries, the fund is more likely
to invest a higher percentage of its assets in the securities of a single
issuer than an investment company which invests in a broad range of
industries. This practice involves an increased risk of loss to the
fund if the issuer is unable to make interest or principal payments
or if the market value of such securities were to decline.

PCM Utilities Growth and Income Fund will generally be managed in a style
similar to that of Putnam Utilities Growth and Income Fund. Because that
fund is "diversified," however, PCM Utilities Growth and Income
Fund's portfolio may be invested in securities of a smaller
number of issuers than the portfolio of that fund .

PCM VOYAGER FUND

PCM Voyager Fund seeks capital appreciation. It is designed for investors
willing to assume above-average risk in return for above-average capital
growth potential. The fund invests primarily in common stocks of
companies that Putnam Management believes have potential for capital
appreciation which is significantly greater than that of market
averages. The fund may also purchase convertible bonds, convertible
preferred stocks, warrants, preferred stocks and debt securities if Putnam
Management believes they would help achieve the fund's objective.
The fund may also hold a portion of its assets in cash and money
market instruments and may invest up to 20% of its assets in foreign
securities. For a discussion of the risks associated with foreign
investments, see "Common investment policies and techniques -- Foreign
investments." The fund may also engage in foreign currency exchange
transactions and transactions in futures and options, enter into repurchase
agreements, loan its portfolio securities and purchase securities for
future delivery. See "Common investment policies and techniques" below for
a discussion of these securities and types of transactions and the risks
associated with them. The fund may engage in defensive strategies
when Putnam Management judges that conditions in the securities markets
make pursuing the fund's basic investment strategy inconsistent with
the best interests of the fund's shareholders. See "Common
investment policies and techniques" below for a discussion of these
strategies.

The fund's investments may include widely-traded common stocks of larger
companies as well as common stocks of smaller, less well-known issuers.
The fund generally invests a portion of its assets in the
securities of small- to medium-sized companies with equity market
capitalizations of less than $3 billion. Investing in these companies
may present greater opportunities for capital appreciation , but may
also involve greater risk. They may have limited product lines, markets or
financial resources, or may depend on a limited management group. Their
securities may trade less frequently and in limited volume and only in
the over-the-counter market or on a regional securities exchange . As a
result, these securities may fluctuate in value more than securities of
larger, more established companies.

PCM Voyager Fund will generally be managed in a style similar to Putnam
Voyager Fund.

GENERAL

As indicated above, certain of the funds are generally managed in
styles similar to other open-end investment companies which are managed by
Putnam Management and whose shares are generally offered to the public.
These other Putnam funds may, however, employ different investment
practices and may invest in securities different from those in which their
counterpart funds invest, and consequently will not have identical
portfolios or experience identical investment results.

COMMON INVESTMENT POLICIES AND TECHNIQUES

Defensive strategies

At times, Putnam Management may judge that conditions in the securities
markets make pursuing a fund's basic investment strategy
inconsistent with the best interests of the fund's shareholders. At
such times Putnam Management may temporarily use alternative
strategies primarily designed to reduce fluctuations in the value of
a fund's assets.

In implementing these defensive strategies, a fund may
invest without limit in cash or cash equivalents, money-market instruments,
short-term bank obligations, high-rated fixed - income securities or
preferred stocks or invest in any other securities Putnam Management
considers consistent with such defensive strategies.

It is impossible to predict when, or for how long, a fund will
use these alternative strategies.

Portfolio turnover

The length of time a fund has held a particular security is not
generally a consideration in investment decisions. A change in the
securities held by a fund is known as "portfolio turnover." As a
result of a fund's investment policies, under certain market
conditions the fund's portfolio turnover rate may be higher than
that of other mutual funds.

Portfolio turnover generally involves some expense to a fund ,
including brokerage commissions or dealer markups and other
transaction costs on the sale of securities and reinvestment in other
securities. These transactions may result in realization of taxable
capital gains. Portfolio turnover rates for the life of each fund are
shown in the section "Financial highlights."

Investments in premium securities

To the extent described above, certain of the funds may invest in
securities bearing coupon rates higher than prevailing market rates. Such
"premium" securities are typically purchased at prices greater than the
principal amounts payable on maturity.

A fund does not amortize the premium paid for these
securities in calculating its net investment income. As a result, the
purchase of premium securities provides a fund a higher level
of investment income distributable to shareholders on a current basis than
if the fund purchased securities bearing current market rates of
interest. Because the value of premium securities tends to approach the
principal amount as they approach maturity (or call price in the case of
securities approaching their first call date), the purchase of such
securities may increase the fund's risk of capital loss if
such securities are held to maturity (or first call date).

During a period of declining interest rates, many of a fund's
portfolio investments will likely bear coupon rates that are higher
than current market rates, regardless of whether such securities were
originally purchased at a premium. These securities would generally
carry premium market values that would be reflected in the net asset
value of the fund's shares. As a result, an investor who purchases
shares of a fund during such periods would initially receive higher
taxable monthly distributions (derived from the higher coupon rates
payable on the fund's investments) than might be available from
alternative investments bearing current market interest rates, but the
investor may face an increased risk of capital loss as these higher
coupon securities approach maturity (or first call date). In evaluating the
potential performance of an investment in a fund , investors may find
it useful to compare the fund's current dividend rate with the
fund's "yield," which is computed on a yield-to-maturity basis in
accordance with SEC regulations and which reflects amortization of market
premiums. See "How performance is shown."

Foreign investments

Each fund may invest to the extent described above in securities
principally traded in foreign markets. Each fund may also purchase
Eurodollar certificates of deposit without limitation. Since foreign
securities are normally denominated and traded in foreign currencies, the
values of fund assets may be affected favorably or unfavorably by
currency exchange rates and exchange control regulations. There may be
less information publicly available about a foreign company than about a
U.S. company, and foreign companies are not generally subject to
accounting, auditing , and financial reporting standards and
practices comparable with those in the United States.

The securities of some foreign companies are less liquid and at times
more volatile than securities of comparable U.S. companies. Foreign
brokerage commissions and other fees are also generally higher than
those in the United States. Foreign settlement procedures and trade
regulations may involve certain risks (such as delay in payment or delivery
of securities or in the recovery of fund assets held abroad) and
expenses not present in the settlement of domestic investments.

In addition, there may be a possibility of nationalization or expropriation
of assets, imposition of currency exchange controls, confiscatory taxation,
political or financial instability and diplomatic developments that
could affect the value of investments in certain foreign countries.
Legal remedies available to investors in certain foreign countries may be
more limited than those available with respect to investments in the United
States or in other foreign countries. The laws of some foreign countries
may limit investments in securities of certain issuers located in
those foreign countries. Special tax considerations apply to foreign
securities.

The risks described above are typically increased for investments in
securities principally traded in, or issued by issuers located in,
underdeveloped and developing nations, which are sometimes referred to
as "emerging markets."

A more detailed explanation of foreign investments, and the risks and
special tax considerations associated with them, is included in the
SAI .

Foreign currency exchange transactions

To the extent described above, certain of the funds may engage in
foreign currency exchange transactions to protect against
uncertainty in the level of future exchange rates. Putnam Management
expects to engage in foreign currency exchange transactions
in connection with the purchase and sale of portfolio securities
("transaction hedging") and to protect against changes in the
value of specific portfolio positions ("position hedging").

A fund may engage in transaction hedging to protect against a change
in foreign currency exchange rates between the date on which the
fund contracts to purchase or sell a security and the settlement
date, or to "lock in" the U.S. dollar equivalent of a dividend or
interest payment in a foreign currency. A fund may also
purchase or sell a currency on a spot (or cash) basis at the prevailing
spot rate in connection with the settlement of transactions in portfolio
securities denominated in that foreign currency.

If conditions warrant, a fund may also enter into contracts to
purchase or sell foreign currencies at a future date ("forward contracts")
and may purchase and sell foreign currency futures contracts as a
hedge against changes in foreign currency exchange rates between the trade
and settlement dates on particular transactions and not for speculation. A
foreign currency forward contract is a negotiated agreement to exchange
currency at a future time at a rate or rates that may be higher or lower
than the spot rate. Foreign currency futures contracts are standardized
exchange-traded contracts and have margin requirements. For transaction
hedging purposes, a fund may also purchase and sell call and put
options on foreign currency futures contracts and on foreign
currencies.

A fund may engage in position hedging to protect against a decline
in value relative to the U.S. dollar of the currencies in which its
portfolio securities are denominated or quoted (or an increase in the value
of a currency in which securities the fund intends to buy are
denominated, when the fund holds cash or short-term
investments). For position hedging purposes, a fund may purchase or
sell foreign currency futures contracts, foreign currency forward
contracts, and options on foreign currency futures contracts and on foreign
currencies. In connection with position hedging, a fund may also
purchase or sell foreign currency on a spot basis.

A fund's currency hedging transactions may call for the delivery of
one foreign currency in exchange for another foreign currency and may at
times not involve currencies in which its portfolio securities are then
denominated. Putnam Management will engage in such "cross hedging"
activities when it believes that such transactions provide significant
hedging opportunities for a fund . Cross hedging transactions by a
fund involve the risk of imperfect correlation between changes in
the values of the currencies to which such transactions relate and changes
in the value of the currency or other asset or liability which is the
subject of the hedge.

For a discussion of the risks associated with options and futures
strategies in connection with a fund's foreign currency exchange
transactions, see "Risks related to options and futures strategies."

Options and futures

Futures and options on futures. Each fund that may invest in
futures and options, as described above, may, to the extent consistent with
its investment objectives and policies, buy and sell index futures
contracts ("index futures") for hedging purposes. An "index future" is a
contract to buy or sell units of a particular bond or stock index at an
agreed price on a specified future date. Depending on the change in value
of the index between the time when a fund enters into and terminates
an index futures transaction, the fund realizes a gain or loss. A
fund may also, to the extent consistent with its investment
objectives and policies, buy and sell call and put options on index futures
or on stock or bond indices in addition to or as an alternative to buying
or selling index futures or, to the extent permitted by applicable law, to
earn additional income. In addition, if a fund's investment
policies permit it to invest in foreign securities, such fund may
invest in futures and options on foreign securities, to the extent
permitted by applicable law, as a substitute for direct investment in
foreign securities.

To the extent described above, each fund may also buy and sell
futures contracts and related options with respect to U.S. government
securities and options directly on U.S. government securities .
Putnam Management believes that, under certain market conditions, price
movements in U.S. government securities futures and related options
may correlate closely with securities in which the funds may invest
and may, as a result, provide hedging opportunities for the funds.
U.S. government securities futures and related options would be used
in a way similar to a fund's use of index futures and options. A
fund will only buy or sell U.S. government securities futures
and related options when, in the opinion of Putnam Management, price
movements in such futures and options are expected to correlate closely
with price movements in the securities which are the subject of the hedge.

Options. As described above, certain of the funds may, to the
extent consistent with their investment objectives and policies, seek to
increase current return by writing covered call and put options on
securities such funds own or in which they may invest. A
fund receives a premium from writing a call or put option, which
increases the return if the option expires unexercised or is closed
out at a net profit.

When a fund writes a call option, it gives up the opportunity to
profit from any increase in the price of a security above the exercise
price of the option; when it writes a put option, the fund takes the
risk that it will be required to purchase a security from the option holder
at a price above the current market price of the security. Each
fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it
purchases an option having the same terms as the option written.

Each fund may also, to the extent consistent with its investment
objectives and policies, buy and sell put and call options for hedging
purposes . From time to time , a fund may also buy and sell
combinations of put and call options on the same underlying security to
earn additional income. The aggregate value of the securities underlying
the options may not exceed 25% of the relevant fund's assets. The use
of these strategies may be limited by applicable law.

Risks related to options and futures strategies

Options and futures transactions involve costs and may result in
losses. The effective use of options and futures strategies depends on a
fund's ability to terminate options and futures positions at times when
Putnam Management deems it desirable to do so. Although a fund will enter
into an option or futures contract position only if Putnam Management
believes that a liquid secondary market exists for such option or
futures contract, there is no assurance that the fund will be able to
effect closing transactions at any particular time or at an
acceptable price. Options on certain U.S. government securities are traded
in significant volume on securities exchanges. However, other options
which a fund may purchase or sell are traded in the "over-the-counter"
market rather than on an exchange. This means that a fund will enter into
such option contracts with particular securities dealers who make markets
in these options. A fund's ability to terminate options positions in the
over-the-counter market may be more limited than for exchange-traded
options and may also involve the risk that securities dealers participating
in such transactions might fail to meet their obligations to the fund.

The use of options and futures strategies also involves the risk of
imperfect correlation among movements in the values of the securities
underlying the futures and options purchased and sold by a fund, of
the option and futures contract itself, and of the securities which are the
subject of a hedge. The successful use of these strategies further depends
on the ability of Putnam Management to forecast interest rates and market
movements correctly. The use of futures and options transactions
for purposes other than hedging entails greater risks .

A more detailed explanation of futures and options transactions, including
the risks associated with them, is included in the SAI .

Lower-rated and other fixed - income securities

As described above, certain of the funds may invest in lower-rated
fixed - income securities (commonly known as "junk bonds"). Differing
yields on fixed - income securities of the same maturity are a
function of several factors, including the relative financial strength of
the issuers. Higher yields are generally available from securities in the
lower rating categories of recognized rating agencies (Baa or MIG-4
or lower by Moody's and BBB or SP-3 or lower by S&P) or from unrated
securities of comparable quality. Securities in the rating categories
below Baa as determined by Moody's and BBB as determined by S&P are
considered to be of poor standing and predominantly speculative. The
rating services' descriptions of securities in the lower rating categories,
including their speculative characteristics, are set forth in the Appendix
to this prospectus .

Securities ratings are based largely on the issuer's historical financial
condition and the rating agencies' investment analysis at the time of
rating. Consequently, the rating assigned to any particular security is
not necessarily a reflection of the issuer's current financial condition,
which may be better or worse than the rating would indicate. Although
Putnam Management considers security ratings when making investment
decisions, it performs its own investment analysis and does not rely
principally on the ratings assigned by the rating services. Putnam
Management's analysis may include consideration of the issuer's experience
and managerial strength, changing financial condition, borrowing
requirements or debt maturity schedules, and its responsiveness to changes
in business conditions and interest rates. It also considers relative
values based on anticipated cash flow, interest or dividend coverage, asset
coverage and earning prospects. Because of the greater number of
investment considerations involved in investing in lower-rated securities,
the achievement of a fund's objectives depends more on Putnam
Management's analytical abilities than would be the case if it were
investing primarily in securities in the higher rating categories.

At times, a substantial portion of fund assets may be invested in
securities as to which the fund , by itself or together with
other funds and accounts managed by Putnam Management and its affiliates,
holds all or a major portion . Under adverse market or
economic conditions or in the event of adverse changes in the financial
condition of the issuer, a fund could find it more difficult to sell
these securities when Putnam Management believes it advisable to do
so or may be able to sell the securities only at prices lower than
if they were more widely held. Under these circumstances, it
may also be more difficult to determine the fair value of such securities
for purposes of computing a fund's net asset value.

In order to enforce its rights in the event of a default of
these securities, a fund may be required to participate in
various legal proceedings or take possession of and manage assets
securing the issuer's obligations on the securities . This
could increase the fund's operating expenses and adversely
affect the fund's net asset value.

Like those of other fixed - income securities, the values of
lower-rated securities fluctuate in response to changes in interest rates.
Thus, a decrease in interest rates will generally result in an increase in
the value of a fund's assets. Conversely, during periods of rising
interest rates, the value of a fund's assets will generally
decline.

The magnitude of these fluctuations will generally be greater when a
fund's average maturity is longer . However, the yields on such
securities are also generally higher. In addition, the values of such
securities are also affected by changes in general economic conditions and
business conditions affecting the specific industries of their issuers.
Changes by recognized rating services in their ratings of any fixed -
income security and in the ability of an issuer to make payments of
interest and principal may also affect the value of these investments.
Changes in the value of portfolio securities generally will not affect
income derived from such securities, but will affect a fund's net
asset value.

Investors should carefully consider their ability to assume the risks of
investing in a mutual fund which invests in lower-rated securities before
allocating a portion of their insurance investment to a fund that
invests in such securities. The lower ratings of certain securities held
by a fund reflect a greater possibility that adverse changes in the
financial condition of the issuer, or in general economic conditions, or
both, or an unanticipated rise in interest rates, may impair the ability of
the issuer to make payments of interest and principal. The inability (or
perceived inability) of issuers to make timely payments of interest and
principal would likely make the values of securities held by a fund
more volatile and could limit the fund's ability to sell its
securities at prices approximating the values the fund had placed on
such securities. In the absence of a liquid trading market for securities
held by it, a fund may be unable at times to establish the fair
value of such securities. The rating assigned to a security by Moody's or
S&P does not reflect an assessment of the volatility of the security's
market value or of the liquidity of an investment in the security.

Putnam Management seeks to minimize the risks of investing in lower-rated
securities through careful investment analysis. When a fund invests
in securities in the lower rating categories, the achievement of the
fund's goals is more dependent on Putnam Management's ability than
would be the case if the fund were investing in securities in the
higher rating categories.

Certain securities held by a fund may permit the issuer at its
option to "call," or redeem, its securities. If an issuer were to redeem
securities held by a 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.

A fund may at times invest in so-called "zero-coupon" bonds and
"payment-in-kind" bonds. Zero-coupon bonds are issued at a significant
discount from their principal amount and pay interest only at maturity
rather than at intervals during the life of the security. Payment-in-kind
bonds allow the issuer, at its option, to make current interest payments on
the bonds either in cash or in additional bonds. The values of zero-coupon
bonds and payment-in-kind bonds are subject to greater fluctuation in
response to changes in market interest rates than bonds which pay interest
in cash currently.

Both zero-coupon bonds and payment-in-kind bonds allow an issuer to
avoid the need to generate cash to meet current interest payments.
Accordingly, such bonds may involve greater credit risks than bonds paying
interest currently. Even though such bonds do not pay current interest in
cash, a fund is nonetheless required to accrue interest income on
such investments and to distribute such amounts on a current basis
to shareholders. Thus, a fund could be required at times to
sell other investments in order to satisfy its income
distributions .

Certain investment grade securities in which a fund may
invest share some of the risk factors discussed above with respect to
lower-rated securities.

Mortgage-backed and asset-backed securities

As described above, certain of the funds may invest in asset-backed
and mortgage-backed securities, such as CMOs and certain stripped
mortgage-backed securities. CMOs and other mortgage-backed securities
represent a participation in, or are secured by, mortgage loans
and include:

- - Certain securities issued or guaranteed by the U.S. government or one
of its agencies or instrumentalities

- - Securities issued by private issuers that represent an interest in or
are secured by mortgage-backed securities issued or guaranteed by the
U.S. government or one of its agencies or instrumentalities

- - Securities issued by private issuers that represent an interest in or
are secured by mortgage loans or mortgage-backed securities without a
government guarantee but usually having some form of private credit
enhancement .

Stripped mortgage-backed securities are usually structured with two
classes that receive different portions of the interest and principal
distributions on a pool of mortgage assets. A fund may invest in
both the interest-only or "IO" class and the principal-only or "PO" class.
The yield to maturity on an IO class of stripped mortgage-backed
securities is extremely sensitive not only to changes in prevailing
interest rates but also to the rate of principal payments (including
prepayments) on the underlying assets . A rapid rate
of principal prepayments may have a measurably adverse effect
on a fund's yield to maturity to the extent it invests in IOs. If
the assets underlying the IO experience greater than
anticipated prepayments of principal, a fund may fail to
recoup fully its initial investment in these securities.
Conversely, POs tend to increase in value if prepayments are greater than
anticipated and decline if prepayments are slower than anticipated. The
secondary market for stripped mortgage-backed securities may be more
volatile and less liquid than that for other mortgage-backed
securities, potentially limiting a fund's ability to buy or sell
those securities at any particular time.

<PAGE>
Mortgage-backed securities include securities issued or guaranteed by the
U.S. government or one of its agencies or instrumentalities, such as Ginnie
Mae, Fannie Mae or Freddie Mac; securities issued by private issuers that
represent an interest in or are collateralized by mortgage-backed
securities issued or guaranteed by the U.S. government or one of its
agencies or instrumentalities; or securities issued by private issuers that
represent an interest in or are collateralized by mortgage loans or
mortgage-backed securities without a government guarantee but usually
having some form of private credit enhancement.

Asset-backed securities are structured like mortgage-backed securities, but
instead of mortgage loans or interests in mortgage loans , the
underlying assets may include motor vehicle installment sales or
installment loan contracts, leases of various types of real and personal
property, and receivables from credit card agreements. The ability of an
issuer of asset-backed securities to enforce its security interest in the
underlying assets may be limited.

Mortgage-backed and asset-backed securities have yield and maturity
characteristics corresponding to the underlying assets. Unlike
traditional debt securities, which may pay a fixed rate of interest until
maturity when the entire principal amount comes due, payments on certain
mortgage-backed securities and asset-backed securities include both
interest and a partial payment of principal.

Besides the scheduled repayment of principal , payments of
principal may result from voluntary prepayment, refinancing , or
foreclosure of the underlying mortgage loans or other assets.

Prepayments may require reinvestment of principal under less attractive
terms. Prepayments may also significantly shorten the effective
maturities of these securities, especially during periods of
declining interest rates. Conversely, during periods of rising interest
rates, a reduction in prepayments may increase the effective maturities of
these securities.

Mortgage -backed and asset-backed securities are less effective
than other types of securities as a means of "locking in" attractive long-
term interest rates. One reason is the need to reinvest prepayments
of principal ; another is the possibility of significant unscheduled
prepayments resulting from declines in interest rates. These prepayments
would have to be reinvested at lower rates. As a result, these securities
may have less potential for capital appreciation during periods of
declining interest rates than other securities of comparable maturities,
although they may have a similar risk of decline in market value
during periods of rising interest rates.

Prepayments may cause losses in securities purchased at a premium.
At times, some of the mortgage-backed and asset-backed securities in which
a fund may invest will have higher than market interest rates
and therefore will be purchased at a premium above their par
value. Unscheduled prepayments, which are made at par, will cause a
fund to experience a loss equal to any unamortized premium.

Prepayments could cause early retirement of CMOs. CMOs are issued
with a number of classes or series which have different maturities and
that may represent interests in some or all of the interest
or principal on the underlying collateral . Payment of interest or
principal on some classes or series of CMOs may be subject to contingencies
or some classes or series may bear some or all of the risk of default on
the underlying mortgages . CMOs of different classes or series
are generally retired in sequence as the underlying mortgage loans in the
mortgage pool are repaid. If enough mortgages are repaid ahead of
schedule, the classes or series of a CMO with the earliest maturities
generally will be retired prior to their maturities . Thus, the
early retirement of particular classes or series of a
CMO held by the fund would have the same effect as the
prepayment of mortgages underlying other mortgage-backed securities.

Securities loans, repurchase agreements and forward commitments

Each fund may lend portfolio securities amounting to not more than
25% of its assets to broker-dealers and may enter into repurchase
agreements on up to 25% of its assets. These transactions must be fully
collateralized at all times. Each fund (other than PCM Money Market
Fund) may also purchase securities for future delivery, which may increase
its overall investment exposure and involves a risk of loss if the value of
the securities declines prior to the settlement date. These transactions
involve some risk to a fund if the other party should default on its
obligation and the fund is delayed or prevented from recovering the
collateral or completing the transaction.

HOW PERFORMANCE IS SHOWN

Each fund's investment performance may from time to time be included
in advertisements about that fund. For funds other than PCM
Money Market Fund, "yield" is calculated by dividing a fund's
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 SEC regulations and may differ from
net investment income as determined for financial reporting purposes. SEC
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. See "Common investment policies and techniques --
Investments in premium securities." For PCM Money Market Fund, "yield"
represents an annualization of the change in value of an investment
(excluding any capital changes) in the fund for a specific seven-day
period; "effective yield" compounds that yield for a year and is, for that
reason, greater than the fund's yield.

"Total return" for the one-, five- and ten-year periods (or for the life of
a fund , if shorter) through the most recent calendar quarter
represents the average annual compounded rate of return on an investment of
$1,000 in such fund . Total return may also be presented for other
periods.

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, the composition of a fund's portfolio,
and a fund's operating expenses. Investment performance also often
reflects the risks associated with a fund's investment objective or
objectives and policies. These factors should be considered when comparing
a 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. A fund's performance may be compared to that of various
indexes. See the SAI.

Performance information presented for the funds should not be
compared directly with performance information of other insurance products
without taking into account insurance-related charges and expenses payable
with respect to these insurance products. Insurance related charges and
expenses are not reflected in the funds' performance information
. As a result of such insurance related charges and expenses, an
investor's return under the insurance product would be lower .

For performance information through the funds' most recent fiscal
year, see "Investment Performance of the Trust" in the SAI .

HOW THE TRUST IS MANAGED

The Trustees of the Trust are responsible for generally overseeing the
conduct of the Trust's business. Subject to such policies as the Trustees
may determine, Putnam Management furnishes a continuing investment program
for the Trust and makes investment decisions on its behalf. Subject to the
control of the Trustees, Putnam Management also manages the Trust's other
affairs and business.

The Trust pays Putnam Management a quarterly fee for these services
based on each fund's average net assets. See the SAI.
<PAGE>
The following officers of Putnam Management have had
primary responsibility for the day-to-day management of each fund's
portfolio since the year stated below:

Business experience
Year (at least 5 years)
------- -------------------------
PCM Asia Pacific
Growth Fund

David K. Thomas 1995 Employed as an investment
Senior Vice President professional by Putnam
Management since 1987 .

PCM Diversified
Income Fund

William Kohli 1994 Employed as an investment
Managing Director professional by Putnam
Management since September, 1994.
Prior to September, 1994, Mr. Kohli
was Executive Vice President, and
Co-Director of Global Bond
Management and, prior to October,
1993, Mr. Kohli was Senior
Portfolio Manager, at Franklin
Advisors/Templeton Investment
Counsel.

Michael Martino 1994 Employed as an investment
Managing Director professional by Putnam Management
since January, 1994. Prior to
January, 1994, Mr. Martino was
employed by Back Bay Advisors in
the positions of Executive Vice
President and Chief Investment
Officer from 1992 to 1994, and
Senior Vice President and Senior
Portfolio Manager from 1990 to
1992.

Jennifer E. Leichter 1993 Employed as an investment
Senior Vice President professional by Putnam Management
since 1987.

Mark J. Siegel 1994 Employed as an investment
Senior Vice President professional by Putnam
Management since June, 1993. Prior
to June, 1993, Mr. Siegel was Vice
President of Salomon Brothers
International Ltd.

<PAGE>
Neil J. Powers 1994 Employed as an investment
Vice President professional by Putnam Management
since 1986

PCM Global Asset
Allocation Fund

William J. Landes 1993 Employed as an investment
Managing Director professional by Putnam Management
since 1985.

Richard M. Frucci 1995 Employed as an investment
Senior Vice President professional by Putnam Management
since 1984.

David L. King 1993 Employed as an investment
Senior Vice President professional by Putnam Management
since 1983.

John K. Storkerson 1993 Employed as an investment
Senior Vice President professional by Putnam Management
since 1979.

Christopher A. Ray 1993 Employed as an investment
Vice President professional by Putnam
Management since December, 1992.
Prior to December, 1992, Mr. Ray
was Vice President and Portfolio
Manager at Scudder, Stevens &
Clark, Inc., and from February,
1986 to March, 1992, Mr. Ray was
Vice President of Putnam
Management.
David J. Santos 1995 Employed as an investment
Vice President professional by Putnam
Management since 1986.

<PAGE>
PCM Global Growth
Fund

Carol C. McMullen 1995 Employed as an investment
Managing Director professional by Putnam Management
since June, 1995. Prior to June,
1995, Ms. McMullen was Senior Vice
President of Baring Asset
Management.

John K. Storkerson 1992 Employed as an investment
Senior Vice President professional by Putnam
Management since 1979 .

PCM Growth and Income
Fund

Anthony I. Kreisel 1993 Employed as an investment
Managing Director professional by Putnam Management
since 1986 .

David L. King 1993 Employed as an investment
Senior Vice President professional by Putnam
Management since 1983 .

PCM High Yield Fund

Rosemary H. Thomsen 1988 Employed as an investment
Senior Vice President professional by
Putnam Management since 1986.

PCM Money Market Fund

Lindsey C. Strong 1992 Employed as an investment
Vice President professional by Putnam
Management since 1984.

PCM New Opportunities
Fund

Daniel L. Miller 1994 Employed as an investment
Managing Director professional by Putnam
Management since 1983.
<PAGE>
PCM U.S. Government
and High Quality
Bond Fund

Kenneth J. Taubes 1993 Employed as an investment
Senior Vice President professional by Putnam
Management since 1991. Prior to
1991, Mr. Taubes was Senior Vice
President of the Finance Division
of U.S. Trust Company.

PCM Utilities Growth
and Income Fund

Sheldon N. Simon 1992 Employed as an investment
Senior Vice President professional by Putnam
Management since 1984.

Christopher A. Ray 1995 Employed as an investment
Vice President professional by Putnam
Management since December, 1992.
Prior to December, 1992, Mr. Ray
was Vice President and Portfolio
Manager at Scudder, Stevens &
Clark, Inc., and from February,
1986 to March, 1992, Mr. Ray was
Vice President of Putnam
Management.

PCM Voyager Fund

Roland W. Gillis 1995 Employed as an investment
Senior Vice President professional by Putnam
Management since March, 1995.
Prior to March, 1995, Mr. Gillis
was Vice President at
Keystone Custodian Funds, Inc.

Robert R. Beck 1995 Employed as an investment
Senior Vice President professional by Putnam
Management since 1989 .

Charles H. Swanberg 1994 Employed as an investment
Senior Vice President professional by Putnam Management
since 1984.

The Trust, on behalf of the funds , pays all expenses not assumed by
Putnam Management, including Trustees' fees and auditing, legal, custodial,
investor servicing and shareholder reporting expenses. The Trust also
reimburses Putnam Management for the compensation and related expenses of
certain officers of the Trust and their staff who provide administrative
services to the Trust. The total reimbursement is determined annually by
the Trustees.

General expenses of the Trust will be allocated among and charged to the
assets of each fund on a basis that the Trustees deem fair and
equitable, which may be based on the relative assets of each fund or
the nature of the services performed and relative applicability to each
fund . Expenses directly charged or attributable to a fund
will be paid from the assets of that fund .

Expense limitation. In order to limit PCM Asia Pacific Growth Fund's
expenses during its start-up period, Putnam Management has agreed to limit
its compensation (and, to the extent necessary, bear other expenses of the
fund) through April 30, 1996, to the extent that expenses of the
fund (exclusive of brokerage, interest, taxes, and deferred
organizational and extraordinary expenses) would exceed an annual rate of
1.20% of the fund's average net assets.

For the purpose of determining any such limitation on Putnam Management's
compensation, expenses of the fund will not reflect the application
of commissions or brokerage service and expense offset arrangements
that may reduce designated fund expenses.

With Trustee approval, this expense limitation may be terminated earlier,
in which event shareholders would be notified and this prospectus
would be revised.

Total expenses, including management fees, for the fiscal year ended
December 31, 1995 , based on each fund's average net assets,
were:
Total Management
Expenses Fees

PCM Asia Pacific Growth Fund* 0.81% 0.22%
(reflecting expense limitation)
PCM Diversified Income Fund 0.85% 0.70%
PCM Global Asset Allocation Fund 0.84% 0.70%
PCM Global Growth Fund 0.75% 0.60%
PCM Growth and Income Fund 0.57% 0.52%
PCM High Yield Fund 0.79% 0.70%
PCM Money Market Fund 0.57% 0.45%
PCM New Opportunities Fund 0.84%
0.70%
PCM U.S. Government and High
Quality Bond Fund 0.70% 0.61%
PCM Utilities Growth and Income Fund ** 0.68% 0.60%
PCM Voyager Fund 0.68% 0.62%

* The total expenses and management fees shown above for PCM
Asia Pacific Growth Fund reflect an expense limitation in
effect for the period and are not annualized . In the absence
of the expense limitation, annualized management fees and
total expenses would have been 0.80% and 1.70,
respectively%
<PAGE>
** On January 7, 1996 ,
the Trustees approved a
proposal to change the fees
payable to Putnam
Management under the
Management Contract for PCM
Utilities Growth and
Income Fund.

The proposed change is subject to shareholder approval and will
be submitted to shareholders at a meeting scheduled for July
11, 1996 .

If the proposed change is approved by shareholders, management
fees for PCM Utilities Growth and Income Fund would
thereafter be paid at the following annual rates: 0.70%
of the first $500 million of average net assets, 0.60% of the
next $500 million, 0.55% of the next $500 million, 0.50%
of the next $5 billion, 0.475% of the next $5
billion, 0.455% of the next $5 billion, 0.44% of
the next $5 billion, and 0.43% of any excess thereafter.
The proposed change would result in an increase in the fees
payable by the Fund based on its net assets as of December 31,
1995 .

The expenses shown in the table do not reflect the application of
credits related to brokerage service and expense offset arrangements that
reduce certain fund expenses.

Putnam Management places all orders for purchases and sales of the
securities of each fund . In selecting broker-dealers, Putnam
Management may consider research and brokerage services furnished to it and
its affiliates. Subject to seeking the most favorable
price and execution available, Putnam Management may consider, if permitted
by law, sales of shares of the other Putnam funds as a factor in the
selection of broker-dealers.

ORGANIZATION AND HISTORY

Putnam Capital Manager Trust is a Massachusetts business trust organized on
September 24, 1987. 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 Trust is an open-end, management investment company with an unlimited
number of authorized shares of beneficial interest. Shares of the Trust
may, without shareholder approval, be divided into two or more series of
shares representing separate investment portfolios, and are currently
divided into eleven series of shares, each representing a separate
investment portfolio which is being offered through separate accounts of
various insurance companies. Each portfolio is managed as a diversified
investment company, except for PCM Utilities Growth and Income Fund, which
is managed as a non-diversified investment company. Until
September 1, 1993, PCM Global Asset Allocation Fund was known as PCM Multi-
Strategy Fund. Shares vote by individual portfolio on all matters except
(i) when required by the Investment Company Act of 1940, shares of all
portfolios shall be voted in the aggregate, and (ii) when the Trustees have
determined that the matter affects only the interests of one or more
portfolios, only the shareholders of such portfolio or portfolios shall be
entitled to vote.

Each share has one vote, with fractional shares voting proportionately.
Shares of each of the portfolios are freely transferable, are entitled to
dividends as declared by the Trustees, and, if the portfolio were
liquidated, would receive the net assets of the portfolio. The Trust may
suspend the sale of shares of any portfolio at any time and may refuse any
order to purchase shares. Although the Trust 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.

Shares of the funds may only be purchased by an insurance
company separate account. For matters requiring shareholder
approval, you may be able to instruct the insurance company separate
account how to vote the fund shares attributable to your contract or
policy. See the Voting Rights section of your insurance product
prospectus.

The funds' Trustees: George Putnam,* Chairman. President of the
Putnam funds. Chairman and Director of Putnam Management and Putnam Mutual
Funds. Director, Marsh & McLennan Companies, Inc.; William F. Pounds,
Vice Chairman. Professor of Management, Alfred P. Sloan School of
Management, Massachusetts Institute of Technology ; Jameson Adkins
Baxter, President, Baxter Associates, Inc.; Hans H. Estin, Vice Chairman,
North American Management Corp.; John A. Hill, Principal and Managing
Director, First Reserve Corporation; Elizabeth T. Kennan, President
Emeritus and Professor , Mount Holyoke College; Lawrence J. Lasser,*
Vice President of the Putnam funds. President, Chief Executive Officer and
Director of Putnam Investments, Inc. and Putnam Management. Director,
Marsh & McLennan Companies, Inc.; Robert E. Patterson, Executive Vice
President, Cabot Partners Limited Partnership; Donald S. Perkins,*
Director of various corporations, including AT&T , Cummins Engine
Company, Inc., Springs Industries, Inc. and Time Warner Inc.; George
Putnam, III,* President, New Generation Research, Inc.; Eli Shapiro, Alfred
P. Sloan Professor of Management, Emeritus, Alfred P. Sloan School of
Management, Massachusetts Institute of Technology ; A.J.C. Smith,*
Chairman, Chief Executive Officer and Director, Marsh & McLennan Companies,
Inc.; and W. Nicholas Thorndike, Director of various corporations and
charitable organizations, including Data General Corporation, Bradley Real
Estate, Inc. and Providence Journal Co. Also, Trustee of Massachusetts
General Hospital and Eastern Utilities Associates. The funds'
Trustees are also Trustees of the other Putnam funds. Those marked with an
asterisk (*) are or may be deemed to be "interested persons" of the Trust,
Putnam Management or Putnam Mutual Funds.

About Your Investment

SALES AND REDEMPTIONS

The Trust has an underwriting agreement relating to the funds with
Putnam Mutual Funds, One Post Office Square, Boston, Massachusetts 02109.
Putnam Mutual Funds presently offers shares of each fund of the
Trust continuously to separate accounts of various insurers. The
underwriting agreement presently provides that Putnam Mutual Funds accepts
orders for shares at net asset value and no sales commission or load is
charged. Putnam Mutual Funds may, at its expense, provide promotional
incentives to dealers that sell variable insurance products.

Shares are sold or redeemed at the net asset value per share next
determined after receipt of an order, except that, in the case of PCM Money
Market Fund, purchases will not be effected until the next determination of
net asset value after federal funds have been made available to the Trust.
Orders for purchases or sales of shares of a fund must be received
by Putnam Mutual Funds before the close of regular trading on the New York
Stock Exchange in order to receive that day's net asset value. No fee is
charged to a separate account when it redeems fund shares.

Please check with your insurance company to determine the funds
available under your variable annuity contract or variable life insurance
policy. Certain funds may not be available in your state due to
various insurance regulations. Inclusion of a fund in this
prospectus that is not available in your state is not to be
considered a solicitation. This prospectus should be read in
conjunction with the prospectus of the separate account of the specific
insurance product which accompanies this prospectus .

Each fund currently does not foresee any disadvantages to
policyowners arising out of the fact that each fund offers its
shares to separate accounts of various insurance companies to serve as the
investment medium for their variable products. Nevertheless, the
Trustees intend to monitor events in order to identify any material
irreconcilable conflicts which may possibly arise, and to determine what
action, if any, should be taken in response to such conflicts. If such a
conflict were to occur, one or more insurance companies' separate accounts
might be required to withdraw their investments in one or more funds
and shares of another fund may be substituted. This might force a
fund to sell portfolio securities at disadvantageous prices. In
addition, the Trustees may refuse to sell shares of any fund to any
separate account or may suspend or terminate the offering of shares of any
fund if such action is required by law or regulatory authority or is
in the best interests of the shareholders of the fund .

Under unusual circumstances, the Trust may suspend repurchases or postpone
payment for up to seven days or longer, as permitted by federal securities
law.

EXCHANGE PRIVILEGE

A shareholder may exchange shares of any fund in the Trust for
shares of any other fund in the Trust on the basis of their
respective net asset values. Exchanges may not be made into portfolios of
the Trust not offered by your variable annuity contract or variable life
policy.

HOW THE TRUST VALUES ITS SHARES

The Trust calculates the net asset value of a share of each fund by
dividing the total value of the assets of the fund , less
liabilities, by the number of shares of the fund outstanding.
Shares are valued as of the close of regular trading on the New York Stock
Exchange each day the Exchange is open.

Except for securities held by PCM Money Market Fund, securities
for which market quotations are readily available are stated at market
value. Short-term investments that will mature in 60 days or less are
stated at amortized cost, which approximates market value. All other
securities and assets are valued at their fair value following procedures
approved by the Trustees. The Trust values the portfolio investments of
PCM Money Market Fund at amortized cost pursuant to Rule 2a-7 under the
Investment Company Act of 1940.

HOW THE TRUST MAKES DISTRIBUTIONS TO SHAREHOLDERS ; TAX
INFORMATION

PCM Money Market Fund will declare a dividend of its net investment income
daily and distribute such dividend monthly. Each month's distributions
will be paid on the first business day of the next month. Since the net
income of PCM Money Market Fund is declared as a dividend each time it is
determined, the net asset value per share of the fund remains at
$1.00 immediately after each determination and dividend declaration. Each
of the other funds will distribute any net investment income and net
realized capital gains at least annually. Both types of distributions will
be made in shares of such funds unless an election is made on behalf
of a separate account to receive some or all of the distributions in cash.

Distributions are reinvested without a sales charge, using the net asset
value determined on the ex-dividend date, except that with respect to PCM
Money Market Fund, distributions are reinvested using the net asset value
determined on the day following the distribution payment date.

Each fund intends to qualify each year as a "regulated investment
company" for federal income tax purposes and to meet all other requirements
necessary for it to be relieved of federal income taxes on income
and gains it distributes to the separate accounts. For information
concerning federal income tax consequences for the holders of variable
annuity contracts and variable life insurance policies, contract holders
should consult the prospectus of the applicable separate account.

Internal Revenue Service regulations applicable to portfolios that serve as
the funding vehicles for variable annuity and variable life insurance
separate accounts generally require that those portfolios invest no more
than 55% of the value of their assets in one investment, 70% in two
investments, 80% in three investments and 90% in four investments. Each of
the funds intends to comply with these requirements.

Fund transactions in foreign currencies and hedging activities will
likely produce a difference between book income and taxable income. This
difference may cause a portion of a fund's income distributions to
constitute a return of capital for tax purposes or require a fund to make
distributions exceeding book income to qualify as a regulated investment
company for tax purposes.

If at the end of a fund's fiscal year more than 50% of the value of a
fund's total assets represents securities of foreign corporations, that
fund intends to make an election permitted by the Internal Revenue Code to
treat any foreign taxes it paid as paid by its shareholders. In this case,
shareholders who are U.S. citizens, U.S. corporations and, in some cases,
U.S. residents generally will be required to include in U.S. taxable income
their pro rata share of such taxes, but may then generally be entitled to
claim a foreign tax credit or deduction (but not both) for their share of
such taxes.

FINANCIAL INFORMATION

It is expected that owners of the variable annuity contracts and variable
life insurance policies who have contract or policy values allocated to the
funds will receive an unaudited semi-annual financial statement and
an audited annual financial statement for such funds . These reports
show the investments owned by each fund and provide other relevant
information about the fund .

About Putnam Investments, Inc.

Putnam Management has been managing mutual funds since 1937. Putnam
Mutual Funds is the principal underwriter of the Trust and of other Putnam
funds. Putnam Fiduciary Trust Company is the Trust's custodian. Putnam
Investor Services, a division of Putnam Fiduciary Trust Company, is the
Trust's investor servicing and transfer agent.

Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust Company
are subsidiaries of Putnam Investments, Inc., which is wholly owned by
Marsh & McLennan Companies, Inc., a publicly-owned holding company whose
principal businesses are international insurance and reinsurance brokerage,
employee benefit consulting and investment management.
<PAGE>
APPENDIX

SECURITIES RATINGS

The following rating services describe rated securities as follows:

Moody's Investors Service, Inc.

Bonds

Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt -edged. " Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, such changes as can
be visualized are most unlikely to impair the fundamentally strong position
of such issues.

Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risk appear
somewhat larger than the Aaa securities.

A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper - medium-grade obligations. Factors
giving security to principal and interest are considered adequate ,
but elements may be present which suggest a susceptibility to impairment
sometime in the future.

Baa -- Bonds which are rated Baa are considered as medium grade
obligations ( i.e., they are neither highly protected nor poorly
secured ) . Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking, or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.

Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well - assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.

B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.

Caa -- Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.

Ca -- Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.

C - Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever earning
any real investment standing.

Notes

MIG 1/VMIG 1 -- This designation denotes best quality. There is
present strong protection by established cash flows, superior liquidity
support or demonstrated broad - based access to the market for
refinancing.

MIG 2/VMIG 2 -- This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.

Commercial paper

Issuers rated Prime-1 (or supporting institutions) have a superior ability
for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by the following characteristics:

- -- Leading market positions in well established industries.
- -- High rates of return on funds employed.
- -- Conservative capitalization structures with moderate reliance on
debt and ample asset protection.
- -- Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
- -- Well established access to a range of financial markets and
assured sources of alternate liquidity.

Issuers rated Prime-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is
maintained.

Standard & Poor's

Bonds

AAA -- Debt rated `AAA' has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.

AA -- Debt rated `AA' has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.

A -- Debt rated `A' has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher-
rated categories.

BBB -- Debt rated `BBB' is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.

BB-B-CCC-CC-C--Debt rated `BB', `B', `CCC', `CC' and `C' is regarded as
having predominantly speculative characteristics with respect to capacity
to pay interest and repay principal. `BB' indicates the least degree of
speculation and `C' the highest. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions.

BB -- Debt rated `BB' has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
The `BB' rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied `BBB-' rating.

B -- Debt rated `B' has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The `B'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied `BB' or `BB-' rating.

CCC -- Debt rated `CCC' has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal. The
`CCC' rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied `B' or `B-' rating.

CC -- The rating `CC' typically is applied to debt subordinated to senior
debt that is assigned an actual or implied `CCC'-rating.
<PAGE>
C -- The rating `C' typically is applied to debt subordinated to senior
debt which is assigned an actual or implied `CCC-' debt rating. The `C'
rating may be used to cover a situation where bankruptcy petition has been
filed, but debt service payments are continued.

D -- Bonds rated D are in payment default. The D rating category is used
when interest payments or principal payments are not made on the date due
even if the applicable grace period has not expired, unless Standard &
Poor's believes that such payments will be made during such grace period.
The D rating also will be used on the filing of a bankruptcy petition if
debt service payments are jeopardized.

Notes

SP-1 -- Strong capacity to pay principal and interest. Issues determined
to possess very strong characteristics are given a plus sign (+)
designation.

SP-2 -- Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of
the notes.

Commercial paper

A-1 -- This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus sign (+) designation.

A-2 -- Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated `A-1'.<PAGE>

Putnam Capital Manager Trust
One Post Office Square
Boston, MA 02109

Investment Manager

Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109

Marketing Services

Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109

Investor Servicing Agent

Putnam Investor Services
Mailing address:
P.O. Box 41203
Providence, RI 02940-1203

Custodian

Putnam Fiduciary
Trust Company
One Post Office Square
Boston, MA 02109

Legal Counsel

Ropes & Gray
One International Place
Boston, MA 02110

Independent Accountants

Price Waterhouse LLP
160 Federal Street
Boston, MA 02110
<PAGE>
PUTNAM CAPITAL MANAGER TRUST

FORM N-1A

PART B

STATEMENT OF ADDITIONAL INFORMATION

("SAI")
May 1, 1996

This SAI is not a prospectus and is only authorized for
distribution when accompanied or preceded by the prospectus of the
Trust dated May 1, 1996 , as revised from time to time. This
SAI contains information which may be useful to investors but which
is not included in the prospectus . If the Trust has more than one
form of current prospectus , each reference to the prospectus
in this SAI shall include all the Trust's prospectuses ,
unless otherwise noted. The SAI should be read together with the
applicable prospectus . Investors may obtain a free copy of the
applicable prospectus from Putnam Investor Services, Mailing
address: P.O. Box 41203, Providence, RI 02940-1203.

The Report of the Trust's independent accountants and the audited financial
statements of the Trust are incorporated by reference into this SAI .

Table of Contents

DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2

INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . B-2

TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B- 27

INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . B- 29

MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B-33

INVESTMENT PERFORMANCE OF THE TRUST. . . . . . . . . . . . . . . . . B- 63

DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . B- 65

SUSPENSION OF REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . . B- 67

SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . B- 68

CUSTODIAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B- 68

INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS . . . . . . . . . . B- 69
<PAGE>
PUTNAM CAPITAL MANAGER TRUST
SAI
DEFINITIONS

The "Trust" -- Putnam Capital Manager Trust.

"Putnam Management" -- Putnam Investment Management, Inc.,
the Trust's investment manager.

"Putnam Mutual Funds" -- Putnam Mutual Funds Corp., the
Trust's principal underwriter.

"Putnam Fiduciary Trust -- Putnam Fiduciary Trust Company,
Company" the Trust's custodian.

"Putnam Investor Services" -- Putnam Investor Services, a division
of Putnam Fiduciary Trust Company,
the Trust's investor servicing
agent.

INVESTMENT OBJECTIVES AND POLICIES

The Trust consists of eleven separate investment portfolios (the
"funds") with differing investment objectives and policies:
PCM Asia Pacific Growth Fund, PCM Diversified Income Fund, PCM Global Asset
Allocation Fund, PCM Global Growth Fund, PCM Growth and Income Fund, PCM
High Yield Fund, PCM Money Market Fund, PCM New Opportunities Fund, PCM
U.S. Government and High Quality Bond Fund, PCM Utilities Growth and Income
Fund, and PCM Voyager Fund. The investment objectives and policies of the
funds are described in the prospectus offering such
funds. This SAI contains, among other things, the investment
restrictions of the funds . It also contains information concerning
certain investment practices in which some or all of the funds may
engage. The prospectus indicates which practices are applicable to
each fund which it offers.

Except as described below under "Investment Restrictions of the Trust," the
investment policies described in the prospectus and in this
SAI are not fundamental, and the Trustees may change such policies
without shareholder approval. As a matter of policy, the Trustees would
not materially change the funds' investment objectives without
shareholder approval.

Short-term Trading

In seeking a fund's objective(s), Putnam Management will buy or sell
portfolio securities whenever Putnam Management believes it appropriate to
do so. In deciding whether to sell a portfolio security, Putnam Management
does not consider how long the fund has owned the security. From time to
time the fund will buy securities intending to seek short-term trading
profits. A change in the securities held by the fund is known as
"portfolio turnover" and generally involves some expense to the fund. This
expense may include brokerage commissions or dealer markups and other
transaction costs on both the sale of securities and the reinvestment of
the proceeds in other securities. If sales of portfolio securities cause
the fund to realize net short-term capital gains, such gains will be
taxable as ordinary income. As a result of the fund's investment policies,
under certain market conditions the fund's portfolio turnover rate may be
higher than that of other mutual funds. Portfolio turnover rate for a
fiscal year is the ratio of the lesser of purchases or sales of portfolio
securities to the monthly average of the value of portfolio securities --
excluding securities whose maturities at acquisition were one year or less.
A fund's portfolio turnover rate is not a limiting factor when Putnam
Management considers a change in the fund's portfolio.

Lower-rated Securities

Each fund may invest in lower-rated fixed-income securities
(commonly known as "junk bonds") to the extent described in the
prospectus . The lower ratings of certain securities held by a
fund reflect a greater possibility that adverse changes in the
financial condition of the issuer or in general economic conditions, or
both, or an unanticipated rise in interest rates, may impair the ability of
the issuer to make payments of interest and principal. The inability (or
perceived inability) of issuers to make timely payment of interest and
principal would likely make the values of securities held by a fund
more volatile and could limit a fund's ability to sell its
securities at prices approximating the values the fund had placed on
such securities. In the absence of a liquid trading market for securities
held by it, a fund at times may be unable to establish the
fair value of such securities.

Securities ratings are based largely on the issuer's historical
financial condition and the rating agencies' analysis at the time of
rating. Consequently, the rating assigned to any particular security is
not necessarily a reflection of the issuer's current financial condition,
which may be better or worse than the rating would indicate. In addition,
the rating assigned to a security by Moody's Investors Service, Inc. or
Standard & Poor's (or by any other nationally recognized securities
rating organization) does not reflect an assessment of the volatility of
the security's market value or the liquidity of an investment in the
security. See the prospectus for a description of security ratings.

Like those of other fixed-income securities, the values of lower-rated
securities fluctuate in response to changes in interest rates. A
decrease in interest rates will generally result in an increase in the
value of a fund's assets. Conversely, during periods of rising
interest rates, the value of a fund's assets will generally decline.
The values of lower-rated securities may often be
affected to a greater extent by changes in general economic
conditions and business conditions affecting the issuers of such
securities and their industries. Negative publicity or investor
perceptions may also adversely affect the values of lower-rated
securities . Changes by recognized rating services in their ratings of
any fixed-income security and changes in the ability of an issuer to
make payments of interest and principal may also affect the value of these
investments. Changes in the value of portfolio securities generally will
not affect income derived from these securities, but will affect a
fund's net asset value. A fund will not necessarily dispose
of a security when its rating is reduced below its rating at the time of
purchase . However, Putnam Management will monitor the investment to
determine whether its retention will assist in meeting a fund's
investment objective (s) .

Issuers of lower-rated securities are often highly leveraged, so that
their ability to service their debt obligations during an economic downturn
or during sustained periods of rising interest rates may be impaired. Such
issuers may not have more traditional methods of financing available to
them and may be unable to repay outstanding obligations at maturity by
refinancing. The risk of loss due to default in payment of interest or
repayment of principal by such issuers is significantly greater because
such securities frequently are unsecured and subordinated to the prior
payment of senior indebtedness.

At times, a substantial portion of a fund's assets may be invested
in securities as to which the fund , by itself or together with other
funds and accounts managed by Putnam Management and its affiliates, holds
all or a major portion . Although Putnam Management
generally considers such securities to be liquid because of the
availability of an institutional market for such securities, it is possible
that, under adverse market or economic conditions or in the event of
adverse changes in the financial condition of the issuer, a fund
could find it more difficult to sell these securities when Putnam
Management believes it advisable to do so or may be able to sell the
securities only at prices lower than if they were more widely held.
Under these circumstances, it may also be more difficult to
determine the fair value of such securities for purposes of computing a
fund's net asset value. In order to enforce its rights in the event
of a default under such securities, a fund may be required to
participate in various legal proceedings or take possession of and
manage assets securing the issuer's obligations on such securities .
This could increase the fund's operating expenses and adversely
affect the fund's net asset value. In addition, each fund's
intention to qualify as a "regulated investment company" under the Internal
Revenue Code may limit the extent to which a fund may exercise its
rights by taking possession of such assets.

A fund may at times invest without limit in so-called "zero-coupon"
bonds and "payment-in-kind" bonds identified in the prospectus ,
unless otherwise specified in the prospectus . Zero-coupon bonds are
issued at a significant discount from their principal amount in lieu of
paying interest periodically. Payment-in-kind bonds allow the issuer, at
its option, to make current interest payments on the bonds either in cash
or in additional bonds. Because zero-coupon bonds and payment-in-
kind bonds do not pay interest currently in cash, their values are
subject to greater fluctuation in response to changes in market interest
rates than bonds which pay interest currently in cash. Both zero-coupon
and payment-in-kind bonds allow an issuer to avoid the need to generate
cash to meet current interest payments. Accordingly, such bonds may
involve greater credit risks than bonds paying interest currently in
cash . Even though such bonds do not pay current interest in cash, a
fund is nonetheless required to accrue interest income on such
investments and to distribute such amounts at least annually to
shareholders. Thus, a fund could be required at times to liquidate
other investments in order to satisfy its dividend requirements.

Investments in Premium Securities

Unless otherwise specified in the prospectus or elsewhere in this
SAI, if a fund may invest in premium securities, it may do so
without limit.

Investments in Miscellaneous Fixed Income Securities

Unless otherwise specified in the prospectus or elsewhere in this SAI, if a
fund may invest in inverse floating obligations, premium securities, or
interest-only or principal-only classes of mortgage-backed securities, it
may do so without limit. None of the funds, however, currently intend to
invest more than 15% of its assets in inverse floating obligations under
normal market conditions.
<PAGE>
Private Placements

Each fund may invest in securities that are purchased in private placements
and, accordingly, are subject to restrictions on resale as a matter of
contract or under federal securities laws. Because there may be relatively
few potential purchasers for such investments, especially under adverse
market or economic conditions or in the event of adverse changes in the
financial condition of the issuer, a fund could find it more difficult to
sell such securities when Putnam Management believes it advisable to do so
or may be able to sell such securities only at prices lower than if such
securities were more widely held. At times, it may also be more difficult
to determine the fair value of such securities for purposes of computing
the fund's net asset value.

Mortgage Related Securities

To the extent described in the prospectus, each fund may invest in
mortgage-backed securities, including collateralized mortgage obligations
("CMOs") and certain stripped mortgage-backed securities. CMOs and other
mortgage-backed securities represent a participation in, or are secured by,
mortgage loans.

Mortgage-backed securities have yield and maturity characteristics
corresponding to the underlying assets. Unlike traditional debt
securities, which may pay a fixed rate of interest until maturity, when the
entire principal amount comes due, payments on certain mortgage-backed
securities include both interest and a partial repayment of principal.
Besides the scheduled repayment of principal, repayments of principal may
result from the voluntary prepayment, refinancing, or foreclosure of the
underlying mortgage loans. If property owners make unscheduled prepayments
of their mortgage loans, these prepayments will result in early payment of
the applicable mortgage-related securities. In that event the fund may be
unable to invest the proceeds from the early payment of the mortgage-
related securities in an investment that provides as high a yield as the
mortgage-related securities. Consequently, early payment associated with
mortgage-related securities may cause these securities to experience
significantly greater price and yield volatility than that experienced by
traditional fixed-income securities. The occurrence of mortgage
prepayments is affected by factors including the level of interest rates,
general economic conditions, the location and age of the mortgage and other
social and demographic conditions. During periods of falling interest
rates, the rate of mortgage prepayments tends to increase, thereby tending
to decrease the life of mortgage-related securities. During periods of
rising interest rates, the rate of mortgage prepayments usually decreases,
thereby tending to increase the life of mortgage-related securities. If
the life of a mortgage-related security is inaccurately predicted, the fund
may not be able to realize the rate of return it expected.

Mortgage-backed securities are less effective than other types of
securities as a means of "locking in" attractive long-term interest rates.
One reason is the need to reinvest prepayments of principal; another is the
possibility of significant unscheduled prepayments resulting from declines
in interest rates. These prepayments would have to be reinvested at lower
rates. As a result, these securities may have less potential for capital
appreciation during periods of declining interest rates than other
securities of comparable maturities, although they may have a similar risk
of decline in market value during periods of rising interest rates.

Prepayments may cause losses in securities purchased at a premium. At
times, some of the mortgage-backed securities in which a fund may invest
will have higher than market interest rates and therefore will be purchased
at a premium above their par value. Unscheduled prepayments, which are
made at par, will cause the fund to experience a loss equal to any
unamortized premium.

CMOs may be issued by a U.S. government agency or instrumentality or by a
private issuer. Although payment of the principal of, and interest on, the
underlying collateral securing privately issued CMOs may be guaranteed by
the U.S. government or its agencies or instrumentalities, these CMOs
represent obligations solely of the private issuer and are not insured or
guaranteed by the U.S. government, its agencies or instrumentalities or any
other person or entity.

Prepayments could cause early retirement of CMOs. CMOs are designed to
allocate the risk of prepayment among investors by issuing multiple classes
of securities, each having different maturities, interest rates and payment
schedules, and with the principal and interest on the underlying mortgages
allocated among the several classes in various ways. Payment of interest
or principal on some classes or series of CMOs may be subject to
contingencies or some classes or series may bear some or all of the risk of
default on the underlying mortgages. CMOS of different classes or series
are generally retired in sequence as the underlying mortgage loans in the
mortgage pool are repaid. If enough mortgages are repaid ahead of
schedule, the classes or series of a CMO with the earliest maturities
generally will be retired prior to their maturities. Thus, the early
retirement of particular classes or series of a CMO held by a fund would
have the same effect as the prepayment of mortgages underlying other
mortgage-backed securities.

Prepayments could result in losses on stripped mortgage-backed securities.
Stripped mortgage-backed securities are usually structured with two classes
that receive different portions of the interest and principal distributions
on a pool of mortgage loans. A fund may invest in both the interest-only
or "IO" class and the principal-only or "PO" class. The yield to maturity
on an IO class of stripped mortgage-backed securities is extremely
sensitive not only to changes in prevailing interest rates but also to the
rate of principal payments (including prepayments) on the underlying
assets. A rapid rate of principal prepayments may have a measurable
adverse effect on the fund's yield to maturity to the extent it invests in
IOs. If the assets underlying the IO experience greater than anticipated
prepayments of principal, the fund may fail to recoup fully its initial
investment in these securities. Conversely, POs tend to increase in value
if prepayments are greater than anticipated and decline if prepayments are
slower than anticipated.

The secondary market for stripped mortgage-backed securities may be more
volatile and less liquid than that for other mortgage-backed securities,
potentially limiting a fund's ability to buy or sell those securities at
any particular time.

Securities Loans

Each fund may make secured loans of its portfolio securities, on
either a short-term or long-term basis, amounting to not more than 25% of
its total assets, thereby realizing additional income. The risks in
lending portfolio securities, as with other extensions of credit, consist
of possible delay in recovery of the securities or possible loss of rights
in the collateral should the borrower fail financially. As a matter of
policy, securities loans are made to broker-dealers pursuant to agreements
requiring that the loans be continuously secured by collateral
consisting of cash or short-term debt obligations at least equal at all
times to the value of the securities on loan, "marked-to-market" daily.
The borrower pays to the fund an amount equal to any dividends or
interest received on securities lent. The fund retains all or a
portion of the interest received on investment of the cash collateral or
receives a fee from the borrower. Although voting rights, or rights to
consent, with respect to the loaned securities may pass to the
borrower, the fund retains the right to call the loans at any time
on reasonable notice, and it will do so to enable the fund to
exercise voting rights on any matters materially affecting the investment.
The fund may also call such loans in order to sell the securities.

Forward Commitments

Each fund may enter into contracts to purchase securities for a
fixed price at a future date beyond customary settlement time ("forward
commitments") if the fund holds, and maintains until the settlement
date in a segregated account, cash or high-grade debt obligations in an
amount sufficient to meet the purchase price, or if the fund enters
into offsetting contracts for the forward sale of other securities
it owns. In the case of to-be-announced ("TBA") purchase commitments, the
unit price and the estimated principal amount are established when the
fund enters into a contract, with the actual principal amount being
within a specified range of the estimate. Forward commitments may be
considered securities in themselves, and involve a risk of loss if the
value of the security to be purchased declines prior to the settlement
date, which risk is in addition to the risk of decline in the value of the
fund's other assets. Where such purchases are made through dealers,
the fund relies on the dealer to consummate the sale. The dealer's
failure to do so may result in the loss to the fund of an
advantageous yield or price. Although a fund will generally enter
into forward commitments with the intention of acquiring securities for its
portfolio or for delivery pursuant to options contracts it has entered
into, a fund may dispose of a commitment prior to settlement if
Putnam Management deems it appropriate to do so. A fund may realize
short-term profits or losses upon the sale of forward commitments.

A fund may enter into TBA sale commitments to hedge its portfolio
positions or to sell securities it owns under delayed delivery
arrangements. Proceeds of TBA sale commitments are not received until the
contractual settlement date. During the time a TBA sale commitment is
outstanding, equivalent deliverable securities, or an offsetting TBA
purchase commitment deliverable on or before the sale commitment date, are
held as "cover" for the transaction. Unsettled TBA sale commitments are
valued at the current market value of the underlying securities. If
the TBA sale commitment is closed through the acquisition of an offsetting
purchase commitment, that fund realizes a gain or loss on the
commitment without regard to any unrealized gain or loss on the underlying
security. If a fund delivers securities under the commitment,
the fund realizes a gain or loss from the sale of the securities
based upon the unit price established at the date the commitment was
entered into.

Repurchase Agreements

Each fund may enter into repurchase agreements up to the limit
specified in the prospectus . A repurchase agreement is a contract
under which a fund acquires a security for a relatively short period
(usually not more than one week) subject to the obligation of the seller to
repurchase and the fund to resell such security at a fixed time and
price (representing the fund's cost plus interest). It is the
Trust's present intention to enter into repurchase agreements only with
commercial banks and registered broker-dealers approved by the Trustees and
only with respect to obligations of the U.S. government or its agencies or
instrumentalities. Repurchase agreements may also be viewed as loans made
by a fund which are collateralized by the securities subject to
repurchase. Putnam Management will monitor such transactions to ensure
that the value of the underlying securities will be at least equal at all
times to the total amount of the repurchase obligation, including the
interest factor. If the seller defaults, a fund could realize a
loss on the sale of the underlying security to the extent that the proceeds
of sale including accrued interest are less than the resale price provided
in the agreement including interest. In addition, if the seller should be
involved in bankruptcy or insolvency proceedings, a fund may incur
delay and costs in selling the underlying security or may suffer a loss of
principal and interest if the fund is treated as an unsecured
creditor and required to return the underlying collateral to the seller's
estate.

Pursuant to an exemptive order issued by the Securities and Exchange
Commission, the fund may transfer uninvested cash balances into a
joint account, along with cash of other Putnam
funds and certain other accounts. These balances may be invested in one or
more repurchase agreements and/or short-term money market instruments.

Options on Securities

Writing covered options. Each fund may write covered call options
and covered put options on optionable securities held in its portfolio,
when in the opinion of Putnam Management such transactions are consistent
with a fund's investment objective(s) and policies. Call
options written by a fund give the purchaser the right to buy the
underlying securities from the fund at a stated exercise price; put
options give the purchaser the right to sell the underlying securities to
the fund at a stated price.

Each fund may write only covered options, which means that, so long
as a fund is obligated as the writer of a call option, it will own
the underlying securities subject to the option (or comparable securities
satisfying the cover requirements of securities exchanges). In the case of
put options, the fund will hold cash and/or high-grade short-term
debt obligations equal to the price to be paid if the option is exercised.
In addition, the fund will be considered to have covered a put or
call option if and to the extent that it holds an option that offsets some
or all of the risk of the option it has written. Each fund may
write combinations of covered puts and calls on the same underlying
security.

A fund will receive a premium from writing a put or call option,
which increases the fund's return on the underlying security in the
event the option expires unexercised or is closed out at a profit. The
amount of the premium reflects, among other things, the relationship
between the exercise price and the current market value of the underlying
security, the volatility of the underlying security, the amount of time
remaining until expiration, current interest rates, and the effect of
supply and demand in the options market and in the market for the
underlying security. By writing a call option, the fund limits its
opportunity to profit from any increase in the market value of the
underlying security above the exercise price of the option but continues to
bear the risk of a decline in the value of the underlying security. By
writing a put option, the fund assumes the risk that it may be
required to purchase the underlying security for an exercise price higher
than its then-current market value, resulting in a potential capital loss
.

A fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it
purchases an offsetting option. The fund realizes a profit or loss
from a closing transaction if the cost of the transaction (option premium
plus transaction costs) is less or more than the premium received from
writing the option. If a fund writes a call option but does
not own the underlying security, and when it writes a put option, the
fund may be required to deposit cash or securities with its broker
as "margin," or collateral, for its obligation to buy or sell the
underlying security. As the value of the underlying security varies, the
fund may have to deposit additional margin with the broker. Margin
requirements are complex and are fixed by individual brokers, subject to
minimum requirements currently imposed by the Federal Reserve Board and by
stock exchanges and other self-regulatory organizations.

Purchasing put options. A fund may purchase put options to protect
its portfolio holdings in an underlying security against a decline in
market value. Such protection is provided during the life of the put
option since the fund , as holder of the option, is able to sell the
underlying security at the put exercise price regardless of any decline in
the underlying security's market price. In order for a put option to be
profitable, the market price of the underlying security must decline
sufficiently below the exercise price to cover the premium and transaction
costs. By using put options in this manner, the fund will reduce
any profit it might otherwise have realized from appreciation of the
underlying security by the premium paid for the put option and by
transaction costs.

Purchasing call options. A fund may purchase call options to hedge
against an increase in the price of securities that the fund wants
ultimately to buy. Such hedge protection is provided during the life of
the call option since the fund , as holder of the call option, is
able to buy the underlying security at the exercise price regardless of any
increase in the underlying security's market price. In order for a call
option to be profitable, the market price of the underlying security must
rise sufficiently above the exercise price to cover the premium and
transaction costs.

Risk Factors in Options Transactions

The successful use of a fund's options strategies depends on the
ability of Putnam Management to forecast correctly interest rate and market
movements. For example, if the fund were to write a call option
based on Putnam Management's expectation that the price of the underlying
security would fall, but the price were to rise instead, the fund
could be required to sell the security upon exercise at a price below the
current market price. Similarly, if the fund were to write a put
option based on Putnam Management's expectation that the price of the
underlying security would rise, but the price were to fall instead, the
fund
could be required to purchase the security upon exercise at a price higher
than the current market price.

When a fund purchases an option, it runs the risk that it will lose
its entire investment in the option in a relatively short period of time,
unless the fund exercises the option or enters into a closing sale
transaction before the option's expiration. If the price of the underlying
security does not rise (in the case of a call) or fall (in the case of a
put) to an extent sufficient to cover the option premium and transaction
costs, the fund will lose part or all of its investment in the
option. This contrasts with an investment by the fund in the
underlying security, since the fund will not realize a loss if the
security's price does not change.

The effective use of options also depends on a fund's ability to
terminate option positions at times when Putnam Management deems it
desirable to do so. There is no assurance that the fund will be
able to effect closing transactions at any particular time or at an
acceptable price.

If a secondary market in options were to become unavailable, a fund
could no longer engage in closing transactions. Lack of investor interest
might adversely affect the liquidity of the market for particular options
or series of options. A market may discontinue trading of a particular
option or options generally. In addition, a market could become
temporarily unavailable if unusual events -- such as volume in excess of
trading or clearing capability -- were to interrupt normal market
operations.

A market may at times find it necessary to impose restrictions on
particular types of options transactions, such as opening transactions.
For example, if an underlying security ceases to meet qualifications
imposed by the market or the Options Clearing Corporation, new series of
options on that security will no longer be opened to replace expiring
series, and opening transactions in existing series may be prohibited. If
an options market were to become unavailable, a fund as a holder of
an option would be able to realize profits or limit losses only by
exercising the option, and the fund , as option writer, would remain
obligated under the option until expiration or exercise.

Disruptions in the markets for the securities underlying options purchased
or sold by a fund could result in losses on the options. If trading
is interrupted in an underlying security, the trading of options on that
security is normally halted as well. As a result, the fund as
purchaser or writer of an option will be unable to close out its positions
until options trading resumes, and it may be faced with considerable losses
if trading in the security reopens at a substantially different price. In
addition, the Options Clearing Corporation or other options markets
may impose exercise restrictions. If a prohibition on exercise is imposed
at the time when trading in the option has also been halted, the
fund as purchaser or writer of an option will be locked into its
position until one of the two restrictions has been lifted. If the Options
Clearing Corporation were to determine that the available supply of an
underlying security appears insufficient to permit delivery by the writers
of all outstanding calls in the event of exercise, the Options Clearing
Corporation may prohibit indefinitely the exercise of put options. The
fund , as holder of such a put option, could lose its entire
investment if the prohibition remained in effect until the put option's
expiration.

Foreign-traded options are subject to many of the same risks
presented by internationally-traded securities. In addition,
because of time differences between the United States and the various
foreign countries, and because different holidays are observed in different
countries, foreign options markets may be open for trading during hours or
on days when U.S. markets are closed. As a result, option premiums may not
reflect the current prices of the underlying interest in the United States.

Over-the-counter ("OTC") options purchased by a fund and assets held
to cover OTC options written by the fund may, under certain
circumstances, be considered illiquid securities for purposes of any
limitation on the fund's ability to invest in illiquid securities.

Futures Contracts and Related Options

Subject to applicable law, and unless otherwise specified in the
prospectus, a fund may invest without limit in the types of futures
contracts and related options identified in the prospectus for hedging
and non-hedging purposes. The use of futures and options transactions for
purposes other than hedging entails greater risks . A financial futures
contract sale creates an obligation by the seller to deliver the type of
financial instrument called for in the contract in a specified delivery
month for a stated price. A financial futures contract purchase creates an
obligation by the purchaser to take delivery of the type of financial
instrument called for in the contract in a specified delivery month at a
stated price. The specific instruments delivered or taken, respectively,
at settlement date are not determined until on or near that date. The
determination is made in accordance with the rules of the exchange on which
the futures contract sale or purchase was made. Futures contracts are
traded in the United States only on commodity exchanges or boards of trade
- -- known as "contract markets" -- approved for such trading by the
Commodities Futures Trading Commission (the "CFTC"), and must be executed
through a futures commission merchant or brokerage firm which is a member
of the relevant contract market.

Although futures contracts (other than index futures) by their terms call
for actual delivery or acceptance of commodities or securities, in most
cases the contracts are closed out before the settlement date without the
making or taking of delivery. Closing out a futures contract sale is
effected by purchasing a futures contract for the same aggregate amount of
the specific type of financial instrument or commodity with the same
delivery date. If the price of the initial sale of the futures contract
exceeds the price of the offsetting purchase, the seller is paid the
difference and realizes a gain. Conversely, if the price of the offsetting
purchase exceeds the price of the initial sale, the seller realizes a loss.
If the fund is unable to enter into a closing transaction, the amount of
the fund's potential loss is unlimited. The closing out of a futures
contract purchase is effected by the purchaser's entering into a futures
contract sale. If the offsetting sale price exceeds the purchase price,
the purchaser realizes a gain, and if the purchase price exceeds the
offsetting sale price, the purchaser realizes a loss. In general, 40% of
the gain or loss arising from the closing out of a futures contract traded
on an exchange approved by the CFTC is treated as short-term gain or loss,
and 60% is treated as long-term gain or loss.

Unlike when a fund purchases or sells a security, no price is paid
or received by the fund upon the purchase or sale of a futures
contract. Upon entering into a contract, the fund is required to
deposit with its custodian in a segregated account in the name of the
futures broker an amount of cash and/or U.S. government securities. This
amount is known as "initial margin." The nature of initial margin in
futures transactions is different from that of margin in security
transactions in that futures contract margin does not involve the borrowing
of funds to finance the transactions. Rather, the initial margin is
similar to a performance bond or good faith deposit which is returned to
the fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. Futures contracts also
involve brokerage costs.

Subsequent payments, called "variation margin" or "maintenance margin," to
and from the broker (or the custodian) are made on a daily basis as the
price of the underlying security or commodity fluctuates, making the long
and short positions in the futures contract more or less valuable, a
process known as "marking to the market." For example, when a fund
has purchased a futures contract on a security and the price of the
underlying security has risen, that position will have increased in value
and the fund will receive from the broker a variation margin payment
based on that increase in value. Conversely, when the fund has
purchased a security futures contract and the price of the underlying
security has declined, the position would be less valuable and the
fund would be required to make a variation margin payment to the
broker.

A fund may elect to close some or all of its futures positions at
any time prior to their delivery date in order to reduce or eliminate the
hedge position then currently held by the fund. The fund may
close its positions by taking opposite positions which will operate to
terminate the fund's position in the futures contracts. Final
determinations of variation margin are then made, additional cash is
required to be paid by or released to the fund, and the fund
realizes a loss or a gain. Such closing transactions involve additional
commission costs.

Options on futures contracts. A fund may purchase and write call
and put options on futures contracts it may buy or sell and enter into
closing transactions with respect to such options to terminate existing
positions. Options on futures contracts give the purchaser the right in
return for the premium paid to assume a position in a futures contract at
the specified option exercise price at any time during the period of the
option. The fund may use options on futures contracts in lieu of
writing options directly on the underlying securities or purchasing and
selling the underlying futures contracts. For example, to hedge against a
possible decrease in the value of its portfolio securities, a fund
may purchase put options or write call options on futures contracts rather
than sell futures contracts. Similarly, a fund may purchase call
options or write put options on futures contracts as a substitute for the
purchase of futures contracts to hedge against a possible increase in the
price of securities which the fund expects to purchase. Such
options generally operate in the same manner as options purchased or
written directly on the underlying investments.

As with options on securities, the holder or writer of an option may
terminate his position by selling or purchasing an offsetting option.
There is no guarantee that such closing transactions can be effected.

A fund will be required to deposit initial margin and variation
margin with respect to put and call options on futures contracts written by
it pursuant to brokers' requirements similar to those described above in
connection with the discussion of futures contracts.

Risks of transactions in futures contracts and related options. Successful
use of futures contracts by a fund is subject to Putnam Management's
ability to predict movements in various factors affecting securities
markets , including interest rates .
Compared to the purchase or sale of futures contracts, the purchase of call
or put options on futures contracts involves less potential risk to a
fund because the maximum amount at risk is the premium paid for the
options (plus transaction costs). However, there may be circumstances when
the purchase of a call or put option on a futures contract would result in
a loss to a fund when the purchase or sale of a futures contract
would not, such as when there is no movement in the prices of the hedged
investments. The writing of an option on a futures contract involves risks
similar to those risks relating to the sale of futures contracts.

There is no assurance that higher than anticipated trading activity or
other unforeseen events might not, at times, render certain market clearing
facilities inadequate, and thereby result in the institution by exchanges
of special procedures which may interfere with the timely execution of
customer orders.

To reduce or eliminate a hedge position held by a fund, the
fund may seek to close out a position. The ability to establish and
close out positions will be subject to the development and maintenance of a
liquid secondary market. It is not certain that this market will develop
or continue to exist for a particular futures contract or option. Reasons
for the absence of a liquid secondary market on an exchange include the
following: (i) there may be insufficient trading interest in certain
contracts or options; (ii) restrictions may be imposed by an exchange on
opening transactions or closing transactions or both; (iii) trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of contracts or options, or underlying securities; (iv)
unusual or unforeseen circumstances may interrupt normal operations on an
exchange; (v) the facilities of an exchange or a clearing corporation may
not at all times be adequate to handle current trading volume; or (vi) one
or more exchanges could, for economic or other reasons, decide or be
compelled at some future date to discontinue the trading of contracts or
options (or a particular class or series of contracts or options), in which
event the secondary market on that exchange for such contracts or options
(or in the class or series of contracts or options) would cease to exist,
although outstanding contracts or options on the exchange that had been
issued by a clearing corporation as a result of trades on that exchange
would continue to be exercisable in accordance with their terms.

U.S. Treasury security futures contracts and options. U.S. Treasury
security futures contracts require the seller to deliver, or the purchaser
to take delivery of, the type of U.S. Treasury security called for in the
contract at a specified date and price. Options on U.S. Treasury security
futures contracts give the purchaser the right in return for the premium
paid to assume a position in a U.S. Treasury security futures contract at
the specified option exercise price at any time during the period of the
option.

Successful use of U.S. Treasury security futures contracts by a fund is
subject to Putnam Management's ability to predict movements in the
direction of interest rates and other factors affecting markets for debt
securities. For example, if a fund has sold U.S. Treasury security futures
contracts in order to hedge against the possibility of an increase in
interest rates which would adversely affect securities held in its
portfolio, and the prices of the fund's securities increase instead as a
result of a decline in interest rates, the fund will lose part or all of
the benefit of the increased value of its securities which it has hedged
because it will have offsetting losses in its futures positions. In
addition, in such situations, if the fund has insufficient cash, it may
have to sell securities to meet daily maintenance margin requirements at a
time when it may be disadvantageous to do so.

There is also a risk that price movements in U.S. Treasury security futures
contracts and related options will not correlate closely with price
movements in markets for particular securities. For example, if a fund has
hedged against a decline in the values of fixed-income securities held by
it by selling Treasury security futures and the values of Treasury
securities subsequently increase while the values of its fixed-income
securities decrease, the fund would incur losses on both the Treasury
security futures contracts written by it and the fixed-income securities
held in its portfolio.

Index futures contracts. An index futures contract is a contract to buy or
sell units of an index at a specified future date at a price agreed upon
when the contract is made. Entering into a contract to buy units of an
index is commonly referred to as buying or purchasing a contract or holding
a long position in the index. Entering into a contract to sell units of an
index is commonly referred to as selling a contract or holding a short
position. A unit is the current value of the index. A fund may
enter into stock index futures contracts, debt index futures contracts, or
other index futures contracts appropriate to its objective (s). A
fund may also purchase and sell options on index futures contracts.

For example, the Standard & Poor's 500 Composite Stock Price Index ("S&P
500") is composed of 500 selected common stocks, most of which are listed
on the New York Stock Exchange. The S&P 500 assigns relative weightings to
the common stocks included in the Index, and the value fluctuates with
changes in the market values of those common stocks. In the case of the
S&P 500, contracts are to buy or sell 500 units. Thus, if the value of the
S&P 500 were $150, one contract would be worth $75,000 (500 units x $150).
The stock index futures contract specifies that no delivery of the actual
stocks making up the index will take place. Instead, settlement in cash
must occur upon the termination of the contract, with the settlement being
the difference between the contract price and the actual level of the stock
index at the expiration of the contract. For example, if a fund
enters into a futures contract to buy 500 units of the S&P 500 at a
specified future date at a contract price of $150 and the S&P 500 is at
$154 on that future date, the fund will gain $2,000 (500 units x
gain of $4). If the fund enters into a futures contract to sell 500
units of the stock index at a specified future date at a contract price of
$150 and the S&P 500 is at $152 on that future date, the fund will
lose $1,000 (500 units x loss of $2).

There are several risks in connection with the use by a fund of
index futures . One risk arises because of the imperfect
correlation between movements in the prices of the index futures and
movements in the prices of securities which are the subject of the hedge.
Putnam Management will, however, attempt to reduce this risk by buying or
selling, to the extent possible, futures on indices the movements of which
will, in its judgment, have a significant correlation with movements in the
prices of the securities sought to be hedged.

Successful use of index futures by a fund is also subject to Putnam
Management's ability to predict movements in the market. For example,
it is possible that, where a fund has sold futures to hedge its
portfolio against a decline in the market, the index on which the futures
are written may advance and the value of securities held in the
fund's portfolio may decline. If this occurred, the fund
would lose money on the futures and also experience a decline in value in
its portfolio securities. It is also possible that, if a fund has
hedged against the possibility of a decline in the market adversely
affecting securities held in its portfolio and securities prices increase
instead, the fund will lose part or all of the benefit of the
increased value of those securities it has hedged because it will have
offsetting losses in its futures positions. In addition, in such
situations, if the fund has insufficient cash, it may have to sell
securities to meet daily variation margin requirements at a time when it is
disadvantageous to do so.

In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the index futures and the
portion of the portfolio being hedged, the prices of index futures may not
correlate perfectly with movements in the underlying index due to certain
market distortions. First, all participants in the futures market are
subject to margin deposit and maintenance requirements. Rather than
meeting additional margin deposit requirements, investors may close futures
contracts through offsetting transactions which could distort the normal
relationship between the index and futures markets. Second, margin
requirements in the futures market are less onerous than margin
requirements in the securities market, and as a result the futures market
may attract more speculators than the securities market does. Increased
participation by speculators in the futures market may also cause temporary
price distortions. Due to the possibility of price distortions in the
futures market and also because of the imperfect correlation between
movements in the index and movements in the prices of index futures, even a
correct forecast of general market trends by Putnam Management may still
not result in a profitable position over a short time period.

Options on stock index futures. Options on index futures are similar to
options on securities except that options on index futures give the
purchaser the right, in return for the premium paid, to assume a position
in an index futures contract (a long position if the option is a call and a
short position if the option is a put), at a specified exercise price at
any time during the period of the option. Upon exercise of the option, the
delivery of the futures position by the writer of the option to the holder
of the option will be accompanied by delivery of the accumulated balance in
the writer's futures margin account which represents the amount by which
the market price of the index futures contract, at exercise, exceeds (in
the case of a call) or is less than (in the case of a put) the exercise
price of the option on the index future. If an option is exercised on the
last trading day prior to its expiration date, the settlement will be made
entirely in cash equal to the difference between the exercise price of the
option and the closing level of the index on which the future is based on
the expiration date. Purchasers of options who fail to exercise their
options prior to the exercise date suffer a loss of the premium paid.

Options on Indices

As an alternative to purchasing call and put options on index futures, a
fund may purchase call and put options on the underlying indices
themselves. Such options would be used in a manner identical to the use of
options on index futures.

Index Warrants

A fund may purchase put warrants and call warrants whose values vary
depending on the change in the value of one or more specified securities
indices ("index warrants"). Index warrants are generally issued by banks
or other financial institutions and give the holder the right, at any time
during the term of the warrant, to receive upon exercise of the warrant a
cash payment from the issuer based on the value of the underlying index at
the time of exercise. In general, if the value of the underlying index
rises above the exercise price of the index warrant, the holder of a call
warrant will be entitled to receive a cash payment from the issuer upon
exercise based on the difference between the value of the index and the
exercise price of the warrant; if the value of the underlying index
falls, the holder of a put warrant will be entitled to receive a cash
payment from the issuer upon exercise based on the difference between the
exercise price of the warrant and the value of the index. The holder of a
warrant would not be entitled to any payments from the issuer at any time
when, in the case of a call warrant, the exercise price is greater than the
value of the underlying index, or, in the case of a put warrant, the
exercise price is less than the value of the underlying index. If the
fund were not to exercise an index warrant prior to its expiration,
then the fund would lose the purchase price paid for the warrant.

A fund will normally use index warrants in a manner similar to its
use of options on securities indices. The risks of a fund's use of
index warrants are generally similar to those relating to its use of index
options. Unlike most index options, however, index warrants are issued in
limited amounts and are not obligations of a regulated clearing agency, but
are backed only by the credit of the bank or other institution which issues
the warrant. Also, index warrants generally have longer terms than index
options. Although the fund will normally invest only in exchange-
listed warrants, index warrants are not likely to be as liquid as certain
index options backed by a recognized clearing agency. In addition, the
terms of index warrants may limit the fund's ability to exercise the
warrants at such times , or in such quantities, as the fund
would otherwise wish to do.

Foreign Securities

Under its current policy, which may be changed without shareholder
approval, each fund may invest up to the limit of its total assets
specified in the prospectus in securities principally traded
in markets outside the United States. Eurodollar certificates of deposit
are excluded for purposes of this limitation. Since foreign securities
are normally denominated and traded in foreign currencies, the value of a
fund's assets may be affected favorably or unfavorably by changes in
currency exchange rates , exchange control regulations and
restrictions or prohibitions on the repatriation of foreign currencies .
There may be less information publicly available about a
foreign company than about a U.S. company, and foreign companies are
not generally subject to accounting, auditing and financial
reporting standards and practices comparable to those in the
United States. The securities of some foreign companies are less
liquid and at times more volatile than securities of
comparable U.S. companies . Foreign brokerage commissions and
other fees are also generally higher than in the United
States. Foreign settlement procedures and trade regulations may involve
certain risks (such as delay in payment or delivery of securities or in the
recovery of a fund's assets held abroad) and expenses not present in the
settlement of domestic investments.

In addition, there may be a possibility of nationalization or expropriation
of assets, imposition of currency exchange controls, confiscatory taxation,
political or financial instability and diplomatic developments which could
affect the value of a fund's investments in certain foreign countries.
Legal remedies available to investors in certain foreign countries may be
more limited than those available with respect to investments in the United
States or in other foreign countries. The laws of some foreign countries
may limit a fund's ability to invest in securities of certain issuers
located in those foreign countries. Special tax considerations apply to
foreign securities.

The risks described above, including the risks of nationalization or
expropriation of assets, are typically increased to the extent that a fund
invests in issuers located in less developed and developing nations, whose
securities markets are sometimes referred to as "emerging securities
markets." Investments in securities located in such countries are
speculative and subject to certain special risks. Political and economic
structures in many of these countries may be in their infancy and
developing rapidly, and such countries may lack the social, political and
economic stability characteristic of more developed countries. Certain of
these countries have in the past failed to recognize private property
rights and have at times nationalized and expropriated the assets of
private companies.

The currencies of certain emerging market countries have experienced a
steady devaluation relative to the U.S. dollar, and continued devaluations
may adversely affect the value of a fund's assets denominated in such
currencies. Many emerging market companies have experienced substantial,
and in some periods extremely high, rates of inflation for many years, and
continued inflation may adversely affect the economies and securities
markets of such countries.

In addition, unanticipated political or social developments may affect the
values of a fund's investments in these countries and the availability to
such fund of additional investments in these countries. The small size,
limited trading volume and relative inexperience of the securities markets
in these countries may make a fund's investments in such countries illiquid
and more volatile than investments in more developed countries, and such
fund may be required to establish special custodial or other arrangements
before making investments in these countries. There may be little
financial or accounting information available with respect to issuers
located in these countries, and it may be difficult as a result to assess
the value or prospects of an investment in such issuers.

Foreign Currency Transactions

Unless otherwise specified in the prospectus or this SAI, a fund may
engage without limit in currency exchange transactions , including
purchasing and selling foreign currency, foreign currency options, foreign
currency forward contracts and foreign currency futures contracts and
related options, to protect against uncertainty in the level of future
currency exchange rates. In addition, a fund may write covered call
and put options on foreign currencies for the purpose of increasing its
current return.

Generally, a fund may engage in both "transaction hedging" and
"position hedging." When it engages in transaction hedging, the
fund enters into foreign currency transactions with respect to
specific receivables or payables, generally arising in connection with the
purchase or sale of portfolio securities. The fund will engage in
transaction hedging when it desires to "lock in" the U.S. dollar price of a
security it has agreed to purchase or sell, or the U.S. dollar equivalent
of a dividend or interest payment in a foreign currency. By transaction
hedging, the fund will attempt to protect itself against a possible
loss resulting from an adverse change in the relationship between the U.S.
dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold, or on which the dividend
or interest payment is earned, and the date on which such payments are made
or received.

A fund may purchase or sell a foreign currency on a spot (or cash)
basis at the prevailing spot rate in connection with the settlement of
transactions in portfolio securities denominated in that foreign currency.
The fund may also enter into contracts to purchase or sell foreign
currencies at a future date ("forward contracts") and purchase and sell
foreign currency futures contracts.

Cross hedging transactions by a fund involve the risk of imperfect
correlation between changes in the values of the currencies to which such
transactions relate and changes in the value of the currency or other asset
or liability which is the subject of the hedge.

For transaction hedging purposes, a fund may also purchase exchange-
listed and over-the-counter call and put options on foreign currency
futures contracts and on foreign currencies. A put option on a futures
contract gives the fund the right to assume a short position in the
futures contract until expiration of the option. A put option on a
currency gives the fund the right to sell the currency at an
exercise price until the expiration of the option. A call option on a
futures contract gives the fund the right to assume a long position
in the futures contract until the expiration of the option. A call option
on a currency gives the fund the right to purchase the currency at
the exercise price until the expiration of the option.

When it engages in position hedging, a fund enters into foreign
currency exchange transactions to protect against a decline in the values
of the foreign currencies in which its portfolio securities are denominated
(or an increase in the value of currency for securities which the fund
expects to purchase) . In connection with position hedging, the
fund may purchase put or call options on foreign currencies and on
foreign currency futures contracts and buy or sell forward contracts and
foreign currency futures contracts. The fund may also purchase or
sell foreign currency on a spot basis.

It is impossible to forecast with precision the market value of portfolio
securities at the expiration or maturity of a forward or futures contract.
Accordingly, it may be necessary for a fund to purchase additional
foreign currency on the spot market (and bear the expense of such purchase)
if the market value of the security or securities being hedged is less than
the amount of foreign currency the fund is obligated to deliver and
a decision is made to sell the security or securities and make delivery of
the foreign currency. Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of the portfolio
security or securities if the market value of such security or securities
exceeds the amount of foreign currency the fund is obligated to
deliver.

Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the fund owns or intends
to purchase or sell. They simply establish a rate of exchange which one
can achieve at some future point in time. Additionally, although
these techniques tend to minimize the risk of loss due to a decline in the
value of the hedged currency, they tend to limit any potential gain which
might result from the increase in value of such currency. See "Risk
factors in options transactions" above.

A fund may seek to increase its current return or to offset some of
the costs of hedging against fluctuations in current exchange rates by
writing covered call options and covered put options on foreign currencies.
The fund receives a premium from writing a call or put option, which
increases the fund's current return if the option expires
unexercised or is closed out at a net profit. The fund may
terminate an option that it has written prior to its expiration by entering
into a closing purchase transaction in which it purchases an option having
the same terms as the option written.

The value of any currency, including U.S. dollars and foreign
currencies, may be affected by complex political and economic factors
applicable to the issuing country. In addition, the exchange rates of
foreign currencies (and therefore the values of foreign currency options,
forward contracts and futures contracts) may be affected significantly,
fixed, or supported directly or indirectly by U.S. and foreign government
actions. Government intervention may increase risks involved in purchasing
or selling foreign currency options, forward contracts and futures
contracts, since exchange rates may not be free to fluctuate in response to
other market forces.

The value of a foreign currency option, forward contract or futures
contract reflects the value of an exchange rate, which in turn reflects
relative values of two currencies, the U.S. dollar and the foreign currency
in question. Because foreign currency transactions occurring in the
interbank market involve substantially larger amounts than those that may
be involved in the exercise of foreign currency options, forward contracts
and futures contracts, investors may be disadvantaged by having to deal in
an odd-lot market for the underlying foreign currencies in connection with
options at prices that are less favorable than for round lots. Foreign
governmental restrictions or taxes could result in adverse changes in the
cost of acquiring or disposing of foreign currencies.

There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely
basis. Available quotation information is generally representative of very
large round-lot transactions in the interbank market and thus may not
reflect exchange rates for smaller odd-lot transactions (less than $1
million) where rates may be less favorable. The interbank market in
foreign currencies is a global, around-the-clock market. To the extent
that options markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place
in the underlying markets that cannot be reflected in the options
markets.

Currency forward and futures contracts. A forward foreign currency
contract involves an obligation to purchase or sell a specific currency at
a future date, which may be any fixed number of days from the date of the
contract as agreed by the parties, at a price set at the time of the
contract. In the case of a cancelable forward contract, the holder has the
unilateral right to cancel the contract at maturity by paying a specified
fee. The contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their
customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for trades. A foreign currency
futures contract is a standardized contract for the future delivery of a
specified amount of a foreign currency at a price set at the time
of the contract. Foreign currency futures contracts traded in the United
States are designed by and traded on exchanges regulated by the CFTC, such
as the New York Mercantile Exchange.

Forward foreign currency exchange contracts differ from foreign currency
futures contracts in certain respects. For example, the maturity date of a
forward contract may be any fixed number of days from the date of the
contract agreed upon by the parties, rather than a predetermined date in a
given month. Forward contracts may be in any amounts agreed upon by the
parties rather than predetermined amounts. Also, forward foreign exchange
contracts are traded directly between currency traders so that no
intermediary is required. A forward contract generally requires no margin
or other deposit.

At the maturity of a forward or futures contract, the fund may
either accept or make delivery of the currency specified in the contract,
or at or prior to maturity enter into a closing transaction involving the
purchase or sale of an offsetting contract. Closing transactions with
respect to forward contracts are usually effected with the currency trader
who is a party to the original forward contract. Closing
transactions with respect to futures contracts are effected on a
commodities exchange; a clearing corporation associated with the exchange
assumes responsibility for closing out such contracts.

<PAGE>
Positions in the foreign currency futures contracts may be closed out only
on an exchange or board of trade which provides a secondary market in such
contracts. Although a fund intends to purchase or sell foreign
currency futures contracts only on exchanges or boards of trade where there
appears to be an active secondary market, there is no assurance that a
secondary market on an exchange or board of trade will exist for any
particular contract or at any particular time. In such event, it may not
be possible to close a futures position and, in the event of adverse price
movements, the fund would continue to be required to make daily cash
payments of variation margin.

Foreign currency options. In general, options on foreign currencies
operate similarly to options on securities and are subject to many of
the risks described above . Foreign currency options are traded
primarily in the over-the-counter market, although options on foreign
currencies are also listed on several exchanges. Options are traded
not only on the currencies of individual nations, but also on the European
Currency Unit ("ECU"). The ECU is composed of amounts of a number of
currencies, and is the official medium of exchange of the European
Community's European Monetary System.

A fund will only purchase or write foreign currency options when
Putnam Management believes that a liquid secondary market exists for such
options. There can be no assurance that a liquid secondary market will
exist for a particular option at any specific time. Options on foreign
currencies are affected by all of those factors which influence
foreign exchange rates and investments generally.

Settlement procedures. Settlement procedures relating to a fund's
investments in foreign securities and to the fund's foreign currency
exchange transactions may be more complex than settlements with respect to
investments in debt or equity securities of U.S. issuers, and may involve
certain risks not present in the fund's domestic investments. For
example, settlement of transactions involving foreign securities or foreign
currencies may occur within a foreign country, and the fund
may be required to accept or make delivery of the underlying securities or
currency in conformity with any applicable U.S. or foreign restrictions or
regulations, and may be required to pay any fees, taxes or charges
associated with such delivery. Such investments may also involve the risk
that an entity involved in the settlement may not meet its obligations.

Foreign currency conversion. Although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on the
difference (the "spread") between prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign
currency to a fund at one rate, while offering a lesser rate of
exchange should the fund desire to resell that currency to the
dealer.

Restricted Securities

The SEC Staff currently takes the view that any delegation by the Trustees
of the authority to determine that a restricted security is readily
marketable (as described in the investment restrictions of the
funds) must be pursuant to written procedures established by the
Trustees. It is the present intention of the Trustees that, if the
Trustees decide to delegate such determinations to Putnam Management or
another person, they would do so pursuant to written procedures, consistent
with the Staff's position. Should the Staff modify its position in the
future, the Trustees would consider what action would be appropriate in
light of the Staff's position at that time.

TAXES

Taxation of the Trust. Each fund intends to qualify each year as a
regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"). In order to so qualify and to
qualify for the special tax treatment accorded regulated investment
companies and their shareholders, each 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) derive less than 30% of its gross income from the sale or other
disposition of certain assets (including stocks or securities and certain
options, futures contracts, forward contracts and foreign currencies) held
for less than three months;

(c) distribute with respect to each taxable year at least 90% of
its taxable net investment income (exclusive of net capital gains) and 90%
of its net tax-exempt income; and

(d) diversify its holdings so that, at the end of each fiscal quarter, (i)
at least 50% of the market value of the fund's assets is represented
by cash and cash items, U.S. government securities, securities of
other regulated investment companies, and other securities limited in
respect of any one issuer to a value not greater than 5% of the value of
the fund's total assets and to 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 a 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 a 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. 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 a 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 fund is exempt from this distribution
requirement and excise tax if at all times during the calendar year each
shareholder in a fund was "a segregated asset account of a life insurance
company held in connection with variable contracts."

Hedging transactions. If a fund engages in hedging
transactions, including hedging transactions in options, futures
contracts, and straddles, or other similar transactions, it will be subject
to special tax rules (including mark-to-market, straddle, wash sale, and
short sale rules), the effect of which may be to accelerate income to the
fund , defer losses to the fund , cause adjustments in the
holding periods of the fund's securities, or convert short-term
capital losses into long-term capital losses. These rules could therefore
affect the amount, timing and character of the fund's distributions.
The fund will endeavor to make any available elections pertaining to
such transactions in a manner believed to be in the best interests of the
fund .

Under the 30% of gross income test described above (see "Taxation of the
Trust"), a fund will be restricted in selling assets held or
considered under Code rules to have been held for less than three months,
and in engaging in certain hedging transactions (including hedging
transactions in options and futures) that in some circumstances could cause
certain fund assets to be treated as held for less than three
months.

Securities issued or purchased at a discount. The fund's investment
in securities that are treated for tax purposes as 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.

Capital loss carryover. Distributions from capital gains are made after
applying any available capital loss carryovers. The amount and
expiration date of any capital loss carryovers available to a fund
are shown in Note 1 (Federal income taxes) to the financial statements
incorporated by reference into this SAI .

With respect to investment income and gains received by a fund from
sources outside the United States, such income and gains may be subject to
foreign taxes which are withheld at the source. The effective rate of
foreign taxes to which a fund will be subject depends on the
specific countries in which its assets will be invested and the extent of
the assets invested in each such country and therefore cannot be determined
in advance.

Investment by a fund in "passive foreign investment
companies" could subject the fund to a U.S. federal income tax or
other charge on the proceeds from the sale of its investment in such a
company; however, this tax can be avoided by making an election to mark
such investments to market annually or to treat the passive foreign
investment company as a "qualified electing fund."

A "passive foreign investment company" is any foreign corporation: (i)
75 percent of more of the income of which for the taxable year is passive
income, or (ii) the average percentage of the assets of which (generally by
value, but by adjusted tax basis in certain cases) that produce or are held
for the production of passive income is at least 50 percent. Generally,
passive income for this purpose means dividends, interest (including income
equivalent to interest), royalties, rents, annuities, the excess of gains
over losses from certain property transactions and commodities
transactions, and foreign currency gains. Passive income for this purpose
does not include rents and royalties received by the foreign corporation
from active business and certain income received from related persons.

This discussion of federal income tax treatment of the Trust and its
shareholders is based on the law as of the date of this SAI.

INVESTMENT RESTRICTIONS

As fundamental investment restrictions, which may not be changed as to any
fund without a vote of a majority of the outstanding voting
securities of that fund , the Trust may not and will not take any of
the following actions with respect to that fund :

(1) (All funds except PCM Voyager Fund) Borrow money in excess
of 10% of the value (taken at the lower of cost or current value) of the
fund's total assets (not including the amount borrowed) at the time
the borrowing is made, and then only from banks as a temporary measure to
facilitate the meeting of redemption requests (not for leverage) which
might otherwise require the untimely disposition of portfolio investments
or for extraordinary or emergency purposes. Such borrowings will be repaid
before any additional investments are purchased.

(PCM Voyager Fund) Borrow more than 50% of the value of its total assets
(excluding borrowings and stock index futures contracts and call options on
stock index futures contracts and stock indices) less liabilities other
than borrowings and stock index futures contracts and call options on stock
index futures contracts and stock indices.

(2) Pledge, hypothecate, mortgage or otherwise encumber its assets in
excess of 15% of the fund's total assets (taken at current value)
and then only to secure borrowings permitted by restriction 1 above. (The
deposit of underlying securities and other assets in escrow and other
collateral arrangements in connection with the writing of put or call
options and collateral arrangements with respect to margin for futures
contracts and related options are not considered to be pledges or other
encumbrances.)

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

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

(5) 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.

(6) (All funds except PCM Asia Pacific Growth Fund, PCM
Diversified Income Fund, PCM New Opportunities Fund and PCM Utilities
Growth and Income Fund) Purchase or sell real estate, although it may
purchase securities which are secured by or represent interests in real
estate.

(PCM Diversified Income Fund) 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 representing
interests in real estate.

(PCM Asia Pacific Growth Fund, PCM New Opportunities Fund and PCM Utilities
Growth and Income Fund) 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 representing
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.

(7) Purchase or sell commodities or commodity contracts, except that it
may purchase or sell futures contracts, options on futures, forward
contracts and options on foreign currencies.

(8) Make loans, except by purchase of debt obligations in which the
fund may invest consistent with its investment policies, by entering
into repurchase agreements with respect to not more than 25% of its total
assets (taken at current value), or through the lending of its portfolio
securities with respect to not more than 25% of its assets.

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

(10) (All funds except PCM Asia Pacific Growth Fund, PCM New
Opportunities Fund and PCM Utilities Growth and Income Fund) Invest in
securities of any issuer if, immediately after such investment, more than
5% of the total assets of the fund (taken at current value) would be
invested in the securities of such issuer; provided that this limitation
does not apply to U.S. government securities, or, with respect to 25% of
the fund's total assets, securities of any foreign government, its
agencies or instrumentalities, securities of supranational entities, and
securities backed by the credit of a governmental entity.

(11) Acquire more than 10% of the voting securities of any issuer.

(12) Invest more than 25% of the value of its total assets in any one
industry, except that PCM Money Market Fund may invest more than 25% of its
assets in securities of banks and bank holding companies as a group when in
the opinion of Putnam Management yield differentials make such
investments desirable, and suitable investments are available, and except
that PCM Utilities Growth and Income Fund may invest more than 25% of its
assets in any of the public utilities industries. (U.S. government
securities and securities of any foreign government, its agencies or
instrumentalities, securities of supranational entities, and securities
backed by the credit of a governmental entity are not considered to
represent an industry).

(13) (All funds except PCM Asia Pacific Growth Fund, PCM Money
Market Fund, PCM New Opportunities Fund and PCM Utilities Growth and Income
Fund) Purchase securities the disposition of which is restricted under
federal securities laws, if, as a result, such investments would exceed 15%
of the value of the fund's net assets, excluding restricted
securities that have been determined by the Trustees of the Trust (or the
person designated by them to make such determinations) to be readily
marketable.

(PCM Money Market Fund) Purchase securities the disposition of which is
restricted under federal securities laws, if, as a result, such investments
would exceed 10% of the value of the fund's net assets.

(14) (All funds except PCM Utilities Growth and Income Fund) Buy
or sell oil, gas or other mineral leases, rights or royalty contracts.

(PCM Utilities Growth and Income Fund) Buy or sell oil, gas or other
mineral leases, rights or royalty contracts, although it may purchase
securities of issuers which deal in, represent interests in, or are secured
by interests in such leases, rights, or contracts, and it may acquire or
dispose of such leases, rights, or contacts acquired through the exercise
of its rights as a holder of debt obligations secured thereby.

(15) Make investments for the purpose of gaining control of a company's
management.

(16) Issue any class of securities which is senior to the fund's
shares of beneficial interest.

It is contrary to each of PCM Asia Pacific Growth Fund's, PCM New
Opportunities Fund's and PCM Utilities Growth and Income Fund's present
policy, which may be changed without shareholder approval, to purchase
securities restricted as to resale (excluding securities determined by the
Trustees or Putnam Management to be readily marketable), if as a result
such investments would exceed 15% of the fund's net assets.

It is contrary to the present policy of each of the funds , which may
be changed without shareholder approval, to invest in securities of other
registered open-end investment companies except as they may be acquired as
part of a merger or consolidation or acquisition of assets.

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

In addition, each fund has agreed that, so long as shares of
beneficial interest in the fund are registered for offer and sale in
the State of California and such undertaking is required as a condition to
such registration, except as noted below, any fund investing in
foreign securities will at all times invest in securities of issuers
located in a minimum of five different foreign countries. However, this
minimum is reduced to four different foreign countries when the
fund's foreign investments comprise less than 80% of its net assets,
to three different foreign countries when the fund's foreign
investments comprise less than 60% of its net assets, to two different
foreign countries when the fund's foreign investments comprise less
than 40% of its net assets, and is eliminated when the fund's
foreign investments comprise less than 20% of its net assets. In addition,
no fund may invest more than 20% of its net assets in securities of
issuers located in any one foreign country, except that, to the extent
consistent with its investment policies, a fund may invest up to 35%
of its net assets in securities of issuers located in any one of the
following countries: Australia, Canada, France, Germany, Japan or the
United Kingdom. Also, subject to such more restrictive investment
restrictions and policies as a fund may adopt from time to time, the
borrowing limits for any fund are (1) 10% of net asset value when
borrowing for any general purpose, and (2) 25% of net asset value when
borrowing as a temporary measure to facilitate redemptions. For this
purpose, a fund's net asset value shall be the market value of all
investments owned less outstanding liabilities of the portfolio at the time
that any new or additional borrowing is undertaken.

All percentage limitations on investments 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.

The Investment Company Act of 1940 provides that a "vote of a majority of
the outstanding voting securities" of a fund or the Trust means the
affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of a fund or the Trust, as the case may be, or (2) 67% or
more of the shares present at a meeting if more than 50% of the outstanding
shares are represented at the meeting in person or by proxy.

MANAGEMENT

Trustees

Name (Age)

*+George Putnam (69) , Chairman and President. Chairman and Director
of Putnam Investment Management, Inc. and Putnam Mutual Funds Corp.
Director, The Boston Company, Inc., Boston Safe Deposit and Trust Company,
Freeport-McMoRan, Inc., General Mills, Inc., Houghton Mifflin Company,
Marsh & McLennan Companies, Inc. and Rockefeller Group, Inc.

+William F. Pounds (67) , Vice Chairman. Professor of Management,
Alfred P. Sloan School of Management, Massachusetts Institute of
Technology. Director of EG&G, Inc., Fisher Price, Inc., IDEXX, M/A-COM,
Inc., and Sun Company, Inc.

Jameson A. Baxter (52) , Trustee. President, Baxter Associates, Inc.
(consultants to management). Director of Avondale Federal Savings Bank,
ASHTA Chemicals, Inc. and Banta Corporation. Chairman Emeritus of
the Board of Trustees, Mount Holyoke College.

<PAGE>
+Hans H. Estin (67) , Trustee. Vice Chairman, North American
Management Corp. (a registered investment adviser). Director of The Boston
Company, Inc. and Boston Safe Deposit and Trust Company.

Elizabeth T. Kennan (57) , Trustee. President Emeritus and
Professor, Mount Holyoke College. Director, the Kentucky Home Life
Insurance Companies, NYNEX Corporation, Northeast Utilities and Talbots and
Trustee of the University of Notre Dame.

*Lawrence J. Lasser (52) , Trustee and Vice President. President,
Chief Executive Officer and Director of Putnam Investments, Inc. and
Putnam Investment Management, Inc. Director of Marsh & McLennan Companies,
Inc. Vice President of the Putnam funds.

John A. Hill (53) , Trustee. Chairman and Managing Director, First
Reserve Corporation (a registered investment adviser). Director, Lantana
Corporation, Maverick Tube Corporation, Snyder Oil Corporation and various
First Reserve Funds.

+Robert E. Patterson (50) , Trustee. Executive Vice President, Cabot
Partners Limited Partnership (a registered investment adviser).

*Donald S. Perkins (68) , Trustee. Director of various
corporations, including American Telephone & Telegraph Company, AON Corp.,
Cummins Engine Company, Inc., Illinois Power Company, Inland Steel
Industries, Inc., LaSalle Street fund, Inc., Springs Industries,
Inc., TBG, Inc. and Time Warner Inc.

*#George Putnam, III (44) , Trustee. President, New Generation
Research, Inc. (publisher of bankruptcy information). Director, World
Environment Center.

Eli Shapiro (79) , Trustee. Alfred P. Sloan Professor of Management,
Emeritus, Alfred P. Sloan School of Management, Massachusetts Institute of
Technology. Director of Nomura Dividend Fund, Inc. (a privately held
registered investment company managed by Putnam Management) and former
Trustee of the Putnam funds (1984-1990).

*A.J.C. Smith (61) , Trustee. Chairman, Chief Executive Officer and
Director, Marsh & McLennan Companies, Inc.

W. Nicholas Thorndike (62) , Trustee. Director of various
corporations and charitable organizations, including Data General
Corporation, Bradley Real Estate Inc., Courier Corporation and Providence
Journal Co. Also, Trustee of Massachusetts General Hospital and Eastern
Utilities Associates.

*Trustees who are or may be deemed to be "interested persons" (as
defined in the Investment Company Act of 1940) of the Trust, Putnam
Management or Putnam Mutual Funds.
<PAGE>
+Members of the Executive Committee of the Trustees. The Executive
Committee meets between regular meetings of the Trustees as may be required
to review investment matters and other affairs of the Trust and may
exercise all of the powers of the Trustees.

#George Putnam, III is the son of George Putnam.

Officers

Name (Age)

Charles E. Porter (57) , Executive Vice President. Managing Director
of Putnam Investments, Inc. and Putnam Investment Management, Inc.

Patricia C. Flaherty (49) , Senior Vice President. Senior Vice
President of Putnam Investments, Inc. and Putnam Investment Management,
Inc.

Gordon H. Silver (48) , Vice President. Director and Senior
Managing Director of Putnam Investments, Inc. and Putnam Investment
Management, Inc.

William N. Shiebler (54) , Vice President. Director and Senior
Managing Director of Putnam Investments, Inc. President and
Director of Putnam Mutual Funds Corp. Vice President of the Putnam funds.

John R. Verani (56) , Vice President. Senior Vice President of
Putnam Investments, Inc. and Putnam Investment Management, Inc. Vice
President of the Putnam funds.

Paul M. O'Neil (42) , Vice President. Vice President of Putnam
Investments, Inc. and Putnam Investment Management, Inc. Vice President of
the Putnam funds.

John D. Hughes (61), Senior Vice President and Treasurer. Vice
President and Treasurer of the Putnam funds.

Beverly Marcus (51) , Clerk and Assistant Treasurer. Clerk and
Assistant Treasurer of the Putnam funds.

Gary N. Coburn (49) , Vice President. Senior Managing Director of
Putnam Investment Management, Inc. Director, Putnam Investments, Inc.
Vice President of certain of the Putnam funds.

Peter Carman (54) , Vice President. Senior Managing Director of
Putnam Investment Management, Inc. Director, Putnam Investments, Inc.
Vice President of certain of the Putnam funds.

Brett C. Browchuk (33) , Vice President. Managing Director of Putnam
Investment Management, Inc.

D. William Kohli (35), Vice President. Managing Director of Putnam
Investment Management, Inc. Vice President of certain of the Putnam
funds.

Anthony I. Kreisel (51) , Vice President. Managing Director of
Putnam Investment Management, Inc. Vice President, Putnam Fiduciary Trust
Company. Vice President of certain of the Putnam funds.

William J. Landes (43) , Vice President. Managing Director of Putnam
Investment Management, Inc. Vice President of certain of the Putnam funds.

Michael Martino (43) , Vice President. Managing Director of Putnam
Investment Management, Inc. Vice President of certain of the Putnam funds.

Carol C. McMullen (40), Vice President. Managing Director of Putnam
Investment Management, Inc. Vice President of certain of the Putnam
funds.

Daniel L. Miller (38) , Vice President. Managing Director of Putnam
Investment Management, Inc. Vice President of certain of the Putnam funds.

Robert R. Beck (55) , Vice President. Senior Vice President of
Putnam Investment Management, Inc. Vice President of certain of the Putnam
funds.

Richard M. Frucci (51) , Vice President. Senior Vice President of
Putnam Investment Management, Inc.

Roland W. Gillis (46) , Vice President. Senior Vice President of
Putnam Investment Management, Inc. Vice President of certain of the Putnam
funds.

David L. King (39) , Vice President. Senior Vice President of Putnam
Investment Management, Inc. Vice President of certain of the Putnam funds.

Jennifer Evans Leichter (35), Vice President. Senior Vice President of
Putnam Investment Management, Inc. Vice President of certain of the Putnam
funds.

Sheldon N. Simon (38) , Vice President. Senior Vice President of
Putnam Investment Management, Inc. Vice President of certain of the Putnam
funds.

John K. Storkerson (57) , Vice President. Senior Vice President of
The Putnam Advisory Company, Inc. Vice President of certain of the Putnam
funds.

Charles H. Swanberg (48) , Vice President. Senior Vice President of
Putnam Investment Management, Inc. Vice President of certain of the Putnam
funds.

Kenneth J. Taubes (38) , Vice President. Senior Vice President of
Putnam Investment Management, Inc. Vice President of certain of the Putnam
funds.

David K. Thomas (54) , Vice President. Senior Vice President of
Putnam Investment Management, Inc. Vice President of certain of the Putnam
funds.

Rosemary H. Thomsen (35) , Vice President. Senior Vice President of
Putnam Investment Management, Inc. Vice President of certain of the Putnam
funds.

Neil J. Powers (34) , Vice President. Vice President of Putnam
Investment Management, Inc. Vice President of certain of the Putnam funds.

Christopher A. Ray (32) , Vice President. Vice President of Putnam
Investment Management, Inc. Vice President of certain of the Putnam funds.

David J. Santos (38) , Vice President. Vice President of Putnam
Investment Management, Inc. Vice President of certain of the Putnam funds.

Mark J. Siegel (36) , Vice President. Vice President of Putnam
Investment Management, Inc. Vice President of certain of the Putnam funds.

Lindsey C. Strong (35), Vice President. Vice President of Putnam
Investment Management, Inc. Vice President of certain of the Putnam
funds .

Except as stated below, the principal occupations of the officers and
Trustees for the last five years have been with the employers as shown
above, although in some cases they have held different positions
with such employers. Prior to January, 1992, Ms. Baxter was Vice President
and Principal, Regency Group, Inc. and Consultant, The First Boston
Corporation. During the past five years Dr. Shapiro has provided
economic and financial consulting services to various clients.
Prior to August 1, 1993, Mr. Carman was Chief Investment Officer, Chairman
of the U.S. Equity Investment Policy Committee and a Director of Sanford C.
Bernstein & Company, Inc. Prior to January, 1994, Mr. Martino was employed
by Bay Bank Advisors in the positions of Executive Vice President and Chief
Investment Officer from 1992 to 1994, and Senior Vice President and Senior
Portfolio Manager from 1990 to 1992. Prior to March, 1995, Mr. Gillis was
Vice President at Keystone Custodian Funds, Inc. Prior to September, 1994,
Mr. Kohli was Executive Vice President and Co-Director of Global Bond
Management and, prior to October, 1993, Senior Portfolio Manager, at
Franklin Advisors/Templeton Investment Counsel. Prior to June, 1991, Mr.
Taubes was Senior Vice President of the Finance Division of U.S. Trust
Company. Prior to January, 1993, Mr. Ray was Vice President and Portfolio
Manager at Scudder, Stevens & Clark, Inc., and from February, 1986 to
March, 1992, Mr. Ray was a Vice President of Putnam Management.

The Trust pays each Trustee 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 Putnam
Management 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 fees paid to each Trustee by each PCM
fund and by all of the Putnam funds are shown below:
<PAGE>
<TABLE>
<CAPTION>
COMPENSATION TABLE

Aggregate compensation* from:

<S> <C> <C> <C> <C> <C> <C>
Asia Pacific Diversified Global Asset Global Growth and High
Trustee/Year Growth Income Allocation Growth Income Yield

Jameson A. Baxter/1994 $148 $1059 $1178 $1961 $3662 $1183
Hans H. Estin/1972 145 1066 1187 1976 3685 1192
John A. Hill/1985*** 148 1059 1178 1962 3659 1183
Elizabeth T. Kennan/1992 145 1066 1187 1976 3685 1192
Lawrence J. Lasser/1992 140 1060 1179 1963 3656 1184
Robert E. Patterson/1984 150 1073 1195 1989 3714 1200
Donald S. Perkins/1982 140 1060 1179 1963 3656 1184
William F. Pounds/1971 148 1059 1179 1962 3658 1183
George Putnam/1957 145 1066 1187 1976 3685 1192
George Putnam, III/1984 145 1066 1187 1976 3685 1192
Eli Shapiro/1995**** 104 709 780 1311 2481 799
A.J.C. Smith/1986 139 1053 1171 1949 3629 1175
W. Nicholas Thorndike/1992 150 1073 1195 1989 3714 1200

/TABLE
<PAGE>

<TABLE>
<CAPTION>
COMPENSATION TABLE (continued)

Aggregate compensation* from:

<S> <C> <C> <C> <C> <C> <C>
Money New Utilities Growth U.S. Government and Voyager All Putnam
Trustee/Year Market Opportunities and Income High Quality Bond Fund funds**

Jameson A. Baxter/1994 $756 $895 $1265 $1537 $3016 $150,854
Hans H. Estin/1972 759 898 1275 1547 3031 150,854
John A. Hill/1985*** 756 893 1265 1538 3013 149,854
Elizabeth T. Kennan/1992 759 898 1275 1547 3031 148,854
Lawrence J. Lasser/1992 756 889 1266 1539 3010 150,854
Robert E. Patterson/1984 762 907 1283 1555 3052 152,854
Donald S. Perkins/1982 756 889 1266 1539 3010 150,854
William F. Pounds/1971 756 892 1265 1538 3012 149,854
George Putnam/1957 759 898 1275 1547 3031 150,854
George Putnam, III/1984 759 898 1275 1547 3031 150,854
Eli Shapiro/1995**** 502 651 848 1023 2038 95,372
A.J.C. Smith/1986 753 883 1257 1530 2992 149,854
W. Nicholas Thorndike/1992 762 907 1283 1555 3052 152,854

* Includes an annual retainer and an attendance fee for each meeting attended.
**Reflects total payments received from all Putnam funds in the most recent calendar year. As of December 31, 1995, there
were 99 funds in the Putnam family.
*** Includes compensation deferred pursuant to a Trustee Compensation Deferral Plan. The total amount of deferred compensation
payable to Mr. Hill by all Putnam funds as of December 31, 1995 was $51,142, including income earned on such amounts.
**** Elected as a Trustee in April 1995.

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

For additional information concerning the Trustees, see "Management
" in this SAI .

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

<PAGE>
Trustees and officers of the Trust who are also officers of Putnam
Management or its affiliates or stockholders of Marsh & McLennan Companies,
Inc. will benefit from the advisory fees, transfer agency fees and
custodian fees and fees paid or allowed by the Trust. At January 31,
1996 the officers and Trustees as a group owned no shares of the Trust
or any fund . As of this date, less than 1% of the value of the
accumulation units with respect to any fund was attributable to the
officers and Trustees of the Trust, as a group, owning variable annuity
contracts or variable life insurance policies issued by the insurers listed
in the following tables. All of the shares of each of the funds are
owned by the insurance company separate accounts listed below and by Putnam
Management pursuant to its initial capital contribution to each fund
during the organization of the Trust and the subsequent organization of
PCM Global Growth Fund, PCM Utilities Growth and Income Fund, PCM
Diversified Income Fund, PCM New Opportunities Fund and PCM Asia Pacific
Growth Fund. Percentage of
Issuer and name of shares owned of record
Separate Account Fund as of January 31, 1996
(1)Hartford Life
Insurance Company

(a) Putnam Capital Manager Trust
Separate Account

PCM Asia Pacific Growth Fund 43.79%

PCM Diversified Income Fund 55.48%

PCM Global Asset Allocation Fund 59.77%
PCM Global Growth Fund 52.90%

PCM Growth and Income Fund 62.42%

PCM High Yield Fund 55.52%

PCM Money Market Fund 56.06%

PCM New Opportunities Fund 45.58%

PCM U.S. Government
and High Quality Bond Fund 74.91%

PCM Utilities Growth
and Income Fund 60.32%

PCM Voyager Fund 58.51%
<PAGE>
(b) Separate Account VL I

PCM Diversified Income Fund 0.01%

PCM Global Asset Allocation Fund 0.70%

PCM Global Growth Fund 0.58%

PCM Growth and Income Fund 0.21%

PCM High Yield Fund 0.23%

PCM Money Market Fund 0.13%

PCM New Opportunities Fund 0.20%

PCM U.S. Government
and High Quality Bond Fund 0.22%

PCM Utilities Growth
and Income Fund 0.23%

PCM Voyager Fund 0.59%
<PAGE>
(c) Separate Account VL II

PCM Diversified Income Fund

PCM Global Asset Allocation Fund

PCM Global Growth Fund

PCM Growth and Income Fund

PCM High Yield Fund

PCM Money Market Fund

PCM New Opportunities Fund

PCM U.S. Government
and High Quality Bond Fund

PCM Utilities Growth
and Income Fund

PCM Voyager Fund <PAGE>
(d) Putnam Capital
Manager Trust
Variable Life
Separate Account Five

PCM Asia Pacific Growth Fund 0.79%

PCM Diversified Income Fund 0.15%

PCM Global Asset Allocation Fund 0.11%

PCM Global Growth Fund 0.36%

PCM Growth and Income Fund 0.17%

PCM High Yield Fund 0.41%

PCM Money Market Fund 1.89%

PCM New Opportunities Fund 0.57%

PCM U.S. Government
and High Quality Bond Fund 0.08%

PCM Utilities Growth
and Income Fund 0.15%

PCM Voyager Fund 0.19%<PAGE>

(2) ITT Hartford Life
and Annuity
Insurance Company

(a) Putnam Capital
Manager Trust
Separate Account Two

PCM Asia Pacific Growth Fund 51.72%

PCM Diversified Income Fund 41.12%

PCM Global Asset Allocation Fund 38.62%

PCM Global Growth Fund 46.03%

PCM Growth and Income Fund 35.63%

PCM High Yield Fund 43.62%

PCM Money Market Fund 35.61%

PCM New Opportunities Fund 51.99%

PCM U.S. Government
and High Quality Bond Fund 22.52%

PCM Utilities Growth
and Income Fund 38.26%

PCM Voyager Fund 38.88%

<PAGE>
(b) Separate Account VL II

PCM Diversified Income Fund

PCM Global Asset Allocation Fund

PCM Global Growth Fund

PCM Growth and Income Fund

PCM High Yield Fund

PCM Money Market Fund

PCM New Opportunities Fund

PCM U.S. Government
and High Quality Bond Fund

PCM Utilities Growth
and Income Fund

PCM Voyager Fund <PAGE>
(c) Putnam Capital
Manager Trust
Variable Life
Separate Account Five

PCM Asia Pacific Growth Fund 0.23%

PCM Diversified Income Fund 0.08%

PCM Global Asset Allocation Fund 0.05%

PCM Global Growth Fund 0.10%

PCM Growth and Income Fund 0.10%

PCM High Yield Fund 0.08%

PCM Money Market Fund 0.78%

PCM New Opportunities Fund 0.31%

PCM U.S. Government
and High Quality Bond Fund 0.04%

PCM Utilities Growth
and Income Fund 0.09%

PCM Voyager Fund 0.09%
<PAGE>
Percentage of
Issuer and name of shares owned of record
Separate Account Fund as of January 31, 1996

(3) Northwestern National
Life Insurance Company

(a) Select Life
PCM Asia Pacific Growth Fund --

PCM Diversified Income Fund 0.06%

PCM Growth and Income Fund 0.02%

PCM New Opportunities Fund --

PCM Utilities Growth
and Income Fund 0.04%

PCM Voyager Fund 0.07%

(b) Select Life II
Variable Account
PCM Asia Pacific Growth Fund 0.47%

PCM Diversified Income Fund 0.10%

PCM Growth and Income Fund 0.05%

PCM New Opportunities Fund 0.16%

PCM Utilities Growth
and Income Fund 0.07%

PCM Voyager Fund 0.26%

<PAGE>
(c) Select Life III Variable Account
PCM Asia Pacific Growth Fund 0.47%

PCM Diversified Income Fund 0.10%

PCM Growth and Income Fund 0.05%

PCM New Opportunities Fund 0.16%

PCM Utilities Growth
and Income Fund 0.07%

PCM Voyager Fund 0.26%

(d) NWNL Select Annuity II

PCM Asia Pacific Growth Fund --

PCM Diversified Income Fund 0.21%

PCM Growth and Income Fund 0.06%

PCM New Opportunities Fund --

PCM Utilities Growth
and Income Fund 0.14%

PCM Voyager Fund 0.20%

<PAGE>
(e) NWNL Select Annuity III

PCM Asia Pacific Growth Fund 2.54%

PCM Diversified Income Fund 2.08%

PCM Growth and Income Fund 0.13%

PCM New Opportunities Fund 0.82%

PCM Utilities Growth
and Income Fund 0.62%

PCM Voyager Fund 0.79%
<PAGE>
(4) American Enterprise Percentage of shares
Life Insurance Fund owned of record as
Company of January 31, 1996

Putnam Capital
Manager Trust
American Enterprise PCM Diversified Income Fund 0.24%
Variable Annuity
Account PCM Growth and Income Fund 0.05%

PCM High Yield Fund 0.13%

PCM New Opportunities Fund 0.21%

(5) Investors Life Insurance Percentage of shares
Company of North owned of record as
America of January 31, 1996

Putnam Capital PCM Growth and Income Fund 0.91%
Manager Trust
CIGNA Separate PCM Money Market Fund 5.53%
Account I
PCM U.S. Government and
High Quality Bond Fund 2.04%

PCM Voyager Fund 0.15%
<PAGE>
(6) Paragon Life Insurance Company

Putnam Capital
Manager Trust
Paragon Variable Life
PCM Asia Pacific Growth Fund

PCM Diversified Income Fund

PCM Global Asset Allocation Fund

PCM Global Growth Fund

PCM Growth and Income Fund

PCM High Yield Fund

PCM Money Market Fund

PCM New Opportunities Fund

PCM U.S. Government
and High Quality Bond Fund

PCM Utilities Growth
and Income Fund

PCM Voyager Fund

*Less than 1/10th of 1%.

The address for the separate accounts listed in (1) through (2)
above is: P.O. Box 2099, Hartford, CT 06140-2999. The address for the
separate account listed in (3) above is: 20 Washington Avenue South,
Minneapolis, MN 55401. The address for the separate account listed in
(4) above is: 80 S. Eighth Street, Minneapolis, MN 55440. The
address for the separate account listed in (5) above is: Austin
Centre, 701 Brazos Street, Austin, TX 78701. The address for the
separate account listed in (6) above is: 100 South Brentwood, St. Louis,
MO 63105.

Each of the insurance companies issuing the separate accounts listed above
have agreed to vote their shares in proportion to and in the manner
instructed by contract and policy owners. By virtue of the foregoing, each
of these insurance companies, or any of them together, may be deemed to be
a controlling person of each of the funds .

Putnam Management and its affiliates

Putnam Management is one of America's oldest and largest money management
firms. Putnam Management'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 could
be purchased by the investor individually; the resulting
diversification helps reduce investment risk. Putnam Management has been
managing mutual funds since 1937. Today, the firm serves as the investment
manager for the funds in the Putnam Family, with over $93
billion in assets in nearly 5 million shareholder accounts at
December 31, 1995. 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. At
December 31, 1995, Putnam Management and its affiliates managed over
$125 billion in assets, including over $17 billion in tax-
exempt securities and over $55 billion in retirement plan assets.

Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust
Company are subsidiaries of Putnam Investments, Inc., a holding company
which is in turn wholly owned by Marsh & McLennan Companies, Inc., a
publicly-owned holding company whose principal operating subsidiaries are
international insurance and reinsurance brokers, investment managers and
management consultants.

Trustees and officers of a fund who are also officers of Putnam Management
or its affiliates or who are stockholders of Marsh & McLennan Companies,
Inc. will benefit from the advisory fees, sales commissions, distribution
fees, custodian fees and transfer agency fees paid or allowed by the
fund.

The Management Contract

Under a Management Contract between the Trust and Putnam Management dated
October 2, 1987, as supplemented March 2, 1990, and as further supplemented
February 27, 1992, July 9, 1993, April 5, 1994, June 2, 1994, April
7, 1995, and April , 1996, subject to such policies as the
Trustees may determine, Putnam Management, at its expense, furnishes
continuously an investment program for the Funds and makes investment
decisions on their behalf. Subject to the control of the Trustees, Putnam
Management also manages, supervises and conducts the other affairs and
business of the Trust, furnishes office space and equipment, provides
bookkeeping and clerical services (including determination of the net asset
values of the funds , but excluding shareholder accounting services)
and places all orders for the purchase and sale of the Trust's portfolio
securities. Putnam Management may place the Trust's portfolio transactions
with broker-dealers which furnish Putnam Management, without cost to it,
certain research, statistical and quotation services of value to Putnam
Management and its affiliates in advising the Trust and other clients. In
so doing, Putnam Management may cause a fund to pay greater
brokerage commissions than it might otherwise pay.

The compensation payable to Putnam Management under the Management Contract
for its investment management services to the funds is paid
quarterly at the following annual rates of each fund's average net
assets, as determined at the close of each business day during the quarter:

fund Rate

PCM Asia Pacific Growth Fund 0.80% of the first $500
million of average net
assets, 0.70% of the next
$500 million, 0.65% of
the next $500 million,
0.60% of the next $5
billion, 0.575% of the
next $5 billion, 0.555%
of the next $5 billion,
0.54% of the next $5
billion, and 0.53% of any
excess thereafter

<PAGE>
PCM Diversified Income Fund, PCM Global 0.70% of the first
Asset Allocation Fund, PCM High Yield $500 million of
Fund, PCM New Opportunities Fund average net assets, and
PCM Voyager Fund 0.60% of the next $500
million, 0.55% of the
next $500 million, and
0.50% of any amount over
$1.5 billion

PCM Growth and Income Fund 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,
and 0.45% of any amount
over $1.5 billion

PCM U.S. Government and High 0.65% of the first
Quality Bond Fund $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% of any
excess thereafter

PCM Global Growth Fund, and 0.60% of average net
and PCM Utilities Growth assets

and Income Fund

PCM Money Market Fund 0.45% of the first $500
million of average net
assets, 0.35% of the next
$500 million, 0.30% of
the next $500 million,
and 0.25% of any amount
over $1.5 billion

On January 5, 1996 , the Trustees approved a proposal to change the
fees payable to Putnam Management under the Management Contract for PCM
Utilities Growth and Income Fund.

The proposed change is subject to shareholder approval and will be
submitted to shareholders at a meeting scheduled for July 11, 1996 .

If approved at that meeting, management fees for the fund would
thereafter be paid at the following annual rates: 0.70% of the first
$500 million of average net assets, 0.60% of the next $500 million,
0.55% of the next $500 million, 0.50% of the next $5 billion,
0.475% of the next $5 billion, 0.455% of the next $5 billion,
0.44% of the next $5 billion, and 0.43% of any excess
thereafter. The proposed change would result in an increase in fees paid
by the fund to Putnam Management based upon the net assets of the
fund at December 31, 1995 .

The Trust pays affiliates of Putnam Management additional amounts for
investor servicing and custody services.

In addition to the fee paid to Putnam Management, the Trust reimburses
Putnam Management for the compensation and related expenses of certain
officers of the funds and certain persons who assist them in
carrying out the responsibilities of their offices. During fiscal
1995 , the Trust reimbursed Putnam Management $ 157,952 in
this regard. The Trust may also pay or reimburse Putnam Management for all
or a part of the compensation and related expenses of one or more other
officers of the Trust and their assistants. Currently the Trust is
reimbursing Putnam Management for the compensation and related expenses of
the Senior Vice President and the Clerk of the Trust. The aggregate amount
of all such payments and reimbursements is determined annually by the
Trustees. Putnam Management pays all other salaries of officers of the
Trust. The Trust pays all expenses not assumed by Putnam Management
including, without limitation, auditing, legal, custodial, investor
servicing and shareholder reporting expenses. The Trust pays any cost of
typesetting for its prospectuses and any cost of printing and mailing
prospectuses sent to its shareholders. Putnam Mutual Funds pays the cost
of printing and distributing all other prospectuses.

The Management Contract provides that Putnam Management shall not be
subject to any liability to the Trust or to any shareholder of the Trust
for any act or omission in the course of or connected with rendering
services to the Trust in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of its duties on the part of Putnam
Management. The Management Contract may be terminated as to the Trust or
as to any fund without penalty by vote of the Trustees or the
shareholders of one or more Funds affected, or by Putnam Management, on 30
days' written notice. It may be amended with respect to a fund only
by a vote of the shareholders of that fund . The Management Contract
also terminates without payment of any penalty in the event of its
assignment. The Management Contract provides that it will continue in
effect as to any fund only so long as such continuance is approved
at least annually by vote of either the Trustees or the shareholders of
that fund , and, in either case, by a majority of the Trustees who
are not "interested persons" of Putnam Management or any fund . In
each of the foregoing cases, the vote of the shareholders of any
fund is the affirmative vote of a "majority of the outstanding
voting securities" of such fund as defined in the Investment Company
Act of 1940. The continuation of the Contract as to all funds was
unanimously approved by the Trustees, including those Trustees who are not
"interested persons," on January 5, 1996 .

Management fees

Reflecting a
reduction in the
following amounts

pursuant to an
Fund Fiscal Management expense
name year fee paid limitation
- ---- ------ ---------- -----------------

PCM Asia Pacific
Growth Fund 1995+ $67,583 $40,348

PCM Diversified
Income Fund 1995 $1,741,950
1994 $1,219,268
1993++ $56,026

PCM Global Asset
Allocation Fund 1995 $3,253,739
1994 $2,501,952
1993 $1,167,001

PCM Global Growth
Fund 1995 $4,329,841
1994 $3,316,215
1993 $1,000,268

PCM Growth & Income
Fund 1995 $13,096,405
1994 $9,644,524
1993 $5,982,583

PCM High Yield Fund 1995 $2,909,080
1994 $2,098,314
1993 $1,208,791

PCM Money Market
Fund 1995 $1,061,046
1994 $960,766
1993 $370,812

PCM New
Opportunities Fund 1995 $1,618,748
1994+++ $119,511 $49,240

PCM U.S. Government
and High Quality
Bond Fund 1995 $4,133,901
1994 $4,062,088
1993 $3,574,490

PCM Utilities
Growth and Income
Fund 1995 $2,666,363
1994 $2,450,006
1993 $1,496,570

PCM Voyager Fund 1995 $8,864,927
1994 $5,347,055
1993 $2,770,454

+ Commencement of operations May 1, 1995
++ Commencement of operations September 15, 1993
+++ Commencement of operations May 1, 1994

Portfolio Transactions

Investment decisions. Investment decisions for each of the funds
and for the other investment advisory clients of Putnam Management and its
affiliates are made with a view to achieving their respective investment
objectives. Investment decisions are the product of many factors in
addition to basic suitability for the particular client involved. Thus, a
particular security may be bought or sold for certain clients even though
it could have been bought or sold for other clients at the same time.
Likewise, a particular security may be bought for one or more clients when
one or more other clients are selling the security. In some instances,
one client may sell a particular security to another client. It also
sometimes happens that two or more clients simultaneously purchase or sell
the same security, in which event each day's transactions in such security
are, insofar as possible, averaged as to price and allocated between such
clients in a manner which in Putnam Management's opinion is equitable to
each and in accordance with the amount being purchased or sold by each.
There may be circumstances when purchases or sales of portfolio securities
for one or more clients will have an adverse effect on other clients.

Brokerage and research services. Transactions on U.S. stock exchanges,
commodities markets and futures markets and other agency transactions
involve the payment by the Trust of negotiated brokerage commissions. Such
commissions vary among different brokers. Also, a particular broker may
charge different commissions according to such factors as the difficulty
and size of the transaction. Transactions in foreign investments often
involve the payment of fixed brokerage commissions, which may be higher
than those in the United States. There is generally no stated commission
in the case of securities traded in the over-the-counter markets, but the
price paid by the Trust usually includes an undisclosed dealer commission
or mark-up. In underwritten offerings, the price paid includes a
disclosed, fixed commission or discount retained by the underwriter or
dealer.

It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional
investors to receive "brokerage and research services" (as defined in the
Securities Exchange Act of 1934, as amended (the "1934 Act")) from broker-
dealers and from third parties with which these broker-dealers have
arrangements which execute portfolio transactions for the clients of such
advisers. Consistent with this practice, Putnam Management receives
brokerage and research services and other similar services from many
broker-dealers with which Putnam Management places the funds'
portfolio transactions and from third parties with which those broker-
dealers have arrangements. These services include such matters as general
economic and market reviews, industry and company reviews, evaluations of
investments, recommendations as to the purchase and sale of investments,
newspapers, magazines, pricing services, quotation services, news services
and personal computers utilized by Putnam Management's managers and
analysts. Where the services referred to above are not used exclusively
by Putnam Management for research services, Putnam Management, based upon
its own allocations of expected use, bears that portion of the cost of
these services which directly relates to their non-research use. Some of
these services are of value to Putnam Management and its affiliates in
advising various of their clients (including the Trust), although not all
of these services are necessarily useful and of value in managing the
Trust. The management fee paid by the Trust is not reduced because Putnam
Management and its affiliates receive these services even though Putnam
Management might otherwise be required to purchase some of these services
for cash.

Putnam Management places all orders for the purchase and sale of portfolio
investments for each fund and buys and sells investments for each
fund through a substantial number of brokers and dealers. In so
doing, Putnam Management uses its best efforts to obtain for each
fund the most favorable price and execution available, except to the
extent it may be permitted to pay higher brokerage commissions as described
below. In seeking the most favorable price and execution, Putnam
Management, having in mind each fund's best interests, considers all
factors it deems relevant, including, by way of illustration, price, the
size of the transaction, the nature of the market for the security or other
investment, the amount of the commission, the timing of the transaction
taking into account market prices and trends, the reputation, experience
and financial stability of the broker-dealer involved and the quality of
service rendered by the broker-dealer in other transactions.

As permitted by Section 28(e) of the 1934 Act , and by the Management
Contract, Putnam Management may cause a fund to pay a broker-dealer
which provides "brokerage and research services" (as defined in the 1934
Act) to Putnam Management an amount of disclosed commission for effecting a
securities transaction on stock exchanges and other agency transactions for
the fund on an agency basis in excess of the commission which
another broker-dealer would have charged for effecting that transaction.
Putnam Management's authority to cause a fund to pay any such
greater commissions is subject to such policies as the Trustees may adopt
from time to time. Putnam Management does not currently intend to cause
the Trust to make such payments. It is the position of the staff of the
Securities and Exchange Commission that Section 28(e) does not
apply to the payment of such greater commissions in "principal"
transactions, and accordingly Putnam Management will use its best efforts
to obtain the most favorable price and execution available with respect to
such transactions, as described above.

The Management Contract provides that commissions, fees, brokerage or
similar payments received by Putnam Management or an affiliate in
connection with the purchase and sale of portfolio investments of a
fund , less any direct expenses approved by the Trustees, shall be
recaptured by the fund through a reduction of the fee payable under
the Management Contract. Putnam Management seeks to recapture for each
fund soliciting dealer fees on the tender of the fund's
portfolio securities in tender or exchange offers. Any such fees which may
be recaptured are likely to be minor in amount.

Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and subject to seeking the most favorable price
and execution available and such other policies as the Trustees may
determine, Putnam Management may consider sales of shares of the Trust
(and, if permitted by law, of the other Putnam funds) as a factor in the
selection of broker-dealers to execute portfolio transactions for the
Funds.

Fund Fiscal Brokerage
name year commissions
- ---- ------ -----------

PCM Asia Pacific
Growth Fund 1995 $205,198
1994 N/A
1993 N/A

PCM Diversified
Income Fund 1995 $14,676
1994 $3,004
1993 $252

PCM Global Asset
Allocation Fund 1995 $797,004
1994 $818,846
1993 $611,157

<PAGE>
PCM Global Growth
Fund 1995 $2,275,831
1994 $1,992,940
1993 $1,163,591

PCM Growth & Income
Fund 1995 $3,637,703
1994 $2,736,406
1993 $2,560,288

PCM High Yield Fund 1995 $11,800
1994 $4,461
1993 $19,196

PCM Money Market
Fund 1995 $0
1994 $0
1993 $0

PCM New
Opportunities Fund 1995 $312,487
1994 $68,123
1993 N/A

PCM U.S. Government
and High Quality
Bond Fund 1995 $2,880
1994 $17,014
1993 $7,844

PCM Utilities
Growth and Income
Fund 1995 $938,350
1994 $1,069,430
1993 $760,057

PCM Voyager Fund 1995 $2,171,392
1994 $1,295,494
1993 $799,917

Principal Underwriter

Putnam Mutual Funds is the principal underwriter of shares of the Trust,
which are continuously offered, and shares of the other continuously
offered Putnam funds. Putnam Mutual Funds is not obligated to sell any
specific amount of shares of the Trust and will purchase shares for resale
only against orders for shares.

Investor servicing agent and Custodian

Putnam Investor Services, a division of Putnam Fiduciary Trust Company
("PFTC"), is the Trust's investor servicing agent (transfer, plan and
dividend disbursing agent), for which it receives fees which are paid
monthly by the Trust as an expense of all its shareholders. The fee paid
to PFTC is determined by the Trustees taking into account the number of
shareholder accounts and transactions. Putnam Investor Services has won
the DALBAR Quality Tested Service Seal every year since the award's 1990
inception. Over 10,000 tests of 38 separate shareholder service
components demonstrated that Putnam Investor Services exceeded the industry
standard in all categories.

The Trust paid $5,038,496 in fees to PFTC for its investor servicing
and custody services during fiscal 1995 . The Trust made no payments
to PFTC for out-of-pocket expenses related to the investor servicing
agent's function for the year. For a description of the custodial services
provided by PFTC, see "Custodian" below.

Putnam Fiduciary Trust Company is also investor servicing agent for the
other Putnam funds and receives fees from each of those funds for its
services.

INVESTMENT PERFORMANCE OF THE TRUST

Standard Performance Measures

Yield and total return data for the funds may from time to time be
presented in the prospectus, this SAI and advertisements.
The data is calculated as follows.

Total return for the life of the funds is determined by calculating
the actual dollar amount of investment return on a $1,000 investment in a
fund at the beginning of the period, and then calculating the annual
compounded rate of return which would produce that amount. Total return
for a period of one year is equal to the actual return of a fund
during that period.

A fund's yield is presented for a specified thirty-day period (the
"base period"). Yield is based on the amount determined by (i) calculating
the aggregate amount of dividends and interest earned by the fund
during the base period less expenses accrued for that period, and (ii)
dividing that amount by the product of (A) the average daily number of
shares of the fund outstanding during the base period and entitled
to receive dividends and (B) the per share net asset value of the
fund on the last day of the base period. The result is annualized
on a compounding basis to determine the fund's yield. For this
calculation, interest earned on debt obligations held by the fund is
generally calculated using the yield to maturity (or first expected call
date) of such obligations based on their market values (or, in the case
of receivables-backed securities such as GNMAs, based on cost). Dividends
on equity securities are accrued daily at their stated dividend rates.

PCM Money Market Fund's yield is computed by determining the percentage net
change, excluding capital changes, in the value of an investment in one
share of the fund over the seven-day period for which yield is
presented (the "base period"), and multiplying the net change by 365/7 (or
approximately 52 weeks). The fund's effective yield represents a
compounding of the fund's yield by adding 1 to the number
representing the percentage change in value of the investment during the
base period, raising that sum to a power equal to 365/7, and subtracting 1
from the result.

At times, Putnam Management may reduce its compensation or assume expenses
of a fund in order to reduce that fund's expenses. The
annual per share amount of any such reduction or assumption of expenses is
shown in the table entitled "Financial highlights" in the
prospectus . Any such waiver or assumption of expenses would
increase a fund's yield and total return during the period of the
waiver or assumption. All data is based on past performance and does not
predict future results.

30-day Total Return
PCM Fund yield* 1 year 5 yearsLife of fund

Asia Pacific N/A N/A N/A 2.30%

Diversified Income 5.79% 19.13% N/A 5.29

Global Asset
Allocation 1.96 24.71 12.56%10.75

Global Growth N/A 15.67 11.698.88

Growth and Income 2.98 36.71 15.42 15.08

High Yield 8.08 18.32 19.28 10.95

Money Market 5.37 5.46 4.31 5.58

New Opportunities N/A 44.87 N/A 30.98

U.S. Government and
High Quality Bond 5.64 20.44 10.33 9.56

Utilities
Growth & Income 3.87 31.08 N/A 11.29

Voyager N/A 40.67 22.16 17.70

* Information shown for the Money Market Fund is 7-day yield

Investment operations of all funds commenced February 1, 1988
(except for PCM Global Growth Fund , which commenced
operations on May 1, 1990, PCM Utilities Growth and Income Fund ,
which commenced operations on May 4, 1992, PCM Diversified Income
Fund , which commenced operations on September 15, 1993, PCM New
Opportunities Fund , which commenced operations on May 2, 1994, and
PCM Asia Pacific Growth Fund , which commenced operations on
May 1, 1995). The foregoing performance information reflects an expense
limitation applicable to PCM High Yield Fund for fiscal 1988
, PCM Utilities Growth and Income Fund for fiscal 1992
, PCM New Opportunities Fund for fiscal 1994 and PCM New
Opportunities Fund for fiscal 1995 . Performance information presented
for the funds should not be compared directly with performance
information of other insurance products without taking into account
insurance-related charges and expenses payable under their variable annuity
contracts. These charges and expenses are not reflected in the
funds' performance and would reduce an investor's return under the
annuity contract.

DETERMINATION OF NET ASSET VALUE

The Trust values the shares of each fund daily on each day the New
York Stock Exchange (the "Exchange") is open. Currently, the New York
Stock Exchange is closed Saturdays, Sundays and the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, the Fourth of July,
Labor Day, Thanksgiving and Christmas. The Trust determines net asset
value as of the close of regular trading on the Exchange, currently
4:00 p.m. However, equity options held by a fund are priced as of
the close of trading at 4:10 p.m., and futures on U.S. government
securities and index options held by a fund are priced as of their
close of trading at 4:15 p.m.

PCM Money Market fund . The valuation of the fund's portfolio
instruments at amortized cost is permitted in accordance with Securities
and Exchange Commission Rule 2a-7 and certain procedures adopted by the
Trustees. The amortized cost of an instrument is determined by valuing it
at cost originally and thereafter amortizing any discount or premium from
its face value at a constant rate until maturity, regardless of the effect
of fluctuating interest rates on the market value of the instrument.
Although the amortized cost method provides certainty in valuation, it may
result at times in determinations of value that are higher or lower than
the price the fund would receive if the instruments were sold.
Consequently, changes in the market value of portfolio instruments during
periods of rising or falling interest rates will not normally be reflected
either in the computation of net asset value of the fund's portfolio
or in the daily computation of net income. Under the procedures adopted by
the Trustees, the fund must maintain a dollar-weighted average
portfolio maturity of 397 days or less, purchase only instruments having
remaining maturities of 90 days or less and invest in securities determined
by the Trustees to be of high quality with minimal credit risks. The
Trustees have also established procedures designed to stabilize, to the
extent reasonably possible, the fund's price per share as computed
for the purpose of distribution, redemption and repurchase at $1.00. These
procedures include review of the fund's portfolio holdings by the
Trustees, at such intervals as they may deem appropriate, to determine
whether the fund's net asset value calculated by using readily
available market quotations deviates from $1.00 per share, and, if so,
whether such deviation may result in material dilution or is otherwise
unfair to existing shareholders. In the event the Trustees determine that
such a deviation exists, they will take such corrective action as they
regard as necessary and appropriate, including selling portfolio
instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity , withholding dividends ,
redeeming of shares in kind , or establishing a net asset value
per share by using readily available market quotations.

Since the net income of the fund is declared as a dividend each time
it is determined, the net asset value per share of the fund remains
at $1.00 per share immediately after such determination and dividend
declaration. Any increase in the value of a shareholder's investment in
the fund representing the reinvestment of dividend income is
reflected by an increase in the number of shares of the fund in the
shareholder's account on the first day of the next month (or, if that day
is not a business day, on the next business day). It is expected that the
fund's net income will be positive each time it is determined.
However, if because of realized losses on sales of portfolio investments, a
sudden rise in interest rates, or for any other reason the net income of
the fund determined at any time is a negative amount, the
fund will offset such amount allocable to each then shareholder's
account from dividends accrued during the month with respect to such
account. If at the time of payment of a dividend (either at the regular
monthly dividend payment date, or, in the case of a shareholder who is
withdrawing all or substantially all of the shares in an account, at the
time of withdrawal), such negative amount exceeds a shareholder's accrued
dividends, the fund will reduce the number of outstanding shares by
treating the shareholder as having contributed to the capital of the
fund that number of full and fractional shares which represent the
amount of excess. Each shareholder is deemed to have agreed to such
contribution in these circumstances by his or her investment in the
fund .

Other Funds. Each of the other funds determines net asset value as
follows: Securities for which market quotations are readily available are
valued at prices which, in the opinion of the Trustees or Putnam
Management, most nearly represent the market values of such securities.
Currently, such prices are determined using the last reported sale price
or, if no sales are reported (as in the case of some securities traded
over-the-counter) the last reported bid price, except that certain U.S.
government securities are stated at the mean between the reported bid and
asked prices. Short-term investments having remaining maturities of 60
days or less are stated 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
outstanding.

Reliable market quotations are not considered to be readily available for
long-term corporate bonds and notes, certain preferred stocks, tax-exempt
securities, and certain foreign securities. These investments are stated
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 a fund are restricted as to resale, Putnam
Management determines their fair value following procedures approved by the
Trustees. The Trustees periodically review such valuations and procedures.
The fair value of such securities is generally determined as the amount
which the fund could reasonably expect to realize from an orderly
disposition of such securities over a reasonable period of time. The
valuation procedures applied in any specific instance are likely to vary
from case to case. However, consideration is generally given to the
financial position of the issuer and other fundamental analytical data
relating to the investment and to the nature of the restrictions on
disposition of the securities (including any registration expenses that
might be borne by the fund in connection with such disposition). In
addition, specific factors are also generally considered, such as the cost
of the investment, the market value of any unrestricted securities of the
same class, the size of the holding, the prices of any recent transactions
or offers with respect to such securities and any available analysts'
reports regarding the issuer.

Generally, trading in certain securities (such as foreign securities) is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset
value of the Trust'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 funds' net asset values. If
events materially affecting the values of such securities occur during such
period, then these securities will be valued at their fair value following
procedures approved by the Trustees.

SUSPENSION OF REDEMPTIONS

The Trust may not suspend the right of redemption and/or postpone payment
for more than seven days unless the New York Stock Exchange is closed for
other than customary weekends or holidays, or except, if permitted by the
rules of the Securities and Exchange Commission, during periods when
trading on the Exchange is restricted or during any emergency which makes
it impracticable for the Trust 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 Commission for the protection of investors.

SHAREHOLDER LIABILITY

Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Trust. However, the
Agreement and Declaration of Trust disclaims shareholder liability for acts
or obligations of the Trust and requires that notice of such disclaimer be
given in each agreement, obligation, or instrument entered into or executed
by the Trust or the Trustees. The Agreement and Declaration of Trust
provides for indemnification out of a fund's property for
all loss and expense of any shareholder held personally liable for the
obligations of that fund . Thus, the risk of a shareholder's
incurring financial loss on account of shareholder liability is limited to
circumstances in which a fund would be unable to meet its
obligations.

CUSTODIAN

Putnam Fiduciary Trust Company ("PFTC") is the custodian of the Trust's
assets. In carrying out its duties under its custodian contract, PFTC may
employ one or more subcustodians whose responsibilities will include
safeguarding and controlling the Trust's cash and securities, handling the
receipt and delivery of securities and collecting interest and dividends on
the Trust's investments. PFTC and any subcustodians employed by it have a
lien on the securities of each fund (to the extent permitted by the
Trust's investment restrictions) to secure charges and any advances made by
such subcustodians at the end of any day for the purpose of paying for
securities purchased by the Trust for the benefit of that fund . The
Trust expects that such advances will exist only in unusual circumstances.
Neither PFTC nor any subcustodian determines the investment policies of any
fund or decides which securities a fund will buy or sell.
PFTC pays the fees and other charges of any subcustodians employed by it.
The Trust may from time to time pay custodial expenses in full or in part
through the placement by Putnam Management of the Trust's portfolio
transactions with the subcustodians or with a third-party broker having an
agreement with the subcustodians. The Trust pays PFTC an annual fee based
on each fund's assets, securities transactions and securities
holdings and reimburses PFTC for certain out-of-pocket expenses incurred by
it or any subcustodian employed by it in performing custodial services.
<PAGE>
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS

Price Waterhouse LLP are the Trust's independent accountants, providing
audit services, tax return review and other tax consulting services and
assistance and consultation in connection with the review of various
Securities and Exchange Commission filings. The Report of Independent
Accountants and financial statements included in the Trust's Annual Report
for the fiscal year ended December 31, 1994, filed on February 24, 1995,
are incorporated by reference into this SAI .

The financial highlights in the prospectus and the financial
statements incorporated by reference into the prospectus and this
SAI have been so included and incorporated in reliance upon the report
of the independent accountants, given on their authority as experts in
auditing and accounting.
<PAGE>
PUTNAM CAPITAL MANAGER TRUST

FORM N-lA
PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Index to Financial Statements and Supporting
Schedules:

(1) Financial Statements:

Statements of assets and liabilities -- June
30, 1995 (unaudited) (a).
Statements of operations -- year ended June 30,
1995 (unaudited) (a).
Statement of changes in net assets -- period ended
June 30, 1995 (unaudited) and year ended December
31, 1994 (audited) (a).
Financial highlights (unaudited) (a) (b).
Notes to financial statements (unaudited) (a).

Statements of assets and liabilities --December
31, 1994 (audited) (a) (c) .
Statement of operations -- year ended
December 31, 1994 (audited) (a)
(c) .
Statement of changes in net assets -- period
ended June 30, 1995 (unaudited) and year ended
December 31, 1994 (audited) (a) (c) .
Financial highlights (audited) (a) (b) (c) .
Notes to financial statements (audited) (a)
(c) .

(2) Supporting Schedules:

Schedule I - Portfolios of investments owned --
June 30, 1995 (unaudited) (a).
Schedule I - Portfolios of investments owned
December 31, 1994 (audited) (a)
(c) .
Schedules II through IX omitted because the
required matter is not present.
<PAGE>
(a) Included in Part B.
(b) Included in Part A.
(c) Incorporated by reference to Post-Effective
Amendment No. 10 to the Registrant's Registration
Statement.

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

(b) Exhibits:

1. Agreement and Declaration of Trust dated September
24, 1987 -- Incorporated by reference to Post-
Effective Amendment No. 10 to the Registrant's
Registration Statement .
2. By-Laws, as amended through June 7, 1991 --
Incorporated by reference to Post-Effective
Amendment No. 10 to the Registrant's Registration
Statement.
3. Not applicable.
4a. Not applicable
4b. Portions of Agreement and Declaration of Trust
Relating to Shareholders' Rights -- Incorporated
by reference to Post-Effective Amendment No. 10 to
the Registrant's Registration Statement.
4c. Portions of By-Laws Relating to Shareholders'
Rights -- Incorporated by reference to Post-
Effective Amendment No. 10 to the Registrant's
Registration Statement.
5. Management Contract, dated October 2,
1987, as supplemented March 2, 1990, as further
supplemented February 27, 1992, July 9, 1993,
April 5, 1994, June 2, 1994, April 7, 1995
, July 13, 1995 and July , 1996 --
Exhibit 1 .
6a. Distributor's Contract dated May 6, 1994 --
Incorporated by reference to Post-Effective
Amendment No. 10 to the Registrant's Registration
Statement.
6b. Form of Specimen Dealer Sales Contract --
Exhibit 2 .
6c. Form of Specimen Financial Institution
Sales Contract -- Exhibit 3 .
7. Not applicable.
8. Custodian Agreement with Putnam Fiduciary
Trust Company dated May 3, 1991, as amended July
13, 1992 -- Incorporated by reference to Post-
Effective Amendment No. 10 to the Registrant's
Registration Statement.
<PAGE>
9. Investor Servicing Agreement, dated June 3, 1991
with Putnam Fiduciary Trust Company --
Incorporated by reference to Post-Effective
Amendment No. 10 to the Registrant's Registration
Statement .
10. Opinion of Ropes & Gray, including consent --
Incorporated by reference to Post-Effective
Amendment No. 10 to the Registrant's Registration
Statement.
11. Not applicable.
12. Not applicable.
13. Investment Letters from The Putnam Management
Company, Inc. to the Registrant -- Incorporated
by reference to Post-Effective Amendment No. 10 to
the Registrant's Registration Statement.
14. Not applicable.
15. Not applicable.
16. Schedules for computation of performance
quotations -- Exhibit 4.
17a. Financial Data Schedule -- PCM Asia Pacific
Growth Fund -- Exhibit 5.
17b . Financial Data Schedule -- PCM Diversified
Income Fund -- Exhibit 6 .
17c . Financial Data Schedule -- PCM Global Asset
Allocation Fund -- Exhibit 7 .
17d . Financial Data Schedule -- PCM Global
Growth Fund -- Exhibit 8 .
17e . Financial Data Schedule -- PCM Growth and
Income Fund -- Exhibit 9 .
17f . Financial Data Schedule -- PCM High Yield
Fund -- Exhibit 10 .
17g . Financial Data Schedule -- PCM Money Market
Fund -- Exhibit 11 .
17h . Financial Data Schedule -- PCM New
Opportunities Fund -- Exhibit 12 .
17i . Financial Data Schedule -- PCM U.S.
Government and High Quality Bond Fund --Exhibit
13 .
17j . Financial Data Schedule -- PCM Utilities
Growth and Income Fund -- Exhibit 14 .
17k . Financial Data Schedule -- PCM Voyager Fund
-- Exhibit 15 .

Item 25. Persons Controlled by or under Common Control with
Registrant

None.
<PAGE>
Item 26. Number of Holders of Securities

As of December 31 , 1995 there were 16
shareholders of the Registrant's shares of beneficial interest.

Item 27. Indemnification

The information required by this item is incorporated by
reference from the Registrant's Initial Registration Statement on Form N-1A
under the Investment Company Act of 1940 (File No. 33-17486) .<PAGE>
<PAGE>

Item 28. Business and Other Connections of Investment Adviser

Except as set forth below, the directors and officers
of the Registrant's investment adviser have been engaged during
the past two fiscal years in no business, vocation or employment
of a substantial nature other than as directors or officers of
the investment adviser or certain of its corporate affiliates.
Certain officers of the investment adviser serve as officers of
some or all of the Putnam funds. The address of the investment
adviser, its corporate affiliates and the Putnam Funds is One
Post Office Square, Boston, Massachusetts 02109.

NAME NON-PUTNAM BUSINESS AND OTHER
CONNECTIONS

James D. Babcock Prior to June, 1994, Interest
Assistant Vice President Supervisor, Salomon Brothers, Inc.
7 World Trade Center, New York, NY
10048

Robert K. Baumbach Prior to August, 1994, Vice President
Vice President and Analyst, Keystone Custodian
Funds, 200 Berkeley St., Boston, MA
02110

Janet S. Becker Prior to July, 1995, National Account
Assistant Vice President Manager for Booz-Allen & Hamilton,
American Express Travel Management
Services, 100 Cambridge Park Drive,
02140; Prior to August, 1994,
Account Manager, Hilton at Dedham
Place, Dedham, MA 02026

Matthew G. Bevin Prior to February, 1995, Consultant,
Assistant Vice President SEI Corporation, 680 East Swedesford
Road, Wayne, PA 19807

Thomas Bogan Prior to November, 1994, Analyst
Senior Vice President Lord, Abbett & Co., 767 Fifth
Avenue, New York, NY 10153

Michael F. Bouscaren Prior to May, 1994, President and
Senior Vice President Chairman of the Board of Directors
at Salomon Series Funds, Inc. and a
Director of Salomon Brothers Asset
Management, 7 World Trade Center,
New York, NY 10048

Susan M. Braid Prior to October, 1995, Manager,
Vice President Pioneer Group, Inc., 60 State St.,
Boston, MA 02109

Brett Browchuk Prior to April, 1994, Managing
Managing Director Director, Fidelity Investments, 82
Devonshire St., Boston, MA 02109

Brian E. Broyles Prior to September, 1995, Accounts
Assistant Vice President Payable Manager, Entex Information
Services, Six International Drive,
Rye Brook, NY 10573

Andrea Burke Prior to August, 1994, Vice President
Vice President and Portfolio Manager, Back Bay
Advisors, 399 Boylston St., Boston,
MA 02116

Susan Chapman Prior to June, 1995, Vice President,
Senior Vice President Forbes, Walsh, Kelly & Company,
Inc., 17 Battery Place, New York, NY
10004

Louis F. Chrostowski Prior to August, 1995, Manager of
Vice President Compensation and Benefits, Itek
Optical Systems, 10 MacGuire Rd.,
Lexington, MA 02173

Beth C. Cotner Prior to September, 1995, Executive
Senior Vice President Vice President, Director of U.S.
Equity Funds, Kemper Financial
Services, 120 S. LaSalle St.,
Chicago, IL 60603

Peter J. Curran Prior to January, 1996, Vice President
Senior Vice President ITT Sheraton Director Worldwide
Staffing, ITT Sheraton Corporation,
60 State St., Boston, MA 02109

Judith S. Deming Prior to May, 1995, Asset Manager,
Assistant Vice President Fidelity Management & Research
Company, 82 Devonshire St., Boston,
MA 02109

Theodore J. Deutz Prior to January, 1995, Senior Vice
Vice President President, Metropolitan West
Securities, Inc. 10880 Wilshire
Blvd., Suite 200, Los Angeles, CA
90024

Joseph J. Eagleeye Prior to August, 1994, Associate,
Assistant Vice President David Taussig & Associates, 424
University Ave., Sacramento, CA
95813
<PAGE>
Michael T. Fitzgerald Prior to September, 1994, Senior
Senior Vice President Vice President, Vantage Global
Advisers, 1201 Morningside Dr.,
Manhattan Beach, CA 90266

Brian J. Fullterton Prior to November, 1995, Vice
Senior Vice President President, Pension and 401(k)
Derivatives Marketing, J.P. Morgan,
60 Wall Street, New York, NY 10260

Roland Gillis Prior to March, 1995, Vice President
Senior Vice President and Senior Portfolio Manager,
Keystone Group, Inc., 200 Berkeley
St., Boston, MA 02116

Mark D. Goodwin Prior to May, 1994, Manager, Audit &
Assistant Vice President Operations Analysis, Mitre
Corporation, 202 Burlington Rd.,
Bedford, MA 01730

Stephen A. Gorman Prior to July, 1994, Financial
Assistant Vice President Analyst, Boston Harbor Trust
Company, 100 Federal St., Boston, MA
02110

Jill Grossberg Prior to March, 1995, Associate
Assistant Vice President Counsel, 440 Financial Group of
and Associate Counsel Worcester, Inc., 440 Lincoln St.,
Worcester, MA 01653

Deborah R. Healey Prior to June, 1994, Senior Equity
Senior Vice President Trader, Fidelity Management &
Research Company, 82 Devonshire St.,
Boston, MA 02109

Lisa A. Heitman Prior to July, 1994, Securities
Senior Vice President Analyst, Lord, Abbett & Company, 767
Fifth Ave., New York, NY 10153

Pamela Holding Prior to May, 1995, Senior Securities
Vice President Analyst, Kemper Financial Services,
Inc., 120 South LaSalle St.,
Chicago, IL 60603

Michael F. Hotchkiss Prior to May, 1994, Vice President,
Vice President Massachusetts Financial Services,
500 Boylston St., Boston, MA 02116
<PAGE>
Walter Hunnewell, Jr. Prior to April, 1994, Managing
Vice President Director, Veronis, Suhler &
Associates, 350 Park Avenue, New
York, NY 10022

Joseph Joseph Prior to October, 1994, Managing
Vice President Director, Vert Independent Capital
Research, 53 Wall St., New York, NY
10052

Mary E. Kearney Prior to February, 1995, Partner,
Managing Director Price Waterhouse, 160 Federal St.,
Boston, MA 02110

Paula Kienert Prior to June, 1995, Senior Reference
Assistant Vice President Librarian, Fidelity Investments, 82
Devonshire Street, Boston, MA 02109

D. William Kohli Prior to September, 1994, Executive
Managing Director Vice President and Co-Director of
Global Bond Management, Franklin
Advisors/Templeton Investment
Counsel, 777 Mariners Island Blvd.,
San Mateo, CA 94404

Karen R. Korn Prior to June, 1994, Vice President,
Vice President Assistant to the President, Designs,
Inc. 1244 Boylston St., Chestnut
Hill, MA 02167

Peter B. Krug Prior to January, 1995, Owner and
Vice President Director, Griswold Special Care, 42
Ethan Allen Drive, Acton, MA 01720

Catherine A. Latham Prior to August, 1995, Director of
Vice President Human Resources, Electronic Data
Systems, 1601 Trapello Rd., Waltham,
MA 02154

Kevin Lemire Prior to March, 1995, Corporate
Assistant Vice President Facilities Manager, Bose
Corporation, The Mountain,
Framingham, MA 01701; Prior to June,
1994, Facilities Manager, The
Pioneer Group, 60 State St., Boston,
MA 02109

Lawrence J. Lasser Director, Marsh & McLennan Companies,
President, Director Inc., 1221 Avenue of the Americas,
and Chief Executive New York, NY 10020; Director,
Officer INROADS/Central New England, Inc.,
99 Bedford St., Boston,MA 02111

Jeffrey R. Lindsey Prior to April, 1994, Vice President,
Vice President Strategic Portfolio Management, 1200
Ashwood Parkway, Suite 290, Atlanta,
GA 30338

James W. Lukens Prior to February, 1995, Vice
Senior Vice President President of Institutional
Marketing, Keystone Group, Inc., 200
Berkeley St., Boston, MA 02116

Helen Mazareas Prior to May, 1995, Librarian,
Assistant Vice President Scudder, Stevens & Clark, 2
International Place, Boston, MA
02110

Alexander J. McAuley Prior to June, 1995, Vice President,
Senior Vice President Deutsche Bank Securities Corp. -
Deutsche Asset Management, 1290
Avenue of the Americas, New York, NY
10019

Susan A. McCormack Prior to May, 1994, Associate
Vice President Investment Banker, Merrill Lynch &
Co., 350 South Grand Ave., Suite
2830, Los Angeles, CA 90071

Carol McMullen Prior to June, 1995, Senior Vice,
Managing Director President and Senior Portfolio
Manager, Baring Asset Management,
125 High Street, Boston, MA 02110

Darryl Mikami Prior to June, 1995, Vice President,
Senior Vice President Fidelity Management & Research
Company, 82 Devonshire St., Boston,
MA 02109

Carol H. Miller Prior to July, 1995, Business
Assistant Vice President Development Officer, Bank of Boston
- Connecticut, 100 Pearl St.,
Hartford, CT 06101

Seung H. Minn Prior to June, 1995, Vice President
Vice President in Portfolio Management and
Research, Templeton Quantitative
Advisors, Inc.,

Maziar Minovi Prior to January, 1995, Associate
Vice President Privatization Specialist, The
International Bank for
Reconstruction and Development, 1818
H St. N.W., Washington, DC 20433

Kenneth Mongtomery Prior to July, 1995, Senior Vice
Managing Director President and Director of World Wide
Sales, Chemcial Banking Corporation,

Paul G. Murphy Prior to January, 1995, Section
Assistant Vice President Manager, First Data Corp., 53 State
Street, Boston, MA 02109

C. Patrick O'Donnell, Jr. Prior to May, 1994, President,
Managing Director Exeter Research, Inc., 163 Water
Street, Exeter, New Hampshire, 03833

Samuel Perry Prior to January, 1996, Regional Vice
Vice President President, AIM Distributors, Inc.,

Jane E. Price Prior to February, 1995, Associate
Assistant Vice President ERISA Attorney, Hale & Dorr,
60 State St., Boston, MA 02109

Keith Quinton Prior to July, 1995, Vice President,
Senior Vice President Falconwood Securities Corporation.,

Paul T. Quistberg Prior to July, 1995, Assistant
Assistant Vice President Investment Officer, The Travelers
Insurance Group.,

George Putnam Chairman and Director, Putnam Mutual
Chairman and Director Funds Corp.; Director, The Boston
Company, Inc., One Boston Place,
Boston, MA 02108; Director, Boston
Safe Deposit and Trust Company, One
Boston Place, Boston, MA 02108;
Director, Freeport-McMoRan, Inc.,
200 Park Avenue, New York, NY 10166;
Director, General Mills, Inc., 9200
Wayzata Boulevard, Minneapolis, MN
55440; Director, Houghton Mifflin
Company, One Beacon Street, Boston,
MA 02108; Director, Marsh & McLennan
Companies, Inc., 1221 Avenue of the
Americas, New York, NY 10020;
Director, Rockefeller Group, Inc.,
1230 Avenue of the Americas, New
York, NY 10020

Thomas Rosalanko Prior to February, 1995, Senior
Senior Vice President Account Manager, SEI Corporation,
680 East Swedesford Road, Wayne, PA
19807
<PAGE>
Michael Scanlon Prior to February, 1995, Senior
Assistant Vice President Financial Analyst, Massachusetts
Financial Services, 500 Boylston
St., Boston, MA 02116

Robert M. Shafto Prior to January, 1995, Account
Assistant Vice President Manager, IBM Corporation, 404 Wyman
St., Waltham, MA 02254

Karen F. Smith Prior to May, 1994, Consultant and
Assistant Vice President Portfolio Manager, Wyatt Asset
Services, Inc., 1211 W.W. 5th Ave.,
Portland, OR 97204

Margaret Smith Prior to September, 1995, Vice
Senior Vice President President, State Street Research,
One Financial Center, Boston, MA
02111

Steven Spiegel Prior to December, 1994, Managing
Senior Managing Director Director/Retirement, Lehman
Brothers, Inc., 200 Vesey St., World
Financial Center, New York, NY 10285

George W. Stairs Prior to July, 1994, Equity Research
Vice President Analyst, ValueQuest Limited,
Roundy's Hill, Marblehead, MA 01945

James H. Steggall Prior to May, 1995, Senior Municipal
Assistant Vice President Analyst, Colonial Management
Associates, Inc., One Financial
Center, Boston, MA 02111; Prior to
May, 1994, Controller, Wheelabrator
Environmental Systems, Libery Lane,
Hampton, NH 03842

Karen Stewart Prior to May, 1995, Equity Research
Assistant Vice President Analyst, Chancellor Capital
Management, 1166 Avenue of the
Americas, New York, NY 10036

Roger Sullivan Prior to December, 1994, Vice
Senior Vice President President, State Street Research &
Management Co., One Financial
Center, Boston, MA 02111

Robert Swift Prior to August, 1995, Far East Team
Senior Vice President Leader and Portfolio Manager, IAI
International/Hill Samuel Investment
Advisors, 10 Fleet Place, London,
England
<PAGE>
Jerry H. Tempelman Prior to May, 1994, Senior Money
Assistant Vice President Market Trader, State Street Bank &
Trust Co., 225 Franklin, Street,
Boston, MA 02110

Michael Temple Prior to June, 1995, Vice President,
Vice President Duff & Phelps, 55 East Monroe,
Chicago, IL 60613

Hillary F. Till Prior to May, 1994, Fixed-Income
Vice President Derivative Trader, Bank of Boston,
100 Federal Street, Boston, MA 02109

Lisa L. Trubiano Prior to July, 1995, Senior Marketing
Vice President Consultant, John Hancock Mutual Life
Insurance Company,

Elizabeth A. Underhill Prior to August, 1994, Vice President
Senior Vice President and Senior Equity Analyst, State
Street Bank and Trust Company, 225
Franklin St., Boston, MA 02110

Charles C. Van Vleet Prior to August, 1994, Vice President
Senior Vice President and Fixed-Income Manager, Alliance
Capital Management, 1345 Avenue of
the Americas, New York, NY 10105

Francis P. Walsh Prior to November, 1994, Research
Vice President Analyst, Furman, Selz, Inc. 230 Park
Avenue, New York, NY 10169

Herbert S. Wagner, III Prior to August, 1995, Investment
Assistant Vice President The First National Bank of Chicago,
One First National Plaza, Chicago,
IL 60670

Michael R. Weinstein Prior to March, 1994, Management
Vice President Consultant, Arthur D. Little, Acorn
Park, Cambridge, MA 02140

<PAGE>
Item 29. Principal Underwriter

(a) Putnam Mutual Funds Corp. is the principal underwriter for
each of the following investment companies, including the
Registrant:

Putnam Adjustable Rate U.S. Government Fund, Putnam American
Government Income Fund, Putnam Arizona Tax Exempt Income Fund,
Putnam Asia Pacific Growth Fund, Putnam Asset Allocation Funds,
Putnam Balanced Retirement Fund, Putnam California Tax Exempt
Income Trust, Putnam California Tax Exempt Money Market Fund,
Putnam Capital Appreciation Fund, Putnam Capital Manager Trust,
Putnam Convertible Income-Growth Trust, Putnam Diversified Equity
Trust, Putnam Diversified Income Trust, Putnam Diversified Income
Trust II, Putnam Equity Income Fund, Putnam Europe Growth Fund,
Putnam Federal Income Trust, Putnam Florida Tax Exempt Income
Fund, The George Putnam Fund of Boston, Putnam Global
Governmental Income Trust, Putnam Global Growth Fund, Putnam
Growth Fund, The Putnam Fund for Growth and Income, Putnam Growth
and Income Fund II, Putnam Health Sciences Trust, Putnam High
Yield Trust, Putnam High Yield Advantage Fund, Putnam Income
Fund, Putnam Intermediate Tax Exempt Fund, Putnam Intermediate
U.S. Government Income Fund, Putnam Investment Funds, Putnam
Investors Fund, Putnam Massachusetts Tax Exempt Income Fund,
Putnam Michigan Tax Exempt Income Fund, Putnam Minnesota Tax
Exempt Income Fund, Putnam Money Market Fund, Putnam Municipal
Income Fund, Putnam Natural Resources Fund, Putnam New Jersey Tax
Exempt Income Fund, Putnam New Opportunities Fund, Putnam New
York Tax Exempt Income Trust, Putnam New York Tax Exempt Money
Market Fund, Putnam New York Tax Exempt Opportunities Fund,
Putnam Ohio Tax Exempt Income Fund, Putnam OTC Emerging Growth
Fund, Putnam Overseas Growth Fund, Putnam Pennsylvania Tax Exempt
Income Fund, Putnam Preferred Income Fund, Putnam Tax Exempt
Income Fund, Putnam Tax Exempt Money Market Fund, Putnam Tax-Free
Income Trust, Putnam U.S. Government Income Trust, Putnam
Utilities Growth and Income Fund, Putnam Vista Fund, Putnam
Voyager Fund, Putnam Voyager Fund II.<PAGE>
<TABLE>
<CAPTION>
(b) The directors and officers of the Registrant's principal underwriter are:

Positions and Offices Positions and Offices
Name with Underwriter with Registrant
<C> <C> <C>
John V. Adduci Assistant Vice President None
Christopher S. Alpaugh Vice President None
Paulette C. Amisano Vice President None
Ronald J. Anwar Vice President None
Steven E. Asher Senior Vice President None
Scott A. Avery Vice President None
Christian E. Aymond Vice President None
Hallie L. Baron Assistant Vice President None
Ira G. Baron Senior Vice President None
John L. Bartlett Senior Vice President None
Dale Beardon Senior Vice President None
Steven M. Beatty Vice President None
Matthew F. Beaudry Vice President None
Janet S. Becker Assistant Vice President None
John J. Bent Vice President None
Thomas A. Beringer Vice President None
Sharon A. Berka Vice President None
Maureen L. Boisvert Vice President None
John F. Boneparth Managing Director None
Keith R. Bouchard Vice President None
Linda M. Brady Assistant Vice President None
Susan M. Braid Vice President None
Leslee R. Bresnahan Senior Vice President None
James D. Brockelman Senior Vice President None
Brian E. Broyles Assistant Vice President None
Gail D. Buckner Senior Vice President None
Robert W. Burke Senior Managing Director None
Susan D. Cabana Vice President None
Ellen S. Callahan Vice President None
Thomas C. Callahan Assistant Vice President None
Peter J. Campagna Vice President None
Robert Capone Vice President None
Patricia A. Cartwright Assistant Vice President None
Janet Casale-Sweeney Vice President None
Stephen J. Chaput Assistant Vice President None
Louis F. Chrostowski Vice President None
Daniel J. Church Vice President None
James E. Clinton Assistant Vice President None
Kathleen M. Collman Managing Director None
Mark L. Coneeny Vice President None
Donald A. Connelly Senior Vice President None
Karen E. Connolly Assistant Vice President None
Anna Coppola Vice President None
F. Nicholas Corvinus Senior Vice President None
Thomas A. Cosmer Vice President None
Chad H. Cristo Assistant Vice President None
Peter J. Curran Senior Vice President None
Jessica E. Dahill Vice President None
Kenneth L. Daly Senior Vice President None
Edward H. Dane Vice President None
Nancy M. Days Assistant Vice President None
Pamela De Oliveira-Smith Assistant Vice President None
Lisa M. DeMont Assistant Vice President None
Richard D. DeSalvo Vice President None
Joseph C. DeSimone Assistant Vice President None
Daniel J. Delianedis Vice President None
Judith S. Deming Assistant Vice President None
Teresa F. Dennehy Assistant Vice President None
J. Thomas Despres Senior Vice President None
Michael G. Dolan Assistant Vice President None
Scott M. Donaldson Vice President None
Emily J. Durbin Vice President None
Dwyer Cabana, Susan Vice President None
David B. Edlin Senior Vice President None
James M. English Senior Vice President None
Vincent Esposito Managing Director None
Mary K. Farrell Assistant Vice President None
Michael J. Fechter Vice President None
Susan H. Feldman Vice President None
Paul F. Fichera Senior Vice President None
C. Nancy Fisher Senior Vice President None
Mitchell B. Fishman Senior Vice President None
Joseph C. Fiumara Vice President None
Patricia C. Flaherty Senior Vice President None
Brian J. Fullerton Senior Vice President None
Samuel F. Gagliardi Vice President None
Karen M. Gardner Assistant Vice President None
Judy S. Gates Vice President None
Richard W. Gauger Assistant Vice President None
Joseph P. Gennaco Vice President None
Stephen E. Gibson Managing Director None
Mark P. Goodfellow Assistant Vice President None
Robert Goodman Managing Director None
Mark D. Goodwin Assistant Vice President None
Anthony J. Grace Assistant Vice President None
Linda K. Grace Assistant Vice President None
Robert G. Greenly Vice President None
Jill Grossberg Assistant Vice President None
Jeffrey P. Gubala Vice President None
James E. Halloran Vice President None
Thomas W. Halloran Vice President None
Meghan C. Hannigan Assistant Vice President None
Bruce D. Harrington Assistant Vice President None
Marilyn M. Hausammann Senior Vice President None
Howard W. Hawkins, III Vice President None
Deanna R. Hayes-Castro Vice President None
Paul P. Heffernan Vice President None
Susan M. Heimanson Vice President None
Joanne Heyman Assistant Vice President None
Bess J.M. Hochstein Vice President None
Maureen A. Holmes Assistant Vice President None
Paula J. Hoyt Assistant Vice President None
William J. Hurley Senior Vice President None
Gregory E. Hyde Senior Vice President None
Dwight D. Jacobsen Senior Vice President None
Douglas B. Jamieson Senior Managing Director, Director None
Jay M. Johnson Vice President None
Kevin M. Joyce Senior Vice President None
Karen R. Kay Senior Vice President None
Mary E. Kearney Managing Director None
John P. Keating Vice President None
A. Siobahn Kelly Assistant Vice President None
Brian J. Kelly Vice President None
Anne Kinsman Assistnat Vice President None
Deborah H. Kirk Senior Vice President None
Jill A. Koontz Assistant Vice President None
Linda G. Kraunelis Assistant Vice President None
Howard H. Kreutzberg Senior Vice President None
Marjorie B. Krieger Assistant Vice President None
Charles Lacasia Assistant Vice President None
Arthur B. Laffer, Jr. Vice President None
Catherine A. Latham Vice President None
James D. Lathrop Vice President None
Charles C. Ledbetter Vice President None
Kevin Lemire Assistant Vice President None
Anthony J. Leonard Vice President None
Eric S. Levy Vice President None
Edward V. Lewandowski Senior Vice President None
Edward V. Lewandowski, Jr. Vice President None
Samuel L. Lieberman Vice President None
David M. Lifsitz Assistant Vice President None
Ann Marie Linehan Assistant Vice President None
Maura A. Lockwood Vice President None
Rufino R. Lomba Vice President None
Peter V. Lucas Senior Vice President None
Robert F. Lucey Senior Managing Director, Director None
Kathryn A. Lucier Assistant Vice President None
Alana Madden Vice President None
Ann Malatos Assistant Vice President None
Bonnie Mallin Vice President None
Renee L. Maloof Assistant Vice President None
Frederick S. Marius Assistant Vice President None
Karen E. Marotta Vice President None
Anne B. McCarthy Assistant Vice President None
Paul McConville Vice President None
Marla J. McDougall Assistant Vice President None
Walter S. McFarland Vice President None
Mark J. McKenna Senior Vice President None
Gregory J. McMillan Vice President None
Claye A. Metelmann Vice President None
Bart D. Miller Vice President None
Douglas W. Miller Vice President None
Jeffery M. Miller Senior Vice President None
Ronald K. Mills Vice President None
Peter M. Moore Assistant Vice President None
Mitchell Moret Senior Vice President None
Donald E. Mullen Vice President None
Paul G. Murphy Assistant Vice President None
Brendan R. Murray Vice President None
Robert Nadherny Vice President None
Alexander L. Nelson Managing Director None
John P. Nickodemus Vice President None
Michael C. Noonis Assistant Vice President None
Kristen P. O'Brien Vice President None
Kevin L. O'Shea Senior Vice President None
Nathan D. O'Steen Assistant Vice President None
Larence J. Olewinksi Vice President None
Joseph R. Palombo Managing Director None
Scott A. Papes Vice President None
Cynthia O. Parr Vice President None
John D. Pataccoli Vice President None
John G. Phoenix Vice President None
Joseph Phoenix Senior Vice President None
Jeffrey E. Place Senior Vice President None
Keith Plapinger Vice President None
Douglas H. Powell Vice President None
Jane E. Price Assistant Vice President None
Susannah Psomas Vice President None
Scott M. Pulkrabek Vice President None
George Putnam Director Chairman & President
George A. Rio Senior Vice President None
Debra V. Rothman Vice President None
Robert B. Rowe Vice President None
Kevin A. Rowell Senior Vice President None
Thomas C. Rowley Vice President None
Charles A. Ruys de Perez Senior Vice President None
Deborah A. Ryan Assistant Vice President None
Debra J. Sarkisian Assistant Vice President None
Catherine A. Saunders Senior Vice President None
Robbin L. Saunders Assistant Vice President None
Karl W. Saur Vice President None
Michael Scanlon Assistant Vice President None
Shannon D. Schofield Vice President None
Christine A. Scordato Vice President None
Joseph W. Scott Assistant Vice President None
John B. Shamburg Vice President None
Kathleen G. Sharpless Managing Director None
William N. Shiebler Director and President Vice President
Mark J. Siebold Assistant Vice President None
Gordon H. Silver Senior Managing Director Vice President
John Skistimas, Jr. Assistant Vice President None
Steven Spiegel Senior Managing Director None
Nicholas T. Stanojev Senior Vice President None
Paul R. Stickney Vice President None
Brian L. Sullivan Vice President None
Guy Sullivan Seniior Vice President None
Kevin J. Sullivan Vice President None
Moira Sullivan Vice President None
James S. Tambone Managing Director None
B. Iris Tanner Assistant Vice President None
Louis Tasiopoulos Managing Director None
David S. Taylor Vice President None
John R. Telling Vice President None
Cynthia Tercha Vice President None
Richard B. Tibbetts Senior Vice President None
Patrice M. Tirado Vice President None
Janet E. Tosi Assistant Vice President None
Bonnie L. Troped Vice President None
Christine M. Twigg Assistant Vice Presient None
Larry R. Unger Vice President None
Douglas J. Vander Linde Senior Vice President None
Edward F. Whalen Vice President None
Robert J. Wheeler Senior Vice President None
John B. White Vice President None
Kirk E. Williamson Senior Vice President None
Leigh T. Williamson Vice President None
Jane Wolfson Vice President None
Benjamin I. Woloshin Vice President None
William H. Woolverton Senior Vice President None
Timothy R. Young Vice President None
SooHee L. Zebedee Vice President None
Laura J. Zografos Vice President None
</TABLE>

The principal business address of each person listed above is One
Post Office Square, Boston, MA 02109, except for:

Mr. Alpaugh, 5980 Richmond Highway, Alexandria, VA 22303
Mr. Anwar, 131 Crystal Road, Colmar, PA 18915
Mr. Avery, 7031 Spring Ridge Rd., Cary NC 27511
Mr. Aymond, 212 Lochview Drive, Cary, NC 27511
Mr. Baron, 31 Cala Moreya, Laguna Niguel, CA 92667
Mr. Bartlett, 7 Fairfield St., Boston, MA 02116
Mr. Beatty, 200 High St., Winchester, MA 01890
Mr. Beringer, 4915 Dupont Avenue South, Minneapolis, MN 55409
Ms. Besset, 1140 North LaSalle Blvd, Chicago, IL 60610
Mr. Bouchard, 18 Brice Rd., Annapolis, MD 21401
Mr. Brockelman, 94 Middleton Rd., Boxford, MA 01921
Mr. Brown, 2012 West Grove Drive, Gibson, PA 15044
Ms. Buckner, 21012 West Grove Drive, Gibsonia, PA 15044
Mr. Campagna, 1130 Green Meadow Court, Acworth, GA 30102
Ms. Castro, 26 Gould Road, Andover, MA 01810
Mr. Church, 4504 Sir Winston Place, Charlotte, NC 28211
Mr. Cristo, 11 Schenck Ave., Great Neck, NY 11021
Mr. Coneeny, 10 Amherst St., Arlington, MA 02174
Mr. Connelly, 4634 Mirada Way, Sarasota, FL 34238
Mr. Corvinus, 274 Water St., Newburyport, MA 01950
Ms. Dahill, 270-1 C Iven Ave., St. David's, PA 19087
Mr. Deliandis, 5161 Muirfield Lane, Concord, CA 94521
Mr. DeSalvo, 54 Morriss Place, Maddison, NJ 07940
Mr. DeSimone, Pheasant Run Apartments, Inlet Ridge Drive,
Maryland Heights, MO 63043
Ms. Dwyer-Cabana, 7730 Herrick Park, Hudson, OH 44236
Mr. Edlin, 7 River Road, 305 Palmer Point, Cos Cob, CT 06807
Mr. English, 1184 Pintail Circle, Boulder, CO 80303
Mr. Goodman, 14 Clover Place, Cos Cob, CT 06807
Mr. Gubala, 4308 Rickover Drive, Dallas, TX 75244
Mr. J. Halloran, 978 W. Creek Lane, Westlake Village, CA 91362
Mr. T. Halloran, 19449 Misty Lake Dr., Strongsville, OH 44136
Mr. Hyde, 3305 Sulky, Marietta, GA 30067
Mr. Jacobsen, 2744 Joyce Ridge Drive, Chesterfield, MO 63017
Mr. Johnson, 200 Clock Tower Place, Carmel, CA 93923
Mr. Keating, 5521 Greenville Avenue, Dallas, TX 75206
Mr. Kelley, 1026 E. Olympus Ridge Cove, Salt Lake City, UT 84117
Ms. Kelly, 31 Jeffrey's Neck Road, Ipswich, MA 01938
Ms. Kinsman, 9599 Brookview Circle, Woodbury, MN 55125
Ms. Kirk, 200 East 62nd Street, New York, NY 10021
Ms. Kraunelis, 584 East Eighth St., South Boston, MA 02127
Mr. Lathrop, 14814 Straub Hill Lane, Chesterfield, MO 63017
Mr. Ledbetter, 820 South Monaco, Denver, CO 80224
Mr. Leonard, 3673 Hopper Ridge Road, Cincinnati, OH 45255
Mr. Lewandowski, 805 Darrell Road, Hillsborough, CA 94010
Mr. Lewandowski, Jr., 1 Kara East, Irvine, CA 92720
Mr. Lieberman, 200 Roy St., Seattle, WA 98109
Ms. Madden, 201 Plantation Club Drive, Melbourne, FL 32940
Mr. McConville, 515 S. Arlington Heights Rd., Arlington
Heights, IL 6005
Mr. McFarland, 8012 Dancing Fern Trail, Chattanooga, TN 37421
Mr. McMillan, 203 D. Zigler St., Zelienople, PA 16063
Mr. McMurtrie, 14529 Glastonbury, Detroit, MI 48223
Mr. B. Miller, 24815 Acropolis Drive, Mission Viejo, CA 92691
Mr. D. Miller, 7 Anthony Place, Riverside, CT 06878
Mr. Moret, 4519 Lawn Avenue, Western Springs, IL 60558
Mr. Murray, 710 Cheyenne Drive, Franklin Lakes, NJ 07417
Mr. Nadherny, 9714 Marmount Drive, Seattle, WA 98117
Mr. Nickodemus, 463 Village Oaks Court, Ann Arbor, MI 48103
Mr. Olewinski, 7707 Hamilton Avenue, Burr Ridge, IL 60521
Mr. O'Steen, 2091-B Lake Park Drive, Smyrna, GA 30080
Mr. Papes, 12891 S. Summit, Olatag, KS 66062
Mr. Pataccoli, 333 39th St., Manhattan Beach, CA 90266
Mr. Perry, 4031 West Main, Houston, TX 77027
Mr. Joe Phoenix, 1426 Asbury Avenue, Hubbard Woods, IL 60093
Mr. John Phoenix, 2987 Jackson Ave., Coconut Grove, FL 33133
Mr. Place, 4211 Loch Highland Parkway, Roswell, GA 30075
Mr. Pulkrabek, 190 Jefferson Lane, Streamwood, IL 60107
Mr. Powell, 1508 Ruth Lane, Newport Beach, CA 92660
Mr. Rowe, 109 Shore Drive, Longwood, FL 32779
Mr. Rowell, 2240 Union St., San Francisco, CA 94123
Mr. Rowley, 237 Peeke Avenue, Kirkwood, MO 63122
Ms. Sarkisian, 1 Goodridge Ct., Boston, MA 02113
Ms. Saunders, 39939 Stevenson Common, Freemont, CA 94538
Ms. Schofield, 172 Rime Village, Hoover, AL 35216
Mr. Shamburg, 10603 N. 100th Street, Scottsdale, AZ 85260
Mr. Stickney, 1314 Log Cabin Lane, St. Louis, MO 63124
Mr. B. Sullivan, 777 Pinoake Road, Pittsburgh, PA 15243
Mr. G. Sullivan, 35 Marlborough St., Boston, MA 02116
Ms. M. Sullivan, 493 Zinfandel Lane, St. Helena, CA 94574
Ms. Sweeney, 8 Surf St., Marblehead, MA 01945
Mr. Tambone, 10 Commercial Wharf, Boston, MA 02110
Mr. Tasiopolous, 5 Homestead Farms Drive, Norwell, MA 02061
Ms. Tercha, 611 East 18th St., Houston, TX 77009
Mr. Telling, 5 Spindriff Court, Williamsville, NY 14221
Mr. Unger, 212 E. Broadway, New York, NY 10002
Mr. Williamson, 111 Maple Ridge Way, Covington, LA 70433
Ms. Williamson, 158 Summer St., Hingham, MA 02043
Mr. White, 10 Mannion Place, Littleton, MA 01460
Mr. Woloshin, 100 West 89th St., New York, NY 10024
Ms. Zebedee, 1616 Queen Ann Ave., N., Seattle, WA 98109
Ms. Zografos, 12712 Coeur de Monde Ct., St. Louis, MO 63146

<PAGE>
Item 30. Location of Accounts and Records

Persons maintaining physical possession of accounts, books
and other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules promulgated thereunder are
Registrant's Clerk, Beverly Marcus; Registrant's investment adviser, Putnam
Investment Management, Inc.; Registrant's principal underwriter, Putnam
Mutual Funds Corp.; Registrant's custodian, Putnam Fiduciary Trust Company
("PFTC"); and Registrant's transfer and dividend disbursing agent, Putnam
Investor Services, a division of PFTC. The address of the Clerk,
investment adviser, principal underwriter, custodian and transfer and
dividend disbursing agent is One Post Office Square, Boston, Massachusetts
02109.

Item 31. Management Services

None.

Item 32. Undertakings

The Registrant undertakes to furnish to each person to whom
a prospectus of the Registrant is delivered a copy of the Registrant's
latest annual report to shareholders, upon request and without charge.

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the
Prospectus and Statement of Additional Information constituting
parts of this Post-Effective Amendment No. 11 to the Registration
Statement on Form N-1A (File No. 33-17486) (the "Registration Statement")
of our report dated February 15, 1995, relating to the financial statements
and financial highlights appearing in the December 31, 1994 Annual Report
of Putnam Capital Manager Trust, which financial statements and financial
highlights are also incorporated by reference into the Registration
Statement. We also consent to the references to us under the heading
"Independent Accountants and Financial Statements" in such Statement of
Additional Information and under the heading "Financial highlights" in such
Prospectus .

PRICE WATERHOUSE LLP
Boston, Massachusetts
February 27, 1996
<PAGE>
NOTICE

A copy of the Agreement and Declaration of Trust of Putnam
Capital Manager Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and notice is hereby given that this
instrument is executed on behalf of the Registrant by an officer of
the Registrant as an officer and not individually and the
obligations of or arising out of this instrument are not binding upon any
of the Trustees, officers or shareholders individually but are binding only
upon the assets and property of the relevant series of the
Registrant.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant has duly
caused this Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Boston, and The Commonwealth of Massachusetts, on the 29th day of
February, 1996 .

PUTNAM CAPITAL MANAGER TRUST

By: Gordon H. Silver, Vice President

Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement of Putnam Capital Manager
Trust has been signed below by the following persons in the capacities
and on the dates indicated:

Signature Title

George Putnam President and Chairman of the Board;
Principal Executive Officer; Trustee

William F. Pounds Vice Chairman; Trustee

John D. Hughes Senior Vice President; Treasurer
and Principal Financial Officer

Paul G. Bucuvalas Assistant Treasurer and Principal
Accounting Officer

Jameson Adkins Baxter Trustee

Hans H. Estin Trustee

John A. Hill Trustee

Elizabeth T. Kennan Trustee

Lawrence J. Lasser Trustee

Robert E. Patterson Trustee

Donald S. Perkins Trustee

George Putnam, III Trustee

Eli Shapiro Trustee

A.J.C. Smith Trustee

W. Nicholas Thorndike Trustee

By: Gordon H. Silver,
as Attorney-in-Fact
February 29, 1996

PUTNAM CAPITAL MANAGER TRUST
MANAGEMENT CONTRACT

Management Contract dated as of October 2, 1987, as supplemented
March 2, 1990, as further supplemented February 27, 1992, as
further supplemented July 9, 1993, as further supplemented April
5, 1994, as further supplemented June 2, 1994, as further
supplemented April 7, 1995, as further supplemented July 13,
1995, and as further supplemented July , 1996, between Putnam
Capital Manager Trust, a Massachusetts business trust (the
"Fund"), and PUTNAM INVESTMENT MANAGEMENT, INC., a Massachusetts
corporation (the "Manager").

WITNESSETH:

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

1. SERVICES TO BE RENDERED BY MANAGER TO FUND.

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

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

(c) The Manager, at its expense, shall place all orders for the
purchase and sale of portfolio investments for the Fund's account
with brokers or dealers selected by the Manager. In the
selection of such brokers or dealers and the placing of such
orders, the Manager shall use its best efforts to obtain for the
Fund the most favorable price and execution available, except to
the extent it may be permitted to pay higher brokerage
commissions for brokerage and research services as described
below. In using its best efforts to obtain for the Fund the most
favorable price and execution available, the Manager, bearing in
mind the Fund's best interests at all times, shall consider all
factors it deems relevant, including by way of illustration,
price, the size of the transaction, the nature of the market for
the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker or
dealer involved and the quality of service rendered by the broker
or dealer in other transactions. Subject to such policies as the
Trustees of the Fund may determine, the Manager shall not be
deemed to have acted unlawfully or to have breached any duty
created by this Contract or otherwise solely by reason of its
having caused the Fund to pay a broker or dealer that provides
brokerage and research services to the Manager an amount of
commission for effecting a portfolio investment transaction in
excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, if the Manager
determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Manager's overall
responsibilities with respect to the Fund and to other clients of
the Manager as to which the Manager exercises investment
discretion. The Manager agrees that in connection with purchases
or sales of portfolio investments for the Fund's account, neither
the Manager nor any officer, director, employee or agent of the
Manager shall act as a principal or receive any commission other
than as provided in Section 3.

(d) The Fund will pay or reimburse the Manager for (i) the
compensation of the Vice Chairman of the Fund and of persons
assisting him in these offices, as determined from time to time
by the Trustees of the Fund, (ii) the compensation in whole or in
part of such other officers of the Fund and persons assisting
them as may be determined from time to time by the Trustees of
the Fund, and (iii) the cost of suitable office space, utilities,
support services and equipment of the Vice Chairman and persons
assisting him and, as determined from time to time by the
Trustees of the Fund, all or a part of such cost attributable to
the other officers and persons assisting them whose compensation
is paid in whole or in part by the Fund. The Fund will pay the
fees, if any, of the Trustees of the Fund.

(e) The Manager shall pay all expenses incurred in connection
with the organization of the Fund and the initial public offering
and sale of its shares of beneficial interest, provided that upon
the issuance and sale of such shares to the public pursuant to
the offering, and only in such event, the Fund shall become
liable for, and to the extent requested reimburse the Manager
for, registration fees payable to the Securities and Exchange
Commission and for an additional amount not exceeding $125,000 as
its agreed share of such expenses.

(f) The Manager shall not be obligated to pay any expenses of or
for the Fund not expressly assumed by the Manager pursuant to
this Section 1 other than as provided in Section 3.

2. OTHER AGREEMENTS, ETC.

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

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

The Fund will pay to the Manager as compensation for the
Manager's services rendered, for the facilities furnished and for
the expenses borne by the Manager pursuant to paragraphs (a),
(b), (c) and (e) of Section 1, a fee, computed and paid quarterly
at the following annual rates applicable to the average net asset
value of each Series of the Fund (a "Series") of:

PCM Asia Pacific Growth Fund:

(a) 0.80% of the first $500 million of average net assets;
(b) 0.70% of the next $500 million;
(c) 0.65% of the next $500 million;
(d) 0.60% of the next $5 billion;
(e) 0.575% of the next $5 billion;
(f) 0.555% of the next $5 billion;
(g) 0.54% of the next $5 billion; and
(h) 0.53% of any excess thereafter.

PCM Utilities Growth & Income Fund:

(a) 0.70% of the first $500 million of average net assets;
(b) 0.60% of the next $500 million;
(c) 0.55% of the next $500 million;
(d) 0.50% of the next $5 billion;
(e) 0.475% of the next $5 billion;
(f) 0.455% of the next $5 billion;
(g) 0.44% of the next $5 billion; and
(h) 0.43% of any excess thereafter.

<PAGE>
PCM New Opportunities Fund, PCM Diversified Income Fund, PCM
Global Asset Allocation Fund, PCM High Yield Fund and PCM Voyager
Fund:

(a) 0.70% of the first $500 million of average net assets;
(b) 0.60% of the next $500 million;
(c) 0.55% of the next $500 million; and
(d) 0.50% of any excess over $1.5 billion of such average net
asset value.

PCM Growth and Income Fund:

(a) 0.65% of the first $500 million of average net assets;
(b) 0.55% of the next $500 million;
(c) 0.50% of the next $500 million; and
(d) 0.45% of any excess over $1.5 billion of such average net
asset value.

PCM U.S. Government and High Quality Bond Fund:

(a) 0.65% of the first $500 million of average net assets;
(b) 0.55% of the next $500 million;
(c) 0.50% of the next $500 million;
(d) 0.45% of the next $5 billion;
(e) 0.425% of the next $5 billion;
(f) 0.405% of the next $5 billion;
(g) 0.39% of the next $5 billion; and
(h) 0.38% of any excess thereafter.

PCM Money Market Fund:

(a) 0.45% of the first $500 million of average net assets;
(b) 0.35% of the next $500 million;
(c) 0.30% of the next $500 million; and
(d) 0.25% of any excess over $1.5 billion of such average net
asset value.

PCM Global Growth Fund: 0.60%.

Such fees computed with respect to the net asset value of each
Series shall be paid from the assets of such Series. Such
average net asset value of each Series of the Fund shall be
determined by taking an average of all of the determinations of
such net asset value during such quarter at the close of business
on each business day during such quarter while this Contract is
in effect. Such fee shall be payable for each month within 30
days after the end of such quarter.

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

In the event that expenses of any Series of the Fund for any
fiscal year should exceed the expense limitation on investment
company expenses imposed by any statute or regulatory authority
of any jurisdiction in which shares of that Series are qualified
for offer or sale, the compensation due the Manager for such
fiscal year shall be reduced by the amount of such excess by a
reduction or refund thereof. In the event that the expenses of
any Series of the Fund exceed any expense limitation which the
Manager may, by written notice to the Fund, voluntarily declare
to be effective subject to such terms and conditions as the
Manager may prescribe in such notice, the compensation due the
Manager shall be reduced, and, if necessary, the Manager shall
assume expenses of the Series to the extent required by the terms
and conditions of such expense limitation.

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

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

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

5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.

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

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

(b) If (i) the Trustees of the Fund or the shareholders by the
affirmative vote of a majority of the outstanding shares of the
Series, and (ii) a majority of the Trustees of the Fund who are
not interested persons of the Fund or of the Manager, by vote
cast in person at a meeting called for the purpose of voting on
such approval, do not specifically approve at least annually the
continuance of this Contract, then this Contract shall
automatically terminate as to such Series at the close of
business on

January 31, 1989 in the case of PCM Global Growth Fund,

January 31, 1995 in the case of PCM Diversified Income Fund,

January 31, 1996 in the case of PCM Global Asset Allocation
Fund, PCM Growth and Income Fund, PCM High Yield Fund, PCM
Money Market Fund, PCM New Opportunities Fund and PCM Voyager
Fund, and

the second anniversary of its execution with respect to any
other Series,

or the expiration of one year from the effective date of the last
such continuance, whichever is later; provided, however, that if
the continuance of this Contract is submitted to the shareholders
of a Series for their approval and such shareholders fail to
approve such continuance of this Contract as provided herein, the
Manager may continue to serve hereunder in a manner consistent
with the Investment Company Act of 1940 and the Rules and
Regulations thereunder.

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

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

6. CERTAIN DEFINITIONS.

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

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

7. NON-LIABILITY OF MANAGER.

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

8. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.

A copy of the Agreement and Declaration of Trust of the Fund is
on file with the Secretary of State of The Commonwealth of
Massachusetts, and notice is hereby given that this instrument is
executed on behalf of the Trustees of the Fund as Trustees and
not individually and that the obligations of or arising out of
this instrument are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets
and property of the Fund.

IN WITNESS WHEREOF, PUTNAM CAPITAL MANAGER TRUST and PUTNAM
INVESTMENT MANAGEMENT, INC. have each caused this instrument to
be signed in duplicate in its behalf by its President or a Vice
President thereunto duly authorized, all as of the day and year
first above written.

PUTNAM CAPITAL MANAGER TRUST

By: _______________________________

PUTNAM INVESTMENT MANAGEMENT, INC.

By: _______________________________

DEALER SALES CONTRACT

Between: PUTNAM MUTUAL FUNDS CORP. and
General Distributor of
The Putnam Family of Mutual Funds
One Post Office Square
Boston, MA 02109

As general distributor of The Putnam Family of Mutual Funds (the
"Funds"), we agree to sell you shares of beneficial interest
issued by the Funds (the "Shares"), subject to any limitations
imposed by any of the Funds and to confirmation by us in each
instance of such sales. By your acceptance hereof, you agree to
all of the following terms and conditions:

1. OFFERING PRICE AND FEES

The public offering price at which you may offer the Shares is
the net asset value thereof, as computed from time to time, plus
any applicable sales charge described in the then-current
Prospectus of the applicable Fund. As compensation for each sale
of Shares made by you, you will be allowed the dealer discount if
any, on such Shares described in the then-current Prospectus of
the Fund whose Shares are sold. We reserve the right to revise
the dealer discount referred to herein upon ten days' written
notice to you. We will furnish you upon request with the public
offering prices for the Shares, and you agree to quote such
prices in connection with any Shares offered by you for sale.
Your attention is specifically called to the fact that each sale
is always made subject to confirmation by us at the public
offering price next computed after receipt of the order. There
is no sales charge or dealer discount to dealers on the
reinvestment of dividends and distributions.

In addition to the dealer discount, if any, allowed pursuant to
the foregoing provisions of this Section 1, we may, at our
expense, provide additional promotional incentives or payments to
dealers. If non-cash concessions are provided, each dealer
earning such a concession may elect to receive an amount in cash
equivalent to the cost of providing such concessions. Notice of
the availability of concessions will be given to you by us. All
dealer discounts, promotional incentives, payments and
concessions will be made by us in accordance with National
Association of Securities Dealers, Inc. ("NASD") guidelines and
rules.
<PAGE>
2. MANNER OF OFFERING,
SELLING AND PURCHASING SHARES

We have delivered to you a copy of each Fund's current Prospectus
and will provide you with such number of copies of each Fund's
Prospectus, Statement of Additional Information and shareholder
reports and of supplementary sales materials prepared by us, as
you may reasonably request. You will offer and sell the Shares
only in accordance with the terms and conditions of the current
Prospectus and Statement of Additional Information of the
applicable Fund. Neither you nor any other person is authorized
to give any information or to make any representations other than
those contained in such Prospectuses, Statements of Additional
Information and shareholder reports or in such supplementary
sales materials. You agree that you will not use any other
offering materials for the Funds without our written consent.

You hereby agree:

(i) to exercise your best efforts to find purchasers for
the Shares of the Funds,

(ii) to furnish to each person to whom any sale is made a
copy of the then-current Prospectus of the applicable fund,

(iii) to transmit to us promptly upon receipt any and all
orders received by you, and

(iv) to pay to us the offering price, less any dealer
discount to which you are entitled, within three (3)
business days of our confirmation of your order, or such
shorter time as may be required by law. If such payment is
not received within said time period, we reserve the right,
without prior notice, to cancel the sale, or at our option
to return the Shares to the issuer for redemption or
repurchase. In the latter case, we shall have the right to
hold you responsible for any loss resulting to us. Should
payment be made by check on your local bank, liquidation of
Shares may be delayed pending clearance of your check. You
agree to issue confirmations promptly for all accepted
purchase orders for accounts held in street name. You shall
make all sales subject to our confirmation. All orders are
subject to acceptance or rejection by us in our sole
discretion, and by the Funds in their sole discretion. The
procedure stated herein relating to the pricing and handling
of orders shall be subject to instructions which we may
forward to you from time to time.

3. COMPLIANCE WITH LAW

You hereby represent that you are registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended, and are
licensed and qualified as a broker-dealer or otherwise authorized
to offer and sell the Shares under the laws of each jurisdiction
in which the Shares will be offered and sold by you. You further
confirm that you are a member in good standing of the NASD and
agree to maintain such membership in good standing or, in the
alternative, you are a foreign dealer not eligible for membership
in the NASD.

You agree that in selling Shares you will comply with all
applicable laws, rules and regulations, including the applicable
provisions of the Securities Act of 1933, as amended, the
applicable rules and regulations of the NASD, and the applicable
rules and regulations of any jurisdiction in which you sell,
directly or indirectly, any Shares. You agree not to offer for
sale or sell the Shares in any jurisdiction in which the Shares
are not qualified for sale or in which you are not qualified as a
broker-dealer.

4. RELATIONSHIP WITH DEALERS

In offering and selling Shares under this Contract, you shall be
acting as principal and nothing herein shall be construed to
constitute you or any of your agents, employees or
representatives as our agent or employee, or as an agent or
employee of the Funds. As general distributor of the Funds, we
shall have full authority to take such action as we may deem
advisable in respect of all matters pertaining to the
distribution of the Shares. We shall not be under any obligation
to you, except for obligations expressly assumed by us in this
Contract.

5. TERMINATION

Either party hereto may terminate this Contract, without cause,
upon ten days' written notice to the other party. We may
terminate this Contract for cause upon the violation by you of
any of the provisions hereof, such termination to become
effective on the date such notice of termination is mailed to
you. This Contract shall terminate automatically if either Party
ceases to be a member of the NASD.

6. ASSIGNABILITY

This Contract is not assignable or transferable, except that we
may assign or transfer this Contract to any successor which
becomes general distributor of the Funds.

7. GOVERNING LAW

This Contract and the rights and obligations of the parties
hereunder shall be governed by and construed under the laws of
The Commonwealth of Massachusetts.

If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for
that purpose, whereupon this letter shall constitute a binding
agreement between us.

Very truly yours,

PUTNAM MUTUAL FUNDS CORP.

By:
------------------------------
William N. Shiebler, President
and Chief Executive Officer

We accept and agree to the foregoing Contract as of the date set
forth below.

Please indicate which best Dealer:-------------
describes your firm's entity:

/ / Partnership --------------------
/ / Corporation
By: --------------------
/ / Other - please specify: Authorized
Signature, Title
---------------------

-------------------------
Please provide your organization's
Tax Identification Number on the -------------------------
following line: Address

- ---------------------------- Dated:-------------------

Please return the signed Putnam copy to Putnam Mutual Funds
Corp., P.O. Box 41203, Providence, RI 02940-1203

Approval:---------------------
Date required:----------------

NF-22.94

FINANCIAL INSTITUTION SALES CONTRACT

Between: and

PUTNAM MUTUAL FUNDS CORP.
General Distributor of
The Putnam Family of Mutual Funds
One Post Office Square
Boston, MA 02109

As general distributor of The Putnam Family of Mutual Funds (the
"Funds"), we agree that you will make available to your
customers, under an agency relationship with your customers,
shares of beneficial interest issued by the Funds (the "Shares"),
subject to any limitations imposed by any of the Funds and to
confirmation by us of each transaction. By your acceptance
hereof, you agree to all of the following terms and conditions:

1. OFFERING PRICES AND FEES

The public offering price at which you may make the Shares
available to your customers is the net asset value thereof, as
computed from time to time, plus any applicable sales charge
described in the then-current Prospectus of the applicable Fund.
In the case of purchases by you, as agent for your customers, of
Shares sold with a sales charge, you shall receive an agency
commission consisting of a portion of the public offering price,
determined on the same basis as the "dealer discount" described
in the then-current Prospectus of the Fund, and such other
compensation to dealers as may be described therein, which shall
be payable to you at the same time and on the same basis as the
same is paid to such dealers, consistent with applicable law,
rules and regulations. In determining the amount of any agency
commission payable to you hereunder, we reserve the right to
exclude any purchases for any accounts which we reasonably
determine are not made in accordance with the terms of the
applicable Fund Prospectus and the provisions of this Contract.
We reserve the right to revise the agency commission referred to
herein upon ten days' written notice to you. We will furnish you
upon request with the public offering prices for the Shares, and
you agree to quote such prices in connection with any Shares made
available by you as agent for your customers. Your attention is
specifically called to the fact that each purchase of Shares by
your customers is always made subject to confirmation by us at
the public offering price next computed after receipt of the
order. There is no sales charge or agency commission to you on
the reinvestment of dividends and distributions.
<PAGE>
2. MANNER OF MAKING SHARES AVAILABLE FOR PURCHASE

We will, upon request, deliver to you a copy of each Fund's then-
current Prospectus and will provide you with such number of
copies of each Fund's then-current Prospectus, Statement of
Additional Information and shareholder reports and of
supplementary sales materials prepared by us, as you may
reasonably request. It shall be your obligation to ensure that
all such information and materials are distributed to your
customers who own Shares, in accordance with securities and/or
banking law and regulations and any other applicable regulations.
Neither you nor any other person is authorized to give any
information or to make any representations other than those
contained in such Prospectuses, Statements of Additional
Information and shareholder reports or in such supplementary
sales materials. You shall not furnish or cause to be furnished
to any person, display or publish any information or materials
relating to any Fund (including, without limitation, promotional
materials and sales literature, advertisements, press releases,
announcements, statements, posters, signs or other similar
material), except such information and materials as may be
furnished to you by us or the Fund, and such other information
and materials as may be approved in writing by us.

You hereby agree:

(i) to not purchase any Shares as agent for any customer,
unless you deliver or cause to be delivered to such
customer, at or prior to the time of such purchase, a copy
of the then-current Prospectus of the applicable Fund unless
such customer has acknowledged receipt of the Prospectus of
such Fund. You hereby represent that you understand your
obligation to deliver a prospectus to customers who purchase
Shares pursuant to federal securities laws and you have
taken all necessary steps to comply with such prospectus
delivery requirements;

(ii) to transmit to us promptly upon receipt any and all
orders received by you, it being understood that no
conditional orders will be accepted;

(iii) to obtain from each customer for whom you act as agent
for the purchase of Shares any taxpayer identification
number certification and backup withholding information
required under the Internal Revenue Code of 1986, as amended
from time to time (the "Code"), and the regulations
promulgated thereunder, or other sections of the Code which
may become applicable, and to provide us or our designee
with timely written notice of any failure to obtain such
taxpayer identification number certification or information
in order to enable the implementation of any required backup
withholding in accordance with the Code and the regulations
thereunder; and

(iv) to pay to us the offering price, less any agency
commission to which you are entitled, within three (3)
business days of our confirmation of your customer's order,
or such shorter time as may be required by law. You may,
subject to our approval, remit the total public offering
price to us, and we will return to you your agency
commission. If such payment is not received within said
time period, we reserve the right, without prior notice, to
cancel the sale, or at our option to return the Shares to
the issuer for redemption or repurchase. In the latter
case, we shall have the right to hold you responsible for
any loss resulting to us. Should payment be made by local
bank check, liquidation of Shares may be delayed pending
clearance of your check.

Unless otherwise mutually agreed in writing or except as provided
below, each transaction placed by you shall be promptly confirmed
by us in writing to you, and shall be confirmed to the customer
promptly upon receipt by us of instructions from you as to such
customer. In the case of a purchase order by customer's
application, each transaction shall be promptly confirmed in
writing directly to the customer and a copy of each confirmation
shall be sent simultaneously to you. We reserve the right, at
our discretion and without notice, to suspend the sale of Shares
or withdraw entirely the sale of Shares of any or all of the
Funds. All orders are subject to acceptance or rejection by us
in our sole discretion, and by the Funds in their sole
discretion. The procedure stated herein relating to the pricing
and handling of orders shall be subject to instructions which we
may forward to you from time to time.

3. COMPLIANCE WITH LAW

You hereby represent that you are either (1) a "bank" as defined
in Section 3(a)(6) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and at the time of each transaction
in shares of the Funds, are not required to register as a broker-
dealer under the Exchange Act or regulations thereunder; or (2)
registered as a broker-dealer under the Exchange Act, a member in
good standing of the National Association of Securities Dealers,
Inc. ("NASD") and affiliated with a bank.

(a) If you are a bank, not required to register as a broker-
dealer under the Exchange Act: You further represent and warrant
to us that with respect to any sales in the United States, you
will use your best efforts to ensure that any purchase of Shares
by your customers constitutes a suitable investment for such
customers. You shall not effect any transaction in, or induce
any purchase or sale of, any Shares by means of any manipulative,
deceptive or other fraudulent device or contrivance, and shall
otherwise deal equitably and fairly with your customers with
respect to transactions in Shares of a Fund.

(b) If you are a NASD member broker-dealer affiliated with a
bank and registered under the Exchange Act: You further
represent and warrant to us that with respect to any sales in the
United States, you agree to abide by all of the applicable laws,
rules and regulations including applicable provisions of the
Securities Act of 1933, as amended, and the applicable rules and
regulations of the NASD, including, without limitation, its Rules
of Fair Practice, and the applicable rules and regulations of any
jurisdiction in which you make Shares available for sale to your
customers. You agree not to make available for sale to your
customers the Shares in any jurisdiction in which the Shares are
not qualified for sale or in which you are not qualified as a
broker-dealer. We shall have no obligation or responsibility as
to your right to make Shares of any Funds available to your
customers in any jurisdiction. You agree to notify us
immediately in the event of (i) your expulsion or suspension from
the NASD or your becoming subject to any enforcement action by
the Securities and Exchange Commission, NASD, or any other self-
regulatory organization, or (ii) your violation of any applicable
federal or state law, rule or regulation including, but not
limited to, those of the SEC, NASD or other self-regulatory
organization, arising out of or in connection with this
Agreement, or which may otherwise affect in any material way your
ability to act in accordance with the terms of this Contract.

You shall not make Shares of any Fund available to your
customers, including your fiduciary customers, except in
compliance with all federal and state laws and rules and
regulations of regulatory agencies or authorities applicable to
you, or any of your affiliates engaging in such activity, which
may affect your business practices. You confirm that you are not
in violation of any banking law or regulations as to which you
are subject.

4. RELATIONSHIP WITH CUSTOMER

With respect to any and all transactions in the Shares of any
Fund pursuant to this Contract, it is understood and agreed in
each case that: (a) you shall be acting solely as agent for the
account of your customer; (b) each transaction shall be initiated
solely upon the order of your customer; (c) we shall execute
transactions only upon receiving instructions from you acting as
agent for your customer or upon receiving instructions directly
from your customer; (d) as between you and your customer, your
customer will have full beneficial ownership of all Shares; (e)
each transaction shall be for the account of your customer and
not for your account; and (f) unless otherwise agreed in writing
we will serve as a clearing broker for you on a fully disclosed
basis, and you shall serve as the introducing agent for your
customers' accounts. Subject to the foregoing, however, and
except for Shares sold subject to a contingent deferred sales
charge, you may maintain record ownership of such customers'
Shares in an account registered in your name or the name of your
nominee, for the benefit of such customers. With respect to
Shares sold subject to a contingent deferred sales charge, you
agree not to hold shares of such Funds in an account registered
in your name or in the name of your nominee for the benefit of
certain of your customers. You understand that such Shares must
be held in a separate account for each shareholder of such Funds.
Each transaction shall be without recourse to you provided that
you act in accordance with the terms of this Agreement. You
represent and warrant to us that you will have full right, power
and authority to effect transactions (including, without
limitation, any purchases and redemptions) in Shares on behalf of
all customer accounts provided by you.

5. RELATIONSHIP WITH FINANCIAL INSTITUTION

Neither this Contract nor the performance of the services of the
respective parties hereunder shall be considered to constitute an
exclusive arrangement, or to create a partnership, association or
joint venture between you and us. In making available Shares of
the Funds under this Contract, nothing herein shall be construed
to constitute you or any of your agents, employees or
representatives as our agent or employee, or as an agent or
employee of the Funds, and you shall not make any representations
to the contrary. As general distributor of the Funds, we shall
have full authority to take such action as we may deem advisable
in respect of all matters pertaining to the distribution of the
Shares. We shall not be under any obligation to you, except for
obligations expressly assumed by us in this Contract.

6. TERMINATION

Either party hereto may terminate this Contract, without cause,
upon ten days' written notice to the other party. We may
terminate this Contract for cause upon the violation by you of
any of the provisions hereof, such termination to become
effective on the date such notice of termination is mailed to
you. If you are registered as a broker-dealer and affiliated
with a bank, this Contract shall terminate automatically if
either Party ceases to be a member of the NASD.

7. ASSIGNABILITY

This Contract is not assignable or transferable, except that we
may assign or transfer this Contract to any successor which
becomes general distributor of the Funds.
<PAGE>
8. MISCELLANEOUS

(a) All communications mailed to us should be sent to the above
address. Any notice to you shall be duly given if mailed or
delivered to you at the address specified by you below.

(b) This Contract constitutes the entire agreement and
understanding between the parties and supercedes any and all
prior agreements between the parties.

(c) This Contract and the rights and obligations of the parties
hereunder shall be governed by and construed under the laws of
The Commonwealth of Massachusetts.

Very truly yours,

PUTNAM MUTUAL FUNDS CORP.

By: ------------------------------
William N. Shiebler, President
and Chief Executive Officer

We accept and agree to the foregoing Contract as of the date
set forth below.

Financial Institution: ---------------------------

By: ----------------------------
Authorized Signature, Title

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

----------------------------
Address

Dated: ----------------------------

Please return the signed Putnam copy of this sales Contract to
Putnam Mutual Funds Corp., P. O. Box 41203, Providence, RI
02940-1203

NF-59.94

SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS

Fund name: Putnam Capital Manager Trust -- PCM Asia Pacific Growth Fund
Fiscal period ending: December 31, 1995
Inception date (if less than 10 years of performance): May 1, 1995

TOTAL RETURN

Formula -- Average Annual Total Return: ERV = P(1+T)^n

n = Number of Time Periods 1 Year 5 Years 10 Years*

P = Initial Investment $ $ $1,000

ERV = Ending Redeemable Value $ $ $1,013

T = Average Annual
Total Return % % 1.35%*

*Life of fund, if less than 10 years

<PAGE>
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS

Fund name: Putnam Capital Manager Trust -- PCM Diversified Income Fund
Fiscal period ending: December 31, 1995
Inception date (if less than 10 years of performance): September 15, 1993

TOTAL RETURN

Formula -- Average Annual Total Return: ERV = P(1+T)^n

n = Number of Time Periods 1 Year 5 Years 10 Years*

P = Initial Investment $1,000 $ $1,000

ERV = Ending Redeemable Value $1,175 $ $1,130

T = Average Annual
Total Return 17.47% % 5.49%*

*Life of fund, if less than 10 years

YIELD

Formula:

Interest + Dividends - Expenses
2 (-------------------------------------------------- +1)(6) -1
POP x Average shares

Interest and Dividends $1,620,314

Expenses $197,803

Reimbursement $0

Average shares 27,070,497

NAV $11.03

Sales Charge 0%

POP $11.03

Yield at POP 5.79%
<PAGE>
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS

Fund name: Putnam Capital Manager Trust -- PCM Global Asset Allocation Fund
Fiscal period ending: December 31, 1995
Inception date (if less than 10 years of performance): February 1, 1988

TOTAL RETURN

Formula -- Average Annual Total Return: ERV = P(1+T)^n

n = Number of Time Periods 1 Year 5 Years 10 Years*

P = Initial Investment $1,000 $ $1,000

ERV = Ending Redeemable Value $1,230 $ $2,009

T = Average Annual
Total Return 22.97% % 9.21%*

*Life of fund, if less than 10 years

YIELD

Formula:

Interest + Dividends - Expenses
2 (-------------------------------------------------- +1)(6) -1
POP x Average shares

Interest and Dividends $1,178,221

Expenses $311,440

Reimbursement $0

Average shares 32,993,072

NAV $16.15

Sales Charge 0%

POP $16.15

Yield at POP 1.96%
<PAGE>
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS

Fund name: Putnam Capital Manager Trust -- PCM Global Growth Fund
Fiscal period ending: December 31, 1995
Inception date (if less than 10 years of performance): May 1, 1990

TOTAL RETURN

Formula -- Average Annual Total Return: ERV = P(1+T)^n

n = Number of Time Periods 1 Year 5 Years 10 Years*

P = Initial Investment $1,000 $1,000 $1,000

ERV = Ending Redeemable Value $1,141 $1,621 $1,496

T = Average Annual
Total Return 14.06% 10.14% 7.37%*

*Life of fund, if less than 10 years
<PAGE>
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS

Fund name: Putnam Capital Manager Trust -- PCM Growth and Income Fund
Fiscal period ending: December 31, 1995
Inception date (if less than 10 years of performance): February 1, 1988

TOTAL RETURN

Formula -- Average Annual Total Return: ERV = P(1+T)^n

n = Number of Time Periods 1 Year 5 Years 10 Years*

P = Initial Investment $1,000 $ $1,000

ERV = Ending Redeemable Value $1,348 $ $2,720

T = Average Annual
Total Return 34.81% % 13.47%*

*Life of fund, if less than 10 years

YIELD

Formula:

Interest + Dividends - Expenses
2 (-------------------------------------------------- +1)(6) -1
POP x Average shares

Interest and Dividends $9,418,268

Expenses $1,344,288

Reimbursement $0

Average shares 152,217,762

NAV $21.47

Sales Charge 0%

POP $21.47

Yield at POP 2.98%
<PAGE>
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS

Fund name: Putnam Capital Manager Trust -- PCM High Yield Fund
Fiscal period ending: December 31, 1995
Inception date (if less than 10 years of performance): February 1, 1988

TOTAL RETURN

Formula -- Average Annual Total Return: ERV = P(1+T)^n

n = Number of Time Periods 1 Year 5 Years 10 Years*

P = Initial Investment $1,000 $ $1,000

ERV = Ending Redeemable Value $1,167 $ $2,039

T = Average Annual
Total Return 16.67% % 9.41%*

*Life of fund, if less than 10 years

YIELD

Formula:

Interest + Dividends - Expenses
2 (-------------------------------------------------- +1)(6) -1
POP x Average shares

Interest and Dividends $3,448,218

Expenses $214,631

Reimbursement $0

Average shares 39,455,578

NAV $12.37

Sales Charge 0%

POP $12.37

Yield at POP 8.08%
<PAGE>
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS

Fund name: Putnam Capital Manager Trust -- PCM Money Market Fund
Fiscal periods ending: December 31, 1995
Inception date (if less than 10 years of performance): February 1, 1988

7 DAY YIELD FORMULA - DIVIDENDS DECLARED FOR LAST 7 DAYS / 7 *365

TOTAL DIVIDENDS DECLARED
PER SHARE FOR LAST 7 DAYS: 0.001025

7 DAY YIELD = 5.34464%

CALCULATION OF 7 DAY EFFECTIVE YIELD

7 DAY YIELD ^52.142857
( 1 + --------------------) -1
(100 * 52.142587)

7 DAY EFFECTIVE YIELD = 5.4871894%
<PAGE>
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS

Fund name: Putnam Capital Manager Trust -- PCM New Opportunities Fund
Fiscal period ending: December 31, 1995
Inception date (if less than 10 years of performance): May 2, 1994

TOTAL RETURN

Formula -- Average Annual Total Return: ERV = P(1+T)^n

n = Number of Time Periods 1 Year 5 Years 10 Years*

P = Initial Investment $1,000 $ $1,000

ERV = Ending Redeemable Value $1,429 $ $1,531

T = Average Annual
Total Return 42.85% % 29.06%*

*Life of fund, if less than 10 years
<PAGE>
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS

Fund name: Putnam Capital Manager Trust -- PCM U.S. Government and High
Quality Bond Fund
Fiscal period ending: December 31, 1995
Inception date (if less than 10 years of performance): February 1, 1988

TOTAL RETURN

Formula -- Average Annual Total Return: ERV = P(1+T)^n

n = Number of Time Periods 1 Year 5 Years 10 Years*

P = Initial Investment $1,000 $ $1,000

ERV = Ending Redeemable Value $1,188 $ $1,845

T = Average Annual
Total Return 18.77% % 8.04%*

*Life of fund, if less than 10 years

YIELD

Formula:

Interest + Dividends - Expenses
2 (-------------------------------------------------- +1)(6) -1
POP x Average shares

Interest and Dividends $3,794,907

Expenses $344,885

Reimbursement $0

Average shares 54,045,674

NAV $13.74

Sales Charge 0%

POP $13.74

Yield at POP 5.64%
<PAGE>
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS

Fund name: Putnam Capital Manager Trust -- PCM Utilities Growth and
Income Fund
Fiscal period ending: December 31, 1995
Inception date (if less than 10 years of performance): May 4, 1992

TOTAL RETURN

Formula -- Average Annual Total Return: ERV = P(1+T)^n

n = Number of Time Periods 1 Year 5 Years 10 Years*

P = Initial Investment $1,000 $ $1,000

ERV = Ending Redeemable Value $1,293 $ $1,407

T = Average Annual
Total Return 29.25% % 9.76%*

*Life of fund, if less than 10 years

YIELD

Formula:

Interest + Dividends - Expenses
2 (-------------------------------------------------- +1)(6) -1
POP x Average shares

Interest and Dividends $1,982,598

Expenses $300,592

Reimbursement $0

Average shares 39,611,596

NAV $13.28

Sales Charge 0%

POP $13.28

Yield at POP 3.87%
<PAGE>
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS

Fund name: Putnam Capital Manager Trust -- PCM Voyager Fund
Fiscal period ending: December 31, 1995
Inception date (if less than 10 years of performance): February 1, 1988

TOTAL RETURN

Formula -- Average Annual Total Return: ERV = P(1+T)^n

n = Number of Time Periods 1 Year 5 Years 10 Years*

P = Initial Investment $1,000 $1,000 $1,000

ERV = Ending Redeemable Value $1,387 $2,536 $3,252

T = Average Annual
Total Return 38.71% 20.46% 16.06%*

*Life of fund, if less than 10 years

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM Putnam Capital Manager
Trust PCM Asia Pacific Growth Fund AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 25,538,238
<INVESTMENTS-AT-VALUE> 25,884,765
<RECEIVABLES> 756,188
<ASSETS-OTHER> 16,203
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 26,657,156
<PAYABLE-FOR-SECURITIES> 1,045,889
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 566,654
<TOTAL-LIABILITIES> 1,612,543
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24,421,188
<SHARES-COMMON-STOCK> 2,448,848
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 260,391
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (281,037)
<ACCUM-APPREC-OR-DEPREC> 644,071
<NET-ASSETS> 25,044,613
<DIVIDEND-INCOME> 109,697
<INTEREST-INCOME> 54,434
<OTHER-INCOME> 0
<EXPENSES-NET> 73,898
<NET-INVESTMENT-INCOME> 90,233
<REALIZED-GAINS-CURRENT> (151,962)
<APPREC-INCREASE-CURRENT> 644,071
<NET-CHANGE-FROM-OPS> 582,342
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,079,125
<NUMBER-OF-SHARES-REDEEMED> (2,630,277)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 25,044,613
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 67,583
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 101,374
<AVERAGE-NET-ASSETS> 12,585,530
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .06
<PER-SHARE-GAIN-APPREC> .17
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.23
<EXPENSE-RATIO> .81
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM Putnam Capital Manager
Trust PCM Diversified Income Fund AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 292,147,041
<INVESTMENTS-AT-VALUE> 298,767,167
<RECEIVABLES> 7,601,968
<ASSETS-OTHER> 21,640
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 306,390,775
<PAYABLE-FOR-SECURITIES> 1,363,345
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,306,637
<TOTAL-LIABILITIES> 2,669,982
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 279,391,034
<SHARES-COMMON-STOCK> 27,533,478
<SHARES-COMMON-PRIOR> 22,158,718
<ACCUMULATED-NII-CURRENT> 19,613,479
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (1,680,317)
<ACCUM-APPREC-OR-DEPREC> 6,396,597
<NET-ASSETS> 303,720,793
<DIVIDEND-INCOME> 204,785
<INTEREST-INCOME> 21,335,530
<OTHER-INCOME> 0
<EXPENSES-NET> 2,018,877
<NET-INVESTMENT-INCOME> 19,521,438
<REALIZED-GAINS-CURRENT> 6,168,362
<APPREC-INCREASE-CURRENT> 17,173,203
<NET-CHANGE-FROM-OPS> 42,863,003
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (11,017,722)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,146,785
<NUMBER-OF-SHARES-REDEEMED> (1,905,536)
<SHARES-REINVESTED> 1,133,511
<NET-CHANGE-IN-ASSETS> 87,785,464
<ACCUMULATED-NII-PRIOR> 11,319,097
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (8,073,322)
<GROSS-ADVISORY-FEES> 1,741,950
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,109,255
<AVERAGE-NET-ASSETS> 248,530,691
<PER-SHARE-NAV-BEGIN> 9.74
<PER-SHARE-NII> .71
<PER-SHARE-GAIN-APPREC> 1.09
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.51)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.03
<EXPENSE-RATIO> .85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM Putnam Capital Manager
Trust PCM Global Asset Allocation Fund AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 483,960,531
<INVESTMENTS-AT-VALUE> 544,509,764
<RECEIVABLES> 9,225,682
<ASSETS-OTHER> 675,607
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 554,411,053
<PAYABLE-FOR-SECURITIES> 14,585,814
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,158,859
<TOTAL-LIABILITIES> 18,744,673
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 433,719,530
<SHARES-COMMON-STOCK> 33,173,381
<SHARES-COMMON-PRIOR> 31,412,939
<ACCUMULATED-NII-CURRENT> 13,978,178
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 26,478,735
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 61,489,937
<NET-ASSETS> 535,666,380
<DIVIDEND-INCOME> 6,364,299
<INTEREST-INCOME> 12,885,472
<OTHER-INCOME> 0
<EXPENSES-NET> 3,873,244
<NET-INVESTMENT-INCOME> 15,376,527
<REALIZED-GAINS-CURRENT> 30,375,882
<APPREC-INCREASE-CURRENT> 56,425,021
<NET-CHANGE-FROM-OPS> 102,177,430
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7,825,970)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,576,518
<NUMBER-OF-SHARES-REDEEMED> (2,388,987)
<SHARES-REINVESTED> 572,911
<NET-CHANGE-IN-ASSETS> 121,443,586
<ACCUMULATED-NII-PRIOR> 8,082,455
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (5,525,272)
<GROSS-ADVISORY-FEES> 3,253,739
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,922,467
<AVERAGE-NET-ASSETS> 464,933,972
<PER-SHARE-NAV-BEGIN> 13.19
<PER-SHARE-NII> .47
<PER-SHARE-GAIN-APPREC> 2.74
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.25)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.15
<EXPENSE-RATIO> .84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM Putnam Capital Manager Trust PCM
Global Growth Fund AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 833,215,989
<RECEIVABLES> 11,724,577
<ASSETS-OTHER> 1,117,873
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 846,058,439
<PAYABLE-FOR-SECURITIES> 12,751,440
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,713,982
<TOTAL-LIABILITIES> 14,465,422
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 695,127,895
<SHARES-COMMON-STOCK> 54,791,007
<SHARES-COMMON-PRIOR> 49,694,917
<ACCUMULATED-NII-CURRENT> 9,392,474
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 31,000,126
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 96,072,522
<NET-ASSETS> 831,593,017
<DIVIDEND-INCOME> 15,039,547
<INTEREST-INCOME> 2,071,812
<OTHER-INCOME> 0
<EXPENSES-NET> 5,284,914
<NET-INVESTMENT-INCOME> 10,726,278
<REALIZED-GAINS-CURRENT> 27,182,770
<APPREC-INCREASE-CURRENT> 70,328,980
<NET-CHANGE-FROM-OPS> 108,238,028
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5,241,911)
<DISTRIBUTIONS-OF-GAINS> (12,181,203)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,808,443
<NUMBER-OF-SHARES-REDEEMED> (9,069,293)
<SHARES-REINVESTED> 1,356,940
<NET-CHANGE-IN-ASSETS> 161,772,186
<ACCUMULATED-NII-PRIOR> 4,411,370
<ACCUMULATED-GAINS-PRIOR> 10,166,269
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,329,841
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,427,031
<AVERAGE-NET-ASSETS> 721,185,850
<PER-SHARE-NAV-BEGIN> 13.48
<PER-SHARE-NII> .20
<PER-SHARE-GAIN-APPREC> 1.85
<PER-SHARE-DIVIDEND> .11
<PER-SHARE-DISTRIBUTIONS> .24
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.18
<EXPENSE-RATIO> .75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM Putnam Capital Manager
Trust PCM Growth & Income Fund AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 3,324,653,224
<RECEIVABLES> 12,778,464
<ASSETS-OTHER> 37,377
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,337,469,065
<PAYABLE-FOR-SECURITIES> 20,804,169
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,358,792
<TOTAL-LIABILITIES> 25,162,961
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,572,199,799
<SHARES-COMMON-STOCK> 154,278,978
<SHARES-COMMON-PRIOR> 116,012,107
<ACCUMULATED-NII-CURRENT> 82,592,880
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 136,639,048
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 520,874,377
<NET-ASSETS> 3,312,306,104
<DIVIDEND-INCOME> 83,313,636
<INTEREST-INCOME> 14,613,507
<OTHER-INCOME> 0
<EXPENSES-NET> 13,799,524
<NET-INVESTMENT-INCOME> 84,127,619
<REALIZED-GAINS-CURRENT> 149,378,098
<APPREC-INCREASE-CURRENT> 540,953,657
<NET-CHANGE-FROM-OPS> 774,459,374
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (61,294,430)
<DISTRIBUTIONS-OF-GAINS> (34,820,960)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 34,911,574
<NUMBER-OF-SHARES-REDEEMED> (2,229,560)
<SHARES-REINVESTED> 5,584,857
<NET-CHANGE-IN-ASSETS> 1,404,925,751
<ACCUMULATED-NII-PRIOR> 60,139,264
<ACCUMULATED-GAINS-PRIOR> 21,926,977
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13,096,405
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14,304,850
<AVERAGE-NET-ASSETS> 2,518,154,242
<PER-SHARE-NAV-BEGIN> 16.44
<PER-SHARE-NII> .53
<PER-SHARE-GAIN-APPREC> 5.31
<PER-SHARE-DIVIDEND> (.51)
<PER-SHARE-DISTRIBUTIONS> (.30)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.47
<EXPENSE-RATIO> .57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM Putnam Capital Manager
Trust PCM High Yield Fund AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 467,339,884
<INVESTMENTS-AT-VALUE> 477,923,815
<RECEIVABLES> 21,451,997
<ASSETS-OTHER> 4,264
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 499,380,076
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 912,924
<TOTAL-LIABILITIES> 912,924
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 457,264,171
<SHARES-COMMON-STOCK> 40,303,807
<SHARES-COMMON-PRIOR> 28,534,560
<ACCUMULATED-NII-CURRENT> 37,603,875
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (6,984,825)
<ACCUM-APPREC-OR-DEPREC> 10,583,931
<NET-ASSETS> 498,467,152
<DIVIDEND-INCOME> 681,702
<INTEREST-INCOME> 41,645,420
<OTHER-INCOME> 0
<EXPENSES-NET> 3,158,540
<NET-INVESTMENT-INCOME> 39,168,582
<REALIZED-GAINS-CURRENT> (3,056,512)
<APPREC-INCREASE-CURRENT> 32,473,048
<NET-CHANGE-FROM-OPS> 68,585,118
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (32,248,315)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20,402,208
<NUMBER-OF-SHARES-REDEEMED> (11,586,104)
<SHARES-REINVESTED> 2,953,143
<NET-CHANGE-IN-ASSETS> 171,347,731
<ACCUMULATED-NII-PRIOR> 30,924,066
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (3,628,915)
<GROSS-ADVISORY-FEES> 2,909,080
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,290,354
<AVERAGE-NET-ASSETS> 415,814,370
<PER-SHARE-NAV-BEGIN> 11.46
<PER-SHARE-NII> .91
<PER-SHARE-GAIN-APPREC> 1.05
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.37
<EXPENSE-RATIO> .79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM Putnam Capital Manager
Trust PCM Money Market Fund AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 260,840,036
<INVESTMENTS-AT-VALUE> 260,840,036
<RECEIVABLES> 2,737,916
<ASSETS-OTHER> 12,321
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 263,590,273
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 376,974
<TOTAL-LIABILITIES> 376,974
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 263,213,299
<SHARES-COMMON-STOCK> 263,213,299
<SHARES-COMMON-PRIOR> 244,063,943
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 263,213,299
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 14,132,558
<OTHER-INCOME> 0
<EXPENSES-NET> 1,331,327
<NET-INVESTMENT-INCOME> 12,801,231
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 12,801,231
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (12,801,231)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 386,282,399
<NUMBER-OF-SHARES-REDEEMED> (379,375,602)
<SHARES-REINVESTED> 12,242,559
<NET-CHANGE-IN-ASSETS> 19,149,356
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,061,046
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,331,358
<AVERAGE-NET-ASSETS> 235,639,642
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .0533
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.0533)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> .57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM Putnam Capital Manager
Trust PCM New Opportunities Fund AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 517,895,901
<RECEIVABLES> 1,616,637
<ASSETS-OTHER> 60,496
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 519,573,034
<PAYABLE-FOR-SECURITIES> 3,637,598
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 826,812
<TOTAL-LIABILITIES> 4,464,410
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 423,796,282
<SHARES-COMMON-STOCK> 32,946,981
<SHARES-COMMON-PRIOR> 6,339,364
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (2,236,510)
<ACCUM-APPREC-OR-DEPREC> 93,548,852
<NET-ASSETS> 515,108,624
<DIVIDEND-INCOME> 282,790
<INTEREST-INCOME> 1,475,975
<OTHER-INCOME> 0
<EXPENSES-NET> 1,822,259
<NET-INVESTMENT-INCOME> (63,494)
<REALIZED-GAINS-CURRENT> 2,173,197
<APPREC-INCREASE-CURRENT> 90,775,571
<NET-CHANGE-FROM-OPS> 88,538,880
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7,784)
<DISTRIBUTIONS-OF-GAINS> (208,404)
<DISTRIBUTIONS-OTHER> (137,365)
<NUMBER-OF-SHARES-SOLD> 29,068,100
<NUMBER-OF-SHARES-REDEEMED> (2,490,522)
<SHARES-REINVESTED> 30,039
<NET-CHANGE-IN-ASSETS> 446,516,628
<ACCUMULATED-NII-PRIOR> 7,145
<ACCUMULATED-GAINS-PRIOR> 208,404
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,618,748
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,944,385
<AVERAGE-NET-ASSETS> 230,279,362
<PER-SHARE-NAV-BEGIN> 10.82
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 4.84
<PER-SHARE-DISTRIBUTIONS> (.02)
<RETURNS-OF-CAPITAL> .01
<PER-SHARE-NAV-END> 15.63
<EXPENSE-RATIO> .84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM Putnam Capital Manager
Trust PCM U.S. Government & High Quality Bond Fund AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 692,241,678
<INVESTMENTS-AT-VALUE> 736,711,798
<RECEIVABLES> 11,801,266
<ASSETS-OTHER> 700
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 748,513,764
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,489,650
<TOTAL-LIABILITIES> 1,489,650
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 668,141,850
<SHARES-COMMON-STOCK> 54,370,263
<SHARES-COMMON-PRIOR> 52,428,374
<ACCUMULATED-NII-CURRENT> 44,995,834
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (10,350,821)
<ACCUM-APPREC-OR-DEPREC> 44,237,251
<NET-ASSETS> 747,024,114
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 46,633,096
<OTHER-INCOME> 0
<EXPENSES-NET> 4,523,874
<NET-INVESTMENT-INCOME> 42,109,222
<REALIZED-GAINS-CURRENT> 20,343,716
<APPREC-INCREASE-CURRENT> 62,812,274
<NET-CHANGE-FROM-OPS> 125,265,212
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (42,687,165)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,879,875
<NUMBER-OF-SHARES-REDEEMED> (10,513,126)
<SHARES-REINVESTED> 3,575,140
<NET-CHANGE-IN-ASSETS> 106,566,519
<ACCUMULATED-NII-PRIOR> 42,245,471
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (27,366,231)
<GROSS-ADVISORY-FEES> 4,133,901
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,718,909
<AVERAGE-NET-ASSETS> 676,995,229
<PER-SHARE-NAV-BEGIN> 12.22
<PER-SHARE-NII> .81
<PER-SHARE-GAIN-APPREC> 1.56
<PER-SHARE-DIVIDEND> (.85)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.74
<EXPENSE-RATIO> .70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM Putnam Capital Manager
Trust PCM Utilities Growth & Income Fund AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST > 477,652,519
<INVESTMENTS-AT-VALUE> 533,564,617
<RECEIVABLES> 5,624,579
<ASSETS-OTHER> 654
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 539,189,850
<PAYABLE-FOR-SECURITIES> 7,874,627
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 854,537
<TOTAL-LIABILITIES> 8,729,164
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 459,084,843
<SHARES-COMMON-STOCK> 39,959,075
<SHARES-COMMON-PRIOR> 35,972,992
<ACCUMULATED-NII-CURRENT> 20,548,328
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (5,084,797)
<ACCUM-APPREC-OR-DEPREC> 55,912,312
<NET-ASSETS> 530,460,686
<DIVIDEND-INCOME> 18,192,954
<INTEREST-INCOME> 5,653,409
<OTHER-INCOME> 0
<EXPENSES-NET> 2,882,561
<NET-INVESTMENT-INCOME> 20,963,802
<REALIZED-GAINS-CURRENT> 8,862,877
<APPREC-INCREASE-CURRENT> 90,894,818
<NET-CHANGE-FROM-OPS> 120,721,497
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (20,768,768)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,530,720
<NUMBER-OF-SHARES-REDEEMED> (3,483,831)
<SHARES-REINVESTED> 1,939,194
<NET-CHANGE-IN-ASSETS> 146,291,363
<ACCUMULATED-NII-PRIOR> 20,383,278
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (14,133,263)
<GROSS-ADVISORY-FEES> 2,666,363
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,035,706
<AVERAGE-NET-ASSETS> 440,080,599
<PER-SHARE-NAV-BEGIN> 10.68
<PER-SHARE-NII> .53
<PER-SHARE-GAIN-APPREC> 2.65
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.58)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.28
<EXPENSE-RATIO> .68
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM Putnam Capital Manager
Trust PCM Voyager Fund AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST > 1,527,367,570
<INVESTMENTS-AT-VALUE> 2,024,654,014
<RECEIVABLES> 15,146,778
<ASSETS-OTHER> 44,558
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,039,845,350
<PAYABLE-FOR-SECURITIES> 36,598,461
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,014,509
<TOTAL-LIABILITIES> 39,612,970
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,388,459,987
<SHARES-COMMON-STOCK> 65,570,845
<SHARES-COMMON-PRIOR> 46,258,270
<ACCUMULATED-NII-CURRENT> 6,843,926
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 107,642,023
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 497,286,444
<NET-ASSETS> 2,000,232,380
<DIVIDEND-INCOME> 12,040,848
<INTEREST-INCOME> 4,426,477
<OTHER-INCOME> 0
<EXPENSES-NET> 9,443,742
<NET-INVESTMENT-INCOME> 7,023,583
<REALIZED-GAINS-CURRENT> 111,497,412
<APPREC-INCREASE-CURRENT> 371,781,199
<NET-CHANGE-FROM-OPS> 490,301,855
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,305,106)
<DISTRIBUTIONS-OF-GAINS> (24,368,992)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20,723,279
<NUMBER-OF-SHARES-REDEEMED> (2,590,280)
<SHARES-REINVESTED> 1,179,126
<NET-CHANGE-IN-ASSETS> 973,259,936
<ACCUMULATED-NII-PRIOR> 3,066,110
<ACCUMULATED-GAINS-PRIOR> 20,512,825
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,864,927
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,733,063
<AVERAGE-NET-ASSETS> 1,436,357,431
<PER-SHARE-NAV-BEGIN> 22.20
<PER-SHARE-NII> .10
<PER-SHARE-GAIN-APPREC> 8.76
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.56)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 30.50
<EXPENSE-RATIO> .68
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>