[Translation]
SECURITIES REGISTRATION STATEMENT
(including amendments planned to be filed on June 22, 1998)
PUTNAM EUROPE GROWTH FUND
SECURITIES REGISTRATION STATEMENT
To: Minister of Finance
Filing
Date of SRS: June 15, 1998
(including amendments planned to
be filed on June 19, 1998
Name of the Registrant Trust: PUTNAM EUROPE GROWTH
FUND
Name of Trustees: George Putnam
William
F. Pounds
Jameson
A. Baxter
Hans H.
Estin
John A.
Hill
Ronald
J. Jackson
Paul L.
Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H.
Mullin, III
Robert
E. Patterson
Donald
S. Perkins
George
Putnam, III
A.J.C.
Smith
W.
Thomas Stephens
W.
Nicholas Thorndike
Address of Principal Office: One Post Office Square
Boston,
Massachusetts 02109
U. S.
A.
Name and Title of Registration Agent: Harume Nakano
Attorney-at-Law
Signature [Harume Nakano]_
(Seal)
Ken
Miura
Attorney-at-Law
Signature [Ken Miura]_____
(Seal)
Address or Place of Business Kasumigaseki Building,
25th Floor
2-5,
Kasumigaseki 3-chome
Chiyoda-
ku, Tokyo
Name of Liaison Contact: Harume Nakano
Ken
Miura
Attorneys-at-Law
Place of Liaison Contact: Hamada & Matsumoto
Kasumigaseki Building, 25th
Floor
2-5,
Kasumigaseki 3-chome
Chiyoda-
ku, Tokyo
Phone Number: 03-3580-3377
- ii -
Public Offering or Sale for Registration
Name of the Fund Making Public PUTNAM EUROPE GROWTH
FUND
Offering or Sale of Foreign
Investment Fund Securities:
Type and Aggregate Amount of Up to 30 million Class M
Shares.
Foreign Investment Fund Securities Up to the total
amount obtained by aggregating
to be Publicly Offered or Sold: the net asset value
per Class M Share in respect of
30 million Class M Shares
(The
maximum amount expected to be
sold is 689.1 million U.S.
dollars (Yen91.24 billion.)
Note 1: U.S.$ amount is translated into Japanese Yen at the
rate of U.S.$l.00=Yen132.40 the mean of the exchange rate
quotations by The Bank of Tokyo-Mitsubishi, Ltd. for
buying and selling spot dollars by telegraphic transfer
against yen on April 30, 1998.
Note 2: The maximum amount expected to be sold is an amount
calculated by multiplying the net asset value per Class M
Share as of April 30, 1998 (U.S.$22.97) by 30 million
Class M Shares for convenience.
Places where a copy of this Securities Registration
Statement is available for Public Inspection
Not applicable.
(Total number of pages of this Securities Registration
Statement in Japanese is
[ ] including front and back pages.)
C O N T E N T S
Japanese This
OriginalEnglish
Translation
PART I. INFORMATION CONCERNING SECURITIES 1 1
PART II. INFORMATION CONCERNING ISSUER 4 5
I. DESCRIPTION OF THE FUND 4 5
l. GENERAL INFORMATION 4
5
2. INVESTMENT POLICY 8 9
3. MANAGEMENT STRUCTURE 14 17
4. INFORMATION CONCERNING THE EXERCISE
OF RIGHTS BY SHAREHOLDERS, ETC. 23
29
5. STATUS OF INVESTMENT FUND 26 33
II. OUTLINE OF THE FUND 30
36
III. OUTLINE OF THE OTHER RELATED COMPANIES 68 70
IV. FINANCIAL CONDITION OF THE FUND 70
72
V. SUMMARY OF INFORMATION CONCERNING
FOREIGN INVESTMENT TRUST SECURITIES 173
78
VI. MISCELLANEOUS 173 78
PART III. SPECIAL INFORMATION 174
80
I. OUTLINE OF THE REGULATORY SYSTEM IN
THE UNITED STATES 174 80
II. FINANCIAL CONDITIONS OF THE INVESTMENT
MANAGEMENT COMPANY 180 86
III. FORM OF FOREIGN INVESTMENT
FUND SECURITIES 203
86
PART I. INFORMATION CONCERNING SECURITIES
1. NAME OF FUND: PUTNAM
EUROPE GROWTH FUND
(hereinafter referred to as the
"Fund")
2. NATURE OF FOREIGN Class M
Shares being all Registered shares
without
INVESTMENT FUND SECU- par
value. In Japan, Class M Shares
(hereinafter
RITIES CERTIFICATES:
referred to as the "Shares") are
for public offering.
No rating
has been acquired.
3. NUMBER OF SHARES TO Up to 30
million Shares
BE OFFERED FOR SALE
(IN JAPAN)
4. TOTAL AMOUNT OF Up to the
total amount obtained by
aggregating the
OFFERING PRICE: the
respective net asset value of each
Share in respect of 30 million
Shares
(The
maximum amount expected to be sold
is 689.1 million U.S. dollars
(Yen91.24 billion).
Note 1: The maximum amount expected to be sold is the
amount calculated, for convenience, by multiplying the
larger of the net asset value per Share of Class M
Shares as of April 30, 1998 ($22.97) by the number of
Shares to be offered (30 million).
Note 2: Dollar amount is translated for convenience at the
rate of $1.00=Yen132.40 (the mean of the exchange rate
quotations by The Bank of Tokyo-Mitsubishi, Ltd. for
buying and selling spot dollars by telegraphic transfer
against yen on April 30, 1998). The same applies
hereinafter.
Note 3: In this document, money amounts and percentages
have been rounded. Therefore, there are cases in which
the amount of the "total column" is not equal to the
aggregate amount. Also, translation into yen is made
simply by multiplying the corresponding amount by the
conversion rate specified and rounding up when
necessary. As a result, in this document, there are
cases in which Japanese yen figures for the same
information differ from each other.
5. ISSUE PRICE: The Net
Asset Value per Share next
calculated after the application
for purchase is received by the
Fund.
6. SALES CHARGE: Class M
Shares:
Sales
charge (in Japan) is 3.50% of the
net asset value.
Note:
From the above amount, 0.50% of
the amount calculated by dividing
the net asset value by (1-0.035)
and rounded to three decimal
places will be retained by Putnam
Mutual Funds Corp.
7. MINIMUM AMOUNT OR The
minimum amount for purchase of
NUMBER OF SHARES Shares is
100 Shares. Shares may be
purchased in
FOR SUBSCRIPTION: integral
multiples of 10 Shares.
8. PERIOD OF SUBSCRIPTION: From:
1st July, 1998 (Wednesday)
To: 31st
December, 1998 (Thursday)
Provided
that the subscription is handled
only on a Fund Business Day and a
business day when securities
companies are open for business in
Japan.
Note:A "Fund Business Day" means a day on which the New York
Stock Exchange is open for business.
9. DEPOSIT FOR SUBSCRIPTION:
None.
10. PLACE OF SUBSCRIPTION: Yamatane
Securities Co., Ltd. (hereinafter
referred to as " Yamatane")
7-12,
Nihonbashi-kabutocho,
Chuo-ku,
Tokyo
Note:The subscription is handled at the head office and the
branch offices in Japan of the above-mentioned
securities company.
11. DATE AND PLACE Investors
shall pay the Issue Price and
Sales
OF PAYMENT: Charge to
Yamatane within 4 business days in
Japan from the day when Yamatane
confirms the execution of the
order (the "Trade Day") (see page
[ ]).
The total
issue price for each Application
Day will be transferred by
Yamatane to the account of the
Fund at Putnam Fiduciary Trust
Company, the transfer agent,
within 3 Fund Business Days
(hereinafter referred to as
"Payment Date") from (and
including) the Application Day.
12. OUTLINE OF UNDERWRITING, ETC.:
(A) Yamatane undertakes to make a public offering of 30 million
Shares in accordance with an agreement dated June 19, 1998
with Putnam Mutual Funds Corp. in connection with the sale
of the Shares in Japan.
(B) During the public offering period, Yamatane will execute or
forward the purchase orders and repurchase requests of the
Shares received directly or indirectly through other
Handling Securities Companies to the Fund.
(C) The Fund has appointed Yamatane as the Agent Securities
Company in Japan.
Note:"The Agent Securities Company" shall mean a securities
company which, under a contract made with a foreign
issuer of investment securities, makes public the net
asset value per Share and submits or forwards the
financial reports or other documents to the Japan
Securities Dealers Association ("JSDA") and other
handling securities companies (the "Handling Securities
Companies") rendering other services.
13. MISCELLANEOUS:
(A) Method of Subscription:
Investors who subscribe to Shares shall enter into
with a Handling Securities Company an agreement concerning
transactions of foreign securities. A Handling Securities
Company shall provide to the investors a Contract
Concerning a Foreign Securities Transactions Account
("Account Contract") and the investors shall submit to the
Handling Securities Company an application for requesting
the opening of a transactions account under the Account
Contract. The subscription amount shall be paid in yen in
principle and the yen exchange rate shall be the foreign
exchange rate quoted in the Tokyo Foreign Exchange Market
on the Trade Day of each subscription, which shall be
determined by such Handling Securities Company.
The subscription amount shall be paid in dollars to
the account of the Fund with Putnam Fiduciary Trust Company
as custodian for the Fund by Yamatane on the Payment Date.
(B) Expenses summary:
EXPENSES SUMMARY
Expenses are one of several factors to consider when investing.
The following table summarizes your maximum transaction costs
from investing in the Fund and expenses based on the most recent
fiscal year. The examples show the cumulative expenses
attributable to a hypothetical $1,000 investment over specified
periods.
CLASS M
SHARES
SHAREHOLDER TRANSACTION
EXPENSES 3.50%
Maximum sales charge
imposed on purchases
(as a percentage of
offering price)
None
Deferred sales charge
(as a percentage of the
lower of original
purchase price or
redemption proceeds)
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Total fund
Management 12b-1 fees Other operating
fees expenses expenses
Class M 0.80% 0.75% 0.40% 1.95%
The table is provided to help you understand the expenses of
investing in Class M Shares of the Fund and your share of fund
operating expenses. The expenses shown in the table do not
reflect the application of credits that reduce fund expenses.
EXAMPLE
An investment of $1,000 would incur the following
expenses, assuming 5% annual return and, except as
indicated, redemption at the end of each period.
1 year 3 years 5 years 10 years
Class M $54 $94 $137 $255
The example does not represent past or future expense
levels. Actual expenses may be greater or less than those
shown. U.S. federal regulations require the example to
assume a 5% annual return, but actual annual return varies.
* The higher 12b-1 fees borne by Class M
Shares may cause long-term shareholders to pay
more than the economic equivalent of the maximum
permitted front-end sales charge on Class A
Shares.
(C) Offerings other than in Japan:
Shares are simultaneously offered in the United States
of America.
PART II. INFORMATION CONCERNING ISSUER
I. DESCRIPTION OF THE FUND
1. GENERAL INFORMATION
(A) Outline of Laws Regulating the Fund in the Jurisdiction
Where Established:
(1) Name of the Fund: Putnam Europe Growth Fund (the
"Fund")
(2) Form of the Fund
Putnam Europe Growth Fund is a Massachusetts business
trust organized on November 10, 1988. A copy of the
Agreement and Declaration of Trust, which is governed by
Massachusetts law, is on file with the Secretary of State
of The Commonwealth of Massachusetts.
The Fund is an open-end, diversified management
investment company with an unlimited number of authorized
shares of beneficial interest. The Trustees may, without
shareholder approval, create two or more series of shares
representing separate investment portfolios. Any such
series of shares may be divided, without shareholder
approval, into two or more classes of shares having such
preferences and special or relative rights and privileges
as the Trustees determine. The Fund's shares are not
currently divided into any series. Only the Fund's Class M
Shares are currently offered in Japan. The Fund may also
offer in the United States of America other classes of
shares with different sales charges and expenses. Because
of these different sales charges and expenses, the
investment performance of the classes will vary.
Each share has one vote, with fractional shares voting
proportionally. Shares of all classes will vote together
as a single class except when otherwise required by law or
as determined by the Trustees. Shares are freely
transferable, are entitled to dividends as declared by the
Trustees, and, if the Fund were liquidated, would receive
the net assets of the Fund. The Fund may suspend the sale
of shares at any time and may refuse any order to purchase
shares. Although the Fund is not required to hold annual
meetings of its shareholders, shareholders holding at least
10% of the outstanding shares entitled to vote have the
right to call a meeting to elect or remove Trustees, or to
take other actions as provided in the Agreement and
Declaration of Trust.
If a shareholder owns fewer shares than the minimum
set by the Trustees (presently 20 shares), the Fund may
choose to redeem the shareholders' shares. Shareholders
will receive at least 30 days' written notice before the
Fund redeems their shares, and shareholders may purchase
additional shares at any time to avoid a redemption. The
Fund may also redeem shares if shareholders own shares
above a maximum amount set by the Trustees. There is
presently no maximum, but the Trustees may, at any time,
establish one which could apply to both present and future
shareholders.
(3) Governing Laws
The Fund was created under, and is subject to, the
laws of the Commonwealth of Massachusetts. The sale of the
Fund's shares is subject to, among other things, the
Securities Act of 1933, as amended, and certain state
securities laws. The Fund also attempts to qualify each
year and elect to be taxed as a regulated investment
company under the United States Internal Revenue Code of
1986, as amended.
The following is a broad outline of certain of the
principal statutes regulating the operations of the Fund in
the U.S.:
a. Massachusetts General Laws, Chapter 182 -
Voluntary Associations and Certain Trusts
Chapter 182 provides in part as follows:
A copy of the declaration of trust must be filed
with the Secretary of State of The Commonwealth of
Massachusetts and with the Clerk of the City of Boston.
Any amendment of the declaration of trust must be filed
with the Secretary and the Clerk within thirty days
after the adoption of such amendment.
A trust must annually file with the Secretary of
State on or before June 1 a report providing the name
of the trust, its address, number of shares outstanding
and the names and addresses of its trustees.
Penalties may be assessed against the trust for
failure to comply with certain of the provisions of
Chapter 182.
b. Investment Company Act of 1940
The Investment Company Act of 1940, as amended
(the "1940 Act"), in general, requires investment
companies to register as such with the U.S. Securities
and Exchange Commission (the "SEC"), and to comply with
a number of substantive regulations of their
operations. The 1940 Act requires an investment
company, among other things, to provide periodic
reports to its shareholders.
c. Securities Act of 1933
The Securities Act of 1933, as amended (the "1933
Act"), regulates many sales of securities. The Act,
among other things, imposes various registration
requirements upon sellers of securities and provides
for various liabilities for failures to comply with its
provisions or in respect of other specified matters.
d. Securities Exchange Act of 1934
The Securities Exchange Act of 1934, as amended
(the "1934 Act"), regulates a variety of matters
involving, among other things, the secondary trading of
securities, periodic reporting by the issuers of
securities, and certain of the activities of transfer
agents and brokers and dealers.
e. The Internal Revenue Code
The Fund intends to qualify as a "regulated
investment company" for federal income tax purposes and
to meet all other requirements necessary for it to be
relieved of federal taxes on income and gains it
distributes to shareholders.
f. Other laws
The Fund is subject to the provisions of other
laws, rules, and regulations applicable to the Fund or
its operations, such as, for example, various state
laws regarding the sale of the Fund's shares.
(B) Outline of the Supervisory Authorities
Among the regulatory authorities having jurisdiction
over the Fund or certain of its operations are the SEC and
state regulatory agencies or authorities.
a. The SEC has broad authority to oversee the
application and enforcement of the federal securities
laws, including the 1940 Act, the 1933 Act, and the
1934 Act, among others, to the Fund. The 1940 Act
provides the SEC broad authority to inspect the records
of investment companies, to exempt investment companies
or certain practices from the provisions of the Act,
and otherwise to enforce the provisions of the Act.
b. State authorities typically have broad
authority to regulate the offering and sale of
securities to their residents or within their
jurisdictions and the activities of brokers, dealers,
or other persons directly or indirectly engaged in
related activities.
(C) Objects and Basic Nature of the Fund:
The Fund seeks capital appreciation. In seeking this
objective, the Fund invests primarily in securities of
European Companies. The Fund is not intended to be a
complete investment program, and there is no assurance that
it will achieve its objective.
(D) History of the Fund:
November 10, 1988:
Organization of the Fund as a
Massachusetts business trust.
Adoption of the Agreement and
Declaration of Trust.
July 13, 1990:
Adoption of the Amended and
Restated Agreement and Declaration
of Trust
(E) Affiliated Companies of the Fund:
Names and related business of the affiliated companies
of the Fund are as follows:
(1) Putnam Investment Management, Inc. ("Investment
Management Company") renders investment management
services to the Fund.
(2) Putnam Fiduciary Trust Company (the "Custodian"
and "Investor Servicing Agent") acts as Custodian and
Investor Servicing Agent.
(3) Putnam Mutual Funds Corp. ("Principal
Underwriter") engages in providing marketing services
to the Fund.
(4) Yamatane Securities Co., Ltd. ("Distributor in
Japan" and "Agent Securities Company") engages in
forwarding the purchase or repurchase orders for the
Shares in Japan and also acts as the agent securities
company.
2. INVESTMENT POLICY
(A) Basic Policy for Investment and Objects of Investment:
The Fund seeks capital appreciation. The Fund is
designed for investors seeking capital appreciation through
a diversified portfolio of common stocks and other
securities of European companies. Dividend and interest
income is only an incidental consideration. The Fund is
not intended to be a complete investment program, and there
is no assurance that it will achieve its objective.
BASIC INVESTMENT STRATEGY
In seeking capital appreciation, the Fund will invest
primarily in securities of European companies. The Fund's
investments will normally include common stocks, preferred
stocks, securities convertible into common stocks, and
warrants to purchase common or preferred stocks. The Fund
may also invest to a lesser extent in debt securities and
other types of investments if the Investment Management
Company believes they would help achieve the Fund's
objective. The Fund may hold a portion of its assets in
cash or money market instruments.
It is anticipated that under normal market conditions
the Fund will invest at least 85% of its assets in
securities of European companies that the Investment
Management Company believes have the potential for capital
appreciation. The Fund will consider an issuer of
securities to be a "European company" if it is organized
under the laws of a European country and has a principal
office in a European country, if it derives 50% or more of
its total revenues from business in Europe, or if its
equity securities are traded principally on a securities
exchange in Europe. It is anticipated that under normal
market conditions 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.
The Fund will not limit its investments to any
particular type of company. The Fund may invest in
companies, large or small, with earnings that the
Investment Management Company believes are in a relatively
strong growth trend, or in companies in which significant
further growth is not anticipated but whose securities are,
in the opinion of the Investment Management Company,
undervalued. It may invest in small and relatively less
well-known companies. Smaller, less well-known companies
may present greater opportunities for capital appreciation,
but may also involve greater risks. 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,
the prices of these securities may fluctuate more than
prices of securities of larger, more established companies.
The Fund may invest in securities of issuers located
in any European country where the Investment Management
Company believes there is potential for above-average
capital appreciation. The Fund may invest in securities of
issuers located in European countries with well-established
economies and securities markets, such as France, Germany,
Holland, Italy, Sweden and the United Kingdom. The Fund
may also invest in countries with emerging economies or
securities markets (such as, for example, Portugal, Greece
and Turkey) or smaller securities markets (such as, for
example, Luxembourg, Norway and Finland), and, if
investment opportunities arise, in countries located in
Eastern Europe (such as, for example, Hungary and Poland).
Investments in such countries involve certain risks,
described below under "Risk factors," which are not present
in investments in more developed countries.
DEFENSIVE STRATEGIES
At times Investment Management Company may judge that
conditions in the securities markets make pursuing the
Fund's basic investment strategy inconsistent with the best
interests of its shareholders. At such times, Investment
Management Company may temporarily use alternative
strategies that are primarily designed to reduce
fluctuations in the value of Fund assets.
In implementing these defensive strategies, the Fund
may invest without limit in cash or money market
instruments, preferred stocks, debt securities issued by
the U.S. government or any foreign government or their
agencies or instrumentalities, or in any other securities
Investment Management Company considers consistent with
such defensive strategies. For defensive purposes, the
Fund may also invest without limit in securities primarily
traded in the U.S. markets.
It is impossible to predict when, or for how long,
these alternative strategies would be used.
RISK FACTORS
Non-U.S. investments
Non-U.S. securities are normally denominated and
traded in non-U.S. currencies. As a result, the value of
the Fund's non-U.S. investments and the value of its shares
may be affected favorably or unfavorably by changes in
currency exchange rates relative to the U.S. dollar. The
Fund may engage in a variety of non-U.S. currency exchange
transactions in connection with its non-U.S. investments,
including transactions involving futures contracts, forward
contracts and options.
Investments in non-U.S. securities may subject the
Fund to other risks as well. For example, there may be
less information publicly available about a non-U.S. issuer
than about a U.S. issuer, and non-U.S. issuers are not
generally subject to accounting, auditing and financial
reporting standards and practices comparable to those in
the United States. The securities of some non-U.S. issuers
are less liquid and at times more volatile than securities
of comparable U.S. issuers. Non-U.S. brokerage commissions
and other fees are also generally higher than in the United
States. Non-U.S. settlement procedures and trade
regulations may involve certain risks (such as delay in
payment or delivery of securities or in the recovery of the
Fund's assets held abroad) and expenses not present in the
settlement of investments in U.S. markets.
In addition, the Fund's investments in non-U.S.
securities may be subject to the risk of nationalization or
expropriation of assets, imposition of currency exchange
controls or restrictions on the repatriation of non-U.S.
currency, confiscatory taxation, political or financial
instability and diplomatic developments which could affect
the value of the Fund's investments in certain non-U.S.
countries. Dividends or interest on, or proceeds from the
sale of, non-U.S. securities may be subject to non-U.S.
withholding taxes, and special U.S. tax considerations may
apply.
Legal remedies available to investors in certain non-
U.S. countries may be more limited than those available
with respect to investments in the United States or in
other non-U.S. countries. The laws of some non-U.S.
countries may limit the Fund's ability to invest in
securities of certain issuers organized under the laws of
those non-U.S. countries.
The risks described above are typically increased in
connection with investments in less developed and
developing nations, which are sometimes referred to as
"emerging markets." For example, political and economic
structures in these countries may be in their infancy and
developing rapidly, causing instability. High rates of
inflation or currency devaluations may adversely affect the
economies and securities markets of such countries.
Investments in emerging markets may be considered
speculative.
Certain of the foregoing risks may also apply to some
extent to securities of U.S. issuers that are denominated
in non-U.S. currencies or that are traded in non-U.S.
markets, or to securities of U.S. issuers having
significant non-U.S. operations.
Non-U.S. currency exchange transactions
The Fund may engage in non-U.S. currency exchange
transactions to manage its exposure to foreign currencies.
The Investment Management Company may engage in non-U.S.
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"). It may
also engage in foreign currency transactions for non-
hedging purposes, subject to applicable law.
The Fund may engage in transaction hedging to protect
against a change in non-U.S. 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 non-U.S. currency. The Fund may purchase or
sell a non-U.S. 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
non-U.S. currency.
If conditions warrant, for transaction hedging
purposes the Fund may also enter into contracts to purchase
or sell non-U.S. currencies at a future date ("forward
contracts") and purchase and sell non-U.S. currency futures
contracts. A non-U.S. 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. Non-U.S. currency futures contracts are
standardized exchange-traded contracts and have margin
requirements. In addition, for transaction hedging
purposes the Fund may also purchase or sell exchange-listed
and over-the-counter call and put options on non-U.S.
currency futures contracts and on non-U.S. currencies.
The Fund may engage in position hedging to protect
against a decline in the 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 the
currency in which the securities the Fund intends to buy
are denominated, when the Fund holds cash or short-term
investments). For position hedging purposes, the Fund may
purchase or sell, on exchanges or in over-the-counter
markets, non-U.S. currency futures contracts, non-U.S.
currency forward contracts and options on non-U.S. currency
futures contracts and on non-U.S. currencies. In
connection with position hedging, the Fund may also
purchase or sell non-U.S. currency on a spot basis.
The Fund's currency hedging transactions may call for
the delivery of one non-U.S. currency in exchange for
another non-U.S. currency and may at times not involve
currencies in which its portfolio securities are then
denominated. The Investment Management Company will engage
in such "cross hedging" activities when it believes that
such transactions provide significant hedging opportunities
for the Fund. Cross hedging transactions by the 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.
The Fund may also engage in non-hedging currency
transactions. For example, the Investment Management
Company may believe that exposure to a currency is in the
Fund's best interest but that securities denominated in
that currency will not assist the Fund in meeting its
objective. In that case, the Fund may purchase a currency
forward contract or option in order to increase its
exposure to the currency. In accordance with regulations
of the Securities and Exchange Commission, the Fund will
segregate liquid assets in its portfolio to cover forward
contracts used for non-hedging purposes.
The decision as to whether and to what extent the Fund
will engage in non-U.S. currency exchange transactions will
depend on a number of factors, including prevailing market
conditions, the composition of the Fund's portfolio and the
availability of suitable transactions. Accordingly, there
can be no assurance that the Fund will engage in non-U.S.
currency exchange transactions at any given time or from
time to time.
For a further discussion of the risks associated with
purchasing and selling futures contracts and options refer
to "Futures and Options".
PORTFOLIO TURNOVER
The length of time the Fund has held a particular
security is not generally a consideration in investment
decisions. A change in the securities held by the Fund is
known as "portfolio turnover." As a result of the Fund's
investment policies, under certain market conditions its
portfolio turnover rate may be higher than that of other
mutual funds.
Portfolio turnover generally involves some expense,
including brokerage commissions or dealer markups and other
transaction costs in connection with the sale of securities
and reinvestment in other securities. These transactions
may result in realization of taxable capital gains.
Portfolio turnover rates are shown in the section
"Financial Condition of the Fund - Financial Statements -
Financial highlights."
FUTURES AND OPTIONS
The Fund may buy and sell stock index futures
contracts. An "index future" is a contract to buy or sell
units of a particular stock index at an agreed price on a
specified future date. Depending on the change in value of
index between the time the Fund enters into and terminates
an index futures transaction, the Fund realizes a gain or
loss. In addition to or as an alternative to purchasing or
selling index futures, the Fund may buy and sell call and
put options on index futures or stock indexes. The Fund
may engage in index futures and options transactions for
hedging purposes and for nonhedging purposes, such as to
adjust its exposure to relevant markets or as a substitute
for direct investment.
The use of index futures and related options involves
certain special risks. Futures and options transactions
involve costs and may result in losses.
Certain risks arise from the possibility of imperfect
correlations among movements in the prices of financial
futures and options purchased or sold by the Fund, of the
underlying stock index, currencies or securities and, in
the case of hedging transactions, of the securities that
are the subject of the hedge. The successful use of the
strategies described above further depends on the
Investment Management Company's ability to forecast market
movement correctly.
Other risks arise from the potential inability to
close out index futures or options positions. There can be
no assurance that a liquid secondary market will exist for
any index future or option at any particular time. The
Fund's ability to terminate option positions established in
the over-the-counter market may be more limited than for
exchange-traded options and may also involve the risk that
securities dealers participating in such transactions would
fail to meet their obligations to the Fund. Certain
provisions of the Internal Revenue Code and certain
regulatory requirements may limit the use of index futures
and options transactions.
OTHER INVESTMENT PRACTICES
The Fund may also engage in the following investment
practices, each of which involves certain special risks.
Options. The Fund may seek to increase its current return
by writing covered call and put options on securities it
owns or in which it may invest. The Fund receives a
premium from writing a call or put option, which increases
the return if the option expires unexercised or is closed
out at a net profit.
When the Fund writes a call option, it gives up the
opportunity to profit from any increase in the price of a
security above the exercise price of the option; when it
writes a put option, it takes the risk that it will be
required to purchase a security from the option holder at a
price above the current market price of the security. The
Fund may terminate an option that it has written prior to
its expiration by entering into a closing purchase
transaction in which it purchases an option having the same
terms as the option written.
The Fund may also buy and sell put and call options,
including combinations of put and call options on the same
underlying security. The use of these strategies may be
limited by applicable law.
Securities loans, repurchase agreements and forward
commitments. The Fund may enter into repurchase agreements
on up to 25% of its assets. These transactions must be
fully collateralized at all times. The Fund may also
purchase securities for future delivery, which may increase
its overall investment exposure and involves a risk of loss
if the value of the securities declines prior to the
settlement date. These transactions involve some risk if
the other party should default on its obligation and the
Fund is delayed or prevented from recovering the collateral
or completing the transaction.
DIVERSIFICATION
The Fund is "diversified" investment company under the
Investment Company Act of 1940. This means that with
respect to 75% of its total assets, the Fund may not invest
more than 5% of its total assets in the securities of any
one issuer (except U.S. government securities). The
remaining 25% of its total assets is not subject to this
restriction. To the extent the Fund invests a significant
portion of its assets in the securities of a particular
issuer, it will be subject to an increased risk of loss if
the market value of such issuer's securities declines.
DERIVATIVES
Certain of the instruments in which the Fund may
invest, such as futures contracts, options and forward
contracts, are considered to be "derivatives." Derivatives
are financial instruments whose value depends upon, or is
derived from, the value of an underlying asset, such as a
security or an index. Further information about these
instruments and the risks involved in their use is included
elsewhere in this document.
(B) Restrictions of Investment:
Except as otherwise specifically designated, the
investment restrictions described in this document are not
fundamental investment restrictions. The Trustees may
change any non-fundamental restrictions without shareholder
approval. As fundamental investment restrictions, which
may not be changed without a vote of a majority of the
outstanding voting securities, the Fund may not and will
not:
(1) Borrow money in excess of 10% of the value (taken at
the lower of cost or current value) of its total assets
(not including the amount borrowed) at the time the
borrowing is made, and then only from banks as a temporary
measure to facilitate the meeting of redemption requests
(not for leverage) which might otherwise require the
untimely disposition of portfolio investments or for
extraordinary or emergency purposes. Such borrowings will
be repaid before any additional investments are purchased.
(2) 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.
(3) 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.
(4) Purchase or sell commodities or commodity contracts,
except that the Fund may purchase and sell financial
futures contracts and options and may enter into foreign
exchange contracts and other financial transactions not
involving physical commodities.
(5) Make loans, except by purchase of debt obligations in
which the fund may invest consistent with its investment
policies, by entering into repurchase agreements, or by
lending its portfolio securities
(6) With respect to 75% of its total assets, invest in the
securities of any issuer if, immediately after such
investment, more than 5% of the total assets of the Fund
(taken at current value) would be invested in the
securities of such issuer; provided that this limitation
does not apply to obligations issued or guaranteed as to
interest or principal by the U.S. government or its
agencies or instrumentalities.
(7) With respect to 75% of its total assets, acquire more
than 10% of the outstanding voting securities of any
issuer.
(8) Purchase securities (other than securities of the U.S.
government) if as a result of such purchase more than 25%
of the Fund's total assets would be invested in any one
industry.
(9) Issue any class of securities which is senior to the
Fund's shares of beneficial interest, except for permitted
borrowings.
Although certain of the Fund's fundamental investment
restrictions permit it to borrow money to a limited extent,
it does not currently intend to do so and did not do so
last year.
The Investment Company Act of 1940 provides that a
"vote of a majority of the outstanding voting securities"
of the Fund means the affirmative vote of the lesser of (1)
more than 50% of the outstanding shares of the Fund, or (2)
67% or more of the shares present at a meeting if more than
50% of the outstanding shares of the Fund are represented
at the meeting in person or by proxy.
IT IS CONTRARY TO THE FUND'S PRESENT POLICY, WHICH MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL, TO:
Invest in (a) securities which are not readily
marketable, (b) securities restricted as to resale
(excluding securities determined by the Trustees (or the
person designated by the Trustees of the Fund to make such
determinations) to be readily marketable, and (c)
repurchase agreements maturing in more than seven days, if,
as a result, more than 15% of the Fund's net assets (taken
at current value) would be invested in securities described
in (a), (b) and (c) above.
In addition, the Fund will, so long as shares of the
Fund are being offered for sale by the Fund in Japan and
such standards are required as a condition of such offer
for sale, comply with the following standards of selection
of the Japan Securities Dealers Association.
1. The Fund may not 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 federal securities laws;
2. The Fund may not make short sales of securities or
maintain a short position for the account of the Fund
unless at all times when a short position is open it owns
an equal amount of such securities or owns securities
which, without payment of any further consideration, are
convertible into or exchangeable for securities of the same
issue as, and equal in amount to, the securities sold
short;
3. The Fund may not borrow money in excess of 10% of the
value (taken at the lower of cost or current value) of its
total assets (not including the amount borrowed) at the
time the borrowing is made and then only from banks, or, if
approved by the Securities and Exchange Commission and the
shareholders of the Fund, from another Putnam Fund, 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;
4. The Fund may not 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 obligations issued or
guaranteed as to interest or principal by the U.S.
government or its agencies or instrumentalities;
5. The Fund may not acquire more than 10% of the
outstanding voting securities of any issuer and may not
acquire more than 15% of the outstanding voting securities
of any issuer together with other mutual funds managed by
Putnam Investment Management, Inc.;
6. The Fund may not invest in the securities of other
registered open-end investment funds or companies, except
as they may be acquired as part of a merger, consolidation
or acquisition of assets;
7. The Fund may not invest more than 10% of the net
assets of the Fund in securities which are not traded on an
official stock exchange or other regulated market,
operating regularly and being recognized and open to the
public (which shall include, without limitation, the
National Association of Securities Dealers Automated
Quotation System). This restriction shall not be applicable
to securities determined by Putnam Investment Management,
Inc. to be liquid and for which a market price (including a
dealer quotation) is generally obtainable or determinable;
If any violation of the foregoing standards occurs,
the Fund will, promptly after discovery of the violation,
take such action as may be necessary to cause the violation
to cease, which shall be the only obligation of the Fund
and the only remedy in respect of the violation.
All percentage limitations on investments (other than
pursuant to non-fundamental restriction (1)) will apply at
the time of the making of an investment and shall not be
considered violated unless an excess or deficiency occurs
or exists immediately after and as a result of such
investment.
(C) Distribution Policy:
The Fund distributes any net investment income and any
net realized capital gains at least annually.
Distributions from net investment income, if any, are
expected to be small. Distributions from capital gains are
made after applying any available capital loss carryovers.
The payment to Japanese investors may be made, in
principle, in accordance with the record date in December
each year by Yamatane.
3. MANAGEMENT STRUCTURE
(A) Outline of Management of Assets, etc.:
A. Valuation of assets:
The Fund determines the net asset value per share of
each class of shares once each day the New York Stock
Exchange (the "Exchange") is open. Currently, the Exchange
is closed Saturdays, Sundays and the following U.S.
holidays: New Year's Day, Rev. Dr. Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, the Fourth
of July, Labor Day, Thanksgiving and Christmas. The Fund
determines the net asset value of each class as of the
close of regular trading on the Exchange, currently 4:00
p.m., New York time. However, equity options held by the
Fund are priced as of the close of trading at 4:10 p.m.,
New York time, and futures contracts on U.S. government and
other fixed-income securities and index options held by the
Fund are priced as of their close of trading at 4:15 p.m.,
New York time.
Securities for which market quotations are readily
available are valued at prices which, in the opinion of
Investment Management Company, most nearly represent the
market values of such securities. Currently, such prices
are determined using the last reported sale price or, if no
sales are reported (as in the case of some securities
traded over-the-counter), the last reported bid price,
except that certain securities are valued at the mean
between the last reported bid and asked prices. Short-term
investments having remaining maturities of 60 days or less
are valued at amortized cost, which approximates market
value. All other securities and assets are valued at their
fair value following procedures approved by the Trustees.
Liabilities are deducted from the total value of the assets
attributable to a class, and the resulting amount is
divided by the number of shares of the class outstanding.
Reliable market quotations are not considered to be
readily available for long-term corporate bonds and notes,
certain preferred stocks, tax-exempt securities, and
certain foreign securities. These investments are valued
at fair value on the basis of valuations furnished by
pricing services, which determine valuations for normal,
institutional-size trading units of such securities using
methods based on market transactions for comparable
securities and various relationships between securities
which are generally recognized by institutional traders.
If any securities held by the Fund are restricted as
to resale, Investment Management Company determines their
fair value using procedures approved by the Trustees. The
fair value of such securities is generally determined as
the amount which the Fund could reasonably expect to
realize from an orderly disposition of such securities over
a reasonable period of time. The valuation procedures
applied in any specific instance are likely to vary from
case to case. However, consideration is generally given to
the financial position of the issuer and other fundamental
analytical data relating to the investment and to the
nature of the restrictions on disposition of the securities
(including any registration expenses that might be borne by
the Fund in connection with such disposition). In
addition, specific factors are also generally considered,
such as the cost of the investment, the market value of any
unrestricted securities of the same class, the size of the
holding, the prices of any recent transactions or offers
with respect to such securities and any available analysts'
reports regarding the issuer.
Generally, trading in certain securities (such as
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 Fund's shares are computed as of such
times. Also, because of the amount of time required to
collect and process trading information as to large numbers
of securities issues, the values of certain securities
(such as convertible bonds, U.S. government securities, and
tax-exempt securities) are determined based on market
quotations collected earlier in the day at the latest
practicable time prior to the close of the Exchange.
Occasionally, events affecting the value of such securities
may occur between such times and the close of the Exchange
which will not be reflected in the computation of the
Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then
these securities may be valued at their fair value using
procedures approved by the Trustees.
B. Management Fee, etc.:
(1) Management Fee:
(a) Management and Agent Securities Company Fees
Under a Management Contract dated October 21,
1996, the Fund pays a quarterly fee to Investment
Management Company based on the average net assets of
the Fund, as determined at the close of each business
day during the quarter, at an annual rate of 0.80% 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, 0.540% of the
next $5 billion, and 0.530% thereafter.
For the fiscal years ending on June 30, 1997, 1996
and 1995 the Fund paid $2,875,190, $1,411,198 and
$943,507, respectively as a management fee.
(b) Custodian Fee and Charges of the Investor
Servicing Agent
Putnam Fiduciary Trust Company, the Fund's
Custodian, shall be entitled to receive, out of the
assets of the Fund, reasonable compensation for its
services and expenses as Custodian, as agreed from time
to time between the Fund and the Custodian, not
including fees paid by the Custodian to any sub-
custodian, payable monthly based on the average daily
total net assets of the Fund during the relevant month.
Any reasonable disbursements and out-of-pocket expenses
(including without limitation telephone, telex, cable
and postage expenses) incurred by the Custodian, and
any custody charges of banks and financial institutions
to whom the custody of assets of the Fund is entrusted,
will be borne by the Fund.
The Fund will pay to Putnam Investor Services, a
division of Putnam Fiduciary Trust Company, the Fund's
Investor Servicing Agent, such fee, out of the assets
of the Fund, as is mutually agreed upon in writing from
time to time, in the amount, at the time and in the
manner of payment mutually agreed.
For the fiscal year ending on June 30, 1997, the
Fund paid $1,065,620 as a custodian fee and investor
servicing agent fee.
(c) Fees under Class M Distribution Plans
The Class M distribution plans provide for
payments by the Fund to Putnam Mutual Funds Corp. at
the annual rate of 1.00% of average net assets
attributable to Class M shares. The Trustees currently
limit payments under the Class M plan to the annual
rate of 0.75% of such assets.
Payments under the plans are intended to
compensate Putnam Mutual Funds Corp. for services
provided and expenses incurred by it as principal
underwriter of the Fund's shares, including payments to
dealers mentioned below. Payments to dealers are
subject to the continuation of the Class M distribution
plan and the terms of an agreement between Yamatane and
Putnam Mutual Funds Corp.
The payments to dealers are based on the average
net asset value of Class M shares attributable to
shareholders for whom Yamatane and other dealers are
designated as the dealer of record. Putnam Mutual
Funds Corp. makes quarterly payments to dealers
(including Yamatane) at the annual rate of 0.25% of the
average net asset value of Class M shares.
Putnam Mutual Funds Corp. also pays to Yamatane
and other dealers, as additional compensation with
respect to the sale of Class M shares, 0.40% of such
average net asset value of Class M shares,
respectively. For Class M shares, the total annual
payment to Yamatane and other dealers equals 0.65% of
such average net asset value.
For the fiscal year ending on June 30, 1997, the
Fund paid fees under the distribution plan of $67,386
for Class M shares.
(d) Other Expenses:
The Fund pays all expenses not assumed by
Investment Management Company, including Trustees'
fees, auditing, legal, custodial, investor servicing
and shareholder reporting expenses, and payments under
its distribution plans (which are in turn allocated to
the relevant class of shares). The Fund also
reimburses Investment Management Company for the
compensation and related expenses of certain Fund
officers and their staff who provide administrative
services. The total reimbursement is determined
annually by the Trustees and was $8,457 for Fiscal
1997.
Each Trustee receives a fee for his or her
services. Each Trustee also receives fees for serving
as Trustee of other Putnam funds. The Trustees
periodically review their fees to assure that such fees
continue to be appropriate in light of their
responsibilities as well as in relation to fees paid to
trustees of other mutual fund complexes. The Trustees
meet monthly over a two-day period, except in August.
The Compensation Committee, which consists solely of
Trustees not affiliated with the Investment Management
Company and is responsible for recommending Trustee
compensation, estimates that Committee and Trustee
meeting time, together with the appropriate
preparation, requires the equivalent of at least three
business days per Trustee meeting. The following table
shows the year each Trustee was first elected a Trustee
of the Putnam funds, the fees paid to each Trustee by
the Fund for fiscal 1997 and the fees paid to each
Trustee by all of the Putnam funds during calendar
1996:
COMPENSATION TABLE
Pension on Estimated Total
Aggregate retirement annual benefits
compensation
compensation benefits accruedfrom all
from all
from the as part of Putnam funds Putnam
Trustees/Year fund (1) fund expenses (2) upon
retirement (3) funds (4)
Jameson A. Baxter/1994$1,171 $259 $85,646 $172,291(5)
Hans H. Estin/1972 1,157 831 85,646 171,291
John A. Hill/1985 1,164 311 85,646 170,791(5)
Ronald J. Jackson/1996 (6)1,171 49 85,646 94,807(5)
Paul L. Joskow/1997 (9) N/A N/A N/A N/A
Elizabeth T. Kennan/19921,157 532 85,646 171,291
Lawrence J. Lasser/1992 1,143 399 85,646 169,791
John H. Mullin, III/1997 (9) N/A N/A N/A N/A
Robert E. Patterson/19841,184 249 85,646 182,291
Donald S. Perkins/1982 1,171 903 85,646 170,291
William F. Pounds/1971 (7)1,239 857 98,146 197,291
George Putnam/1957 1,164 953 85,646 171,291
George Putnam, III/1984 1,171 164 85,646 171,291
A.J.C. Smith/1986 1,129 556 85,646 169,791
W. Thomas Stephens/1997 (8) N/A N/A 85,646 N/A
W. Nicholas Thorndike/19921,167 764 85,646 181,291
(1) Includes an annual retainer and an attendance fee for
each meeting attended.
(2) The Trustees approved a Retirement Plan for Trustees of
the Putnam funds on October 1, 1996. Prior to that
date, voluntary retirement benefits were paid to
certain retired Trustees.
(3) Assumes that each Trustee retires at the normal
retirement date. Estimated benefits for each Trustee
are based on Trustee fee rates in effect during
calendar 1996.
(4) As of December 31, 1996, there were 96 funds in the
Putnam family.
(5) Includes compensation deferred pursuant to a Trustee
Compensation Deferral Plan.
(6) Elected as a Trustee in May 1996.
(7) Includes additional compensation for service as Vice
Chairman of the Putnam funds.
(8) Elected as a Trustee in September 1997.
(9) Elected as a Trsutee in November 1997.
Under a Retirement Plan for Trustees of the Putnam
funds (the "Plan") each Trustee who retires with at
least five years of service as a Trustee of the funds
is entitled to receive an annual retirement benefit
equal to one-half of the average annual compensation
paid to such Trustee for the last three years of
service prior to retirement. This retirement benefit
is payable during a Trustee's lifetime, beginning the
year following retirement, for a number of years equal
to such Trustee's years of service. A death benefit is
also available under the Plan which assures that the
Trustee and his or her beneficiaries will receive
benefit payments for the lesser of an aggregate period
of (i) ten years or (ii) such Trustee's total years of
service.
The Plan Administrator (a committee comprised of
Trustees who are not "interested persons" of the Fund,
as defined in the Investment Company Act of 1940) may
terminate or amend the Plan at any time, but no
termination or amendment will result in a reduction in
the amount of benefits (i) currently being paid to a
Trustee at the time of such termination or amendment,
or (ii) to which a current Trustee would have been
entitled had he or she retired immediately prior to
such termination or amendment.
Investment Management Company places all orders
for purchases and sales of Fund securities. In
selecting broker-dealers, Investment Management Company
may consider research and brokerage services furnished
to it and its affiliates. Subject to seeking the most
favorable price and execution available, Investment
Management Company may consider sales of Fund shares
(and, if permitted by law, of the other Putnam Funds)
as a factor in the selection of broker-dealers. During
fiscal 1995, 1996 and 1997, the Fund paid $365,321,
$448,749 and $1,427,191 in brokerage commissions,
respectively. During fiscal 1996 the Fund did not pay
any fee to brokers and dealers to recognize research,
statistical and quotation services provided to
Investment Management Company and its affiliates.
For the fiscal year ending June 30, 1997, the Fund
paid $2,492,186 in total other expenses (including
payments under its distribution plan but excluding
Management Fees, investor servicing agent expenses and
custodian expenses.)
C. Sales, Repurchases and Custody:
(1) Sales of Shares:
a. Sales in the United States
Investors residing in the United States can open a
Fund account with as little as $500 and make additional
investments at any time with as little as $50. They
can buy Fund shares three ways - through most
investment dealers, through Putnam Mutual Funds Corp.
or through a systematic investment plan.
BUYING SHARES THROUGH PUTNAM MUTUAL FUNDS CORP.
Complete an order form and write a check for the amount
shareholders wish to invest, payable to the Fund.
Return the completed form and check to Putnam Mutual
Funds Corp., which will act as investor's agent in
purchasing shares.
BUYING SHARES THROUGH SYSTEMATIC INVESTING.
Investors can make regular investments of $25 or more
per month through automatic deductions from the
investor's bank checking or savings account.
Application forms are available from the investor's
investment dealer or through Investor Servicing Agent.
Shares are sold at the public offering price based
on the net asset value next determined after Investor
Servicing Agent receives a shareholder's order. In most
cases, in order to receive that day's public offering
price, Investor Servicing Agent must receive a
shareholder's order before the close of regular trading
on the New York Stock Exchange. If shareholders buy
shares through their investment dealer, the dealer must
receive the shareholders' orders before the close of
regular trading on the New York Stock Exchange to
receive that day's public offering price.
U.S. OFFERING PRICE AND SALES CHARGES
CLASS M SHARES
The public offering price of Class M Shares is the
net asset value plus a sales charge that varies
depending on the size of your purchase. The Fund
receives the net asset value. The sales charge is
allocated between your investment dealer and Putnam
Mutual Funds Corp. as shown in the following table,
except when Putnam Mutual Funds, at its discretion,
allocates the entire amount to your investment dealer.
Sales charge as
Amount of sales
a percentage of:
charge reallowed
Net to dealers as a
Amount of transactionamount Offering percentage of
at offering price ($) invested price
offering price
Under 50,000 3.63 % 3.50 %
3.00 %
50,000 but under 100,000 2.56 % 2.50 %
2.00 %
100,000 but under 250,000 1.52 % 1.50 %
1.00 %
250,000 but under 500,000 1.01 % 1.00 %
1.00 %
500,000 and above NONE NONE NONE
Class M qualified benefit plans (retirement plans
for which Putnam Fiduciary Trust Company or its
affiliates provide recordkeeping or other services in
connection with the purchase of Class M Shares) and
members of qualified groups may purchase Class M Shares
without a sales charge.
An investor may be eligible to buy Class M Shares
at reduced sales charges. For fiscal 1996 and 1997,
Putnam Mutual Funds Corp. received $38,077 and
$105,793, respectively, in sales charges for Class M
Shares, of which it retained $5,994 and $18,298,
respectively.
b. Sales in Japan
In Japan, Shares of the Fund are offered on any
Business Day and any business day of securities
companies in Japan during the Subscription Period
mentioned in "8. Period of Subscription, Part I
Information concerning Securities" of a securities
registration statement pursuant to the terms set forth
in "Part I. Information concerning Securities" of the
relevant securities registration statement. A Handling
Securities Company shall provide to the investors a
Contract Concerning a Foreign Securities Transactions
Account (the "Contract") and receive from such
investors an application for requesting the opening of
a transactions account under the Contract. The
purchase shall be made in the minimum investment amount
of 100 shares. Purchases may be made in integral
multiples of 10 shares.
The issue price for Shares during the Subscription
period shall be, in principle, the Net Asset Value per
Share next calculated on the day on which the Fund has
received such application. The Trade Day in Japan is
the day when the Handling Securities Company confirms
the execution of the order (ordinarily the business day
in Japan next following the placement of orders), and
the payment and delivery shall be made on the fourth
Business Day after and including the Trade Day. The
sales charge applicable to Classs M Shares in Japan
shall be 3.5% of the net asset value of such shares.
From such amount, 0.50% of the amount calculated by
dividing the net asset value by (1-0.035) and rounded
to three decimal places shall be retained by Putnam
Mutual Fund Corp., principal underwriter of the Fund.
The Investors having entrusted a Handling
Securities Company with safekeeping of the certificates
for Fund shares will receive a certificate of
safekeeping in exchange for the purchase price. In
such case payment shall be made in yen in principle and
the applicable exchange rate shall be the foreign
exchange rate quoted in the Tokyo Foreign Exchange
Market on the Trade Day, which shall be determined by
such Handling Securities Company. The payment may be
made in dollars to the extent that the Handling
Securities Companies can agree.
In addition, Handling Securities Companies in
Japan who are members of the Japan Securities Dealers'
Association cannot continue sales of the Shares in
Japan when the net assets of the Fund are less than
Yen500,000,000 or the Shares otherwise cease to comply
with the "Standards of Selection of Foreign Investment
Fund Securities" established by the Association.
(2) Repurchase of Shares:
a. Repurchase in the United States
A shareholder can sell his shares to the Fund any
day the New York Stock Exchange is open, either
directly to the Fund or through his investment dealer.
The Fund will only redeem shares for which it has
received payment.
SELLING SHARES DIRECTLY TO THE FUND. A
shareholder must send a signed letter of instruction or
stock power form to Investor Servicing Agent, along
with any certificates that represent shares a
shareholder wants to sell. The price a shareholder
will receive is the next net asset value calculated
after the Fund receives the shareholder's request in
proper form less any applicable contingent defered
sales charge ("CDSC"). In order to receive that day's
net asset value, Investor
Servicing Agent must receive a shareholder's request before
the close of regular trading on the New York Stock
Exchange.
If a shareholder sells shares having a net asset
value of $100,000 or more, the signatures of registered
owners or their legal representatives must be
guaranteed by a bank, broker-dealer or certain other
financial institutions.
If a shareholder wants his redemption proceeds
sent to an address other than his address as it appears
on records of the Investor Servicing Agent, a signature
guarantee is required. Investor Servicing Agent
usually requires additional documentation for the sale
of shares by a corporation, partnership, agent or
fiduciary, or a surviving joint owner.
The Fund generally sends shareholders payment for
shareholders' shares the business day after
shareholders' request is received. Under unusual
circumstances, the Fund may suspend repurchase, or
postpone payment for more than seven days, as permitted
by U.S. securities law.
A shareholder may use Investor Servicing Agent's
Telephone Redemption Privilege to redeem shares valued
up to $100,000 unless he has notified Investor
Servicing Agent of an address change within the
preceding 15 days. Unless an investor indicates
otherwise on the account application, Investor
Servicing Agent will be authorized to act upon
redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to
act as his representative, who can provide Investor
Servicing Agent with his account registration and
address as it appears on Investor Servicing Agent's
records.
Investor Servicing Agent will employ these and
other reasonable procedures to confirm that
instructions communicated by telephone are genuine; if
it fails to employ reasonable procedures, Investor
Servicing Agent may be liable for any losses due to
unauthorized or fraudulent instructions.
During periods of unusual market changes and
shareholder activity, a shareholder may experience
delays in contacting Investor Servicing Agent by
telephone. In this event, the shareholder may wish to
submit a written redemption request, as described
above, or contact shareholders' investment dealer. The
Telephone Redemption Privilege is not available if the
shareholder was issued certificates for shares that
remain outstanding. The Telephone Redemption Privilege
may be modified or terminated without notice.
SELLING SHARES THROUGH INVESTMENT DEALERS. A
shareholder's dealer must receive the shareholder's
request before the close of regular trading on the New
York Stock Exchange to receive that day's net asset
value. A shareholder's dealer will be responsible for
furnishing all necessary documentation to Investor
Servicing Agent, and may charge a shareholder for its
services.
b. Repurchase in Japan
Shareholders in Japan may at any time request
repurchase of their Shares. Repurchase requests in
Japan may be made to Investor Servicing Agent through
the Handling Securities Company on a Fund Business Day
that is a business day of securities companies in Japan
without a contingent deferred sales charge. The
repurchase shall be made in integral multiples of 10
shares
The price a shareholder in Japan will receive is
the next net asset value calculated after the Fund
receives the repurchase request from Yamatane, provided
the request is received before the close of regular
trading on the New York Stock Exchange. The payment of
the price shall be made in yen through the Handling
Securities Companies pursuant to the Contracts or, if
the Handling Securities Companies agree, in dollars.
The payment for repurchase proceeds shall be made on
the fourth business day of securities companies in
Japan after and including the Trade Day.
(3) Suspension of Repurchase:
The Fund may suspend shareholders' right of
redemption, or postpone payment for more than seven
days, if the New York Stock Exchange is closed for
other than customary weekends or holidays, or if
permitted by the rules of the U.S. Securities and
Exchange Commission during periods when trading on the
Exchange is restricted or during any emergency which
makes it impracticable for the Fund to dispose of its
securities or to determine fairly the value of its net
assets, or during any other period permitted by order
of the U.S. Securities and Exchange Commission for
protection of investors.
(4) Custody of Shares:
Share certificates shall be held by shareholders
at their own risk.
The custody of the Share certificates (if issued)
representing Shares sold to Japanese shareholders
shall, unless otherwise instructed by the shareholder,
be held, in the name of the custodian, by the custodian
of Yamatane. Certificates of custody for the Shares
shall be delivered by the Handling Securities Companies
to the Japanese shareholders.
D. Miscellaneous:
(1) Duration and Liquidation:
Unless terminated, the Fund shall continue without
limitation of time. The Fund may be terminated at any
time by vote of Shareholders holding at least 66 2/3%
of the Shares entitled to vote or by the Trustees of
the Fund by written notice to the Shareholders.
(2) Accounting Year:
The accounts of the Fund will be closed each year
on 30th June.
(3) Authorized Shares:
There is no prescribed authorized number of
Shares, and Shares may be issued from time to time.
(4) Agreement and Declaration of Trust:
Originals or copies of the Agreement and
Declaration of Trust, as amended, are maintained in the
office of the Fund and are made available for public
inspection for the Shareholders. Originals or copies
of the Agreement and Declaration of Trust, as amended,
are on file in the United States with the Secretary of
State of The Commonwealth of Massachusetts and with the
Clerk of the City of Boston.
The Agreement and Declaration of Trust may be
amended at any time by an instrument in writing signed
by a majority of the then Trustees when authorized to
do so by vote of Shareholders holding a majority of the
Shares entitled to vote, except that an amendment which
shall affect the holders of one or more series or
classes of Shares but not the holders of all
outstanding series and classes shall be authorized by
vote of the Shareholders holding a majority of the
Shares entitled to vote of each series and class
affected and no vote of Shareholders of a series or
class not affected shall be required. Amendments
having the purpose of changing the name of the Fund or
of supplying any omission, curing any ambiguity or
curing, correcting or supplementing any defective or
inconsistent provision contained herein shall not
require authorization by Shareholder vote.
In Japan, material changes in the Agreement and
Declaration of Trust shall be published or notice
thereof shall be sent to the Japanese Shareholders.
(5) Issue of Warrants, Subscription Rights, etc.:
The Fund may not grant privileges to purchase
shares of the Fund to shareholders or investors by
issuing warrants, subscription rights or options, or
other similar rights.
(6) How Performance Is Shown:
FUND ADVERTISEMENTS MAY, FROM TIME TO TIME,
INCLUDE PERFORMANCE INFORMATION.
"Total return" for the one-, five- and ten-year
periods (or for the life of the Fund, if shorter)
through the most recent calendar quarter represents the
average annual compounded rate of return on an
investment of $1,000 in the Fund invested at the
maximum public offering price (in the case of Class M
Shares). Total return may also be presented for other
periods or based on investment at reduced sales charge
levels. Any quotation of investment performance not
reflecting the maximum initial sales charge or
contingent deferred sales charge would be reduced if
the sales charge were used.
For the one-year, five-year and the life of the
Fund periods ended June 30, 1997, the average annual
total return for Class M shares was 23.40%, 15.80% and
14.71%, respectively. Returns for Class M shares
reflect the deduction of the current maximum initial
sales charges of 3.50%.
ALL DATA ARE BASED ON PAST INVESTMENT RESULTS AND
DO NOT PREDICT FUTURE PERFORMANCE. Investment
performance, which will vary, is based on many factors,
including market conditions, portfolio composition,
Fund operating expenses and the class of shares the
investor purchases. Investment performance also often
reflects the risks associated with the Fund's
investment objective and policies. These factors
should be considered when comparing the Fund's
investment results with those of other mutual funds and
other investment vehicles.
Quotations of investment performance for any
period when an expense limitation was in effect will be
greater than if the limitation had not been in effect.
Fund performance may be compared to that of various
indexes.
(B) Outline of Disclosure System:
(1) Disclosure in U.S.A.:
(i) Disclosure to shareholders
In accordance with the Investment Company Act of
1940, the Fund is required to send to its shareholders
annual and semi-annual reports containing financial
information.
(ii)Disclosure to the SEC
The Fund has filed a registration statement with
the SEC on Form N-1A; the Fund updates that
registration statement annually in accordance with the
Investment Company Act of 1940.
(2) Disclosure in Japan:
a. Disclosure to the Supervisory Authority:
When the Fund intends to offer the Shares
amounting to more than 500 million yen in Japan, it
shall submit to the Minister of Finance of Japan
securities registration statements together with the
copies of the Agreement and Declaration of the Fund and
the agreements with major related companies as
attachments thereto. The said documents are made
available for public inspection for investors and any
other persons who desire at the Ministry of Finance.
The Handling Securities Companies of the Shares
shall deliver to the investors prospectuses the
contents of which are substantially identical to Part I
and Part II of the securities registration statements.
For the purpose of disclosure of the financial
conditions, etc., the Trustees shall submit to the
Minister of Finance of Japan securities reports within
6 months of the end of each fiscal year, semi-annual
reports within 3 months of the end of each semi-annual
period and extraordinary reports from time to time when
changes occur as to material subjects of the Fund.
These documents are available for public inspection for
the investors and any other persons who desire at the
Ministry of Finance.
b. Disclosure to Japanese Shareholders:
The Japanese Shareholders will be notified of
changes in material facts which would change their
position, including material amendments to the
Agreement and Declaration of Trust of the Fund, and of
notices from the Trustees, through the Handling
Securities Companies.
The financial statements shall be sent to the
Japanese Shareholders through the Handling Securities
Companies or the summary thereof shall be carried in
daily newspapers.
(C) Restrictions on Transactions with Interested Parties:
Portfolio securities of the Fund may not be purchased
from or sold or loaned to any Trustee of the Fund, Putnam
Investment Management, Inc., acting as investment adviser
of the Fund, or any affiliate thereof or any of their
directors, officers, or employees, or any major shareholder
thereof (meaning a shareholder who holds to the actual
knowledge of Investment Management Company, on his own
account whether in his own or other name (as well as a
nominee's name), 10% or more of the total issued
outstanding shares of such a company) acting as principal
or for their own account unless the transaction is made
within the investment restrictions set forth in the Fund's
prospectus and statement of additional information and
either (i) at a price determined by current publicly
available quotations (including a dealer quotation) or
(ii) at competitive prices or interest rates prevailing
from time to time on internationally recognized securities
markets or internationally recognized money markets
(including a dealer quotation).
4. INFORMATION CONCERNING THE EXERCISE OF RIGHTS BY
SHAREHOLDERS, ETC.
(A) Rights of Shareholders and Procedures for Their Exercise:
Shareholders must register their shares in their own
name in order to exercise directly their rights as
Shareholders. Therefore, the Shareholders in Japan who
entrust the custody of their Shares to the Handling
Securities Company cannot exercise directly their
Shareholder rights, because their Shares are registered in
the name of the custodian. Shareholders in Japan may have
the Handling Securities Companies exercise their rights on
their behalf in accordance with the Contract with the
Handling Securities Companies.
Shareholders in Japan who do not entrust the custody
of their Shares to the Handling Securities Companies may
exercise their rights in accordance with their own
arrangement under their own responsibility.
The major rights enjoyed by Shareholders are as
follows:
(i) Voting rights
Each share has one vote, with fractional shares
voting proportionally. Shares of each class will vote
together as a single class except when otherwise
required by law or as determined by the Trustees.
Although the Fund is not required to hold annual
meetings of its shareholders, shareholders holding at
least 10% of the outstanding shares entitled to vote
have the right to call a meeting to elect or remove
Trustees, or to take other actions as provided in the
Agreement and Declaration of Trust.
(ii)Repurchase rights
Shareholders are entitled to request repurchase of
Shares at their Net Asset Value at any time.
(iii) Rights to receive dividends
Shareholders are entitled to receive any
distributions from net investment income and any net
realized capital gains at least annually.
Distributions from net investment income, if any, are
expected to be small. Distributions from capital gains
are made after applying any available capital loss
carryovers.
Shareholders may choose from three distribution
options, though investors in Japan may only choose the
last alternative.
- Reinvest all distributions in additional shares
without a sales charge;
- Receive distributions from net investment income
in cash while reinvesting
capital gains distributions in additional shares
without a sales charge; or
- Receive all distributions in cash.
(iv)Right to receive distributions upon dissolution
Shareholders of the Fund are entitled to receive
distributions upon dissolution in proportion to the
number of shares then held by them, except as otherwise
required.
(v) Right to inspect accounting books and the like
Shareholders are entitled to inspect the Agreement
and Declaration of Trust, the accounting books at the
discretion of the Court and the minutes of any
shareholders' meetings.
(vi)Right to transfer shares
Shares are transferable without restriction except
as limited by applicable law.
(vii) Rights with respect to the U.S. registration
statement
If, under the 1933 Act, there is any material
false statement in the U.S. Registration Statement, or
any omission of any material statement to be stated
therein necessary or not to cause the statements made
therein to be materially misleading, shareholders are
generally entitled to institute a lawsuit, against the
person who had signed the relevant Registration
Statement, the trustee of the issuer (or any person
placed in the same position) at the time of filing such
Statement, any person involved in preparing such
Statement or any subscriber of the relevant shares.
(B) Tax Treatment of Shareholders in Japan:
The tax treatment of Shareholders in Japan shall be as
follows:
(1) The distributions to be made by the Fund will be
treated as distributions made by a domestic investment
trust.
a. The distributions to be made by the Fund to
Japanese individual shareholders will be subject to
separate taxation from other income (i.e. withholding
of income tax at the rate of 15% and withholding of
local taxes at the rate of 5% in Japan). In this case,
no report concerning distributions will be filed with
the Japanese tax authorities.
b. The distributions to be made by the Fund to
Japanese corporate shareholders will be subject to
withholding of income tax at the rate of 15% and to
withholding of local taxes at the rate of 5% in Japan.
In certain cases, the Handling Securities Companies
will prepare a report concerning distributions and file
such report with the Japanese tax authorities.
c. Net investment returns such as dividends, etc. and
distributions of short-term net realized capital gain,
among distributions on Shares of the Fund, will be, in
principle, subject to withholding of U.S. federal
income tax at the rate of 15% and the amount obtained
after such deduction will be paid in Japan.
Distributions of long-term net realized capital
gain will not be subject to withholding of U.S. federal
income tax and the full amount thereof will be paid in
Japan. The amount subject to withholding of U.S.
federal income tax may be deducted from the tax levied
on a foreign entity in Japan.
The Japanese withholding tax imposed on
distributions as referred to in a. and b. above will be
collected by way of so-called "difference collecting
method." In this method only the difference between
the amount equivalent to 20% of the distributions
before U.S. withholding tax and the amount of U.S.
withholding tax withheld in the U.S. will be collected
in Japan.
(2) The provisions of Japanese tax laws giving the
privilege of a certain deduction from taxable income to
corporations, which may apply to dividends paid by a
domestic corporation, shall not apply.
(3) Capital gains and losses arising from purchase and
repurchase of the Shares shall be treated in the same way
as those arising from purchase and sale of a domestic
investment trust. The distribution of the net liquidation
assets shall be also treated in the same way as those
arising from liquidation of a domestic investment trust.
(4) The Japanese securities transaction tax will not be
imposed so far as the transactions concerned are conducted
outside Japan. Such tax, however, is applicable to
dealers' transactions for their own account and to
privately negotiated transactions conducted in Japan.
(C) Foreign Exchange Control in U.S.A.:
In U.S.A., there are no foreign exchange control
restrictions on remittance of dividends, repurchase money,
etc. of the Shares to Japanese shareholders.
(D) Agent in Japan:
Hamada & Matsumoto
Kasumigaseki Building, 25th Floor
2-5, Kasumigaseki 3-chome
Chiyoda-ku, Tokyo
The foregoing law firm is the true and lawful agent of
the Fund to represent and act for the Fund in Japan for the
purpose of;
(1) the receipt of any and all communications, claims,
actions, proceedings and processes as to matters involving
problems under the laws and the rules and regulations of
the JSDA and
(2) representation in and out of court in connection with
any and all disputes, controversies or differences
regarding the transactions relating to the public offering,
sale and repurchase in Japan of the Shares of the Fund.
The agent for the registration with the Japanese
Minister of Finance of the initial public offering
concerned as well as for the continuous disclosure is each
of the following persons:
Harume Nakano
Ken Miura
Attorneys-at-law
Hamada & Matsumoto
Kasumigaseki Building, 25th Floor
2-5, Kasumigaseki, 3-chome
Chiyoda-ku, Tokyo
(E) Jurisdiction:
Limited only to litigation brought by Japanese
investors regarding transactions relating to (D)(2) above,
the Fund has agreed that the following court has
jurisdiction over such litigation and the Japanese law is
applicable thereto:
Tokyo District Court
1-4, Kasumigaseki 1-chome
Chiyoda-ku, Tokyo
5. STATUS OF INVESTMENT FUND
(A) Diversification of Investment Portfolio
(A.) Diversification of Investment Fund
(As of the end of November, 1997)
Types of Assets
Name of Country
Total
U.S. Dollars
Investment Ratio (%)
U.S. Government Obligations
United States
1,668,400,627
32.76
Corporate Bonds
United States
1,359,734,706
26.70
Mexico
64,525,176
1.27
Indonesia
47,193,749
0.93
Canada
31,657,494
0.62
United Kingdom
24,065,775
0.47
Luxembourg
23,276,100
0.46
Netherlands
13,712,550
0.27
Bermuda
12,167,458
0.24
Australia
11,709,661
0.23
India
11,382,125
0.23
Columbia
11,023,000
0.21
Greece
9,247,800
0.18
China
7,181,125
0.14
Brazil
5,589,250
0.11
Argentina
3,206,600
0.06
Israel
2,535,975
0.05
Ireland
2,240,000
0.04
Switzerland
2,130,600
0.04
Poland
1,990,425
0.04
Ecuador
1,360,000
0.03
Sub-total
1,645,929,569
32.32
Foreign Government Bonds
France
153,431,224
3.01
Germany
147,797,571
2.90
United Kingdom
139,182,825
2.73
Canada
89,045,705
1.75
New Zealand
67,300,700
1.32
Russia
52,037,610
1.02
Denmark
30,736,335
0.61
Argentina
18,928,421
0.37
Peru
10,485,150
0.21
South Africa
9,704,009
0.19
Poland
9,404,850
0.19
Mexico
4,525,901
0.09
Ecuador
1,649,918
0.03
Peru
Sub-total
734,230,219
14.42
Brady Bonds
Mexico
143,714,357
2.82
Brazil
140,567,513
2.76
Argentina
51,435,947
1.01
Bulgaria
28,192,450
0.56
Philippines
22,431,440
0.44
Sub-total
386,341,707
7.59
Preferred Stock
United States
149,305,999
2.93
Canada
8,855,385
0.18
Germany
2,085,000
0.04
Sub-total
160,246,384
3.15
Short-term
United States
214,804,763
4.22
Turkey
35,381,731
0.69
Sub-total
250,186,494
4.91
Collateralized Mortgage Obligation
United States
132,849,634
2.61
Units
United States
82,318,591
1.61
United Kingdom
12,542,175
0.25
Australia
888,000
0.02
Sub-total
95,748,766
1.88
Common Stock
United States
53,733,639
1.06
Asset-Backed Securities
United States
41,644,875
0.82
Convertile Bonds
United States
28,675,270
0.56
United Kingdom
4,464,825
0.09
Sub-total
33,140,095
0.65
Warrants
United States
7,066,708
0.14
Colombia
744,000
0.02
Ireland
112,000
0.00
Sub-total
7,922,708
0.16
Convertible Preferred Stocks
United States
1,502,400
0.03
Options, Futures and
Japan
40,005
0.00
Other Derivatives
Italy
5,964
0.00
Sub-total
45,969
0.00
Cash, Deposit and Other Assets (After deduction of liabilities)
- -119,306,403
- -2.34
Total
5,092,616,683
100.00
(Net Asset Value)
Yen647,781 million
Note: Investment ratio is calculated by dividing each asset at its market
value by the total Net
Asset Value of the Fund. The same applies hereinafter.
(B) Results of Past Operations
(1) Record of Changes in Net Assets
Record of changes in net assets at the end of the
following fiscal years and at the end of each month within
one year prior to the end of April 1998 is as follows:
Class M Shares
132.4
Total Net Asset Value
Net Asset Value per Share
Dollar (thousands)
Yen (millions)
Dollar
Yen
1st Fiscal Year
$746
99
$13.90
1,840
(June 30, 1995)
2nd Fiscal Year
4,047
536
15.86
2,100
(June 30, 1996)
3rd Fiscal Year
15,811
2,093
18.85
2,496
(June 30, 1997)
1997 End of May
14,945
1,979
17.99
2,382
June
16,241
2,150
18.85
2,496
July
17,982
2,381
19.76
2,616
August
16,536
2,189
18.59
2,461
September
19,465
2,577
20.37
2,697
October
18,746
2,482
19.28
2,553
November
19,334
2,560
19.55
2,588
December
20,002
2,648
18.52
2,452
1998 End of January
20,999
2,780
18.82
2,492
February
23,418
3,101
20.52
2,717
March
26,875
3,558
22.21
2,941
April
31,145
4,124
22.97
3,041
(Note) Operations of Class M Shares were commenced on
December 1, 1994.
(2) Record of Distributions Paid
Class M Shares
132.4
Period
Amount of Dividend paid per Share
Income
Capital Gains
1st Fiscal Year
(12/1/94-6/30/95)
- -
- -
$0.16
(Yen21.18)
2nd Fiscal Year
(7/1/95-6/30/96)
- -
- -
$0.40
(Yen52.96)
3rd Fiscal Year
(7/1/96-6/30/97)
$0.17
(Yen22.51)
$1.06
(Yen140.34)
(Note) Record of distribution paid from December 1994 to
April 1998 are as follows:
132.4
Dividend
NAV per Share
Month/Year
Dollar
Yen
Dollar
1996 December 20
$0.172
22.77
$16.11
1997 December 19
0.289
38.26
18.09
(C) Record of Sales and Repurchases
Record of sales and repurchases during the following
fiscal years and number of outstanding Shares of the Fund as of
the end of such Fiscal Years are as follows:
Class M Shares
Number of Number of Net Increase Number of
Shares Sold Shares (Decrease) in Outstanding
Repurchased Shares Shares
Outstanding
1st Fiscal 91,235 37,562 53,673 53,673
Year (0) (0) (0)
(12/1/94-
6/30/95)
2nd Fiscal 297,970 96,466 201,504 255,177
Year (0) (0) (0)
(7/1/95-
6/30/96)
3rd Fiscal 1,962,484 1,378,637 583,847 839,024
Year (0) (0) (0)
(7/1/96-
6/30/97)
Note: The number of Shares sold, repurchased and outstanding
in the parentheses represents those sold, repurchased and
outstanding in Japan. The Shares will be sold in Japan from
July 1, 1998.
II. OUTLINE OF THE FUND
1. Fund
(A) Law of Place of Incorporation
The Fund is a Massachusetts business trust organized
in Massachusetts, U.S.A. on November 10, 1988.
Chapter 182 of the Massachusetts General Laws
prescribes the fundamental matters in regard to the
operations of certain business trusts constituting
voluntary associations under that chapter.
The Fund is an open-end, diversified management
company under the Investment Company Act of 1940.
(B) Outline of the Supervisory Authority
Refer to I - l (B) Outline of the Supervisory
Authority.
(C) Purpose of the Fund
The purpose of the Fund is to provide investors a
managed investment primarily in securities, debt
instruments and other instruments and rights of a financial
character.
(D) History of the Fund
Organization of the Fund as a Massachusetts business trust.
Adoption of the Agreement and Declaration of Trust.
November 10, 1988:
Adoption of the Amended and Restated Agreement
and Declaration of Trust July 13, 1990
(E) Amount of Capital Stock
Not applicable.
(F) Structure of the management of the Fund
The Trustees are responsible for generally overseeing
the conduct of the Fund's business. The Agreement and
Declaration of Trust provides that they shall have all
powers necessary or convenient to carry out that
responsibility. The number of Trustees is fixed by the
Trustees and may not be less than three. A Trustee may be
elected either by the Trustees or by the shareholders. At
any meeting called for the purpose, a Trustee may be
removed by vote of two-thirds of the outstanding shares of
the Fund. Each Trustee elected by the Trustees or the
shareholders shall serve until he or she retires, resigns,
is removed, or dies or until the next meeting of
shareholders called for the purpose of electing Trustees
and until the election and qualification of his or her
successor.
The Trustees of the Fund are authorized by the
Agreement and Declaration of Trust to issue shares of the
Fund in one or more series, each series being preferred
over all other series in respect of the assets allocated to
that series. The Trustees may, without shareholder
approval, divide the shares of any series into two or more
classes, with such preferences and special or relative
rights and privileges as the Trustees may determine.
Under the Agreement and Declaration of Trust the
shareholders shall have power, as and to the extent
provided therein, to vote only (i) for the election of
Trustees, to the extent provided therein, (ii) for the
removal of Trustees, to the extent provided therein, (iii)
with respect to any investment adviser, to the extent
provided therein, (iv) with respect to any termination of
the Fund, to the extent provided therein, (v) with respect
to certain amendments of the Agreement and Declaration of
Trust, (vi) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a
court action, proceeding, or claim should or should not be
brought or maintained derivatively or as a class action on
behalf of the Fund or the shareholders, and (vii) with
respect to such additional matters relating to the Fund as
may be required by the Agreement and Declaration of Trust,
the Bylaws of the Fund, or any registration of the Fund
with the U.S. Securities and Exchange Commission (or any
successor agency) or any state, or as the Trustees may
consider necessary or desirable. Certain of the foregoing
actions may, in addition, be taken by the Trustees without
vote of the shareholders of the Fund.
On any matter submitted to a vote of shareholders, all
shares of the Fund then entitled to vote are voted in the
aggregate as a single class without regard to series or
classes of shares, except (1) when required by the
Investment Company Act of 1940, as amended, or when the
Trustees hall have determined that the matter affects one
or more series or classes of shares materially differently,
share are voted by individual series or class; and (2) when
the Trustees have determined that the matter affects only
the interests of one or more series or classes, then only
shareholders of such series or classes are entitled to vote
thereon. There is no cumulative voting.
Meetings of shareholders may be called by the Clerk
whenever ordered by the Trustees, the Chairman of the
Trustees, or requested in writing by the holder or holders
of at least one-tenth of the outstanding shares entitled to
vote at the meeting. Written notice of any meeting of
shareholders must be given by mailing the notice at least
seven days before the meeting. Thirty percent of shares
entitled to vote on a particular matter is a quorum for the
transaction of business on that matter at a shareholders'
meeting, except that, where any provision of law or of the
Agreement and Declaration of Trust permits or requires that
holders of any series or class vote as an individual series
or class, then thirty percent of the aggregate number of
shares of that series or class entitled to vote are
necessary to constitute a quorum for the transaction of
business by that series or class. For the purpose of
determining the shareholders of any class or series of
shares who are entitled to vote or act at any meeting, or
who are entitled to receive payment of any dividend or
other distribution, the Trustees are authorized to fix
record dates, which may not be more then 90 days before the
date of any meeting of shareholders or more than 60 days
before the date of payment of any dividend or other
distribution.
The Trustees are authorized by the Agreement and
Declaration of Trust to adopt Bylaws not inconsistent with
the Agreement and Declaration of Trust providing for the
conduct of the business of the Fund. The Bylaws
contemplate that the Trustees shall elect a Chairman of the
Trustees, the President, the Treasurer, and the Clerk of
the Fund, and that other officers, if any, may be elected
or appointed by the Trustees at any time. The Bylaws may
be amended or repealed, in whole or in part, by a majority
of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a
majority.
Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the
Trustees may from time to time determine. It shall be
sufficient notice to a Trustee of a special meeting to send
notice by mail at least forty-eight hours or by telegram at
least twenty-four hours before the meeting or to give
notice to him or her in person or by telephone at least
twenty-four hours before the meeting.
At any meeting of Trustees, a majority of the Trustees
then in office shall constitute a quorum. Except as
otherwise provided in the Agreement and Declaration of
Trust or Bylaws, any action to be taken by the Trustees may
be taken by a majority of the Trustees present at a meeting
(a quorum being present), or by written consents of a
majority of the Trustees then in office.
Subject to a favorable majority shareholder vote (as
defined in the Agreement and Declaration of Trust), the
Trustees may contract for exclusive or nonexclusive
advisory and/or management services with any corporation,
trust, association, or other organization.
The Agreement and Declaration of Trust contains
provisions for the indemnification of Trustees, officers,
and shareholders of the Fund under the circumstances and on
the terms specified therein.
The Fund may be terminated at any time by vote of
shareholders holding at least two-thirds of the shares
entitled to vote or by the trustees by written notice to
the shareholders. Any series of shares may be terminated
at any time by vote of shareholders holding at least two-
thirds of the shares of such series entitled to vote or by
the Trustees by written notice to the shareholders of such
series.
The foregoing is a general summary of certain
provisions of the Agreement and Declaration of Trust and
Bylaws of the Fund, and is qualified in its entirety by
reference to each of those documents.
(G) Information Concerning Major Shareholders
Not applicable.
(H) Information Concerning Directors, Officers and Employees
(1) Trustees and Officers of the Trust
(as of April 30, 1998)
Shares
Name Office and Resume Owned
Title
George Putnam Chairman and present: Chairman and
President Director of the 5,094.708
Investment
Management
Company and
Putnam Mutual
Funds Corp.
Director, Marsh &
McLennan
Companies, Inc.
William F. Vice present: Professor of
Pounds Chairman Management, 8,323.780
Alfred P. Sloan
School of
Management,
Massachusetts
Institute of
Technology
Jameson Adkins Trustee present: President,
Baxter Baxter 642.698
Associates, Inc.
Hans H. Estin Trustee present: Vice Chairman,
North American 392.335
Management Corp.
John A. Hill Trustee present: Chairman and
Managing 6,605.893
Director, First
Reserve
Corporation
Ronald J. Trustee present: Former
Jackson Chairman, 1,126.007
President and
Chief Executive
Officer of Fisher-
Price, Inc.,
Trustee of Salem
Hospital and the
Peabody Essex
Museum
Paul. L. Trustee present: Professor of 0
Joskow Economics and
Management and
Head of the
Department of
Economics at the
Massachusetts
Institute of
Technology,
Director, New
England Electric
System, State
Farm Indemnity
Company and
Whitehead
Institute for
Biomedical
Research
Elizabeth T. Trustee present: President 0
Kennan Emeritus and
Professor, Mount
Holyoke College
Lawrence J. Trustee and present: President,
Lasser Vice Chief Executive 101.831
President Officer and
Director of
Putnam
Investments, Inc.
and the
Investment
Management
Company
Director, Marsh &
McLennan
Companies, Inc.
John H. Trustee present: Chairman and
Mullin, III Chief Executive 545.697
Officer of
Ridgeway Farm,
Director of ACX
Technologies,
Inc., Alex. Brown
Realty, Inc., and
The Liberty
Corporation
Robert E. Trustee present: President and
Patterson Trustee of Cabot 1,616.236
Industrial Trust
and Trustee of
Sea Education
Association
Donald S. Trustee present: Director of
Perkins various 1,526.594
corporations,
including Cummins
Engine Company,
Lucent
Technologies,
Inc., Nanophase
Technologies,
Inc., Springs
Industries, Inc.
and Time Warner
Inc.
George Putnam, Trustee present: President, New
III Generation 309.150
Research, Inc.
A.J.C. Smith Trustee present: Chairman and
Chief Executive 130.781
Officer, Marsh &
McLennan
Companies, Inc.
W. Thomas Trustee present: President and
Stephens Chief Executive 110.194
Officer of
MacMillan Bloedel
Ltd., Director of
Qwest
Communications
and New Century
Energies
W. Nicholas Trustee present: Director of
Thorndike various 121.585
corporations and
charitable
organizations,
including Data
General
Corporation,
Bradley Real
Estate, Inc. and
Providence
Journal Co.
Trustee of Cabot
Industrial Trust,
Massachusetts
General Hospital
and Eastern
Utilities
Associations
Charles E. Executive present: Managing 0
Porter Vice Director of
President Putnam
Investments, Inc.
and the
Investment
Management
Company
Patricia C. Senior Vice present: Senior Vice 0
Flaherty President President of
Putnam
Investments, Inc.
and the
Investment
Management
Company
William N. Vice present: Director and 0
Shiebler President Senior Managing
Director of
Putnam
Investments, Inc.
President and
Director of
Putnam Mutual
Funds
Ian C. Vice present: Senior 0
Ferguson President Managing Director
of Investment
Management
Company
Gordon H. Vice present: Director and 10,170
Silver President Senior Managing .011
Director of
Putnam
Investments, Inc.
and the
Investment
Management
Company
John D. Hughes Vice present Senior Vice 0
President President of the
and Investment
Treasurer Management
Company
Beverly Marcus Clerk and N/A
Assistant 117.831
Treasurer
John R. Verani Vice present Senior Vice 0
President President of
Putnam
Investment, Inc.
and the
Investment
Management
Company
William J. Vice present Managing 0
Curtin President Director of
Putnam
Investments, Inc.
and the
Investment
Management
Company
D. William Managing present Managing 0
Kohli Director Director of
Putnam
Investment, Inc.
and the
Investment
Management
Company
(2) Employees of the Fund
The Fund does not have any employees.
(I) Description of Business and Outline of Operation
The Fund may carry out any administrative and
managerial act, including the purchase, sale, subscription
and exchange of any securities, and the exercise of all
rights directly or indirectly pertaining to the Fund's
assets. The Fund has retained Putnam Investment
Management, Inc., the investment adviser, to render
investment advisory services and Putnam Fiduciary Trust
Company, to hold the assets of the Fund in custody and act
as Investor Servicing Agent.
(J) Miscellaneous
(1) Changes of Trustees and Officers
Trustees may be removed or replaced by, among
other things, a resolution adopted by a vote of two-
thirds of the outstanding shares at a meeting called
for the purpose. In the event of vacancy, the
remaining Trustees may fill such vacancy by appointing
for the remaining term of the predecessor Trustee such
other person as they in their discretion shall see fit.
The Trustees may add to their number as they consider
appropriate. The Trustees may elect and remove
officers as they consider appropriate.
(2) Amendment to the Agreement and Declaration of Trust
Generally, approval of shareholders is required to
amend the Agreement and Declaration of Trust, except
for certain matters such as change of name, curing any
ambiguity or curing any defective or inconsistent
provision.
(3) Litigation and Other Significant Events
Nothing which has or which would have a material
adverse effect on the Fund has occurred which has not
been disclosed. The fiscal year end of the Fund is
June 30. The Fund is established for an indefinite
period and may be dissolved at any time by vote of the
shareholders holding at least two-thirds of the shares
entitled to vote or by the Trustees by written notice
to shareholders.
2. Putnam Investment Management, Inc. (Investment Management
Company)
(A) Law of Place of Incorporation
Putnam is incorporated under the General Corporation Law of
The Commonwealth of Massachusetts, U.S.A. Its investment
advisory business is regulated under the Investment
Advisers Act of 1940.
Under the Investment Advisers Act of 1940, an investment
adviser means, with certain exceptions, any person who, for
compensation, engages in the business of advising others,
either directly or through publications or writings, as to
the value of securities or as to the advisability of
investing in, purchasing or selling securities, or who, for
compensation and as part of a regular business, issues
analyses or reports concerning securities. Investment
advisers under the Act may not conduct their business
unless they are registered with the SEC.
(B) Outline of the Supervisory Authority
Investment Management Company is registered as an
investment adviser under the Investment Advisers Act of
1940.
(C) Purpose of the Company
Investment Management Company's sole business is investment
management, which includes the buying, selling, exchanging
and trading of securities of all descriptions on behalf of
mutual funds in any part of the world.
(D) History of the Company
Investment Management Company is one of America's oldest
and largest money management firms. Investment Management
Company's staff of experienced portfolio managers and
research analysts selects securities and constantly
supervises the fund's portfolio. By pooling an investor's
money with that of other investors, a greater variety of
securities can be purchased than would be the case
individually: the resulting diversification helps reduce
investment risk. Investment Management Company has been
managing mutual funds since 1937. Today, the firm serves
as the Investment Management Company for the funds in the
Putnam Family, with nearly $208 billion in assets in nearly
10 million shareholder accounts at the end of April 1998.
An affiliate, The Putnam Advisory Company, Inc., manages
domestic and foreign institutional accounts and mutual
funds, including the accounts of many Fortune 500
companies. Another affiliate, Putnam Fiduciary Trust
Company, provides investment advice to institutional
clients under its banking and fiduciary powers as well as
shareholder and custody services to the Putnam Funds.
Putnam Investment Management Inc., Putnam Mutual Funds and
Putnam Fiduciary Trust Company are subsidiaries of Putnam
Investments, Inc., which is a subsidiary of Marsh &
McLennan Companies, Inc., a publicly-owned holding company
whose principal businesses are international insurance and
reinsurance brokerage, employee benefit consulting and
investment management.
(E) Amount of Capital Stock (as of the end of April 1998)
1. Amount of Capital (issued capital stock at par value):
Common Stock 1,000 shares at $1 par value
2. Number of authorized shares of capital stock:
Common Stock 1,000 shares
3. Number of outstanding shares of capital stock:
Common Stock 1,000 shares
4. Amount of capital (for the purposes of this Item,
"Amount of Capital" means total stockholders' equity
for the past five years:
Amount of Capital
Year (Total Stockholders' Equity)
End of 1993 $49,847,760
End of 1994 $48,149,491
End of 1995 $45,521,351
End of 1996 $45,817,658
End of 1997 $48,617,160
(F) Structure of the Management of the Company
Investment Management Company is ultimately managed by its
Board of Directors, which is elected by its shareholders.
Each fund managed by Investment Management Company is
managed by one or more portfolio managers. These managers,
in coordination with analysts who research specific
securities and other members of the relevant investment
group (in the case of the Fund, Investment Management
Company's Global Core and Growth Equities Group), provide a
continuous investment program for the Fund and place all
orders for the purchase and sale of portfolio securities.
The investment performance and portfolio of each Fund is
overseen by its Board of Trustees, a majority of whom are
not affiliated with Investment Management Company. The
Trustees meet 11 times a year and review the performance of
each fund with its manager at least quarterly.
In selecting portfolio securities for the Fund, Investment
Management Company looks for securities that represent
attractive values based on careful issue-by-issue credit
analysis and hundreds of onsite visits and other contacts
with issuers every year. Investment Management Company is
one of the largest managers of equity, high yield and other
debt securities in the United States.
The following officers of Investment Management Company has
had primary responsibility for the day-to-day management of
the Fund's portfolio since the years stated below:
(as of the end of April 1998)
Names Year Business Experience
(at least 5 years)
Omid Kamshad 1996 Employed as an investment professional by
Managing Putnam Management since January 1996. Prior
Director to January, 1996, Mr. Kamshad was Director
of Investments at Lombard Odier
International. Prior to April, 1995, Mr.
Kamshad was Director at Baring Asset
Management Company
Mark D. Pollard 199 Employed as an investment professional by
Senior Vice 5 Putnam Management since 1990
President
Justin M. Scott 199 Employed as an investment professional by
Managing 0 Putnam Management since 1988.
Director
(G) Information Concerning Major Stockholders
As of the end of April 1998, all the outstanding shares of
capital stock of Investment Management Company were owned
by Putnam Investments, Inc. See subsection D above.
(H) Information Concerning Officers and Employees
The following table lists the names of various officers and
directors of Investment Management Company and their
respective positions with Investment Management Company.
For each named individual, the table lists: (i) any other
organizations (excluding other Investment Management
Company's funds) with which the officer and/or director
has recently had or has substantial involvement; and (ii)
positions held with such organization:
List of Officers and Directors of Putnam Investment Management,
Inc.
(as of the end of April, 1998)
Position
with Putnam
Name Investment Other Business Affiliation
Management,
Inc.
Putnam, Chairman Director of Putnam Mutual
George Funds Corp.
Lasser, President
Lawrence J. and Director
Silver, Director and Director of Putnam Fiduciary
Gordon Senior Trust Company, Senior
Managing Administrative Officer and
Director Senior Managing Director of
Putnam Mutual Funds Corp.
Burke, Senior Senior Managing Director of
Robert W. Managing Putnam Mutual Funds Corp.
Director
Collman, Senior Senior Managing Director of
Kathleen M. Managing Putnam Mutual Funds Corp.
Director
Ferguson, Senior
Ian C. Managing
Director
Regan, Senior
Anthony W. Managing
Director
Spiegel, Director and Senior Managing Director of
Steven Senior Putnam Mutual Funds Corp.
Managing
Director
Anderson, Managing
Blake E. Director
Antill, Managing
Jennifer Director
Beck, Managing
Robert R. Director
Bogan, Managing
Thomas R. Director
Browchuk, Managing
Brett Director
Cassaro, Managing
Jeseph A. Director
Cotner, C. Managing
Beth Director
Cronin, Managing Managing Director of Putnam
Kevin M. Director Fiduciary Trust Company
Curtin, Managing
William J. Director
D'Alelio, Managing
Edward H. Director
Daly, Managing Managing Director of Putnam
Kenneth L. Director Mutual Funds Corp.
DeTore, Managing Managing Director of Putnam
John A. Director Fiduciary Trust Company
Durgarian, Managing
Karnig H. Director
Esteves, Managing Treasurer and CFO of Putnam
Irene M. Director Fiduciary Trust Company
Gillis, Managing
Roland Director
Haslett, Managing
Thomas R. Director
Hurley, Managing Managing Director and CFO of
William J. Director Putnam Mutual Funds Corp.
Jacobs, Managing
Jerome J. Director
Joseph, Managing
Joseph P. Director
Kamshad, Managing
Omid Director
King, David Managing
L. Director
Kohli, D. Managing
William Director
Kreisel, Managing
Anthony I. Director
Kuenstner, Managing
Deborah F. Director
Landes, Managing
William J. Director
Leichter, Managing
Jennifer Director
Maloney, Managing
Kevin J. Director
Martino, Managing Managing Director of Putnam
Michael Director Fiduciary Trust Company
Maxwell, Managing
Scott M. Director
McGue, Managing
William F. Director
McMullan, Managing
Carol C. Director
Miller, Managing
Daniel L. Director
Morgan Jr., Managing Managing Director of Putnam
John J. Director Fiduciary Trust Company
O'Donnell Managing
Jr., C. Director
Patrick
Peacher, Managing
Stephen C. Director
Porter, Managing
Charles E. Director
Reilly, Managing
Thomas V. Director
Schultz, Managing Managing Director of Putnam
Mitchell D. Director Mutual Funds Corp.
Scott, Managing Managing Director of Putnam
Justin M. Director Fiduciary Trust Company
Shadek Jr., Managing Managing Director of Putnam
Edward T. Director Fiduciary Trust Company
Starr, Managing Managing Director of Putnam
Loren Director Mutual Funds Corp.
Swift, Managing
Robert Director
Talanian, Managing Managing Director of Putnam
John C. Director Mutual Funds Corp.
Tibbetts, Managing Managing Director of Putnam
Richard B. Director Mutual Funds Corp.
Waldman, Managing
David L. Director and
Chief
Financial
Officer
Wetlaufer, Managing Managing Director of Putnam
Eric Director Mutual Funds Corp.
Woolverton, Managing Managing Director of Putnam
William H. Director Mutual Funds Corp.
Zieff, Managing
William E. Director
Arends, Senior Vice Senior Vice President of
Michael K. President Putnam Mutual Funds Corp.
Asher, Senior Vice Senior Vice President of
Steven E. President Putnam Mutual Funds Corp.
and Senior Vice President of
Putnam Fiduciary Trust
Company
Atkin, Senior Vice
Michael J. President
Attridge, Senior Vice Senior Vice President of
Gail S. President Putnam Fiduciary Trust
Company
Agustine, Senior Vice
Jeffrey B. President
Bakshi, Senior Vice
Manjit S. President
Bamford, Senior Vice
Dolores President
Snyder
Baumbach, Senior Vice
Robert K. President
Berka, Senior Vice Senior Vice President of
Sharon A. President Putnam Mutual Funds Corp.
Blaisdell, Senior Vice
Geoffrey C. President
Boselli, Senior Vice
John A. President
Bousa, Senior Vice
Edward P. President
Bresnahan, Senior Vice Senior Vice President of
Leslee R. President Putnam Mutual Funds Corp.
Burke, Senior Vice
Andrea President
Burns, Senior Vice
Cheryl A. President
Byme, Senior Vice
Joshua L. President
Callahan, Senior Vice
Ellen S. President
Carlson, Senior Vice
David G. President
Chapman, Senior Vice
Susan President
Chrostowski Senior Vice Senior Vice President of
, Louis F. President Putnam Mutual Funds Corp.
Curran, Senior Vice Senior Vice President of
Peter J. President Putnam Mutual Funds Corp.
Dalferro, Senior Vice
John R. President
Danoff, Ami Senior Vice
K. President
Derbyshire, Senior Vice Senior Vice President of
Ralph C. President Putnam Fiduciary Trust
Company
England, Senior Vice
Richard B. President
Eurkus, Senior Vice
David J. President
Farrell, Senior Vice Senior Vice President of
Deborah S. President Putnam Mutual Funds Corp.
Finch, Ted Senior Vice
President
Fitzgerald, Senior Vice
Michael T. President
Flaherry, Senior Vice Senior Vice President of
Patricia C. President Putnam Mutual Funds Corp.
Fontana, Senior Vice
Forrest N. President
Francis, Senior Vice
Jonathan H. President
Frucci, Senior Vice Senior Vice President of
Richard M. President Putnam Fiduciary Trust
Company
Fullerton, Senior Vice Senior Vice President of
Brian J. President Putnam Mutual Funds Corp.
Grant, Senior Vice Senior Vice President of
Peter J. President Putnam Fiduciary Trust
Company
Graviere, Senior Vice
Patrice President
Grim, Senior Vice
Daniel J. President
Haagensen, Senior Vice
Paul E. President
Hadden, Senior Vice
Peter J. President
Halperin, Senior Vice
Matthew C. President
Healey, Senior Vice
Deborah R. President
Holding, Senior Vice
Pamela President
Hotchkiss, Senior Vice
Michael F. President
Kay, Karen Senior Vice Clerk, Director and Senior
R. President Vice President of Putnam
Fiduciary Trust Company and
Senior Vice President of
Putnam Mutual Funds Corp.
Kirson, Senior Vice
Steven L. President
Knight, Senior Vice
Jeffrey L. President
Kobylarz, Senior Vice
Jeffrey J. President
Koontz, Senior Vice Senior Vice President of
Jill A. President Putnam Mutual Funds Corp.
Korn, Karen Senior Vice
R. President
Lannum III, Senior Vice
Coleman N. President
Lindsey, Senior Vice
Jeffrey R. President
Lomba, Senior Vice
Rufino R. President
Lukens, Senior Vice
James W. President
MacElwee, Senior Vice
Elizabeth President
M.
Madore, Senior Vice Senior Vice President of
Robert A. President Putnam Fiduciary Trust
Company
Malloy, Senior Vice
Julie M. President
Manning, Senior Vice
Howard K. President
Marrkand, Senior Vice
Paul E. President
Matteis, Senior Vice
Andrew S. President
McAuley, Senior Vice
Alexander President
J.
McDonald, Senior Vice
Richard E. President
Meehan, Senior Vice
Thalia President
Mehta, Senior Vice
Sandeep President
Mikami, Senior Vice
Darryl K. President
Miller, Senior Vice
William H. President
Minn, Seung Senior Vice
H. President
Mockard, Senior Vice
Jeanne L. President
Morgan, Senior Vice
Kelly A. President
Mufson, Senior Vice
Michael J. President
Mullen, Senior Vice Senior Vice President of
Donald E. President Putnam Mutual Funds Corp.
Mullin, Senior Vice
Hugh H. President
Netols, Senior Vice Senior Vice President of
Jeffrey W. President Putnam Fiduciary Trust
Company
Oler, Senior Vice
Stephen S. President
Paine, Senior Vice
Robert M. President
Parker, Senior Vice
Margery C. President
Perry, Senior Vice
William President
Peters, Senior Vice
Carmel President
Plapinger, Senior Vice Senior Vice President of
Keith President Putnam Mutual Funds Corp.
Pohl, Senior Vice
Charles G. President
Polland, Senior Vice
Mark D. President
Prusko, Senior Vice Senior Vice President of
James M. President Putnam Fiduciary Trust
Company
Quinton, Senior Vice
Keith P. President
Quistberg, Senior Vice
Paul T. President
Ray, Senior Vice
Christophe President
r A.
Reeves, Senior Vice
William H. President
Rosalanko, Senior Vice
Thomas J. President
Ruys de Senior Vice Senior Vice President of
Perez, President Putnam Fiduciary Trust
Charles A. Company and Senior Vice
President of Putnam Mutual
Funds Corp.
Santos, Senior Vice Senior Vice President of
David J. President Putnam Fiduciary Trust
Company
Santosus, Senior Vice
Anthony C. President
Schwister, Senior Vice Senior Vice President of
Jay E. President Putnam Fiduciary Trust
Company
Scordato, Senior Vice Senior Vice President of
Christine President Putnam Mutual Funds Corp.
A.
Senter, Senior Vice
Max S. President
Shadek Senior Vice
Jr., President
Edward
Silk, Senior Vice
David M. President
Simon, Senior Vice
Sheldon N. President
Simozar, Senior Vice
Saied President
Smith Jr., Senior Vice
Leo J. President
Smith, Senior Vice
Margaret President
D.
Spatz, Senior Vice
Erin J. President
Stack, Senior Vice Senior Vice President of
Michael P. President Putnam Mutual Funds Corp.
Stairs, Senior Vice
George W. President
Storkerson Senior Vice Senior Vice President of
, John K. President Putnam Fiduciary Trust
Company
Strumpf, Senior Vice
Casey President
Sullivan, Senior Vice
Roger R. President
Svensson, Senior Vice
Lisa H. President
Swanberg, Senior Vice
Charles H. President
Thomas, Senior Vice
David K. President
Thomsen, Senior Vice Senior Vice President of
Rosemary President Putnam Fiduciary Trust
H. Company
Till, Senior Vice
Hilary F. President
Troped, Senior Vice Senior Vice President of
Bonnie L. President Putnam Mutual Funds Corop.
Tumer, Senior Vice
Virginia President
M.
Van Vleet, Senior Vice .
Charles C. President
Verani, Senior Vice Senior Vice President of
John R. President Putnam Fiduciary Trust
Company and Senior Vice
President of Putnam Mutal
Funds Corp.
Walsh, Senior Vice
Francis P. President
Warren, Senior Vice
Paul C. President
Weinstein, Senior Vice
Michael R. President
Weiss, Senior Vice
Manuel President
Whalen, Senior Vice Senior Vice President of
Edward F. President Putnam Mutual Funds Corp.
Wheeler, Senior Vice
Diane D.F. President
Wyke, Senior Vice
Richard P. President
Yogg, Senior Vice
Michael R. President
Zukowski, Senior Vice
Gerald S. President
(I) Summary of Business Lines and Business Operation
Investment Management Company is engaged in the business of
providing investment management and investment advisory
services to mutual funds. As of the end of April 1998,
Investment Management Company managed, advised, and/or
administered the following 103 funds and fund portfolios
(having an aggregate net asset value of approximately $207
billion):
(As of
the
end of
April
1998)
Name Month/Dat Principal Total Net
e/Year Characteri Net Asset
Establish stics Asset Value
ed Value ($ per
million) share
($)
The George Putnam Fund of 11/5/37 Open/Equit 3,358.6 19.32
Boston; A y
The George Putnam Fund of 4/24/92 Open/Equit 1,246.9 19.17
Boston; B y
The George Putnam Fund of 12/1/94 Open/Equit 272.8 19.17
Boston; M y
The George Putnam Fund of 1/1/94 Open/Equit 474.5 19.35
Boston; Y y
Putnam Arizona Tax Exempt 1/30/91 Open/Bond 119.6 9.24
Income Fund; A
Putnam Arizona Tax Exempt 7/15/93 Open/Bond 31.7 9.23
Income Fund; B
Putnam Arizona Tax Exempt 7/3/95 Open/Bond 0.5 9.25
Income Fund; M
Putnam American Government 3/1/85 Open/Bond 1,472.3 8.79
Income Fund; A
Putnam American Government 5/20/94 Open/Bond 36.8 8.75
Income Fund; B
Putnam American Government 2/14/95 Open/Bond 1.7 8.81
Income Fund; M
Putnam Asia Pacific Growth 2/20/91 Open/Equit 345.4 10.91
Fund; A y
Putnam Asia Pacific Growth 6/1/93 Open/Equit 143.1 10.75
Fund; B y
Putnam Asia Pacific Growth 2/1/95 Open/Equit 7.8 10.86
Fund; M y
Putnam Asset Allocation: 2/7/94 Open/Balan 905.0 12.16
Balanced Portfolio; A ced
Putnam Asset Allocation: 2/11/94 Open/Balan 521.2 12.09
Balanced Portfolio; B ced
Putnam Asset Allocation: 9/1/94 Open/Balan 92.8 12.03
Balanced Portfolio; C ced
Putnam Asset Allocation: 2/6/95 Open/Balan 56.8 12.14
Balanced Portfolio; M ced
Putnam Asset Allocation: 7/14/94 Open/Balan 255.4 12.17
Balanced Portfolio; Y ced
Putnam Asset Allocation : 2/7/94 Open/Balan 383.9 10.52
Conservative Portfolio; A ced
Putnam Asset Allocation : 2/18/94 Open/Balan 159.2 10.48
Conservative Portfolio; B ced
Putnam Asset Allocation : 9/1/94 Open/Balan 36.7 10.46
Conservative Portfolio; C ced
Putnam Asset Allocation : 2/7/95 Open/Balan 19.0 10.49
Conservative Portfolio; M ced
Putnam Asset Allocation : 7/14/94 Open/Balan 27.4 10.53
Conservative Portfolio; Y ced
Putnam Asset Allocation: Growth 2/8/94 Open/Balan 650.5 13.70
Portfolio; A ced
Putnam Asset Allocation: Growth 2/16/94 Open/Balan 431.4 13.54
Portfolio; B ced
Putnam Asset Allocation: Growth 9/1/94 Open/Balan 94.2 13.44
Portfolio; C ced
Putnam Asset Allocation: Growth 2/1/95 Open/Balan 50.1 13.55
Portfolio; M ced
Putnam Asset Allocation: Growth 7/14/94 Open/Balan 246.3 13.78
Portfolio; Y ced
Putnam Balanced Retirement 4/19/85 Open/Balan 660.2 11.58
Fund; A ced
Putnam Balanced Retirement 2/1/94 Open/Balan 123.5 11.48
Fund; B ced
Putnam Balanced Retirement 3/17/95 Open/Balan 10.4 11.52
Fund; M ced
Putnam California Tax Exempt 4/29/83 Open/Bond 3,021.2 8.67
Income Fund; A
Putnam California Tax Exempt 1/4/93 Open/Bond 601.1 8.66
Income Fund; B
Putnam California Tax Exempt 2/14/95 Open/Bond 13.1 8.66
Income Fund; M
Putnam VT Asia Pacific Growth 5/1/95 Open/Equit 112.5 8.62
Fund; A y
Putnam VT Asia Pacific Growth 4/30/98 Open/Equit 1,006.0 8.62
Fund; B y
Putnam VT Diversified Income 9/15/93 Open/Bond 647.4 10.97
Fund; A
Putnam VT Diversified Income 4/6/98 Open/Bond 1,001.0 10.97
Fund; B
Putnam VT Global Growth Fund; A 5/1/90 Open/Equit 1,862.9 18.38
y
Putnam VT Global Growth Fund; B 4/30/98 Open/Equit 1,020.0 18.38
y
Putnam VT Global Asset 2/1/88 Open/Balan 1,046.1 18.41
Allocation Fund; A ced
Putnam VT Global Asset 4/30/98 Open/Balan 1,013.0 18.41
Allocation Fund; B ced
Putnam VT Growth and Income 2/1/88 Open/Balan 9,429.7 27.67
Fund; A ced
Putnam VT Growth and Income 4/6/98 Open/Balan 987.0 27.61
Fund; B ced
Putnam VT High Yield Fund; A 2/1/88 Open/Bond 1,117.5 13.00
Putnam VT High Yield Fund; B 4/30/98 Open/Bond 1,002.0 13.02
Putnam VT Money Market Fund; A 2/1/88 Open/Bond 430.4 1.00
Putnam VT Money Market Fund; B 4/30/98 Open/Bond 1,000.0 1.00
Putnam VT New Opportunities 5/2/94 Open/Equit 3,144.7 24.29
Fund; A y
Putnam VT New Opportunities 4/30/98 Open/Equit 1,015.0 24.29
Fund; B y
Putnam VT U.S. Government and 2/1/88 Open/Bond 804.2 12.97
High Quality Bond Fund; A
Putnam VT U.S. Government and 4/30/98 Open/Bond 1,006.0 12.97
High Quality Bond Fund; B
Putnam VT Utilities Growth and 5/1/92 Open/Balan 875.4 16.44
Income Fund; A ced
Putnam VT Utilities Growth and 4/30/98 Open/Balan 1,015.0 16.44
Income Fund; B ced
Putnam VT Voyager Fund; A 2/1/88 Open/Equit 5,295.5 42.25
y
Putnam VT Voyager Fund; B 4/30/98 Open/Equit 1,017.0 42.25
y
Putnam Capital Appreciation 8/5/93 Open/Equit 1,520.7 23.98
Fund; A y
Putnam Capital Appreciation 11/2/94 Open/Equit 1,685.5 23.69
Fund; B y
Putnam Capital Appreciation 1/22/96 Open/Equit 121.0 23.74
Fund; M y
Putnam Convertible Income- 6/29/72 Open/Balan 1,209.2 22.92
Growth Trust; A ced
Putnam Convertible Income- 7/15/93 Open/Balan 313.5 22.69
Growth Trust; B ced
Putnam Convertible Income- 3/13/95 Open/Balan 19.4 22.77
Growth Trust; M ced
Putnam Diversified Equity 7/1/94 Open/Equit 288.3 14.00
Trust; A y
Putnam Diversified Equity 7/2/94 Open/Equit 361.5 13.87
Trust; B y
Putnam Diversified Equity 7/3/95 Open/Equit 27.4 13.91
Trust; M y
Putnam Diversified Income 10/3/88 Open/Bond 2,098.2 12.68
Trust; A
Putnam Diversified Income 3/1/93 Open/Bond 2,372.8 12.63
Trust; B
Putnam Diversified Income 12/1/94 Open/Bond 1,098.1 12.64
Trust; M
Putnam Diversified Income Trust 7/11/96 Open/Bond 23.3 12.68
; Y
Putnam Equity Income Fund; A 6/15/77 Open/Balan 1,049.9 17.06
ced
Putnam Equity Income Fund; B 9/13/93 Open/Balan 596.4 16.95
ced
Putnam Equity Income Fund; M 12/2/94 Open/Balan 60.6 16.97
ced
Putnam Europe Growth Fund; A 9/7/90 Open/Equit 674.9 23.12
y
Putnam Europe Growth Fund; B 2/1/94 Open/Equit 511.5 22.59
y
Putnam Europe Growth Fund; M 12/1/94 Open/Equit 31.1 22.97
y
Putnam Florida Tax Exempt 8/24/90 Open/Bond 238.0 9.33
Income Fund; A
Putnam Florida Tax Exempt 1/4/93 Open/Bond 69.8 9.33
Income Fund; B
Putnam Florida Tax Exempt 5/1/95 Open/Bond 1.3 9.32
Income Fund; M
Putnam High Quality Bond Fund; 6/2/86 Open/Bond 330.5 10.12
A
Putnam High Quality Bond Fund; 6/6/94 Open/Bond 15.2 10.08
B
Putnam High Quality Bond Fund; 4/12/95 Open/Bond 1.1 10.13
M
Putnam Global Governmental 6/1/87 Open/Bond 273.1 13.19
Income Trust; A
Putnam Global Governmental 2/1/94 Open/Bond 38.2 13.16
Income Trust; B
Putnam Global Governmental 3/17/95 Open/Bond 300.0 13.12
Income Trust; M
Putnam Global Growth Fund; A 9/1/67 Open/Equit 3,023.2 11.68
y
Putnam Global Growth Fund; B 4/27/92 Open/Equit 1,925.8 11.28
y
Putnam Global Growth Fund; M 3/1/95 Open/Equit 52.4 11.60
y
Putnam Global Growth Fund; Y 6/15/94 Open/Equit 61.6 11.86
y
Putnam Growth and Income Fund 1/5/95 Open/Balan 1,249.1 15.14
II; A ced
Putnam Growth and Income Fund 1/5/95 Open/Balan 1,494.4 15.03
II; B ced
Putnam Growth and Income Fund 1/5/95 Open/Balan 175.1 15.08
II; M ced
The Putnam Fund for Growth and 11/6/57 Open/Balan 19,553.3 21.55
Income; A ced
The Putnam Fund for Growth and 4/27/92 Open/Balan 16,596.9 21.29
Income; B ced
The Putnam Fund for Growth and 5/1/95 Open/Balan 436.4 21.43
Income; M ced
The Putnam Fund for Growth and 6/15/94 Open/Balan 897.6 21.59
Income; Y ced
Putnam High Yield Advantage 3/25/86 Open/Bond 1,586.7 10.10
Fund; A
Putnam High Yield Advantage 5/16/94 Open/Bond 1,355.6 10.05
Fund; B
Putnam High Yield Advantage 12/1/94 Open/Bond 2,168.3 10.09
Fund; M
Putnam High Yield Trust; A 2/14/78 Open/Bond 3,296.1 13.18
Putnam High Yield Trust; B 3/1/93 Open/Bond 1,233.7 13.12
Putnam High Yield Trust; M 7/3/95 Open/Bond 23.5 13.17
Putnam Health Sciences Trust; A 5/28/82 Open/Equit 2,400.7 63.21
y
Putnam Health Sciences Trust; B 3/1/93 Open/Equit 1,162.3 61.29
y
Putnam Health Sciences Trust; M 7/3/95 Open/Equit 52.9 62.58
y
Putnam Income Fund; A 11/1/54 Open/Bond 1,397.9 7.12
Putnam Income Fund; B 3/1/93 Open/Bond 444.6 7.08
Putnam Income Fund; M 12/14/94 Open/Bond 1,567.9 7.08
Putnam Income Fund; Y 2/12/94 Open/Bond 231.9 7.12
Putnam Intermediate U.S. 2/16/93 Open/Bond 143.0 4.92
Government Income Fund; A
Putnam Intermediate U.S. 2/16/93 Open/Bond 74.5 4.92
Government Income Fund; B
Putnam Intermediate U.S. 4/3/95 Open/Bond 6.9 4.93
Government Income Fund; M
Putnam International New 1/3/95 Open/Equit 815.2 13.06
Opportunities Fund; A y
Putnam International New 7/21/95 Open/Equit 1,030.7 12.85
Opportunities Fund; B y
Putnam International New 7/21/95 Open/Equit 83.1 12.94
Opportunities Fund; M y
Putnam Investors Fund; A 12/1/25 Open/Equit 2,739.2 13.16
y
Putnam Investors Fund; B 3/1/93 Open/Equit 654.5 12.69
y
Putnam Investors Fund; M 12/2/94 Open/Equit 65.4 12.98
y
Putnam Investors Fund; Y 11/30/96 Open/Equit 160.5 13.17
y
Putnam Massachusetts Tax Exempt 10/23/89 Open/Bond 290.0 9.51
Income Fund; A
Putnam Massachusetts Tax Exempt 7/15/93 Open/Bond 102.9 9.50
Income Fund; B
Putnam Massachusetts Tax Exempt 5/12/95 Open/Bond 2.6 9.50
Income Fund; M
Putnam Michigan Tax Exempt 10/23/89 Open/Bond 143.3 9.27
Income Fund; A
Putnam Michigan Tax Exempt 7/15/93 Open/Bond 40.3 9.26
Income Fund; B
Putnam Michigan Tax Exempt 4/17/95 Open/Bond 1.7 9.27
Income Fund; M
Putnam Minnesota Tax Exempt 10/23/89 Open/Bond 101.5 9.11
Income Fund; A
Putnam Minnesota Tax Exempt 7/15/93 Open/Bond 42.6 9.09
Income Fund; B
Putnam Minnesota Tax Exempt 4/3/95 Open/Bond 1.5 9.11
Income Fund; M
Putnam Money Market Fund; A 10/1/76 Open/Bond 2,190.0 1.00
Putnam Money Market Fund; B 4/27/92 Open/Bond 456.8 1.00
Putnam Money Market Fund; M 12/8/94 Open/Bond 64.2 1.00
Putnam Municipal Income Fund; A 5/22/89 Open/Bond 807.7 9.22
Putnam Municipal Income Fund; B 1/4/93 Open/Bond 493.6 9.21
Putnam Municipal Income Fund; M 12/1/94 Open/Bond 14.9 9.22
Putnam New Jersey Tax Exempt 2/20/90 Open/Bond 218.5 9.23
Income Fund; A
Putnam New Jersey Tax Exempt 1/4/93 Open/Bond 94.2 9.22
Income Fund; B
Putnam New Jersey Tax Exempt 5/1/95 Open/Bond 0.6 9.23
Income Fund; M
Putnam New York Tax Exempt 9/2/83 Open/Bond 1,660.3 8.88
Income Fund; A
Putnam New York Tax Exempt 1/4/93 Open/Bond 224.3 8.86
Income Fund; B
Putnam New York Tax Exempt 4/10/95 Open/Bond 2.2 8.88
Income Fund; M
Putnam New York Tax Exempt 11/7/90 Open/Bond 165.6 9.09
Opportunities Fund; A
Putnam New York Tax Exempt 2/1/94 Open/Bond 63.4 9.08
Opportunities Fund; B
Putnam New York Tax Exempt 2/10/95 Open/Bond 2.4 9.07
Opportunities Fund; M
Putnam Global Natural Resources 7/24/80 Open/Equit 239.4 21.90
Fund; A y
Putnam Global Natural Resources 2/1/94 Open/Equit 157.0 21.56
Fund; B y
Putnam Global Natural Resources 7/3/95 Open/Equit 8.5 21.75
Fund; M y
Putnam New Opportunities Fund; 8/31/90 Open/Equit 9,883.0 56.46
A y
Putnam New Opportunities Fund; 3/1/93 Open/Equit 7,856.4 54.31
B y
Putnam New Opportunities Fund; 12/1/94 Open/Equit 437.9 55.50
M y
Putnam New Opportunities Fund; 7/19/94 Open/Equit 452.0 57.03
Y y
Putnam Ohio Tax Exempt Income 10/23/89 Open/Bond 184.2 9.18
Fund; A
Putnam Ohio Tax Exempt Income 7/15/93 Open/Bond 52.5 9.17
Fund; B
Putnam Ohio Tax Exempt Income 4/3/95 Open/Bond 2.2 9.18
Fund; M
Putnam OTC & Emerging Growth 11/1/82 Open/Equit 2,664.6 18.72
Fund; A y
Putnam OTC & Emerging Growth 7/15/93 Open/Equit 1,333.8 17.95
Fund; B y
Putnam OTC & Emerging Growth 12/2/94 Open/Equit 242.5 18.36
Fund; M y
Putnam OTC & Emerging Growth 7/12/96 Open/Equit 111.0 18.82
Fund; Y y
Putnam International Growth 2/28/91 Open/Equit 1,660.0 19.93
Fund; A y
Putnam International Growth 6/1/94 Open/Equit 1,102.8 19.59
Fund; B y
Putnam International Growth 12/1/94 Open/Equit 130.1 19.80
Fund; M y
Putnam International Growth 7/12/96 Open/Equit 146.7 19.98
Fund; Y y
Putnam Pennsylvania Tax Exempt 7/21/89 Open/Bond 184.7 9.41
Income Fund; A
Putnam Pennsylvania Tax Exempt 7/15/93 Open/Bond 88.5 9.40
Income Fund; B
Putnam Pennsylvania Tax Exempt 7/3/95 Open/Bond 1.8 9.42
Income Fund; M
Putnam Preferred Income Fund; A 1/4/84 Open/Bond 121.8 9.15
Putnam Preferred Income Fund; M 4/20/95 Open/Bond 10.9 9.12
Putnam Tax - Free Income Trust 9/20/93 Open/Bond 650.8 14.55
Tax - Free High Yield Fund; A
Putnam Tax - Free Income Trust 9/9/85 Open/Bond 1,346.6 14.56
Tax - Free High Yield Fund B
Putnam Tax - Free Income Trust 12/29/94 Open/Bond 17.9 14.55
Tax - Free High Yield Fund M
Putnam Tax - Free Income Trust 9/30/93 Open/Bond 223.1 15.27
Tax - Free Insured Fund; A
Putnam Tax - Free Income Trust 9/9/85 Open/Bond 333.5 15.29
Tax - Free Insured Fund; B
Putnam Tax - Free Income Trust 6/1/95 Open/Bond 1.7 15.26
Tax - Free Insured Fund; M
Putnam Tax Exempt Income Fund; 12/31/76 Open/Bond 1,988.3 9.13
A
Putnam Tax Exempt Income Fund; 1/4/93 Open/Bond 248.3 9.13
B
Putnam Tax Exempt Income Fund; 2/16/95 Open/Bond 9.9 9.15
M
Putnam Tax Exempt Money Market 10/26/87 Open/Bond 84.0 1.00
Fund
Putnam U.S. Government Income 2/8/84 Open/Bond 2,095.9 13.07
Trust; A
Putnam U.S. Government Income 4/27/92 Open/Bond 1,237.4 13.02
Trust; B
Putnam U.S. Government Income 2/6/95 Open/Bond 201.9 13.05
Trust; M
Putnam U.S. Government Income 4/11/94 Open/Bond 6.5 13.07
Trust; Y
Putnam Utilities Growth and 11/19/90 Open/Balan 721.1 13.35
Income Fund; A ced
Putnam Utilities Growth and 4/27/92 Open/Balan 759.7 13.27
Income Fund; B ced
Putnam Utilities Growth and 3/1/95 Open/Balan 11.0 13.33
Income Fund; M ced
Putnam Vista Fund; A 6/3/68 Open/Equit 3,232.8 13.51
y
Putnam Vista Fund; B 3/1/93 Open/Equit 1,566.5 12.93
y
Putnam Vista Fund; M 12/1/94 Open/Equit 129.7 13.25
y
Putnam Vista Fund; Y 3/28/95 Open/Equit 285.5 13.65
y
Putnam Voyager Fund II; A 4/14/93 Open/Equit 646.7 21.87
y
Putnam Voyager Fund II; B 10/2/95 Open/Equit 601.4 21.45
y
Putnam Voyager Fund II; M 10/2/95 Open/Equit 72.0 21.61
y
Putnam Voyager Fund; A 4/1/96 Open/Equit 13,785.6 21.78
y
Putnam Voyager Fund; B 4/27/92 Open/Equit 7,336.2 20.58
y
Putnam Voyager Fund; M 12/1/94 Open/Equit 322.9 21.38
y
Putnam Voyager Fund; Y 4/1/94 Open/Equit 1,489.9 22.08
y
Putnam California Investment 11/27/92 Closed/Bon 70.8 15.37
Grade Municipal Trust d
Putnam Convertible 6/29/95 Closed/Bon 16.0 28.28
Opportunities and Income Trust d
Putnam Dividend Income Fund 9/28/89 Closed/Bon 127.7 11.80
d
Putnam High Income Convertible 7/9/87 Closed/Bon 134.4 9.97
and Bond Fund d
Putnam Investment Grade 10/26/89 Closed/Bon 247.2 11.93
Municipal Trust; A d
Putnam Investment Grade 10/26/89 Closed/Bon 140.1 11.93
Municipal Trust; B d
Putnam Investment Grade 11/27/92 Closed/Bon 188.8 14.14
Municipal Trust II; A d
Putnam Investment Grade 11/27/92 Closed/Bon 63.1 14.14
Municipal Trust II; B d
Putnam Investment Grade 11/29/93 Closed/Bon 53.3 13.30
Municipal Trust III; A d
Putnam Investment Grade 11/29/93 Closed/Bon 10.0 13.30
Municipal Trust III; B d
Putnam Managed High Yield Trust 6/25/93 Closed/Bon 112.8 15.02
d
Putnam Managed Municipal Income 2/24/89 Closed/Bon 452.8 9.83
Trust; A d
Putnam Managed Municipal Income 2/24/89 Closed/Bon 175.1 9.83
Trust; B d
Putnam Master Income Trust 12/28/87 Closed/Bon 493.0 9.29
d
Putnam Master Intermediate 4/29/88 Closed/Bon 864.6 8.65
Income Trust d
Putnam Municipal Opportunities 5/28/93 Closed/Bon 227.0 14.05
Trust; A d
Putnam Municipal Opportunities 5/28/93 Closed/Bon 121.2 14.05
Trust; B d
Putnam New York Investment 11/27/92 Closed/Bon 39.7 13.96
Grade Municipal Trust; A d
Putnam New York Investment 11/27/92 Closed/Bon 10.0 13.96
Grade Municipal Trust; B d
Putnam Premier Income Trust 2/29/88 Closed/Bon 1,246.3 8.89
d
Putnam Tax - Free Heath Care 6/29/92 Closed/Bon 205.5 14.89
Fund d
Putnam Growth Opportunities; A 10/2/95 Open/Equit 187.0 15.88
y
Putnam Growth Opportunities; B 8/1/97 Open/Equit 198.6 15.79
y
Putnam Growth Opportunities; M 8/1/97 Open/Equit 16.5 15.82
y
Putnam Strategic Income Fund; A 2/19/95 Open/Bond 59.0 8.69
Putnam Strategic Income Fund; B 2/19/96 Open/Bond 88.5 8.70
Putnam Strategic Income Fund; M 2/19/96 Open/Bond 8.6 8.70
Putnam High Yield Total Return 1/1/97 Open/Bond 27.2 9.10
Fund; A
Putnam High Yield Total Return 1/1/97 Open/Bond 34.7 8.99
Fund; B
Putnam High Yield Total Return 1/1/97 Open/Bond 2.9 9.01
Fund; M
Putnam VT International Growth 1/1/97 Open/Balan 286.8 13.61
and Income; A ced
Putnam VT International Growth 4/6/98 Open/Balan 1,019.0 13.61
and Income; B ced
Putnam VT International New 1/1/97 Open/Equit 3,144.7 11.60
Opportunities Fund; A y
Putnam VT International New 4/30/98 Open/Equit 1,018.0 11.60
Opportunities Fund; B y
Putnam VT International Growth 1/1/97 Open/Equit 225.7 13.66
Fund; A y
Putnam VT International Growth 4/30/98 Open/Equit 1,016.0 13.66
Fund; B y
Putnam Balanced Fund 10/2/95 Open/Balan 3.2 12.22
ced
Putnam Emerging Markets Fund; A 10/2/95 Open/Equit 52.6 10.16
y
Putnam Emerging Markets Fund; B 10/2/95 Open/Equit 40.2 10.05
y
Putnam Emerging Markets Fund; M 10/2/95 Open/Equit 3.7 10.08
y
Putnam California Tax Exempt 10/26/87 Open/Bond 30.6 1.00
Money Market Fund
Putnam High Yield Municipal 5/25/89 Closed/Bon 201.3 9.19
Trust; A d
Putnam High Yield Municipal 5/25/89 Closed/Bon 45.0 9.19
Trust; B d
Putnam New York Tax Exempt 10/26/87 Open/Bond 37.0 1.00
Money Market Fund
Putnam International Growth and 8/1/96 Open/Equit 389.2 12.56
Income Fund; A y
Putnam International Growth and 8/1/96 Open/Equit 393.9 12.49
Income Fund; B y
Putnam International Growth and 8/1/96 Open/Equit 37.7 12.53
Income Fund; M y
Putnam Research Fund 10/2/95 Open/Equit 14.6 13.47
y
Putnam New Value Fund; A 1/3/95 Open/Equit 476.4 14.92
y
Putnam New Value Fund; B 2/26/96 Open/Equit 480.6 14.78
y
Putnam New Value Fund; M 2/26/96 Open/Equit 51.5 14.84
y
Putnam Global Growth and Income 1/3/95 Open/Equit 20.1 13.59
Fund; A y
Putnam Global Growth and Income 1/3/95 Open/Equit 14.6 13.56
Fund; B y
Putnam Global Growth and Income 1/3/95 Open/Equit 1.4 13.57
Fund; M y
Putnam International Fund 12/28/95 Open/Equit 4.3 11.09
y
Putnam Japan Fund 12/28/95 Open/Equit 2.2 5.05
y
Putnam International Voyager 12/28/95 Open/Equit 82.2 13.66
Fund; A y
Putnam International Voyager 10/30/96 Open/Equit 64.6 13.56
Fund; B y
Putnam International Voyager 10/30/96 Open/Equit 6.9 13.61
Fund; M y
Putnam VT New Value Fund; A 1/2/97 Open/Equit 240.1 12.07
y
Putnam VT New Value Fund; B 4/30/98 Open/Equit 1,014.0 12.07
y
Putnam VT Vista Fund; A 1/2/97 Open/Equit 229.9 14.02
y
Putnam VT Vista Fund; B 4/30/98 Open/Equit 1,019.0 14.02
y
Putnam Equity 98 Fund 12/30/97 Open/Equit 4.6 11.02
y
Putnam High Yield Fund II; A 12/31/97 Open/Bond 142.9 9.07
Putnam High Yield Fund II; B 12/31/97 Open/Bond 221.2 9.06
Putnam High Yield Fund II; M 12/31/97 Open/Bond 11.0 9.06
(J) Miscellaneous
1. Election and Removal of Directors
Directors of Investment Management Company are elected
to office or removed from office by vote of either
stockholders or directors, in accordance with Articles of
Organization and By-Laws of Investment Management Company.
2. Results of Operations
Officers are elected by the Board of Directors. The
Board of Directors may remove any officer without cause.
3. Supervision by SEC of Changes in Directors and Certain
Officers
Investment Management Company files certain reports
with the SEC in accordance with Sections 203 and 204 of the
Investment Advisers Act of 1940, which reports list and
provide certain information relating to directors and
officers of Investment Management Company.
Under Section 9 (b) of the Investment Company Act of
1940 SEC may prohibit the directors and officers from
remaining in office, if SEC will judge that such directors
and officers have willfully violated any provision of the
federal securities law.
4. Amendment to the Articles of Organization, Transfer of
Business and Other Important Matters.
a. Articles of Organization of Investment Management
Company may be amended, under the General
Corporation Law of The Commonwealth of
Massachusetts, by appropriate shareholders' vote.
b. Under the General Corporation Law of The
Commonwealth of Massachusetts, transfer of
business requires a vote of 2/3 of the
stockholders entitled to vote thereon.
c. Investment Management Company has no direct
subsidiaries.
5. Litigation, etc.
There are no known facts, such as legal proceedings,
which are expected to materially affect the Fund and/or
Investment Management Company within the six-month period
preceding the filing of this Registration Statement.
III. OUTLINE OF THE OTHER RELATED COMPANIES
(A) Putnam Fiduciary Trust Company (the Transfer Agent,
Shareholder Service Agent and Custodian)
(1) Amount of Capital
U.S.$36,748,540.70 as of the end of April 1998
(2) Description of Business
Putnam Fiduciary Trust Company is a Massachusetts trust
company and is a wholly-owned subsidiary of Putnam
Investments, Inc., parent of Putnam. Putnam Fiduciary
Trust Company has been providing paying agent and
shareholder service agent services to mutual funds,
including the Fund, since its inception and custody
services since 1990.
(3) Outline of Business Relationship with the Fund
Putnam Fiduciary Trust Company provides transfer agent
services, shareholder services and custody services to
the Fund.
(B) Putnam Mutual Funds Corp. (the Principal Underwriter)
(1) Amount of Capital
U.S.$165,651,021.38 as of the end of April 1998
(2) Description of Business
Putnam Mutual Funds Corp. is the Principal Underwriter
of the shares of Putnam Funds including the Fund.
(3) Outline of Business Relationship with the Fund
Putnam Mutual Funds Corp. engages in providing
marketing services to the Fund.
(C) Yamatane Securities Co., Ltd. (Distributor in Japan and
Agent Securities Company)
(1) Amount of Capital
Yen14,760,035,531 billion as of the end of April 1998
(2) Description of Business
Yamatane Securities Co., Ltd.is a diversified
securities company in Japan. Also, it engages the fund
units for the investment trust funds of Asahi
Investment Trust Management Co., Ltd., Sakura
Investment Trust Management Co., Ltd., Nissei
Investment Trust Management Co., Ltd., NCG Investment
Trust Management Co., Ltd. and Nomura Investment Trust
Management Co., Ltd., and acts as the Agent Securities
Company and engages in handling the sales and
repurchase for Fidelity Funds International Fund.
(3) The Company acts as a Distributor in Japan and Agent
Securities Company for the Fund in connection with the
offering of shares in Japan.
(D) Capital Relationships
100% of the shares of Putnam Investment Management,
Inc. are held by Putnam Investments, Inc.
(E) Interlocking Directors and Officers
Names and functions of officers of the Fund who also
are officers of the related companies are as follows:
(as of the filing date)
Name of Investment Transfer Agent
Officer Management and
or Fund Company Shareholder
Trustee Service Agent
George Chairman and Chairman and None
Putnam Trustee Director
Charles Executive Vice Managing None
E. Porter President Director
Patricia Senior Vice Senior Vice None
C. President President
Flaherty
Lawrence Trustee and President and None
J. Lasser Vice President CEO
Gordon H. Vice President Senior Director
Silver Managing
Director
John R. Vice President Senior Vice None
Verani President
D. Vice President Managing None
William Director
Kohli
William Vice President Managing None
J. Curtin Director
Ian C. Vice President Senior None
Ferguson Managing
Director
IV. FINANCIAL CONDITION OF THE FUND
1. FINANCIAL STATEMENTS
[Omitted, in Japanese version, financial statements of the
Fund and Japanese translations thereof are incorporated
here]
FINANCIAL HIGHLIGHTS
The following tables present per share financial
information for Class M Shares. This information has been
derived from the Fund's Financial Statements, which have
been audited and reported on by the Fund's independent
accountants. Financial statements included in the Fund's
annual report to shareholders for the 1997 fiscal year are
presented in their entirety in this SRS. The Fund's annual
report is available without charge upon request.
CLASS M
FOR THE PERIOD
PER SHARE OPERATING DECEMBER 1,
1994 +
PERFORMANCE YEAR ENDED JUNE 30, TO JUNE
30,
__________________________________
1997 1996 1995
__________________________________
NET ASSET VALUE,
BEGINNING OF PERIOD
________________________________________________________________
______________
INVESTMENT OPERATIONS 15.86 13.90 12.35
________________________________________________________________
______________
Net investment income .19(c) .24(c) .09
Net realized and unrealized
gain (loss) on investments 4.03 2.12 1.62
________________________________________________________________
______________
TOTAL FROM INVESTMENT
OPERATIONS 4.22 2.36 1.71
________________________________________________________________
______________
LESS DISTRIBUTIONS:
From net investment income (.17)
- - -
In excess of net investment income
- - - -
From net realized gain
on investments (1.06) (.40) (.16)
________________________________________________________________
______________
TOTAL DISTRIBUTIONS (1.23) (.40) (.16)
________________________________________________________________
______________
NET ASSET VALUE,
END OF PERIOD $18.85 $15.86 $13.90
________________________________________________________________
______________
RATIOS AND SUPPLEMENTAL DATA
TOTAL INVESTMENT RETURN AT NET
ASSET VALUE (%)(b) 27.91 17.28 14.06*
________________________________________________________________
______________
NET ASSETS, END OF PERIOD
(in thousands) $15,811 $4,047 $746
________________________________________________________________
______________
Ratio of expenses to average net assets (%) (b) 1.95 2.02 1.08*
Ratio of net investment income to average
net assets (%) 1.10 1.59 1.61*
Portfolio turnover (%) 55.45 38.85 44.33
Average commisiion rate paid (d) $.0435
________________________________________________________________
______________
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and
does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the year
ended on or after June 30, 1996 includes amounts paid
through expense offset and brokerage service arrangements.
Prior period ratios exclude these amounts.
(c) Per share net investment income has been determined on the
basis of the weighted average number of shares outstanding
during the period.
(d) Average commision rate paid on security trades is required
for fiscal periods beginning on or after September 1, 1995
[The following financial documents are omitted here.]
Statement of assets and liabilities June 30, 1997
Statement of operations Year ended June 30, 1997
Statement of changes in net assets
Financial highlights (For a share outstanding throughout the
period)
Notes to financial statements June 30, 1997
Portfolio of investments owned June 30, 1997
Statement of assets and liabilities June 30, 1996
Statement of operations Year ended June 30, 1996
Statement of changes in net assets
Financial highlights (For a share outstanding throughout the
period)
Notes to financial statements June 30, 1996
Report of independent accountants For the fiscal year ended
June 30, 1997
Report of independent accountants For the year ended June 30,
1996
Statement of assets and liabilities December 31, 1997
(unaudited)
Statement of operations Period ended December 31, 1997
(unaudited)
Statement of changes in net assets
Financial highlights (For a share outstanding throughout the
period)
Notes to financial statements December 31, 1997 (unaudited)
Portfolio of investments owned December 31, 1997 (unaudited)
2. CONDITION OF THE FUND
(a) Statement of Net Assets
b ) Names of Major Portfolio Holdings (Top 30 Holdings)
<TABLE) [CAPTION]
[S] [C] [C] [C] [C]
(As of the
end of
April 30,
1998)
U.S.
Dollar
Number of Acquisitio Current
Investment
n
Name of Issue Country Shares Cost Value
Ratio (%)
1. Nestle S.A. Switzerland 17,794 24,411,943 34,509,053
2.83
2. Oy Nokia AB Class A Finland 488,920 19,413,229 32,859,216
2.69
3. Internationale Netherlands 455,727 17,993,176 29,601,739
2.42
Nederlanden Groep
4. Novartis AG ADR Switzerland 17,509 23,512,487 28,938,567
2.37
5. Generale Des Eaux France 155,481 20,743,251 28,891,840
2.37
6. Philips Electronics N.V. Netherlands 312,491 16,384,649 27,517,264
2.25
7. Scottish Power PLC United 2,605,270 15,390,638 23,947,173
1.96
Kingdom
8. Akzo-Nobel N.V. Netherlands 116,957 18,061,981 23,780,215
1.95
9. Societe Generale France 112,540 15,635,935 23,418,945
1.92
10 Michelin France 370,179 20,751,204 23,312,694
1.91
.
11 Elf Aquitaine S.A. France 177,358 17,507,939 23,258,616
1.91
.
12 UBS Bearer Switzerland 14,442 15,395,644 23,253,497
1.90
.
13 Allied Irish Banks PLC Ireland 1,661,990 10,066,117 22,835,078
1.87
.
14 Mannesmann AG Germany 27,827 15,775,854 22,069,423
1.81
.
15 British Petroleum Co. PLC United 1,397,035 17,094,765 22,062,033
1.81
. Kingdom
16 Banque Nationale de Paris France 260,864 15,603,551 21,982,556
1.80
.
17 Total Corp. ADR Class B France 183,439 15,868,269 21,799,665
1.79
.
18 Tomkins PLC United 3,620,268 17,563,450 21,306,870
1.75
. Kingdom
19 Avis Europe PLC 144A ADR United 5,309,705 11,709,458 20,507,780
1.68
. Kingdom
20 Bass PLC United 1,023,340 16,763,564 19,420,128
1.59
. Kingdom
21 Portugal Telecom S.A. Portugal 359,787 12,281,369 19,323,537
1.58
.
22 Burmah Castrol PLC United 912,386 14,873,859 18,870,551
1.55
. Kingdom
23 Penninsular & Oriental United 1,253,320 14,733,958 18,493,236
1.51
. Steam Kingdom
24 Electricidade de Portugal Portugal 696,459 12,631,749 18,163,574
1.49
. S.A.
25 BTR PLC United 5,437,826 17,144,172 18,070,440
1.48
. Kingdom
26 CRH PLC Ireland 1,263,141 10,842,891 18,010,294
1.48
.
27 Deutsche Bank AG Germany 231,036 16,960,834 17,770,021
1.46
.
28 B A T Industries PLC United 1,865,857 15,832,574 17,595,181
1.44
. Kingdom
29 Glaxo Wellcome PLC United 621,295 14,774,997 17,555,809
1.44
. Kingdom
30 ABN AMRO Holding N.V. Netherlands 712,905 15,115,256 17,351,799
1.42
.
TOTALS 490,838,76 $ 676,476,794
3
[/TABLE]
V. SUMMARY OF INFORMATION CONCERNING FOREIGN INVESTMENT TRUST
SECURITIES
1. Transfer of the Shares
The transfer agent for the registered share
certificates is Putnam Fiduciary Trust Company, P.O.Box
41203, Providence, RI 02940-1203, U. S. A.
The Japanese investors who entrust the custody of
their shares to a Handling Securities Company shall have
their shares transferred under the responsibility of such
company, and the other investors shall make their own
arrangements.
No fee is chargeable for the transfer of shares.
2. The Closing Period of the Shareholders' Book
No provision is made.
3. There are no annual shareholders' meetings. Special
shareholders' meeting may be held from time to time as
required by the Agreement and Declaration of Trust and the
Investment Company Act of 1940.
4. No special privilege is granted to Shareholders.
The acquisition of Shares by any person may be restricted.
VI. MISCELLANEOUS
(1) The ornamental design is used in cover page of the Japanese
Prospectus.
(2) The following must be set forth in the Prospectus.
Outline of the Prospectus will be included at the beginning
of the Prospectus, summarizing the content of Part I.,
Information on the securities, "I. Descriptions of the
Fund", "III. Outline of Other Related Companies" and "IV.
Finanacial Condition of the Fund" in Part II, Information
on the Issuer, of the SRS.
(3) Summarized Preliminary Prospectus will be used.
Attached document (Summarized Preliminary Prospectus) will
be used pursuant to the below, as the document (Summarized
Preliminary Prospectus) as set forth at Item 1.(1)(b), of
Article 12 of the Ordinance Concerning the Disclosure of
the Content, etc. of the Specified Securities.
(a) The content of the summarized Preliminary Prospectus
may be publicized by leaflets, pamphlets, direct mails
(post cards and mails in envelopes) or at newspapers,
magazines and other books.
(b) The layout, quality of papers, priting colour,
design etc. of the Summarized Preliminary Prospectus may
vary depending on manner of usage. Photos and
illustrations set forth in the attached may be used.
(c) For information of the Fund's achievements, the
changes of the net asset value per share and the
fluctuation rates since the establishment of the Fund or
for the latest 3 months, 6 months, one year, two years,
three years or five years may be set out in the figures
or graphs. Such information regarding the Fund's
achievement may be converted into and presented in yen.
PART III. SPECIAL INFORMATION
I. OUTLINE OF THE REGULATORY SYSTEM IN THE UNITED STATES
Below is an outline of certain general information about open-
end U.S. investment companies. This outline is not intended to
provide comprehensive information about such investment
companies or the various laws, rules or regulations applicable
to them, but provides only a brief summary of certain
information which may be of interest to investors. The
discussion below is qualified in its entirely by the complete
registration statement of the fund and the full text of any
referenced statutes and regulations.
(I) Massachusetts Business Trusts
A. General Information
Many investment companies are organized as
Massachusetts business trusts. A Massachusetts business
trust is organized pursuant to a declaration of trust,
setting out the general rights and obligations of the
shareholders, trustees, and other related parties.
Generally, the trustees of the trust oversee its business,
and its officers and agents manage its day-to-day affairs.
Chapter 182 of the Massachusetts General Laws applies
to certain "voluntary associations," including many
Massachusetts business trusts. Chapter 182 provides for,
among other things, the filing of the declaration of trust
with the Secretary of State of the Commonwealth of
Massachusetts and the filing by the trust of an annual
statement regarding, among other things, the number of its
shares outstanding and the names and addresses of its
trustees.
B. Shareholder Liability
Under Massachusetts law, shareholders could, under
certain circumstances, be held personally liable for the
obligations of a trust. Typically, a declaration of trust
disclaims shareholder liability for acts or obligations of
the trust and provides for indemnification out of trust
property for all loss and expense of any shareholder held
personally liable for the obligations of a trust. Thus,
the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to
circumstances in which a particular trust would be unable
to meet its obligations.
(II) United States Investment Company Laws and Enforcement
A. General
In the United States, pooled investment management
arrangements which offer shares to the public are governed
by a variety of federal statutes and regulations. Most
mutual funds are subject to these laws. Among the more
significant of these statutes are:
1. Investment Company Act of 1940
The Investment Company Act of 1940, as amended
(the "1940 Act"), in general, requires investment
companies to register as such with the U.S. Securities
and Exchange Commission (the "SEC"), and to comply with
a number of substantive regulations of their
operations. The 1940 Act requires an investment
company, among other things, to provide periodic
reports to its shareholders.
2. Securities Act of 1933
The Securities Act of 1933, as amended (the "1933
Act"), regulates many sales of securities. The Act,
among other things, imposes various registration
requirements upon sellers of securities and provides
for various liabilities for failures to comply with its
provisions or in respect of other specified matters.
3. Securities Exchange Act of 1934
The Securities Exchange Act of 1934, as amended
(the "1934 Act"), regulates a variety of matters
involving, among other things, the secondary trading of
securities, periodic reporting by the issuers of
securities, and certain of the activities of transfer
agents and brokers and dealers.
4. The Internal Revenue Code
An investment company is an entity subject to
federal income taxation under the Internal Revenue
Code. However, under the Code, an investment company
may be relieved of federal taxes on income and gains it
distributes to shareholders if it qualifies as a
"regulated investment company" under the Code for
federal income tax purposes and meets all other
necessary requirements.
5. Other laws
The Fund is subject to the provisions of other
laws, rules, and regulations applicable to the Fund or
its operations, such as, for example, various state
laws regarding the sale of the Fund's shares.
B. Outline of the Supervisory Authorities
Among the regulatory authorities having jurisdiction
over the Fund or certain of its operations are the SEC and
state regulatory agencies or authorities.
1. The SEC has broad authority to oversee the
application and enforcement of the federal securities
laws, including the 1940 Act, the 1933 Act, and the
1934 Act, among others, to the Fund. The 1940 Act
provides the SEC broad authority to inspect the records
of investment companies, to exempt investment companies
or certain practices from the provisions of the Act,
and otherwise to enforce the provisions of the Act.
2. State authorities typically have broad authority
to regulate the offering and sale of securities to
their residents or within their jurisdictions and the
activities of brokers, dealers, or other persons
directly or indirectly engaged in related activities.
C. Offering Shares to the Public
An investment company ("investment company" or fund)
offering its shares to the public must meet a number of
requirements, including, among other things, registration
as an investment company under the 1940 Act; registration
of the sale of its shares under the 1933 Act; registration
of the fund, the sale of its shares, or both, with state
securities regulators; delivery of a current prospectus to
current or prospective investors; and so forth. Many of
these requirements must be met not only at the time of the
original offering of the fund's shares, but compliance must
be maintained or updated from time to time throughout the
life of the fund.
D. Ongoing Requirements
Under U.S. law, a fund is subject to numerous ongoing
requirements, including, but not limited to;
1. Updating its prospectus if it becomes materially
inaccurate or misleading;
2. Annual update of its registration statement;
3. Filing semi-annual and annual financial reports
with the SEC and distributing them to shareholders;
4. Annual trustee approval of investment advisory
arrangements, distribution plans, underwriting
arrangements, errors and omissions/director and officer
liability insurance, foreign custody arrangements, and
auditors;
5. Maintenance of a code of ethics; and
6. Periodic board review of certain fund
transactions, dividend payments, and payments under a
fund's distribution plan.
(III) Management of a Fund
The board of directors or trustees of a fund are
responsible for generally overseeing the conduct of a fund's
business. The officers and agents of a fund are generally
responsible for the day-to-day operations of a fund. The
trustees and officers of a fund may or may not receive a fee for
their services.
The investment adviser to a fund is typically responsible
for implementing the fund's investment program. The adviser
typically receives a fee for its services based on a percentage
of the net assets of a fund. Certain rules govern the
activities of investment advisers and the fees they may charge.
In the United States, investment advisers to investment
companies must be registered under the Investment Advisers Act
of 1940, as amended.
(IV) Share Information
A. Valuation
Shares of a fund are generally sold at the net asset
value next determined after an order is received by a fund,
plus any applicable sales charges. A fund normally
calculates its net asset value per share by dividing the
total value of its assets, less liabilities, by the number
of its shares outstanding. Shares are typically valued as
of the close of regular trading on the New York Stock
Exchange (generally 4:00 p.m., New York time) each day the
Exchange is open.
B. Redemption
Shareholders may generally sell shares of an open-end
fund to that fund any day the fund is open for business at
the net asset value next computed after receipt of the
shareholders' order. Under unusual circumstances, a fund
may suspend redemptions, or postpone payment for more than
seven days, if permitted by U.S. securities laws. A fund
may charge redemption fees as described in its prospectus.
C. Transfer agency
The transfer agent for a fund typically processes the
transfer of shares, redemption of shares, and payment
and/or reinvestment of distributions.
(V) Shareholder Information, Rights and Procedures for the
Exercise of Such Rights
A. Voting Rights
Voting rights vary from fund to fund. In the case of
many funds organized as Massachusetts business trusts,
shareholders are entitled to vote on the election of
trustees, approval of investment advisory agreements,
underwriting agreements, and distribution plans (or
amendments thereto), certain mergers or other business
combinations, and certain amendments to the declaration of
trust. Shareholder approval is also required to modify or
eliminate a fundamental investment policy.
B. Dividends
Shareholders are typically entitled to receive
dividends when and if declared by a fund's trustees. In
declaring dividends, the trustees will normally set a
record date, and all shareholders of record on that date
will be entitled to receive the dividend paid.
C. Dissolution
Shareholders would normally be entitled to receive a
pro rata portion of the net assets of a fund upon its
liquidation.
D. Transferability
Shares of a fund are typically transferable without
restriction.
E. Right to Inspection
Shareholders of a Massachusetts business trust have
the right to inspect the records of the trust as provided
in the declaration of trust or as otherwise provided by
applicable law.
(VI) U.S. Tax Matters
The Fund intends to qualify each year as a regulated
investment company under Subchapter M of the United States
Internal Revenue Code of 1986, as amended (the "Code").
As a regulated investment company qualifying to have its
tax liability determined under Subchapter M, the Fund will not
be subject to U.S. federal income tax on any of its net
investment income or net realized capital gains that are
distributed to its shareholders. In addition, as a
Massachusetts business trust, the Fund under present
Massachusetts law is not subject to any excise or income taxes
in Massachusetts.
In order to qualify as a "regulated investment company",
the Fund must, among other things, (a) derive at least 90% of
its gross income from dividends, interest, payments with respect
to certain securities loans, and gains from the sale of stock,
securities and foreign currencies, or other income (including
but not limited to gains from options, futures, or forward
contracts) derived with respect to its business of investing in
such stock, securities, or currencies; (b) distribute with
respect to each taxable year at least 90% of the sum of its
taxable net investment income, its net tax-exempt income, and
the excess, if any, of its net short-term capital gains over net
long-term capital losses for such year; (c) diversify its
holdings so that, at the close of each quarter of its taxable
year, (i) at least 50% of the value of its total assets consists
of cash, cash items, U.S. Government Securities, securities of
other regulated investment companies and other securities
limited generally with respect to any one issuer to not more
than 5% of the total assets of the Fund and not more than 10% of
the outstanding voting securities of such issuer, and (ii) not
more than 25 % of the value of its assets is invested in the
securities (other than those of the U.S. Government or other
regulated investment companies) of any one issuer or of two or
more issuers which the Fund controls and which are engaged in
the same, similar or related trades or businesses.
If the Fund qualifies as a regulated investment company
that is accorded special tax treatment, the Fund will not be
subject to federal income tax on income paid to its shareholders
in the form of dividends (including capital gain dividends).
If the Fund failed to qualify as a regulated investment
company accorded special tax treatment in any taxable year, the
Fund would be subject to tax on its taxable income at corporate
rates, and all distributions from earnings and profits,
including any distributions of net tax-exempt income and net
long-term capital gains, would be taxable to shareholders as
ordinary income. In addition, the Fund could be required to
recognize unrealized gains, pay substantial taxes and interest
and make substantial distributions before requalifying as a
regulated investment company that is accorded special tax
treatment.
If the Fund fails to distribute in a calendar year
substantially all of its ordinary income for such year and
substantially all of its capital gain net income for the one-
year period ending October 31 (or later if the Fund is permitted
to elect and so elects), plus any retained amount from the prior
year, the Fund will be subject to a 4% excise tax on the
undistributed amounts. A dividend paid to shareholders by the
Fund in January of a year generally is deemed to have been paid
by the Fund on December 31 of the preceding year, if the
dividend was declared and payable to shareholders of record on a
date in October, November or December of that preceding year.
The Fund intends generally to make distributions sufficient to
avoid imposition of the 4% excise tax.
Fund distributions will be taxable to shareholders as
ordinary income, except that any distributions designated by the
Fund as deriving from net gains on securities held for more than
one year but not more than 18 months and from net gains on
securities held for more than 18 months will be taxable as such,
regardless of how long a shareholder has held shares in the
Fund. Distributions will be taxable as described above whether
received in cash or in shares through the reinvestment of
distributions. Shareholders who are not subject to U.S. federal
income tax on their income generally will not have to pay such
tax on amounts distributed to them.
Distributions from capital gains are made after applying
any available capital loss carryovers.
The Fund's transactions in foreign currencies, foreign
currency-denominated debt securities and certain foreign
currency options, futures contracts and forward contracts (and
similar instruments) may give rise to ordinary income or loss to
the extent such income or loss results from fluctuations in the
value of the foreign currency concerned.
Investments by the 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 or more of the income of which for
the taxable year is passive income, or (ii) the average
percentage of the assets of which (generally by value, but by
adjusted tax basis in certain cases) that produce or are held
for the production of passive income is at least 50 percent.
Generally, passive income for this purpose means dividends,
interest (including income equivalent to interest), royalties,
rents, annuities, the excess of gains over losses from certain
property transactions and commodities transactions, and 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.
The sale, exchange or redemption of Fund shares may give
rise to a gain or loss. In general, any gain or loss realized
upon a taxable disposition of shares will be treated as long-
term capital gain or loss if the shares have been held for more
than 12 months, and otherwise as short-term capital gain or
loss. However, any loss realized upon a taxable disposition of
shares held for six months or less will be treated as long-term,
rather than short-term, to the extent of any long-term capital
gain distributions received by the shareholder with respect to
the shares. All or a portion of any loss realized upon a
taxable disposition of Fund shares will be disallowed if other
shares of the Fund are purchased within 30 days before or after
the disposition. In such a case, the basis of the newly
purchased shares will be adjusted to reflect the disallowed
loss.
Special tax rules apply to investments though defined
contribution plans and other tax-qualified plans. Shareholders
should consult their tax adviser to determine the suitability of
shares of the Fund as an investment through such plans and the
precise effect of an investment on their particular tax
situation.
The Fund generally is required to withhold and remit to the
U.S. Treasury 31% of the taxable dividends and other
distributions paid to any individual shareholder who fails to
furnish the Fund with a correct taxpayer identification number
(TIN), who has under-reported dividends or interest income, or
who fails to certify to the fund that he or she is not subject
to such withholding.
The Fund's investment in securities issued at a discount
and certain other obligations will (and investments in
securities purchased at a discount may) require the Fund to
accrue and distribute income not yet received. In order to
generate sufficient cash to make the requisite distributions,
the Fund may be required to sell securities in its portfolio
that it otherwise would have continued to hold.
The foregoing is a general and abbreviated summary of the
applicable provisions of the Code and related regulations
currently in effect. For the complete provisions, reference
should be made to the pertinent Code sections and regulations.
The Code and regulations are subject to change by legislative or
administrative actions. Dividends and distributions also may be
subject to state taxes. Shareholders are urged to consult their
tax advisers regarding specific questions as to U.S. federal,
state or local taxes. The foregoing discussion relates solely
to U.S. federal income tax law. Non-U.S. investors should
consult their tax advisers concerning the tax consequences of
ownership of shares of the fund, including the possibility that
distributions may be subject to a 30% United States withholding
tax (or a reduced rate of withholding provided by treaty), the
possibility that a non-U.S. investor may be subject to U.S. tax
on capital gain distributions and gains realized upon the sale
of fund shares if the investor is present in the United States
for more than 182 days during the taxable year (and certain
other conditions apply), or the possibility that a non-U.S.
investor may be subject to U.S. tax on income from the fund that
is "effectively connected" with a U.S. trade or business carried
on by such an investor. Shareholders residing in Japan should
consult "Tax Treatment of Shareholders in Japan", above.
(VII) Important Participants in Offering of Mutual Fund
Shares
A. Investment Company
Certain pooled investment vehicles qualify as
investment companies under the 1940 Act. There are open-
end investment companies (those which offer redeemable
securities) and closed-end investment companies (any
others).
B. Investment Adviser/Administrator
The investment adviser is typically responsible for
the implementation of an investment company's investment
program. It, or another affiliated or unaffiliated entity,
may also perform certain record keeping and administrative
functions.
C. Underwriter
An investment company may appoint one or more
principal underwriters for its shares. The activities of
such a principal underwriter are generally governed by a
number of legal regimes, including, for example, the 1940
Act, the 1933 Act, the 1934 Act, and state laws.
D. Transfer Agent
A transfer agent performs certain bookkeeping, data
processing, and administrative services pertaining to the
maintenance of shareholder accounts. A transfer agent may
also handle the payment of any dividends declared by the
trustees of a fund.
E. Custodian
A custodian's responsibilities may include, among
other things, safeguarding and controlling a fund's cash
and securities, handling the receipt and delivery of
securities, and collecting interest and dividends on a
fund's investments.
II. FINANCIAL CONDITIONS OF THE INVESTMENT MANAGEMENT COMPANY
[Omitted, in Japanese version, financial statements of the
Investment Management Company and Japanese translations
thereof are incorporated here.]
III. FORM OF FOREIGN INVESTMENT FUND SECURITIES
Main items to be set forth on the share certificate of the
Fund (if issued) are as follows:-
(1) Front
a. Name of the Fund
b. Number of shares represented
c. Signatures of the Chairman and Transfer Agent
d. Description stating that the Declaration of Trust
applies to shareholders and assignees therefrom
(2) Back
a. Space for endorsement
b. Description concerning delegation of transfer agency
