As filed with the Securities and Exchange Commission on
October 31, 1994
Registration No. 33-37214
811-6190
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
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Pre-Effective Amendment No. / /
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Post-Effective Amendment No. 4 / X /
and ----
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X /
ACT OF 1940 ----
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Amendment No. 6 / X /
(Check appropriate box or boxes) ----
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PUTNAM OVERSEAS GROWTH FUND
(Exact name of registrant as specified in charter)
One Post Office Square, Boston, Massachusetts 02109
(Address of principal executive offices)
Registrant's Telephone Number, including Area Code
(617) 292-1000
It is proposed that this filing will becone effective (check
appropriate box):
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/ / immediately upon filing pursuant to paragraph (b)
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/ X / on November 1, 1994 pursuant to paragraph
(b)
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/ / 60 days after filing pursuant to paragraph
(a) (i)
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/ / on (date) pursuant to paragraph (a)
(i)
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/ / 75 days after filing pursuant to paragraph
(a)(ii)
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/ / on (date) purusant to paragraph (a)(ii) of
rule ----- 485
If appropriate, check the following box:
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/ / this post-effective amendment designates a new
---- effective date for a previously filed post-
effective amendment.
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JOHN R. VERANI, Vice President
PUTNAM OVERSEAS GROWTH FUND
One Post Office Square
Boston, Massachusetts 02109
(Name and address of agent for service)
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Copy to:
JOHN W. GERSTMAYR, Esquire
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
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The Registrant has registered an indefinite number or amount
of securities under the Securities Act of 1933 pursuant to Rule
24f-2. A Rule 24f-2 Notice for the fiscal year ended June 30,
1994 was filed on August 30, 1994 .
<PAGE>
PUTNAM OVERSEAS GROWTH FUND
CROSS REFERENCE SHEET
(as required by Rule 481 (a))
PART A
N-1A ITEM NO. LOCATION
1. Cover Page....................... Cover Page
2. Synopsis......................... Expenses summary
3. Condensed Financial Information.. Financial highlights;
How performance is shown
4. General Description of
Registrant....................... Objective; How objective
is pursued; Organization
and history
5. Management of the Fund........... Expenses summary; How
the Fund is managed;
About Putnam
Investments, Inc.
5a. Management Discussion of Fund (Contained in Annual
Performance Report of Registrant)
6. Capital Stock and Other
Securities....................... Cover Page; Organization
and history; How
distributions are made;
tax information
7. Purchase of Securities Being
Offered.......................... How to buy shares;
Distribution Plan;
How to sell shares; How
to exchange shares; How
the Fund values its
shares
8. Redemption or Repurchase......... How to buy shares; How
to sell shares; How to
exchange shares;
Organization and history
9. Pending Legal Proceedings........ Not Applicable <PAGE>
PART B
N-1A ITEM NO.
LOCATION
10. Cover Page....................... Cover Page
11. Table of Contents................ Cover Page
12. General Information and History.. Organization and history
(Part A)
13. Investment Objectives and
Policies......................... How objective is pursued
(Part A); Investment
Restrictions of the
Fund; Miscellaneous
Investment Practices
14. Management of the Registrant..... Management of the Fund
(Trustees; Officers);
Additional Officers of
the Fund
15. Control Persons and Principal
Holders of Securities............ Management of the Fund
(Trustees; Officers);
Fund Charges and
Expenses (Ownership of
Fund Shares)
16. Investment Advisory and Other
Services......................... Management of the Fund
(Trustees; Officers; The
Management Contract;
Principal
Underwriter ;
Investor Servicing Agent
and Custodian) ; Fund
Charges and Expenses;
Distribution Plan;
Independent Accountants
and Financial
Statements
17. Brokerage Allocation............. Management of the Fund
(Portfolio
Transactions); Fund
Charges and Expenses
<PAGE>
18. Capital Stock and Other
Securities....................... Organization and history
(Part A); How
distributions are made;
tax information (Part
A); Suspension of
Redemptions
19. Purchase, Redemption and Pricing
of Securities Being Offered...... How to buy shares (Part
A); How to sell shares
(Part A); How to
exchange shares (Part
A); How to Buy Shares;
Determination of Net
Asset Value; Suspension
of Redemptions
20. Tax Status....................... How distributions are
made; tax information
(Part A); Taxes
21. Underwriters..................... Management of the Fund
(Principal Underwriter);
Fund Charges and
Expenses
22. Calculation of Performance Data.. How performance is shown
(Part A); Investment
Performance of the Fund;
Standard Performance
Measures
23. Financial Statements............. Independent Accountants
and Financial Statements
PART C
Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C of the
Registration Statement.
<PAGE>
PROSPECTUS
NOVEMBER 1,
1994
PUTNAM OVERSEAS GROWTH FUND
CLASS A, B AND M SHARES
INVESTMENT STRATEGY: GROWTH
This Prospectus explains concisely what you should know before
investing in Class A, B or M shares of Putnam Overseas Growth
Fund (the "Fund") . Please read it carefully and keep it for
future reference. You can find more detailed information about
the Fund in the November 1, 1994 Statement of Additional
Information, as amended from time to time. For a free copy of
the Statement or other information , call Putnam Investor
Services at 1-800-225-1581. The Statement has been filed with
the Securities and Exchange Commission and is incorporated into
this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION , ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND INVOLVE RISK, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL.
BOSTON*LONDON*TOKYO
<PAGE>
ABOUT THE FUND
Expenses summary
.....................................................3
Financial highlights
.....................................................4</R
>
Objective
.....................................................6
How objective is pursued
.....................................................6
Risk factors
.....................................................7
How performance is shown
.....................................................12</
R>
How the Fund is managed
.....................................................13</
R>
Organization and history 13
ABOUT YOUR INVESTMENT
Alternative sales arrangements
.....................................................15
How to buy shares
.....................................................16
Distribution Plans
.....................................................21</
R>
How to sell shares
.....................................................22</
R>
How to exchange shares
.....................................................23</
R>
How the Fund values its shares
.....................................................24</
R>
How distributions are made; tax information
25
ABOUT PUTNAM INVESTMENTS, INC.
26
<PAGE>
ABOUT THE FUND
EXPENSES SUMMARY
Expenses are one of several factors to consider when investing in
the Fund. The following table summarizes your maximum
transaction costs from investing in the Fund and expenses
incurred by the Fund based on its most recent fiscal year. The
Examples show the cumulative expenses attributable to a
hypothetical $1,000 investment over specified periods.
CLASS A CLASS B CLASS M
SHARES SHARES SHARES
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Charge
Imposed on Purchases
(as a percentage of
offering price) 5.75% NONE* 3.50%*
Deferred Sales Charge 5.0% in the
first
(as a percentage year, declining
of the lower of to 1.0% in the
original purchase sixth year, and
price or redemption eliminated
proceeds) NONE** thereafter NONE
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)
Management Fees 0.25% 0.25% 0.25%
(after expense limitation)
12b-1 Fees 0.25% 1.00% 0.75%
Other Expenses 1.67% 1.67% 1.67%
Total Fund Operating
Expenses 2.17% 2.92% 2.67%
(after expense limitation)
The table is provided to help you understand the expenses of
investing in the Fund and your share of the operating expenses
which the Fund incurs.
Management fees and total operating expenses in the table
reflect an expense limitation currently in effect. In the
absence of the expense limitation, management fees and total
operating expenses for Class A shares would have been 0.78%
and 2.70%, respectively, management fees and total operating
expenses for Class B shares would be 0.78% and 3.45%,
respectively, and management fees and total operating expenses
for Class M shares would be 0.78% and 3.20%. For Class B shares
and Class M shares, management fees and "Other expenses" are
based on the operating expenses for the Fund's Class A shares.
The 12b-1 fees for Class B shares and Class M shares shown in
the table reflect the maximum amount permitted under the Class B
Distribution Plan and the amount to which the Trustees currently
limit payments under the Class M Distribution Plan.
EXAMPLES
Your investment of $1,000 would incur the following expenses,
assuming 5% annual return and redemption at the end of each
period:
1 3 5 10
YEAR YEARS YEARS YEARS
CLASS A $78 $122 $167 $293
CLASS B $80 $120 $174 $307***
CLASS M $61 $115 $172 $325
Your investment of $1,000 would incur the following expenses,
assuming 5% annual return but no redemption:
1 3 5 10
YEAR YEARS YEARS YEARS
CLASS A $78 $122 $167 $293
CLASS B $30 $90 $154 $307***
CLASS M $61 $115 $172 $325
The Examples do not represent past or future expense levels.
Actual expenses may be greater or less than those shown. Federal
regulations require the Examples to assume a 5% annual return,
but actual annual return has varied.
* The higher 12b-1 fees for Class B and Class M
shares may cause long-term shareholders to pay more
than the economic equivalent of the maximum permitted
front-end sales charge on Class A shares .
** A deferred sales charge of up to 1.00% is assessed on
certain redemptions of Class A shares that were purchased
without an initial sales charge as part of an investment
of $1 million or more. See "How to buy shares -
Class A shares."
<PAGE>
*** Reflects conversion of Class B shares to Class A shares
(which pay lower ongoing expenses) approximately eight
years after purchase. See "How to buy shares -
Class B shares - Conversion of Class B shares."
FINANCIAL HIGHLIGHTS
The table on the following page presents per share financial
information for Class A and B shares. No Class M
shares were outstanding during the periods
presented . This information has been audited and reported
on by the Fund's independent accountants. The Report of
Independent Accountants and financial statements included in the
Fund's Annual Report to shareholders for the 1994 fiscal
year are incorporated by reference into this Prospectus. The
Fund's Annual Report, which contains additional unaudited
performance information, is available without charge upon
request.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING DURING THE PERIOD)
<PAGE>
OBJECTIVE
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS*
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
FOR THE PERIOD FOR THE PERIOD
JUNE 1, 1994 FEBRUARY 28, 1991
(COMMENCEMENT OF (COMMENCEMENT
OPERATIONS) TO OF OPERATIONS) TO
JUNE 30 YEAR ENDED JUNE 30 JUNE 30
1994 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
CLASS B CLASS A
NET ASSET VALUE, BEGINNING
OF PERIOD $11.78 $9.58 $8.82 $8.18 $8.63
INVESTMENT OPERATIONS
NET INVESTMENT
INCOME (LOSS) (.01)(A)(B) (.06)(A) .07(A) .06 .07(A)
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS .05 2.53 .69 .71 (.52)
TOTAL FROM INVESTMENT
OPERATIONS .04 2.47 .76 .77 (.45)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT
INCOME -- -- -- (.13) --
NET REALIZED GAIN
ON INVESTMENTS -- (.22) -- -- --
<PAGE>
TOTAL DISTRIBUTIONS -- (.22) -- (.13) --
<PAGE>
NET ASSET VALUE,
END OF PERIOD $11.82 $11.83 $9.58 $8.82 $8.18
TOTAL INVESTMENT
RETURN AT NET
ASSET VALUE (%) (C) 7.50(D) 25.81 8.62 9.52 (15.32)(D)
NET ASSETS, END OF PERIOD
(IN THOUSANDS) $2,470 $8,781 $2,859 $2,502 $2,054
RATIO OF EXPENSES TO AVERAGE
NET ASSETS (%) 1.80(A)(B)(D) 2.17(A) 1.80(A) 1.98 2.33(A)(D)
RATIO OF NET INVESTMENT
INCOME (LOSS) TO AVERAGE
NET ASSETS (%) (.75)(A)(B)(D) (.17)(A) .81(A) .76 2.57(A)(D)
PORTFOLIO TURNOVER (%) 96.13(E) 96.13 80.92 82.45 14.54(E)
*FINANCIAL HIGHLIGHTS FOR PERIODS ENDED THROUGH JUNE 30, 1992 HAVE BEEN RESTATED TO
CONFORM WITH REQUIREMENTS ISSUED BY THE SEC IN APRIL 1993.
(A)REFLECTS A VOLUNTARY EXPENSE LIMITATION APPLICABLE DURING THE PERIOD. AS A RESULT OF
SUCH LIMITATION, EXPENSES FOR CLASS A SHARES OF THE FUND FOR THE PERIODS ENDED JUNE 30,
1994, JUNE 30, 1993, AND JUNE 30, 1991 REFLECT PER SHARE REDUCTIONS OF APPROXIMATELY
$0.03, $0.05, AND $0.10, RESPECTIVELY. EXPENSES FOR CLASS B SHARES OF THE FUND FOR THE
PERIOD ENDED JUNE 30, 1994 REFLECT A REDUCTION OF LESS THAN $0.01 PER SHARE.
(B)PER SHARE NET INVESTMENT INCOME FOR THE PERIOD ENDED JUNE 30, 1994 HAS BEEN DETERMINED
ON THE BASIS OF THE WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING FOR THE PERIOD.
(C)TOTAL INVESTMENT RETURN ASSUMES DIVIDEND REINVESTMENT AND DOES NOT REFLECT THE EFFECT
OF SALES CHARGES.
(D)ANNUALIZED.
(E)NOT ANNUALIZED.
/TABLE
<PAGE>
PUTNAM OVERSEAS GROWTH FUND SEEKS CAPITAL APPRECIATION. The Fund
is designed for investors seeking capital appreciation primarily
through a diversified portfolio of equity securities of companies
located outside North America. The Fund is not intended to be a
complete investment program, and there is no assurance that it
will achieve its objective.
HOW OBJECTIVE IS PURSUED
BASIC INVESTMENT STRATEGY
THE FUND SEEKS ITS OBJECTIVE BY INVESTING PRIMARILY IN EQUITY
SECURITIES OF COMPANIES LOCATED OUTSIDE NORTH AMERICA. The
Fund's investments will normally include common stocks, preferred
stocks, securities convertible into common or preferred 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 Putnam Investment Management, Inc., the
Fund's investment adviser ("Putnam Management"), believes
purchasing them would help achieve the Fund's objective. The
Fund will under normal circumstances invest at least 65% of its
assets in at least three different countries outside North
America. The Fund may hold a portion of its assets in cash or
money market instruments.
The Fund will consider an issuer of securities to be "located
outside North America" if it is organized under the laws of a
country outside North America and has a principal office outside
North America, or if it derives 50% or more of its total revenues
from business outside North America.
The Fund may invest in securities of issuers in emerging markets,
as well as more developed markets. Investing in emerging markets
generally involves more risks then in investing in
developed markets. See " Risk factors" below.
THE FUND WILL NOT LIMIT ITS INVESTMENTS TO ANY PARTICULAR TYPE OF
COMPANY. The Fund may invest in companies, large or small, whose
earnings are believed to be in a relatively strong growth trend,
or in companies in which significant further growth is not
anticipated but whose market value per share is thought to be
undervalued. It may invest in small and relatively less well-
known companies which meet these characteristics.
At times Putnam Management may judge that conditions in the
international securities markets make pursuing the Fund's basic
investment strategy inconsistent with the best interests of its
shareholders. At such times Putnam Management may temporarily
use alternative strategies, primarily designed to reduce
fluctuations in the value of the Fund's assets. In implementing
these "defensive" strategies, the Fund may invest without limit
in securities of any kind traded primarily in U.S. markets and in
cash and money market instruments. It is impossible to predict
when, or for how long, the Fund will use these alternative
strategies.
RISK FACTORS
PUTNAM MANAGEMENT BELIEVES THAT THE SECURITIES MARKETS OF MANY
NATIONS MOVE RELATIVELY INDEPENDENTLY OF ONE ANOTHER, BECAUSE
BUSINESS CYCLES AND OTHER ECONOMIC OR POLITICAL EVENTS THAT
INFLUENCE ONE COUNTRY'S SECURITIES MARKETS MAY HAVE LITTLE EFFECT
ON SECURITIES MARKETS IN OTHER COUNTRIES. By investing in a
diversified portfolio of foreign securities, Putnam Management
attempts to reduce the risks associated with being invested in
the economy of only one country. The countries which Putnam
Management believes offer attractive opportunities for investment
may change from time to time.
The Fund may seek investment opportunities among securities of
large, widely traded companies as well as securities of smaller,
less well known companies. Smaller companies may present greater
opportunities for capital appreciation, but may also involve
greater risks. They may have limited product lines, markets for
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.
FOREIGN INVESTMENTS CAN INVOLVE RISKS THAT MAY NOT BE PRESENT IN
DOMESTIC INVESTMENTS. Since foreign securities are normally
denominated and traded in foreign currencies, the values of the
Fund's assets may be affected favorably or unfavorably by changes
in currency exchange rates and exchange control regulations.
There may be less information publicly available about a foreign
company than about a U. S. company, and foreign companies are not
generally subject to accounting, auditing and financial reporting
standards and practices comparable to those in the United States.
The securities of some foreign companies are less liquid and at
times more volatile than securities of comparable U. S.
companies. Foreign brokerage commissions and other fees are also
generally higher than in the United States. Foreign settlement
procedures and trade regulations may involve certain risks (such
as delay in payment or delivery of securities or in the recovery
of the Fund's assets held abroad) and expenses not present in the
settlement of domestic investments.
In addition, with respect to certain foreign countries,
there is a possibility of nationalization or expropriation of
assets, confiscatory taxation, political or financial instability
and diplomatic developments which could affect the value of
investments in those countries. In certain countries, legal
remedies available to investors may be more limited than those
available with respect to investments in the United States or
other countries. The laws of some foreign countries may limit
the Fund's ability to invest in securities of certain issuers
located in those countries. Special tax considerations apply to
foreign securities. The risks described above are typically
increased to extent that the Fund invests in securities traded in
under-developed and developing nations, which are sometimes
referred to as "emerging markets."
See, also, "Portfolio turnover,"Risk factors in options and
futures transactions" and "Other investment practices" below.
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 the Fund's portfolio turnover rate may be
higher than that of other mutual funds. Portfolio turnover
generally involves some expense to the Fund, including brokerage
commissions or dealer mark-ups and other transaction costs on the
sale of securities and reinvestment in other securities. Such
transactions may result in realization of taxable capital gains.
Portfolio turnover rates for the life of the Fund are shown in
the section "Financial highlights."
OPTIONS AND FUTURES PORTFOLIO STRATEGIES
THE FUND MAY ENGAGE IN A VARIETY OF TRANSACTIONS INVOLVING THE
USE OF OPTIONS AND FUTURES CONTRACTS AND IN FOREIGN CURRENCY
EXCHANGE TRANSACTIONS FOR PURPOSES OF INCREASING ITS INVESTMENT
RETURN OR HEDGING AGAINST MARKET CHANGES. The Fund may seek to
increase its current return by writing covered call options and
covered put options on its portfolio securities or other
securities in which it may invest. The Fund receives a premium
from writing a call or put option, which increases the Fund's
return if the option expires unexercised or is closed out at a
net profit. The Fund may also buy and sell put and call options
on such securities for hedging purposes. When the Fund writes a
call option on a portfolio security, it gives up the opportunity
to profit from any increase in the price of the security above
the exercise price of the option; when it writes a put option,
the Fund takes the risk that it will be required to purchase a
security from the option holder at a price above the current
market price of the security. 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
from time to time buy and sell combinations of put and call
options on the same underlying security to earn additional
income.
The Fund may buy and sell index futures contracts for hedging
purposes. An "index future" is a contract to buy or sell units
of a particular index at an agreed price on a specified future
date. Depending on the change in value of the index between the
time when the Fund enters into and terminates an index future
transaction, the Fund realizes a gain or loss. The Fund may also
purchase and sell call and put options on index futures or on
indices in addition or as an alternative to purchasing or
selling index futures or, to the extent permitted by applicable
law, to earn additional income. The Fund may also purchase
warrants, issued by banks and other financial institutions, whose
values are based on the values from time to time of one or more
securities indices.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. The Fund may engage in
foreign currency exchange transactions to protect against
uncertainty in the level of future currency exchange rates.
Putnam Management expects to engage in foreign currency exchange
transactions in connection with the purchase and sale of
portfolio securities ("transaction hedging") and to protect
against changes in the value of specific portfolio positions
("position hedging").
The Fund may engage in transaction hedging to protect against a
change in foreign currency exchange rates between the date on
which the Fund contracts to purchase or sell a security and the
settlement date, or to "lock in" the U.S. dollar equivalent of a
dividend or interest payment in a foreign currency. The Fund may
purchase or sell a foreign currency on a spot (or cash) basis at
the prevailing spot rate in connection with the settlement of
transactions in portfolio securities denominated in that foreign
currency.
If conditions warrant, the Fund may also enter into contracts to
purchase or sell foreign currencies at a future date ("forward
contracts") and may purchase and sell foreign currency futures
contracts as a hedge against changes in foreign currency exchange
rates between the trade and settlement dates on particular
transactions and not for speculation. A foreign currency forward
contract is a negotiated agreement to exchange currency at a
future time at a rate or rates that may be higher or lower than
the spot rate. Foreign currency futures contracts are
standardized exchange-traded contracts and have margin
requirements.
For transaction hedging purposes, the Fund may also purchase and
sell call and put options on foreign currency futures contracts
and on foreign currencies.
The Fund may engage in position hedging to protect against a
decline in value relative to the U.S. dollar of the currencies in
which its portfolio securities are denominated or quoted (or an
increase in value of a currency in which securities the Fund
intends to buy are denominated). For position hedging purposes,
the Fund may purchase or sell foreign currency futures contacts,
foreign currency forward contracts, and options on foreign
currency futures contracts and on foreign currencies. In
connection with position hedging, the Fund may also purchase or
sell foreign currency on a spot basis.
The Fund's currency hedging transactions may call for the
delivery of one foreign currency in exchange for another foreign
currency and may at times not involve currencies in which its
portfolio securities are then denominated. Putnam Management
will engage in such "cross hedging" activities when it believes
that such transactions provide significant hedging opportunities
for the Fund.
The currencies of certain countries are not widely traded, and
the foreign currency exchange transactions described above may
not be available with respect to those currencies.
RISK FACTORS IN OPTIONS AND FUTURES TRANSACTIONS
OPTIONS AND FUTURES TRANSACTIONS INVOLVE COSTS AND MAY RESULT IN
LOSSES. OPTIONS AND FUTURES TRANSACTIONS INVOLVE CERTAIN
SPECIAL RISKS, INCLUDING THE RISKS THAT THE FUND MAY BE UNABLE AT
TIMES TO CLOSE OUT ITS POSITIONS, THAT SUCH TRANSACTIONS MAY NOT
ACCOMPLISH THEIR PURPOSE BECAUSE OF IMPERFECT MARKET
CORRELATIONS, OR THAT PUTNAM MANAGEMENT MAY NOT FORECAST MARKET
MOVEMENTS CORRECTLY. The effective use of options and futures
strategies is dependent on, among other things, the Fund's
ability to terminate options and futures positions at times when
Putnam Management deems it desirable to do so. Although the Fund
will enter into an option or futures contract position only if
Putnam Management believes that a liquid secondary market exists
for such option or futures contract, there is no assurance that
the Fund will be able to effect closing transactions at any
particular time or at an acceptable price.
The Fund generally expects that its options and futures contract
transactions will be conducted on recognized exchanges. In
certain instances, however, the Fund may purchase and sell
options in the over-the-counter markets. The Fund's ability to
terminate options in over-the-counter markets may be more limited
than for exchange-traded options and may also involve the risk
that securities dealers participating in such transactions would
be unable to meet their obligations to the Fund.
The use of options and futures strategies also involves the risk
of imperfect correlation between movements in the prices of
options and futures contracts and movements in the value of the
underlying securities , securities index or foreign
currency, or in the prices of the securities or
currency that are the subject of a hedge. 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 successful use of these strategies further depends on
the ability of Putnam Management to forecast market movements
correctly.
Because the markets for certain options and futures contracts in
which the Fund will invest (including markets located in foreign
countries) are relatively new and still developing and may be
subject to regulatory restraints, the Fund's ability to engage in
transactions using such investments may be limited.
The Fund's ability to engage in hedging transactions may be
limited by certain regulatory requirements and tax
considerations. The Fund's hedging transactions may affect the
character or amount of the Fund's distributions.
A more detailed exlanation of futures and options
transactions, including the risks associated with them, is
included in the Statement of Additional Information.
OTHER INVESTMENT PRACTICES
THE FUND MAY ALSO ENGAGE TO A LIMITED EXTENT IN THE FOLLOWING
INVESTMENT PRACTICES, EACH OF WHICH MAY INVOLVE CERTAIN SPECIAL
RISKS. THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE
DETAILED INFORMATION ABOUT THESE PRACTICES, INCLUDING LIMITATIONS
DESIGNED TO REDUCE THESE RISKS.
SECURITIES LOANS, REPURCHASE AGREEMENTS AND FORWARD COMMITMENTS.
The Fund may lend portfolio securities amounting to not more than
25% of its assets to broker-dealers and may enter into repurchase
agreements on up to 25% of its assets. These transactions must
be fully collateralized at all times. The Fund may also purchase
securities for future delivery, which may increase its overall
investment exposure and involves a risk of loss if the value of
the securities declines prior to the settlement date.
These transactions involve some risk to the Fund if the other
party should default on its obligation and the Fund is delayed or
prevented from recovering the collateral or completing the
transaction.
LIMITING INVESTMENT RISK
SPECIFIC INVESTMENT RESTRICTIONS HELP THE FUND LIMIT INVESTMENT
RISKS FOR ITS SHAREHOLDERS. THESE RESTRICTIONS PROHIBIT THE FUND
FROM: acquiring more than 10% of the voting securities of any one
issuer* and investing more than: (a) 5% of its total assets in
securities of any one issuer (other than U.S. government
securities); provided that, with respect to investments in
securities issued by foreign governments, this limitation shall
apply only to 75% of the Fund's total assets;* (b) 5% of its net
assets in companies that, together with any predecessors, have
been in operation less than three years (other than U.S.
government securities); (c) 25% of its total assets in any one
industry (except securities of the U.S. government or its
agencies or instrumentalities);* or (d) 15% of its net assets in
any combination of securities that are not readily marketable,
securities restricted as to resale, (excluding securities that
have been determined by the Fund's Trustees (or the person
designated by them to make such determinations) to be readily
marketable) and repurchase agreements maturing in more than seven
days.
Restrictions marked with an asterisk(*) above are summaries of
fundamental investment policies. See the Statement of
Additional Information for the full text of these policies and
the Fund's other fundamental investment policies. Except
for investment policies designated as fundamental in this
Prospectus or the Statement, the investment policies described in
this Prospectus and in the Statement are not fundamental
investment policies. The Trustees may change any non-
fundamental investment policies without shareholder approval. As
a matter of policy, the Trustees would not materially change the
Fund's investment objective without shareholder approval.
HOW PERFORMANCE IS SHOWN
THE FUND'S INVESTMENT PERFORMANCE MAY FROM TIME TO TIME BE
INCLUDED IN ADVERTISEMENTS ABOUT THE FUND. ""Total return" for
the one- , five- and ten-year periods (or for the life of a
class, if shorter) through the most recent calendar quarter
represents the average annual compounded rate of return on an
investment of $1,000 in the Fund invested at the maximum
public offering price (in the case of Class A and M
shares) or reflecting the deduction of any applicable contingent
deferred sales charge (in the case of Class B shares). Total
return may also be presented for other periods or based on
investment at reduced sales charge levels . Any quotation
of investment performance not reflecting the maximum
initial sales charge or a contingent deferred sales charge would
be reduced if such sales charge were used.
ALL DATA IS BASED ON THE FUND'S PAST INVESTMENT RESULTS AND DOES
NOT PREDICT FUTURE PERFORMANCE. Investment performance, which
will vary, is based on many factors, including market conditions,
the composition of the Fund's portfolio, the Fund's operating
expenses and which class of shares you purchase. 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
to 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. The Fund's performance may be
compared to various indices. See the Statement of Additional
Information.
HOW THE FUND IS MANAGED
THE TRUSTEES OF THE FUND ARE RESPONSIBLE FOR GENERALLY OVERSEEING
THE CONDUCT OF THE FUND'S BUSINESS. Subject to such policies as
the Trustees may determine, Putnam Management furnishes a
continuing investment program for the Fund and makes investment
decisions on its behalf. Subject to the control of the Trustees,
Putnam Management also manages the Fund's other affairs and
business. Justin Scott, Senior Vice President of Putnam
Management and Vice President of the Fund, has had primary
responsibility for the day-to-day management of the Fund's
portfolio since 1991. Mr. Scott has been employed by Putnam
Management since 1988.
The Fund pays all expenses not assumed by Putnam Management,
including Trustees' fees, auditing, legal, custodial, investor
servicing and shareholder reporting expenses, and payments under
its Distribution Plans (which are in turn allocated to the
relevant class of shares). The Fund also reimburses Putnam
Management for the compensation and related expenses of certain
officers of the Fund and their staff who provide administrative
services to the Fund. The total reimbursement is determined
annually by the Trustees.
Putnam Management places all orders for purchases and sales of
the Fund's securities. In selecting broker-dealers, Putnam
Management may consider research and brokerage services furnished
to it and its affiliates. Subject to seeking the most favorable
price and execution available, Putnam Management may consider
sales of shares of the Fund (and, if permitted by law, of the
other Putnam funds) as a factor in the selection of broker-
dealers.
ORGANIZATION AND HISTORY
Putnam Overseas Growth Fund is a Massachusetts business trust
organized on October 5, 1990. 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. Shares of the Fund may, without shareholder
approval, be divided into 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 or special
or relative rights and privileges as the Trustees
determine. The Fund's shares are currently divided into
three classes. Each share has one vote, with fractional
shares voting proportionally. Shares of each class will vote
together as a single class except when 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 you own fewer shares than a minimum amount set by the Trustees
(presently 20 shares), the Fund may choose to redeem your shares
and pay you for them. You will receive at least 30 days' written
notice before the Fund redeems your shares, and you may purchase
additional shares at any time to avoid a redemption. The Fund
may also redeem shares if you own shares above a maximum amount
set by the Trustees. There is presently no maximum, but the
Trustees may establish one at any time, which could apply to both
present and future shareholders.
THE FUND'S TRUSTEES: GEORGE PUTNAM,* CHAIRMAN. President of the
Putnam funds. Chairman and Director of Putnam Management and
Putnam Mutual Funds Corp. ("Putnam Mutual Funds"). Director,
Marsh & McLennan Companies, Inc.; WILLIAM F. POUNDS, VICE
CHAIRMAN. Professor of Management, Alfred P. Sloan School of
Management, M.I.T.; JAMESON ADKINS BAXTER, President, Baxter
Associates, Inc.; HANS H. ESTIN, Vice Chairman, North American
Management Corporation; JOHN A. HILL, Principal and Managing
Director, First Reserve Corporation; ELIZABETH T. KENNAN,
President, Mount Holyoke College; LAWRENCE J. LASSER,* Vice
President of the Putnam funds. President, Chief Executive Officer
and Director of Putnam Investments, Inc. and Putnam Management.
Director, Marsh & McLennan Companies, Inc.; ROBERT E. PATTERSON,
Executive Vice President, Cabot Partners Limited Partnership;
DONALD S. PERKINS, Director of various corporations, including
AT&T, K mart Corporation and Time Warner Inc.; GEORGE PUTNAM,
III,* President, New Generation Research, Inc.; A.J.C. SMITH,*
Chairman, Chief Executive Officer and Director, Marsh & McLennan
Companies, Inc.; and W. NICHOLAS THORNDIKE, Director of various
corporations and charitable organizations, including Providence
Journal Co. Also, Trustee of Massachusetts General
Hospital and Trustee of Eastern Utilities Associates. The Fund's
Trustees are also Trustees of the other Putnam funds. Those
marked with an asterisk (*) are "interested persons" of the Fund,
Putnam Management or Putnam Mutual Funds.
ABOUT YOUR INVESTMENT
ALTERNATIVE SALES ARRANGEMENTS
This Prospectus offers investors three classes of
shares which bear sales charges in different forms and amounts
and which bear different levels of expenses:
CLASS A SHARES. An investor who purchases Class A shares pays a
sales charge at the time of purchase. As a result, Class A shares
are not subject to any charges when they are redeemed (except for
sales at net asset value in excess of $1 million which are
subject to a contingent deferred sales charge). Certain
purchases of Class A shares qualify for reduced sales charges.
Class A shares currently bear a 12b-1 fee at the annual rate of
0.25% of the Fund's average net assets attributable to Class A
shares. See "How to buy shares -- Class A shares."
CLASS B SHARES. Class B shares are sold without an initial sales
charge, but are subject to a contingent deferred sales charge of
up to 5% if redeemed within six years. Class B shares also bear
a higher 12b-1 fee than Class A shares, currently at the annual
rate of 1.00% of the Fund's average net assets attributable to
Class B shares. Class B shares will automatically convert into
Class A shares, based on relative net asset value, approximately
eight years after purchase. Class B shares provide an investor
the benefit of putting all of the investor's dollars to work from
the time the investment is made, but (until conversion) will have
a higher expense ratio and pay lower dividends than Class A
shares due to the higher 12b-1 fee. See "How to buy shares --
Class B shares."
CLASS M SHARES. An investor who purchases Class M shares pays
a sales charge at the time of purchase, which is lower than the
sales charge applicable to Class A shares. Class M shares are
not subject to any charge when they are redeemed. Certain
purchases of Class M shares qualify for reduced sales charges.
Class M shares currently bear a 12b-1 fee at the annual rate of
0.75% of a Fund's average net assets attributable to Class M
shares. It is expected that Class M shares will be available on
or about December 1, 1994. See "How to buy shares - Class M
shares."
WHICH ARRANGEMENT IS BEST FOR YOU? The decision as to
which class of shares provides the most suitable
investment for an investor depends on a number of factors,
including the amount and intended length of the investment.
Investors making investments that qualify for reduced sales
charges might consider Class A or Class M shares.
Investors who prefer not to pay an initial sales charge might
consider Class B shares. Orders for Class B shares for $250,000
or more or orders for Class M shares for $1 million or
more will be treated as orders for Class A shares or
declined. For more information about these sales arrangements,
consult your investment dealer or Putnam Investor Services.
Sales personnel may receive different compensation depending on
which class of shares they sell. Shares may only be exchanged
for shares of the same class of another Putnam fund. See "How to
exchange shares . "
HOW TO BUY SHARES
You can open a Fund account with as little as $500 and make
additional investments at any time with as little as $50. You can
buy Fund shares three ways - through most investment dealers,
through Putnam Mutual Funds (at 1-800-225-1581), or through a
systematic investment plan. If you do not have a dealer, Putnam
Mutual Funds can refer you to one.
BUYING SHARES THROUGH PUTNAM MUTUAL FUNDS. Complete an order
form and return it with a check payable to the Fund to Putnam
Mutual Funds, which will act as your agent in purchasing shares
through your designated investment dealer.
BUYING SHARES THROUGH SYSTEMATIC INVESTING. You can make regular
investments of $25 or more per month through automatic deductions
from your bank checking account. Application forms are available
from your investment dealer or through Putnam Investor Services.
Shares are sold at the public offering price based on the net
asset value next determined after Putnam Investor Services
receives your order. In most cases, in order to receive that
day's public offering price, Putnam Investor Services must
receive your order before the close of regular trading on the New
York Stock Exchange. If you buy shares through your investment
dealer, the dealer must receive your order before the close of
regular trading on the New York Stock Exchange to receive that
day's public offering price.
CLASS A SHARES
The public offering price of Class A shares is the net asset
value plus a sales charge. The Fund receives the net asset
value. The sales charge varies depending on the size of your
purchase and is allocated between your investment dealer and
Putnam Mutual Funds. The current sales charges are:
<PAGE>
<TABLE>
<CAPTION>
SALES CHARGE AMOUNT OF
AS A PERCENTAGE OF: SALES CHARGE
------------------ REALLOWED
NET TO DEALERS
AMOUNT OF TRANSACTION AMOUNT OFFERING AS A PERCENTAGE
AT OFFERING PRICE INVESTED PRICE OF OFFERING
PRICE*
-----------------------------------------------------------------------------------
- -------
<C> <C> <C> <C> <C> <C>
Less than $ 50,000 6.10% 5.75% 5.00%
$ 50,000 but less than 100,000 4.71 4.50 3.75
100,000 but less than 250,000 3.63 3.50 2.75
250,000 but less than 500,000 2.56 2.50 2.00
500,000 but less than 1,000,000 2.04 2.00 1.75
- ------------------------------------------------------------------------------------------
/TABLE
<PAGE>
*At the discretion of Putnam Mutual Funds, however, the entire
sales charge may at times be reallowed to dealers. The Staff of
the Securities and Exchange Commission has indicated that dealers
who receive more than 90% of the sales charge may be considered
underwriters.
There is no initial sales charge on purchases of Class A shares
of $1 million or more. However, a contingent deferred sales
charge ("CDSC") of 1.00% or 0.50%, respectively, is imposed on
redemptions of such shares within the first or second year after
purchase, based on the lower of the shares' cost and current net
asset value. Any shares acquired by reinvestment of
distributions will be redeemed without a CDSC. Shares purchased
by participant-directed qualified retirement plans sponsored by
employers with more than 750 employees or investing $1 million or
more are not subject to the CDSC. In addition, shares purchased
by certain investors investing $1 million or more that have made
arrangements with Putnam Mutual Funds and whose dealer of record
waived the commission described in the next paragraph are not
subject to the CDSC. In determining whether a CDSC is payable,
the Fund will first redeem shares not subject to any charge.
Putnam Mutual Funds receives the entire amount of any CDSC you
pay. See the Statement of Additional Information for more
information about the CDSC.
Except as stated below, Putnam Mutual Funds pays investment
dealers of record commissions on sales of Class A shares of $1
million or more based on an investor's cumulative purchases
during the one-year period beginning with the date of the initial
purchase at net asset value and each subsequent one-year period
beginning with the first purchase at net asset value following
the end of the prior period. Such commissions are paid at the
rates of 1.00% of the amount under $3 million, 0.50% of the next
$47 million and 0.25% thereafter. On sales at net asset value to
a participant-directed qualified retirement plan initially
investing less than $20 million in Putnam funds and other
investments managed by Putnam Management or its affiliates
(including a plan sponsored by an employer with more than 750
employees), Putnam Mutual Funds pays commissions on cumulative
purchases during the life of the account at the rates of 1.00% of
the amount under $3 million and 0.50% thereafter. On sales at
net asset value to all other participant-directed qualified
retirement plans, Putnam Mutual Funds pays commissions on the
initial investment and on subsequent net quarterly sales at the
rate of 0.15%.
CLASS B SHARES
Class B shares are sold without an initial sales charge ,
although a CDSC will be imposed if you redeem shares within six
years of purchase. The following types of shares may be redeemed
without charge at any time: (i) shares acquired by reinvestment
of distributions and (ii) shares otherwise exempt from the CDSC,
as described in "How to buy shares - General" below. For
other shares , the amount of the charge is determined as a
percentage of the lesser of the current market value or the cost
of the shares being redeemed. The amount of the CDSC
will depend on the number of years since you invested and the
dollar amount being redeemed, according to the following table:
CONTINGENT DEFERRED
SALES CHARGE AS A
PERCENTAGE OF
YEARS SINCE PURCHASE DOLLAR AMOUNT
PAYMENT MADE SUBJECT TO CHARGE
- -----------------------------------------------------------------
0-1 5.0%
1-2 4.0%
2-3 3.0%
3-4 3.0%
4-5 2.0%
5-6 1.0%
6 and thereafter None
<PAGE>
In determining whether a CDSC is payable on any redemption, the
Fund will first redeem shares not subject to any charge, and then
shares held longest during the six-year period. For this
purpose, the amount of any increase in a share's value above its
initial purchase price is not regarded as a share exempt from the
CDSC. Thus, when a share that has appreciated in value is
redeemed during the six-year period, a CDSC is assessed on its
initial purchase price. For information on how sales charges
are calculated if you exchange your shares, see "How to exchange
shares." Putnam Mutual Funds receives the entire amount of any
CDSC you pay.
CONVERSION OF CLASS B SHARES. Class B shares will automatically
convert into Class A shares at the end of the month eight years
after the purchase date, except as noted below. Class B shares
acquired by exchanging Class B shares of another Putnam
Fund will convert into Class A shares based on the time of the
initial purchase. Class B shares acquired through reinvestment
of distributions will convert into Class A shares based on the
date of the initial purchase to which such shares relate. For
this purpose, Class B shares acquired through reinvestment of
distributions will be attributed to particular purchases of Class
B shares in accordance with such procedures as the Trustees may
determine from time to time. The conversion of Class B shares to
Class A shares is subject to the continuing availability of a
ruling from the Internal Revenue Service or an opinion of counsel
that such conversions will not constitute taxable events for
federal tax purposes. There can be no assurance that such ruling
or opinion will be available, and the conversion of Class B
shares to Class A shares will not occur if such ruling or opinion
is not available. In such event, Class B shares would continue to
be subject to higher expenses than Class A shares for an
indefinite period.
CLASS M SHARES
The public offering price of Class M shares is the net asset
value plus a sales charge. The Fund receives the net asset
value. The sales charge varies depending on the size of your
purchase and is allocated between your investment dealer and
Putnam Mutual Funds. The current sales charges are:
<PAGE>
<TABLE>
<CAPTION>
SALES CHARGE
AS A PERCENTAGE OF: AMOUNT OF SALES
------------------- CHARGE REALLOWED
NET TO DEALERS
AMOUNT OF TRANSACTION AMOUNT OFFERING AS A PERCENTAGE OF
AT OFFERING PRICE INVESTED PRICE OFFERING PRICE*
- -----------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
Less than $ 50,000 3.63% 3.50% 3.00%
50,000 but less than 100,000 2.56 2.50 2.00
$ 100,000 but less than 250,000 1.52 1.50 1.00
250,000 but less than 500,000 1.01 1.00 1.00
500,000 but less that 1,000,000 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE>
* At the discretion of Putnam Mutual Funds, however, the
entire sales charge may at times be reallowed to dealers.
The Staff of the Securities and Exchange Commission has
indicated that dealers who receive more than 90% of the
sales charge may be considered underwriters.
GENERAL
YOU MAY BE ELIGIBLE TO BUY CLASS A SHARES AND CLASS M SHARES
AT REDUCED SALES CHARGES. Consult your investment dealer or
Putnam Mutual Funds for details about Putnam's Combined Purchase
Privilege, Cumulative Quantity Discount, Statement of Intention,
Group Sales Plan, Employee Benefit Plans and other plans.
Descriptions are also included in the order form and in the
Statement of Additional Information. In addition, sales charges
will not apply to Class M shares purchased with redemption
proceeds received within the prior ninety days from non-Putnam
mutual funds on which the investor paid a front-end or contingent
deferred sales charge.
The Fund may sell Class A , Class B and Class M
shares at net asset value without an initial sales charge or a
CDSC to the Fund's current and retired Trustees (and their
families), current and retired employees (and their families) of
Putnam Management and affiliates, registered representatives and
other employees (and their families) of broker-dealers having
sales agreements with Putnam Mutual Funds, employees (and their
families) of financial institutions having sales agreements with
Putnam Mutual Funds (or otherwise having an arrangement with a
broker-dealer or financial institution with respect to sales of
Fund shares), financial institution trust departments investing
an aggregate of $1 million or more in Putnam funds, clients of
certain administrators of tax-qualified plans, employee benefit
plans of companies with more than 750 employees, tax-qualified
plans when proceeds from repayments of loans to participants are
invested (or reinvested) in Putnam funds, "wrap accounts" for the
benefit of clients of broker-dealers, financial institutions or
financial planners adhering to certain standards established by
Putnam Mutual Funds, and investors meeting certain requirements
who sold shares of certain Putnam closed-end funds pursuant to a
tender offer by the closed-end fund. In addition, the Fund may
sell shares at net asset value without an initial sales charge or
a CDSC in connection with the acquisition by the Fund of assets
of an investment company or personal holding company, and the
CDSC will be waived on redemptions of shares arising out of death
or disability or in connection with certain withdrawals from IRA
or other retirement plans. Up to 12% of the value of Class B
shares subject to a Systematic Withdrawal Plan may also be
redeemed each year without a CDSC. See the Statement of
Additional Information.
Shareholders of other Putnam funds may be entitled to exchange
their shares for, or reinvest distributions from their funds in,
shares of the Fund at net asset value.
If you are considering redeeming or exchanging shares or
transferring shares to another person shortly after purchase, you
should pay for those shares with a certified check to avoid any
delay in redemption, exchange or transfer. Otherwise the Fund
may delay payment until the purchase price of those shares has
been collected or, if you redeem by telephone, until 15 calendar
days after the purchase date.
To eliminate the need for safekeeping, the Fund will not issue
certificates for your shares unless you request them. Putnam
Mutual Funds may, at its expense, provide additional promotional
incentives or payments to dealers that sell shares of the Putnam
funds. In some instances, these incentives or payments may be
offered only to certain dealers who have sold or may sell
significant amounts of shares. Certain dealers may not sell all
classes of shares.
DISTRIBUTION PLANS
CLASS A DISTRIBUTION PLAN. The Class A Plan provides for
payments by the Fund to Putnam Mutual Funds at the annual rate of
up to 0.35% of the Fund's average net assets attributable to
Class A shares . The Trustees currently limit payments
under the Class A Plan to the annual rate of 0.25% of
such assets . Should the Trustees decide in the future to
approve payments in excess of this amount, shareholders will be
notified and this Prospectus will be revised.
In order to compensate investment dealers (including, for this
purpose, certain financial institutions) for services provided in
connection with sales of Class A shares and the maintenance of
shareholder accounts, Putnam Mutual Funds makes quarterly
payments to qualifying dealers based on the average net asset
value of Class A shares of the Fund which are attributable to
shareholders for whom the dealers are designated as the dealer of
record. This calculation excludes until one year after purchase
shares purchased at net asset value by shareholders investing $1
million or more and by participant-directed qualified retirement
plans sponsored by employers with more than 750 employees ("NAV
Shares"), except for shares owned by certain investors investing
$1 million or more that have made arrangements with Putnam Mutual
Funds and whose dealer of record waived the sales commission.
Except as stated below, Putnam Mutual Funds makes such
payments at the annual rate of 0.25% of such average net asset
value for Class A shares (including shares acquired
through reinvestment of distributions). For participant-
directed qualified retirement plans initially investing less than
$20 million in Putnam funds and other investments managed by
Putnam Management or its affiliates, Putnam Mutual Funds'
payments to qualifying dealers on NAV Shares are 100% of the rate
stated above if average plan assets in Putnam funds (excluding
money market funds) during the quarter are less than $20 million,
60% of the stated rate if average plan assets are at least $20
million but less than $30 million, and 40% of the stated rate if
average plan assets are $30 million or more. For all other
participant-directed qualified retirement plans purchasing NAV
Shares, Putnam Mutual Funds makes quarterly payments to
qualifying dealers at the annual rate of 0.10% of the average net
asset value of such shares.
CLASS B AND CLASS M DISTRIBUTION PLANS . The Class
B Plan and the Class M Plan provide for payments by the
Fund to Putnam Mutual Funds at the annual rate of up to 1.00% of
the Fund's average net assets attributable to Class B
shares and Class M shares, as the case may be. At present, the
Trustees have approved payments under the Class M Plan at the
annual rate of 0.75% .
Although Class B shares are sold without an initial sales charge,
Putnam Mutual Funds pays a sales commission equal to 4.00% of the
amount invested to dealers who sell Class B shares. These
commissions are not paid on exchanges from other Putnam funds and
sales to investors exempt from the CDSC. The amount paid to
dealers at the time of the sale of Class M shares is set forth
above under "How to buy shares -- Class M shares." In
addition, in order to further compensate dealers (including, for
this purpose, certain financial institutions) for services
provided in connection with sales of Class B shares and Class
M shares and the maintenance of shareholder accounts, Putnam
Mutual Funds makes quarterly payments to qualifying dealers based
on the average net asset value of Class B shares and Class M
shares which are attributable to shareholders for whom the
dealers are designated as the dealer of record. Putnam Mutual
Funds makes such payments at an annual rate of 0.25% of such
average net asset value of Class B shares and Class M shares,
as the case may be. Putnam Mutual Funds also pays to 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.
For Class M shares, the total annual payment to dealers equals
0.65% of such average net asset value.
GENERAL. Payments under the Plans are intended to compensate
Putnam Mutual Funds for services provided and expenses incurred
by it as principal underwriter of the Fund's shares, including
the payments to dealers mentioned above. Putnam Mutual Funds
may suspend or modify such payments to dealers
. Such payments are also subject to the
continuation of the relevant Distribution Plan ,
the terms of Service Agreements between dealers and Putnam Mutual
Funds, and any applicable limits imposed by the National
Association of Securities Dealers, Inc.
HOW TO SELL SHARES
You can sell your shares to the Fund any day the New York Stock
Exchange is open, either directly to the Fund or through your
investment dealer. The Fund will only redeem shares for
which it has received payment.
SELLING SHARES DIRECTLY TO THE FUND. Send a signed letter of
instruction or stock power form to Putnam Investor Services,
along with any certificates that represent shares you want to
sell. The price you will receive is the next net asset value
calculated after the Fund receives your request in proper form
less any applicable CDSC. In order to receive that day's net
asset value, Putnam Investor Services must receive your request
before the close of regular trading on the New York Stock
Exchange. If you sell shares having a net asset value of $100,000
or more, the signatures of registered owners or their legal
representatives must be guaranteed by a bank, broker-dealer or
certain other financial institutions. See the Statement of
Additional Information for more information about where to obtain
a signature guarantee. Stock power forms are available from your
investment dealer, Putnam Investor Services and many commercial
banks. If you want your redemption proceeds sent to an address
other than your address as it appears on Putnam's records, a
signature guarantee is required. Putnam Investor Services usually
requires additional documentation for the sale of shares by a
corporation, partnership, agent or fiduciary, or a surviving
joint owner. Contact Putnam Investor Services for details.
THE FUND GENERALLY SENDS YOU PAYMENT FOR REDEEMED SHARES
THE BUSINESS DAY AFTER YOUR REQUEST IS RECEIVED. Under unusual
circumstances, the Fund may suspend redemptions , or
postpone payment for more than seven days, as permitted by
federal securities law.
You may use Putnam's Telephone Redemption Privilege to redeem
shares valued up to $100,000 from your account unless you have
notified Putnam Investor Services of an address change within the
preceding 15 days. Unless an investor indicates otherwise on the
Account Application, Putnam Investor Services will be authorized
to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as
his or her representative, who can provide Putnam Investor
Services with his or her account registration and address as it
appears on Putnam Investor Services' records. Putnam Investor
Services will employ these and other reasonable procedures to
confirm that instructions communicated by telephone are genuine;
if it fails to employ reasonable procedures, Putnam Investor
Services may be liable for any losses due to unauthorized or
fraudulent instructions. For information, consult Putnam
Investor Services. During periods of unusual market changes and
shareholder activity, you may experience delays in contacting
Putnam Investor Services by telephone in which case you may wish
to submit a written redemption request, as described above, or
contact your investment dealer, as described below. The Telephone
Redemption Privilege is not available if you were issued
certificates for your shares which remain outstanding. The
Telephone Redemption Privilege may be modified or terminated
without notice.
SELLING SHARES THROUGH YOUR INVESTMENT DEALER. Your dealer must
receive your request before the close of regular trading on the
New York Stock Exchange to receive that day's net asset
value. Your dealer will be responsible for furnishing all
necessary documentation to Putnam Investor Services, and may
charge for its services.
HOW TO EXCHANGE SHARES
You can exchange your shares for shares of the same class of
certain other Putnam funds at net asset value beginning 15 days
after purchase. Not all Putnam funds offer all classes of
shares. If you exchange shares subject to a CDSC, the
transaction will not be subject to the CDSC. However, when you
redeem the shares acquired through the exchange, the redemption
may be subject to the CDSC, depending upon when you originally
purchased the shares and using the schedule of any fund into or
from which you have exchanged your shares that would result in
your paying the highest CDSC applicable to your class of shares.
For purposes of computing the CDSC, the length of time you have
owned your shares will be measured from the date of original
purchase and will not be affected by any exchange.
To exchange your shares, simply complete an Exchange
Authorization Form and send it to Putnam Investor Services.
Exchange Authorization Forms are available by calling or writing
Putnam Investor Services. For federal income tax purposes, an
exchange is treated as a sale of shares and generally results in
a capital gain or loss. A Telephone Exchange Privilege is
currently available for amounts up to $500,000. Putnam Investor
Services' procedures for telephonic transactions are described
above under "How to sell shares." The Telephone Exchange
Privilege is not available if you were issued certificates for
shares which remain outstanding. Ask your investment dealer or
Putnam Investor Services for prospectuses of other Putnam funds.
Shares of certain Putnam funds are not available to residents of
all states.
The exchange privilege is not intended as a vehicle for short-
term trading. Excessive exchange activity may interfere with
portfolio management and have an adverse effect on all
shareholders. In order to limit excessive exchange activity and
in other circumstances where Putnam Management or the
Trustees believe doing so would be in the best interests of
the Fund, the Fund reserves the right to revise or terminate the
exchange privilege, limit the amount or number of exchanges or
reject any exchange. Shareholders would be notified of any such
action to the extent required by law. Consult Putnam Investor
Services before requesting an exchange. See the Statement of
Additional Information to find out more about the exchange
privilege.
HOW THE FUND VALUES ITS SHARES
THE FUND CALCULATES THE NET ASSET VALUE OF A SHARE OF EACH CLASS
BY DIVIDING THE TOTAL VALUE OF ITS ASSETS, LESS LIABILITIES, BY
THE NUMBER OF IT SHARES OUTSTANDING. SHARES ARE VALUED AS OF THE
CLOSE OF REGULAR TRADING ON THE NEW YORK STOCK EXCHANGE EACH DAY
THE EXCHANGE IS OPEN. Portfolio securities for which market
quotations are readily available are stated at market value.
Short-term investments that will mature in 60 days or less are
stated at amortized cost, which approximates market value. All
other securities and assets are valued at their fair value
following procedures approved by the Trustees. Securities quoted
in foreign currencies are translated into U.S. dollars at the
current exchange rates or at such other rates as the Trustees may
determine in computing net asset value. As a result,
fluctuations in the value of such currencies in relation to the
U.S. dollar will affect the net asset value of Fund shares even
though there has not been any change in the values of such
securities as quoted in such foreign currencies.
<PAGE>
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
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. Distributions paid by the Fund
with respect to Class A shares will generally be greater than
those paid with respect to Class B shares and Class M
shares because expenses attributable to Class B shares and
Class M shares will generally be higher.
You can choose from three distribution options: (1) reinvest all
distributions in additional Fund shares without a sales charge;
(2) receive distributions from net investment income in cash
while reinvesting capital gains distributions in additional
shares without a sales charge; or (3) receive all distributions
in cash. You can change your distribution option by notifying
Putnam Investor Services in writing. If you do not select an
option when you open your account, all distributions will be
reinvested. All distributions not paid in cash will be reinvested
in shares of the class on which the distribution was paid. You
will receive a statement confirming reinvestment of distributions
in additional fund shares (or in shares of other Putnam funds for
Dividends Plus accounts) promptly following the quarter in which
the reinvestment occurs.
If a check representing a Fund distribution is not cashed within
a specified period, Putnam Investor Services will notify you that
you have the option of requesting another check or reinvesting
the distribution in the Fund or in another Putnam fund. If
Putnam Investor Services does not receive your election, the
distribution will be reinvested in the Fund. Similarly, if
correspondence sent by the Fund or Putnam Investor Services is
returned as "undeliverable," the Fund distributions will
automatically be reinvested in the Fund or in another Putnam
fund.
The Fund intends to qualify as a "regulated investment company"
for federal income tax purposes and to meet all other
requirements that are necessary for it to be relieved of federal
taxes on income and gains it distributes to shareholders. The
Fund will distribute substantially all of its ordinary income and
capital gain net income on a current basis.
All Fund distributions will be taxable to you as ordinary income,
except that any distributions of net long-term capital gains will
be taxable as such, regardless of how long you have held
the shares. Distributions will be taxable as described above
whether received in cash or in shares through the reinvestment of
distributions.
Early in each year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding
year.
<PAGE>
The Fund's transactions in foreign currencies and hedging
activities will likely produce a difference between its book
income and taxable income. This difference may cause a portion
of the Fund's income distributions to constitute a return of
capital for tax purposes or require the Fund to make
distributions exceeding book income to qualify as a regulated
investment company.
If, at the end of each fiscal year of the Fund, more than 50% of
the value of the Fund's total assets is represented by stock
or securities of foreign corporations, the Fund intends to
make an election permitted by the Internal Revenue Code so that
shareholders who are U.S. citizens , U.S. resident aliens,
or U.S. corporations may claim a foreign tax credit or deduction
(but not both) for qualified foreign taxes paid by the
Fund on their U.S. income tax returns.
The foregoing is a summary of certain federal income tax
consequences of investing in the Fund. The tax treatment of
shareholders who are not U.S. citizens , resident aliens or
U.S. corporations may differ substantially. You should
consult your tax adviser to determine the precise effect of an
investment in the Fund on your particular tax situation
(including possible liability for state and local taxes).
<PAGE>
ABOUT PUTNAM INVESTMENTS, INC.
PUTNAM MANAGEMENT HAS BEEN MANAGING MUTUAL FUNDS SINCE 1937.
Putnam Mutual Funds is the principal underwriter of the Fund and
of other Putnam funds. Putnam Fiduciary Trust Company is the
Fund's custodian. Putnam Investor Services, a division of Putnam
Fiduciary Trust Company, is the Fund's investor servicing and
transfer agent.
Putnam Management, Putnam Mutual Funds, and Putnam Fiduciary
Trust Company are subsidiaries of Putnam Investments, Inc., which
is wholly-owned by Marsh & McLennan Companies, Inc., a publicly
owned holding company whose principal businesses are
international insurance and reinsurance brokerage, employee
benefit consulting and investment management.
<PAGE>
PUTNAM OVERSEAS GROWTH FUND
One Post Office Square
Boston, MA 02109
FUND INFORMATION:
INVESTMENT MANAGER
Putnam Investment Management,
Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
INVESTOR SERVICING AGENT
Putnam Investor Services
Mailing address:
P.O. Box 41203
Providence, RI 02940-1203
CUSTODIAN
Putnam Fiduciary
Trust Company
One Post Office Square
Boston, MA 02109
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
PUTNAMINVESTMENTS
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581<PAGE>
PUTNAM OVERSEAS GROWTH FUND
ONE POST OFFICE SQUARE, BOSTON, MA 02109
CLASS A SHARES
INVESTMENT STRATEGY: GROWTH
PROSPECTUS-NOVEMBER 1, 1994
This Prospectus explains concisely what you should know before
investing in Class A shares of Putnam Overseas Growth Fund
(the "Fund") offered without a sales charge through eligible
employer-sponsored defined contribution plans ("defined
contribution plans") . Please read it carefully and keep it
for future reference. You can find more detailed information
about the Fund in the November 1, 1994 Statement of Additional
Information, as amended from time to time. For a free copy of
the Statement or for other information, including a
Prospectus regarding any other class of Fund shares or Class A
shares for other investors, call Putnam Investor Services at
1-800- 752-9894 . The Statement has been filed with the
Securities and Exchange Commission and is incorporated into this
Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PUTNAMINVESTMENTS
PUTNAM DEFINED
CONTRIBUTION PLANS
<PAGE>
ABOUT THE FUND
Expenses
summary ..........................................2
Financial
highlights ......................................3
Objectives.................................................4
How objective is
pursued ..................................4
Risk
factors ..............................................4</R
>
How performance is
shown
..................................9
How the Fund is
managed ..................................10
Organization and history
................................10
ABOUT YOUR INVESTMENT
How to buy
shares ......................................12
Distribution
Plan.........................................12
How to sell shares ........
..............................13
How to exchange
shares ...................................14
How the Fund values its
shares ...........................14
How distributions are made; tax information
.............15
ABOUT PUTNAM INVESTMENTS, INC.
..........................15
<PAGE>
ABOUT THE FUND
EXPENSES SUMMARY
Expenses are one of several factors to consider when investing in
the Fund. The following table summarizes expenses
incurred by the Fund based on its most recent fiscal year. The
Example shows the cumulative expenses attributable to a
hypothetical $1,000 investment in Class A shares of the
Fund over specified periods.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.25%
(after expense limitation)
12b - 1 Fees 0.25%
Other Expenses 1.67%
Total Fund Operating Expenses
(after expense limitation) 2.17%
The table is provided to help you understand the expenses of
investing in the Fund and your share of the operating expenses
that the Fund incurs. Management fees and total
operating expenses shown in the table reflect an expense
limitation currently in effect. In the absence of the expense
limitation, management fees and total operating expenses
would have been 0.78% and 2.70%, respectively .
EXAMPLE
Your investment of $1,000 would incur the following expenses,
assuming 5% annual return and redemption at the end of each
period:
1 3 5 10
YEAR YEARS YEARS YEARS
$22 $68 $116 $250
The Example does not represent past or future expense
levels and actual expenses may be greater or less than
those shown. Federal regulations require the Example to
assume a 5% annual return, but actual annual return has varied.
The Example does not reflect any charges or expenses related
to your employer's plan.
See "Organization and history" for information about any
other class of shares offered by the Fund.
FINANCIAL HIGHLIGHTS
The table on the following page presents per share financial
information for Class A 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. The Report of Independent Accountants and financial
statements included in the Fund's Annual Report to shareholders
for the 1994 fiscal year are incorporated by reference into this
Prospectus. The Fund's Annual Report, which contains additional
unaudited performance information, is available without charge
upon request.
FINANCIAL HIGHLIGHTS *
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
For the period
February 28, 1991
(commencement
of operations) to
Year ended June 30 June 30
1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Class A
Net asset value, beginning
of period $9.58 $8.82 $8.18 $8.63
Investment operations
Net investment
income (loss) (.06)(a) .07(a) .06 .07(a)
Net realized and unrealized
gain (loss) on
investments 2.53 .69 .71 (.52)
Total from investment
operations 2.47 .76 .77 (.45)
Distributions to shareholders from:
Net investment
income -- -- (.13) --
Net realized gain
on investments (.22) -- -- --
Total distributions (.22) -- (.13) --
<PAGE>
Net asset value,
end of period $11.83 $9.58 $8.82 $8.18
Total investment
return at net
asset value (%) (c) 25.81 8.62 9.52 (15.32)(d)
Net assets, end of period
(in thousands) $8,781 $2,859 $2,502 $2,054
Ratio of expenses to average
net assets (%) 2.17(a) 1.80(a) 1.98 2.33(a)(d)
Ratio of net investment
income (loss) to average
net assets (%) (.17)(a) .81(a) .76 2.57(a)(d)
Portfolio turnover (%) 96.13 80.92 82.45 14.54(e)
*Financial highlights for periods ended through June 30, 1992 have been restated to
conform with requirements issued by the SEC in April 1993.
(a)Reflects an expense limitation applicable during the period. As a result of such
limitation, expenses for class A shares of the fund for the periods ended June 30, 1994,
June 30, 1993, and June 30, 1991 reflect per share reductions of approximately $0.03,
$0.05, and $0.10, respectively.
(b)Per share net investment income for the period ended June 30, 1994 has been determined
on the basis of the weighted average number of shares outstanding for the period.
(c)Total investment return assumes dividend reinvestment and does not reflect the effect
of sales charges.
(d)Annualized.
(e)Not annualized.
</TABLE>
OBJECTIVE
Putnam Overseas Growth Fund seeks capital appreciation. The Fund
is designed for investors seeking capital appreciation primarily
through a diversified portfolio of equity securities of companies
located outside North America. The Fund is not intended to be a
complete investment program, and there is no assurance that it
will achieve its objective.
HOW OBJECTIVE IS PURSUED
BASIC INVESTMENT STRATEGY
THE FUND SEEKS ITS OBJECTIVE BY INVESTING PRIMARILY IN EQUITY
SECURITIES OF COMPANIES LOCATED OUTSIDE NORTH AMERICA. The
Fund's investments will normally include common stocks, preferred
stocks, securities convertible into common or preferred 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 Putnam Investment Management, Inc., the
Fund's investment adviser ("Putnam Management"), believes
purchasing them would help achieve the Fund's objective. The
Fund will under normal circumstances invest at least 65% of its
assets in at least three different countries outside North
America. The Fund may hold a portion of its assets in cash or
money market instruments.
The Fund will consider an issuer of securities to be "located
outside North America" if it is organized under the laws of a
country outside North America and has a principal office outside
North America, or if it derives 50% or more of its total revenues
from business outside North America.
The Fund may invest in securities of issuers in emerging markets,
as well as more developed markets. Investing in emerging markets
generally involves more risks then in investing in developed
markets. See "Risk factors" below.
THE FUND WILL NOT LIMIT ITS INVESTMENTS TO ANY PARTICULAR TYPE OF
COMPANY. The Fund may invest in companies, large or small, whose
earnings are believed to be in a relatively strong growth trend,
or in companies in which significant further growth is not
anticipated but whose market value per share is thought to be
undervalued. It may invest in small and relatively less well-
known companies which meet these characteristics.
At times Putnam Management may judge that conditions in the
international securities markets make pursuing the Fund's basic
investment strategy inconsistent with the best interests of its
shareholders. At such times Putnam Management may temporarily
use alternative strategies, primarily designed to reduce
fluctuations in the value of the Fund's assets. In implementing
these "defensive" strategies, the Fund may invest without limit
in securities of any kind traded primarily in U.S. markets and in
cash and money market instruments. It is impossible to predict
when, or for how long, the Fund will use these alternative
strategies.
RISK FACTORS
PUTNAM MANAGEMENT BELIEVES THAT THE SECURITIES MARKETS OF MANY
NATIONS MOVE RELATIVELY INDEPENDENTLY OF ONE ANOTHER, BECAUSE
BUSINESS CYCLES AND OTHER ECONOMIC OR POLITICAL EVENTS THAT
INFLUENCE ONE COUNTRY'S SECURITIES MARKETS MAY HAVE LITTLE EFFECT
ON SECURITIES MARKETS IN OTHER COUNTRIES. By investing in a
diversified portfolio of foreign securities, Putnam Management
attempts to reduce the risks associated with being invested in
the economy of only one country. The countries which Putnam
Management believes offer attractive opportunities for investment
may change from time to time.
The Fund may seek investment opportunities among securities of
large, widely traded companies as well as securities of smaller,
less well known companies. Smaller companies may present greater
opportunities for capital appreciation, but may also involve
greater risks. They may have limited product lines, markets for
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.
FOREIGN INVESTMENTS CAN INVOLVE RISKS THAT MAY NOT BE PRESENT IN
DOMESTIC INVESTMENTS. Since foreign securities are normally
denominated and traded in foreign currencies, the values of the
Fund's assets may be affected favorably or unfavorably by changes
in currency exchange rates and exchange control regulations.
There may be less information publicly available about a foreign
company than about a U. S. company, and foreign companies are not
generally subject to accounting, auditing and financial reporting
standards and practices comparable to those in the United States.
The securities of some foreign companies are less liquid and at
times more volatile than securities of comparable U. S.
companies. Foreign brokerage commissions and other fees are also
generally higher than in the United States. Foreign settlement
procedures and trade regulations may involve certain risks (such
as delay in payment or delivery of securities or in the recovery
of the Fund's assets held abroad) and expenses not present in the
settlement of domestic investments.
In addition, with respect to certain foreign countries, there is
a possibility of nationalization or expropriation of assets,
confiscatory taxation, political or financial instability and
diplomatic developments which could affect the value of
investments in those countries. In certain countries, legal
remedies available to investors may be more limited than those
available with respect to investments in the United States or
other countries. The laws of some foreign countries may limit
the Fund's ability to invest in securities of certain issuers
located in those countries. Special tax considerations apply to
foreign securities. The risks described above are typically
increased to extent that the Fund invests in securities traded in
under-developed and developing nations, which are sometimes
referred to as "emerging markets."
See, also, "Portfolio turnover,"Risk factors in options and
futures transactions" and "Other investment practices" below.
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 the Fund's portfolio turnover rate may be
higher than that of other mutual funds. Portfolio turnover
generally involves some expense to the Fund, including brokerage
commissions or dealer mark-ups and other transaction costs on the
sale of securities and reinvestment in other securities. Such
transactions may result in realization of taxable capital gains.
Portfolio turnover rates for the life of the Fund are shown in
the section "Financial highlights."
OPTIONS AND FUTURES PORTFOLIO STRATEGIES
THE FUND MAY ENGAGE IN A VARIETY OF TRANSACTIONS INVOLVING THE
USE OF OPTIONS AND FUTURES CONTRACTS AND IN FOREIGN CURRENCY
EXCHANGE TRANSACTIONS FOR PURPOSES OF INCREASING ITS INVESTMENT
RETURN OR HEDGING AGAINST MARKET CHANGES. The Fund may seek to
increase its current return by writing covered call options and
covered put options on its portfolio securities or other
securities in which it may invest. The Fund receives a premium
from writing a call or put option, which increases the Fund's
return if the option expires unexercised or is closed out at a
net profit. The Fund may also buy and sell put and call options
on such securities for hedging purposes. When the Fund writes a
call option on a portfolio security, it gives up the opportunity
to profit from any increase in the price of the security above
the exercise price of the option; when it writes a put option,
the Fund takes the risk that it will be required to purchase a
security from the option holder at a price above the current
market price of the security. 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
from time to time buy and sell combinations of put and call
options on the same underlying security to earn additional
income.
The Fund may buy and sell index futures contracts for hedging
purposes. An "index future" is a contract to buy or sell units
of a particular index at an agreed price on a specified future
date. Depending on the change in value of the index between the
time when the Fund enters into and terminates an index future
transaction, the Fund realizes a gain or loss. The Fund may also
purchase and sell call and put options on index futures or on
indices in addition or as an alternative to purchasing or selling
index futures or, to the extent permitted by applicable law, to
earn additional income. The Fund may also purchase warrants,
issued by banks and other financial institutions, whose values
are based on the values from time to time of one or more
securities indices.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS. The Fund may engage in
foreign currency exchange transactions to protect against
uncertainty in the level of future currency exchange rates.
Putnam Management expects to engage in foreign currency exchange
transactions in connection with the purchase and sale of
portfolio securities ("transaction hedging") and to protect
against changes in the value of specific portfolio positions
("position hedging").
The Fund may engage in transaction hedging to protect against a
change in foreign currency exchange rates between the date on
which the Fund contracts to purchase or sell a security and the
settlement date, or to "lock in" the U.S. dollar equivalent of a
dividend or interest payment in a foreign currency. The Fund may
purchase or sell a foreign currency on a spot (or cash) basis at
the prevailing spot rate in connection with the settlement of
transactions in portfolio securities denominated in that foreign
currency.
If conditions warrant, the Fund may also enter into contracts to
purchase or sell foreign currencies at a future date ("forward
contracts") and may purchase and sell foreign currency futures
contracts as a hedge against changes in foreign currency exchange
rates between the trade and settlement dates on particular
transactions and not for speculation. A foreign currency forward
contract is a negotiated agreement to exchange currency at a
future time at a rate or rates that may be higher or lower than
the spot rate. Foreign currency futures contracts are
standardized exchange-traded contracts and have margin
requirements.
For transaction hedging purposes, the Fund may also purchase and
sell call and put options on foreign currency futures contracts
and on foreign currencies.
The Fund may engage in position hedging to protect against a
decline in value relative to the U.S. dollar of the currencies in
which its portfolio securities are denominated or quoted (or an
increase in value of a currency in which securities the Fund
intends to buy are denominated). For position hedging purposes,
the Fund may purchase or sell foreign currency futures contacts,
foreign currency forward contracts, and options on foreign
currency futures contracts and on foreign currencies. In
connection with position hedging, the Fund may also purchase or
sell foreign currency on a spot basis.
The Fund's currency hedging transactions may call for the
delivery of one foreign currency in exchange for another foreign
currency and may at times not involve currencies in which its
portfolio securities are then denominated. Putnam Management
will engage in such "cross hedging" activities when it believes
that such transactions provide significant hedging opportunities
for the Fund.
The currencies of certain countries are not widely traded, and
the foreign currency exchange transactions described above may
not be available with respect to those currencies.
<PAGE>
RISK FACTORS IN OPTIONS AND FUTURES TRANSACTIONS
OPTIONS AND FUTURES TRANSACTIONS INVOLVE COSTS AND MAY RESULT IN
LOSSES. OPTIONS AND FUTURES TRANSACTIONS INVOLVE CERTAIN
SPECIAL RISKS, INCLUDING THE RISKS THAT THE FUND MAY BE UNABLE AT
TIMES TO CLOSE OUT ITS POSITIONS, THAT SUCH TRANSACTIONS MAY NOT
ACCOMPLISH THEIR PURPOSE BECAUSE OF IMPERFECT MARKET
CORRELATIONS, OR THAT PUTNAM MANAGEMENT MAY NOT FORECAST MARKET
MOVEMENTS CORRECTLY. The effective use of options and futures
strategies is dependent on, among other things, the Fund's
ability to terminate options and futures positions at times when
Putnam Management deems it desirable to do so. Although the Fund
will enter into an option or futures contract position only if
Putnam Management believes that a liquid secondary market exists
for such option or futures contract, there is no assurance that
the Fund will be able to effect closing transactions at any
particular time or at an acceptable price.
The Fund generally expects that its options and futures contract
transactions will be conducted on recognized exchanges. In
certain instances, however, the Fund may purchase and sell
options in the over-the-counter markets. The Fund's ability to
terminate options in over-the-counter markets may be more limited
than for exchange-traded options and may also involve the risk
that securities dealers participating in such transactions would
be unable to meet their obligations to the Fund.
The use of options and futures strategies also involves the risk
of imperfect correlation between movements in the prices of
options and futures contracts and movements in the value of the
underlying securities, securities index or foreign currency, or
in the prices of the securities or currency that are the subject
of a hedge. 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 successful use of these strategies
further depends on the ability of Putnam Management to forecast
market movements correctly.
Because the markets for certain options and futures contracts in
which the Fund will invest (including markets located in foreign
countries) are relatively new and still developing and may be
subject to regulatory restraints, the Fund's ability to engage in
transactions using such investments may be limited.
The Fund's ability to engage in hedging transactions may be
limited by certain regulatory requirements and tax
considerations. The Fund's hedging transactions may affect the
character or amount of the Fund's distributions.
A more detailed exlanation of futures and options transactions,
including the risks associated with them, is included in the
Statement of Additional Information.
<PAGE>
OTHER INVESTMENT PRACTICES
THE FUND MAY ALSO ENGAGE TO A LIMITED EXTENT IN THE FOLLOWING
INVESTMENT PRACTICES, EACH OF WHICH MAY INVOLVE CERTAIN SPECIAL
RISKS. THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE
DETAILED INFORMATION ABOUT THESE PRACTICES, INCLUDING LIMITATIONS
DESIGNED TO REDUCE THESE RISKS.
SECURITIES LOANS, REPURCHASE AGREEMENTS AND FORWARD COMMITMENTS.
The Fund may lend portfolio securities amounting to not more than
25% of its assets to broker-dealers and may enter into repurchase
agreements on up to 25% of its assets. These transactions must
be fully collateralized at all times. The Fund may also purchase
securities for future delivery, which may increase its overall
investment exposure and involves a risk of loss if the value of
the securities declines prior to the settlement date. These
transactions involve some risk to the Fund if the other party
should default on its obligation and the Fund is delayed or
prevented from recovering the collateral or completing the
transaction.
LIMITING INVESTMENT RISK
SPECIFIC INVESTMENT RESTRICTIONS HELP THE FUND LIMIT INVESTMENT
RISKS FOR ITS SHAREHOLDERS. THESE RESTRICTIONS PROHIBIT THE FUND
FROM: acquiring more than 10% of the voting securities of any one
issuer* and investing more than: (a) 5% of its total assets in
securities of any one issuer (other than U.S. government
securities); provided that, with respect to investments in
securities issued by foreign governments, this limitation shall
apply only to 75% of the Fund's total assets;* (b) 5% of its net
assets in companies that, together with any predecessors, have
been in operation less than three years (other than U.S.
government securities); (c) 25% of its total assets in any one
industry (except securities of the U.S. government or its
agencies or instrumentalities);* or (d) 15% of its net assets in
any combination of securities that are not readily marketable,
securities restricted as to resale, (excluding securities that
have been determined by the Fund's Trustees (or the person
designated by them to make such determinations) to be readily
marketable) and repurchase agreements maturing in more than seven
days.
Restrictions marked with an asterisk(*) above are summaries of
fundamental investment policies. See the Statement of Additional
Information for the full text of these policies and the Fund's
other fundamental investment policies. Except for investment
policies designated as fundamental in this Prospectus or the
Statement, the investment policies described in this Prospectus
and in the Statement are not fundamental investment policies.
The Trustees may change any non-fundamental investment policies
without shareholder approval. As a matter of policy, the
Trustees would not materially change the Fund's investment
objective without shareholder approval.
<PAGE>
HOW PERFORMANCE IS SHOWN
THE FUND'S INVESTMENT PERFORMANCE MAY FROM TIME TO TIME BE
INCLUDED IN ADVERTISEMENTS ABOUT THE FUND."Total return"
for the one-, five- and ten-year periods (or for the life of
the Fund , if shorter) through the most recent calendar
quarter represents the average annual compounded rate of return
on an investment of $1,000 in the Fund invested at the maximum
public offering price . Total return may also be presented
for other periods or based on investment at reduced sales charge
levels. Any quotation of investment performance not reflecting
the maximum initial sales charge would be reduced if such
sales charge were used.
ALL DATA IS BASED ON THE FUND'S PAST INVESTMENT RESULTS AND DOES
NOT PREDICT FUTURE PERFORMANCE. Investment performance, which
will vary, is based on many factors, including market conditions,
the composition of the Fund's portfolio, the Fund's operating
expenses and which class of shares you purchase. 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 to
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. The Fund's performance may be
compared to various indices. See the Statement of Additional
Information. Because shares sold through eligible defined
contribution plans are sold without a sales charge, quotations of
investment performance reflecting the deduction of a sales charge
will be lower than the actual investment performance on shares
purchased through such plans.
HOW THE FUND IS MANAGED
THE TRUSTEES OF THE FUND ARE RESPONSIBLE FOR GENERALLY OVERSEEING
THE CONDUCT OF THE FUND'S BUSINESS. Subject to such policies as
the Trustees may determine, Putnam Management furnishes a
continuing investment program for the Fund and makes investment
decisions on its behalf. Subject to the control of the Trustees,
Putnam Management also manages the Fund's other affairs and
business. Justin Scott, Senior Vice President of Putnam
Management and Vice President of the Fund, has had primary
responsibility for the day-to-day management of the Fund's
portfolio since 1991. Mr. Scott has been employed by Putnam
Management since 1988.
The Fund pays all expenses not assumed by Putnam Management,
including Trustees' fees, auditing, legal, custodial, investor
servicing and shareholder reporting expenses, and payments under
its Distribution Plans (which are in turn allocated to the
relevant class of shares). The Fund also reimburses Putnam
Management for the compensation and related expenses of certain
officers of the Fund and their staff who provide administrative
services to the Fund. The total reimbursement is determined
annually by the Trustees.
Putnam Management places all orders for purchases and sales of
the Fund's securities. In selecting broker-dealers, Putnam
Management may consider research and brokerage services furnished
to it and its affiliates. Subject to seeking the most favorable
price and execution available, Putnam Management may consider
sales of shares of the Fund (and, if permitted by law, of the
other Putnam funds) as a factor in the selection of broker-
dealers.
ORGANIZATION AND HISTORY
Putnam Overseas Growth Fund is a Massachusetts business trust
organized on October 5, 1990. 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. Shares of the Fund may, without shareholder
approval, be divided into 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 or special or
relative rights and privileges as the Trustees determine. The
Fund's shares are currently divided into three classes. Only
the Fund's Class A shares are offered by this Prospectus. Class
B shares are sold at net asset value, but are subject to a
contingent deferred sales charge upon redemption and bear a
higher 12b-1 fee than Class A shares. Class M shares are sold
subject to a front-end sales charge and bear a higher 12b-1 fee
than Class A shares. Because Class A shares bear lower expenses
than Class B shares and Class M shares, the investment
performance of Class A shares will be greater than that of Class
B shares and Class M shares.
Each share has one vote, with fractional shares voting
proportionally. Shares of each class will vote together as a
single class except when 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 you own fewer shares than a minimum amount set by the Trustees
(presently 20 shares), the Fund may choose to redeem your shares
and pay you for them. You will receive at least 30 days' written
notice before the Fund redeems your shares, and you may purchase
additional shares at any time to avoid a redemption. The Fund
may also redeem shares if you own shares above a maximum amount
set by the Trustees. There is presently no maximum, but the
Trustees may establish one at any time, which could apply to both
present and future shareholders.
THE FUND'S TRUSTEES: GEORGE PUTNAM,* CHAIRMAN. President of the
Putnam funds. Chairman and Director of Putnam Management and
Putnam Mutual Funds Corp. ("Putnam Mutual Funds"). Director,
Marsh & McLennan Companies, Inc.; WILLIAM F. POUNDS, VICE
CHAIRMAN. Professor of Management, Alfred P. Sloan School of
Management, M.I.T.; JAMESON ADKINS BAXTER, President, Baxter
Associates, Inc.; HANS H. ESTIN, Vice Chairman, North American
Management Corporation; JOHN A. HILL, Principal and Managing
Director, First Reserve Corporation; ELIZABETH T. KENNAN,
President, Mount Holyoke College; LAWRENCE J. LASSER,* Vice
President of the Putnam funds. President, Chief Executive Officer
and Director of Putnam Investments, Inc. and Putnam Management.
Director, Marsh & McLennan Companies, Inc.; ROBERT E. PATTERSON,
Executive Vice President, Cabot Partners Limited Partnership;
DONALD S. PERKINS, Director of various corporations, including
AT&T, K mart Corporation and Time Warner Inc.; GEORGE PUTNAM,
III,* President, New Generation Research, Inc.; A.J.C. SMITH,*
Chairman, Chief Executive Officer and Director, Marsh & McLennan
Companies, Inc.; and W. NICHOLAS THORNDIKE, Director of various
corporations and charitable organizations, including Providence
Journal Co. Also, Trustee of Massachusetts General Hospital and
Trustee of Eastern Utilities Associates. The Fund's Trustees are
also Trustees of the other Putnam funds. Those marked with an
asterisk (*) are "interested persons" of the Fund, Putnam
Management or Putnam Mutual Funds.
ABOUT YOUR INVESTMENT
HOW TO BUY SHARES
ALL ORDERS TO PURCHASE SHARES MUST BE MADE THROUGH YOUR
EMPLOYER'S DEFINED CONTRIBUTION PLAN. FOR MORE INFORMATION ABOUT
HOW TO PURCHASE SHARES OF THE FUND THROUGH YOUR EMPLOYER'S PLAN
OR LIMITATIONS ON THE AMOUNT THAT MAY BE PURCHASED, PLEASE
CONSULT YOUR EMPLOYER. Shares are sold to eligible defined
contribution plans at the net asset value per share next
determined after receipt of an order by Putnam Mutual Funds.
Orders must be received by Putnam Mutual Funds before the close
of regular trading on the New York Stock Exchange in order to
receive that day's net asset value. In order to be eligible to
purchase shares at net asset value, defined contribution plans
must initially invest at least $1 million or be sponsored by
companies with more than 750 employees. Eligible plans may make
additional investments of any amount at any time. To eliminate
the need for safekeeping, the Fund will not issue certificates
for your shares. Sales personnel may receive different
compensation depending on which class of shares they sell.
On sales at net asset value to a participant-directed qualified
retirement plan initially investing less than $20 million in
Putnam funds and other investments managed by Putnam Management
or its affiliates (including a plan sponsored by an employer with
more than 750 employees), Putnam Mutual Funds pays commissions on
cumulative purchases during the life of the account at the
rate of 1.00% of the amount under $3 million and 0.50%
thereafter. On sales at net asset value to all other
participant-directed qualified retirement plans, Putnam Mutual
Funds pays commissions on the initial investment and on
subsequent net quarterly sales at the rate of 0.15%.
Putnam Mutual Funds may, at its expense, provide additional
promotional incentives or payments to dealers that sell shares of
the Putnam funds. In some instances, these incentives or
payments may be offered only to certain dealers who have sold or
may sell significant amounts of shares.
DISTRIBUTION PLAN
The Class A Plan provides for payments by the Fund to
Putnam Mutual Funds at the annual rate of up to 0.35% of the
Fund's average net assets attributable to Class A shares. The
Trustees currently limit payments under the Class A Plan to the
annual rate of 0.25% of such assets. Should the Trustees decide
in the future to approve payments in excess of this amount,
shareholders will be notified and this Prospectus will be
revised.
In order to compensate investment dealers (including, for this
purpose, certain financial institutions) for services provided in
connection with sales of Class A shares and the maintenance of
shareholder accounts, Putnam Mutual Funds makes quarterly
payments to qualifying dealers based on the average net asset
value of Class A shares of the Fund which are attributable to
shareholders for whom the dealers are designated as the dealer of
record. This calculation excludes until one year after purchase
shares purchased at net asset value by shareholders investing $1
million or more and by participant-directed qualified retirement
plans sponsored by employers with more than 750 employees ("NAV
Shares"), except for shares owned by certain investors investing
$1 million or more that have made arrangements with Putnam Mutual
Funds and whose dealer of record waived the sales commission.
Except as stated below, Putnam Mutual Funds makes such payments
at the annual rate of 0.25% of such average net asset value for
Class A shares (including shares acquired through reinvestment of
distributions). For participant-directed qualified retirement
plans initially investing less than $20 million in Putnam funds
and other investments managed by Putnam Management or its
affiliates, Putnam Mutual Funds' payments to qualifying dealers
on NAV Shares are 100% of the rate stated above if average plan
assets in Putnam funds (excluding money market funds) during the
quarter are less than $20 million, 60% of the stated rate if
average plan assets are at least $20 million but less than $30
million, and 40% of the stated rate if average plan assets are
$30 million or more. For all other participant-directed
qualified retirement plans purchasing NAV Shares, Putnam Mutual
Funds makes quarterly payments to qualifying dealers at the
annual rate of 0.10% of the average net asset value of such
shares.
GENERAL. Payments under the Plan are intended to
compensate Putnam Mutual Funds for services provided and expenses
incurred by it as principal underwriter of the Fund's Class
A shares, including the payments to dealers mentioned above.
Putnam Mutual Funds may suspend or modify such payments to
dealers. Such payments are also subject to the continuation of
the Class A Distribution Plan, the terms of Service
Agreements between dealers and Putnam Mutual Funds, and any
applicable limits imposed by the National Association of
Securities Dealers, Inc.
HOW TO SELL SHARES
SUBJECT TO ANY RESTRICTIONS IMPOSED BY YOUR EMPLOYER'S PLAN,
YOU CAN SELL YOUR SHARES THROUGH THE PLAN TO THE FUND
ANY DAY THE NEW YORK STOCK EXCHANGE IS OPEN . For more
information about how to sell shares of the Fund through your
employer's plan, including any charges that may be imposed by the
plan, please consult with your employer.
Your plan administrator must send a signed letter of
instruction to Putnam Investor Services . The
price you will receive is the next net asset value calculated
after the Fund receives your request in proper form . All
requests must be received by the Fund prior to the close of
regular trading on the New York Stock Exchange in order to
receive that day's net asset value . If you sell shares
having a net asset value of $100,000 or more, the signatures of
registered owners or their legal representatives must be
guaranteed by a bank, broker-dealer or certain other financial
institutions. See the Statement of Additional Information for
more information about where to obtain a signature guarantee.
THE FUND GENERALLY PROVIDES PAYMENT FOR REDEEMED SHARES
THE BUSINESS DAY AFTER THE REQUEST IS RECEIVED. Under
unusual circumstances, the Fund may suspend redemptions, or
postpone payment for more than seven days, as permitted by
federal securities law. The Fund will only redeem shares for
which it has received payment.
HOW TO EXCHANGE SHARES
Subject to any restrictions contained in your plan, you
can exchange your shares for shares of other Putnam funds
available through your plan at net asset value. Contact your
plan administrator or Putnam Investor Services on how to
exchange your shares or how to obtain
prospectuses of other Putnam funds in which you may
invest . Shares of certain Putnam funds are not available to
residents of all states.
The exchange privilege is not intended as a vehicle for short-
term trading. Excessive exchange activity may interfere with
portfolio management and have an adverse effect on all
shareholders. In order to limit excessive exchange activity and
in other circumstances where Putnam Management or the Trustees
believe doing so would be in the best interests of the Fund, the
Fund reserves the right to revise or terminate the exchange
privilege, limit the amount or number of exchanges or reject any
exchange. Shareholders would be notified of any such action to
the extent required by law. Consult Putnam Investor Services
before requesting an exchange. See the Statement of Additional
Information to find out more about the exchange privilege.
<PAGE>
HOW THE FUND VALUES ITS SHARES
THE FUND CALCULATES THE NET ASSET VALUE OF A SHARE OF EACH CLASS
BY DIVIDING THE TOTAL VALUE OF ITS ASSETS, LESS LIABILITIES, BY
THE NUMBER OF IT SHARES OUTSTANDING. SHARES ARE VALUED AS OF THE
CLOSE OF REGULAR TRADING ON THE NEW YORK STOCK EXCHANGE EACH DAY
THE EXCHANGE IS OPEN. Portfolio securities for which market
quotations are readily available are stated at market value.
Short-term investments that will mature in 60 days or less are
stated at amortized cost, which approximates market value. All
other securities and assets are valued at their fair value
following procedures approved by the Trustees. Securities quoted
in foreign currencies are translated into U.S. dollars at the
current exchange rates or at such other rates as the Trustees may
determine in computing net asset value. As a result,
fluctuations in the value of such currencies in relation to the
U.S. dollar will affect the net asset value of Fund shares even
though there has not been any change in the values of such
securities as quoted in such foreign currencies.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
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 terms of your plan will govern how your plan may receive
distributions from the Fund. Generally, periodic distributions
from the Fund to your plan are reinvested in additional Fund
shares , although your plan may permit Fund distributions
from net investment income to be received by you in cash
while reinvesting capital gains distributions in additional
shares or all Fund distributions to be received in cash. If
another option is not selected , all distributions will be
reinvested in additional Fund shares.
The Fund intends to qualify as a "regulated investment company"
for federal income tax purposes and to meet all other
requirements that are necessary for it to be relieved of federal
taxes on income and gains it distributes . The Fund will
distribute substantially all of its ordinary income and capital
gain net income on a current basis. Generally, Fund
distributions are taxable as ordinary income,
except that any distributions of net long-term capital gains will
be taxable as such . However, distributions by the Fund to
employer-sponsored defined contribution plans that qualify for
tax-exempt treatment under federal income tax laws will not be
taxable. Special tax rules apply to investments through such
plans. You should consult your tax adviser to determine the
suitability of the Fund as an investment through such a plan and
the tax treatment of distributions (including distributions of
amounts attributable to an investment in the Fund) from such a
plan.
The foregoing is a summary of certain federal income tax
consequences of investing in the Fund. You should
consult your tax adviser to determine the precise effect of an
investment in the Fund on your particular tax situation
(including possible liability for state and local taxes).
ABOUT PUTNAM INVESTMENTS, INC .
PUTNAM MANAGEMENT HAS BEEN MANAGING MUTUAL FUNDS SINCE 1937.
Putnam Mutual Funds is the principal underwriter of the
Fund and of other Putnam funds. Putnam Defined Contribution
Plans is a division of Putnam Mutual Funds. Putnam Fiduciary
Trust Company is the Fund's custodian. Putnam Investor Services,
a division of Putnam Fiduciary Trust Company, is the Fund's
investor servicing and transfer agent.
Putnam Management, Putnam Mutual Funds and Putnam
Fiduciary Trust Company are located at One Post Office Square,
Boston, Massachusetts, 02109 and are subsidiaries of Putnam
Investments, Inc., which is wholly-owned by Marsh & McLennan
Companies, Inc., a publicly owned holding company whose principal
businesses are international insurance and reinsurance brokerage,
employee benefit consulting and investment management.
<PAGE>
PUTNAM OVERSEAS GROWTH FUND
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 1, 1994
This Statement of Additional Information is not a Prospectus and
is only authorized for distribution when accompanied or preceded
by the Prospectus of the Fund dated November 1, 1994 , as
revised from time to time. This Statement contains information
which may be useful to investors but which is not included in the
Prospectus. If the Fund has more than one form of current
Prospectus, each reference to the Prospectus in this Statement
shall include all the Fund's Prospectuses, unless otherwise
noted. The Statement should be read together with the applicable
Prospectus. Investors may obtain a free copy of the applicable
Prospectus from Putnam Investor Services, Mailing address: P.O.
Box 41203, Providence, RI 02940-1203.
Part I of this Statement of Additional Information contains
specific information about the Fund. Part II includes information
about the Fund and the other Putnam funds.
<PAGE>
TABLE OF CONTENTS
PART I PAGE
INVESTMENT RESTRICTIONS OF THE FUND . . . . . . . . . . . . . .I-3
FUND CHARGES AND EXPENSES . . . . . . . . . . . . . . . . . . .I-6
INVESTMENT PERFORMANCE OF THE FUND. . . . . . . . . . . . . . .I-8
ADDITIONAL OFFICERS OF THE FUND . . . . . . . . . . . . . . . I-14
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS. . . . . . . I-15
PART II
MISCELLANEOUS INVESTMENT PRACTICES. . . . . . . . . . . . . . II-1
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-22
MANAGEMENT OF THE FUND. . . . . . . . . . . . . . . . . . . .II-27
DETERMINATION OF NET ASSET VALUE. . . . . . . . . . . . . . .II-36
HOW TO BUY SHARES . . . . . . . . . . . . . . . . . . . . . .II-38
DISTRIBUTION PLAN . . . . . . . . . . . . . . . . . . . . . .II-49
INVESTOR SERVICES . . . . . . . . . . . . . . . . . . . . . .II-50
SIGNATURE GUARANTEES. . . . . . . . . . . . . . . . . . . . .II-56
SUSPENSION OF REDEMPTIONS . . . . . . . . . . . . . . . . . .II-56
SHAREHOLDER LIABILITY . . . . . . . . . . . . . . . . . . . .II-57
STANDARD PERFORMANCE MEASURES . . . . . . . . . . . . . . . .II-57
COMPARISON OF PORTFOLIO PERFORMANCE . . . . . . . . . . . . .II-58
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . .II-63
<PAGE>
PUTNAM OVERSEAS GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
PART I
INVESTMENT RESTRICTIONS OF THE FUND
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) Pledge, hypothecate, mortgage or otherwise encumber its
assets in excess of 15% of its total assets (taken at current
value) and then only to secure borrowings permitted by
restriction 1 above. (The deposit of underlying securities and
other assets in escrow and collateral arrangements with respect
to margin for futures contracts and options are not deemed to be
pledges or other encumbrances.)
(3) Purchase securities on margin, except such short-term
credits as may be necessary for the clearance of purchases and
sales of securities, and except that it may make margin payments
in connection with futures contracts and options.
(4) Make short sales of securities or maintain a short sale
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 at least equal in amount to,
the securities sold short.
(5) Underwrite securities issued by other persons except to the
extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under certain
federal securities laws.
(6) Purchase or sell real estate, although it may purchase
securities of issuers which deal in real estate, securities which
are secured by interests in real estate, and securities
representing interests in real estate, and it may acquire and
dispose of real estate or interests in real estate acquired
through the exercise of its rights as a holder of debt
obligations secured by real estate or interests therein.
(7) Purchase or sell commodities or commodity contracts, except
that the Fund may purchase and sell financial futures contracts
and related options.
(8) Make loans, except by purchase of debt obligations in which
the Fund may invest consistent with its investment policies, by
entering into repurchase agreements with respect to not more than
25% of its total assets (taken at current value) or through the
lending of its portfolio securities with respect to not more than
25% of its total assets.
(9) Invest in securities of any issuer if, to the knowledge of
the Fund, officers and Trustees of the Fund and officers and
directors of Putnam Management who beneficially own more than
0.5% of the shares or securities of that issuer together own more
than 5%.
(10) 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, and
this limitation shall apply only to 75% of the Fund's total
assets with respect to investments in securities issued by, or
backed by the credit of, any foreign government or its agencies
and instrumentalities.
(11) Acquire more than 10% of the voting securities of any
issuer.
(12) Purchase securities (other than securities of the U.S.
government, its agencies or instrumentalities) if as a result of
such purchase more than 25% of the Fund's total assets would be
invested in any one industry.
(13) Invest in the securities of other registered investment
companies, except by purchase in the open market including only
customary brokers' commissions, and except as they may be
acquired as part of a merger, consolidation or acquisition of
assets.
(14) Buy or sell oil, gas or other mineral leases, rights or
royalty contracts, although it may purchase securities of issuers
which deal in, represent interests in, or are secured by
interests in such leases, rights, or contracts, and it may
acquire or dispose of such leases, rights, or contracts acquired
through the exercise of its rights as a holder of debt
obligations secured thereby.
(15) Make investments for the purpose of gaining control of a
company's management.
<PAGE>
(16) Issue any class of securities which is senior to the Fund's
shares of beneficial interest.
IT IS CONTRARY TO THE FUND'S PRESENT POLICY, WHICH MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL, TO:
(1) Invest in (a) securities which at the time of such
investment are not readily marketable, (b) securities restricted
as to resale, excluding securities determined by the Trustees of
the Fund (or the person designated by the Trustees of the Fund to
make such determinations) to be readily marketable, and (c)
repurchase agreements maturing in more than seven days, if, as a
result, more than 15% of the Fund's net assets (taken at current
value) would be invested in securities described in (a), (b) and
(c) above.
(2) Invest in securities of any issuer if the party responsible
for payment, together with any predecessors, has been in
operation for less than three consecutive years and, as a result
of the investment, the aggregate of such investments would exceed
5% of the value of the Fund's net assets; provided, however, that
this restriction shall not apply to any obligation of the United
States or its agencies or instrumentalities.
In addition, the Fund has agreed with certain state securities
commissions to the following investment restrictions ,
which may only be amended with the consent of the relevant
commission and unless so amended will continue to apply to the
Fund for so long as shares of the Fund are qualified for sale in
the relevant state.
The Fund will not:
(1) Invest in warrants (other than warrants acquired by the Fund
as a part of a unit or attached to securities at the time of
purchase) if, as a result, such investments (valued at the lower
of cost or market) would exceed 10% of the value of the Fund's
net assets; provided that not more than 2% of the Fund's net
assets may be invested in warrants not listed on any principal
foreign or domestic exchange.
(2) Purchase or sell real property (including limited partnership
interests), except that the Fund may (a) purchase or sell readily
marketable interests in real estate investment trusts or readily
marketable securities of companies which invest in real estate
(b) purchase or sell securities that are secured by interests in
real estate or interests therein, or (c) acquire real estate
through exercise of its rights as a holder of obligations secured
by real estate or interests therein or sell real estate so
acquired.
<PAGE>
Although certain of the Fund's fundamental investment
restrictions permit the Fund to borrow money to a limited extent,
the Fund does not currently intend to do so and did not do so
last year.
---------------------
All percentage limitations on investments will apply at the time
of the making of an investment and shall not be considered
violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment.
The Investment Company Act of 1940 provides that a "vote of a
majority of the outstanding voting securities" of 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
are represented at the meeting in person or by proxy.
FUND CHARGES AND EXPENSES
MANAGEMENT FEES
Under the Management Contract dated February 7, 1991, the Fund
pays a quarterly fee to Putnam Management 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, and 0.60% of any
amount over $1.5 billion. For its 1992 fiscal year,
pursuant to the Management Contract, the Fund incurred fees of
$18,635. For its 1993 and 1994 fiscal years ,
pursuant to the Management Contract, the Fund incurred fees of
$4,701 and $10,001, respectively , reflecting
reductions of $15,364 and $22,860,
respectively, pursuant to an expense limitation then in
effect.
EXPENSE LIMITATION. In order to limit the Fund's expenses,
Putnam Management has agreed to limit its
compensation and , to the extent necessary ,
bear other expenses of the Fund through December 31, 1994,
to the extent that expenses of the Fund (exclusive of brokerage,
interest, taxes, deferred organizational and extraordinary
expenses and payments under the Fund's Distribution Plans)
would exceed an annual rate of 1.90% of the Fund's average
net assets. For the purpose of determining any such
limitation on Putnam Management's compensation, expenses
of the Fund shall not reflect the application of commissions or
cash management credits that may reduce designated Fund expenses.
With Trustee approval, this expense limitation may be terminated
earlier, in which event shareholders would be notified and the
Statement of Additional Information would be revised.
<PAGE>
BROKERAGE COMMISSIONS
During its 1992, 1993 and 1994 fiscal years, the Fund
incurred negotiated brokerage commissions on agency transactions
of $19,929 , $17,477 and $49,103 ,
respectively. In fiscal 1992, the Fund did not incur any
underwriting commissions on underwritten transactions. In fiscal
1993 and 1994 , the Fund incurred underwriting commissions
aggregating $1,140 and $12,222, respectively, on
underwritten transactions. In fiscal 1994 , Putnam
Management on behalf of the Fund, placed agency transactions
having an approximate aggregate dollar value of $37,699,952
(57.0% of the Fund's agency and underwritten
transactions, on which approximately $34,980 of
commissions were paid) with brokers and dealers to recognize
research, statistical and quotation services Putnam Management
considered to be particularly useful to it and its affiliates.
ADMINISTRATIVE EXPENSE REIMBURSEMENT
The Fund reimbursed Putnam Management $40 for administrative
services in fiscal 1994, including $35 for the
compensation of certain officers of the Fund and their staff and
contributions to the Putnam Investments, Inc. Profit Sharing
Retirement Plan for their benefit.
TRUSTEE FEES
Each Trustee of the Fund receives an annual fee of $100 and an
additional fee for each Trustees' meeting attended. Trustees who
are not interested persons of Putnam Management and who serve on
committees of the Trustees receive additional fees for attendance
at certain committee meetings. The Fund incurred Trustees' fees
aggregating $1,402 in fiscal 1994 .
OWNERSHIP OF FUND SHARES
At September 30, 1994, the officers and Trustees of the
Fund as a group owned 6.07% of the outstanding Class A
shares of the Fund, and to the knowledge of the Fund no person
owned of record or beneficially 5% or more of the shares
of any class of the Fund, except that Putnam Investments,
Inc., One Post Office Square, Boston, MA, 02109, owned of record
18.30% of the Class A shares of the Fund, and Granjee
Limited Partnership, c/o Stole, Rives, Boley, Jones & Gray, 900
Southwest, Portland Oregon, 97204 owned of record 9.70% of
the Class A shares of the Fund. No Class M shares were
outstanding at September 30, 1994.
<PAGE>
CLASS A SALES CHARGES, CONTINGENT DEFERRED SALES CHARGES AND
12B-1 FEES
During fiscal 1992 and 1993, Putnam Mutual Funds received
no sales charges on sales of Class A shares of the Fund. During
fiscal 1994, Putnam Mutual Funds received $65,752 in sales
charges on sales of Class A shares of the Fund, of which it
retained $6,203 after allowance of dealer consessions. During
fiscal 1992, 1993 and 1994 , Putnam Mutual Funds received no
contingent deferred sales charges upon redemptions of Class A
shares of the Fund. During fiscal 1994, the Fund
incurred $13,641 in 12b-1 fees pursuant to the Fund's
Class A Distribution Plan.
CLASS B CONTINGENT DEFERRED SALES CHARGES AND 12B-1 FEES
During fiscal 1994, Putnam Mutual Funds received no contingent
deferred sales charges upon redemptions of Class B shares of the
Fund. During fiscal 1994, the Fund incurred $757 in 12b-1 fees
pursuant to the Fund's Class B Distribution Plan.
INVESTOR SERVICING FEES AND EXPENSES
During the 1994 fiscal year, the Fund incurred
$34,481 in fees and out-of-pocket expenses for investor
servicing provided by Putnam Fiduciary Trust Company.
INVESTMENT PERFORMANCE OF THE FUND
STANDARD PERFORMANCE MEASURES
The Fund's average annual total return (compounded annually) for
Class A shares for the one-year period ended June 30, 1994
and for the life of the class through June 30, 1994
was +18.63% and +9.07% , respectively, adjusted to
reflect the deduction of the maximum sales charge of 5.75%.
The cumulative total return for Class B shares for the life of
the class through June 30, 1994 was -4.66%, adjusted to reflect
deduction of the maximum contingent deferred sales charge. The
maximum contingent deferred sales charge is 5.00%. See "Other
Performance Information" below for the inception date of each
class. No Class M shares were outstanding during these
periods. See "Standard Performance Measures" in Part II of
this Statement for information on how the Fund's investment
return is calculated.
<PAGE>
PERFORMANCE RATINGS
For the 1994 fiscal year, the Class A shares of the Fund
were ranked 21 of 139 one-year international funds
by Lipper Analytical Services, Inc. For the 1994 fiscal
year, Class B shares were not ranked or rated. No Class M
shares were outstanding during fiscal 1994. See
"Comparison Portfolio Performance" in Part II of this
Statement for information about how this ranking is
determined. Past performance is no guarantee of future results.
<TABLE>
OTHER PERFORMANCE INFORMATION
The tables below show total return (capital changes plus reinvestment of all distributions) on a hypothetical investment
in one share of the Fund during the life of the Fund. This was a period of fluctuating security prices. The tables do
not project the future performance of the Fund. No Class M shares were outstanding during these periods.
CLASS A SHARES
CUMULATIVE
MAXIMUM NET ASSET DISTRIBUTIONS NET ASSET VALUE
FISCAL OFFERING VALUE ---------------- AT YEAR-END
YEAR PRICE AT ----------------- FROM FROM WITH ALL
ENDED BEGINNING BEGINNING END OF INVESTMENT CAPITAL DISTRIBUTIONS
JUNE 30 OF PERIOD OF PERIOD PERIOD INCOME GAINS REINVESTED
- ---------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
1991(1) $9.16 $8.63 $8.18 $0.00 $0.00 $8.18
1992 8.68 8.18 8.82 0.13 0.00 8.96
1993 9.36 8.82 9.58 0.00 0.00 9.73
1994 10.16 9.58 11.83 0.00 0.22 12.24
Total distributions $0.13 $0.22
(1) Investment operations began February 28, 1991.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING LIFE OF CLASS A SHARES
PUTNAM OVERSEAS GROWTH FUND
--------------------------- ----------
MAXIMUM NET ASSET MORGAN STANLEY MORGAN STANLEY
OFFERING VALUE TO CAPITAL CAPITAL
FISCAL PRICE TO NET NET ASSET INTERNATIONAL INTERNATIONAL CONSUMER
YEAR ASSET VALUE VALUE EAFE INDEX WORLD INDEX PRICE INDEX
ENDED CUMULA- CUMULA- CUMULA- CUMULA- CUMULA-
JUNE 30 ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE
- --------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<C>
1991(1) - -10.70% - -5.21% - -11.04% - -6.26% -
+0.89%
1992 +3.21 % -2.20 +9.52 % +3.81 -0.31 %-11.31 +4.22-2.31
+3.09% +4.01
1993 +2.35 +6.23 +8.62 +12.75 +20.70 +7.04 +16.75 +14.06 +3.00+7.12
1994 +18.63 +33.64 +25.81 +41.85 +17.30 +24.25 +10.24 +25.74 +2.49
+9.79
(1) Investment operations began February 28, 1991.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS B SHARES
CUMULATIVE
NET ASSET DISTRIBUTIONS NET ASSET VALUE
FISCAL VALUE ------------------- AT YEAR-END
YEAR ----------------- FROM FROM WITH ALL
ENDED BEGINNING END OF INVESTMENT CAPITAL DISTRIBUTIONS
JUNE 30 OF YEAR YEAR INCOME GAINS REINVESTED
- ----------------------------------------------------------------------------
1994 (1) $11.78 $11.82 ----- ----- $11.82
(1) Class B shares were offered beginning June 1, 1994.
<PAGE>
PERCENTAGE CHANGES DURING LIFE OF CLASS B SHARES
PUTNAM OVERSEAS GROWTH FUND
-----------------
MORGAN STANLEY MORGAN STANLEY
NET ASSET VALUE CAPITAL CAPITAL
FISCAL TO NET INTERNATIONAL INTERNATIONAL CONSUMER
YEAR ASSET VALUE EAFE INDEX WORLD INDEX PRICE INDEX
ENDED CUMULA- CUMULA- CUMULA- CUMULA-
JUNE 30 ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE
- ------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 (1) - +0.34% - +1.44% - -0.30% - +0.34%
(1) Class B shares were offered beginning June 1, 1994.
</TABLE>
The tables are not adjusted for any taxes payable on reinvested
distributions or for any contingent deferred sales charges
which would be applied upon redemption of Class B shares .
The total values for the Fund as of the end of each period
reflect reinvestment of all distributions and all changes in net
asset value.
The Morgan Stanley Capital International EAFE Index is an
unmanaged list of approximately 1,045 equity securities
originating in 18 countries listed on the stock exchanges of
Europe, Australia, and the Far East, with all values expressed in
U. S. dollars. The Morgan Stanley Capital International World
Index is an unmanaged list of approximately 1,482 equity
securities listed on the stock exchanges of the United States,
Europe, Canada, Australia, New Zealand and the Far East, with all
values expressed in U.S. dollars. Performance figures reflect
changes in market prices and reinvestment of distributions net of
withholding taxes. The securities in the indexes may
change over time . Because the Fund is a managed portfolio
investing in a wide variety of securities, the securities
it owns will not match those in the indexes .
The Consumer Price Index, prepared by the U.S. Bureau of Labor
Statistics, is a commonly used measure of the rate of inflation.
The index shows the average changes in the cost of selected
consumer goods and services and does not represent a return on an
investment vehicle.
ADDITIONAL OFFICERS OF THE FUND
In addition to the persons listed as officers of the Fund in Part
II of this Statement, the following persons are also officers of
the Fund. Officers of Putnam Management hold the same offices in
Putnam Management's parent company, Putnam Investments, Inc.
ANTHONY W. REGAN, Vice President. Senior Managing Director,
Putnam Management. Director, Putnam Investments, Inc. Vice
President and Trust Officer, Putnam Fiduciary Trust Company.
Vice President of certain of the Putnam funds.
JUSTIN M. SCOTT, Vice President. Senior Vice President, Putnam
Management.
<PAGE>
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA
02109, are the Fund's independent accountants, providing
audit services, tax return review and other tax consulting
services and assistance and consultation in connection with the
review of various Securities and Exchange Commission filings. The
Report of Independent Accountants and financial statements
included in the Fund's Annual Report for the fiscal year ended
June 30, 1994 , filed electronically on September 1,
1994 (811-6190), are incorporated by reference into this
Statement of Additional Information. The financial
highlights in the Prospectus and the financial statements
incorporated by reference into the Prospectus and the Statement
of Additional Information have been so included and incorporated
in reliance upon the report of the independent accountants,
given on their authority as experts in auditing and accounting.
<PAGE>
<PAGE>
TABLE OF CONTENTS
MISCELLANEOUS INVESTMENT PRACTICES . . . . . . . . . . . . . . . . . . II-1
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-22
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . .II-27
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . .II-36
HOW TO BUY SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-38
DISTRIBUTION PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . .II-49
INVESTOR SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-50
SIGNATURE GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . .II-56
SUSPENSION OF REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . . .II-56
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . .II-57
STANDARD PERFORMANCE MEASURES. . . . . . . . . . . . . . . . . . . . .II-57
COMPARISON OF PORTFOLIO PERFORMANCE. . . . . . . . . . . . . . . . . .II-58
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-63
<PAGE>
THE PUTNAM FUNDS
STATEMENT OF ADDITIONAL INFORMATION
PART II
The following information applies generally to your Fund and to
the other Putnam funds. In certain cases the discussion applies
to some but not all of the funds or their shareholders, and you
should refer to your Prospectus to determine whether the matter
is applicable to you or your Fund. You will also be referred to
Part I for certain information applicable to your particular
Fund. Shareholders who purchase shares at net asset value
through employer-sponsored defined contribution plans should also
consult their employer for information about the extent to which
the matters described below apply to them.
MISCELLANEOUS INVESTMENT PRACTICES
YOUR FUND'S PROSPECTUS STATES WHICH OF THE FOLLOWING INVESTMENT
PRACTICES ARE AVAILABLE TO YOUR FUND. THE FACT THAT YOUR FUND IS
AUTHORIZED TO ENGAGE IN A PARTICULAR PRACTICE DOES NOT
NECESSARILY MEAN THAT IT WILL ACTUALLY DO SO. YOU SHOULD
DISREGARD ANY PRACTICE DESCRIBED BELOW WHICH IS NOT MENTIONED IN
THE PROSPECTUS.
SHORT-TERM TRADING
In seeking the Fund's objective, Putnam Management will buy or
sell portfolio securities whenever Putnam Management believes it
appropriate to do so. In deciding whether to sell a portfolio
security, Putnam Management does not consider how long the Fund
has owned the security. From time to time the Fund will buy
securities intending to seek short-term trading profits. A
change in the securities held by the Fund is known as "portfolio
turnover" and generally involves some expense to the Fund. These
expenses may include brokerage commissions or dealer mark-ups and
other transaction costs on both the sale of securities and the
reinvestment of the proceeds in other securities. If sales of
portfolio securities cause the Fund to realize net short-term
capital gains, such gains will be taxable as ordinary income. As
a result of the Fund's investment policies, under certain market
conditions the Fund's portfolio turnover rate may be higher than
that of other mutual funds. Portfolio turnover rate for a fiscal
year is the ratio of the lesser of purchases or sales of
portfolio securities to the monthly average of the value of
portfolio securities -- excluding securities whose maturities at
acquisition were one year or less. The Fund's portfolio turnover
rate is not a limiting factor when Putnam Management considers a
change in the Fund's portfolio.
<PAGE>
LOWER-RATED SECURITIES
The Fund may invest in lower-rated fixed-income securities
(commonly known as "junk bonds"), to the extent described in the
Prospectus. The lower ratings of certain securities held by the
Fund reflect a greater possibility that adverse changes in the
financial condition of the issuer or in general economic
conditions, or both, or an unanticipated rise in interest rates,
may impair the ability of the issuer to make payments of interest
and principal. The inability (or perceived inability) of issuers
to make timely payment of interest and principal would likely
make the values of securities held by the Fund more volatile and
could limit the Fund's ability to sell its securities at prices
approximating the values the Fund had placed on such securities.
In the absence of a liquid trading market for securities held by
it, the Fund may be unable at times to establish the fair value
of such securities. The rating assigned to a security by Moody's
Investors Service, Inc. or Standard & Poor's Corporation (or by
any other nationally recognized securities rating organization)
does not reflect an assessment of the volatility of the
security's market value or the liquidity of an investment in the
security. See the Prospectus or Part I of this Statement for a
description of security ratings.
Like those of other fixed-income securities, the values of
lower-rated securities fluctuate in response to changes in
interest rates. Thus, a decrease in interest rates will
generally result in an increase in the value of the Fund's
assets. Conversely, during periods of rising interest rates, the
value of the Fund's assets will generally decline. In addition,
the values of such securities are also affected by changes in
general economic conditions and business conditions affecting the
specific industries of their issuers. Changes by recognized
rating services in their ratings of any fixed-income security and
in the ability of an issuer to make payments of interest and
principal may also affect the value of these investments.
Changes in the value of portfolio securities generally will not
affect cash income derived from such securities, but will affect
the Fund's net asset value. The Fund will not necessarily
dispose of a security when its rating is reduced below its rating
at the time of purchase, although Putnam Management will monitor
the investment to determine whether its retention will assist in
meeting the Fund's investment objective.
At times, a substantial portion of the Fund's assets may be
invested in securities as to which the Fund, by itself or
together with other funds and accounts managed by Putnam
Management and its affiliates, holds a major portion or all of
such securities. Although Putnam Management generally considers
such securities to be liquid because of the availability of an
institutional market for such securities, it is possible that,
under adverse market or economic conditions or in the event of
adverse changes in the financial condition of the issuer, the
Fund could find it more difficult to sell such securities when
Putnam Management believes it advisable to do so or may be able
to sell such securities only at prices lower than if such
securities were more widely held. Under such circumstances, it
may also be more difficult to determine the fair value of such
securities for purposes of computing the Fund's net asset value.
In order to enforce its rights in the event of a default under
such securities, the Fund may be required to take possession of
and manage assets securing the issuer's obligations on such
securities, which may increase the Fund's operating expenses and
adversely affect the Fund's net asset value. In the case of
tax-exempt funds, any income derived from the Fund's ownership or
operation of such assets would not be tax-exempt. In addition,
the Fund's intention to qualify as a "regulated investment
company" under the Internal Revenue Code may limit the extent to
which the Fund may exercise its rights by taking possession of
such assets.
Certain securities held by the Fund may permit the issuer at its
option to "call", or redeem, its securities. If an issuer were
to redeem securities held by the Fund during a time of declining
interest rates, the Fund may not be able to reinvest the proceeds
in securities providing the same investment return as the
securities redeemed.
If the Fund's Prospectus describes so-called "zero-coupon" bonds
and "payment-in-kind" bonds as possible investments, the Fund may
invest without limit in such bonds unless otherwise specified in
the Prospectus. Zero-coupon bonds are issued at a significant
discount from their principal amount in lieu of paying interest
periodically. Payment-in-kind bonds allow the issuer, at its
option, to make current interest payments on the bonds either in
cash or in additional bonds. Because zero-coupon bonds do not
pay current interest, their value is subject to greater
fluctuation in response to changes in market interest rates than
bonds which pay interest currently. Both zero-coupon and
payment-in-kind bonds allow an issuer to avoid the need to
generate cash to meet current interest payments. Accordingly,
such bonds may involve greater credit risks than bonds paying
interest currently. Even though such bonds do not pay current
interest in cash, the Fund is nonetheless required to accrue
interest income on such investments and to distribute such
amounts at least annually to shareholders. Thus, the Fund could
be required at times to liquidate investments in order to satisfy
its dividend requirements.
The amount of information about the financial condition of an
issuer of tax exempt securities may not be as extensive as that
which is made available by corporations whose securities are
publicly traded. Therefore, to the extent the Fund invests in
tax exempt securities in the lower rating categories, the
achievement of the Fund's goals is more dependent on Putnam
Management's investment analysis than would be the case if the
Fund were investing in securities in the higher rating
categories.
INVESTMENTS IN MISCELLANEOUS FIXED INCOME SECURITIES
Unless otherwise specified in the Prospectus or elsewhere in this
Statement of Additional Information, if the Fund may invest in
inverse floating obligations and premium securities, it may do so
without limit. The Fund, however, currently does not intend to
invest more than 15% of its assets in inverse floating
obligations under normal market conditions.
SECURITIES LOANS
The Fund may make secured loans of its portfolio securities, on
either a short-term or long-term basis, amounting to not more
than 25% of its total assets, thereby realizing additional
income. The risks in lending portfolio securities, as with other
extensions of credit, consist of possible delay in recovery of
the securities or possible loss of rights in the collateral
should the borrower fail financially. As a matter of policy,
securities loans are made to broker-dealers pursuant to
agreements requiring that loans be continuously secured by
collateral consisting of cash or short-term debt obligations at
least equal at all times to the value of the securities on loan,
"marked-to-market" daily. The borrower pays to the Fund an
amount equal to any dividends or interest received on securities
lent. The Fund retains all or a portion of the interest received
on investment of the cash collateral or receives a fee from the
borrower. Although voting rights, or rights to consent, with
respect to the loaned securities pass to the borrower, the Fund
retains the right to call the loans at any time on reasonable
notice, and it will do so to enable the Fund to exercise voting
rights on any matters materially affecting the investment. The
Fund may also call such loans in order to sell the securities.
FORWARD COMMITMENTS
The Fund may enter into contracts to purchase securities for a
fixed price at a future date beyond customary settlement time
("forward commitments") if the Fund holds, and maintains until
the settlement date in a segregated account, cash or high-grade
debt obligations in an amount sufficient to meet the purchase
price, or if the Fund enters into offsetting contracts for the
forward sale of other securities it owns. In the case of to-be-
announced ("TBA") purchase commitments, the unit price and the
estimated principal amount are established when the Fund enters
into a contract, with the actual principal amount being within a
specified range of the estimate. Forward commitments may be
considered securities in themselves, and involve a risk of loss
if the value of the security to be purchased declines prior to
the settlement date, which risk is in addition to the risk of
decline in the value of the Fund's other assets. Where such
purchases are made through dealers, the Fund relies on the dealer
to consummate the sale. The dealer's failure to do so may result
in the loss to the Fund of an advantageous yield or price.
Although the Fund will generally enter into forward commitments
with the intention of acquiring securities for its portfolio or
for delivery pursuant to options contracts it has entered into,
the Fund may dispose of a commitment prior to settlement if
Putnam Management deems it appropriate to do so. The Fund may
realize short-term profits or losses upon the sale of forward
commitments.
The Fund may enter into TBA sale commitments to hedge its
portfolio positions or to sell mortgage-backed securities it owns
under delayed delivery arrangements. Proceeds of TBA sale
commitments are not received until the contractual settlement
date. During the time a TBA sale commitment is outstanding,
equivalent deliverable securities, or an offsetting TBA purchase
commitment deliverable on or before the sale commitment date, are
held as "cover" for the transaction. Unsettled TBA sale
commitments are valued at current market value of the underlying
securities. If the TBA sale commitment is closed through the
acquisition of an offsetting purchase commitment, the Fund
realizes a gain or loss on the commitment without regard to any
unrealized gain or loss on the underlying security. If the Fund
delivers securities under the commitment, the Fund realizes a
gain or loss from the sale of the securities based upon the unit
price established at the date the commitment was entered into.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements up to the limit
specified in the Prospectus. A repurchase agreement is a
contract under which the Fund acquires a security for a
relatively short period (usually not more than one week) subject
to the obligation of the seller to repurchase and the Fund to
resell such security at a fixed time and price (representing the
Fund's cost plus interest). It is the Fund's present intention
to enter into repurchase agreements only with commercial banks
and registered broker-dealers and only with respect to
obligations of the U.S. government or its agencies or
instrumentalities. Repurchase agreements may also be viewed as
loans made by the Fund which are collateralized by the securities
subject to repurchase. Putnam Management will monitor such
transactions to ensure that the value of the underlying
securities will be at least equal at all times to the total
amount of the repurchase obligation, including the interest
factor. If the seller defaults, the Fund could realize a loss on
the sale of the underlying security to the extent that the
proceeds of sale including accrued interest are less than the
resale price provided in the agreement including interest. In
addition, if the seller should be involved in bankruptcy or
insolvency proceedings, the Fund may incur delay and costs in
selling the underlying security or may suffer a loss of principal
and interest if the Fund is treated as an unsecured creditor and
required to return the underlying collateral to the seller's
estate.
Pursuant to an exemptive order issued by the Securities and
Exchange Commission, the Fund may transfer uninvested cash
balances into a joint account, along with cash of other Putnam
funds and certain other accounts. These balances may be invested
in one or more repurchase agreements and/or short-term money
market instruments.
OPTIONS ON SECURITIES
WRITING COVERED OPTIONS. The Fund may write covered call options
and covered put options on optionable securities held in its
portfolio, when in the opinion of Putnam Management such
transactions are consistent with the Fund's investment objectives
and policies. Call options written by the Fund give the
purchaser the right to buy the underlying securities from the
Fund at a stated exercise price; put options give the purchaser
the right to sell the underlying securities to the Fund at a
stated price.
The Fund may write only covered options, which means that, so
long as the Fund is obligated as the writer of a call option, it
will own the underlying securities subject to the option (or
comparable securities satisfying the cover requirements of
securities exchanges). In the case of put options, the Fund will
hold cash and/or high-grade short-term debt obligations equal to
the price to be paid if the option is exercised. In addition,
the Fund will be considered to have covered a put or call option
if and to the extent that it holds an option that offsets some or
all of the risk of the option it has written. The Fund may write
combinations of covered puts and calls on the same underlying
security.
The Fund will receive a premium from writing a put or call
option, which increases the Fund's return on the underlying
security in the event the option expires unexercised or is closed
out at a profit. The amount of the premium reflects, among other
things, the relationship between the exercise price and the
current market value of the underlying security, the volatility
of the underlying security, the amount of time remaining until
expiration, current interest rates, and the effect of supply and
demand in the options market and in the market for the underlying
security. By writing a call option, the Fund limits its
opportunity to profit from any increase in the market value of
the underlying security above the exercise price of the option
but continues to bear the risk of a decline in the value of the
underlying security. By writing a put option, the Fund assumes
the risk that it may be required to purchase the underlying
security for an exercise price higher than its then-current
market value, resulting in a potential capital loss unless the
security subsequently appreciates in value.
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 offsetting option. The Fund realizes a
profit or loss from a closing transaction if the cost of the
transaction (option premium plus transaction costs) is less or
more than the premium received from writing the option. Because
increases in the market price of a call option generally reflect
increases in the market price of the security underlying the
option, any loss resulting from a closing purchase transaction
may be offset in whole or in part by unrealized appreciation of
the underlying security owned by the Fund.
If the Fund writes a call option but does not own the underlying
security, and when it writes a put option, the Fund may be
required to deposit cash or securities with its broker as
"margin", or collateral, for its obligation to buy or sell the
underlying security. As the value of the underlying security
varies, the Fund may have to deposit additional margin with the
broker. Margin requirements are complex and are fixed by
individual brokers, subject to minimum requirements currently
imposed by the Federal Reserve Board and by stock exchanges and
other self-regulatory organizations.
PURCHASING PUT OPTIONS. The Fund may purchase put options to
protect its portfolio holdings in an underlying security against
a decline in market value. Such protection is provided during
the life of the put option since the Fund, as holder of the
option, is able to sell the underlying security at the put
exercise price regardless of any decline in the underlying
security's market price. In order for a put option to be
profitable, the market price of the underlying security must
decline sufficiently below the exercise price to cover the
premium and transaction costs. By using put options in this
manner, the Fund will reduce any profit it might otherwise have
realized from appreciation of the underlying security by the
premium paid for the put option and by transaction costs.
PURCHASING CALL OPTIONS. The Fund may purchase call options to
hedge against an increase in the price of securities that the
Fund wants ultimately to buy. Such hedge protection is provided
during the life of the call option since the Fund, as holder of
the call option, is able to buy the underlying security at the
exercise price regardless of any increase in the underlying
security's market price. In order for a call option to be
profitable, the market price of the underlying security must rise
sufficiently above the exercise price to cover the premium and
transaction costs.
RISK FACTORS IN OPTIONS TRANSACTIONS
The successful use of the Fund's options strategies depends on
the ability of Putnam Management to forecast correctly interest
rate and market movements. For example, if the Fund were to
write a call option based on Putnam Management's expectation that
the price of the underlying security would fall, but the price
were to rise instead, the Fund could be required to sell the
security upon exercise at a price below the current market price.
Similarly, if the Fund were to write a put option based on Putnam
Management's expectation that the price of the underlying
security would rise, but the price were to fall instead, the Fund
could be required to purchase the security upon exercise at a
price higher than the current market price.
When the Fund purchases an option, it runs the risk that it will
lose its entire investment in the option in a relatively short
period of time, unless the Fund exercises the option or enters
into a closing sale transaction before the option's expiration.
If the price of the underlying security does not rise (in the
case of a call) or fall (in the case of a put) to an extent
sufficient to cover the option premium and transaction costs, the
Fund will lose part or all of its investment in the option. This
contrasts with an investment by the Fund in the underlying
security, since the Fund will not realize a loss if the
security's price does not change.
The effective use of options also depends on the Fund's ability
to terminate option positions at times when Putnam Management
deems it desirable to do so. There is no assurance that the Fund
will be able to effect closing transactions at any particular
time or at an acceptable price.
If a secondary market in options were to become unavailable, the
Fund could no longer engage in closing transactions. Lack of
investor interest might adversely affect the liquidity of the
market for particular options or series of options. A market may
discontinue trading of a particular option or options generally.
In addition, a market could become temporarily unavailable if
unusual events -- such as volume in excess of trading or clearing
capability -- were to interrupt its normal operations.
A market may at times find it necessary to impose restrictions on
particular types of options transactions, such as opening
transactions. For example, if an underlying security ceases to
meet qualifications imposed by the market or the Options Clearing
Corporation, new series of options on that security will no
longer be opened to replace expiring series, and opening
transactions in existing series may be prohibited. If an options
market were to become unavailable, the Fund as a holder of an
option would be able to realize profits or limit losses only by
exercising the option, and the Fund, as option writer, would
remain obligated under the option until expiration or exercise.
Disruptions in the markets for the securities underlying options
purchased or sold by the Fund could result in losses on the
options. If trading is interrupted in an underlying security,
the trading of options on that security is normally halted as
well. As a result, the Fund as purchaser or writer of an option
will be unable to close out its positions until options trading
resumes, and it may be faced with considerable losses if trading
in the security reopens at a substantially different price. In
addition, the Options Clearing Corporation or other options
markets may impose exercise restrictions. If a prohibition on
exercise is imposed at the time when trading in the option has
also been halted, the Fund as purchaser or writer of an option
will be locked into its position until one of the two
restrictions has been lifted. If the Options Clearing
Corporation were to determine that the available supply of an
underlying security appears insufficient to permit delivery by
the writers of all outstanding calls in the event of exercise, it
may prohibit indefinitely the exercise of put options. The Fund,
as holder of such a put option, could lose its entire investment
if the prohibition remained in effect until the put option's
expiration.
Special risks are presented by internationally-traded options.
Because of time differences between the United States and various
foreign countries, and because different holidays are observed in
different countries, foreign options markets may be open for
trading during hours or on days when U.S. markets are closed. As
a result, option premiums may not reflect the current prices of
the underlying interest in the United States.
Over-the-counter ("OTC") options purchased by the Fund and assets
held to cover OTC options written by the Fund may, under certain
circumstances, be considered illiquid securities for purposes of
any limitation on the Fund's ability to invest in illiquid
securities.
FUTURES CONTRACTS AND RELATED OPTIONS
Subject to applicable law, and unless otherwise specified in the
Prospectus, the Fund may invest without limit in the types of
futures contracts and related options identified in the
Prospectus. A financial futures contract sale creates an
obligation by the seller to deliver the type of financial
instrument called for in the contract in a specified delivery
month for a stated price. A financial futures contract purchase
creates an obligation by the purchaser to take delivery of the
type of financial instrument called for in the contract in a
specified delivery month at a stated price. The specific
instruments delivered or taken, respectively, at settlement date
are not determined until on or near that date. The determination
is made in accordance with the rules of the exchange on which the
futures contract sale or purchase was made. Futures contracts
are traded in the United States only on commodity exchanges or
boards of trade -- known as "contract markets" -- approved for
such trading by the Commodity Futures Trading Commission (the
"CFTC"), and must be executed through a futures commission
merchant or brokerage firm which is a member of the relevant
contract market.
Although futures contracts (other than index futures) by their
terms call for actual delivery or acceptance of commodities or
securities, in most cases the contracts are closed out before the
settlement date without the making or taking of delivery.
Closing out a futures contract sale is effected by purchasing a
futures contract for the same aggregate amount of the specific
type of financial instrument or commodity with the same delivery
date. If the price of the initial sale of the futures contract
exceeds the price of the offsetting purchase, the seller is paid
the difference and realizes a gain. Conversely, if the price of
the offsetting purchase exceeds the price of the initial sale,
the seller realizes a loss. Similarly, the closing out of a
futures contract purchase is effected by the purchaser's entering
into a futures contract sale. If the offsetting sale price
exceeds the purchase price, the purchaser realizes a gain, and if
the purchase price exceeds the offsetting sale price, he realizes
a loss. In general 40% of the gain or loss arising from the
closing out of a futures contract traded on an exchange approved
by the CFTC is treated as short-term gain or loss, and 60% is
treated as long-term gain or loss.
Unlike when the Fund purchases or sells a security, no price is
paid or received by the Fund upon the purchase or sale of a
futures contract. Upon entering into a contract, the Fund is
required to deposit with its custodian in a segregated account in
the name of the futures broker an amount of cash and/or U.S.
Government Securities. This amount is known as "initial margin."
The nature of initial margin in futures transactions is different
from that of margin in security transactions in that futures
contract margin does not involve the borrowing of funds to
finance the transactions. Rather, initial margin is similar to a
performance bond or good faith deposit which is returned to the
Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. Futures contracts
also involve brokerage costs.
Subsequent payments, called "variation margin" or "maintenance
margin", to and from the broker (or the custodian) are made on a
daily basis as the price of the underlying security or commodity
fluctuates, making the long and short positions in the futures
contract more or less valuable, a process known as "marking to
the market." For example, when the Fund has purchased a futures
contract on a security and the price of the underlying security
has risen, that position will have increased in value and the
Fund will receive from the broker a variation margin payment
based on that increase in value. Conversely, when the Fund has
purchased a security futures contract and the price of the
underlying security has declined, the position would be less
valuable and the Fund would be required to make a variation
margin payment to the broker.
The Fund may elect to close some or all of its futures positions
at any time prior to their expiration in order to reduce or
eliminate a hedge position then currently held by the Fund. The
Fund may close its positions by taking opposite positions which
will operate to terminate the Fund's position in the futures
contracts. Final determinations of variation margin are then
made, additional cash is required to be paid by or released to
the Fund, and the Fund realizes a loss or a gain. Such closing
transactions involve additional commission costs.
OPTIONS ON FUTURES CONTRACTS. The Fund may purchase and write
call and put options on futures contracts it may buy or sell and
enter into closing transactions with respect to such options to
terminate existing positions. Options on future contracts give
the purchaser the right in return for the premium paid to assume
a position in a futures contract at the specified option exercise
price at any time during the period of the option. The Fund may
use options on futures contracts in lieu of writing or buying
options directly on the underlying securities or purchasing and
selling the underlying futures contracts. For example, to hedge
against a possible decrease in the value of its portfolio
securities, the Fund may purchase put options or write call
options on futures contracts rather than selling futures
contracts. Similarly, the Fund may purchase call options or
write put options on futures contracts as a substitute for the
purchase of futures contracts to hedge against a possible
increase in the price of securities which the Fund expects to
purchase. Such options generally operate in the same manner as
options purchased or written directly on the underlying
investments.
As with options on securities, the holder or writer of an option
may terminate his position by selling or purchasing an offsetting
option. There is no guarantee that such closing transactions can
be effected.
The Fund will be required to deposit initial margin and
maintenance margin with respect to put and call options on
futures contracts written by it pursuant to brokers' requirements
similar to those described above in connection with the
discussion of futures contracts.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS.
Successful use of futures contracts by the Fund is subject to
Putnam Management's ability to predict movements in the direction
of interest rates and other factors affecting securities markets.
For example, if the Fund has hedged against the possibility of
decline in the values of its investments and the values of its
investments increase instead, the Fund will lose part or all of
the benefit of the increase through payments of daily maintenance
margin. The Fund may have to sell investments at a time when it
may be disadvantageous to do so in order to meet margin
requirements.
Compared to the purchase or sale of futures contracts, the
purchase of call or put options on futures contracts involves
less potential risk to the Fund because the maximum amount at
risk is the premium paid for the options (plus transaction
costs). However, there may be circumstances when the purchase of
a call or put option on a futures contract would result in a loss
to the Fund when the purchase or sale of a futures contract would
not, such as when there is no movement in the prices of the
hedged investments. The writing of an option on a futures
contract involves risks similar to those risks relating to the
sale of futures contracts.
There is no assurance that higher than anticipated trading
activity or other unforeseen events might not, at times, render
certain market clearing facilities inadequate, and thereby result
in the institution by exchanges of special procedures which may
interfere with the timely execution of customer orders.
To reduce or eliminate a hedge position held by the Fund, the
Fund may seek to close out a position. The ability to establish
and close out positions will be subject to the development and
maintenance of a liquid secondary market. It is not certain that
this market will develop or continue to exist for a particular
futures contract or option. Reasons for the absence of a liquid
secondary market on an exchange include the following: (i) there
may be insufficient trading interest in certain contracts or
options; (ii) restrictions may be imposed by an exchange on
opening transactions or closing transactions or both; (iii)
trading halts, suspensions or other restrictions may be imposed
with respect to particular classes or series of contracts or
options, or underlying securities; (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v)
the facilities of an exchange or a clearing corporation may not
at all times be adequate to handle current trading volume; or
(vi) one or more exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the
trading of contracts or options (or a particular class or series
of contracts or options), in which event the secondary market on
that exchange for such contracts or options (or in the class or
series of contracts or options) would cease to exist, although
outstanding contracts or options on the exchange that had been
issued by a clearing corporation as a result of trades on that
exchange would continue to be exercisable in accordance with
their terms.
U.S. TREASURY SECURITY FUTURES CONTRACTS AND OPTIONS. If the
Fund invests in tax-exempt securities issued by a governmental
entity, the Fund may purchase and sell futures contracts and
related options on U.S. Treasury securities when, in the opinion
of Putnam Management, price movements in Treasury security
futures and related options will correlate closely with price
movements in the tax-exempt securities which are the subject of
the hedge. U.S. Treasury security futures contracts require the
seller to deliver, or the purchaser to take delivery of, the type
of U.S. Treasury security called for in the contract at a
specified date and price. Options on U.S. Treasury security
futures contracts give the purchaser the right in return for the
premium paid to assume a position in a U.S. Treasury security
futures contract at the specified option exercise price at any
time during the period of the option.
Successful use of U.S. Treasury security futures contracts by the
Fund is subject to Putnam Management's ability to predict
movements in the direction of interest rates and other factors
affecting markets for debt securities. For example, if the Fund
has sold U.S. Treasury security futures contracts in order to
hedge against the possibility of an increase in interest rates
which would adversely affect tax-exempt securities held in its
portfolio, and the prices of the Fund's tax-exempt securities
increase instead as a result of a decline in interest rates, the
Fund will lose part or all of the benefit of the increased value
of its securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such
situations, if the Fund has insufficient cash, it may have to
sell securities to meet daily maintenance margin requirements at
a time when it may be disadvantageous to do so.
There is also a risk that price movements in U.S. Treasury
security futures contracts and related options will not correlate
closely with price movements in markets for tax-exempt
securities. For example, if the Fund has hedged against a
decline in the values of tax-exempt securities held by it by
selling Treasury security futures and the values of Treasury
securities subsequently increase while the values of its
tax-exempt securities decrease, the Fund would incur losses on
both the Treasury security futures contracts written by it and
the tax-exempt securities held in its portfolio. Putnam
Management will seek to reduce this risk by monitoring movements
in markets for U.S. Treasury security futures and options and for
tax-exempt securities closely. The Fund will only purchase or
sell Treasury security futures or related options when, in the
opinion of Putnam Management, price movements in Treasury
security futures and related options will correlate closely with
price movements in tax-exempt securities in which the Fund
invests.
INDEX FUTURES CONTRACTS. An index futures contract is a contract
to buy or sell units of an index at a specified future date at a
price agreed upon when the contract is made. Entering into a
contract to buy units of an index is commonly referred to as
buying or purchasing a contract or holding a long position in
the index. Entering into a contract to sell units of an index is
commonly referred to as selling a contract or holding a short
position. A unit is the current value of the index. The Fund
may enter into stock index futures contracts, debt index futures
contracts, or other index futures contracts appropriate to its
objective. The Fund may also purchase and sell options on index
futures contracts.
For example, the Standard & Poor's Composite 500 Stock Price
Index ("S&P 500") is composed of 500 selected common stocks, most
of which are listed on the New York Stock Exchange. The S&P 500
assigns relative weightings to the common stocks included in the
Index, and the value fluctuates with changes in the market values
of those common stocks. In the case of the S&P 500, contracts
are to buy or sell 500 units. Thus, if the value of the S&P 500
were $150, one contract would be worth $75,000 (500 units x
$150). The stock index futures contract specifies that no
delivery of the actual stocks making up the index will take
place. Instead, settlement in cash must occur upon the
termination of the contract, with the settlement being the
difference between the contract price and the actual level of the
stock index at the expiration of the contract. For example, if
the Fund enters into a futures contract to buy 500 units of the
S&P 500 at a specified future date at a contract price of $150
and the S&P 500 is at $154 on that future date, the Fund will
gain $2,000 (500 units x gain of $4). If the Fund enters into a
futures contract to sell 500 units of the stock index at a
specified future date at a contract price of $150 and the S&P 500
is at $152 on that future date, the Fund will lose $1,000 (500
units x loss of $2).
There are several risks in connection with the use by the Fund of
index futures as a hedging device. One risk arises because of
the imperfect correlation between movements in the prices of the
index futures and movements in the prices of securities which are
the subject of the hedge. Putnam Management will, however,
attempt to reduce this risk by buying or selling, to the extent
possible, futures on indices the movements of which will, in its
judgment, have a significant correlation with movements in the
prices of the securities sought to be hedged.
Successful use of index futures by the Fund for hedging purposes
is also subject to Putnam Management's ability to predict
movements in the direction of the market. It is possible that,
where the Fund has sold futures to hedge its portfolio against a
decline in the market, the index on which the futures are written
may advance and the value of securities held in the Fund's
portfolio may decline. If this occurred, the Fund would lose
money on the futures and also experience a decline in value in
its portfolio securities. It is also possible that, if the Fund
has hedged against the possibility of a decline in the market
adversely affecting securities held in its portfolio and
securities prices increase instead, the Fund will lose part or
all of the benefit of the increased value of those securities it
has hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if the Fund has
insufficient cash, it may have to sell securities to meet daily
variation margin requirements at a time when it is
disadvantageous to do so.
In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the
index futures and the portion of the portfolio being hedged, the
prices of index futures may not correlate perfectly with
movements in the underlying index due to certain market
distortions. First, all participants in the futures market are
subject to margin deposit and maintenance requirements. Rather
than meeting additional margin deposit requirements, investors
may close futures contracts through offsetting transactions which
could distort the normal relationship between the index and
futures markets. Second, margin requirements in the futures
market are less onerous than margin requirements in the
securities market, and as a result the futures market may attract
more speculators than the securities market does. Increased
participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price
distortions in the futures market and also because of the
imperfect correlation between movements in the index and
movements in the prices of index futures, even a correct forecast
of general market trends by Putnam Management may still not
result in a successful hedging transaction over a short time
period.
OPTIONS ON STOCK INDEX FUTURES. Options on index futures are
similar to options on securities except that options on index
futures give the purchaser the right, in return for the premium
paid, to assume a position in an index futures contract (a long
position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during
the period of the option. Upon exercise of the option, the
delivery of the futures position by the writer of the option to
the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account which
represents the amount by which the market price of the index
futures contract, at exercise, exceeds (in the case of a call) or
is less than (in the case of a put) the exercise price of the
option on the index future. If an option is exercised on the
last trading day prior to its expiration date, the settlement
will be made entirely in cash equal to the difference between the
exercise price of the option and the closing level of the index
on which the future is based on the expiration date. Purchasers
of options who fail to exercise their options prior to the
exercise date suffer a loss of the premium paid.
OPTIONS ON INDICES
As an alternative to purchasing call and put options on index
futures, the Fund may purchase and sell call and put options on
the underlying indices themselves. Such options would be used in
a manner identical to the use of options on index futures.
INDEX WARRANTS
The Fund may purchase put warrants and call warrants whose values
vary depending on the change in the value of one or more
specified securities indices ("index warrants"). Index warrants
are generally issued by banks or other financial institutions and
give the holder the right, at any time during the term of the
warrant, to receive upon exercise of the warrant a cash payment
from the issuer based on the value of the underlying index at the
time of exercise. In general, if the value of the underlying
index rises above the exercise price of the index warrant, the
holder of a call warrant will be entitled to receive a cash
payment from the issuer upon exercise based on the difference
between the value of the index and the exercise price of the
warrant; if the value of the underlying index falls, the holder
of a put warrant will be entitled to receive a cash payment from
the issuer upon exercise based on the difference between the
exercise price of the warrant and the value of the index. The
holder of a warrant would not be entitled to any payments from
the issuer at any time when, in the case of a call warrant, the
exercise price is greater than the value of the underlying index,
or, in the case of a put warrant, the exercise price is less than
the value of the underlying index. If the Fund were not to
exercise an index warrant prior to its expiration, then the Fund
would lose the amount of the purchase price paid by it for the
warrant.
The Fund will normally use index warrants in a manner similar to
its use of options on securities indices. The risks of the
Fund's use of index warrants are generally similar to those
relating to its use of index options. Unlike most index options,
however, index warrants are issued in limited amounts and are not
obligations of a regulated clearing agency, but are backed only
by the credit of the bank or other institution which issues the
warrant. Also, index warrants generally have longer terms than
index options. Although the Fund will normally invest only in
exchange-listed warrants, index warrants are not likely to be as
liquid as certain index options backed by a recognized clearing
agency. In addition, the terms of index warrants may limit the
Fund's ability to exercise the warrants at such time, or in such
quantities, as the Fund would otherwise wish to do.
FOREIGN SECURITIES
Under its current policy, which may be changed without
shareholder approval, the Fund may invest up to the limit of its
total assets specified in its Prospectus in securities
principally traded in markets outside the United States.
Eurodollar certificates of deposit are excluded for purposes of
this limitation. Foreign investments can be affected favorably
or unfavorably by changes in currency exchange rates and in
exchange control regulations. There may be less publicly
available information about a foreign company than about a U.S.
company, and foreign companies may not be subject to accounting,
auditing and financial reporting standards and requirements
comparable to those applicable to U.S. companies. Securities of
some foreign companies are less liquid or more volatile than
securities of U.S. companies, and foreign brokerage commissions
and custodian fees are generally higher than in the United
States. Investments in foreign securities can involve other
risks different from those affecting U.S. investments, including
local political or economic developments, expropriation or
nationalization of assets and imposition of withholding taxes on
dividend or interest payments. To hedge against possible
variations in foreign exchange rates, the Fund may purchase and
sell forward foreign currency contracts. These represent
agreements to purchase or sell specified currencies at specified
dates and prices. The Fund will only purchase and sell forward
foreign currency contracts in amounts Putnam Management deems
appropriate to hedge existing or anticipated portfolio positions
and will not use such forward contracts for speculative purposes.
Foreign securities, like other assets of the Fund, will be held
by the Fund's custodian or by a subcustodian.
FOREIGN CURRENCY TRANSACTIONS
Unless otherwise specified in the Prospectus, the Fund may engage
without limit in currency exchange transactions, as well as
foreign currency forward and futures contracts, to protect
against uncertainty in the level of future currency exchange
rates. In addition, the Fund may write covered call and put
options on foreign currencies for the purpose of increasing its
current return.
Generally, the Fund may engage in both "transaction hedging" and
"position hedging". When it engages in transaction hedging, the
Fund enters into foreign currency transactions with respect to
specific receivables or payables, generally arising in connection
with the purchase or sale of portfolio securities. The Fund will
engage in transaction hedging when it desires to "lock in" the
U.S. dollar price of a security it has agreed to purchase or
sell, or the U.S. dollar equivalent of a dividend or interest
payment in a foreign currency. By transaction hedging the Fund
will attempt to protect itself against a possible loss resulting
from an adverse change in the relationship between the U.S.
dollar and the applicable foreign currency during the period
between the date on which the security is purchased or sold, or
on which the dividend or interest payment is earned, and the date
on which such payments are made or received.
The Fund may purchase or sell a foreign currency on a spot (or
cash) basis at the prevailing spot rate in connection with the
settlement of transactions in portfolio securities denominated in
that foreign currency. The Fund may also enter into contracts to
purchase or sell foreign currencies at a future date ("forward
contracts") and purchase and sell foreign currency futures
contracts.
For transaction hedging purposes the Fund may also purchase
exchange-listed and over-the-counter call and put options on
foreign currency futures contracts and on foreign currencies. A
put option on a futures contract gives the Fund the right to
assume a short position in the futures contract until the
expiration of the option. A put option on a currency gives the
Fund the right to sell the currency at an exercise price until
the expiration of the option. A call option on a futures
contract gives the Fund the right to assume a long position in
the futures contract until the expiration of the option. A call
option on a currency gives the Fund the right to purchase the
currency at the exercise price until the expiration of the
option.
When it engages in position hedging, the Fund enters into foreign
currency exchange transactions to protect against a decline in
the values of the foreign currencies in which its portfolio
securities are denominated (or an increase in the value of
currency for securities which the Fund expects to purchase, when
the Fund holds cash or short-term investments). In connection
with position hedging, the Fund may purchase put or call options
on foreign currency and on foreign currency futures contracts and
buy or sell forward contracts and foreign currency futures
contracts. The Fund may also purchase or sell foreign currency
on a spot basis.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved
will not generally be possible since the future value of such
securities in foreign currencies will change as a consequence of
market movements in the value of those securities between the
dates the currency exchange transactions are entered into and the
dates they mature.
It is impossible to forecast with precision the market value of
portfolio securities at the expiration or maturity of a forward
or futures contract. Accordingly, it may be necessary for the
Fund to purchase additional foreign currency on the spot market
(and bear the expense of such purchase) if the market value of
the security or securities being hedged is less than the amount
of foreign currency the Fund is obligated to deliver and a
decision is made to sell the security or securities and make
delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency
received upon the sale of the portfolio security or securities if
the market value of such security or securities exceeds the
amount of foreign currency the Fund is obligated to deliver.
Transaction and position hedging do not eliminate fluctuations in
the underlying prices of the securities which the Fund owns or
intends to purchase or sell. They simply establish a rate of
exchange which one can achieve at some future point in time.
Additionally, although these techniques tend to minimize the risk
of loss due to a decline in the value of the hedged currency,
they tend to limit any potential gain which might result from the
increase in value of such currency.
The Fund may seek to increase its current return or to offset
some of the costs of hedging against fluctuations in current
exchange rates by writing covered call options and covered put
options on foreign currencies. The Fund receives a premium from
writing a call or put option, which increases the Fund's current
return if the option expires unexercised or is closed out at a
net profit. The Fund may terminate an option that it has written
prior to its expiration by entering into a closing purchase
transaction in which it purchases an option having the same terms
as the option written.
The Fund's currency hedging transactions may call for the
delivery of one foreign currency in exchange for another foreign
currency and may at times not involve currencies in which its
portfolio securities are then denominated. Putnam Management
will engage in such "cross hedging" activities when it believes
that such transactions provide significant hedging opportunities
for 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.
CURRENCY FORWARD AND FUTURES CONTRACTS. A forward foreign
currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number
of days from the date of the contract as agreed by the parties,
at a price set at the time of the contract. In the case of a
cancelable forward contract, the holder has the unilateral right
to cancel the contract at maturity by paying a specified fee.
The contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial
banks) and their customers. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage
for trades. A foreign currency futures contract is a
standardized contract for the future delivery of a specified
amount of a foreign currency at a future date at a price set at
the time of the contract. Foreign currency futures contracts
traded in the United States are designed by and traded on
exchanges regulated by the CFTC, such as the New York Mercantile
Exchange.
Forward foreign currency exchange contracts differ from foreign
currency futures contracts in certain respects. For example, the
maturity date of a forward contract may be any fixed number of
days from the date of the contract agreed upon by the parties,
rather than a predetermined date in a given month. Forward
contracts may be in any amounts agreed upon by the parties rather
than predetermined amounts. Also, forward foreign exchange
contracts are traded directly between currency traders so that no
intermediary is required. A forward contract generally requires
no margin or other deposit.
At the maturity of a forward or futures contract, the Fund either
may accept or make delivery of the currency specified in the
contract, or at or prior to maturity enter into a closing
transaction involving the purchase or sale of an offsetting
contract. Closing transactions with respect to forward contracts
are usually effected with the currency trader who is a party to
the original forward contract. Closing transactions with respect
to futures contracts are effected on a commodities exchange; a
clearing corporation associated with the exchange assumes
responsibility for closing out such contracts.
Positions in the foreign currency futures contracts may be closed
out only on an exchange or board of trade which provides a
secondary market in such contracts. Although the Fund intends to
purchase or sell foreign currency futures contracts only on
exchanges or boards of trade where there appears to be an active
secondary market, there is no assurance that a secondary market
on an exchange or board of trade will exist for any particular
contract or at any particular time. In such event, it may not be
possible to close a futures position and, in the event of adverse
price movements, the Fund would continue to be required to make
daily cash payments of variation margin.
FOREIGN CURRENCY OPTIONS. In general, options on foreign
currencies operate similarly to options on securities and are
subject to many similar risks. Foreign currency options are
traded primarily in the over-the-counter market, although options
on foreign currencies have recently been listed on several
exchanges. Options are traded not only on the currencies of
individual nations, but also on the European Currency Unit
("ECU"). The ECU is composed of amounts of a number of
currencies, and is the official medium of exchange of the
European Community's European Monetary System.
The Fund will only purchase or write foreign currency options
when Putnam Management believes that a liquid secondary market
exists for such options. There can be no assurance that a liquid
secondary market will exist for a particular option at any
specific time. Options on foreign currencies are affected by all
of those factors which influence foreign exchange rates and
investments generally.
The value of any currency, including U.S. dollars and foreign
currencies, may be affected by complex political and economic
factors applicable to the issuing country. In addition, the
exchange rates of foreign currencies (and therefore the values
of foreign currency options) may be affected significantly,
fixed, or supported directly or indirectly by U.S. and foreign
government actions. Government intervention may increase risks
involved in purchasing or selling foreign currency options, since
exchange rates may not be free to fluctuate in response to other
market forces.
The value of a foreign currency option reflects the value of an
exchange rate, which in turn reflects relative values of two
currencies, the U.S. dollar and the foreign currency in question.
Because foreign currency transactions occurring in the interbank
market involve substantially larger amounts than those that may
be involved in the exercise of foreign currency options,
investors may be disadvantaged by having to deal in an odd lot
market for the underlying foreign currencies in connection with
options at prices that are less favorable than for round lots.
Foreign governmental restrictions or taxes could result in
adverse changes in the cost of acquiring or disposing of foreign
currencies.
There is no systematic reporting of last sale information for
foreign currencies and there is no regulatory requirement that
quotations available through dealers or other market sources be
firm or revised on a timely basis. Available quotation
information is generally representative of very large round-lot
transactions in the interbank market and thus may not reflect
exchange rates for smaller odd-lot transactions (less than $1
million) where rates may be less favorable. The interbank market
in foreign currencies is a global, around-the-clock market. To
the extent that options markets are closed while the markets for
the underlying currencies remain open, significant price and rate
movements may take place in the underlying markets that cannot be
reflected in the options markets.
SETTLEMENT PROCEDURES. Settlement procedures relating to the
Fund's investments in foreign securities and to the Fund's
foreign currency exchange transactions may be more complex than
settlements with respect to investments in debt or equity
securities of U.S. issuers, and may involve certain risks not
present in the Fund's domestic investments. For example,
settlement of transactions involving foreign securities or
foreign currency may occur within a foreign country, and the Fund
may be required to accept or make delivery of the underlying
securities or currency in conformity with any applicable U.S. or
foreign restrictions or regulations, and may be required to pay
any fees, taxes or charges associated with such delivery. Such
investments may also involve the risk that an entity involved in
the settlement may not meet its obligations.
FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers
do not charge a fee for currency conversion, they do realize a
profit based on the difference (the "spread") between prices at
which they are buying and selling various currencies. Thus, a
dealer may offer to sell a foreign currency to the Fund at one
rate, while offering a lesser rate of exchange should the Fund
desire to resell that currency to the dealer.
RESTRICTED SECURITIES
The SEC Staff currently takes the view that any designation by
the Trustees of the authority to determine that a restricted
security is readily marketable (as described in the investment
restrictions of the Funds) must be pursuant to written procedures
established by the Trustees. It is the present intention of the
Funds' Trustees that, if the Trustees decide to delegate such
determinations to Putnam Management or another person, they would
do so pursuant to written procedures, consistent with the Staff's
position. Should the Staff modify its position in the future,
the Trustees would consider what action would be appropriate in
light of the Staff's position at that time.
TAXES
TAXATION OF THE FUND. The Fund intends to qualify each year as a
regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). In order so to
qualify and to qualify for the special tax treatment accorded
regulated investment companies and their shareholders, the Fund
must, among other things:
(a) Derive at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, and
gains from the sale of stock, securities and foreign currencies,
or other income (including but not limited to gains from options,
futures, or forward contracts) derived with respect to its
business of investing in such stock, securities, or currencies;
(b) derive less than 30% of its gross income from the sale or
other disposition of certain assets (including stock or
securities and certain options, futures contracts, forward
contracts and foreign currencies) held for less than three
months;
(c) distribute with respect to each taxable year at least 90% of
the sum of its taxable net investment income, its net tax-exempt
income, and the excess, if any, of net short-term capital gains
over net long-term capital losses for such year; and
(d) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the market value of the Fund's
assets is represented by cash and cash items, U.S. Government
securities, securities of other regulated investment companies,
and other securities limited in respect of any one issuer to a
value not greater than 5% of the value of the Fund's total assets
and to not more than 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities (other than those of the
U.S. Government or other regulated investment companies) of any
one issuer or of two or more issuers which the Fund controls and
which are engaged in the same, similar, or related trades or
businesses.
If the Fund qualifies as a regulated investment company that is
accorded special tax treatment, the Fund will not be subject to
federal income tax on income paid to its shareholders in the form
of dividends (including capital gain dividends).
If the Fund failed to qualify as a regulated investment company
accorded special tax treatment in any taxable year, the Fund
would be subject to tax on its taxable income at corporate rates,
and all distributions from earnings and profits, including any
distributions of net tax-exempt income and net long-term capital
gains, would be taxable to shareholders as ordinary income. In
addition, the Fund could be required to recognize unrealized
gains, pay substantial taxes and interest and make substantial
distributions before requalifying as a regulated investment
company that is accorded special tax treatment.
If the Fund fails to distribute in a calendar year substantially
all of its ordinary income for such year and substantially all of
its capital gain net income for the one-year period ending
October 31 (or later if the Fund is permitted so to elect and so
elects), plus any retained amount from the prior year, the Fund
will be subject to a 4% excise tax on the undistributed amounts.
A dividend paid to shareholders by the Fund in January of a year
generally is deemed to have been paid by the Fund on December 31
of the preceding year, if the dividend was declared and payable
to shareholders of record on a date in October, November or
December of that preceding year. The Fund intends generally to
make distributions sufficient to avoid imposition of the 4%
excise tax.
EXEMPT-INTEREST DIVIDENDS. The Fund will be qualified to pay
exempt-interest dividends to its shareholders only if, at the
close of each quarter of the Fund's taxable year, at least 50% of
the total value of the Fund's assets consists of obligations the
interest on which is exempt from federal income tax.
Distributions that the Fund properly designates as exempt-
interest dividends are treated by shareholders as interest
excludable from their gross income for federal income tax
purposes but may be taxable for federal alternative minimum tax
purposes and for state and local purposes. If the Fund intends
to be qualified to pay exempt-interest dividends, the Fund may be
limited in its ability to enter into taxable transactions
involving forward commitments, repurchase agreements, financial
futures, and options contracts on financial futures, tax-exempt
bond indices, and other assets.
Part or all of the interest on indebtedness, if any, incurred or
continued by a shareholder to purchase or carry shares of a Fund
paying exempt-interest dividends is not deductible. The portion
of interest that is not deductible is equal to the total interest
paid or accrued on the indebtedness, multiplied by the percentage
of the Fund's total distributions (not including distributions
from net long-term capital gains) paid to the shareholder that
are exempt-interest dividends. Under rules used by the Internal
Revenue Service for determining when borrowed funds are
considered used for the purpose of purchasing or carrying
particular assets, the purchase of shares may be considered to
have been made with borrowed funds even though such funds are not
directly traceable to the purchase of shares.
In general, exempt-interest dividends, if any, attributable to
interest received on certain private activity obligations and
certain industrial development bonds will not be tax-exempt to
any shareholders who are "substantial users" of the facilities
financed by such obligations or bonds or who are "related
persons" of such substantial users.
A Fund which is qualified to pay exempt-interest dividends will
inform investors within 60 days of the Fund's fiscal year-end of
the percentage of its income distributions designated as
tax-exempt. The percentage is applied uniformly to all
distributions made during the year. The percentage of income
designated as tax-exempt for any particular distribution may be
substantially different from the percentage of the Fund's income
that was tax-exempt during the period covered by the
distribution.
HEDGING TRANSACTIONS. If the Fund engages in transactions,
including hedging transactions in options, futures contracts, and
straddles, or other similar transactions, it will be subject to
special tax rules (including mark-to-market, straddle, wash sale,
and short sale rules), the effect of which may be to accelerate
income to the Fund, defer losses to the Fund, cause adjustments
in the holding periods of the Fund's securities, or convert
short-term capital losses into long-term capital losses. These
rules could therefore affect the amount, timing and character of
distributions to shareholders. The Fund will endeavor to make
any available elections pertaining to such transactions in a
manner believed to be in the best interests of the Fund.
Under the 30% of gross income test described above (see "Taxation
of the Fund"), the Fund will be restricted in selling assets held
or considered under Code rules to have been held for less than
three months, and in engaging in certain hedging transactions
(including hedging transactions in options and futures) that in
some circumstances could cause certain Fund assets to be treated
as held for less than three months.
Certain of the Fund's hedging activities (including its
transactions, if any, in foreign currencies or foreign
currency-denominated instruments) are likely to produce a
difference between its book income and its taxable income. If
the Fund's book income exceeds its taxable income, the
distribution (if any) of such excess will be treated as a
dividend to the extent of the Fund's remaining earnings and
profits (including earnings and profits arising from tax-exempt
income), and thereafter as a return of capital or as gain from
the sale or exchange of a capital asset, as the case may be. If
the Fund's book income is less than its taxable income, the Fund
could be required to make distributions exceeding book income to
qualify as a regulated investment company that is accorded
special tax treatment.
RETURN OF CAPITAL DISTRIBUTIONS. If the Fund makes a
distribution to you in excess of its current and accumulated
"earnings and profits" in any taxable year, the excess
distribution will be treated as a return of capital to the extent
of your tax basis in your shares, and thereafter as capital gain.
A return of capital is not taxable, but it reduces your tax basis
in your shares, thus reducing any loss or increasing any gain on
a subsequent taxable disposition by you of your shares.
SECURITIES ISSUED OR PURCHASED AT A DISCOUNT. 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.
CAPITAL LOSS CARRYOVER. The amounts and expiration dates of any
capital loss carryovers available to the Fund are shown in Note 1
(Federal income taxes) to the financial statements included in
Part I of this Statement or incorporated by reference into this
Statement.
FOREIGN CURRENCY-DENOMINATED SECURITIES AND RELATED HEDGING
TRANSACTIONS. 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.
If more than 50% of the Fund's assets at year end consists of the
debt and equity securities of foreign corporations, the Fund may
elect to permit shareholders to claim a credit or deduction on
their income tax returns for their pro rata portion of qualified
taxes paid by the Fund to foreign countries. In such a case,
shareholders will include in gross income from foreign sources
their pro rata shares of such taxes. A shareholder's ability to
claim a foreign tax credit or deduction in respect of foreign
taxes paid by the Fund may be subject to certain limitations
imposed by the Code, as a result of which a shareholder may not
get a full credit or deduction for the amount of such taxes.
Shareholders who do not itemize on their federal income tax
returns may claim a credit (but no deduction) for such foreign
taxes.
Investment by the Fund in certain "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."
SALE OR REDEMPTION OF SHARES. 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, if a shareholder sells shares at
a loss within six months of purchase, any loss will be disallowed
for Federal income tax purposes to the extent of any exempt-
interest dividends received on such shares. In addition, any
loss (not already disallowed as provided in the preceding
sentence) 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 Fund
shares 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.
SHARES PURCHASED THROUGH TAX-QUALIFIED PLANS. 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 a fund as an
investment through such plans and the precise effect of an
investment on their particular tax situation.
BACKUP WITHHOLDING. 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 underreported dividends or interest income, or who
fails to certify to the Fund that he or she is not subject to
such withholding. Shareholders who fail to furnish their currect
TIN are subject to a penalty of $50 for each such failure unless
the failure is due to reasonable cause and not wilful neglect.
An individual's taxpayer identification number is his or her
social security number.
MANAGEMENT OF THE FUND
TRUSTEES
*+GEORGE PUTNAM, Chairman and President. Chairman and Director
of Putnam Management and Putnam Mutual Funds. Director, The
Boston Company, Inc., Boston Safe Deposit and Trust Company,
Freeport-McMoRan, Inc., General Mills, Inc., Houghton Mifflin
Company, Marsh & McLennan Companies, Inc. and Rockefeller Group,
Inc.
+WILLIAM F. POUNDS, Vice Chairman. Professor of Management,
Alfred P. Sloan School of Management, Massachusetts Institute of
Technology. Director of EG&G, Inc., Fisher Price, Inc., IDEXX,
M/A-COM, Inc., and Sun Company, Inc.
JAMESON A. BAXTER, Trustee. President, Baxter Associates, Inc.
(consultants to management). Director of Avondale Federal Savings
Bank, ASHTA Chemicals, Inc. and Banta Corporation. Chairman of
the Board of Trustees, Mount Holyoke College.
+HANS H. ESTIN, Trustee. Vice Chairman, North American
Management Corp. (a registered investment adviser). Director of
The Boston Company, Inc. and Boston Safe Deposit and Trust
Company.
ELIZABETH T. KENNAN, Trustee. President of Mount Holyoke
College. Director, the Kentucky Home Life Insurance Companies,
NYNEX Corporation, Northeast Utilities and Talbots and Trustee of
the University of Notre Dame.
*LAWRENCE J. LASSER, Trustee and Vice President. President,
Chief Executive Officer and Director of Putnam Investments, Inc.
and Putnam Investment Management, Inc. Director of Marsh &
McLennan Companies, Inc. Vice President of the Putnam funds.
JOHN A. HILL, Trustee. Chairman and Managing Director, First
Reserve Corporation (a registered investment adviser). Director,
Lantana Corporation, Maverick Tube Corporation, Snyder Oil
Corporation and various First Reserve Funds.
+ROBERT E. PATTERSON, Trustee. Executive Vice President, Cabot
Partners Limited Partnership (a registered investment adviser).
DONALD S. PERKINS, Trustee. Director of various corporations,
including American Telephone & Telegraph Company, AON Corp.,
Cummins Engine Company, Inc., Illinois Power Company, Inland
Steel Industries, Inc., K mart Corporation, LaSalle Street Fund,
Inc., Springs Industries, Inc., TBG, Inc. and Time Warner Inc.
*#GEORGE PUTNAM, III, Trustee. President, New Generation
Research, Inc. (publisher of bankruptcy information). Director,
World Environment Center.
*A.J.C. SMITH, Trustee. Chairman, Chief Executive Officer and
Director, Marsh & McLennan Companies, Inc.
W. NICHOLAS THORNDIKE, Trustee. Director of various corporations
and charitable organizations, including Courier Corporation and
Providence Journal Co. Also, Trustee and President of
Massachusetts General Hospital and Trustee of Bradley Real Estate
Trust and Eastern Utilities Associates.
OFFICERS
CHARLES E. PORTER, Executive Vice President. Managing Director
of Putnam Investments, Inc. and Putnam Investment Management,
Inc. Executive Vice President of the Putnam funds.
PATRICIA C. FLAHERTY, Senior Vice President. Senior Vice
President of Putnam Investments, Inc. and Putnam Investment
Management, Inc.
WILLIAM N. SHIEBLER, Vice President. Director and Senior
Managing Director of Putnam Investments, Inc. President, Chief
Operating Officer and Director of Putnam Mutual Funds. Vice
President of the Putnam funds.
GORDON H. SILVER, Vice President. Senior Managing Director of
Putnam Investments, Inc. and Putnam Investment Management, Inc.
Director, Putnam Investments, Inc. and Putnam Investment
Management, Inc. Vice President of the Putnam funds.
JOHN R. VERANI, Vice President. Senior Vice President of Putnam
Investments, Inc. and Putnam Investment Management, Inc. Vice
President of the Putnam funds.
PAUL M. O'NEIL, Vice President. Vice President of Putnam
Investments, Inc. and Putnam Investment Management, Inc. Vice
President of the Putnam funds.
JOHN D. HUGHES, Vice President and Treasurer. Vice President and
Treasurer of the Putnam funds.
KATHERINE HOWARD, Assistant Vice President. Assistant Vice
President of the Putnam funds.
BEVERLY MARCUS, Clerk and Assistant Treasurer. Clerk and
Assistant Treasurer of the Putnam funds.
*Trustees who are "interested persons" (as defined in the
Investment Company Act of 1940) of the Fund, Putnam Management or
Putnam Mutual Funds.
+Members of the Executive Committee of the Trustees. The
Executive Committee meets between regular meetings of the
Trustees as may be required to review investment matters and
other affairs of the Fund and may exercise all of the powers of
the Trustees.
#George Putnam, III is the son of George Putnam.
-----------------
Certain other officers of Putnam Management are officers of your
Fund. SEE "ADDITIONAL OFFICERS OF THE FUND" IN PART I OF THIS
STATEMENT. The mailing address of each of the officers and
Trustees is One Post Office Square, Boston, Massachusetts 02109.
Except as stated below, the principal occupations of the officers
and Trustees for the last five years have been with the employers
as shown above, although in some cases they have held different
positions with such employers. Also, prior to January, 1992, Ms.
Baxter was Vice President and Principal, Regency Group, Inc. and
Consultant, The First Boston Corporation. Prior to May, 1991,
Mr. Pounds was Senior Advisor to the Rockefeller Family and
Associates, Chairman of Rockefeller Trust Company and Director of
Rockefeller Group, Inc. Prior to November, 1990, Mr. Shiebler
was President and Chief Operating Officer of the Intercapital
Division of Dean Witter Reynolds, Inc., Vice President of the
Dean Witter Funds and Director of Dean Witter Trust Company.
Each Trustee of the Fund receives an annual fee and an additional
fee for each Trustees' meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on
committees of the Trustees receive additional fees for attendance
at certain committee meetings and for special services rendered
in that connection. All of the Trustees are Trustees of all the
Putnam funds and each receives fees for his or her services. FOR
DETAILS OF TRUSTEES' FEES PAID BY THE FUND, SEE "FUND CHARGES AND
EXPENSES" IN PART I OF THIS STATEMENT.
The Agreement and Declaration of Trust of the Fund provides that
the Fund will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with the
Fund, except if it is determined in the manner specified in the
Agreement and Declaration of Trust that they have not acted in
good faith in the reasonable belief that their actions were in
the best interests of the Fund or that such indemnification would
relieve any officer or Trustee of any liability to the Fund or
its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of his or her duties. The
Fund, at its expense, provides liability insurance for the
benefit of its Trustees and officers.
Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust
Company are subsidiaries of Putnam Investments, Inc., a holding
company which is in turn wholly owned by Marsh & McLennan
Companies, Inc., a publicly owned holding company whose principal
operating subsidiaries are international insurance and
reinsurance brokers, investment managers and management
consultants.
Trustees and officers of the Fund who are also officers of Putnam
Management or its affiliates or who are stockholders of Marsh &
McLennan Companies, Inc. will benefit from the advisory fees,
sales commissions, distribution fees (if any), custodian fees and
transfer agency fees paid or allowed by the Fund.
PUTNAM MANAGEMENT
Putnam Management is one of America's oldest and largest money
management firms. Putnam Management's staff of experienced
portfolio managers and research analysts selects securities and
constantly supervises the Fund's portfolio. By pooling an
investor's money with that of other investors, a greater variety
of securities can be purchased than would be the case
individually; the resulting diversification helps reduce
investment risk. Putnam Management has been managing mutual funds
since 1937. Today, the firm serves as the investment manager for
the funds in the Putnam Family, with over $65 billion in assets
in over 4.0 million shareholder accounts at June 30, 1994. An
affiliate, The Putnam Advisory Company, Inc., manages domestic
and foreign institutional accounts and mutual funds, including
the accounts of many Fortune 500 companies. Another affiliate,
Putnam Fiduciary Trust Company, provides investment advice to
institutional clients under its banking and fiduciary powers. At
June 30, 1994, Putnam Management and its affiliates managed over
$92 billion in assets, including nearly $52 billion in tax exempt
securities and over $32 billion in retirement plan assets.
THE MANAGEMENT CONTRACT
Under a Management Contract between the Fund and Putnam
Management, subject to such policies as the Trustees may
determine, Putnam Management, at its expense, furnishes
continuously an investment program for the Fund and makes
investment decisions on behalf of the Fund. Subject to the
control of the Trustees, Putnam Management also manages,
supervises and conducts the other affairs and business of the
Fund, furnishes office space and equipment, provides bookkeeping
and clerical services (including determination of the Fund's net
asset value, but excluding shareholder accounting services) and
places all orders for the purchase and sale of the Fund's
portfolio securities. Putnam Management may place Fund portfolio
transactions with broker-dealers which furnish Putnam Management,
without cost to it, certain research, statistical and quotation
services of value to Putnam Management and its affiliates in
advising the Fund and other clients. In so doing, Putnam
Management may cause the Fund to pay greater brokerage
commissions than it might otherwise pay.
FOR DETAILS OF PUTNAM MANAGEMENT'S COMPENSATION UNDER THE
MANAGEMENT CONTRACT, SEE "FUND CHARGES AND EXPENSES" IN PART I OF
THIS STATEMENT. Putnam Management's compensation under the
Management Contract may be reduced in any year if the Fund's
expenses exceed the limits on investment company expenses imposed
by any statute or regulatory authority of any jurisdiction in
which shares of the Fund are qualified for offer or sale. The
term "expenses" is defined in the statutes or regulations of such
jurisdictions, and generally, excludes brokerage commissions,
taxes, interest, extraordinary expenses and, if the Fund has a
Distribution Plan, payments made under such Plan. The only such
limitation as of the date of this Statement (applicable to any
Fund registered for sale in California) was 2.5% of the first $30
million of average net assets, 2% of the next $70 million and
1.5% of any excess over $100 million.
Under the Management Contract, Putnam Management may reduce its
compensation to the extent that the Fund's expenses exceed such
lower expense limitation as Putnam Management may, by notice to
the Fund, declare to be effective. The expenses subject to this
limitation are exclusive of brokerage commissions, interest,
taxes, deferred organizational and extraordinary expenses and,
if the Fund has a Distribution Plan, payments required under such
Plan. THE TERMS OF ANY EXPENSE LIMITATION FROM TIME TO TIME IN
EFFECT ARE DESCRIBED IN EITHER THE PROSPECTUS OR PART I OF THIS
STATEMENT.
In addition to the fee paid to Putnam Management, the Fund
reimburses Putnam Management for the compensation and related
expenses of certain officers of the Fund and their assistants who
provide certain administrative services for the Fund and the
other funds in the Putnam Family, each of which bears an
allocated share of the foregoing costs. The aggregate amount of
all such payments and reimbursements is determined annually by
the Trustees. THE AMOUNT OF THIS REIMBURSEMENT FOR THE FUND'S
MOST RECENT FISCAL YEAR IS INCLUDED IN "FUND CHARGES AND
EXPENSES" IN PART I OF THIS STATEMENT. Putnam Management pays
all other salaries of officers of the Fund. The Fund pays all
expenses not assumed by Putnam Management including, without
limitation, auditing, legal, custodial, investor servicing and
shareholder reporting expenses. The Fund pays the cost of
typesetting for its Prospectuses and the cost of printing and
mailing any Prospectuses sent to its shareholders. Putnam Mutual
Funds pays the cost of printing and distributing all other
Prospectuses.
The Management Contract provides that Putnam Management shall not
be subject to any liability to the Fund or to any shareholder of
the Fund for any act or omission in the course of or connected
with rendering services to the Fund in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
its duties on the part of Putnam Management.
The Management Contract may be terminated without penalty by vote
of the Trustees or the shareholders of the Fund, or by Putnam
Management, on 30 days' written notice. It may be amended only
by a vote of the shareholders of the Fund. The Management
Contract also terminates without payment of any penalty in the
event of its assignment. The Management Contract provides that
it will continue in effect only so long as such continuance is
approved at least annually by vote of either the Trustees or the
shareholders, and, in either case, by a majority of the Trustees
who are not "interested persons" of Putnam Management or the
Fund. In each of the foregoing cases, the vote of the
shareholders is the affirmative vote of a "majority of the
outstanding voting securities" as defined in the Investment
Company Act of 1940.
PORTFOLIO TRANSACTIONS
INVESTMENT DECISIONS. Investment decisions for the Fund and for
the other investment advisory clients of Putnam Management and
its affiliates are made with a view to achieving their respective
investment objectives. Investment decisions are the product of
many factors in addition to basic suitability for the particular
client involved. Thus, a particular security may be bought or
sold for certain clients even though it could have been bought or
sold for other clients at the same time. Likewise, a particular
security may be bought for one or more clients when one or more
other clients are selling the security. In some instances, one
client may sell a particular security to another client. It also
sometimes happens that two or more clients simultaneously
purchase or sell the same security, in which event each day's
transactions in such security are, insofar as possible, averaged
as to price and allocated between such clients in a manner which
in Putnam Management's opinion is equitable to each and in
accordance with the amount being purchased or sold by each.
There may be circumstances when purchases or sales of portfolio
securities for one or more clients will have an adverse effect on
other clients.
BROKERAGE AND RESEARCH SERVICES. Transactions on U.S. stock
exchanges, commodities markets and futures markets and other
agency transactions involve the payment by the Fund of negotiated
brokerage commissions. Such commissions vary among different
brokers. A particular broker may charge different commissions
according to such factors as the difficulty and size of the
transaction. Transactions in foreign investments often involve
the payment of fixed brokerage commissions, which may be higher
than those in the United States. There is generally no stated
commission in the case of securities traded in the
over-the-counter markets, but the price paid by the Fund usually
includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid by the Fund includes a
disclosed, fixed commission or discount retained by the
underwriter or dealer. It is anticipated that most purchases and
sales of securities by funds investing primarily in tax-exempt
securities and certain other fixed-income securities will be with
the issuer or with underwriters of or dealers in those
securities, acting as principal. Accordingly, those funds would
not ordinarily pay significant brokerage commissions with respect
to securities transactions. SEE "FUND CHARGES AND EXPENSES" IN
PART I OF THIS STATEMENT FOR INFORMATION CONCERNING COMMISSIONS
PAID BY THE FUND.
It has for many years been a common practice in the investment
advisory business for advisers of investment companies and other
institutional investors to receive brokerage and research
services (as defined in the Securities Exchange Act of 1934, as
amended (the "1934 Act")) from broker-dealers that execute
portfolio transactions for the clients of such advisers and from
third parties with which such broker-dealers have arrangements.
Consistent with this practice, Putnam Management receives
brokerage and research services and other similar services from
many broker-dealers with which Putnam Management places the
Fund's portfolio transactions and from third parties with which
these broker-dealers have arrangements. These services include
such matters as general economic and market reviews, industry and
company reviews, evaluations of investments, recommendations as
to the purchase and sale of investments, newspapers, magazines,
pricing services, quotation services, news services and personal
computers utilized by Putnam Management's managers and analysts.
Where the services referred to above are not used exclusively by
Putnam Management for research purposes, Putnam Management, based
upon its own allocations of expected use, bears that portion of
the cost of these services which directly relates to their
non-research use. Some of these services are of value to Putnam
Management and its affiliates in advising various of their
clients (including the Fund), although not all of these services
are necessarily useful and of value in managing the Fund. The
management fee paid by the Fund is not reduced because Putnam
Management and its affiliates receive these services even though
Putnam Management might otherwise be required to purchase some of
these services for cash.
Putnam Management places all orders for the purchase and sale of
portfolio investments for the Fund and buys and sells investments
for the Fund through a substantial number of brokers and dealers.
In so doing, Putnam Management uses its best efforts to obtain
for the Fund the most favorable price and execution available,
except to the extent it may be permitted to pay higher brokerage
commissions as described below. In seeking the most favorable
price and execution, Putnam Management, having in mind the Fund's
best interests, considers all factors it deems relevant,
including, by way of illustration, price, the size of the
transaction, the nature of the market for the security or other
investment, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the
reputation, experience and financial stability of the
broker-dealer involved and the quality of service rendered by the
broker-dealer in other transactions.
As permitted by Section 28(e) of the 1934 Act, and by the
Management Contract, Putnam Management may cause the Fund to pay
a broker-dealer which provides "brokerage and research services"
(as defined in the 1934 Act) to Putnam Management an amount of
disclosed commission for effecting securities transactions on
stock exchanges and other transactions for the Fund on an agency
basis in excess of the commission which another broker-dealer
would have charged for effecting that transaction. Putnam
Management's authority to cause the Fund to pay any such greater
commissions is also subject to such policies as the Trustees may
adopt from time to time. Putnam Management does not currently
intend to cause the Fund to make such payments. It is the
position of the staff of the Securities and Exchange Commission
that Section 28(e) does not apply to the payment of such greater
commissions in "principal" transactions. Accordingly Putnam
Management will use its best effort to obtain the most favorable
price and execution available with respect to such transactions,
as described above.
The Management Contract provides that commissions, fees,
brokerage or similar payments received by Putnam Management or an
affiliate in connection with the purchase and sale of portfolio
investments of the Fund, less any direct expenses approved by the
Trustees, shall be recaptured by the Fund through a reduction of
the fee payable by the Fund under the Management Contract.
Putnam Management seeks to recapture for the Fund soliciting
dealer fees on the tender of the Fund's portfolio securities in
tender or exchange offers. Any such fees which may be recaptured
are likely to be minor in amount.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. and subject to seeking
the most favorable price and execution available and such other
policies as the Trustees may determine, Putnam Management may
consider sales of shares of the Fund (and, if permitted by law,
of the other Putnam funds) as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.
PRINCIPAL UNDERWRITER
Putnam Mutual Funds is the principal underwriter of shares of the
Fund and the other continuously offered Putnam funds. Putnam
Mutual Funds is not obligated to sell any specific amount of
shares of the Fund and will purchase shares for resale only
against orders for shares. SEE "FUND CHARGES AND EXPENSES" IN
PART I OF THIS STATEMENT FOR INFORMATION ON SALES CHARGES AND
OTHER PAYMENTS RECEIVED BY PUTNAM MUTUAL FUNDS.
INVESTOR SERVICING AGENT AND CUSTODIAN
Putnam Investor Services, a division of Putnam Fiduciary Trust
Company ("PFTC"), is the Fund's investor servicing agent
(transfer, plan and dividend disbursing agent), for which it
receives fees which are paid monthly by the Fund as an expense of
all its shareholders. The fee paid to Putnam Investor Services
is determined by the Trustees taking into account the number of
shareholder accounts and transactions. Putnam Investor Services
has won the DALBAR Quality Tested Service Seal every year since
the award's 1990 inception. Over 10,000 tests of 38 separate
shareholders service components demonstrated that Putnam Investor
Services exceeded the industry standard in all categories.
PFTC is the custodian of the Fund's assets. In carrying out its
duties under its custodian contract, PFTC may employ one or more
subcustodians whose responsibilities will include safeguarding
and controlling the Fund's cash and securities, handling the
receipt and delivery of securities and collecting interest and
dividends on the Fund's investments. PFTC and any subcustodians
employed by it have a lien on the securities of the Fund (to the
extent permitted by the Fund's investment restrictions) to secure
charges and any advances made by such subcustodians at the end of
any day for the purpose of paying for securities purchased by the
Fund. The Fund expects that such advances will exist only in
unusual circumstances. Neither PFTC nor any subcustodian
determines the investment policies of the Fund or decides which
securities the Fund will buy or sell. PFTC pays the fees and
other charges of any subcustodians employed by it. The Fund may
from time to time pay custodial expenses in full or in part
through the placement by Putnam Management of the Fund's
portfolio transactions with the subcustodians or with a third-
party broker having an agreement with the subcustodians. The
Fund pays PFTC an annual fee based on the Fund's assets,
securities transactions and securities holdings and reimburses
PFTC for certain out-of-pocket expenses incurred by it or any
subcustodian employed by it in performing custodial services.
SEE "FUND CHARGES AND EXPENSES" IN PART I OF THIS STATEMENT FOR
INFORMATION ON FEES AND REIMBURSEMENTS FOR INVESTOR SERVICING AND
CUSTODY RECEIVED BY PFTC. THE FEES MAY BE REDUCED BY CREDITS
ALLOWED BY PFTC.
DETERMINATION OF NET ASSET VALUE
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 holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, the Fourth of July,
Labor Day, Thanksgiving and Christmas. The Fund determines net
asset value as of the close of regular trading on the Exchange,
currently 4:00 p.m. However, equity options held by the Fund are
priced as of the close of trading at 4:10 p.m., and futures
contracts on U.S. Government securities and index options held by
the Fund are priced as of their close of trading at 4:15 p.m.
Securities for which market quotations are readily available are
valued at prices which, in the opinion of the Trustees or Putnam
Management, most nearly represent the market values of such
securities. Currently, such prices are determined using the last
reported sale price or, if no sales are reported (as in the case
of some securities traded over-the-counter), the last reported
bid price, except that certain U.S. Government securities are
stated at the mean between the last reported bid and asked
prices. Short-term investments having remaining maturities of 60
days or less are stated at amortized cost, which approximates
market value. All other securities and assets are valued at
their fair value following procedures approved by the Trustees.
Liabilities are deducted from the total, and the resulting amount
is divided by the number of shares 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 stated at fair value on the
basis of valuations furnished by pricing services approved by the
Trustees, which determine valuations for normal,
institutional-size trading units of such securities using methods
based on market transactions for comparable securities and
various relationships between securities which are generally
recognized by institutional traders.
If any securities held by the Fund are restricted as to resale,
Putnam Management determines their fair value following
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 will
be valued at their fair value following procedures approved by
the Trustees.
Money market funds generally value their portfolio securities at
amortized cost according to Rule 2a-7 under the Investment
Company Act of 1940.
HOW TO BUY SHARES
General
The Prospectus contains a general description of how investors
may buy shares of the Fund and states whether the Fund offers
more than one class of shares. This Statement contains
additional information which may be of interest to investors.
Class A shares and Class M shares are sold with a sales charge
payable at the time of purchase (except for Class A shares and
Class M shares of money market funds). As used in this Statement
and unless the context requires otherwise, the term "Class A
shares" includes shares of Funds that offer only one class of
shares. The Prospectus contains a table of applicable sales
charges. For information about how to purchase Class A shares of
a Putnam fund at net asset value through an employer's defined
contribution plan, please consult your employer. Certain
purchases of Class A shares and Class M shares may be exempt from
a sales charge or, in the case of Class A shares, may be subject
to a contingent deferred sales charge ("CDSC"). See "General--
Sales without sales charges or contingent deferred sales
charges", "Additional Information About Class A and Class M
Shares", and "Contingent Deferred Sales Charges--Class A shares".
Class B shares and Class C shares are sold subject to a CDSC
payable upon redemption within a specified period after purchase.
The Prospectus contains a table of applicable CDSCs.
Class Y shares, which are available only to employer-sponsored
defined contribution plans initially investing at least $250
million in a combination of Putnam funds and other investments
managed by Putnam Management or its affiliates, are not subject
to sales charges or a CDSC.
Certain purchase programs described below are not available to
defined contribution plans. Consult your employer for
information on how to purchase shares through your plan.
The Fund is currently making a continuous offering of its shares.
The Fund receives the entire net asset value of shares sold. The
Fund will accept unconditional orders for shares to be executed
at the public offering price based on the net asset value per
share next determined after the order is placed. In the case of
Class A shares and Class M shares, the public offering price is
the net asset value plus the applicable sales charge, if any. No
sales charge is included in the public offering price of other
classes of shares. In the case of orders for purchase of shares
placed through dealers, the public offering price will be based
on the net asset value determined on the day the order is placed,
but only if the dealer receives the order before the close of
regular trading on the Exchange. If the dealer receives the
order after the close of the Exchange, the price will be based on
the net asset value next determined. If funds for the purchase
of shares are sent directly to Putnam Investor Services, they
will be invested at the public offering price based on the net
asset value next determined after receipt. Payment for shares of
the Fund must be in U.S. dollars; if made by check, the check
must be drawn on a U.S. bank.
Initial and subsequent purchases must satisfy the minimums stated
in the Prospectus, except that (i) individual investments under
certain employee benefit plans or Tax Qualified Retirement Plans
may be lower, (ii) persons who are already shareholders may make
additional purchases of $50 or more by sending funds directly to
Putnam Investor Services (see "Your Investing Account" below),
and (iii) for investors participating in systematic investment
plans and military allotment plans, the initial and subsequent
purchases must be $25 or more. Information about these plans is
available from investment dealers or from Putnam Mutual Funds.
As a convenience to investors, shares may be purchased through a
systematic investment plan. Preauthorized monthly bank drafts
for a fixed amount (at least $25) are used to purchase Fund
shares at the applicable public offering price next determined
after Putnam Mutual Funds receives the proceeds from the draft
(normally the 20th of each month, or the next business day
thereafter). Further information and application forms are
available from investment dealers or from Putnam Mutual Funds.
Except for Putnam funds that declare a distribution daily,
distributions to be reinvested are reinvested without a sales
charge in shares of the same class as of the ex-dividend date
using the net asset value determined on that date, and are
credited to a shareholder's account on the payment date.
Dividends for Putnam money market funds are credited to a
shareholder's account on the payment date. Distributions for
Putnam Tax-Free Income Trust and Putnam Corporate Asset Trust are
reinvested without a sales charge as of the last day of the
period for which distributions are paid using the net asset value
determined on that date, and are credited to a shareholder's
account on the payment date. Distributions for all other Putnam
funds that declare a distribution daily are reinvested without a
sales charge as of the next day following the period for which
distributions are paid using the net asset value determined on
that date, and are credited to a shareholder's account on the
payment date.
PAYMENT IN SECURITIES. In addition to cash, the Fund may accept
securities as payment for Fund shares at the applicable net asset
value. Generally, the Fund will only consider accepting
securities to increase its holdings in a portfolio security, or
if Putnam Management determines that the offered securities are a
suitable investment for the Fund and in a sufficient amount for
efficient management.
While no minimum has been established, it is expected that the
Fund would not accept securities with a value of less than
$100,000 per issue as payment for shares. The Fund may reject in
whole or in part any or all offers to pay for purchases of Fund
shares with securities, may require partial payment in cash for
such purchases to provide funds for applicable sales charges, and
may discontinue accepting securities as payment for Fund shares
at any time without notice. The Fund will value accepted
securities in the manner described in the section "Determination
of Net Asset Value" for valuing shares of the Fund. The Fund
will only accept securities which are delivered in proper form.
The Fund will not accept options or restricted securities as
payment for shares. The acceptance of securities by certain
Funds in exchange for Fund shares are subject to additional
requirements. In the case of Putnam Capital Appreciation Fund,
Putnam Europe Growth Fund, Putnam Overseas Growth Fund, Putnam
Intermediate Tax Exempt Fund and Putnam Diversified Equity Trust,
transactions involving the issuance of Fund shares for securities
or assets other than cash will be limited to a bona-fide re-
organization or statutory merger and to other acquisitions of
portfolio securities that meet all the following conditions: (a)
such securities meet the investment objectives and policies of
the Fund; (b) such securities are acquired for investment and not
for resale; (c) such securities are liquid securities which are
not restricted as to transfer either by law or liquidity of
market; and (d) such securities have a value which is readily
ascertainable, as evidenced by a listing on the American Stock
Exchange, the New York Stock Exchange or NASDAQ. In addition,
Putnam Global Governmental Income Trust may accept only
investment grade bonds with prices regularly stated in
publications generally accepted by investors, such as the London
Financial Times and the Association of International Bond Dealers
manual, or securities listed on the New York or American Stock
Exchanges or with NASDAQ, and Putnam Diversified Income Trust may
accept only bonds with prices regularly stated in publications
generally accepted by investors. For federal income tax
purposes, a purchase of Fund shares with securities will be
treated as a sale or exchange of such securities on which the
investor will realize a taxable gain or loss. The processing of
a purchase of Fund shares with securities involves certain delays
while the Fund considers the suitability of such securities and
while other requirements are satisfied. For information
regarding procedures for payment in securities, contact Putnam
Mutual Funds. Investors should not send securities to the Fund
except when authorized to do so and in accordance with specific
instructions received from Putnam Mutual Funds.
SALES WITHOUT SALES CHARGES OR CONTINGENT DEFERRED SALES CHARGES.
The Fund may sell shares without a sales charge or CDSC to:
(i) current and retired Trustees of the Fund; officers of
the Fund; directors and current and retired U.S. full-time
employees of Putnam Management, Putnam Mutual Funds, their
parent corporations and certain corporate affiliates;
family members of and employee benefit plans for the
foregoing; and partnerships, trusts or other entities in
which any of the foregoing has a substantial interest;
(ii) employee benefit plans, for the repurchase of shares
in connection with repayment of plan loans made to plan
participants (if the sum loaned was obtained by redeeming
shares of a Putnam fund sold with a sales charge) (not
offered by tax-exempt funds);
(iii) clients of administrators of tax-qualified employee
benefit plans which have entered into agreements with
Putnam Mutual Funds (not offered by tax-exempt funds);
(iv) registered representatives and other employees of
broker-dealers having sales agreements with Putnam Mutual
Funds; employees of financial institutions having sales
agreements with Putnam Mutual Funds or otherwise having an
arrangement with any such broker-dealer or financial
institution with respect to sales of Fund shares; and
their spouses and children under age 21 (Putnam Mutual
Funds is regarded as the dealer of record for all such
accounts);
(v) investors meeting certain requirements who sold shares
of certain Putnam closed-end funds pursuant to a tender
offer by such closed-end fund;
(vi) a trust department of any financial institution
purchasing shares of the Fund in its capacity as trustee
of any trust, if the value of the shares of the Fund and
other Putnam funds purchased or held by all such trusts
exceeds $1 million in the aggregate; and
(vii) "wrap accounts" maintained for clients of broker-
dealers, financial institutions or financial planners who
have entered into agreements with Putnam Mutual Funds with
respect to such accounts.
In addition, the Fund may issue its shares at net asset value in
connection with the acquisition of substantially all of the
securities owned by other investment companies or personal
holding companies.
PAYMENTS TO DEALERS. Putnam Mutual Funds may, at its expense,
pay concessions in addition to the payments disclosed in the
Prospectus to dealers which satisfy certain criteria established
from time to time by Putnam Mutual Funds relating to increasing
net sales of shares of the Putnam funds over prior periods, and
certain other factors.
ADDITIONAL INFORMATION ABOUT CLASS A AND CLASS M SHARES
The underwriter's commission is the sales charge shown in the
Prospectus less any applicable dealer discount. Putnam Mutual
Funds will give dealers ten days' notice of any changes in the
dealer discount. Putnam Mutual Funds retains the entire sales
charge on any retail sales made by it.
Putnam Mutual Funds offers several plans by which an investor may
obtain reduced sales charges on purchases of Class A shares and
Class M shares. The variations in sales charges reflect the
varying efforts required to sell shares to separate categories of
purchasers. These plans may be altered or discontinued at any
time.
COMBINED PURCHASE PRIVILEGE. The following persons may qualify
for the sales charge reductions or eliminations shown in the
Prospectus by combining into a single transaction the purchase of
Class A shares or Class M shares with other purchases of any
class of shares:
(i) an individual, or a "company" as defined in Section
2(a)(8) of the Investment Company Act of 1940 (which
includes corporations which are corporate affiliates of
each other);
(ii) an individual, his or her spouse and their children
under twenty-one, purchasing for his, her or their own
account;
(iii) a trustee or other fiduciary purchasing for a single
trust estate or single fiduciary account (including a
pension, profit-sharing, or other employee benefit trust
created pursuant to a plan qualified under Section 401 of
the Internal Revenue Code);
(iv) tax-exempt organizations qualifying under Section
501(c)(3) of the Internal Revenue Code (not including
403(b) plans); and
(v) employee benefit plans of a single employer or of
affiliated employers, other than 403(b) plans.
A combined purchase currently may also include shares of any
class of other continuously offered Putnam funds (other than
money market funds) purchased at the same time through a single
investment dealer, if the dealer places the order for such shares
directly with Putnam Mutual Funds.
CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION). A
purchaser of Class A shares or Class M shares may qualify for a
cumulative quantity discount by combining a current purchase (or
combined purchases as described above) with certain other shares
of any class of Putnam funds already owned. The applicable sales
charge is based on the total of:
(i) the investor's current purchase; and
(ii) the maximum public offering price (at the close of
business on the previous day) of:
(a) all shares held by the investor in all of the
Putnam funds (except money market funds); and
(b) any shares of money market funds acquired by
exchange from other Putnam funds; and
(iii) the maximum public offering price of all shares
described in paragraph (ii) owned by another shareholder
eligible to participate with the investor in a "combined
purchase" (see above).
To qualify for the combined purchase privilege or to obtain the
cumulative quantity discount on a purchase through an investment
dealer, when each purchase is made the investor or dealer must
provide Putnam Mutual Funds with sufficient information to verify
that the purchase qualifies for the privilege or discount. The
shareholder must furnish this information to Putnam Investor
Services when making direct cash investments.
STATEMENT OF INTENTION. Investors may also obtain the reduced
sales charges for Class A shares or Class M shares shown in the
Prospectus for investments of a particular amount by means of a
written Statement of Intention, which expresses the investor's
intention to invest that amount (including certain "credits," as
described below) within a period of 13 months in shares of any
class of the Fund or any other continuously offered Putnam fund
(excluding money market funds). Each purchase of Class A shares
or Class M shares under a Statement of Intention will be made at
the public offering price applicable at the time of such purchase
to a single transaction of the total dollar amount indicated in
the Statement. A Statement of Intention may include purchases of
shares made not more than 90 days prior to the date that an
investor signs a Statement; however, the 13-month period during
which the Statement is in effect will begin on the date of the
earliest purchase to be included.
An investor may receive a credit toward the amount indicated in
the Statement equal to the maximum public offering price as of
the close of business on the previous day of all shares he or she
owns on the date of the Statement which are eligible for purchase
under a Statement (plus any shares of money market funds acquired
by exchange of such eligible shares). Investors do not receive
credit for shares purchased by the reinvestment of distributions.
Investors qualifying for the "combined purchase privilege" (see
above) may purchase shares under a single Statement of Intention.
The Statement of Intention is not a binding obligation upon the
investor to purchase the full amount indicated. The minimum
initial investment under a Statement of Intention is 5% of such
amount, and must be invested immediately. Class A shares or
Class M shares purchased with the first 5% of such amount will be
held in escrow to secure payment of the higher sales charge
applicable to the shares actually purchased if the full amount
indicated is not purchased. When the full amount indicated has
been purchased, the escrow will be released. If an investor
desires to redeem escrowed shares before the full amount has been
purchased, the shares will be released from escrow only if the
investor pays the sales charge that, without regard to the
Statement of Intention, would apply to the total investment made
to date.
To the extent that an investor purchases more than the dollar
amount indicated on the Statement of Intention and qualifies for
a further reduced sales charge, the sales charge will be adjusted
for the entire amount purchased at the end of the 13-month
period, upon recovery from the investor's dealer of its portion
of the sales charge adjustment. Once received from the dealer,
which may take a period of time or may never occur, the sales
charge adjustment will be used to purchase additional shares at
the then current offering price applicable to the actual amount
of the aggregate purchases. These additional shares will not be
considered as part of the total investment for the purpose of
determining the applicable sales charge pursuant to the Statement
of Intention. No sales charge adjustment will be made unless and
until the investor's dealer returns any excess commissions
previously received.
To the extent that an investor purchases less than the dollar
amount indicated on the Statement of Intention within the 13-
month period, the sales charge will be adjusted upward for the
entire amount purchased at the end of the 13-month period. This
adjustment will be made by redeeming shares from the account to
cover the additional sales charge, the proceeds of which will be
paid to the investor's dealer and Putnam Mutual Funds in
accordance with the Prospectus. If the account exceeds an amount
that would otherwise qualify for a reduced sales charge, that
reduced sales charge will be applied.
Statements of Intention are not available for certain employee
benefit plans.
Statement of Intention forms may be obtained from Putnam Mutual
Funds or from investment dealers. Interested investors should
read the Statement of Intention carefully.
REDUCED SALES CHARGE FOR GROUP PURCHASES OF CLASS A SHARES.
Members of qualified groups may purchase Class A shares of the
Fund at a group sales charge rate of 4.5% of the public offering
price (4.71% of the net amount invested). The dealer discount on
such sales is 3.75% of the offering price.
To receive the group rate, group members must purchase Class A
shares through a single investment dealer designated by the
group. The designated dealer must transmit each member's initial
purchase to Putnam Mutual Funds, together with payment and
completed application forms. After the initial purchase, a
member may send funds for the purchase of Class A shares directly
to Putnam Investor Services. Purchases of Class A shares are
made at the public offering price based on the net asset value
next determined after Putnam Mutual Funds or Putnam Investor
Services receives payment for the shares. The minimum investment
requirements described above apply to purchases by any group
member. Only Class A shares are included in calculating the
purchased amount.
Qualified groups include the employees of a corporation or a sole
proprietorship, members and employees of a partnership or
association, or other organized groups of persons (the members of
which may include other qualified groups) provided that: (i) the
group has at least 25 members of which at least 10 members
participate in the initial purchase; (ii) the group has been in
existence for at least six months; (iii) the group has some
purpose in addition to the purchase of investment company shares
at a reduced sales charge; (iv) the group's sole organizational
nexus or connection is not that the members are credit card
holders of a company, policy holders of an insurance company,
customers of a bank or broker-dealer, clients of an investment
adviser or security holders of a company; (v) the group agrees to
provide its designated investment dealer access to the group's
membership by means of written communication or direct
presentation to the membership at a meeting on not less
frequently than an annual basis; (vi) the group or its investment
dealer will provide annual certification in form satisfactory to
Putnam Investor Services that the group then has at least 25
members and that at least ten members participated in group
purchases during the immediately preceding 12 calendar months;
and (vii) the group or its investment dealer will provide
periodic certification in form satisfactory to Putnam Investor
Services as to the eligibility of the purchasing members of the
group.
Members of a qualified group include: (i) any group which meets
the requirements stated above and which is a constituent member
of a qualified group; (ii) any individual purchasing for his or
her own account who is carried on the records of the group or on
the records of any constituent member of the group as being a
good standing employee, partner, member or person of like status
of the group or constituent member; or (iii) any fiduciary
purchasing shares for the account of a member of a qualified
group or a member's beneficiary. For example, a qualified group
could consist of a trade association which would have as its
members individuals, sole proprietors, partnerships and
corporations. The members of the group would then consist of the
individuals, the sole proprietors and their employees, the
members of the partnerships and their employees, and the
corporations and their employees, as well as the trustees of
employee benefit trusts acquiring Class A shares for the benefit
of any of the foregoing.
A member of a qualified group may, depending upon the value of
Class A shares of the Fund owned or proposed to be purchased by
the member, be entitled to purchase Class A shares of the Fund at
non-group sales charge rates shown in the Prospectus which may be
lower than the group sales charge rate, if the member qualifies
as a person entitled to reduced non-group sales charges. Such a
group member will be entitled to purchase at the lower rate if,
at the time of purchase, the member or his or her investment
dealer furnishes sufficient information for Putnam Mutual Funds
or Putnam Investor Services to verify that the purchase qualifies
for the lower rate.
Interested groups should contact their investment dealer or
Putnam Mutual Funds. The Fund reserves the right to revise the
terms of or to suspend or discontinue group sales at any time.
EMPLOYEE BENEFIT PLANS; INDIVIDUAL ACCOUNT PLANS. The term
"employee benefit plan" means any plan or arrangement, whether or
not tax-qualified, which provides for the purchase of Class A
shares. The term "affiliated employer" means employers who are
affiliated with each other within the meaning of Section
2(a)(3)(C) of the Investment Company Act of 1940. The term
"individual account plan" means any employee benefit plan whereby
(i) Class A shares are purchased through payroll deductions or
otherwise by a fiduciary or other person for the account of
participants who are employees (or their spouses) of an employer,
or of affiliated employers, and (ii) a separate Investing Account
is maintained in the name of such fiduciary or other person for
the account of each participant in the plan.
The table of sales charges in the Prospectus applies to sales to
employee benefit plans, except that the Fund may sell Class A
shares at net asset value to employee benefit plans, including
individual account plans, of employers or of affiliated employers
which have at least 750 employees to whom such plan is made
available, in connection with a payroll deduction system of plan
funding (or other system acceptable to Putnam Investor Services)
by which contributions or account information for plan
participation are transmitted to Putnam Investor Services by
methods acceptable to Putnam Investor Services. The Fund may
also sell Class A shares at net asset value to employee benefit
plans of employers or of affiliated employers which have at least
750 employees, if such plans are qualified under Section 401 of
the Internal Revenue Code.
Additional information about employee benefit plans and
individual account plans is available from investment dealers or
from Putnam Mutual Funds.
CONTINGENT DEFERRED SALES CHARGES
CLASS A SHARES. Class A shares purchased at net asset value by
shareholders investing $1 million or more, including purchases
pursuant to any Combined Purchase Privilege, Right of
Accumulation or Statement of Intention, are subject to a CDSC of
1.00% or 0.50%, respectively, if redeemed within the first or
second year after purchase. The Class A CDSC is imposed on the
lower of the cost and the current net asset value of the shares
redeemed. The CDSC does not apply to shares sold without a sales
charge through participant-directed qualified retirement plans
and shares purchased by certain investors investing $1 million or
more that have made arrangements with Putnam Mutual Funds and
whose dealer of record waived the commission described in the
next paragraph.
Except as stated below, Putnam Mutual Funds pays investment
dealers of record commissions on sales of Class A shares of $1
million or more based on an investor's cumulative purchases of
such shares, including purchases pursuant to any Combined
Purchase Privilege, Right of Accumulation or Statement of
Intention, during the one-year period beginning with the date of
the initial purchase at net asset value and each subsequent one-
year period beginning with the first net asset value purchase
following the end of the prior period. Such commissions are paid
at the rate of 1.00% of the amount under $3 million, 0.50% of the
next $47 million and 0.25% thereafter. On sales at net asset
value to a participant-directed qualified retirement plan
initially investing less than $20 million in Putnam funds and
other investments managed by Putnam Management or its affiliates
(including a plan sponsored by an employer with more than 750
employees), Putnam Mutual Funds pays commissions on cumulative
purchases during the life of the account at the rate of 1.00% of
the amount under $3 million and 0.50% thereafter. On sales at
net asset value to all other participant-directed qualified
retirement plans, Putnam Mutual Funds pays commissions on the
initial investment and on subsequent net quarterly sales (gross
sales minus gross redemptions during the quarter) at the rate of
0.15%. Money market fund shares are excluded from all commission
calculations, except for determining the amount initially
invested by a participant-directed qualified retirement plan.
Commissions on sales at net asset value to such plans are subject
to Putnam Mutual Funds' right to reclaim such commissions if the
shares are redeemed within two years.
Different CDSC and commission rates may apply to shares purchased
before April 1, 1994.
CLASS B AND CLASS C SHARES. Investors who set up an Automatic
Cash Withdrawal Plan (ACWP) for a Class B and Class C share
account (see "Plans Available To Shareholders -- Automatic Cash
Withdrawal Plan") may withdraw through the ACWP up to 12% of the
net asset value of the account (calculated as set forth below)
each year without incurring any CDSC. Shares not subject to a
CDSC (such as shares representing reinvestment of distributions)
will be redeemed first and will count toward the 12% limitation.
If there are insufficient shares not subject to a CDSC, shares
subject to the lowest CDSC liability will be redeemed next until
the 12% limit is reached. The 12% figure is calculated on a pro
rata basis at the time of the first payment made pursuant to a
ACWP and recalculated thereafter on a pro rata basis at the time
of each ACWP payment. Therefore, shareholders who have chosen a
ACWP based on a percentage of the net asset value of their
account of up to 12% will be able to receive ACWP payments
without incurring a CDSC. However, shareholders who have chosen
a specific dollar amount (for example, $100 per month from a fund
that pays income distributions monthly) for their periodic ACWP
payment should be aware that the amount of that payment not
subject to a CDSC may vary over time depending on the net asset
value of their account. For example, if the net asset value of
the account is $10,000 at the time of payment, the shareholder
will receive $100 free of the CDSC (12% of $10,000 divided by 12
monthly payments). However, if at the time of the next payment
the net asset value of the account has fallen to $9,400, the
shareholder will receive $94 free of any CDSC (12% of $9,400
divided by 12 monthly payments) and $6 subject to the lowest
applicable CDSC. This ACWP privilege may be revised or
terminated at any time.
ALL SHARES. No CDSC is imposed on shares of any class subject to
a CDSC ("CDSC Shares") to the extent that the CDSC Shares
redeemed (i) are no longer subject to the holding period
therefor, (ii) resulted from reinvestment of distributions on
CDSC Shares, or (iii) were exchanged for shares of another Putnam
fund, provided that the shares acquired in such exchange or
subsequent exchanges (including shares of a Putnam money market
fund) will continue to remain subject to the CDSC, if applicable,
until the applicable holding period expires. In determining
whether the CDSC applies to each redemption of CDSC Shares, CDSC
Shares not subject to a CDSC are redeemed first.
The Fund will waive any CDSC on redemptions, in the case of
individual or Uniform Transfers to Minors Act accounts, in case
of death or disability or for the purpose of paying benefits
pursuant to tax-qualified retirement plans. Such payments
currently include, without limitation, (1) distributions from an
IRA due to death or disability, (2) a return of excess
contributions to an IRA or 401(k) plan, and (3) distributions
from retirement plans qualified under section 401(a) or section
403(b)(7) (a "403(b) plan") of the Internal Revenue Code of 1986,
as amended (the "Code"), due to death, disability, retirement or
separation from service. The Fund will also waive any CDSC in
the case of the death of one joint tenant. These waivers may be
changed at any time. Additional waivers may apply to IRA
accounts opened prior to February 1, 1994.
DISTRIBUTION PLAN
If the Fund or a class of shares of the Fund has adopted a
Distribution Plan, the Prospectus describes the principal
features of the Plan. This Statement contains additional
information which may be of interest to investors.
Continuance of a Plan is subject to annual approval by a vote of
the Trustees, including a majority of the Trustees who are not
interested persons of the Fund and who have no direct or indirect
interest in the Plan or related arrangements (the "Qualified
Trustees"), cast in person at a meeting called for that purpose.
All material amendments to a Plan must be likewise approved by
the Trustees and the Qualified Trustees. No Plan may be amended
in order to increase materially the costs which the Fund may bear
for distribution pursuant to such Plan without also being
approved by a majority of the outstanding voting securities of
the Fund or the relevant class of the Fund, as the case may be.
A Plan terminates automatically in the event of its assignment
and may be terminated without penalty, at any time, by a vote of
a majority of the Qualified Trustees or by a vote of a majority
of the outstanding voting securities of the Fund or the relevant
class of the Fund, as the case may be.
If Plan payments are made to reimburse Putnam Mutual Funds for
payments to dealers based on the average net asset value of Fund
shares attributable to shareholders for whom the dealers are
designated as the dealer of record, "average net asset value"
attributable to a shareholder account means the product of (i)
the Fund's average daily share balance of the account and (ii)
the Fund's average daily net asset value per share (or the
average daily net asset value per share of the class, if
applicable). For administrative reasons, Putnam Mutual Funds may
enter into agreements with certain dealers providing for the
calculation of "average net asset value" on the basis of assets
of the accounts of the dealer's customers on an established day
in each quarter.
Financial institutions receiving payments from Putnam Mutual
Funds as described above may be required to comply with various
state and federal regulatory requirements, including among others
those regulating the activities of securities brokers or dealers.
INVESTOR SERVICES
SHAREHOLDER INFORMATION
Each time shareholders buy or sell shares, they will receive a
statement confirming the transaction and listing their current
share balance. (Under certain investment plans, a statement may
only be sent quarterly.) Shareholders will receive a statement
confirming reinvestment of distributions in additional Fund
shares (or in shares of other Putnam funds for Dividends Plus
accounts) promptly following the quarter in which the
reinvestment occurs. To help shareholders take full advantage of
their Putnam investment, they will receive a Welcome Kit and a
periodic publication covering many topics of interest to
investors. The Fund also sends annual and semiannual reports
that keep shareholders informed about its portfolio and
performance, and year-end tax information to simplify their
recordkeeping. Easy-to-read, free booklets on special subjects
such as the Exchange Privilege and IRAs are available from Putnam
Investor Services. Shareholders may call Putnam Investor
Services toll-free weekdays at 1-800-225-1581 between 8:30 a.m.
and 7:00 p.m. Boston time for more information, including account
balances.
YOUR INVESTING ACCOUNT
The following information provides more detail concerning the
operation of a Putnam Investing Account. For further information
or assistance, investors should consult Putnam Investor Services.
Shareholders who purchase shares through a defined contribution
plan should note that not all of the services or features
described below may be available to them, and they should contact
their employer for details.
A shareholder may reinvest a recent cash distribution without a
front-end sales charge or without the reinvested shares being
subject to a CDSC, as the case may be, by delivering to Putnam
Investor Services the uncashed distribution check, endorsed to
the order of the Fund. Putnam Investor Services must receive the
properly endorsed check within 30 days after the date of the
check. Upon written notice to shareholders, the Fund may permit
shareholders who receive cash distributions to reinvest amounts
representing returns of capital without a sales charge or without
being subject to the CDSC.
The Investing Account also provides a way to accumulate shares of
the Fund. In most cases, after an initial investment of $500, a
shareholder may send checks to Putnam Investor Services for $50
or more, made payable to the Fund, to purchase additional shares
at the applicable public offering price next determined after
Putnam Investor Services receives the check. For Putnam
Corporate Asset Trust, the minimum initial investment is $25,000
and the minimum subsequent investment is $5,000. Checks must be
drawn on a U.S. bank and must be payable in U.S. dollars.
Putnam Investor Services acts as the shareholder's agent whenever
it receives instructions to carry out a transaction on the
shareholder's account. Upon receipt of instructions that shares
are to be purchased for a shareholder's account, shares will be
purchased through the investment dealer designated by the
shareholder. Shareholders may change investment dealers at any
time by written notice to Putnam Investor Services, provided the
new dealer has a sales agreement with Putnam Mutual Funds.
Shares credited to an account are transferable upon written
instructions in good order to Putnam Investor Services and may be
sold to the Fund as described under "How to buy shares, sell
shares and exchange shares" in the Prospectus. Money market
funds and certain other funds will not issue share certificates.
A shareholder may send any certificates which have been
previously issued to Putnam Investor Services for safekeeping at
no charge to the shareholder.
Putnam Mutual Funds, at its expense, may provide certain
additional reports and administrative material to qualifying
institutional investors with fiduciary responsibilities to assist
these investors in discharging their responsibilities.
Institutions seeking further information about this service
should contact Putnam Mutual Funds, which may modify or terminate
this service at any time.
Putnam Investor Services may make special services available to
shareholders with investments exceeding $1,000,000. Contact
Putnam Investor Services for details.
The Fund pays Putnam Investor Services' fees for maintaining
Investing Accounts.
<PAGE>
REINSTATEMENT PRIVILEGE
CLASS A SHARES AND CLASS M SHARES
An investor who has sold shares to the Fund may reinvest (within
90 days) the proceeds of such sale in shares of the Fund, or may
be able to reinvest (within 90 days) the proceeds in shares of
the other continuously offered Putnam funds (through the Exchange
Privilege described in the Prospectus and below). Any such
reinvestment would be at the net asset value of the shares of the
fund(s) the investor selects, next determined after Putnam Mutual
Funds receives a Reinstatement Authorization and will not be
subject to any sales charge, including a CDSC.
CLASS B SHARES AND CLASS C SHARES
An investor who has sold Class B and Class C shares to the Fund
may reinvest (within 90 days) the proceeds of such sale in Class
B and Class C shares of the Fund, or may be able to reinvest
(within 90 days) the proceeds in Class B and Class C shares of
other Putnam funds (through the Exchange Privilege described in
the Prospectus and below). Upon such reinvestment, the investor
would receive Class B and Class C shares at the net asset value
next determined after Putnam Mutual Funds receives a
Reinstatement Authorization subject to the applicable CDSC
calculated for this purpose using the date of the original
purchase.
ALL SHARES
Exercise of the Reinstatement Privilege does not alter the
federal income tax treatment of any capital gains realized on a
sale of Fund shares, but to the extent that any shares are sold
at a loss and the proceeds are reinvested in shares of the Fund,
some or all of the loss may be disallowed as a deduction.
Consult your tax adviser.
Investors who desire to exercise this Privilege should contact
their investment dealer or Putnam Investor Services.
EXCHANGE PRIVILEGE
Except as otherwise set forth in this section, by calling Putnam
Investor Services, investors may exchange shares valued up to
$500,000 between accounts with identical registrations, provided
that no certificates are outstanding for such shares and no
address change has been made within the preceding 15 days.
During periods of unusual market changes and shareholder
activity, shareholders may experience delays in contacting Putnam
Investor Services by telephone to exercise the Telephone Exchange
Privilege.
Putnam Investor Services also makes exchanges promptly after
receiving a properly completed Exchange Authorization Form and,
if issued, share certificates. If the shareholder is a
corporation, partnership, agent, or surviving joint owner, Putnam
Investor Services will require additional documentation of a
customary nature. Because an exchange of shares involves the
redemption of Fund shares and reinvestment of the proceeds in
shares of another Putnam fund, completion of an exchange may be
delayed under unusual circumstances if the Fund were to suspend
redemptions or postpone payment for the Fund shares being
exchanged, in accordance with federal securities laws. Exchange
Authorization Forms and prospectuses of the other Putnam funds
are available from Putnam Mutual Funds or investment dealers
having sales contracts with Putnam Mutual Funds. The prospectus
of each fund describes its investment objective(s) and policies,
and shareholders should obtain a prospectus and consider these
objectives and policies carefully before requesting an exchange.
Shares of certain Putnam funds are not available to residents of
all states. The Fund reserves the right to change or suspend the
Exchange Privilege at any time. Shareholders would be notified
of any change or suspension. Additional information is available
from Putnam Investor Services.
Shares of the Fund must be held at least 15 days by the
shareholder requesting an exchange. There is no holding period
if the shareholder acquired the shares to be exchanged through
reinvestment of distributions, transfer from another shareholder,
prior exchange or certain employer-sponsored defined contribution
plans. In all cases, the shares to be exchanged must be
registered on the records of the Fund in the name of the
shareholder requesting the exchange.
Shareholders of other Putnam funds may also exchange their shares
at net asset value for shares of the Fund, as set forth in the
current prospectus of each fund.
For federal income tax purposes, an exchange is a sale on which
the investor generally will realize a capital gain or loss
depending on whether the net asset value at the time of the
exchange is more or less than the investor's basis. The Exchange
Privilege may be revised or terminated at any time. Shareholders
would be notified of any such change or suspension.
DIVIDENDS PLUS
Shareholders may invest the Fund's distributions of net
investment income or distributions combining net investment
income and short-term capital gains in shares of the same class
of another continuously offered Putnam fund (the "receiving
fund") using the net asset value per share of the receiving fund
determined on the date the Fund's distribution is payable. No
sales charge or CDSC will apply to the purchased shares unless
the Fund is a money market fund. The prospectus of each fund
describes its investment objective(s) and policies, and
shareholders should obtain a prospectus and consider these
objective(s) and policies carefully before investing their
distributions in the receiving fund. Shares of certain Putnam
funds are not available to residents of all states.
The minimum account size requirement for the receiving fund will
not apply if the current value of your account in this Fund is
more than $5,000.
Shareholders of other Putnam funds (except for money market
funds, whose shareholders must pay a sales charge or become
subject to a CDSC) may also use their distributions to purchase
shares of the Fund at net asset value.
For federal tax purposes, distributions from the Fund which are
reinvested in another fund are treated as paid by the Fund to the
shareholder and invested by the shareholder in the receiving fund
and thus, to the extent comprised of taxable income and deemed
paid to a taxable shareholder, are taxable.
The Dividends PLUS program may be revised or terminated at any
time.
PLANS AVAILABLE TO SHAREHOLDERS
The Plans described below are fully voluntary and may be
terminated at any time without the imposition by the Fund or
Putnam Investor Services of any penalty. All Plans provide for
automatic reinvestment of all distributions in additional shares
of the Fund at net asset value. The Fund, Putnam Mutual Funds or
Putnam Investor Services may modify or cease offering these Plans
at any time.
AUTOMATIC CASH WITHDRAWAL PLAN. An investor who owns or buys
shares of the Fund valued at $10,000 or more at the current
public offering price may open a Withdrawal Plan and have a
designated sum of money ($50 or more) paid monthly, quarterly,
semi-annually or annually to the investor or another person.
(Payments from the Fund can be combined with payments from other
Putnam funds into a single check through a Designated Payment
Plan.) Shares are deposited in a Plan account, and all
distributions are reinvested in additional shares of the Fund at
net asset value (except where the Plan is utilized in connection
with a charitable remainder trust). Shares in a Plan account are
then redeemed at net asset value to make each withdrawal payment.
Payment will be made to any person the investor designates;
however, if shares are registered in the name of a trustee or
other fiduciary, payment will be made only to the fiduciary,
except in the case of a profit-sharing or pension plan where
payment will be made to a designee. As withdrawal payments may
include a return of principal, they cannot be considered a
guaranteed annuity or actual yield of income to the investor.
The redemption of shares in connection with a Withdrawal Plan
generally will result in a gain or loss for tax purposes. Some
or all of the losses realized upon redemption may be disallowed
pursuant to the so-called wash sale rules if shares of the same
fund from which shares were redeemed are purchased (including
through the reinvestment of fund distributions) within a period
beginning 30 days before, and ending 30 days after, such
redemption. In such a case, the basis of the replacement shares
will be increased to reflect the disallowed loss. Continued
withdrawals in excess of income will reduce and possibly exhaust
invested principal, especially in the event of a market decline.
The maintenance of a Withdrawal Plan concurrently with purchases
of additional shares of the Fund would be disadvantageous to the
investor because of the sales charge payable on such purchases.
For this reason, the minimum investment accepted while a
Withdrawal Plan is in effect is $1,000, and an investor may not
maintain a Plan for the accumulation of shares of the Fund (other
than through reinvestment of distributions) and a Withdrawal Plan
at the same time. The cost of administering these Plans for the
benefit of those shareholders participating in them is borne by
the Fund as an expense of all shareholders. The Fund, Putnam
Mutual Funds or Putnam Investor Services may terminate or change
the terms of the Withdrawal Plan at any time. A Withdrawal Plan
will be terminated if communications mailed to the shareholder
are returned as undeliverable.
Investors should consider carefully with their own financial
advisers whether the Plan and the specified amounts to be
withdrawn are appropriate in their circumstances. The Fund and
Putnam Investor Services make no recommendations or
representations in this regard.
TAX QUALIFIED RETIREMENT PLANS; 403(B) AND SEP PLANS. (NOT
OFFERED BY FUNDS INVESTING PRIMARILY IN TAX-EXEMPT SECURITIES.)
Investors may purchase shares of the Fund through the following
Tax Qualified Retirement Plans, available to qualified
individuals or organizations:
Standard and variable profit-sharing (including 401(k))
and money purchase pension plans; and
Individual Retirement Account Plans (IRAs).
Each of these Plans has been qualified as a prototype plan by the
Internal Revenue Service. Putnam Investor Services will furnish
services under each plan at a specified annual cost. Putnam
Fiduciary Trust Company serves as trustee under each of these
Plans.
Forms and further information on these Plans are available from
investment dealers or from Putnam Mutual Funds. In addition,
specialized professional plan administration services are
available on an optional basis; contact Putnam Defined
Contribution Plan Services at 1-800-225-2465, extension 8600.
A 403(b) Retirement Plan is available for employees of public
school systems and organizations which meet the requirements of
Section 501(c)(3) of the Internal Revenue Code. Forms and
further information on the 403(b) Plan are also available from
investment dealers or from Putnam Mutual Funds. Shares of the
Fund may also be used in simplified employee pension (SEP) plans.
For further information on the Putnam prototype SEP plan, contact
an investment dealer or Putnam Mutual Funds.
Consultation with a competent financial and tax adviser regarding
these Plans and consideration of the suitability of Fund shares
as an investment under the Employee Retirement Income Security
Act of 1974, or otherwise, is recommended.
SIGNATURE GUARANTEES
Redemption requests for shares having a net asset value of
$100,000 or more must be signed by the registered owners or their
legal representatives and must be guaranteed by a bank,
broker/dealer, municipal securities dealer or broker, government
securities dealer or broker, credit union, national securities
exchange, registered securities association, clearing agency,
savings association or trust company, provided such institution
is acceptable under and conforms with Putnam Fiduciary Trust
Company's signature guarantee procedures. A copy of such
procedures is available upon request. If you want your
redemption proceeds sent to an address other than your address as
it appears on Putnam's records, you must provide a signature
guarantee. Putnam Investor Services usually requires additional
documentation for the sale of shares by a corporation,
partnership, agent or fiduciary, or a surviving joint owner.
Contact Putnam Investor Services for details.
SUSPENSION OF REDEMPTIONS
The Fund may not suspend shareholders' right of redemption, or
postpone payment for more than seven days, unless the New York
Stock Exchange is closed for other than customary weekends or
holidays, or if permitted by the rules of the Securities and
Exchange Commission during periods when trading on the Exchange
is restricted or during any emergency which makes it
impracticable for the 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 Commission for protection of
investors.
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of
the Fund. However, the Agreement and Declaration of Trust
disclaims shareholder liability for acts or obligations of the
Fund and requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by
the Fund or the Trustees. The Agreement and Declaration of Trust
provides for indemnification out of Fund property for all loss
and expense of any shareholder held personally liable for the
obligations of the Fund. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund would be unable to
meet its obligations. The likelihood of such circumstances is
remote.
STANDARD PERFORMANCE MEASURES
Yield and total return data for the Fund may from time to time be
presented in Part I of this Statement and in advertisements. In
the case of funds with more than one class of shares, all
performance information is calculated separately for each class.
The data is calculated as follows.
Total return for one-, five- and ten-year periods (or for such
shorter periods as the Fund has been in operation or shares of
the relevant class have been outstanding) is determined by
calculating the actual dollar amount of investment return on a
$1,000 investment in the Fund made at the beginning of the
period, at the maximum public offering price for Class A shares
and Class M shares and net asset value for other classes of
shares, and then calculating the annual compounded rate of return
which would produce that amount. Total return for a period of
one year is equal to the actual return of the Fund during that
period. Total return calculations assume deduction of the Fund's
maximum sales charge or CDSC, if applicable, and reinvestment of
all Fund distributions at net asset value on their respective
reinvestment dates.
The Fund's yield is presented for a specified thirty-day period
(the "base period"). Yield is based on the amount determined by
(i) calculating the aggregate amount of dividends and interest
earned by the Fund during the base period less expenses accrued
for that period, and (ii) dividing that amount by the product of
(A) the average daily number of shares of the Fund outstanding
during the base period and entitled to receive dividends and (B)
the per share maximum public offering price for Class A shares or
Class M shares, as appropriate and net asset value for other
classes of shares on the last day of the base period. The result
is annualized on a compounding basis to determine the yield. For
this calculation, interest earned on debt obligations held by the
Fund is generally calculated using the yield to maturity (or
first expected call date) of such obligations based on their
market values (or, in the case of receivables-backed securities
such as GNMA's, based on cost). Dividends on equity securities
are accrued daily at their stated dividend rates.
If the Fund is a money market fund, yield is computed by
determining the percentage net change, excluding capital changes,
in the value of an investment in one share over the seven-day
period for which yield is presented (the "base period"), and
multiplying the net change by 365/7 (or approximately 52 weeks).
Effective yield represents a compounding of the yield by adding 1
to the number representing the percentage change in value of the
investment during the base period, raising that sum to a power
equal to 365/7, and subtracting 1 from the result.
If the Fund is a tax-exempt fund, the tax-equivalent yield during
the base period may be presented for shareholders in one or more
stated tax brackets. Tax-equivalent yield is calculated by
adjusting the tax-exempt yield by a factor designed to show the
approximate yield that a taxable investment would have to earn to
produce an after-tax yield equal, for that shareholder, to the
tax-exempt yield. The tax-equivalent yield will differ for
shareholders in other tax brackets.
At times, Putnam Management may reduce its compensation or assume
expenses of the Fund in order to reduce the Fund's expenses. The
per share amount of any such fee reduction or assumption of
expenses during the Fund's past ten fiscal years (or for the life
of the Fund, if shorter) is reflected in the table in the section
entitled "Financial history" in the Prospectus. Any such fee
reduction or assumption of expenses would increase the Fund's
yield and total return during the period of the fee reduction or
assumption of expenses.
All data are based on past performance and do not predict future
results.
COMPARISON OF PORTFOLIO PERFORMANCE
Independent statistical agencies measure the Fund's investment
performance and publish comparative information showing how the
Fund, and other investment companies, performed in specified time
periods. Three agencies whose reports are commonly used for such
comparisons are set forth below. From time to time, the Fund may
distribute these comparisons to its shareholders or to potential
investors. THE AGENCIES LISTED BELOW MEASURE PERFORMANCE BASED
ON THEIR OWN CRITERIA RATHER THAN ON THE STANDARDIZED
PERFORMANCE MEASURES DESCRIBED IN THE PRECEDING SECTION.
LIPPER ANALYTICAL SERVICES, INC. distributes mutual fund
rankings monthly. The rankings are based on total return
performance calculated by Lipper, reflecting generally
changes in net asset value adjusted for reinvestment of
capital gains and income dividends. They do not reflect
deduction of any sales charges. Lipper rankings cover a
variety of performance periods, for example year-to-date,
1-year, 5-year, and 10-year performance. Lipper
classifies mutual funds by investment objective and asset
category.
MORNINGSTAR, INC. distributes mutual fund ratings twice a
month. The ratings are divided into five groups:
highest, above average, neutral, below average and lowest.
They represent a fund's historical risk/reward ratio
relative to other funds with similar objectives. The
performance factor is a weighted-average assessment of the
Fund's 3-year, 5-year, and 10-year total return
performance (if available) reflecting deduction of
expenses and sales charges. Performance is adjusted using
quantitative techniques to reflect the risk profile of the
fund. The ratings are derived from a purely quantitative
system that does not utilize the subjective criteria
customarily employed by rating agencies such as Standard &
Poor's Corporation and Moody's Investor Service, Inc.
CDA/WIESENBERGER'S MANAGEMENT RESULTS publishes mutual
fund rankings and is distributed monthly. The rankings
are based entirely on total return calculated by
Weisenberger for periods such as year-to-date, 1-year,
3-year, 5-year and 10-year. Mutual funds are ranked in
general categories (e.g., international bond,
international equity, municipal bond, and maximum capital
gain). Weisenberger rankings do not reflect deduction of
sales charges or fees.
Independent publications may also evaluate the Fund's
performance. Certain of those publications are listed below, at
the request of Putnam Mutual Funds, which bears full
responsibility for their use and the descriptions appearing
below. From time to time the Fund may distribute evaluations by
or excerpts from these publications to its shareholders or to
potential investors. The following illustrates the types of
information provided by these publications.
BUSINESS WEEK publishes mutual fund rankings in its
Investment Figures of the Week column. The rankings are
based on 4-week and 52-week total return reflecting
changes in net asset value and the reinvestment of all
distributions. They do not reflect deduction of any sales
charges. Funds are not categorized; they compete in a
large universe of over 2000 funds. The source for
rankings is data generated by Morningstar, Inc.
INVESTOR'S BUSINESS DAILY publishes mutual fund rankings
on a daily basis. The rankings are depicted as the top 25
funds in a given category. The categories are based
loosely on the type of fund, e.g., growth funds, balanced
funds, U.S. government funds, GNMA funds, growth and
income funds, corporate bond funds, etc. Performance
periods for sector equity funds can vary from 4 weeks to
39 weeks; performance periods for other fund groups vary
from 1 year to 3 years. Total return performance reflects
changes in net asset value and reinvestment of dividends
and capital gains. The rankings are based strictly on
total return. They do not reflect deduction of any sales
charges. Performance grades are conferred from A+ to E.
An A+ rating means that the fund has performed within the
top 5% of a general universe of over 2000 funds; an A
rating denotes the top 10%; an A- is given to the top 15%,
etc.
BARRON'S periodically publishes mutual fund rankings. The
rankings are based on total return performance provided by
Lipper Analytical Services. The Lipper total return data
reflects changes in net asset value and reinvestment of
distributions, but does not reflect deduction of any sales
charges. The performance periods vary from short-term
intervals (current quarter or year-to-date, for example)
to long-term periods (five-year or ten-year performance,
for example). Barron's classifies the funds using the
Lipper mutual fund categories, such as Capital
Appreciation Funds, Growth Funds, U.S. Government Funds,
Equity Income Funds, Global Funds, etc. Occasionally,
Barron's modifies the Lipper information by ranking the
funds in asset classes. "Large funds" may be those with
assets in excess of $25 million; "small funds" may be
those with less than $25 million in assets.
THE WALL STREET JOURNAL publishes its Mutual Fund
Scorecard on a daily basis. Each Scorecard is a ranking
of the top-15 funds in a given Lipper Analytical Services
category. Lipper provides the rankings based on its total
return data reflecting changes in net asset value and
reinvestment of distributions and not reflecting any sales
charges. The Scorecard portrays 4-week, year-to-date,
one-year and 5-year performance; however, the ranking is
based on the one-year results. The rankings for any given
category appear approximately once per month.
FORTUNE magazine periodically publishes mutual fund
rankings that have been compiled for the magazine by
Morningstar, Inc. Funds are placed in stock or bond fund
categories (for example, aggressive growth stock funds,
growth stock funds, small company stock funds, junk bond
funds, Treasury bond funds, etc.), with the top-10 stock
funds and the top-5 bond funds appearing in the rankings.
The rankings are based on 3-year annualized total return
reflecting changes in net asset value and reinvestment of
distributions and not reflecting sales charges.
Performance is adjusted using quantitative techniques to
reflect the risk profile of the fund.
MONEY magazine periodically publishes mutual fund rankings
on a database of funds tracked for performance by Lipper
Analytical Services. The funds are placed in 23 stock or
bond fund categories and analyzed for five-year risk
adjusted return. Total return reflects changes in net
asset value and reinvestment of all dividends and capital
gains distributions and does not reflect deduction of any
sales charges. Grades are conferred (from A to E): the
top 20% in each category receive an A, the next 20% a B,
etc. To be ranked, a fund must be at least one year old,
accept a minimum investment of $25,000 or less and have
had assets of at least $25 million as of a given date.
FINANCIAL WORLD publishes its monthly Independent
Appraisals of Mutual Funds, a survey of approximately 1000
mutual funds. Funds are categorized as to type, e.g.,
balanced funds, corporate bond funds, global bond funds,
growth and income funds, U.S. government bond funds, etc.
To compete, funds must be over one year old, have over $1
million in assets, require a maximum of $10,000 initial
investment, and should be available in at least 10 states
in the United States. The funds receive a composite past
performance rating, which weighs the intermediate- and
long-term past performance of each fund versus its
category, as well as taking into account its risk, reward
to risk, and fees. An A+ rated fund is one of the best,
while a D-rated fund is one of the worst. The source for
Financial World rating is Schabacker investment management
in Rockville, MD.
FORBES magazine periodically publishes mutual fund ratings
based on performance over at least two bull and bear
market cycles. The funds are categorized by type,
including stock and balanced funds, taxable bond funds,
municipal bond funds, etc. Data sources include Lipper
Analytical Services and CDA Investment Technologies. The
ratings are based strictly on performance at net asset
value over the given cycles. Funds performing in the top
5% receive an A+ rating; the top 15% receive an A rating;
and so on until the bottom 5% receive an F rating. Each
fund exhibits two ratings, one for performance in "up"
markets and another for performance in "down" markets.
KIPLINGER'S PERSONAL FINANCE MAGAZINE (formerly Changing
Times), periodically publishes rankings of mutual funds
based on one-, three- and five-year total return
performance reflecting changes in net asset value and
reinvestment of dividends and capital gains and not
reflecting deduction of any sales charges. Funds are
ranked by tenths: a rank of 1 means that a fund was among
the highest 10% in total return for the period; a rank of
10 denotes the bottom 10%. Funds compete in categories of
similar funds--aggressive growth funds, growth and income
funds, sector funds, corporate bond funds, global
governmental bond funds, mortgage-backed securities funds,
etc. Kiplinger's also provides a risk-adjusted grade in
both rising and falling markets. Funds are graded against
others with the same objective. The average weekly total
return over two years is calculated. Performance is
adjusted using quantitative techniques to reflect the risk
profile of the fund.
U.S. NEWS AND WORLD REPORT periodically publishes mutual
fund rankings based on an overall performance index (OPI)
devised by Kanon Bloch Carre & Co., a Boston research
firm. Over 2000 funds are tracked and divided into 10
equity, taxable bond and tax-free bond categories. Funds
compete within the 10 groups and three broad categories.
The OPI is a number from 0-100 that measures the relative
performance of funds at least three years old over the
last 1, 3, 5 and 10 years and the last six bear markets.
Total return reflects changes in net asset value and the
reinvestment of any dividends and capital gains
distributions and does not reflect deduction of any sales
charges. Results for the longer periods receive the most
weight.
THE 100 BEST MUTUAL FUNDS YOU CAN BUY (1992), authored by
Gordon K. Williamson. The author's list of funds is
divided into 12 equity and bond fund categories, and the
100 funds are determined by applying four criteria.
First, equity funds whose current management teams have
been in place for less than five years are eliminated.
(The standard for bond funds is three years.) Second, the
author excludes any fund that ranks in the bottom 20
percent of its category's risk level. Risk is determined
by analyzing how many months over the past three years the
fund has underperformed a bank CD or a U.S. Treasury bill.
Third, a fund must have demonstrated strong results for
current three-year and five-year performance. Fourth, the
fund must either possess, in Mr. Williamson's judgment,
"excellent" risk-adjusted return or "superior" return with
low levels of risk. Each of the 100 funds is ranked in
five categories: total return, risk/volatility,
management, current income and expenses. The rankings
follow a five-point system: zero designates "poor"; one
point means "fair"; two points denote "good"; three points
qualify as a "very good"; four points rank as "superior";
and five points mean "excellent."
In addition, Putnam Mutual Funds may distribute to shareholders
or prospective investors illustrations of the benefits of
reinvesting tax-exempt or tax-deferred distributions over
specified time periods, which may include comparisons to fully
taxable distributions. These illustrations use hypothetical
rates of tax-advantaged and taxable returns and are not intended
to indicate the past or future performance of any fund.
DEFINITIONS
"Putnam Management" -- Putnam Investment Management,
Inc., the Fund's investment
manager.
"Putnam Mutual Funds" -- Putnam Mutual Funds Corp., the
Fund's principal underwriter.
"Putnam Fiduciary Trust -- Putnam Fiduciary Trust Company,
Company" the Fund's custodian.
"Putnam Investor Services" -- Putnam Investor Services, a
division of Putnam Fiduciary
Trust Company, the Fund's
investor servicing agent.
<PAGE>
PUTNAM OVERSEAS GROWTH FUND
FORM N-1A
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Index to Financial Statements and Supporting
Schedule:
(1) Financial Statements:
Statement of assets and liabilities -- June
30,
1994(a) .
Statement of operations -- year ended June
30, 1994(a) .
Statement of changes in net assets --
years ended June 30, 1994 and
June 30, 1993 (a).
Financial highlights (a)(b).
Notes to financial statements(a).
(2) Supporting Schedules:
Schedule I, Portfolio of investments owned --
June 30, 1994(a) .
Schedules II through IX omitted because the
required matter is not present.
(a) Incorporated by reference into
Parts A and B.
(b) Included in Part A.
- --------------------------
(b) Exhibits:
1a. Agreement and Declaration of Trust dated
October 5, 1990 -- Incorporated by reference
to the Registrant's Initial Registration
Statement.
1b. Amendment to the Agreement and Declaration of
Trust dated November 2, 1990 -- Incorporated
by reference to Pre-Effective Amendment No. 1
to the Registrant's Registration Statement.<PAGE>
2. By-Laws, as amended through June 1, 1994 -
-Exhibit 1.
3. Not applicable.
4a. Specimen Class A share certificate --
Exhibit 2.
4b. Specimen Class B share certificate -- Exhibit
3.
4c. Specimen Class M share certificate -- Exhibit
4.
4d. Portions of Agreement and Declaration of
Trust relating to Shareholders' Rights -
- Incorporated by reference to Post-
Effective Amendment No. 3 to the
Registrant's Registration Statement.
4e . Portions of By-Laws Relating to
Shareholders' Rights - Exhibit
5 .
5. Copy of Management Contract dated February 7,
1991 -- Incorporated by reference to Pre-
Effective Amendment No. 2 to the Registrant's
Registration Statement.
6a. Copy of Distributor's Contract dated
June 1, 1994 -- Exhibit 6.
6b. Copy of Specimen Dealer Sales Contract --
Incorporated by reference to Post-Effective
Amendment No. 1 to the Registrant's
Registration Statement.
6c. Copy of Specimen Financial Institution Sales
Contract -- Incorporated by reference to
Post-Effective Amendment No. 1 to the
Registrant's Registration Statement.
7. Not applicable.
8. Copy of Custodian Agreement with Brown
Brothers Harriman & Co. dated September 30,
1985 -- Incorporated by reference to Pre-
Effective Amendment No. 1 to the Registrant's
Registration Statement.
9. Copy of Investor Servicing Agreement with
Putnam Fiduciary Trust Company dated June 3,
1991 -- Incorporated by reference to Post-
Effective Amendment No. 1 to the Registrant's
Registration Statement.
10. Opinion of Ropes & Gray, including consent --
Incorporated by reference to Pre-Effective
Amendment No. 1 to the Registrant's
Registration Statement.
11. Not applicable.
12. Not applicable.
13. Investment Letter from Putnam
Investments , Inc. to the Registrant --
Incorporated by reference to Pre-Effective
Amendment No. 1 to the Registrant's
Registration Statement.
14a. Copy of Prototype Individual Retirement
Account Plan -- Exhibit 7.
14b. Copy of Prototype Basic Plan Document and
related Plan Agreements -- Exhibit 8.
15a. Copy of Class A Distribution Plan and
Agreement dated June 1, 1994 -- Exhibit 9.
15b. Copy of Class B Distribution Plan and
Agreement dated June 1, 1994 -- Exhibit 10.
15c. Form of Class M Distribution Plan and
Agreement dated , 1994 -- Exhibit 11.
15d . Copy of Specimen Dealer Service
Agreement --Incorporated by
reference to Post-Effective
Amendment No. 1 to the Registrant's
Registration Statement.
15e . Copy of Specimen Financial
Institution Service Agreement --
Incorporated by reference to Post-
Effective Amendment No. 1 to the
Registrant's Registration
Statement.
16. Schedule of computation of performance
quotations. -- Exhibit 12.
17. Financial Data Schedules for Class A shares
-- Exhibit 13.
Financial Data Schedules for Class B shares
-- Exhibit 14.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
None
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of September 30, 1994 there were 1,368 and 1,130
holders, respectively, of the Registrant's Class A and Class B
shares. No Class M shares were outstanding at September 30,
1994.
ITEM 27. INDEMNIFICATION
The information required by this item is incorporated
herein by reference to Amendment No. 1 to the Registrant's
Registration Statement on Form N-1A under the Investment Company
Act of 1940 (File No. 811-6190).<PAGE>
<PAGE>
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
Except as set forth below, the directors and officers
of the Registrant's investment adviser have been engaged during
the past two fiscal years in no business, vocation or employment
of a substantial nature other than as directors or officers of
the investment adviser or certain of its corporate affiliates.
Certain officers of the investment adviser serve as officers of
some or all of the Putnam funds. The address of the investment
adviser, its corporate affiliates and the Putnam Funds is One
Post Office Square, Boston, Massachusetts 02109.
NAME NON-PUTNAM BUSINESS AND OTHER
CONNECTIONS
John V. Adduci Prior to July, 1993, Human Resources
Assistant Vice President Manager, First Security Services, 80
Main St., Reading, MA 01867
Gail S. Attridge Prior to November, 1993, International
Vice President Analyst, Keystone Custodian Funds,
200 Berkley Street, Boston, MA 02116
James E. Babcock Prior to June, 1994, Interest
Assistant Vice President Supervisor, Salomon Brothers, Inc.
7 World Trade Center, New York, NY
10048
Prior to June, 1993, Audit Manager,
Coopers & Lybrand, One Sylvan Way,
Parsipanny, NJ 07054
Robert K. Baumbach Prior to August, 1994, Vice President
Vice President and Analyst, Keystone Custodian
funds, 200 Berkely St., Boston, MA
02110
Sharon A. Berka Prior to January, 1994, Vice
Vice President President - Compensation Manager,
BayBanks, Inc., 175 Federal Street,
Boston, MA 02110
Edward P. Bousa Prior to October, 1992, Vice President
Senior Vice President and Portfolio Manager, Fidelity
Investments, 82 Devonshire St.,
Boston, MA 02109
Michael F. Bouscaren Prior to May, 1994, President and
Senior Vice President Chairman of the Board of Directors
at Salomon Series Funds, Inc. and a
Director of Salomon Brothers Asset
Management, 7 World Trade Center,
New York, NY 10048
Brett Browchuk Prior to April, 1994, Managing
Managing Director Director, Fidelity Investments, 82
Devonshire St., Boston, MA 02109
Carolyn S. Bunten Prior to July, 1993, Assistant Trader,
Assistant Vice President Scudder Stevens & Clark, Inc., 175
Federal St., Boston, MA 02110
Andrea Burke Prior to August, 1994, Vice President
Vice President and Portfolio Manager, Back Bay
Advisors, 399 Boylston St., Boston,
MA 02116
John M. Burton Prior to June, 1994, Manager --
Assistant Vice President Marketing Asset Management Pension
Services, The Travelers, Inc., 1
Tower Square, Hartford, CT 06183
Patricia A. Carey Prior to May, 1993, Research Analyst,
Assistant Vice President John Hancock Financial Services, 100
Clarendon St., Boston, MA 02116
Peter Carman Prior to August, 1993, Chief
Senior Managing Director Investment Officer, Chairman, U.S.
Equity Investment Policy Committee,
Member of Board of Directors,
Sanford C. Bernstein & Co., Inc.,
767 Fifth Avenue, New York, NY 10153
Steven Cheshire Prior to January, 1994, Assistant
Vice President Vice President, Wellington
Management, 75 State Street, Boston,
MA 02109
Anna Coppola Prior to May, 1993, Associate,
Assistant Vice President Heidrick & Struggles, One Post
Office Square, Boston, MA 02109
Kathleen Crews Prior to February, 1993, Assistant
Assistant Vice President Vice President, Alliance Capital
Management, L.P., 1345 Avenue of
the Americas, New York, NY 10105
York, NY
Kenneth L. Daly Prior to September, 1993, Vice
Senior Vice President President, Fidelity Investments,
82 Devonshire St., Boston, MA 02109
<PAGE>
John A. DeTore Prior to January, 1994, Director of
Managing Director Quantitative Portfolio Management,
Wellington Management, 75 State
Street, Boston, Ma 02109
Michael G. Dolan Prior to February, 1994, Senior
Assistant Vice President Financial Analyst, General Electric
Company, 1000 Western Ave., Lynn, MA
01905
Joseph Eagleeye Prior to August, 1994, Associate,
Assistant Vice President David Taussig & Associates, 424
University Ave., Sacremento, CA
95813
Richard B. England Prior to December, 1992, Investment
Senior Vice President Officer, Aetna Equity Investors,
151 Farmington Avenue, Hartford,
CT, 06156
Jonathan H. Francis Prior to March, 1993, President,
Senior Vice President J.H. Francis & Co., N. Pheasant
Lane, Westport, CT 06880
James F. Giblin Prior to April, 1993, Managing
Senior Vice President Director, CIGNA Corp. Investments,
Inc., 900 Cottage Grove Rd.
Bloomfield, CT 06152
Thomas C. Goggins Prior to June, 1993, Portfolio
Vice President Manager, Transamerica Investment
Services, 1150 South Olive Street,
Los Angeles, CA 90015
Mark D. Goodwin Prior to May, 1994, Manager, Audit &
Assistant Vice President Operations Analysis, Mitre
Corporation, 202 Burlington Rd.,
Bedford, MA 01730
Stephen Gorman Prior to July, 1994, Financial
Assistant Vice President Analyst, Boston Harbor Trust
Company, 100 Federal St., Boston, MA
02110
Daniel J. Grim Prior to May 1993, Consultant,
Vice President Connie Lee, 2445 M Street N.W.,
Washington, D.C. 20037;
Chief Operating Officer, Boardwalk,
Inc., Minocqua, WI 54548
<PAGE>
Billy P. Han Prior to December, 1992, Vice
Vice President President, Scudder, Stevens & Clark,
Inc., 160 Federal Street, Boston, MA
02110
Deborah R. Healy Prior to June, 1994, Senior Equity
Senior Vice President Trader, Fidelity Management &
Research Company, 82 Devonshire St.,
Boston, MA 02109
Lisa Heitman Prior to July, 1994, Securities
Analyst, Lord, Abbett & Company, 767
Fifth Ave., New York, NY 10153
Michael F. Hotchkiss Prior to May, 1994, Vice President,
Vice President Massachusetts Financial Services,
500 Boylston St., Boston, MA 02116
Walter Hunnewell, Jr. Prior to April, 1994, Managing
Vice President Director, Veronis, Suhler &
Associates, 350 Park Avenue, New
York, NY 10022
Stephon A. Jackson Prior to December, 1992, nalyst,
Assistant Vice President Arco Investment Management Co.,
515 South Flower Street,
Los Angeles, CA 91030
Jeffrey L. Knight Prior to March, 1993, Teacher,
Vice President Greater Newburyport Educational
Collaborative, Newburyport, MA 01950
Jeffrey J. Kobylarz Prior to May, 1993, Credit Analyst,
Vice President Dean Witter Reynolds, Inc.,
Two World Trade Center,
New York, NY 10048
D. William Kohli Prior to September, 1994, Executive
Senior Vice President Vice President and Co-Director of
Global Bond Managment; Prior to
1993, Portfolio Manager, Franklin
Advisors/Templeton Investment
Counsel, 777 Mariners Island Blvd.,
San Mateo, CA 94404
<PAGE>
Karen R. Korn Prior to June, 1994, Vice President,
Vice President Assistant to the President, Designs,
Inc. 1244 Boylston St., Chestnut
Hill, MA 02167
Prior to March, 1993, Vice President,
Paine Webber, Inc., 265 Franklin
St., Boston, MA 02110
Bruce M. Landers Prior to February, 1993, Manager,
Assistant Vice President Purchasing, Vicor Coproration, 23
Frontage Road, Andover, MA 01810
Lawrence J. Lasser Director, Marsh & McLennan Companies,
President, Director Inc., 1221 Avenue of the Americas,
and Chief Executive New York, NY 10020
Officer Director, INROADS/Central New England,
Inc., 99 Bedford St., Boston,
MA 02111
John A. Libertine, Jr. Prior to December, 1992, Tax Manager,
Assistant Vice President Coopers & Lybrand, One Post Office
Square, Boston, MA 02109
Jeff Lindsay Prior to April, 1994, Vice President
Vice President and Board Member, Strategic
Portfolio Management, 900 Ashwood
Parkway, Suite 290, Atlanta, GA
30338
Robert A. Madore Prior to October, 1992, Senior Vice
Vice President President and Portfolio Manager,
Fiduciary Captial Management, Inc.
51 Sherman Hill Rd., Woodbury,
CT 06798
Frederick S. Marius Prior to September, 1992, Associate
Assistant Vice President Attorney at Skadden Arps, One
Associate Counsel Beacon St., Boston, MA 02109
Michael Martino Prior to January, 1994, Executive
Senior Vice President Vice President and Chief Investment
Officer until 1992; Senior Vice
President and Portfolio Manager from
1990 to 1992, Back Bay Advisors, 399
Boylston St, Boston, MA 02116
Andrew S. Matteis Prior to March, 1993, Vice President,
Vice President Fitch Investors Service, One
State Street Plaza, New York,
NY 10004
Susan McCormack Prior to May, 1994, Associate
Vice President Investment Banker, Merrill Lynch &
Co., 350 South Grand Ave., Suite
2830, Los Angeles, CA 90071
Michael J. Mufson Prior to June, 1993, Senior Equity
Vice President Analyst, Stein Roe & Farnham,
One South Wacker Drive, Chicago, Il
60606
Warren S. Naphtal Prior to January, 1994, Managing
Senior Vice President Director, Continental Bank, 231
So. Lasalle St., Chicago, IL 60697
Jeffrey W. Netols Prior to February, 1993, Portfolio
Senior Vice President Analyst, Associated Bank,
200 N. Adams, Greenbay, WI 54307
Patrick C. O'Donnell, Jr. Prior to May, 1994, President,
Managing Director Exeter Research, Inc., 163 Water
Street, Exeter, New Hampshire, 03833
Brian O'Keefe Prior to December, 1993, Vice
Vice President President - Foreign Exchange
Trader, Bank of Boston, 100 Federal
Street, Boston, MA 02109
Pat G. Patel Prior to April, 1993, Regional
Vice President Manager, Zacks Investment Research,
155 N. Wacker Drive, Chicago,
IL 60606
Margaret Pietropaolo Prior to January, 1994, Data Base/
Assistant Vice President Production Analyst, Wellington
Management, 75 State Street, Boston,
MA 02109
George Putnam Chairman and Director, Putnam Mutual
Chairman and Director Funds Corp.
Director, The Boston Company, Inc.,
One Boston Place, Boston, MA 02108
Director, Boston Safe Deposit and
Trust Company, One Boston Place,
Boston, MA 02108
Director, Freeport-McMoRan, Inc., 200
Park Avenue, New York, NY 10166
Director, General Mills, Inc., 9200
Wayzata Boulevard, Minneapolis,
MN 55440
Director, Houghton Mifflin Company,
One Beacon Street, Boston, MA 02108
Director, Marsh & McLennan Companies,
Inc., 1221 Avenue of the Americas,
New York, NY 10020
Director, Rockefeller Group, Inc.,
1230 Avenue of the Americas,
New York, NY 10020
Christopher A. Ray Prior to December, 1992, Vice
Vice President President and Portfolio Manager at
Scudder, Stevens & Clark, Inc., 160
Federal Street, Boston, MA 02110
Mark J. Siegel Prior to June, 1993, Vice President,
Vice President Salomon Brothers International,
Ltd., Victoria Plaza, 111 Buckingham
Palace Road, London SW1W 0SB,
England
Joanne Soja Prior to June, 1993, Managing
Senior Vice President Director/Portfolio Manager,
Chancellor Capital Management,
153 East 53rd Street, New York, NY
10002
George W. Stairs Prior to July, 1994, Equity Research
Vice President Analyst, ValueQuest Limited,
Roundy's Hill, Marblehead, MA 01945
Hillary F. Till Prior to May, 1994, Fixed-Income
Vice President Deritive Trader, Bank of Boston,
100 Federal Street, Boston, MA 02109
Prior to December, 1993, Equity
Analyst, Harvard Management Company,
600 Atlantic St., Boston, MA 02109
Bonnie L. Troped Prior to May, 1993, Assistant Vice
Vice President President/Director of Corporate
Events, The Boston Company, One
Boston Place, Boston, MA 02108
Elizabeth A. Underhill Prior to August, 1994, Vice President
Vice President and Senior Equity Analyst, State
Street Bank and Trust Company, 225
Franklin St., Boston, MA 02110
Charles C. Van Vleet Prior to August, 1994, Vice President
Senior Vice President and Fixed-Income Manager, Alliance
Capital Management, 1345 Avenue of
the Americas, New York, NY 10105
Michael R. Weinstein Prior to March, 1994, Management
Vice President Consultant, Arthur D. Little, Acorn
Park, Cambridge, MA 02140
Item 29. Principal Underwriter
(a) Putnam Mutual Funds Corp. is the principal underwriter for
each of the following investment companies, including the
Registrant:
Putnam Adjustable Rate U.S. Government Fund, Putnam American
Government Income Fund, Putnam Arizona Tax Exempt Income Fund,
Putnam Asia Pacific Growth Fund, Putnam Asset Allocation Funds,
Putnam Balanced Government Fund, Putnam California Tax Exempt
Income Trust, Putnam California Tax Exempt Money Market Fund,
Putnam Capital Appreciation Fund, Putnam Capital Growth and
Income Fund, Putnam Capital Manager Trust, Putnam Convertible
Income-Growth Trust, Putnam Corporate Asset Trust, Putnam
Diversified Equity Trust, Putnam Diversified Income Trust, Putnam
Dividend Growth Fund, Putnam Equity Income Fund, Putnam Europe
Growth Fund, Putnam Federal Income Trust, Putnam Florida Tax
Exempt Income Fund, The George Putnam Fund of Boston, Putnam
Global Governmental Income Trust, Putnam Global Growth Fund,
Putnam Growth Fund, The Putnam Fund for Growth and Income, Putnam
Health Sciences Trust, Putnam High Yield Trust, Putnam High Yield
Advantage Fund, Putnam Income Fund, Putnam Intermediate Tax
Exempt Income Fund, Putnam Investors Fund, Putnam Managed Income
Trust, Putnam Massachusetts Tax Exempt Income Fund II, Putnam
Michigan Tax Exempt Income Fund II, Putnam Minnesota Tax Exempt
Income Fund II, Putnam Money Market Fund, Putnam Municipal Income
Fund, Putnam Natural Resources Fund, Putnam New Jersey Tax Exempt
Income Fund, Putnam New Opportunities Fund, Putnam New York Tax
Exempt Income Fund, Putnam New York Tax Exempt Money Market Fund,
Putnam New York Tax Exempt Opportunities Fund, Putnam Ohio Tax
Exempt Income Fund II, Putnam OTC Emerging Growth Fund, Putnam
Overseas Growth Fund, Putnam Pennsylvania Tax Exempt Income Fund,
Putnam Research Analyst Fund, Putnam Tax-Free Income Trust,
Putnam Tax Exempt Income Fund, Putnam Tax Exempt Money Market
Fund, Putnam U.S. Government Income Trust, Putnam Utilities
Growth and Income Fund, Putnam Vista Fund, Putnam Voyager Fund
(b) The directors and officers of the Registrant's principal
underwriter are:<PAGE>
<TABLE>
<CAPTION>
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
<C> <C> <C>
John V. Adduci Assistant Vice President None
Christopher S. Alpaugh Vice President None
Paulette C. Amisano Vice President None
Ronald J. Anwar Vice President None
Karen M. Apatow Assistant Vice President None
Steven E. Asher Senior Vice President None
Georgette M. Bacca Vice President None
Ira G. Baron Senior Vice President None
John L. Bartlett Senior Vice President None
Steven M. Beatty Vice President None
Matthew F. Beaudry Vice President None
Robert A. Benish Vice President None
John J. Bent Vice President None
Sharon A. Berka Vice President None
James R. Besher Vice President None
Suzanne J. Bessett Vice President None
Maureen L. Boisvert Vice President None
Keith R. Bouchard Vice President None
Leslee R. Bresnahan Vice President None
James D. Brockelman Senior Vice President None
Scott C. Brown Vice President None
Gail Buckner Senior Vice President None
Robert W. Burke Senior Managing Director None
Richard P. Busher Vice President None
Ellen S. Callahan Assistant Vice President None
William A. Campagna Senior Vice President None
Charles A. Carey Assistant Vice President None
Patricia A. Cartwright Assistant Vice President None
Christopher D. Caton Assistant Vice President None
Stephen J. Chaput Assisant Vice President None
Daniel J. Church Vice President None
James E. Clinton Assistant Vice President None
Kathleen M. Collman Managing Director None
Mark L. Coneeny Vice President None
Donald A. Connelly Senior Vice President None
Anna Coppola Assistant Vice President None
F. Nicholas Corvinus Senior Vice President None
Kenneth L. Daly Senior Vice President None
Edward H. Dane Assistant Vice President None
Nancy M. Days Assistant Vice President None
Daniel J. Delianedis Vice President None
J. Thomas Depres Senior Vice President None
Michael G. Dolan Assistant Vice President None
Scott M. Donaldson Vice President None
Emily J. Durbin Assistant Vice President None
David B. Edlin Senior Vice President None
James M. English Senior Vice President None
Vincent Esposito Senior Vice President None
Mary K. Farrell Assistant Vice President None
Susan H. Feldman Vice President None
Michael J. Fetcher Assistant Vice President None
Paul F. Fichera Senior Vice President None
C. Nancy Fisher Senior Vice President None
Mitchell B. Fishman Vice President None
Joseph C. Fiumara Vice President None
Patricia C. Flaherty Senior Vice President None
Judy P. Frodigh Vice President None
Samuel F. Gagliardi Vice President None
Judy S. Gates Vice President None
Richard W. Gauger Assistant Vice President None
Joseph P. Gennaco Vice President None
Steven E. Gibson Managing Director None
Mark D. Goodwin Assistant Vice President None
Robert Goodman Managing Director None
Robert G. Greenly Vice President None
Thomas W. Halloran Vice President None
Marilyn M. Hausammann Senior Vice President None
Howard W. Hawkins, III Vice President None
Deanna R. Hayes-Castro Assistant Vice President None
Paul P. Heffernan Vice President None
Susan M. Heimanson Vice President None
Bradley J. Hilsabeck Vice President None
Bess J.M. Hochstein Vice President None
Maureen A. Holmes Assistant Vice President None
William J. Hurley Senior Vice President None
Gregory E. Hyde Vice President None
Dwight D. Jacobsen Senior Vice President None
Douglas B. Jamieson Director and Senior Managing Director None
Jay M. Johnson Vice President None
Kevin M. Joyce Senior Vice President None
John P. Keating Vice President None
James J. Kilbane Vice President None
Deborah H. Kirk Senior Vice President None
Jill A. Koontz Assistant Vice President None
Howard H. Kreutzberg Senior Vice President None
Edward V. Lewandowski Senior Vice President None
Edward V. Lewandowski, Jr. Vice President None
Samuel L. Lieberman Vice President None
Rufino R. Lomba Vice President None
Maura A. Lockwood Assistant Vice President None
Robert F. Lucey Senior Managing Director None
Philip J. Lussier Managing Director None
Ann Malatos Assistant Vice President None
Renee L. Maloof Assistant Vice President None
Frederick S. Marius Assistant Vice President None
Karen E. Marotta Vice President None
Jill Maserian Vice President None
Kathleen M. McAnulty Assistant Vice President None
Anne B. McCarthy Assistant Vice President None
Mark J. McKenna Vice President None
Marla J. McDougall Assistant Vice President None
Walter S. McFarland Vice President None
Greg J. McMillan Assistant Vice President None
Robert E. McMurtrie Vice President None
Claye A. Metelmann Assistant Vice President None
J. Chris Meyer Senior Vice President None
Douglas W. Miller Vice President None
Ronald K. Mills Vice President None
Mitchell L. Moret Vice President None
Donald E. Mullen Vice President None
Brendan R. Murray Vice President None
Robert Nadherny Vice President None
Alexander L. Nelson Managing Director None
Jane M. Nickodemus Vice President None
John P. Nickodemus Vice President None
Michael C. Noonis Assistant Vice President None
Peter A. Nyhus Vice President None
Kristen P. O'Brien Vice President None
Lorie C. O'Malley Senior Vice President None
Kevin L. O'Shea Vice President None
Philip G. Padgett, Jr. Vice President None
Richard N. Pallan Senior Managing Director None
Scott A. Papes Vice President None
Cynthia O. Parr Vice President None
John D. Pataccoli Vice President None
Joseph Phoenix Vice President None
Jeffrey E. Place Senior Vice President None
Keith Plapinger Vice President None
Douglas H. Powell Vice President None
George Putnam Director Chairman & President
Susannah Psomas Vice President None
Robert B. Rowe Vice President None
Kevin A. Rowell Senior Vice President None
Thomas C. Rowley Vice President None
Deborah A. Ryan Assistant Vice President None
Charles Ruys de Perez Vice President None
Catherine A. Saunders Senior Vice President None
Robbin L. Saunders Assistant Vice President None
Karl W. Saur Vice President None
Christine A. Scordato Vice President None
Joseph W. Scott Assistant Vice President None
Kathleen G. Sharpless Senior Vice President None
John F. Sharry Managing Director None
John B. Shamburg Vice President None
Vincent P. Sheehan Vice President None
William N. Shiebler Director, Chief Executive Vice President
Officer and President
Daniel S. Shore Vice President None
Mark J. Siebold Assistant Vice President None
Gordon H. Silver Senior Managing Director Vice President
Barry Sommers Vice President None
Nicholas T. Stanojev Vice President None
Brian L. Sullivan Vice President None
Kevin J. Sullivan Vice President None
Moira A. Sullivan Vice President None
Janet C. Sweeney Vice President None
Edward M. Syring, Jr. Vice President None
James S. Tambone Senior Vice President None
B. Iris Tanner Assistant Vice President None
Louis Tasiopoulos Senior Vice President None
David S. Taylor Vice President None
John R. Telling Vice President None
Richard B. Tibbetts Senior Vice President None
Patrice M. Tirado Vice President None
Janet E. Tosi Assistant Vice President None
John C. Tredinnick Vice President None
Bonnie L. Troped Vice President None
Larry R. Unger Vice President None
Douglas J. Vander Linde Vice President None
John F. Wallin Senior Vice President None
Edward F. Whalen Vice President None
Robert J. Wheeler Senior Vice President None
John B. White Vice President None
Kirk E. Williamson Senior Vice President None
Leigh T. Williamson Vice President None
Benjamin Woloshin Vice President None
William H. Woolverton Senior Vice President and Clerk None
Timothy R. Young Vice President None
SooHee L. Zebedee Assistant Vice President None
</TABLE>
The principal business address of each person listed above is One
Post Office Square, Boston, MA 02109, except for:
Mr. Alpaugh, 5980 Richmond Highway, Alexandria, VA 22303
Mr. Anwar, 25-49 86th St. Jackson Heights, NY 11369
Mr. Baron, 31 Cala Moreya, Laguna Niguel, CA 92667
Mr. Bartlett, 7 Farifield St., Boston, MA 02116
Mr. Besher, 14000 Margaux, Town & Country, MO 63017
Ms. Besset, 1140 North LaSalle Blvd, Chicago, IL 60610
Mr. Bouchard, 18 Brice Rd., Annapolis, MD 21401
Mr. Brown, 221 East Mallord Drive, Boise, ID 83706
Ms. Buckner, 8338 Timber Trail, Pittsburgh, PA 15237
Mr. Busher, 12005 Ridge Knoll Drive, Fairfax, VA 22033
Mr. Campagna, 2179-D Lake Park Drive, Smyrna, GA 30080
Mr. Church, 4504 Sir Winston Place, Charlotte, NC 28211
Mr. Connelly, 4634 Mirada Way, Sarasota, FL 34238
Mr. Corvinus, 208 Water St., Newburyport, MA 01950
Mr. Deliandis, 206 Promontory Drive, Newport Beach, CA 92660
Mr. Edlin, 7 River Road, 305 Palmer Point, Cos Cob, CT 06807
Mr. English, 1184 Pintail Circle, Boulder, CO 80303
Mr. Goodman, 14 Clover Place, Cos Cob, CT 06807
Mr. Halloran, 978 W. Creek Lane, Westlake Village, CA 91362
Mr. Hyde, 3305 Sulky, Marietta, GA 30067
Mr. Jacobsen, 2744 Joyce Ridge Drive, Chesterfield, MO 63017
Mr. Johnson, 200 Clock Tower Place, Carmel, CA 93923
Mr. Keating, 5521 Greenville Avenue, Dallas, TX 75206
Ms. Kirk, 124 Rivermist Dr., Buffalo, NY 14202
Mr. Lewandowski, 805 Darrell Road, Hillsborough, CA 94010
Mr. Lewandowski, Jr., 2120 The Strand, Manhattan Beach, CA 90266
Mr. Lieberman, 200 Roy St., Seattle, WA 98199
Mr. McFarland, 8012 Dancing Fern Trail, Chattanooga, TN 37421
Mr. McMillan, 203 D. Zigler St., Zelienople, PA 16063
Mr. McMurtrie, 14529 Glastonbury, Detroit, MI 48223
Mr. Miller, 260 West 72nd St., New York, NY 10023
Mr. Moret, 4519 Lawn Avenue, Western Springs, IL 60558
Mr. Murray, 13 Ridge Court, Saratoga Springs, NY 12866
Mr. Nadherny, 9714 Marmount Drive, Seattle, WA 98117
Mr. and Mrs. Nickodemus, 1232 B Louden St., Cincinnati, OH 45202
Mr. Nyhus, 7203 Oak Pointe Curve, Bloomington, MN 55438
Mr. Padgett, Jr., 7709 Charleston Drive, Bethesda, MD 20817
Mr. Papes, 3102 Wood View Bridge Drive, Kansas City, KS 66103
Mr. Pataccoli, 125 41st Street, Manhattan Beach, Ca 90266
Mr. Phoenix, 1426 Asbury Avenue, Hubbard Woods, IL 60093
Mr. Place, 4211 Loch Highland Parkway, Roswell, GA 30075
Mr. Powell, 1508 Ruth Lane, Newport Beach, CA 92660
Mr. Rowe, 109 Shore Drive, Longwood, FL 32779
Mr. Rowell, 1508 Ruth Lane, Newport Beach, CA 92660
Mr. Rowley, 237 Peeke Avenue, Kirkwood, MO 63122
Ms. Saunders, 39939 Stevenson Common, Freemont, CA 94538
Mr. Shamburg, 10603 N. 100th Street, Scottsdale, AZ 85260
Mr. Sheehan, Parkway Center, 1150 Galapago, Denver, CO 80204
Mr. Shore, 2870 Pharr Court South, N.W., Atlanta, BA 30305
Mr. Sommers, 397 North Little Pour, New City, NY 10956
Mr. B. Sullivan, 777 Pinoake Road, Mt. Lebanon, PA 15243
Ms. M. Sullivan, 493 Zinfandel Lane, St. Helena, CA 94574
Ms. Sweeney, 8 Surf Street, Marblehead, MA 01945
Mr. Syring, 7540 Mandarian Dr., Boca Raton, FL 33433
Mr. Tambone, 10 Commercial Wharf, Boston, MA 02110
Mr. Tredinnick, 2995 Glenwood Drive, Boulder, CO 80301
Mr. Telling, 1995 Delaware Ave., Buffalo, NY 14216
Mr. Unger, 212 E. Broadway, New York, NY 10002
Mr. Vessels, 7 Riverview Drive, Norwalk, CT 06850
Mr. Williamson, 32 Kramer Place, Mandeville, LA 70448
Mr. White, 23 Wellington St., Arlington, MA 02174
Mr. Woloshin, 730 North Bundy Drive, Los Angeles, CA 90049
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Persons maintaining physical possession of accounts,
books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules
promulgated thereunder are Registrant's Clerk, Beverly Marcus;
Registrant's investment adviser, Putnam Investment
Management , Inc.; Registrant's principal underwriter,
Putnam Mutual Funds Corp.; Registrant's custodian,
Putnam Fiduciary Trust Company ("PFTC"); and Registrant's
transfer and dividend disbursing agent, Putnam Investor Services,
a division of PFTC. The address of the Clerk, investment adviser,
principal underwriter, transfer and dividend disbursing agent and
custodian is One Post Office Square, Boston,
Massachusetts 02109.
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
The Registrant undertakes to furnish to each person to
whom a prospectus of the Registrant is delivered, a copy of the
Registrant's latest annual report to shareholders, upon request
and without charge.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by
reference in Post -Effective Amendment No. 4
to the Registration Statement of Putnam Overseas Growth
Fund (the "Fund") on Form N -1A (File No. 33-37214) of
our report dated August 17, 1994, on our audits of
the financial statements and "Financial highlights" of the
Fund, which report is included in the Annual Report
for Putnam Overseas Growth Fund for the year ended June
30, 1994, which is incorporated by reference in the
Registration Statement.
We also consent to the reference to our
firm under the caption "Independent Accountants
and Financial Statements" in the Statement of Additional
Information.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
October 28, 1994
<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust of
Putnam Overseas Growth Fund is on file with the Secretary of
State of The Commonwealth of Massachusetts and notice is hereby
given that this instrument is executed on behalf of the
Registrant by an officer of the Registrant as an officer and not
individually and the obligations of or arising out of this
instrument are not binding upon any of the Trustees, officers or
shareholders individually but are binding only upon the assets
and property of the Registrant.
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee of Putnam Overseas Growth
Fund, hereby severally constitute and appoint George Putnam,
Charles E. Porter, Gordon H. Silver, Edward A. Benjamin, Timothy
W. Diggins and John W. Gerstmayr, and each of them singly, my
true and lawful attorneys, with full power to them and each of
them, to sign for me, and in my name and in the capacity
indicated below, the Registration Statement on Form N-1A of
Putnam Overseas Growth Fund and any and all amendments (including
post-effective amendments) to said Registration Statement and to
file the same with all exhibits thereto, and other documents in
connection thereunder, with the Securities and Exchange
Commission, granting unto my said attorneys, and each of them
acting alone, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in the
premises, as fully to all intents and purposes as he or she might
or could do in person, and hereby ratify and confirm all that
said attorneys or any of them may lawfully do or cause to be done
by virtue thereof.
WITNESS my hand and seal on the date set forth below.
Signature Title Date
/s/ Jameson A. Baxter
JAMESON A. BAXTER Trustee January 17,
1994
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant
[ certifies that it meets all of the requirements for
effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and ] has duly
caused this Amendment to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Boston, and The Commonwealth of Massachusetts, on the
28th day of October, 1994 .
PUTNAM OVERSEAS GROWTH FUND
By: Gordon H. Silver, Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement of Putnam Overseas Growth
Fund has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE
George Putnam President and Chairman of
the Board; Principal
Executive Officer;
Trustee
William F. Pounds Vice Chairman and Trustee
John D. Hughes Vice President,
Treasurer and
Principal Financial
Officer
Paul G. Bucuvalas Assistant Treasurer and
Principal Accounting Officer
Jameson A. Baxter Trustee
Hans H. Estin Trustee
John A. Hill Trustee
Elizabeth T. Kennan Trustee
Lawrence J. Lasser Trustee
Robert E. Patterson Trustee
Donald S. Perkins Trustee
George Putnam, III Trustee
A.J.C. Smith Trustee
W. Nicholas Thorndike Trustee
By: Gordon H. Silver,
as Attorney-in-Fact
October 28, 1994
BYLAWS
OF
PUTNAM ADJUSTABLE RATE U.S. GOVERNMENT FUND,
PUTNAM AMERICAN GOVERNMENT INCOME FUND,
PUTNAM ARIZONA TAX EXEMPT INCOME FUND,
PUTNAM ASIA PACIFIC GROWTH FUND,
PUTNAM ASSET ALLOCATION FUNDS,
PUTNAM BALANCED GOVERNMENT FUND,
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND,
PUTNAM CONVERTIBLE INCOME-GROWTH TRUST,
PUTNAM DAILY DIVIDEND TRUST,
PUTNAM DIVERSIFIED INCOME TRUST,
PUTNAM DIVIDEND GROWTH FUND,
PUTNAM ENERGY-RESOURCES TRUST,
PUTNAM EQUITY INCOME FUND,
PUTNAM EUROPE GROWTH FUND,
PUTNAM FLORIDA TAX EXEMPT INCOME FUND,
THE GEORGE PUTNAM FUND OF BOSTON,
PUTNAM GLOBAL GOVERNMENTAL INCOME TRUST,
PUTNAM GLOBAL GROWTH FUND,
PUTNAM HEALTH SCIENCES TRUST,
PUTNAM HIGH YIELD TRUST,
PUTNAM INCOME FUND,
PUTNAM INVESTORS FUND,
PUTNAM MANAGED INCOME TRUST,
PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND II,
PUTNAM MICHIGAN TAX EXEMPT INCOME FUND II,
PUTNAM MINNESOTA TAX EXEMPT INCOME FUND II,
PUTNAM MUNICIPAL INCOME FUND,
PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND,
PUTNAM NEW OPPORTUNITIES FUND,
PUTNAM NEW YORK TAX EXEMPT MONEY MARKET FUND,
PUTNAM NEW YORK TAX EXEMPT OPPORTUNITIES FUND,
PUTNAM OHIO TAX EXEMPT INCOME FUND II,
PUTNAM OTC EMERGING GROWTH FUND,
PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND,
PUTNAM RESEARCH ANALYSTS FUND,
PUTNAM TAX EXEMPT INCOME FUND,
PUTNAM TAX EXEMPT MONEY MARKET FUND,
PUTNAM TAX-FREE INCOME TRUST,
PUTNAM U.S. GOVERNMENT INCOME TRUST,
PUTNAM UTILITIES GROWTH AND INCOME FUND,
PUTNAM VISTA FUND,
PUTNAM VOYAGER FUND
(AS AMENDED THROUGH FEBRUARY 1, 1994),
PUTNAM INTERMEDIATE TAX EXEMPT FUND
(AS AMENDED THROUGH MARCH 7, 1994),
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST,
PUTNAM NEW YORK TAX EXEMPT INCOME TRUST
(AS AMENDED THROUGH APRIL 8, 1994),
PUTNAM HIGH YIELD ADVANTAGE FUND,
PUTNAM OVERSEAS GROWTH FUND
(AS AMENDED THROUGH JUNE 1, 1994) AND
PUTNAM FEDERAL INCOME TRUST
(AS AMENDED THROUGH JUNE 6, 1994)
<PAGE>
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1 AGREEMENT AND DECLARATION OF TRUST. These Bylaws shall
be subject to the Agreement and Declaration of Trust, as from
time to time in effect (the "Declaration of Trust"), of the
Massachusetts business trust established by the Declaration of
Trust (the "Trust").
1.2 PRINCIPAL OFFICE OF THE TRUST. The principal office of
the Trust shall be located in Boston, Massachusetts.
ARTICLE 2
MEETINGS OF TRUSTEES
2.1 REGULAR MEETINGS. 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, provided that
notice of the first regular meeting following any such
determination shall be given to absent Trustees.
2.2 SPECIAL MEETINGS. Special meetings of the Trustees may
be held at any time and at any place designated in the call of
the meeting when called by the Chairman of the Trustees, the
President or the Treasurer or by two or more Trustees, sufficient
notice thereof being given to each Trustee by the Clerk or an
Assistant Clerk or by the officer or the Trustees calling the
meeting.
2.3 NOTICE OF SPECIAL MEETINGS. 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 addressed to the Trustee at his or her
usual or last known business or residence address or to give
notice to him or her in person or by telephone at least
twenty-four hours before the meeting. Notice of a special
meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the meeting, is
filed with the records of the meeting, or to any Trustee who
attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her. Neither notice of
a meeting nor a waiver of a notice need specify the purposes of
the meeting.
2.4 QUORUM. At any meeting of the Trustees a majority of
the Trustees then in office shall constitute a quorum. Any
meeting may be adjourned from time to time by a majority of the
votes cast upon the question, whether or not a quorum is present,
and the meeting may be held as adjourned without further notice.
2.5 NOTICE OF CERTAIN ACTIONS BY CONSENT. If in accordance
with the provisions of the Declaration of Trust any action is
taken by the Trustees by a written consent of less than all of
the Trustees, then prompt notice of any such action shall be
furnished to each Trustee who did not execute such written
consent, provided that the effectiveness of such action shall not
be impaired by any delay or failure to furnish such notice.
ARTICLE 3
OFFICERS
3.1 ENUMERATION; QUALIFICATION. The officers of the Trust
shall be a Chairman of the Trustees, a President, a Treasurer, a
Clerk and such other officers, if any, as the Trustees from time
to time may in their discretion elect. The Trust may also have
such agents as the Trustees from time to time may in their
discretion appoint. The Chairman of the Trustees and the
President shall be a Trustee and may but need not be a
shareholder; and any other officer may but need not be a Trustee
or a shareholder. Any two or more offices may be held by the
same person. A Trustee may but need not be a shareholder.
3.2 ELECTION. The Chairman of the Trustees, the President,
the Treasurer and the Clerk shall be elected by the Trustees upon
the occurrence of any vacancy in any such office. Other
officers, if any, may be elected or appointed by the Trustees at
any time. Vacancies in any such other office may be filled at
any time.
3.3 TENURE. The Chairman of the Trustees, the President,
the Treasurer and the Clerk shall hold office in each case until
he or she dies, resigns, is removed or becomes disqualified.
Each other officer shall hold office and each agent shall retain
authority at the pleasure of the Trustees.
3.4 POWERS. Subject to the other provisions of these
Bylaws, each officer shall have, in addition to the duties and
powers herein and in the Declaration of Trust set forth, such
duties and powers as are commonly incident to the office occupied
by him or her as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the
Trustees may from time to time designate.
3.5 CHAIRMAN; PRESIDENT. Unless the Trustees otherwise
provide, the Chairman of the Trustees or, if there is none or in
the absence of the Chairman of the Trustees, the President shall
preside at all meetings of the shareholders and of the Trustees.
Unless the Trustees otherwise provide, the President shall be the
chief executive officer.
<PAGE>
3.6 TREASURER. Unless the Trustees shall provide
otherwise, the Treasurer shall be the chief financial and
accounting officer of the Trust, and shall, subject to the
provisions of the Declaration of Trust and to any arrangement
made by the Trustees with a custodian, investment adviser or
manager, or transfer, shareholder servicing or similar agent, be
in charge of the valuable papers, books of account and accounting
records of the Trust, and shall have such other duties and powers
as may be designated from time to time by the Trustees or by the
President.
3.7 CLERK. The Clerk shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which
books or a copy thereof shall be kept at the principal office of
the Trust. In the absence of the Clerk from any meeting of the
shareholders or Trustees, an Assistant Clerk, or if there be none
or if he or she is absent, a temporary Clerk chosen at such
meeting shall record the proceedings thereof in the aforesaid
books.
3.8 RESIGNATIONS AND REMOVALS. Any Trustee or officer may
resign at any time by written instrument signed by him or her and
delivered to the Chairman of the Trustees, the President or the
Clerk or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some
other time. The Trustees may remove any officer elected by them
with or without cause. Except to the extent expressly provided
in a written agreement with the Trust, no Trustee or officer
resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation or
removal, or any right to damages on account of such removal.
ARTICLE 4
COMMITTEES
4.1 QUORUM; VOTING. A majority of the members of any
Committee of the Trustees shall constitute a quorum for the
transaction of business, and any action of such a Committee may
be taken at a meeting by a vote of a majority of the members
present (a quorum being present) or evidenced by one or more
writings signed by such a majority. Members of a Committee may
participate in a meeting of such Committee by means of a
conference telephone or other communications equipment by means
of which all persons participating in the meeting can hear each
other at the same time and participation by such means shall
constitute presence in person at a meeting.
ARTICLE 5
REPORTS
5.1 GENERAL. The Trustees and officers shall render
reports at the time and in the manner required by the Declaration
of Trust or any applicable law. Officers and Committees shall
render such additional reports as they may deem desirable or as
may from time to time be required by the Trustees.
ARTICLE 6
FISCAL YEAR
6.1 GENERAL. Except as from time to time otherwise
provided by the Trustees, the initial fiscal year of the Trust
shall end on such date as is determined in advance or in arrears
by the Treasurer, and subsequent fiscal years shall end on such
date in subsequent years.
ARTICLE 7
SEAL
7.1 GENERAL. The seal of the Trust shall consist of a
flat-faced die with the word "Massachusetts", together with the
name of the Trust and the year of its organization cut or
engraved thereon but, unless otherwise required by the Trustees,
the seal shall not be necessary to be placed on and its absence
shall not impair the validity of, any document, instrument or
other paper executed and delivered by or on behalf of the Trust.
ARTICLE 8
EXECUTION OF PAPERS
8.1 GENERAL. Except as the Trustees may generally or in
particular cases authorize the execution thereof in some other
manner, all deeds, leases, contracts, notes and other obligations
made by the Trustees shall be signed by the President, the Vice
Chairman, a Vice President or the Treasurer and need not bear the
seal of the Trust.
ARTICLE 9
ISSUANCE OF SHARES AND SHARE CERTIFICATES
9.1 SALE OF SHARES. Except as otherwise determined by the
Trustees, the Trust will issue and sell for cash or securities
from time to time, full and fractional shares of its shares of
beneficial interest, such shares to be issued and sold at a price
of not less than the par value per share, if any, and not less
than the net asset value per share as from time to time
determined in accordance with the Declaration of Trust and these
Bylaws and, in the case of fractional shares, at a proportionate
reduction in such price. In the case of shares sold for
securities, such securities shall be valued in accordance with
the provisions for determining the value of the assets of the
Trust as stated in the Declaration of Trust and these Bylaws.
The officers of the Trust are severally authorized to take all
such actions as may be necessary or desirable to carry out this
Section 9.1.
9.2 SHARE CERTIFICATES. In lieu of issuing certificates
for shares, the Trustees or the transfer agent may either issue
receipts therefor or may keep accounts upon the books of the
Trust for the record holders of such shares, who shall in either
case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and
agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled
to a certificate stating the number of shares of each class owned
by him, in such form as shall be prescribed from time to time by
the Trustees. Such certificate shall be signed by the President
or a Vice President and by the Treasurer or an Assistant
Treasurer. Such signatures may be facsimile if the certificate
is signed by a transfer agent or by a registrar. In case any
officer who has signed or whose facsimile signature has been
placed on such certificate shall cease to be such officer before
such certificate is issued, it may be issued by the Trust with
the same effect as if he were such officer at the time of its
issue.
9.3 LOSS OF CERTIFICATES. The transfer agent of the Trust,
with the approval of any two officers of the Trust, is authorized
to issue and countersign replacement certificates for the shares
of the Trust which have been lost, stolen or destroyed upon (i)
receipt of an affidavit or affidavits of loss or non-receipt and
of an indemnity agreement executed by the registered holder or
his legal representative and supported by an open penalty surety
bond, said agreement and said bond in all cases to be in form and
content satisfactory to and approved by the President or the
Treasurer, or (ii) receipt of such other documents as may be
approved by the Trustees.
9.4 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. A pledgee of
shares transferred as collateral security shall be entitled to a
new certificate if the instrument of transfer substantially
describes the debt or duty that is intended to be secured
thereby. Such new certificate shall express on its face that it
is held as collateral security, and the name of the pledgor shall
be stated thereon, who alone shall be liable as a shareholder and
entitled to vote thereon.
9.5 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The
Trustees may at any time discontinue the issuance of share
certificates and may, by written notice to each shareholder,
require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect
the ownership of shares in the Trust.
ARTICLE 10
PROVISIONS RELATING TO THE CONDUCT OF THE TRUST'S BUSINESS
10.1 CERTAIN DEFINITIONS. When used herein the following
words shall have the following meanings: "Distributor" shall mean
any one or more corporations, firms or associations which have
distributor's or principal underwriter's contracts in effect with
the Trust providing that redeemable shares issued by the Trust
shall be offered and sold by such Distributor. "Manager" shall
mean any corporation, firm or association which may at the time
have an advisory or management contract with the Trust.
10.2 LIMITATIONS ON DEALINGS WITH OFFICERS OR TRUSTEES.
The Trust will not lend any of its assets to the Distributor or
Manager or to any officer or director of the Distributor or
Manager or any officer or Trustee of the Trust, and shall not
permit any officer or Trustee or any officer or director of the
Distributor or Manager to deal for or on behalf of the Trust with
himself or herself as principal or agent, or with any
partnership, association or corporation in which he or she has a
financial interest; provided that the foregoing provisions shall
not prevent (a) officers and Trustees of the Trust or officers
and directors of the Distributor or Manager from buying, holding
or selling shares in the Trust or from being partners, officers
or directors of or otherwise financially interested in the
Distributor or the Manager; (b) purchases or sales of securities
or other property if such transaction is permitted by or is
exempt or exempted from the provisions of the Investment Company
Act of 1940 or any Rule or Regulation thereunder and if such
transaction does not involve any commission or profit to any
security dealer who is, or one or more of whose partners,
shareholders, officers or directors is, an officer or Trustee of
the Trust or an officer or director of the Distributor or
Manager; (c) employment of legal counsel, registrar, transfer
agent, shareholder servicing agent, dividend disbursing agent or
custodian who is, or has a partner, shareholder, officer or
director who is, an officer or Trustee of the Trust or an officer
or director of the Distributor or Manager; (d) sharing
statistical, research, legal and management expenses and office
hire and expenses with any other investment company in which an
officer or Trustee of the Trust or an officer or director of the
Distributor or Manager is an officer or director or otherwise
financially interested.
10.3 SECURITIES AND CASH OF THE TRUST TO BE HELD BY
CUSTODIAN SUBJECT TO CERTAIN TERMS AND CONDITIONS.
(a) All securities and cash owned by the Trust
shall be held by or deposited with one or more banks or
trust companies having (according to its last published
report) not less than $1,000,000 aggregate capital,
surplus and undivided profits (any such bank or trust
company being hereby designated as "Custodian"),
provided such a Custodian can be found ready and
willing to act; subject to such rules, regulations and
orders, if any, as the Securities and Exchange
Commission may adopt, the Trust may, or may permit any
Custodian to, deposit all or any part of the securities
owned by the Trust in a system for the central handling
of securities pursuant to which all securities of any
particular class or series of any issue deposited
within the system may be transferred or pledged by
bookkeeping entry, without physical delivery. The
Custodian may appoint, subject to the approval of the
Trustees, one or more subcustodians.
(b) The Trust shall enter into a written contract
with each Custodian regarding the powers, duties and
compensation of such Custodian with respect to the cash
and securities of the Trust held by such Custodian.
Said contract and all amendments thereto shall be
approved by the Trustees.
(c) The Trust shall upon the resignation or
inability to serve of any Custodian or upon change of
any Custodian:
(i) in case of such resignation or inability to
serve, use its best efforts to obtain a successor
Custodian;
(ii) require that the cash and securities owned
by the Trust be delivered directly to the successor
Custodian; and
(iii) in the event that no successor Custodian
can be found, submit to the shareholders, before
permitting delivery of the cash and securities owned by
the Trust otherwise than to a successor Custodian, the
question whether the Trust shall be liquidated or shall
function without a Custodian.
10.4 REPORTS TO SHAREHOLDERS. The Trust shall send to each
shareholder of record at least semi-annually a statement of the
condition of the Trust and of the results of its operations,
containing all information required by applicable laws or
regulations.
10.5 DETERMINATION OF NET ASSET VALUE PER SHARE. Net asset
value per share of each class or series of shares of the Trust
shall mean: (i) the value of all the assets properly allocable
to such class or series; (ii) less total liabilities properly
allocable to such class or series; (iii) divided by the number of
shares of such class or series outstanding, in each case at the
time of each determination. Except as otherwise determined by
the Trustees, the net asset value per share of each class or
series shall be determined no less frequently than once daily,
Monday through Friday, on days on which the New York Stock
Exchange is open for trading, at such time or times that the
Trustees set at least annually.
In valuing the portfolio investments of any class or series
of shares for the determination of the net asset value per share
of such class or series, securities for which market quotations
are readily available shall be valued at prices which, in the
opinion of the Trustees or the person designated by the Trustees
to make the determination, most nearly represent the market value
of such securities, and other securities and assets shall be
valued at their fair value as determined by or pursuant to the
direction of the Trustees, which in the case of debt obligations,
commercial paper and repurchase agreements may, but need not, be
on the basis of yields for securities of comparable maturity,
quality and type, or on the basis of amortized cost. Expenses
and liabilities of the Trust shall be accrued each day.
Liabilities may include such reserves for taxes, estimated
accrued expenses and contingencies as the Trustees or their
designates may in their sole discretion deem fair and reasonable
under the circumstances. No accruals shall be made in respect of
taxes on unrealized appreciation of securities owned unless the
Trustees shall otherwise determine.
ARTICLE 11
SHAREHOLDERS
11.1 MEETINGS. A meeting of the shareholders shall 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 such meeting. If the Clerk, when so ordered or
requested, refuses or neglects for more than two days to call
such meeting, the Trustees, Chairman of the Trustees or the
shareholders so requesting may, in the name of the Clerk, call
the meeting by giving notice thereof in the manner required when
notice is given by the Clerk.
11.2 ACCESS TO SHAREHOLDER LIST. Shareholders of record
may apply to the Trustees for assistance in communicating with
other shareholders for the purpose of calling a meeting in order
to vote upon the question of removal of a Trustee. When ten or
more shareholders of record who have been such for at least six
months preceding the date of application and who hold in the
aggregate shares having a net asset value of at least $25,000 so
apply, the Trustees shall within five business days either:
(i) afford to such applicants access to a list of
names and addresses of all shareholders as recorded on
the books of the Trust; or
(ii) inform such applicants of the approximate
number of shareholders of record and the approximate
cost of mailing material to them, and, within a
reasonable time thereafter, mail, at the applicants'
expense, materials submitted by the applicants, to all
such shareholders of record. The Trustees shall not be
obligated to mail materials which they believe to be
misleading or in violation of applicable law.
11.3 RECORD DATES. For the purpose of determining the
shareholders of any class or series of shares of the Trust who
are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to receive payment of any dividend
or of any other distribution, the Trustees may from time to time
fix a time, which shall be not more than 90 days before the date
of any meeting of shareholders or more than 60 days before the
date of payment of any dividend or of any other distribution, as
the record date for determining the shareholders of such class or
series having the right to notice of and to vote at such meeting
and any adjournment thereof or the right to receive such dividend
or distribution, and in such case only shareholders of record on
such record date shall have such right notwithstanding any
transfer of shares on the books of the Trust after the record
date; or without fixing such record date the Trustees may for any
such purposes close the register or transfer books for all or
part of such period.
11.4 PROXIES. The placing of a shareholder's name on a
proxy pursuant to telephone or electronically transmitted
instructions obtained pursuant to procedures reasonably designed
to verify that such instructions have been authorized by such
shareholder shall constitute execution of such proxy by or on
behalf of such shareholder.
ARTICLE 12
PREFERENCES, RIGHTS AND PRIVILEGES OF THE
TRUST'S CLASSES OF SHARES
12.1 GENERAL. Each class of shares of the Trust or of a
particular series of the Trust, as the case may be, will
represent interests in the same portfolio of investments of the
Trust (or that series) and be identical in all respects, except
as set forth below: (a) each class of shares shall be charged
with the expense of any Distribution Plan adopted by the Trust
pursuant to Rule 12b-1 under the Investment Company Act of 1940
with respect to such class of shares, (b) each class of shares
will be charged with any incremental shareholder servicing
expense attributable solely to such class, as determined by the
Trustees, (c) each class of shares shall be charged with any
other expenses properly allocated to such class, as determined by
the Trustees and approved by the Securities and Exchange
Commission, (d) each class of shares shall vote as a separate
class on matters which pertain to any Rule 12b-1 Distribution
Plan pertaining to such class of shares, (e) each class of shares
will have only such exchange privileges as may from time to time
be described in the Trust's prospectus with respect to such
class, (f) each class of shares shall bear such designation as
may be approved from time to time by the Trustees and (g)
reinvestments of distributions from the Trust paid with respect
to the shares of a particular class will be paid in additional
shares of such class.
12.2. CONVERSION OF CLASS B SHARES. Except as hereinafter
provided with respect to shares acquired by exchange or
reinvestment of distributions, Class B shares of the Trust will
automatically convert into Class A shares of the Trust at the end
of the month eight years after the month of purchase, or at such
earlier time as the Trustees may in their sole discretion
determine from time to time as to all Class B shares purchased on
or before such date as the Trustees may specify. Class B shares
acquired by exchange from Class B shares of another Putnam Fund
will convert into Class A shares based on the date of the initial
purchase of the Class B shares of such other Fund. Class B
shares acquired through reinvestment of distributions will
convert into Class A shares based on the date of the initial
purchase of Class B shares to which such reinvestment shares
relate. For this purpose, Class B shares acquired through
reinvestment of distributions will be attributed to particular
purchases of Class B shares in accordance with such procedures,
which may include without limitation methods of proration or
approximation, as the Trustees may in their sole discretion
determine from time to time.
ARTICLE 13
AMENDMENTS TO THE BYLAWS
13.1 GENERAL. These 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.
NF-04F
PUTNAM OVERSEAS GROWTH FUND
Class A Shares
Trust Certificate
Account No. Certificate No. Shares
CUSIP 746918 10 1
THIS CERTIFIES THAT
is the owner of Class A shares of
beneficial interest in Putnam Overseas Growth Fund, fully paid
and nonassessable, the said shares being issued, received and
held under and subject to the terms and provisions of the
Agreement and Declaration of Trust dated as of October 5,
1990, establishing Putnam Overseas Growth Fund, and all
amendments thereto, copies of which are on file with the
Secretary of State of The Commonwealth of Massachusetts. The
said owner by accepting this certificate agrees to and is bound
by all of the said terms and provisions. The shares represented
hereby are transferable in writing by the owner thereof in person
or by attorney upon surrender of this certificate to the Trustees
properly endorsed for transfer. This certificate is executed on
behalf of the Trustees as Trustees and not individually and the
obligations hereof are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets
and property of the Trust. This certificate is not valid unless
countersigned by the Investor Servicing Agent.
In Witness Whereof the Trustees of Putnam Overseas Growth
Fund have caused the following facsimile signatures to be affixed
to this certificate.
Dated: COUNTERSIGNED:
PUTNAM INVESTOR SERVICES
a division of Putnam Fiduciary
Trust Company
INVESTOR SERVICING AGENT
BY
FOR THE TRUSTEES AUTHORIZED SIGNATURE
PUTNAM OVERSEAS GROWTH FUND
Class B Shares
Trust Certificate
Account No. Certificate No. Shares
CUSIP 746918 20 0
THIS CERTIFIES THAT
is the owner of Class B shares of
beneficial interest in Putnam Overseas Growth Fund, fully paid
and nonassessable, the said shares being issued, received and
held under and subject to the terms and provisions of the
Agreement and Declaration of Trust dated as of October 5,
1990, establishing Putnam Overseas Growth Fund, and all
amendments thereto, copies of which are on file with the
Secretary of State of The Commonwealth of Massachusetts. The
said owner by accepting this certificate agrees to and is bound
by all of the said terms and provisions. The shares represented
hereby are transferable in writing by the owner thereof in person
or by attorney upon surrender of this certificate to the Trustees
properly endorsed for transfer. This certificate is executed on
behalf of the Trustees as Trustees and not individually and the
obligations hereof are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets
and property of the Trust. This certificate is not valid unless
countersigned by the Investor Servicing Agent.
In Witness Whereof the Trustees of Putnam Overseas Growth
Fund have caused the following facsimile signatures to be affixed
to this certificate.
Dated: COUNTERSIGNED:
PUTNAM INVESTOR SERVICES
a division of Putnam Fiduciary
Trust Company
INVESTOR SERVICING AGENT
BY
FOR THE TRUSTEES AUTHORIZED SIGNATURE
PUTNAM OVERSEAS GROWTH FUND
Class M Shares
Trust Certificate
Account No. Certificate No. Shares
CUSIP 746918 30 9
THIS CERTIFIES THAT
is the owner of Class M shares of
beneficial interest in Putnam Overseas Growth Fund, fully paid
and nonassessable, the said shares being issued, received and
held under and subject to the terms and provisions of the
Agreement and Declaration of Trust dated as of October 5,
1990, establishing Putnam Overseas Growth Fund, and all
amendments thereto, copies of which are on file with the
Secretary of State of The Commonwealth of Massachusetts. The
said owner by accepting this certificate agrees to and is bound
by all of the said terms and provisions. The shares represented
hereby are transferable in writing by the owner thereof in person
or by attorney upon surrender of this certificate to the Trustees
properly endorsed for transfer. This certificate is executed on
behalf of the Trustees as Trustees and not individually and the
obligations hereof are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets
and property of the Trust. This certificate is not valid unless
countersigned by the Investor Servicing Agent.
In Witness Whereof the Trustees of Putnam Overseas Growth
Fund have caused the following facsimile signatures to be affixed
to this certificate.
Dated: COUNTERSIGNED:
PUTNAM INVESTOR SERVICES
a division of Putnam Fiduciary
Trust Company
INVESTOR SERVICING AGENT
BY
FOR THE TRUSTEES AUTHORIZED SIGNATURE
(PORTIONS OF BYLAWS OF
PUTNAM OVERSEAS GROWTH FUND
RELATING TO SHAREHOLDERS' RIGHTS)
ARTICLE 9
ISSUANCE OF SHARES AND SHARE CERTIFICATES
9.1 SALE OF SHARES. Except as otherwise determined by the
Trustees, the Trust will issue and sell for cash or securities
from time to time, full and fractional shares of its shares of
beneficial interest, such shares to be issued and sold at a price
of not less than the par value per share, if any, and not less
than the net asset value per share as from time to time
determined in accordance with the Declaration of Trust and these
Bylaws and, in the case of fractional shares, at a proportionate
reduction in such price. In the case of shares sold for
securities, such securities shall be valued in accordance with
the provisions for determining the value of the assets of the
Trust as stated in the Declaration of Trust and these Bylaws.
The officers of the Trust are severally authorized to take all
such actions as may be necessary or desirable to carry out this
Section 9.1.
9.2 SHARE CERTIFICATES. In lieu of issuing certificates
for shares, the Trustees or the transfer agent may either issue
receipts therefor or may keep accounts upon the books of the
Trust for the record holders of such shares, who shall in either
case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and
agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled
to a certificate stating the number of shares of each class owned
by him, in such form as shall be prescribed from time to time by
the Trustees. Such certificate shall be signed by the President
or a Vice President and by the Treasurer or an Assistant
Treasurer. Such signatures may be facsimile if the certificate
is signed by a transfer agent or by a registrar. In case any
officer who has signed or whose facsimile signature has been
placed on such certificate shall cease to be such officer before
such certificate is issued, it may be issued by the Trust with
the same effect as if he were such officer at the time of its
issue.
9.3 LOSS OF CERTIFICATES. The transfer agent of the Trust,
with the approval of any two officers of the Trust, is authorized
to issue and countersign replacement certificates for the shares
of the Trust which have been lost, stolen or destroyed upon (i)
receipt of an affidavit or affidavits of loss or non-receipt and
of an indemnity agreement executed by the registered holder or
his legal representative and supported by an open penalty surety
bond, said agreement and said bond in all cases to be in form and
content satisfactory to and approved by the President or the
Treasurer, or (ii) receipt of such other documents as may be
approved by the Trustees.
9.4 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. A pledgee of
shares transferred as collateral security shall be entitled to a
new certificate if the instrument of transfer substantially
describes the debt or duty that is intended to be secured
thereby. Such new certificate shall express on its face that it
is held as collateral security, and the name of the pledgor shall
be stated thereon, who alone shall be liable as a shareholder and
entitled to vote thereon.
9.5 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The
Trustees may at any time discontinue the issuance of share
certificates and may, by written notice to each shareholder,
require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect
the ownership of shares in the Trust.
ARTICLE 10
PROVISIONS RELATING TO THE CONDUCT OF THE TRUST'S BUSINESS
10.4 REPORTS TO SHAREHOLDERS. The Trust shall send to each
shareholder of record at least semi-annually a statement of the
condition of the Trust and of the results of its operations,
containing all information required by applicable laws or
regulations.
ARTICLE 11
SHAREHOLDERS
11.1 MEETINGS. A meeting of the shareholders shall 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 such meeting. If the Clerk, when so ordered or
requested, refuses or neglects for more than two days to call
such meeting, the Trustees, Chairman of the Trustees or the
shareholders so requesting may, in the name of the Clerk, call
the meeting by giving notice thereof in the manner required when
notice is given by the Clerk.
11.2 ACCESS TO SHAREHOLDER LIST. Shareholders of record
may apply to the Trustees for assistance in communicating with
other shareholders for the purpose of calling a meeting in order
to vote upon the question of removal of a Trustee. When ten or
more shareholders of record who have been such for at least six
months preceding the date of application and who hold in the
aggregate shares having a net asset value of at least $25,000 so
apply, the Trustees shall within five business days either:
(i) afford to such applicants access to a list of
names and addresses of all shareholders as recorded on
the books of the Trust; or
(ii) inform such applicants of the approximate
number of shareholders of record and the approximate
cost of mailing material to them, and, within a
reasonable time thereafter, mail, at the applicants'
expense, materials submitted by the applicants, to all
such shareholders of record. The Trustees shall not be
obligated to mail materials which they believe to be
misleading or in violation of applicable law.
11.3 RECORD DATES. For the purpose of determining the
shareholders of any class or series of shares of the Trust who
are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to receive payment of any dividend
or of any other distribution, the Trustees may from time to time
fix a time, which shall be not more than 90 days before the date
of any meeting of shareholders or more than 60 days before the
date of payment of any dividend or of any other distribution, as
the record date for determining the shareholders of such class or
series having the right to notice of and to vote at such meeting
and any adjournment thereof or the right to receive such dividend
or distribution, and in such case only shareholders of record on
such record date shall have such right notwithstanding any
transfer of shares on the books of the Trust after the record
date; or without fixing such record date the Trustees may for any
such purposes close the register or transfer books for all or
part of such period.
11.4 PROXIES. The placing of a shareholder's name on a
proxy pursuant to telephone or electronically transmitted
instructions obtained pursuant to procedures reasonably designed
to verify that such instructions have been authorized by such
shareholder shall constitute execution of such proxy by or on
behalf of such shareholder.
ARTICLE 12
PREFERENCES, RIGHTS AND PRIVILEGES OF THE
TRUST'S CLASSES OF SHARES
12.1 GENERAL. Each class of shares of the Trust or of a
particular series of the Trust, as the case may be, will
represent interests in the same portfolio of investments of the
Trust (or that series) and be identical in all respects, except
as set forth below: (a) each class of shares shall be charged
with the expense of any Distribution Plan adopted by the Trust
pursuant to Rule 12b-1 under the Investment Company Act of 1940
with respect to such class of shares, (b) each class of shares
will be charged with any incremental shareholder servicing
expense attributable solely to such class, as determined by the
Trustees (c) each class of shares shall be charged with any other
expenses properly allocated to such class, as determined by the
Trustees and approved by the Securities and Exchange Commission,
(d) each class of shares shall vote as a separate class on
matters which pertain to any Rule 12b-1 Distribution Plan
pertaining to such class of shares, (e) each class of shares will
have only such exchange privileges as may from time to time be
described in the Trust's prospectus with respect to such class,
(f) each class of shares shall bear such designation as may be
approved from time to time by the Trustees and (g) reinvestments
of distributions from the Fund paid with respect to the shares of
a particular class will be paid in additional shares of such
class.
12.2. CONVERSION OF CLASS B SHARES. Except as hereinafter
provided with respect to shares acquired by exchange or
reinvestment of distributions, Class B shares of the Fund will
automatically convert into Class A shares of the Fund at the end
of the month eight years after the month of purchase, or at such
earlier time as the Trustees may in their sole discretion
determine from time to time as to all Class B shares purchased on
or before such date as the Trustees may specify. Class B shares
acquired by exchange from Class B shares of another Putnam Fund
will convert into Class A shares based on the date of the initial
purchase of the Class B shares of such other Fund. Class B
shares acquired through reinvestment of distributions will
convert into Class A shares based on the date of the initial
purchase of Class B shares to which such reinvestment shares
relate. For this purpose, Class B shares acquired through
reinvestment of distributions will be attributed to particular
purchases of Class B shares in accordance with such procedures,
which may include without limitation methods of proration or
approximation, as the Trustees may in their sole discretion
determine from time to time.
PUTNAM OVERSEAS GROWTH FUND
DISTRIBUTOR'S CONTRACT
Distributor's Contract dated May 6, 1994, by and between
PUTNAM OVERSEAS GROWTH FUND, a Massachusetts business trust (the
"Fund"), and PUTNAM MUTUAL FUNDS CORP., a Massachusetts
corporation ("Putnam").
WHEREAS, the Fund and Putnam are desirous of entering into
this agreement to provide for the distribution by Putnam of
shares of the Fund;
NOW, THEREFORE, in consideration of the mutual agreements
contained in the Terms and Conditions of Distributor's Contract
attached to and forming a part of this Contract (the "Terms and
Conditions"), the Fund hereby appoints Putnam as a distributor of
shares of the Fund, and Putnam hereby accepts such appointment,
all as set forth in the Terms and Conditions.
A copy of the Agreement and Declaration of Trust of the Fund
is on file with the Secretary of State of The Commonwealth of
Massachusetts and notice is hereby given that this instrument is
executed on behalf of the Trustees of the Fund as Trustees and
not individually, and that the obligations of or arising out of
this instrument are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets
and property of the Fund.
IN WITNESS WHEREOF, PUTNAM OVERSEAS GROWTH FUND and PUTNAM
MUTUAL FUNDS CORP. have each caused this Distributor's Contract
to be signed in duplicate in its behalf, all as of the day and
year first above written.
PUTNAM OVERSEAS GROWTH FUND
By: -----------------------------
Executive Vice President
PUTNAM MUTUAL FUNDS CORP.
By: -----------------------------
President<PAGE>
TERMS AND CONDITIONS
OF
DISTRIBUTOR'S CONTRACT
1. RESERVATION OF RIGHT NOT TO SELL. The Fund reserves the
right to refuse at any time or times to sell any of its shares of
beneficial interest ("shares") hereunder for any reason deemed
adequate by it.
2. PAYMENTS TO PUTNAM. In connection with the distribution of
shares of the Fund, Putnam will be entitled to receive: (a)
payments pursuant to any Distribution Plan and Agreement from
time to time in effect between the Fund and Putnam with respect
to the Fund or any particular class of shares of the Fund, (b)
any contingent deferred sales charges applicable to the
redemption of shares of the Fund or of any particular class of
shares of the Fund, determined in the manner set forth in the
then current Prospectus and Statement of Additional Information
of the Fund and (c) subject to the provisions of Section 3 below,
any front-end sales charges applicable to the sale of shares of
the Fund or of any particular class of shares of the Fund, less
any applicable dealer discount.
3. SALES OF SHARES TO PUTNAM AND SALES BY PUTNAM. Putnam will
have the right, as principal, to sell shares of the Fund to
investment dealers against orders therefor (a) at the public
offering price (calculated as described below) less a discount
determined by Putnam, which discount shall not exceed the amount
of the sales charge referred to below, or (b) at net asset value.
Upon receipt of an order to purchase Fund shares from an
investment dealer with whom Putnam has a Sales Contract, Putnam
will promptly purchase shares from the Fund to fill such order.
The public offering price of a class of shares shall be the net
asset value of such shares then in effect, plus any applicable
front-end sales charge determined in the manner set forth in the
then current Prospectus and Statement of Additional Information
of the Fund or as permitted by the Investment Company Act of
1940, as amended, and the Rules and Regulations of the Securities
and Exchange Commission promulgated thereunder. In no event
shall the public offering price exceed 1000/915ths of such net
asset value, and in no event shall any applicable sales charge
exceed 8 1/2% of the public offering price. The net asset value
of the shares shall be determined in the manner provided in the
Agreement and Declaration of Trust of the Fund as then amended
and when determined shall be applicable to transactions as
provided for in the then current Prospectus and Statement of
Additional Information of the Fund.
Putnam will also have the right, as principal, to purchase
shares from the Fund at their net asset value and to sell such
shares to the public against orders therefor at the public
offering price or at net asset value.
Putnam will also have the right, as principal, to sell
shares at their net asset value and not subject to a contingent
deferred sales charge to such persons as may be approved by the
Trustees of the Fund, all such sales to comply with the
provisions of the Investment Company Act of 1940, as amended, and
the Rules and Regulations of the Securities and Exchange
Commission promulgated thereunder.
Putnam will also have the right, as agent for the Fund, to
sell shares at the public offering price or at net asset value to
such persons and upon such conditions as the Trustees of the Fund
may from time to time determine.
On every sale the Fund shall receive the applicable net
asset value of the shares. Putnam will reimburse the Fund for
any increased issue tax paid on account of sales charges. Upon
receipt of registration instructions in proper form and payment
for shares, Putnam will transmit such instructions to the Fund or
its agent for registration of the shares purchased.
4. SALES OF SHARES BY THE FUND. The Fund reserves the right to
issue shares at any time directly to its shareholders as a stock
dividend or stock split and to sell shares to its shareholders or
to other persons approved by Putnam at not less than net asset
value.
5. REPURCHASE OF SHARES. Putnam will act as agent for the Fund
in connection with the repurchase of shares by the Fund upon the
terms and conditions set forth in the then current Prospectus and
Statement of Additional Information of the Fund.
6. BASIS OF PURCHASES AND SALES OF SHARES. Putnam will use its
best efforts to place shares sold by it on an investment basis.
Putnam does not agree to sell any specific number of shares.
Shares will be sold by Putnam only against orders therefor.
Putnam will not purchase shares from anyone other than the Fund
except in accordance with Section 5, and will not take "long" or
"short" positions in shares contrary to the Agreement and
Declaration of Trust of the Fund.
7. RULES OF NASD, ETC. Putnam will conform to the Rules of
Fair Practice of the National Association of Securities Dealers,
Inc. and the sale of securities laws of any jurisdiction in which
it sells, directly or indirectly, any shares. Putnam also agrees
to furnish to the Fund sufficient copies of any agreements or
plans it intends to use in connection with any sales of shares in
adequate time for the Fund to file and clear them with the proper
authorities before they are put in use, and not to use them until
so filed and cleared.
8. PUTNAM INDEPENDENT CONTRACTOR. Putnam shall be an
independent contractor and neither Putnam nor any of its officers
or employees as such is or shall be an employee of the Fund.
Putnam is responsible for its own conduct and the employment,
control and conduct of its agents and employees and for injury to
such agents or employees or to others through its agents or
employees. Putnam assumes full responsibility for its agents and
employees under applicable statutes and agrees to pay all
employer taxes thereunder.
Putnam will maintain at its own expense insurance against
public liability in such an amount as the Trustees of the Fund
may from time to time reasonably request.
9. EXPENSES. Putnam will pay all expenses of qualifying shares
of the Fund for sale under the so-called "Blue Sky" laws of any
state (except expenses of any action by the Fund relating to its
Agreement and Declaration of Trust or other matters in which the
Fund has a direct concern), and expenses of preparing, printing
and distributing advertising and sales literature (apart from
expenses of registering shares under the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
and the preparation and printing of Prospectuses and Statements
of Additional Information and reports as required by said Acts
and the direct expenses of the issue of shares, except that
Putnam will pay the cost of the preparation and printing of
Prospectuses and Statements of Additional Information and
shareholders' reports used by it and by others in the sale of
Fund shares to the extent such cost is not paid by others).
10. INDEMNIFICATION OF FUND. Putnam agrees to indemnify and
hold harmless the Fund and each person who has been, is, or may
hereafter be a Trustee of the Fund against expenses reasonably
incurred by any of them in connection with any claim or in
connection with any action, suit or proceeding to which any of
them may be a party, which arises out of or is alleged to arise
out of any misrepresentation or omission to state a material
fact, or out of any alleged misrepresentation or omission to
state a material fact, on the part of Putnam or any agent or
employee of Putnam or any other person for whose acts Putnam is
responsible or is alleged to be responsible unless such
misrepresentation or omission was made in reliance upon written
information furnished by the Fund. Putnam also agrees likewise
to indemnify and hold harmless the Fund and each such person in
connection with any claim or in connection with any action, suit
or proceeding which arises out of or is alleged to arise out of
Putnam's (or an affiliate of Putnam's) failure to exercise
reasonable care and diligence with respect to its services
rendered in connection with investment, reinvestment, automatic
withdrawal and other plans for shares. The term "expenses"
includes amounts paid in satisfaction of judgments or in
settlements which are made with Putnam's consent. The foregoing
rights of indemnification shall be in addition to any other
rights to which the Fund or a Trustee may be entitled as a matter
of law.
11. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT. This Contract shall automatically terminate, without
the payment of any penalty, in the event of its assignment. This
Contract may be amended only if such amendment be approved either
by action of the Trustees of the Fund or at a meeting of the
shareholders of the Fund by the affirmative vote of a majority of
the outstanding shares of the Fund, and by a majority of the
Trustees of the Fund who are not interested persons of the Fund
or of Putnam by vote cast in person at a meeting called for the
purpose of voting on such approval.
12. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT. This
Contract shall take effect upon the date first above written and
shall remain in full force and effect continuously (unless
terminated automatically as set forth in Section 11) until
terminated:
(a) Either by the Fund or Putnam by not more
than sixty (60) days' nor less than ten (10) days'
written notice delivered or mailed by registered
mail, postage prepaid, to the other party; or
(b) If the continuance of this Contract after
January 31, 1995 is not specifically approved at
least annually by the Trustees of the Fund or the
shareholders of the Fund by the affirmative vote of a
majority of the outstanding shares of the Fund, and
by a majority of the Trustees of the Fund who are not
interested persons of the Fund or of Putnam by vote
cast in person at a meeting called for the purpose of
voting on such approval.
Action by the Fund under (a) above may be taken either (i) by
vote of its Trustees or (ii) by the affirmative vote of a
majority of the outstanding shares of the Fund. The requirement
under (b) above that continuance of this Contract be
"specifically approved at least annually" shall be construed in a
manner consistent with the Investment Company Act of 1940, as
amended, and the Rules and Regulations thereunder.
Termination of this Contract pursuant to this Section 12
shall be without the payment of any penalty.
13. CERTAIN DEFINITIONS. For the purposes of this
Contract, the "affirmative vote of a majority of the outstanding
shares of the Fund" means the affirmative vote, at a duly called
and held meeting of shareholders of the Fund, (a) of the holders
of 67% or more of the shares of the Fund present (in person or by
proxy) and entitled to vote at such meeting, if the holders of
more than 50% of the outstanding shares of the Fund entitled to
vote at such meeting are present in person or by proxy, or (b) of
the holders of more than 50% of the outstanding shares of the
Fund entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "interested
person" and "assignment" shall have the meanings defined in the
Investment Company Act of 1940, as amended, subject, however, to
such exemptions as may be granted by the Securities and Exchange
Commission under said Act.
S:\shared\discon1
<PAGE>
PUTNAM IRA PLAN
ARTICLE I
INTRODUCTION
By executing the related Adoption Agreement, the
Participant, or the Employer on behalf of the Participants, has
established an Individual Retirement Account Plan for the
exclusive benefit of the Participant(s) and his or their
Beneficiaries intended to qualify under Section 408(a) or 408(c),
in the case of a Plan established by the Employer on behalf of
the Participants, of the Code.
ARTICLE II
DEFINITIONS
As used in this Plan the following terms shall have the
following meanings, unless a different meaning is plainly
required by the context:
2.1 "Agreement" shall mean the Adoption Agreement pursuant
to which the Participant or the Employer has adopted the Plan.
2.2 "Annuity" shall mean an annuity contract or
participation therein (participating interests) which is made
available as a funding option by the Trustee to an Employer or a
particular class of Participants under the Plan. Each such
contract or participating interest, when it is issued in the name
of any person other than the Trustee, shall provide that it is
non-transferable, that the owner shall have no right or power to
sell, assign, discount or pledge as collateral or security for
the performance of any obligation or for any other purpose
interest in such annuity contract other than to the issuer.
2.3 "Beneficiary" shall mean the person or persons
designated by a Participant pursuant to Section 7.3.
2.4 "Code" shall mean the Internal Revenue Code of 1986, as
it may be amended from time to time.
2.5 "Compensation" shall mean wages, salaries, professional
fees, or other amounts derived from or received for personal
service actually rendered (including, but not limited to,
commissions paid salesmen, compensation for services on the basis
of a percentage of profits, commissions on insurance premiums,
tips, and bonuses) and include earned income, as defined in
Section 401(c)(2) of the Code (reduced by the deduction the self-
employed individual takes for contributions to a plan qualified
under Section 401(a) of the Code). Compensation shall not
include any amounts derived from or received as earnings or
profits from property (including, but not limited to, interest
and dividends) or amounts not includible in gross income.
Compensation shall not include any amount received as a pension
or annuity or as deferred compensation. Compensation shall
include any amount includible in the individual's gross income
under Section 71 of the Code with respect to a divorce or
separation instrument described in subparagraph (A) of Section
71(b)(2) of the Code.
2.6 "Designated Beneficiary" shall mean the Beneficiary who
is considered as such under Sections 401(a)(9) and 408 of the
Code and the regulations promulgated thereunder.
2.7 "Effective Date" shall mean the date on which the
Employer or Participant signs the Agreement.
2.8 "Employer" shall mean the employer or an association of
employees (within the meaning of Section 408(c) of the Code)
named in the Agreement, if any is so named.
2.9 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as it may be amended from time to time.
2.10 "Excess Contribution" shall mean the amount of any
contribution (other than a Rollover Contribution) made by or on
behalf of a Participant for any Plan Year which is in excess of
the limitations under Sections 219 and 408(o) of the Code.
2.11 "Investment Company Shares" shall mean shares issued by
any registered investment company for which The Putnam Management
Company, Inc., or its affiliate, serves as investment advisor, or
for which Putnam Financial Services, Inc., or its affiliate,
serves as principal underwriter; provided, however, that in the
case of any open-end investment company, the then current
prospectus of such investment company offers its shares for
purchase under the Plan.
2.12 "IRA Account" shall mean the property held in trust by
the Trustee for the account of the Participant and his
Beneficiaries.
2.13 "Participant" shall mean each individual named as a
participant in the Agreement.
2.14 "Plan" shall mean The Putnam Individual Retirement
Account Plan set forth in this instrument, as it may be amended
from time to time.
2.15 "Plan Year" shall mean the calendar year.
2.16 "Required Beginning Date" shall mean April 1 following
the calendar year in which the Participant attains age 70-1/2.
2.17 "Rollover Contribution" shall mean a contribution
described in Section 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8),
or 408(d)(3) of the Code.
2.18 "Service Company" shall mean Putnam Investor Services,
Inc.
2.19 "Simplified Employee Pension Program" shall mean an
arrangement as defined in Section 408(k) of the Code.
2.20 "Term Deposit" shall mean a deposit offered by a bank
and which is made available as a funding option by the Trustee to
an Employer or a particular class of Participants under the Plan.
2.21 "Trustee" shall mean Putnam Fiduciary Trust Company.
2.22 A pronoun in the masculine gender includes the feminine
gender unless the context indicates otherwise.
ARTICLE III
Contributions
3.1 For each Plan Year, contributions to the IRA Account of
each Participant may be made in accordance with the following
provisions:
(a) by or on behalf of each Participant, an amount not
exceeding the lesser of $2,000 or 100% of the Participant's
Compensation.
(b) if the Participant has no Compensation (or elects
to be treated as having no Compensation) and is the spouse of
another Participant in a similar individual account retirement
plan, an amount not to exceed the amount in (a); provided, that
the aggregate of (a) and (b) may not exceed the lesser of $2,250
or 100% of the spouse's Compensation.
(c) on behalf of a Participant by an Employer pursuant
to a Simplified Employee Pension Program, an amount in accordance
with the terms of a Simplified Employee Pension Program as
described in Section 408(k) of the Code.
(d) if the Participant has attained age 70-1/2 before
the close of a Plan Year, no contribution may be made for the
Plan Year except Rollover Contributions or Employer contributions
made pursuant to a Simplified Employee Pension.
3.2 In addition to the current cash contributions
contemplated by Section 3.1, any Participant may cause to be
contributed to his IRA Account from time to time a Rollover
<PAGE>
Contribution to the extent permitted by Sections 402(a)(5),
402(a)(7), 403(a)(4), 403(b)(8) and 408(d)(3) of the Code.
3.3 In no event shall a contribution, other than a Rollover
Contribution, by or on behalf of a Participant be made if (a) the
contribution, when added to other contributions (other than
Rollover Contributions) for the same Plan Year, exceeds the
applicable limits set forth in Section 3.1, or (b) the
contribution is not in cash.
A Rollover Contribution shall not be accepted under the
Plan unless it is in cash or is in a form of investment permitted
under Article V.
The Participant assumes sole responsibility for making
sure that all contributions made to his IRA Account satisfy the
applicable limits set forth in Section 3.1 and the Service
Company and the Trustee shall have no duty to determine whether
such contributions are in excess of such limits.
3.4 The Employer shall notify the Service Company in
writing or other medium acceptable to the Service Company of the
amount of each contribution made by it on behalf of each
Participant (and such Participant's spouse).
3.5 For purposes of Section 3.1, a contribution to a
Participant's IRA Account shall be deemed to have been made for
the Plan Year in which it is made unless the Participant directs
that it was made with respect to the preceding Plan Year. A
contribution shall be deemed to have been made on the last day of
the preceding Plan Year if the contribution is made on account of
such Plan Year, and it is made no later than the due date of the
Participant's Federal income tax return.
3.6 The deductibility or non-deductibility of contributions
made by or on behalf of the Participant (other than contributions
made under Section 3.1(c)) shall be determined under Sections 219
and 408(o) of the Code. The Participant, and not the Trustee or
the Service Company, determines whether contributions are
deductible or non-deductible.
ARTICLE IV
Participants' IRA Accounts
4.1 Each Participant's interest in his IRA Account shall be
fully vested and nonforfeitable at all times.
4.2 The Service Company shall keep records showing the
amount of each Participant's interest in his IRA Account. The
Service Company and the Trustee shall establish and maintain such
other accounts and records as each deems in its discretion to be
reasonably required in order to discharge its duties under the
Plan.
4.3 The Trustee and the Service Company shall have no duty
to account for deductible contributions separately from non-
deductible contributions. In determining the taxable amount of a
distribution, the Participant shall only rely on his annual
Federal income tax returns and not on any reports of the Trustee
or the Service Company. The Trustee and Service Company shall
withhold Federal income tax from any distribution from the
Participant's IRA Account as if the total amount of the
distribution is includible in the Participant's income, unless
otherwise permitted by applicable law.
ARTICLE V
INVESTMENT OF THE IRA ACCOUNT
The Participant shall determine what proportion of each
contribution by or on behalf of the Participant to the IRA
Account shall be invested in Investment Company Shares, an
Annuity, a Term Deposit, and/or in such other securities that are
acceptable to the Trustee. The Participant shall from time to
time direct the Trustee with respect to the investment and
reinvestment of assets held in the IRA Account by means of
written instructions given to the Service Company in such manner
required by the Service Company. Notwithstanding the foregoing,
the Employer may limit on the Agreement the funding choices
available to the Participant.
The Trustee shall invest all contributions made to the IRA
Account and all income received thereon in the funding option(s)
in accordance with the Participant's directions and shall
reinvest in each such funding option all income, interest or
other distributions thereon (unless directed otherwise by the
Participant). If at any time investment instructions given by
the Participant to the Trustee are unclear in the opinion of the
Trustee, the Trustee may invest part or all of the assets in the
IRA Account in the Putnam Daily Dividend Trust or any other
similar fund. The Trustee and the Service Company reserve the
right, however, when prudent, to postpone the investment of
initial contributions for seven days from the date of adoption of
the Agreement.
The Participant may change the choice of funding options as
often as desired but subject to any restrictions or penalties
imposed by the underlying investment. Any such change shall be
made in the manner required by the Service Company; except that
the Employer may place further restrictions on the change of
funding options by the Participant if the Employer so elects in
the Agreement.
The Trustee and the Service Company assume no responsibility
for rendering advice with respect to the investment and
reinvestment of the Participant's IRA Account and shall not be
liable for any loss incurred with respect to any investment made
or retained in accordance with the Participant's instructions.
The Participant shall have and exercise exclusive responsibility
and control over the investment of the assets of his IRA Account
in accordance with the terms of this Plan and the Agreement, and
the Trustee and the Service Company shall have no duty to
question his instructions in that regard or to advise him
regarding purchase, retention, or sale of such assets.
No part of the IRA Account shall be invested in life
insurance contracts or in collectibles, as defined in Section
408(m) of the Code. No part of the IRA Account shall be
commingled with any other property except in a common trust fund
or common investment fund (within the meaning of Section
408(a)(5) of the Code and the regulations thereunder), and no
part of the IRA Account shall be commingled with other property
in any common trust fund or common investment fund which includes
assets other than the assets of individual retirement accounts as
described in Section 408(a) or (c) of the Code and the assets of
trusts exempt from taxation under Section 501(a) of the Code
which are parts of plans described in Section 401(a) of the Code.
If the Participant authorizes the Employer to withhold
contributions from the Participant's pay and remit them to the
Trustee periodically, those contributions may be invested in a
group trust maintained by the Trustee, and commingled with
contributions made by other individual retirement plan
participants pending allocation of the Participant's
contributions to his IRA Account. The group trust assets shall
be invested, and its earnings shall be allocated, as described in
the Adoption Agreement signed by the Participant, and the
governing instrument of that group trust shall be deemed to be
adopted as a part of this Plan.
ARTICLE VI
Powers and Duties of the Trustee and
Service Company
6.1 Each Participant may direct the manner in which any
Investment Company Shares (including fractional Shares) held in
his IRA Account shall be voted with respect to any matters coming
before any meeting of shareholders of the investment company
which issued such shares. The Participant's directions must be
in writing on a form approved by the Service Company, signed by
the Participant and delivered to the Service Company within the
time prescribed by it. Subject to any requirements of applicable
law, the Service Company shall deliver to each Participant copies
of any notices of shareholders' meetings, proxies and proxy-
soliciting materials, prospectuses and the annual and other
reports to shareholders which have been received by the Service
Company with respect to Investment Company Shares held for that
Participant. The Trustee and the Service Company shall not vote
any Investment Company Shares except upon receipt by the Service
Company of adequate written instructions from the Participant.
6.2 In addition to and not in limitation of such powers as
the Trustee has by law or under any other provisions of the Plan,
the Trustee shall, subject to the limitations set forth in
Article V hereof, have the following powers:
(a) to deal with all or any part of the IRA Account;
(b) to retain uninvested such cash as it may deem
necessary or advisable, without liability for interest thereon;
(c) to enforce by suit or otherwise, or to waive, its
rights on behalf of the IRA Account, and to defend claims
asserted against it or the IRA Account, provided that the Trustee
is indemnified by the Participant to its satisfaction against
liability and expenses;
(d) to compromise, adjust and settle any and all
claims against or in favor of it or the IRA Account;
(e) to register securities in its own name (with or
without indication of its fiduciary capacity hereunder),
including commingling with other securities held by the Trustee
as provided in Article V;
(f) to enter into contracts or participating interests
for investments permitted under the Plan;
(g) to make, execute, acknowledge and deliver any and
all instruments that it deems necessary or appropriate to carry
out the powers herein granted; and
(h) except as otherwise provided herein, generally to
exercise any of the powers of an owner with respect to all or any
part of the IRA Account.
6.3 Within a reasonable period after (a) the end of each
Plan Year and (b) the termination of the Plan, the Service
Company shall render to each Participant, and to other persons as
required by law, accounts for its administration under the Plan
during the preceding Plan Year or interim period. The Trustee,
through the Service Company as its agent, shall make reports
regarding such accounts to the Commissioner of Internal Revenue
or his delegate and individuals for whom the IRA Account is
maintained with respect to contributions, distributions and such
other matters as the Commissioner or his delegate may required by
regulation. The Participant or, in the case of a Plan adopted by
an Employer, the Employer shall furnish such information as is
necessary to prepare such reports. Such reports shall be filed
at such time and in such manner and furnished to such individuals
at such time and in such manner as may be required by regulation.
The Trustee and the Service Company shall also give access to
their respective records with respect to the Plan at reasonable
times and upon reasonable notice to any person designated by a
Participant or to any person required by law to have access to
such records. Should no person or persons to whom an account is
rendered, as required by law, file with the Service Company
written objection to specific items in such account within a
period of 60 days after its mailing, and commence legal
proceedings within a further 60 days after the filing of written
objection, the account shall be considered approved to the extent
permitted by applicable law, with the same effect as though it
had been judicially allowed. If any Participant, or any other
person required by law to receive such accounts, files any
exceptions or objections within such 60-day period with respect
to any matters or transactions stated or shown in the account and
questions raised in such exception or objections cannot be
amicably settled, the Service Company or any person required by
law to receive such accounts shall have the right to have such
questions settled by judicial proceedings although the
Participant or any person required by law to receive such
accounts shall have, to the extent permitted by applicable law,
only 60 days from the filing of written objection to the account
to commence legal proceedings. Nothing herein contained shall be
construed as depriving the Trustee or the Service Company of the
right to have a judicial settlement of accounts. In any
proceeding for a judicial settlement, the only necessary parties,
except as required by law, shall be the Trustee, the Service
Company and all persons to whom the accounting was rendered; and
any judgment or decree entered in any such pro- ceeding shall, to
the extent permitted by applicable law, be binding and conclusive
on all persons claiming to have any interest in the IRA Account.
6.4 The Trustee and the Service Company shall be entitled
to reasonable compensation for services, determined from time to
time on such basis as shall be specified in the last preceding
account rendered by the Service Company and shared by them in
such manner as they may determine. Unless otherwise provided,
their compensation and all reasonable expenses incurred by them
in the administration of the Plan shall be paid from the
Participant's IRA Account. The Service Company is expressly
authorized to cause IRA Account assets to be redeemed for the
purpose of paying such amounts.
6.5 Any corporation into which the Trustee or Service
Company may merge or with which it may consolidate or any
corporation resulting from any such merger or consolidation shall
be the successor of the Trustee or Service Company, as the case
may be, without the execution or filing of any additional
instrument or the performance of any further act.
6.6 Except as may otherwise be required by law and other
provisions of this Plan:
(a) the Trustee and the Service Company shall be
responsible only for the management and disbursement of amounts
actually contributed to the IRA Account; and
(b) neither the Trustee nor the Service Company shall
have any responsibility for determining the correctness of the
amount of any contributions, the propriety of any contribution as
a Rollover Contribution, the failure of a Participant or an
Employer to make the contributions provided for in the Agreement,
the correctness of any disbursement made pursuant to the written
directions of a Participant or an Employer, the taxable amount of
a distribution or whether any Participant is an individual by or
on behalf of whom deductible contributions within the meaning of
Section 219 of the Code may be made; and
(c) neither the Trustee nor the Service Company shall
be liable for any acts or omissions except its own negligence or
bad faith in failing to carry out the terms contained in the Plan
and the Agreement; and
(d) neither the Trustee nor the Service Company shall
be liable for any loss or breach caused by any Participant's
exercise of control over assets in his IRA Account.
ARTICLE VII
Payments to Participant and Beneficiary
7.1 Subject to the further provisions of this Article VII,
the Service Company shall make distributions to a Participant
and/or his Beneficiary from the Participant's IRA Account in
accordance with instructions in writing from the Participant (or
his Beneficiary if the Participant is deceased). It shall be the
responsibility of the Participant (or his Beneficiary if the
Participant is deceased) to determine that any such distribution
is in accordance with Sections 408(a)(6) and 408(b)(3) of the
Code and the regulations promulgated thereunder. Neither the
Trustee nor the Service Company assumes any responsiblity to make
any distributions to the Participant (or his Beneficiary if the
Participant is deceased) unless and until such written
instructions specify the occasion for such distribution, the
amount of such distribution, the elected manner of distribution,
and any written statement required by this Article VII. Prior to
making any such distributions from the IRA Account, the Service
Company shall be furnished with any and all applications,
certificates, tax waivers, signature guarantees, and other
documents (including power of any legal representative's
authority) deemed necessary or desirable by the Service Company,
but the Service Company shall not be liable for complying with
written instructions which appear on their face to be genuine, or
for refusing to comply if not satisfied that such instructions
are genuine, and assumes no duty of further inquiry. Upon
receipt of proper written instructions as required above, the
Service Company shall cause the assets of the IRA Account to be
distributed in cash and/or in Investment Company Shares, as
specified in such written instructions, to the Participant (or
his Beneficiary if the Participant is deceased).
7.2 (a) Distributions to a Participant may be paid in any
one or more of the following ways as the Participant may direct
the Service Company in writing, on a form acceptable to the
Service Company:
(i) in a lump sum in cash and/or in Investment
Company Shares;
(ii) in systematic monthly, quarterly, semi-annual
or annual installments in cash and/or in Investment Company
Shares over a period not to exceed the life expectancy of the
Participant or the joint life and last survivor expectancy of the
Participant and his Designated Beneficiary;
(iii) in systematic monthly, quarterly, semi-
annual or annual installments in cash and/or in Investment
Company shares over a period designated by the Participant.
(iv) in a dollar amount designated by the
Participant in cash and/or in Investment Company shares;
(v) in installments in cash consisting of current
dividends and capital gains earned by the IRA Account; or
(vi) in installments in cash consisting only of
current dividends earned by the IRA Account.
(b) With respect to any distributions made under this
Article VII to or on behalf of a Participant who has not attained
the age of 59-1/2 (unless the distribution is made after the
Participant's death or the Participant has become disabled), the
Service Company prior to making a distribution must receive a
written statement, on a form acceptable to it, addressed to the
Trustee from that Participant declaring his intention as to the
disposition of the amount distributed.
A Participant shall be considered to be disabled only if he
is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which
can be expected to result in death or to be of long continued and
indefinite duration. All other distributions may be subject to
any penalties imposed by the Code. Any distributions from the
Term Deposit or Annuity may be subject to penalties and other
conditions.
7.3 Unless distribution of the entire balance standing in
the credit of a Participant's IRA Account has been made or
provided for in accordance with Section 7.1 by the Participant's
Required Beginning Date, the Participant shall direct the Service
Company to begin the distribution of his remaining balance in his
IRA Account beginning no later than his Required Beginning Date
pursuant to the distribution method specified in either Section
7.2(a)(i) or (ii) as the Participant may select in writing on a
form acceptable to the Service Company.
If distribution is to be made over a period under Section
7.2(a)(ii) above, the minimum amount to be distributed for each
year, beginning with the Participant's Required Beginning Date
and each December 31 thereafter, shall be at least an amount
equal to the lesser of the balance standing to the credit of the
Participant's IRA Account or the quotient obtained by dividing
the Participant's entire interest in his IRA Account as of the
close of business on December 31 of the preceding year by the
life expectancy of the Participant or the joint life and last
survivor expectancy of the Participant and his Designated
Beneficiary, whichever is applicable. Life expectancy and joint
and last survivor expectancy shall be computed by use of the
return multiples contained in Section 1.72-9 of the Income Tax
Regulation. The initial life expectancy or joint life and last
survivor expectancy shall be computed using the attained ages of
the Participant and his Designated Bene- ficiary as of their
birthdays in the year the Participant attains age 70-1/2. The
life expectancy of the Participant (and the life expectancy of
his spouse, if applicable) shall be recalculated annually using
their attained ages as of their birthdays in the year for which
the minimum annual payment is being determined. The life
expectancy of any other Designated Beneficiary shall not be
recalculated. If the Designated Beneficiary of a Participant is
not his spouse, the method of distribution selected must assure
that at least 50% of the present value of the amount available
for distribution is paid within the life expectancy of the
Participant. Therefore, the period over which annual
distributions shall be made to the Participant and his
Beneficiary shall not exceed the applicable period determined by
use of the table contained in Section 1.401(a)(9)-2 of the
Proposed Income Tax Regulations.
7.4 Upon the death of a Participant after his Required
Beginning Date but before his entire interest in his IRA Account
has been distributed, the Participant's remaining interest in his
IRA Account shall continue to be distributed to his Beneficiary
at least as rapidly as under the method of dis-tribution being
used prior to the Participant's death. The Beneficiary shall be
the person whom the Participant shall have designated in a
writing prior to his death, which writing shall have been
deposited with the Service Company in a form acceptable to it.
Such designation may be changed by the Participant during his
lifetime. If no Beneficiary has been properly designated, or if
no Beneficiary survives the Participant, distribution shall be
made to the Participant's surviving spouse, or if no spouse, to
his issue PER STIRPES, or if none, to his estate.
7.5 If the Participant dies prior to his Required Beginning
Date, the following provisions shall apply:
(a) Distribution to his Beneficiary may be made by one
of the following methods as the Beneficiary shall request in
writing on a form acceptable to the Service Company:
(i) lump sum in cash and/or in Investment Company
Shares distributed no later than December 31 of the year
containing the fifth anniversary of the Participant's death;
(ii) in systematic monthly, quarterly, semi-annual
or annual installments in cash and/or in Investment Company
Shares over a period of time ending no later than December 31 of
the year containing the fifth anniversary of the Participant's
death; provided, however, that the Service Company shall not be
required to pay installments amounting to less than fifty dollars
per month;
(iii) in systematic monthly, quarterly, semi-
annual or annual installments in cash and/or in Investment
Company Shares over a period of years not exceeding the life
expectancy of the Designated Beneficiary; provided, however, that
the Service Company shall not be required to pay installments
amounting to less than fifty dollars per month.
(b) The Beneficiary who is other than a surviving
spouse shall elect one of the distribution methods described in
(a) above no later than December 31 of the year following the
year of the Participant's death and shall so inform the Service
Company in writing. The Beneficiary who is a surviving spouse
shall elect one of the distribution methods described in (a)
above no later than December 31 of the year containing the fifth
(5th) anniversary of the Participant's death and shall so inform
the Service Company in writing. If the Beneficiary or
Beneficiaries do not make such election, the Service Company
shall make a distribution in cash in accordance with Section
7.5(a)(i) if the Beneficiary is other than the surviving spouse,
and in accordance with Section 7.5(a)(iii) if the Beneficiary is
the Participant's surviving spouse.
<PAGE>
(c) If distribution is to be made in accordance with
Section 7.5(a)(iii), it must commence by the December 31 of the
year following the year of the Participant's death; provided,
however, that if the Participant's spouse is the Designated
Beneficiary, distribution may be delayed until the December 31 of
the year the Participant would have attained age 70-1/2, if
later. The minimum amount to be distributed each year shall be
at least an amount equal to the lesser of the balance standing to
the credit of the Participant's IRA Account or the quotient
obtained by dividing the Participant's entire interest in his IRA
Account as of the close of business on December 31 of the
preceding year by the life expectancy of the Designated
Beneficiary. The Beneficiary may elect at any time to receive a
greater amount of distribtuion or to accelerate the method of
distribution.
Life expectancy shall be calculated by use of the return
multiplies specified in Section 1.72-9 of the Income Tax
Regulations. The initial life expectancy shall be computed using
the attained age of the Designated Beneficiary as of his birthday
in the year distributions are required to commence. Life
expectancy of a surviving spouse shall be recalculated annually
using the spouse's attained age as of the spouse's birthday in
the year for which the minimum annual payment is being
determined. In the case of any other Designated Beneficiary,
payments for any calendar year after the year in which
distributions are required to commence shall be based on the
initial life expectancy minus the number of whole years passed
since distribution first commenced.
To the extent provided by regulations, for purposes of the
foregoing distribution requirements, any amount paid to a child
of the Participant will be treated as if it had been paid to the
surviving spouse if the remainder of the interest becomes payable
to the surviving spouse when the child reaches the age of
majority.
7.6 Notwithstanding the foregoing, if the Designated
Beneficiary is the Participant's surviving spouse, such spouse
may treat the IRA Account as the spouse's own individual
retirement account (IRA). This election will be deemed to have
been made if such surviving spouse makes a regular IRA
contribution to the account, makes a rollover to or from such
account, or fails to receive distribution pursuant to Section 7.4
or 7.5 above.
7.7 In making distributions to a Participant, the Service
Company shall, to the extent allowed by applicable law, be
entitled to rely on the written certification by a Participant as
to the Participant's and Designated Beneficiary's age or as to
<PAGE>
the Participant's having become disabled within the meaning of
Section 7.2(b).
7.8 Whenever the consent of the Participant or a direction
by the Participant is required under this Article VII, action by
the Service Company may be taken without such consent or
direction by reason of death, illness or absence of the
Participant.
7.9 Notwithstanding any of the foregoing, any Employer
contribution to the IRA Account pursuant to a Simplified Employee
Pension may be withdrawn by the Participant at any time.
ARTICLE VIII
RETURN OF EXCESS CONTRIBUTIONS;
LIABILITY OF TAXES
8.1 In the event the Trustee or the Service Company
receives written notice from a Participant, an Employer on behalf
of the Participant if the Agreement so provides or from the
Commissioner of Internal Revenue, that there has been made by or
on behalf of the Participant a contribution which has been
determined by the Participant or the Commissioner to be an Excess
Contribution or nondeductible contribution, the Service Company
shall, as soon as practicable, pay to such Participant in cash
(if permitted by the terms of the investment in his IRA Account)
an amount equal to the amount of the Excess Contribution or
nondeductible contribution made by him or on his behalf and, if
the payment is made on or prior to the due date of the
Participant's tax return (including extensions) for the year in
which the Excess Contribution or nondeductible contribution was
made, the net income attributable thereto (reduced by any
administrative charge or penalty applicable thereto).
Alternatively, the Participant may, by written instructions on a
form acceptable to the Service Company, elect to treat the Excess
Contribution and the net income attributable thereto (reduced by
any administrative charge applicable thereto), to the extent it
does not exceed the limitations under Section 219 and 408(o) of
the Code, as a contribution for the Plan Year in which notice is
received (and reducing, as is appropriate, the contributions that
can be made under Section 3.1 for such Plan Year).
8.2 In the event the Trustee or the Service Company
receives written notice from a Participant, or an Employer on
behalf of the Participant in the case of an IRA Account
established under a Simplified Employee Pension, that there has
been an employer contribution to the IRA Account which is in
excess of the limitation under Section 402(h) or
408(k)(6)(A)(iii) of the Code, the Service Company shall, as soon
as practicable, pay to such Participant in cash (if permitted by
the terms of the investment in his IRA Account) an amount equal
to the amount of such excess employer contribution made on his
behalf, as adjusted for income or loss, and reduced by any
administrative charge or penalty applicable thereto.
8.3 In the event the Trustee or the Service Company shall
be required to pay any tax with respect to an IRA Account, the
amount of such tax (including interest) shall be paid from such
IRA Account.
ARTICLE IX
AMENDMENT AND TERMINATION
9.1 A Participant may at any time terminate the Plan
adopted by the Participant, and an Employer may at any time
terminate a Plan adopted by the Employer. Termination may be
effected by delivering to the Service Company a written notice of
termination addressed to the Trustee and the Service Company and
signed by the Participant or the Employer. On termination, if
permitted by the terms of the investment, distribution of the IRA
Account (reduced by any penalty applicable thereto) shall be made
by payment of a lump sum in cash and/or in Investment Company
Shares to the Participant. Upon complete distribution of the
assets in the IRA Account, this Plan shall terminate and shall
have no further force and effect and the Trustee and the Service
Company shall be relieved from all further liability with respect
to the Plan, the IRA Account, and all assets thereof so
established.
9.2 Putnam Fiduciary Trust Company may at any time and from
time to time modify or amend this Plan as is necessary or
appropriate to qualify this Plan as an Individual Retirement
Account under Section 408(a) of the Code, or as is necessary or
appropriate under any applicable law by delivering to the Trustee
and mailing to the Employer, or, in the case of a Plan where
there is no Employer, the Participant at his last known address
shown on the books of the Service Company or the Trustee, a copy
of such amendment. Each Participant and each Employer shall be
deemed to have consented to any modification or amendment so
made. No amendment of this Plan shall cause any part of the IRA
Account to be used for a purpose other than for the exclusive
benefit of the Participant and his Beneficiary. No amendment
shall change the rights, duties or responsibilities of the
Trustee or the Service Company without the written consent of
either of them.
ARTICLE X
TRANSFER TO OTHER QUALIFIED PLANS
A Participant or an Employer, subject to the provisions of
the Agreement and to the extent allowed by applicable law, may
request the Trustee to transfer assets held in the IRA Account of
the Participant or Participants to another bank or banks as
custodian or trustee or to any other plan or plans maintained by
the Participant or the Employer or the Employers of a Participant
for the benefit of the Participant, provided the Trustee or the
Service Company, before transfer, may at its discretion require
an opinion of counsel satisfactory to it that the requirements of
Section 401(a) or Section 408, whichever is applicable, of the
Code or any successor provision of law are satisfied by such
other plan or plans; and provided, further, that the Trustee and
the Service Company shall have the right to reduce from the
amount to be transferred (a) any amounts referred to in Section
6.4, and (b) any amounts required to be distributed in the
calendar year of the transfer to the Participant under Section
408(a)(6) or 408(b)(3) of the Code. Upon such transfer, the
provisions of the plan to which such transfer is made shall
govern and the provisions of this Plan shall have no further
effect.
ARTICLE XI
RESIGNATION OF THE TRUSTEE OR THE SERVICE COMPANY
11.1 Either the Trustee or the Service Company may resign at
any time upon thirty (30) days' notice, in writing, to the
Participant or the Employer in the case of a Plan established by
the Employer.
11.2 Within thirty (30) days of the effective date of a
successor trustee's appointment, the Trustee shall perform all
acts necessary to transfer and deliver the assets of IRA Account
to its successor. Within thirty (30) days of the effective date
of a successor service company's appointment, the Service Company
shall perform all acts necessary to transfer records held by it
to its successor. However, the Trustee may reserve such portion
of the IRA Account as it may reasonably determine to be necessary
for payment of its fees and any taxes and expenses and any
balance of such reserve remaining after payment of such fees,
taxes and expenses shall be paid over to the successor.
11.3 Resignation of the Trustee or the Service Company will
not terminate the Plan adopted by an Employer or a Participant.
In the event of any vacancy due to the resignation of the Trustee
or the Service Company, the Service Company shall appoint a
successor unless the Agreement is sooner terminated. Any
successor Trustee shall be a "bank" within the meaning of Section
581 of the Code or another person found qualified to act as a
trustee or custodian under an individual retirement account plan
by the Secretary of the Treasury, or his delegate. The
appointment of a successor Trustee or Service Company shall be
effective upon receipt by the Trustee and the Service Company of
such written acceptance which shall be submitted to the
Participant, the Employer in the case of a Plan established by
the Employer, the Trustee and the Service Company. In the event
no successor Trustee is appointed within thirty (30) days after
resignation becomes effective, each Participant or Employer may
request the Trustee to transfer the assets held in the
Participant's IRA Account as is provided in Article X.
ARTICLE XII
NOTICES
12.1 All notices required to be given by the Trustee or the
Service Company to a Participant or an Employer shall be deemed
to have been given when sent by mail to the address of the
Participant or the Employer indicated by the Service Company's
records.
12.2 All notices required to be given by a Participant or an
Employer to the Trustee or Service Company shall be deemed to
have been given when received by the Service Company.
12.3 Whenever the Trustee or the Service Company is required
or authorized to take any action under the Plan on the direction
of a Participant, such action shall be taken on the direction of
the duly appointed representative of the Participant or his
estate, in the event of his incompetency or death.
ARTICLE XIII
SPENDTHRIFT PROVISION
To the extent permitted by applicable law, a Participant's
beneficial interest in the Plan shall not be assignable, subject
to hypothecation, pledge, or lien, nor subject to attachment or
receivership, nor shall it pass to any trustee in bankruptcy or
be reached or applied by the legal process for the payment of any
obligation of the Participant or any Beneficiary hereunder;
provided, however, that in the case of the Participant's death
the value of his IRA Account shall be paid, as provided in
Article VII; and provided, further, that the Participant (or the
Trustee or Service Company, where applicable) shall have the
right to direct the transfer or distribution of the value of his
IRA Account, or any part thereof as provided in Articles VII,
VIII, X or XI.
ARTICLE XIV
GOVERNING LAW
The terms of this Plan and the Agreement shall be construed,
administered and enforced according to the laws of the
<PAGE>
Commonwealth of Massachusetts except to the extent such laws are
preempted by the provisions of ERISA.
PUTNAM INDIVIDUAL RETIREMENT
ACCOUNT DISCLOSURE STATEMENT
As an individual establishing an Individual Retirement
Account ("IRA"), or as an employee of an Employer-Sponsored IRA,
you should be aware that you may elect to revoke the account if
you do so within seven days of the date of establishment of your
account, which is the date on which you signed the adoption
agreement. In order to revoke your account, you should mail or
deliver a written request stating that "I hereby elect to revoke
my IRA account," with your signature written exactly as it
appears on your application, to Putnam Investor Services, Inc.,
P.O. Box 2701, Boston, MA 02208. The revocation request will be
considered given as of the date of the postmark (or date of
certification of registration if sent certified or registered
mail). Upon receipt of the revocation request, the entire amount
of your contribution, without adjustment for administrative fees,
interest accrued, or fluctuation in market value, will be
returned to you. If you have any questions relative to this
procedure you may contact the Retirement Plans Services by phone
at 1-800-662-0019. You should also be aware that, whenever it
may be considered prudent to do so, Putnam Investor Services,
Inc., acting on behalf of the Plan Trustee, reserves the right to
postpone the establishment of the account and investment of the
contributions for seven days from the date of adoption.
IRAs are a means for all individuals, regardless of whether
they are participants in any employer-sponsored retirement plan,
to provide for their own retirement. Contributions (up to a
maximum) may be deductible from your income subject to federal
income tax, (See paragraph 6). Whether or not your full
contribution is deductible, investment income from your IRA is
not taxed until distributed. Please consult your tax adviser as
to state income tax treatment, which may differ.
There are several important conditions and restrictions
imposed by the Internal Revenue Code on you as the owner of an
IRA:
1. Contributions (other than "rollover" contributions as
described in paragraph 18) must be made in cash. Therefore,
securities or other assets cannot be contributed directly to an
IRA but can be converted to cash and the cash can then be
contributed.
2. Any person with Compensation (as defined in the Putnam
IRA Plan, and generally including amounts paid for personal
services rendered), and who is younger than age 70-1/2, is
eligible for an IRA.
Additionally, regardless of your age, you may establish an
IRA to receive your employer's contribution under a Simplified
Employee Pension Plan or may transfer certain qualified plan
distributions or funds from another IRA to a Rollover IRA.
Rollover rules are described in paragraph 18 of this Disclosure
Statement.
3. Your maximum annual contribution is the lesser of $2000
or 100% of your Compensation. "Rollover" contributions are not
subject to this limit.
Your employer may also contribute to your IRA, pursuant to a
Simplified Employee Pension Plan ("SEP"), up to the lesser of 15%
of your Compensation from such employer or $30,000. Your
employer's SEP contribution should NOT be included as part of,
and should not be deducted from, your gross income on your
federal income tax return.
4. If you and your spouse both have Compensation, both you
and your spouse can make contributions to separate IRAs. Your
(or your spouse's) allowable contribution is computed separately
based on your (or your spouse's) income.
If one spouse does not have any Compensation or earns $250
or less and elects to be treated as not having any Compensation,
then a spousal IRA containing two separate accounts may be
established if you and your spouse file a joint Federal tax
return. The annual contribution to both accounts combined cannot
exceed the lesser of $2,250, or 100% of the earning spouse's
Compensation. No more than $2,000 can be contributed to one
account each year.
5. If you are a divorced spouse, all taxable alimony
received by you under a decree of divorce or separate maintenance
will be treated as Compensation for purposes of the IRA
contribution limit. Accordingly, you can make annual IRA
contributions of up to $2,000, or 100% of Compensation (including
taxable alimony), whichever is less.
6. You may deduct the full amount of your IRA contribution
up to the annual maximum if you are not an "active participant"
in an employer-sponsored retirement plan (including qualified
plans, Simplified Employee Pension plans, tax-sheltered annuity
plans, and certain governmental plans) for any part of such year.
If you are married, you will be deemed to be an active
participant in an employer-sponsored retirement plan if either
you or your spouse is an active participant in such a plan. For
this purpose, a husband and wife who file separate tax returns
for any year and who live apart at all times during the year are
not considered to be married.
<PAGE>
In addition, even if you are an active participant in such a
plan, you may deduct the full amount of your IRA contribution if
you have adjusted gross income equal to or below a specified
level ($40,000 for married taxpayers filing joint returns and
$25,000 for single taxpayers). If your adjusted gross income
exceeds this specified level, the amount of your IRA contribution
which is deductible is phased out on the basis of adjusted gross
income between $25,000 and $35,000 if you are a single taxpayer
and adjusted gross income of $10,000 and under if you are a
married taxpayer who files a separate return. If you are married
and you file a joint return, if either you or your spouse is an
active participant in an employer-sponsored retirement plan, the
amount of your IRA contribution which is deductible will be
phased out on the basis of your combined adjusted gross income
between $40,000 and $50,000. If your adjusted gross income
exceeds the level specified in the preceding sentences and you
are an active participant in an employer-sponsored retirement
plan (or your spouse is an active participant in such a plan),
then you may not deduct any portion of your IRA contribution.
Special rules apply for purposes of determining whether or not
you are an active participant in an employer-sponsored retirement
plan. Your (or your spouse's) Form W-2 should indicate whether
you (or your spouse) is an active participant. However, you
should consult your own tax or financial advisor if you should
have any questions about this.
In general, the IRA deduction is phased out at a rate of
$200 per $1,000 of adjusted gross income in excess of the levels
described above. However, if you contribute to a spousal IRA,
your IRA deduction is phased out at a rate of $225 per $1,000 of
adjusted gross income in excess of the levels described above.
When calculating your reduced IRA deduction limit, you
always round up to the next lowest $10. Therefore, your
deduction limit is always a multiple of $10. In addition, if
your adjusted gross income is within the phase-out range and your
reduced deduction limit is more than $0 but less than $200, you
are permitted to deduct up to $200 of your IRA contributions.
Even if you will not be able to DEDUCT the full amount of
your IRA contribution under the rules described above, you can
still contribute up to your annual maximum amount with all or
part of the contribution being a non tax-deductible contribution.
Of course, the combined total of deductible and non-deductible
contributions must not exceed your annual maximum amount. Any
earnings on ALL your IRA contributions accumulate tax-deferred
until you withdraw them.
7. Even if you are otherwise able to deduct all or part of
your IRA contributions, no deduction is allowed for (a) excess
contributions; (b) contributions made during the taxable year in
which you attain age 70-1/2 or thereafter; or (c) any amount you
contribute which was a distribution from another retirement plan
("rollover" contribution).
8. Contributions to an IRA may be made for a particular
year not later than the time prescribed by law for filing your
federal tax returns (excluding any extensions) for that year. A
contribution shall be deemed made for the calendar year in which
it was made unless you direct that it was made with respect to
the preceding calendar year.
9. Your interest in your IRA is nonforfeitable at all
times.
10. If you engage in a so-called "prohibited transaction"
as defined in the Internal Revenue Code, your IRA will be
disqualified and the entire balance in your IRA will be taxed as
ordinary income during the year in which such transaction occurs.
You may also have to pay the 10% penalty tax on premature
distributions. A "prohibited transaction" includes:
(a) the sale, exchange, or leasing of any property
between your IRA account and you;
(b) the lending of money or other extension of credit
between your IRA account and you;
(c) the furnishing of goods, services, or facilities
between your IRA account and you; or
(d) the transfer of assets of your IRA account for
your use or for your benefit.
Additionally, if you pledge your IRA as security for a loan,
or invest your IRA in "collectibles" such as art, antiques, coins
(other than United States gold and silver coins or state coins)
or gems, the amount so pledged or invested is considered by the
Internal Revenue Service to have been distributed to you and will
be taxed as ordinary income during the year in which you make
such pledge or investment. You may also have to pay the 10%
penalty tax on premature distributions.
11. Penalty taxes may be imposed as follows:
(a) A 6% nondeductible penalty tax on contributions
exceeding the allowable contribution limits.
(b) A nondeductible penalty tax of 10% of any amounts
prematurely distributed before age 59-1/2, UNLESS
(a) the distribution is made because of your death
or permanent disability, (b) the distribution is
an exempt withdrawal of excess contributions, (c)
the distribution is rolled over into another IRA
or qualified plan, or (d) the distribution is paid
in installment payments in substantially equal
amounts over a period that does not exceed your
life expectancy or the life expectancy of you and
your designated beneficiary. You should be aware,
however, that the 10% penalty tax will be applied
retroactively to all installment payments if you
alter the method of distribution before you attain
age 59-1/2 to a method that does not qualify for
the exception. This 10% penalty tax will also
apply retroactively if you do not receive the
installment payments under a method that qualifies
for the exception for at least five years.
The 10% penalty tax does not apply to the portion
of your IRA distribution which is not includible
in your gross income.
(c) A nondeductible penalty tax of 50% of the
difference between the required distributions (see
paragraph 13, below) and the amount actually
distributed (if less than the required amount).
You can avoid the 6% penalty tax described in (a) above by
removing the excess contribution and all net earnings
attributable to it before the due date for filing your Federal
income tax return for that year. Upon removing an excess
contribution in this manner, the net earnings attributable to it
are includible in your income for the tax year in which the
excess contribution was made. You may also have to pay an
additional 10% tax on premature distributions (discussed in (b)
above) on the amount of net earnings. However, the excess
contribution amount will not be included in your taxable income
and will not be subject to the 10% tax on premature
distributions. You can also remove any nondeductible IRA
contributions by following this same procedure.
If you elect not to withdraw an excess contribution, you can
eliminate the excess by contributing less to your IRA in a later
year. Further, to the extent you have not contributed the
maximum permissible amount for that later year, the amount of the
excess so eliminated may be deductible as a "make-up" deduction.
The 6% excise tax will, however, be imposed each year until the
year in which you eliminate the excess.
If you do not withdraw an excess contribution on or before
the due date for filing your Federal income tax return and your
contribution to your IRA did not exceed $2,250, you can withdraw
the excess at any later time as long as you have not deducted it
on your Federal income tax return. The excess amount which you
withdraw will not be included in your gross income and will not
be subject to the 10% tax on premature distributions. However,
the 6% excise tax will be imposed each year until the year of
withdrawal.
If you do not withdraw an excess contribution on or before
the due date for filing your Federal income tax return and your
contribution to your IRA exceeded $2,250, you must include in
your gross income any excess amount which you withdraw even if
you have not deducted it on your Federal income tax return. You
may also have to pay a 10% tax on premature distributions on the
amount you withdraw. Additionally, the 6% excise tax will be
imposed each year until the year of withdrawal.
12. You can begin to withdraw funds held in your IRA
without incurring the 10% penalty tax at any time, in any amount,
and for any reason after you reach age 59-1/2. However, when you
reach age 70-1/2, you must elect to receive distributions in
either a lump sum or in installments. The law requires that you
begin to receive distributions from your IRA no later than April
1 following the calendar year in which you reach age 70-1/2 (the
"Required Distribution Date"). There is a minimum amount which
you must withdraw by the Required Distribution Date, and by each
December 31 thereafter. This minimum amount is determined by
your life expectancy or the joint life and last survivor
expectancy of you and your designated beneficiary (as defined by
law). Your life expectancy (and your spouse's life expectancy if
your spouse is your designated beneficiary) will be recalculated
each year. Moreover, beginning in 1989, distributions must
comply with the minimum incidental death benefit rule under
Federal law if your beneficiary is not your spouse. If the
amount distributed during a taxable year is less than the minimum
amount required to be distributed, you will be subject to a
penalty tax equal to 50% of the deficiency unless you can prove
that the failure to make such minimum distribution was due to
reasonable cause, or demonstrate that reasonable steps are being
taken to remedy the shortfall.
13. If you should die before all the funds held in your IRA
have been distributed, the remaining funds in your IRA will be
distributed to your designated beneficiary either outright or
periodically as selected by your beneficiary. Putnam Investor
Services, Inc. will make distributions to your beneficiary in
accordance with his or her specific instructions. Your
beneficiary should be aware that he or she is subject to minimum
distributions rules and it is his or her responsibility to make
sure that the rules are met. Under the post-death minimum
distributions rules, if you die after your Required Distribution
Date, the funds remaining in your account must continue to be
distributed to your designated beneficiary at least as rapidly as
under the method of distribution in effect prior to your death.
If you die prior to your Required Distribution Date, then the
entire account balance must generally be completely distributed
to your designated beneficiary by December 31 of the calendar
year containing the fifth anniversary of your death. However,
there are exceptions to this five-year distribution rule. First,
the five-year distribution rule does not apply if the funds in
your IRA will be payable to your designated beneficiary over a
fixed period that is not longer than the life expectancy of the
beneficiary and if the distribution commences no later than
December 31 of the calendar year following the calendar year in
which you die. Second, if your beneficiary is your surviving
spouse, he or she may elect, by December 31 of the calendar year
following the calendar year in which you die, to receive the
funds in your IRA over a fixed period that is not longer than his
or her life expectancy and commencing on or before December 31 of
the calendar year in which you would have attained age 70-1/2.
In all instances, if your beneficiary is your surviving spouse,
he or she may elect to rollover the funds in your IRA into his or
her own IRA, or treat your IRA as his or her own by making
regular or rollover deposits into such IRA or by failing to
receive required distributions in a timely manner. In this case,
he or she is not required to make withdrawals from the IRA until
April 1 following the year in which he or she reaches age 70 1/2.
14. Generally, amounts distributed to you are includible in
your gross income in the taxable year you receive them and are
taxed as ordinary income without any special lump sum
distribution privileges.
15. If you withdraw an amount from any IRA during a taxable
year and you have previously made BOTH deductible and
nondeductible IRA contributions, then part of the amount
withdrawn is excludible from ordinary income and not subject to
taxation. The amount excludible for the taxable year is the
portion of the amount withdrawn which bears the same ratio to the
amount withdrawn for the taxable year as your aggregate non-
deductible IRA contributions bear to the aggregate balance of all
your IRAs at the end of the year plus the amount of the
distribution during the year. FOR EXAMPLE, assume an individual
previously made both deductible and nondeductible contributions
to his IRAs. In 1989 he withdraws $1000 from an IRA. At the end
of 1989, the account balances of all his IRAs equal $4,000, of
which $2,500 was nondeductible contributions. The amount
excludible from income is $500. ($2,500/$5,000 x $1,000).
It is your responsibility to keep records of your
nondeductible contributions on Form 8606 and your deductible
contributions to each of your IRAs. You will need this
information to calculate your taxable income when distributions
from your IRAs begin.
16. In general, if you receive distributions from your
IRAs, 403(b) annuities and qualified plans which, in the
aggregate, exceed $150,000 in any year, you may be subject to a
15% penalty tax on the amount in excess of $150,000. If the
total amount of your benefits payable from such plans at your
death exceed a certain permissible level, a similar 15% estate
tax is imposed on the amount in excess of the permissible level.
Special rules apply in certain circumstances and you should
consult your tax advisor if you have any question regarding this
tax.
17. Deductions for IRA contributions are claimed on Form
1040 or Form 1040A. The only separate return which you may be
required to file with the Internal Revenue Service in connection
with an IRA are Form 5329 and Form 8606. Form 5329 is filed as
an attachment to Form 1040 or Form 1040A for any year, if any of
the special IRA penalty taxes apply to you. If you make any non-
deductible contributions to any IRA, you must designate these as
non-deductible contributions on Form 8606 and attach it to your
Form 1040 or Form 1040A. There is a $100 penalty each time you
overstate the amount of your non-deductible contributions unless
you can prove that the overstatement was due to reasonable cause.
You will also be required to give additional information on your
Form 8606 in years in which you receive a distribution from your
IRA. If you fail to file a required Form 8606, there is a $50
penalty for each such failure unless you can prove that the
failure was due to reasonable cause.
18. You may "rollover" (tax free) all or part of a
qualified partial or total distribution received from a qualified
plan within 60 days after you receive it. A "rollover" from a
qualified retirement plan should be made to a separate IRA. You
should not make additional contributions to the "rollover" IRA,
in order to permit a subsequent tax-free "rollover" to a
qualified retirement plan at a later date, should you become a
participant in such a plan. Strict limitations apply to
"rollovers," and you should seek competent tax advice in order to
comply with all of the rules governing "rollovers."
19. The proceeds from the Putnam Individual Retirement
Account may be used as a "rollover" contribution to another
account or annuity if you pay all or part of the amount received
into the new account or annuity not later than the 60th day after
the day on which you receive the distribution. Once in
each 12-month period you are allowed to "rollover" your
investment from one IRA to another without any tax liability,
provided you contribute the rollover amount to the new IRA within
60 days of the date you receive it. Strict rules and limitations
apply to rollovers, and you should consult your tax adviser in
order to comply with all the rules governing rollovers. Upon
your death, this privilege is also available to your beneficiary
if your beneficiary is your surviving spouse.
A transfer of the proceeds of your IRA from one trustee
directly to another is not a rollover. It is a transfer that is
not affected by the one-year waiting period discussed in the
preceding paragraph. Do not include this amount in your gross
income if you do not receive any part of it.
20. The Putnam Individual Retirement Account Plan was most
recently approved as to form for use as an account by the
Internal Revenue Service on March 11, 1983, with I.R.S. Serial
Number 1751609A. The plan has since been amended further to
incorporate the changes dictated by the Tax Equity and Fiscal
Responsibility Act of 1982, the Deficit Reduction Act of 1984,
the Tax Reform Act of 1986 and the Tax and Miscellaneous Revenue
Act of 1988, respectively, and it is expected that I.R.S.
approval will be obtained in due course. I.R.S. approval is only
an approval of the form of the IRA and should not be considered a
determination as to the merits of the IRA.
21. You have the right to determine what proportion of the
amounts contributed to your IRA shall be invested in mutual fund
shares or, if applicable, an annuity, a term deposit, or any
other permitted investment. You may change your choice of
investments as often as desired, subject to any limitations or
penalties imposed by your Employer (if applicable) or by the
underlying form of investment. To the extent you do not direct
how amounts in your IRA are to be invested, or to the extent your
investment directions are unclear, amounts contributed to your
IRA will be invested in the Putnam Daily Dividend Fund or any
other similar fund.
There is an annual maintenance fee of $10 per IRA,
irrespective of the number of mutual funds or other investments,
if applicable. Unless you have already paid the fee by separate
payment, this fee will be deducted from your IRA on or about June
1 of the following year. If you redeem (or exchange) from a
mutual fund account before the deduction date, the fee may be
deducted from the first such redemption. Certain corporate IRA
programs may be entitled to a reduced fee, determined by the
Trustee and Putnam Investor Services, Inc. If you invest in a
mutual fund, up to $45 or $85 will be deducted from every $1,000
of contributions that you make, depending upon whether you are
investing on a group or an individual basis. Please consult your
mutual fund prospectus(es) for details. The mutual fund in which
you may invest is under contract to its investment adviser to pay
certain annual management fees and also pays operating expenses
up to a specified maximum; these are also described in the
prospectus(es).
The prospectus(es) also outline the investment objectives of
the mutual fund(s) you may have selected for your IRA. You
should consider these objectives carefully to determine if they
are consistent with your own planning for retirement. You should
also understand that fluctuations in market value will affect the
value of the IRA and that growth in value of your IRA is neither
guaranteed nor projected. If you select as an investment an
annuity, a term deposit or other permitted investment, we will
furnish you with additional information which will constitute
part of this disclosure statement.
22. The designation of a beneficiary to receive funds from
your IRA at your death is not considered a transfer subject to
Federal gift taxes. However, funds remaining in your IRA at the
time of your death would be includible in your Federal gross
estate for tax purposes.
23. For any further information regarding Individual
Retirement Programs and the conditions and requirements to which
they are subject, you should contact your local district office
of the Internal Revenue Service.
PUTNAM INVESTOR SERVICES, INC.
<PAGE>
PUTNAM BASIC PLAN DOCUMENT
ARTICLE
Introduction
By executing the Plan Agreement, the Employer has
established a retirement plan (the "Plan") according to the terms
and conditions of the Plan Agreement and this Putnam Basic Plan
Document, for the purpose of providing a retirement fund for the
benefit of Participants and Beneficiaries.
ARTICLE
Definitions
The terms defined in Sections 2.1 through 2.50 appear
generally throughout the document. Sections 2.51 through 2.63
and Article 5 contain definitions of terms used only in a CODA or
in a Variable Plan which permits nondeductible Participant
Contributions pursuant to Section 5.9and Section 10.4 contains
additional definitions related to distributions from the Plan.
Articles 6 and 11 contain additional definitions of terms used
only in those Articles.
Account means any of, and Accounts means all of, a
Participant's Employer Contribution Account, Participant
Contribution Account, Rollover Account, and if the Plan contains
a CODA, the accounts maintained for the Participant pursuant to
Article 5.
Affiliated Employer, for purposes of the Plan other
than Article 6, means the Employer and a trade or business,
whether or not incorporated, which is any of the following:
A member of a group of controlled corporations
(within the meaning of Section 414(b) of the Code) which includes
the Employer; or
A trade or business under common control (within
the meaning of Section 414(c) of the Code) with the Employer; or
A member of an affiliated service group (within
the meaning of Section 414(m) of the Code) which includes the
Employer; or
An entity otherwise required to be aggregated with
the Employer pursuant to Section 414(o) of the Code.
<PAGE>
In determining an Employee's service for vesting and for
eligibility to participate in the Plan, all employment with
Affiliated Employers will be treated as employment by the
Employer.
In a Variable Plan, in addition to the Employer, any
Affiliated Employer may adopt the Plan for the benefit of its
Employees by executing a Plan Agreement.
For purposes of Article 6 only, the definitions in
paragraphs (a) and (b) of this Section 2.2 shall be modified by
adding at the conclusion of the parenthetical phrase in each such
paragraph the words "as modified by Section 415(h) of the Code."
Authorized Leave of Absence means a leave of absence
from employment granted in writing by an Affiliated Employer.
Authorized Leave of Absence shall be granted on account of
military service for any period during which an Employee's right
to re-employment is guaranteed by law, and for such other reasons
and periods as an Affiliated Employer shall consider proper,
provided that Employees in similar situations shall be similarly
treated.
Base Contribution Percentage means the percentage so
specified in the Plan Agreement.
Beneficiary means a person entitled to receive benefits
under the Plan upon the death of a Participant, in accordance
with Section 7.2 and Articles 10 and 11.
CODA means a cash or deferred arrangement that meets
the requirements of Section 401(k) of the Code, adopted as part
of a profit sharing plan.
Code means the Internal Revenue Code of 1986, as
amended.
Compensation means all of an Employee's (a) Form W-2
earnings or (b) compensation as defined in Section 415(c)(3) of
the Code, as elected by the Employer in the Plan Agreement.
Compensation shall include only amounts actually paid to the
Employee during the Plan Year, except that if the Employer so
elects in the Plan Agreement, Compensation shall include any
amount which is contributed to an employee benefit plan for the
Employee by the Employer pursuant to a salary reduction
agreement, and which is not includible in the gross income of the
Employee under Section 125, 402(a)(8), 402(h) or 403(b) of the
Code.
Date of Employment means the first date on which an
Employee performs an Hour of Service; or, in the case of an
Employee who has incurred one or more One-Year Eligibility Breaks
and who is treated as a new Employee under the rules of Section
3.3, the first date on which he performs an Hour of Service after
his return to employment.
Deductible Employee Contribution Account means an
account maintained on the books of the Plan on behalf of a
Participant, in which are recorded amounts contributed by him to
the Plan on a tax-deductible basis under prior law, and the
income, expenses, gains and losses thereon.
Disabled means unable to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment that can be expected to result in death or
which has lasted or can be expected to last for a continuous
period of not less than 12 months. The permanence and degree of
such impairment shall be supported by medical evidence.
Earned Income means a Self-Employed Individual's net
earnings from self-employment in the trade or business with
respect to which the Plan is established, excluding items not
included in gross income and the deductions allocable to such
items, and reduced by (i) contributions by the Employer to
qualified plans, to the extent deductible under Section 404 of
the Code, and (ii) the deduction allowed to the Employer under
Section 164(f) of the Code for taxable years beginning after
December 31, 1989.
Earnings, effective for all Plan Years beginning after
December 31, 1988, means the first $200,000 (as adjusted by the
Secretary of the Treasury at the same time and in the same manner
as under Section 415(d) of the Code) of the sum of the
Compensation and the Earned Income received by an Employee during
a Plan Year. In determining the Earnings of a Participant, the
rules of Section 414(q)(6) of the Code shall apply, except that
in applying those rules the term "family" shall include only the
Participant's spouse and the Participant's lineal descendants who
have not reached age 19 by the last day of the Plan Year. If, as
a result of the application of such rules the adjusted $200,000
limitation is exceeded, then (except for purposes of determining
the portion of compensation up to the Integration Level), the
limitation shall be prorated among the affected individuals in
proportion to each such individual's compensation as determined
under this section prior to the application of this limitation.
Effective Date means the date so designated in the Plan
Agreement. If the Plan Agreement indicates that the Employer is
adopting the Plan as an amendment of an existing plan, the
provisions of the existing plan apply to all events preceding the
Effective Date, except as to specific provisions of the Plan
which set forth a retroactive effective date in accordance with
Section 1140 of the Tax Reform Act of 1986.
Eligibility Period means a period of 12 consecutive
months beginning on an Employee's most recent Date of Employment
or any anniversary thereof, in which he is credited with at least
1,000 Hours of Service; provided that if the Employer has elected
in the Plan Agreement to establish a number less than 1,000 as
the requisite for crediting an Eligibility Period, that number
shall be substituted for 1,000, and provided further that in the
case of an Employee in a seasonal industry (as defined under
regulations prescribed by the Secretary of Labor) in which the
customary extent of employment during a calendar year is fewer
than 1,000 Hours of
Service, the number specified in any regulations prescribed by
the Secretary of Labor dealing with years of service shall be
substituted for 1,000.
Employee means a common law Employee of an Affiliated
Employer; in the case of an Affiliated Employer which is a sole
proprietorship, the sole proprietor thereof; in the case of an
Affiliated Employer which is a partnership, a partner thereof;
and a Leased Employee of an Affiliated Employer. The term
"Employee" includes an individual on Authorized Leave of Absence,
a Self-employed Individual and an Owner-Employee.
Employer means the Employer named in the Plan Agreement
and any successor to all or the major portion of its assets or
business which assumes the obligations of the Employer under the
Plan Agreement.
Employer Contribution Account means an account
maintained on the books of the Plan on behalf of a Participant,
in which are recorded the amounts allocated for his benefit from
contributions by the Employer (other than contributions pursuant
to Article 5), Forfeitures by former Participants (if the Plan
provides for reallocation of Forfeitures), amounts reapplied
under Section 6.1(d), and the income, expenses, gains and losses
incurred thereon.
ERISA means the Employee Retirement Income Security Act
of 1974, as amended.
Excess Earnings means a Participant's Earnings in
excess of the Integration Level of the Plan.
Forfeiture means a nonvested amount forfeited by a
former Participant in a Variable Plan, pursuant to Section 8.3,
or an amount forfeited by a former Participant or Beneficiary who
cannot be located, pursuant to Section 9.5.
Hour of Service means each hour described in paragraphs
(a), (b), (c), (d) or (e) below, subject to paragraphs (f) and
(g) below.
Each hour for which an Employee is paid, or
entitled to payment, for the performance of duties for an
Affiliated Employer. These hours shall be credited to the
Employee for the computation period or periods in which the
duties are performed.
Each hour for which an Employee is paid, or
entitled to payment, by an Affiliated Employer on account of a
period of time during which no duties are performed (irrespective
of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability),
layoff, jury duty, military duty or leave of absence. No more
than 501 Hours of Service shall be credited under this paragraph
for any single continuous period of absence (whether or not such
period occurs in a single computation period) unless the
Employee's absence is not an Authorized Leave of Absence. Hours
under this paragraph shall be calculated and credited pursuant to
Section 2530.200b-2 of the Department of Labor Regulations, which
are incorporated herein by this reference.
Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by an
Affiliated Employer. The same Hours of Service shall not be
credited under both paragraph (a) or paragraph (b), as the case
may be, and under this paragraph (c); and no more than 501 Hours
of Service shall be credited under this paragraph (c) with
respect to payments of back pay, to the extent that such pay is
agreed to or awarded for a period of time described in paragraph
(b) during which the Employee did not perform or would not have
performed any duties. These hours shall be credited to the
Employee for the computation period or periods to which the award
or agreement pertains rather than the computation period in which
the award, agreement or payment is made.
Each hour during an Authorized Leave of Absence.
Such hours shall be credited at the rate of a customary full work
week for an Employee.
Solely for purposes of determining whether a One-
Year Vesting Break or a One-Year Eligibility Break has occurred,
each hour which otherwise would have been credited to an Employee
but for an absence from work by reason of: the pregnancy of the
Employee, the birth of a child of the Employee, the placement of
a child with the Employee in connection with the adoption of the
child by the Employee, or caring for a child for a period
beginning immediately after its birth or placement. If the Plan
Administrator cannot determine the hours which would normally
have been credited during such an absence, the Employee shall be
credited with eight Hours of Service for each day of absence. No
more than 501 Hours of Service shall be credited under this
paragraph by reason of any pregnancy or placement. Hours
credited under this paragraph shall be treated as Hours of
Service only in the Plan Year or Eligibility Period or both, as
the case may be, in which the absence from work begins, if
necessary to prevent the Participant's incurring a One-Year
Vesting Break or One-Year Eligibility Break in that period, or,
if not, in the period immediately following that in which the
absence begins. The Employee must timely furnish to the Employer
information reasonably required to establish (i) that an absence
from work is for a reason specified above, and (ii) the number of
days for which the absence continued.
Hours of Service shall be determined on the basis of
actual hours for which an Employee is paid or entitled to
payment, or as otherwise specified in the Plan Agreement.
If the Employer maintains the plan of a
predecessor employer, service for the predecessor Employer shall
be treated as service for the Employer.
Insurance Trustee means the person named in the Plan
Agreement as Insurance Trustee, and any successor thereto.
Integration Level means the Earnings amount selected by
the Employer in the Plan Agreement.
Investment Company means an open-end registered
investment company for which Putnam Financial Services, Inc., or
its affiliate acts as principal underwriter, or for which The
Putnam Management Company, Inc., or its affiliate serves as an
investment adviser; provided that its prospectus offers its
shares under the Plan.
Investment Company Shares means shares issued by an
Investment Company.
Investment Products means any of the investment
products specified by the Employer in accordance with Section
13.2, from the group of those products sponsored, underwritten or
managed by Putnam as shall be made available by Putnam under the
Plan, and such other products as shall be accepted in writing by
Putnam for availability under the Plan. The term "Investment
Products" does not include any Policy selected pursuant to
Article 14.
Leased Employee means any person (other than an
Employee of the recipient) who pursuant to an agreement between
the recipient and any other person ("leasing organization") has
performed services for the recipient (or for the recipient and
related persons determined in accordance with Section 414(n)(6)
of the Code) on a substantially full time basis for a period of
at least one year, and such services are of a type historically
performed by Employees in the business field of the recipient
Employer. The compensation of a Leased Employee for purposes of
the Plan means the Compensation (as defined in Section 2.8) of
the Leased Employee attributable to services performed for the
recipient Employer. Contributions or benefits provided to a
leased Employee by the leasing organization which are
attributable to services performed for the recipient Employer
shall be treated as provided by the recipient Employer. Provided
that leased Employees do not constitute more than 20 percent of
the recipient's nonhighly compensated workforce, a leased
Employee shall not be considered an Employee of the recipient if
he is covered by a money purchase pension plan providing: (1) a
nonintegrated Employer contribution rate of at least 10 percent
of compensation (as defined in Section 415(c)(3) of the Code, but
including amounts contributed pursuant to a salary reduction
agreement which are excludable from the
Employee's gross income under Section 125, Section 402(a)(8),
Section 402(h) or Section 403(b) of the Code), (2) immediate
participation, and (3) full and immediate vesting.
One-Year Eligibility Break means an Eligibility Period
during which an individual is not credited with more than 500
Hours of Service; provided, however, that in the case of an
Employee in a seasonal industry, there shall be substituted for
500 the number of Hours of Service specified in any regulations
of the Secretary of Labor dealing with breaks in service, and
provided further that if the Employer has elected in the Plan
Agreement to establish a number less than 500 as the requisite
Hours of Service for crediting an Eligibility Period, that number
shall be substituted for 500.
One-Year Vesting Break means a Plan Year during which
an individual is not credited with more than 500 Hours of
Service; provided, however, that in the case of an Employee in a
seasonal industry, there shall be substituted for 500 the number
of Hours of Service specified in any regulations for the
Secretary of Labor dealing with breaks in service, and provided
further that if the Employer has elected in the Plan Agreement to
establish a number less than 500 as the requisite Hours of
Service for crediting a Year of Service, that number shall be
substituted for 500.
Owner-Employee means the sole proprietor of an
Affiliated Employer that is a sole proprietorship, or a partner
owning more than 10 percent of either the capital or profits
interest of an Affiliated Employer that is a partnership.
Participant means each Employee who has met the
requirements for participation in Article 3.
Participant Contribution Account means an account
maintained on the books of the Plan, in which are recorded
nondeductible contributions by a Participant in accordance with
Section 4.2(e) or a similar provision in effect under the Plan or
a predecessor plan for periods before the first Plan Year
beginning after December 31, 1986, and any income, expenses,
gains or losses incurred thereon.
Plan means the form of defined contribution retirement
plan and trust agreement adopted by the Employer, consisting of
the Plan Agreement and the Putnam Basic Plan Document as set
forth herein, together with any and all amendments and
supplements thereto.
Plan Administrator means the Employer or its appointee
pursuant to Section 16.1.
Plan Agreement means the separate agreement entered
into between the Employer and the Trustee (and the Insurance
Trustee, if any) and accepted by Putnam, under which the Employer
adopts the Plan and selects among its optional provisions.
Plan Year means the period of 12 consecutive months
specified by the Employer in the Plan Agreement; provided that if
the Effective Date is not the first day of the Employer's taxable
year, the initial Plan Year shall begin on the Effective Date and
end on the last day of the Employer's taxable year.
Policy means an ordinary life insurance, term
insurance, retirement income or endowment policy or an individual
or group annuity contract issued by a life insurance company in
connection with the Plan, or an interest therein. An ordinary
life insurance policy within the meaning of this definition
provides non-decreasing death benefits and non-increasing
premiums.
Putnam means Putnam Financial Services, Inc., or a
company affiliated with it which Putnam Financial Services, Inc.
has designated as its agent to perform specified actions or
procedures in connection with the prototype Plan.
Qualified Participant means (i) in a Standard Plan, any
Participant who is an active Employee on the last day of the Plan
Year in question or who is credited with more than 500 Hours of
Service during the Plan Year in question or whose Retirement or
death occurred during the Plan Year in question; and (ii) in a
Variable Plan, any Participant who meets the requirements
specified by the Employer in the Plan Agreement. If the Plan is
not adopted to replace an existing plan, this Section 2.40 is
effective on the Effective Date. If the Plan replaces an
existing plan, this Section 2.40 is effective on the first day of
the first Plan Year that begins after December 31, 1988, or if
later, on the Effective Date, and the provision of the existing
plan that this Section 2.40 replaces shall continue to apply
until that time.
Recordkeeper means the person or entity designated by
the Employer in the Plan Agreement to perform the duties
described in Section 16.4, and any successor thereto.
Retirement means ceasing to be an Employee in
accordance with Section 7.1.
Rollover Account means an account established for an
Employee who makes a rollover contribution to the Plan pursuant
to Section 4.5.
Self-Employed Individual means an individual whose
personal services are a material income-producing factor in the
trade or business for which the Plan is established, and who has
Earned Income for the taxable year from that trade or business,
or would have Earned Income but for the fact that the trade or
business had no net profits for the taxable year.
Shareholder-Employee means any officer or Employee of
an electing small business corporation, within the meaning of
Section 1362 of the Code, who on any day during a taxable year of
the Employer owns (or is considered as owning under Section
318(a)(1) of the Code) more than 5% of the outstanding stock of
the Employer.
Social Security Wage Base means the maximum amount
considered as wages under Section 3121(a)(1) of the Code as in
effect on the first day of the Plan Year.
Standard Plan means a Plan adopted by execution of a
Putnam Standard Profit Sharing Plan Agreement #001 (including
such a Plan with a CODA) or a Putnam Standard Money Purchase
Pension Plan Agreement #002.
Trust and Trust Fund mean the trust fund established
under Section 13.1.
Trustee means the person, or the entity with trustee
powers, named in the Plan Agreement as trustee, and any successor
thereto.
Valuation Date means (i) for a Standard Plan, each
business day, and (ii) for a Variable Plan, the last day of each
Plan Year, and such other dates as the Employer may designate by
written agreement with the Recordkeeper.
Variable Plan means a Plan adopted by execution of a
Putnam Variable Profit Sharing Plan Agreement #003 or a Putnam
Variable Money Purchase Pension Plan Agreement #004.
Year of Service means a Plan Year in which an Employee
is credited with at least 1,000 Hours of Service; provided,
however, that if the Employer has elected in the Plan Agreement
to establish a number less than 1,000 as the requisite for
crediting a Year of Service, that number shall be substituted for
1,000, and provided further that in the case of an Employee in a
seasonal industry (as defined under regulations prescribed by the
Secretary of Labor) in which the customary extent of employment
during a calendar year is fewer than 1,000 Hours of Service, the
number specified in any regulations prescribed by the Secretary
of Labor dealing with years of service shall be substituted for
1,000. An Employee's Years of Service shall include service
credited prior to the Effective Date under any predecessor plan.
If the initial Plan Year is shorter than 12 months, each Employee
who is credited with at least 1,000 Hours of Service in the 12-
month period ending on the last day of the initial Plan Year
shall be credited with a Year of Service with respect to the
initial Plan Year.
If the Employer has so elected in the Plan Agreement, Years
of Service shall not include:
Service in any Plan Year (or comparable period
prior to the Effective Date) completed before the Employee
reached age 18;
Service completed during a period in which the Employer
did not maintain the Plan or any predecessor plan (as defined
under regulations prescribed by the Secretary of the Treasury).
The following definitions apply only to cash or deferred
arrangements under Section 401(k)(CODA) and to Variable Plans
which permits nondeductible Participant Contributions pursuant to
Section 5.9:
Deferral Agreement means an Employee's agreement to
make one or more Elective Deferrals in accordance with Section
5.2.
Elective Deferral means any contribution made to the
Plan by the Employer at the election of a Participant, in lieu of
cash compensation, including contributions made pursuant to a
Deferral Agreement or other deferral mechanism.
Elective Deferral Account means an account maintained
on the books of the Plan, in which are recorded a Participant's
Elective Deferrals and the income, expenses, gains and losses
incurred thereon.
Employer Matching Contribution means a contribution
made by the Employer (i) to the Plan pursuant to Section 5.8, or
(ii) to another defined contribution plan on account of a
<PAGE>
Participant's "elective deferrals" or "employee contributions,"
as those terms are defined in Section 401(m)(4) of the Code.
Employer Matching Account means an account maintained
on the books of the Plan, in which are recorded the Employer
Matching Contributions made on behalf of a Participant and the
income, expenses, gains and losses incurred thereon.
Highly Compensated Employee means any highly
compensated active Employee or highly compensated former
Employee, as defined in this Section 2.58. For this purpose, the
"determination year" shall be the Plan Year, and the "look-back
year" shall be the 12-month period immediately preceding the
determination year.
A highly compensated active Employee includes any Employee
who performs service for the Employer during the determination
year and who during the look-back year: (i) received compensation
from the Employer in excess of $75,000 (as adjusted pursuant to
Section 415(d) of the Code); (ii) received compensation from the
Employer in excess of $50,000 (as adjusted pursuant to Section
415(d) of the Code) and was a member of the top-paid group for
such year; or (iii) was an officer of the Employer and received
compensation during such year that is greater than 50 percent of
the dollar limitation in effect under Section 415(b)(1)(A) of the
Code. The term also includes (i) Employees who are both
described in the preceding sentence if the term "determination
year" is substituted for the term "look-back year," and among the
100 Employees who received the most compensation from the
Employer during the
determination year; and (ii) Employees who are 5 percent owners
at any time during the look-back year or determination year. If
no officer has satisfied the compensation requirement of (iii)
above during either a determination year or look-back year, the
highest paid officer for such year shall be treated as a Highly
Compensated Employee.
A highly compensated former Employee includes any Employee
who separated from service (or was deemed to have separated)
before the determination year, performed no service for the
Employer during the determination year, and was a highly
compensated active Employee for either the year of separation
from service or any determination year ending on or after the
Employee's 55th birthday.
If during a determination year or look-back year an Employee
is a family member of either a 5 percent owner who is an active
or former Employee, or a Highly Compensated Employee who is one
of the 10 most highly paid Highly Compensated Employees ranked on
the basis of compensation paid by the Employer during the year,
then the family member and the 5 percent owner or top-ten Highly
Compensated Employee shall be treated as a single Employee
receiving compensation and plan contributions or benefits equal
to the sum of the compensation and contributions or benefits of
the family member and the 5 percent owner or top-ten highly
compensated Employee. For purposes of this Section 2.58, family
members include the spouse, lineal ascendants and descendants of
the Employee or former Employee and the spouses of such lineal
ascendants and descendants.
The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of
Employees in the top-paid group, the top 100 Employees, the
number of Employees treated as officers and the compensation that
is considered, will be made in accordance with Section 414(q) of
the Code and the regulations thereunder.
Non-Highly Compensated Employee means an Employee who
is not a Highly Compensated Employee.
Qualified Matching Contribution means a contribution
made by the Employer that: (i) is allocated in proportion to a
Participant's Elective Deferrals or Participant Contributions, as
specified by the Employer in the Plan Agreement; (ii) is fully
vested at all times, and (iii) is distributable only in
accordance with Section 5.13.
Qualified Matching Account means an account maintained
on the books of the Plan, in which are recorded the Qualified
Matching Contributions on behalf of a Participant and the income,
expense, gain and loss attributable thereto.
Qualified Nonelective Contribution means a contribution
(other than an Employer Matching Contribution or Qualified
Matching Contribution) made by the Employer, that: (i) a
Participant may not elect to receive in cash until it is
distributed from the Plan; (ii) is fully vested at all times; and
(iii) is distributable only in accordance with Section 5.13.
Qualified Nonelective Contribution Account means an
account maintained on the books of the Plan, in which are
recorded the Qualified Nonelective Contributions on behalf of a
Participant and the income, expense, gain and loss attributable
thereto.
ARTICLE
Participation
Initial Participation. An Employee shall become a
Participant in the Plan as of the first day of the month in which
he first satisfies the age and service requirements specified by
the Employer in the Plan Agreement, or as of the Effective Date,
whichever is later; provided, however, that:
If the Plan is adopted as an amendment of a
predecessor plan of the Employer, every Employee who was
participating under the predecessor plan when it was so amended
shall become a Participant in the Plan as of the Effective Date,
whether or not he has satisfied the age and service requirements
specified in the Plan Agreement; and
Unless the Employer specifies otherwise in the
Plan Agreement, any individual who is (i) a nonresident alien
receiving no earned income from an Affiliated Employer which
constitutes income from sources within the United States, or (ii)
included in a unit of Employees covered by a collective
bargaining agreement between the Employer and Employee
representatives if retirement benefits were the subject of good
faith bargaining (unless the collective bargaining agreement
specifically provides for coverage by the Plan or involves as an
employee representative an organization more than one-half of
whose members are Employees who are owners, officers or
executives of the Employer) shall not participate in the Plan;
and
If the Plan is a Variable Plan and is not adopted
as an amendment of a predecessor plan of the Employer, all
Employees on the Effective Date shall become Participants on the
Effective Date, if the Employer so elects in the Plan Agreement;
and
If the Plan is a Variable Plan, (i) only Employees in
the eligible classes specified by the Employer in the Plan
Agreement shall participate in the Plan; and (ii) eligible
Employees will begin participation on the entry date specified in
the Plan Agreement.
Notwithstanding paragraphs (c) and (d), the Plan must comply
with the coverage and participation rules of Sections 410(b) and
401(a)(26) of the Code and the regulations thereunder.
Special Participation Rule. With respect to a Standard
Plan, or a Variable Plan in which the Employer has specified full
and immediate vesting in the Plan Agreement, an Employee who
incurs a One-Year Eligibility Break before completing the number
of Eligibility Periods required under Section 3.1 shall not
thereafter be credited with any Eligibility Period completed
before the One-Year Eligibility Break.
Resumed Participation. A former Employee who incurs a
One-Year Eligibility Break after having become a Participant
shall participate in the Plan as of the date on which he again
becomes an Employee, if (i) his Employer Contribution Account or
Employer Matching Account had become partially or fully vested
before he incurred a One-Year Vesting Break, or (ii) he incurred
fewer than five consecutive One-Year Eligibility Breaks. In any
other case, when he again becomes an Employee he shall be treated
as a new Employee under Section 3.1.
Changes in Classification (Variable Plans Only). If a
Participant in a Variable Plan ceases to be a member of a
classification of Employees eligible to participate in the Plan,
but does not incur a One-Year Eligibility Break, he will continue
to be credited with Eligibility Periods while he remains an
Employee, and he will resume participation as of the date on
which he again becomes a member of a classification of Employees
eligible to participate in the Plan. If such a Participant
incurs a One-Year Eligibility Break, Section 3.3 will apply.
If an Employee who is not a member of a classification of
Employees eligible to participate in the Plan satisfies the age
and service requirements specified in the Plan Agreement, he will
begin to participate immediately upon becoming a member of an
eligible classification.
Benefits for Owner-Employees. If the Plan provides
contributions or benefits for one or more Owner-Employees who
control both the trade or business with respect to which the Plan
is established and one or more other trades or businesses, the
Plan and plans established with respect to such other trades or
businesses must, when looked at as a single plan, satisfy
Sections 401(a) and (d) of the Code with respect to the Employees
of this and all such other trades or businesses. If the Plan
provides contributions or benefits for one or more Owner
Employees who control one or more other trades or businesses, the
Employees of each such other trade or business must be included
in a plan which satisfies Sections 401(a) and (d) of the Code and
which provides contributions and benefits not less favorable than
those provided for such Owner-Employees under the Plan. If an
individual is covered as an Owner-Employee under the plans of two
or more trades or businesses which he does not control and such
individual controls a trade or business, then the contributions
or benefits of the Employees under the plan of the trade or
business which he does control must be as favorable as those
provided for him under the most favorable plan of the trade or
business which he does not control. For purposes of this Section
3.5, an Owner-Employee, or two or more Owner-Employees, shall be
considered to control a trade or business if such Owner-Employee,
or such two or more Owner-Employees together:
own the entire interest in an unincorporated trade
or business, or
in the case of a partnership, own more than 50
percent of either the capital interest or the profits interest in
such partnership.
<PAGE>
For purposes of the preceding sentence, an Owner-Employee or
two or more Owner-Employees shall be treated as owning any
interest in a partnership which is owned, directly or indirectly,
by a partnership which such Owner-Employee or such two or more
Owner-Employees are considered to control within the meaning of
the preceding sentence.
ARTICLE
Contributions
Provisions Applicable to All Plans.
Payment and Crediting of Employer Contributions.
The Employer shall pay to the order of the Trustee the aggregate
contribution to the Trust Fund (other than the premium payments
on any Policy) for each Plan Year. Each contribution shall be
accompanied by written instructions from the Employer, in the
manner prescribed by Putnam. Neither the Trustee nor Putnam shall
be under any duty to inquire into the correctness of the amount
or the timing of any contribution, or to collect any amount if
the Employer fails to make a contribution as provided in the
Plan.
Responsibility for Premium Payments.
Contributions to be applied to the payment of the premiums on any
Policy shall be paid by the Employer directly to the insurer in
cash. In determining the amount of any premium due under any
Policy with respect to any Participant, the Employer and the
Insurance Trustee may rely conclusively upon information
furnished by the provider of the Policy. For purposes of
Sections 4.2(a), 4.3(a) and Article 5, all Employer contributions
used to pay premiums on Policies shall be treated as
contributions made to the appropriate Participant's Employer
Contribution Account. If the Employer omits any premium payment
or makes any mistake concerning a premium payment, neither the
Employer nor the Insurance Trustee shall have any liability in
excess of the premium to be paid.
Time for Payment. The aggregate of all
contributions with respect to a Plan Year shall be transferred in
accordance with paragraphs (a) and (b) no later than the due date
(including extensions) for filing the Employer's federal income
tax return for that Plan Year.
Limitations on Allocations. All allocations shall
be subject to the limitations in Article 6.
Establishment of Accounts. The Employer will
establish and maintain (or cause to be established and
maintained) for each Participant individual accounts adequate to
disclose his interest in the Trust Fund, including such of the
following separate accounts as shall apply to the Participant:
Deductible Employee Contribution Account, Employer Contribution
Account, Participant Contribution Account, and Rollover Account;
and in a Plan with a CODA, Elective Deferral Account, Qualified
Nonelective Account, Qualified Matching Account and Employer
Matching Account. The maintenance of such accounts shall be only
for recordkeeping purposes, and the assets of separate accounts
shall not be required to be segregated for purposes of
investment.
Restoration of Accounts (Variable Plans Only).
Notwithstanding any other provision of the Plan, for any Plan
Year in which it is necessary to restore any portion of a
Participant's Account pursuant to Section 8.3(b) or 9.5, to the
extent that the amount of Forfeitures available is insufficient
to accomplish such restoration, the Employer shall contribute the
amount necessary to eliminate the insufficiency, regardless of
whether the contribution is currently deductible by the Employer
under Section 404 of the Code. Forfeitures shall be considered
available for allocation pursuant to Sections 4.2, 4.3 and 5.8 in
a Plan Year only after all necessary restoration of Accounts has
been accomplished.
Provisions Applicable Only to Profit Sharing Plans.
Amount of Annual Contribution. The Employer will
contribute for each Plan Year an amount determined in accordance
with the formula specified by the Employer in the Plan Agreement,
less any amounts reapplied for the Plan Year under Section
6.1(d), not to exceed the amount deductible under Section 404 of
the Code. In a Variable Plan, if the Employer so elects in the
Plan Agreement, the amount of Forfeitures occurring in a Plan
Year shall be applied to reduce the Employer's contribution by a
like amount, and such Forfeitures shall be treated as a portion
of the Employer contribution for purposes of paragraphs (b) and
(c).
Allocation of Contributions: General Rule. As of the
last day of each Plan Year, the Employer's contribution (and any
amounts reapplied under Section 6.1(d)) for the Plan Year shall
be allocated among the Employer Contribution Accounts of
Qualified Participants in proportion to their Earnings. This
general rule does not apply to a Plan that is integrated with
Social Security or to allocations in a CODA.
Plans Integrated with Social Security. If the
Employer elects in the Plan Agreement an allocation formula
integrated with Social Security, Employer contributions (and any
amounts reapplied under Section 6.1(d)) shall be allocated as of
the last day of the Plan Year, as follows:
Top-Heavy Integration Formula. If the Plan
is required to provide a minimum allocation for the Plan Year
pursuant to the Top-Heavy Plan rules of Article 15, or if the
Employer has specified in the Plan Agreement that this paragraph
(1) will apply whether or not the Plan is Top-Heavy, then:
(A) First, among the Employer Contribution
Accounts of all Qualified Participants, in the ratio that each
Qualified Participant's Earnings bears to all Qualified
Participants' Earnings. The total amount allocated in this
manner shall be equal to 3% of all Qualified Participants'
Earnings (or, if less, the entire amount to be allocated).
(B) Next, among the Employer Contribution
Accounts of all Qualified Participants who have Excess Earnings,
in the ratio that each Qualified Participant's Excess Earnings
bears to all Qualified Participants' Excess Earnings. The total
amount allocated in this manner shall be equal to 3% of all
Qualified Participants' Excess Earnings (or, if less, the entire
amount remaining to be allocated).
(C) Next, among the Employer Contribution
Accounts of all Qualified Participants, in the ratio that the sum
of each Qualified Participant's Earnings and Excess Earnings
bears to the sum of all Qualified Participants' Earnings and
Excess Earnings. The total amount allocated in this manner shall
not exceed the lesser of (i) the sum of all Participants'
Earnings and Excess Earnings multiplied by the Top-Heavy Maximum
Disparity Percentage determined under subparagraph (1)(E), or
(ii) the entire amount remaining to be allocated.
(D) Finally, any amount remaining shall be
allocated among the Employer Contribution Accounts of all
Qualified Participants in the ratio that each Qualified
Participant's Earnings bears to all Qualified Participants'
Earnings.
(E) The Top-Heavy Maximum Disparity
Percentage shall be the lesser of (i) 2.7% or (ii) the applicable
percentage from the following table:
If the Plan's
Integration
Level is But not The applicable
more than: more than: percentage is:
$0 The greater of $10,000
or 20% of the Social
Security Wage Base 2.7%
<PAGE>
The greater of 80% of the Social
$10,000 or 20% Security Wage Base
of the Social
Security Wage Base 1.3%
80% of the Social Less than the Social
Security Wage Security Wage Base 2.4%
Base
If the Plan's Integration Level is equal to the Social
Security Wage Base, the Top-Heavy Maximum Disparity Percentage is
2.7%.
Non-Top-Heavy Integration Formula. If the
Plan is not required to provide a minimum allocation for the Plan
Year pursuant to the Top-Heavy Plan rules of Article 15, and the
Employer has not specified in the Plan Agreement that paragraph
(1) will apply whether or not the Plan is Top-Heavy, then:
(A) An amount equal to (i) the Maximum
Disparity Percentage determined under subparagraph (2)(C)
multiplied by the sum of all Qualified Participants' Earnings and
Excess Earnings, or (ii) if less, the entire amount to be
allocated, shall be allocated among the Employer Contribution
Amounts of all Participants in the ratio that the sum of each
Qualified Participant's Earnings and Excess Earnings bears to the
sum of all Qualified Participants' Earnings and Excess Earnings.
(B) Any amount remaining after the
allocation in paragraph (2)(A) shall be allocated among the
Employer Contribution Accounts of all Qualified Participants in
the ratio that each Qualified Participant's Earnings bears to all
Qualified Participants' Earnings.
(C) The Maximum Disparity Percentage shall
be the lesser of (i) 5.7% or (ii) the applicable percentage from
the following table:
If the Plan's
Integration
Level is But not The applicable
more than: more than: percentage is:
$0 The greater of $10,000
or 20% of the Social
Security Wage Base 5.7%
The greater of 80% of the Social
$10,000 or 20% of Security Wage Base
the Social Security
Wage Base 4.3%
80% of the Social Less than the Social
Security Wage Security Wage Base 5.4%
Base
If the Plan's Integration Level is equal to the Social
Security Wage Base, the Maximum Disparity Percentage is 5.7%.
In this Section 4.2, Earnings means Earnings as
defined in Section 2.13.
Allocation of Forfeitures. Forfeitures shall be allocated
among the Employer Contribution Amounts of all Qualified
Participants in accordance with paragraph (b) or (c), whichever
applies to Employer Contributions. Forfeitures may be allocated
pursuant to paragraphs (c)(1)(B), (c)(1)(C) and (c)(2)(A) only to
the extent that the limitation described therein has not been
fully utilized by the allocation of Employer Contributions and
amounts reapplied under Section 6.1(d).
Participant Contributions. Except in the case of a Variable
Plan in which the Employer has provided in the Plan Agreement for
nondeductible Participant contributions, the Plan will accept no
such contributions for any Plan Year beginning after the Plan
Year in which the Employer adopts this Plan. Nevertheless, a
Participant Contribution Account shall be maintained in any Plan
which accepted nondeductible Participant contributions for any
Plan Year beginning after December 31, 1986, and such
contributions, together with any matching contributions (as
defined in Section 401(m)(4) of the Code), shall be limited so as
to meet the nondiscrimination test of Section 401(m) of the Code.
Rules applicable to Participant contributions to a Variable Plan
in Plan Years beginning after the adoption of this Plan are set
forth in Section 5.9. All Participant Contribution Accounts will
be fully vested at all times.
Provisions Applicable Only to Money Purchase Pension Plans.
Amount of Annual Contributions. The Employer will
contribute for each Plan Year an amount described in paragraph
(b) or (c) below, whichever is applicable, less any amounts
reapplied for the Plan Year under Section 6.1(d), not to exceed
the amount deductible under Section 404(c) of the Code. In a
Variable Plan, if the Employer so elects in the Plan Agreement,
the amount of Forfeitures occurring in a Plan Year shall be
applied to reduce the Employer's contribution by a like amount,
and such Forfeitures shall be treated as a portion of the
Employer contribution for purposes of paragraphs (b) and (c).
Allocation of Contributions: General Rule. The
Employer shall contribute an amount equal to the product of the
Earnings of all Qualified Participants and the Base Contribution
Percentage, and the contribution shall be allocated as of the
last day of the Plan Year among the Employer Contribution
Accounts of all Qualified Participants in the ratio that the
Earnings of each Qualified Participant bears to the Earnings of
all Qualified Participants. This general rule does not apply to
a Plan that is integrated with Social Security.
Plans Integrated with Social Security. If the Employer
has elected in the Plan Agreement to integrate the Plan with
Social Security, the Employer shall contribute an amount equal to
the sum of the following amounts, and the contribution shall be
allocated as of the last day of the Plan Year as follows:
To the Employer Contribution Account of each
Qualified Participant, an amount equal to the product of the Base
Contribution Percentage and his Earnings, and
To the Employer Contribution Account of each Qualified
Participant who has Excess Earnings, the product of his Excess
Earnings and the lesser of (i) the Base Contribution Percentage
or (ii) the Money Purchase Maximum Disparity Percentage
determined under paragraph (d).
The Base Contribution Percentage shall be no
less than three percent in either of the following circumstances:
(i) any Plan Year of a Standard Plan for which the Plan Agreement
does not specify that the Employer will perform annual Top-Heavy
testing, or (ii) any Plan Year in which the Plan is required to
provide a minimum allocation for the Plan Year pursuant to the
Top-Heavy Plan rules of Article 15.
The Money Purchase Maximum Disparity Percentage is
equal to the lesser of (i) 5.7% or (ii) the applicable percentage
from the following table:
If the Plan's
Integration
Level is But not The applicable
more than: more than: percentage is:
$0 The greater of $10,000
or 20% of the Social
Security Wage Base 5.7%
The greater of 80% of the Social
$10,000 or 20% Security Wage Base
of the Social
Security Wage Base 4.3%
80% of the Social Less than the Social
Security Wage Security Wage Base 5.4%
Base
If the Plan's Integration Level is equal to the Social
Security Wage Base, the Money Purchase Maximum Disparity
Percentage is 5.7%.
In this Section 4.3, Earnings means Earnings as
defined in Section 2.13.
Separate Allocation of Forfeitures. If the
Employer has not elected in the Plan Agreement to use Forfeitures
to reduce the amount of its contribution, Forfeitures shall be
allocated among the Employer Contribution Accounts of all
Qualified Participants in proportion to their Earnings.
Paired Plans. An Employer may adopt as paired plans
Putnam Standard Profit Sharing Plan (Plan Agreement #001) and
Putnam Standard Money Purchase Pension Plan (Plan Agreement
#002). Only one of the two paired plans may be integrated with
Social Security. In any Plan Year in which Putnam Standard
paired plans are top-heavy, each non-key employee who is eligible
to participate in both plans will have allocated to his Account
in the Putnam Standard Money Purchase Pension Plan a minimum
contribution that meets the requirements of Section 15.3.
Rollover Contributions. An Employee in an eligible
class may contribute at any time cash or other property (which is
not a collectible within the meaning of Section 408(m) of the
Code) acceptable to the Trustee representing qualified rollover
amounts under Sections 402, 403, or 408 of the Code. Amounts so
contributed shall be credited to a Rollover Account for the
Participant.
No Deductible Employee Contributions. The Plan
Administrator shall not accept deductible employee contributions
for a taxable year beginning after December 31, 1986. In the
event that the Plan is adopted as an amendment of a plan which
previously accepted such contributions from any Participant, the
Employer will establish and maintain (or cause to be established
and maintained) a separate account in which shall be recorded the
amount of such contributions and the income, expenses, gains and
losses incurred thereon. Such an account shall be nonforfeitable
at all times and shall in no event be used to pay premiums on any
life insurance policy. Subject to Article 10, Joint and Survivor
Annuity Requirements, the Participant may withdraw any part of
such an account at any time upon written request to the Plan
Administrator.
ARTICLE
Cash or Deferred Arrangement under Section 401(k)(CODA)
Applicability; Allocations. This Article 5 applies to
any profit sharing plan for which the Employer has elected in the
Plan Agreement to include a CODA. The Employer may specify in
the Plan Agreement that contributions will be made to the Plan
only under the CODA, or that contributions may be made under
Section 4.2 as well as under the CODA. Allocations to
Participants' Accounts of contributions made pursuant to this
Article 5 shall be made as soon as administratively feasible
after their receipt by the Trustee, but in any case no later than
as of the last day of the Plan Year for which the contributions
were made.
CODA Participation. Each Employee who has met the
eligibility requirements of Article 3 may make Elective Deferrals
to the Plan by completing and returning to the Plan Administrator
a Deferral Agreement form which provides that the Participant's
cash compensation from the Employer will be reduced by the amount
indicated in the Deferral Agreement, and that the Employer will
contribute an equivalent amount to the Trust on behalf of the
Participant. The following rules will govern Elective Deferrals:
Subject to the limits specified in the Plan
Agreement and set forth in Section 5.3, a Deferral Agreement may
apply to any amount or percentage of either or both of the
Earnings payable to a Participant in each regular payroll period
of the Employer, or one or more bonuses payable to a Participant
from time to time as specified by the Employer.
In accordance with such reasonable rules as the
Plan Administrator shall specify, a Deferral Agreement will
become effective as soon as is administratively feasible after
the Deferral Agreement is returned to the Plan Administrator, and
will remain effective until it is modified or terminated. No
Deferral Agreement may become effective retroactively.
A Participant may modify his Deferral Agreement by
completing and returning to the Plan Administrator a new Deferral
Agreement form as of any of the dates specified in the Plan
Agreement, and any such modification will become effective as
described in paragraph (b).
A Participant may terminate his Deferral Agreement
at any time upon advance written notice to the Plan
Administrator, and any such termination will become effective as
described in paragraph (b).
Annual Limit on Elective Deferrals. During any taxable
year of a Participant, his Elective Deferrals under the Plan and
any other qualified plan of an Affiliated Employer shall not
exceed the dollar limit contained in Section 402(g) of the Code
in effect at the beginning of the taxable year. With respect to
any taxable year, a Participant's Elective Deferrals for purposes
of this Section 5.3 include all Employer contributions made on
his behalf pursuant to an election to defer under any qualified
CODA as described in Section 401(k) of the Code, any simplified
employee pension cash or deferred arrangement (SARSEP) as
described in Section 402(h)(1)(B) of the Code, any eligible
deferred compensation plan under Section 457 of the Code, any
plan described under Section 501(c)(18) of the Code, and any
Employer contributions made on behalf of the Participant for the
purchase of an annuity contract under Section 403(b) of the Code
pursuant to a salary reduction agreement. The amount of Elective
Deferrals of a Participant who receives a hardship distribution
pursuant to Section 5.14 shall be reduced, for the taxable year
next following the distribution, by the amount of Elective
Deferrals made in the taxable year of the hardship distribution.
Distribution of Excess Elective Deferrals. "Excess
Elective Deferrals" means those Elective Deferrals described in
Section 5.3 that are includible in a Participant's gross income
under Section 402(g) of the Code, to the extent that the
Participant's aggregate elective deferrals for a taxable year
exceed the dollar limitation under that Code Section. Excess
Elective Deferrals shall be treated as Annual Additions under the
Plan, whether or not they are distributed under this Section 5.4.
A Participant may designate to the Plan any Excess Elective
Deferrals made during his taxable year by notifying the Employer
on or before the following March 15 of the amount of the Excess
Elective Deferrals to be so designated.
Notwithstanding any other provision of the Plan, Excess
Elective Deferrals, plus any income and minus any loss allocable
thereto, shall be distributed no later than April 15 to any
Participant to whose Account Excess Elective Deferrals were
designated for the preceding year and who claims Excess Elective
Deferrals for such taxable year. Excess Elective Deferrals shall
be adjusted for any income or loss up to the date of
distribution. The income or loss allocable to Excess Elective
Deferrals is the sum of: (1) income or loss allocable to the
Participant's Elective Deferral Account for the taxable year
multiplied by a fraction, the numerator of which is the
Participant's Excess Elective Deferrals for the year and the
denominator of which is the Participant's Account balance
attributable to Elective Deferrals without regard to any income
or loss occurring during the year; and (2) ten percent of the
amount determined under (1), multiplied by the number of whole
calendar months between the end of the Participant's taxable year
and the date of distribution, counting the month of distribution
if distribution occurs after the 15th day of that month.
Satisfaction of ADP and ACP Tests. In each Plan Year,
the Plan must satisfy the ADP test described in Section 5.6 and
the ACP test described in Section 5.11. The Employer may cause
the Plan to satisfy the ADP or ACP test or both tests for a Plan
Year by any of the following methods or by any combination of
them:
By the distribution of Excess Contributions in
accordance with Section 5.7, or the distribution of Excess
Aggregate Contributions in accordance with Section 5.12, or both;
In a Variable Plan that permits all Participants
to make Participant Contributions, by recharacterization of
Excess Contributions in accordance with Section 5.10; or
If the Employer has so elected in the Plan
Agreement, by making Qualified Nonelective Contributions or
Qualified Matching Contributions or both, in accordance with the
Plan Agreement and this Section 5.5.
Actual Deferral Percentage Test Limit. The Actual
Deferral Percentage (hereinafter "ADP") for Participants who are
Highly Compensated Employees for each Plan Year and the ADP for
Participants who are Non-Highly Compensated Employees for the
same Plan Year must satisfy one of the following tests:
The ADP for Participants who are Highly
Compensated Employees for the Plan Year shall not exceed the ADP
for Participants who are Non-Highly Compensated Employees for the
same Plan Year multiplied by 1.25; or
The ADP for Participants who are Highly
Compensated Employees for the Plan Year shall not exceed the ADP
for Participants who are Non-Highly Compensated Employees for the
same Plan Year multiplied by 2.0, provided that the ADP for
Participants who are Highly Compensated Employees does not exceed
the ADP for Participants who are Non-Highly Compensated Employees
by more than two percentage points.
The following special rules shall apply to the computation
of the ADP:
"Actual Deferral Percentage" means, for a
specified group of Participants for a Plan Year, the average of
the ratios (calculated separately for each Participant in the
group) of (1) the amount of Employer contributions actually paid
over to the Trust on behalf of the Participant for the Plan Year
to (2) the Participant's Earnings for the Plan Year (whether or
not the Employee was a Participant for the entire Plan Year).
Employer contributions on behalf of any Participant shall
include: (i) his Elective Deferrals, including Excess Elective
Deferrals, but excluding Elective Deferrals that are taken into
account in the Average Contribution Percentage test described in
Section 5.11 (provided the ADP test is satisfied both with and
without exclusion of these Elective Deferrals); and (ii) if the
Employer has elected to make Qualified Nonelective Contributions,
such amount of Qualified Nonelective Contributions, if any, as
shall be necessary to enable the Plan to satisfy the ADP test;
and (iii) if the Employer has elected to make Qualified Matching
Contributions, such amount of Qualified Matching Contributions,
if any, as shall be necessary to enable the Plan to satisfy the
ADP test. For purposes of computing Actual Deferral Percentages,
an Employee who would be a Participant but for his failure to
make Elective Deferrals shall be treated as a Participant on
whose behalf no Elective Deferrals are made.
In the event that the Plan satisfies the
requirements of Sections 401(k), 401(a)(4), or 410(b) of the Code
only if aggregated with one or more other plans, or if one or
more other plans satisfy the requirements of such sections of the
Code only if aggregated with the Plan, then this Section 5.6
shall be applied by determining the ADP of Employees as if all
such plans were a single plan. For Plan Years beginning after
December 31, 1989, plans may be aggregated in order to satisfy
Section 401(k) of the Code only if they have the same Plan Year.
The ADP for any Participant who is a Highly Compensated
Employee for the Plan Year and who is eligible to have Elective
Deferrals (and Qualified Nonelective Contributions or Qualified
Matching Contributions, or both, if these are treated as Elective
Deferrals for purposes of the ADP test) allocated to his Accounts
under two or more CODAs described in Section 401(k) of the Code
that are maintained by the Affiliated Employers shall be
determined as if such Elective Deferrals (and, if applicable,
such Qualified Nonelective Contributions or Qualified Matching
Contributions, or both) were made under a single CODA. If a
Highly Compensated Employee participates in two or more CODAs
that have different Plan Years, all CODAs ending with or within
the same calendar year shall be treated as a single CODA.
For purposes of determining the ADP of a
Participant who is a 5-percent owner or one of the ten most
highly-paid Highly Compensated Employees, the Elective Deferrals
(and Qualified Nonelective Contributions or Qualified Matching
Contributions, or both, if these are treated as Elective
Deferrals for purposes of the ADP test) and the Compensation of
such a Participant shall include the Elective Deferrals (and, if
applicable, Qualified Nonelective contributions and Qualified
Matching Contributions, or both) and Compensation for the Plan
Year of his Family Members (as defined in section 414(q)(6) of
the Code). Family Members of such Highly Compensated Employees
shall be disregarded as separate employees in determining the ADP
both for Participants who are Non-Highly Compensated Employees
and for Participants who are Highly Compensated Employees.
For purposes of the ADP test, Elective Deferrals,
Qualified Nonelective Contributions and Qualified Matching
Contributions must be made before the last day of the 12-month
period immediately following the Plan Year to which those
contributions relate.
The Employer shall maintain records sufficient to
demonstrate satisfaction of the ADP test and the amount of
Qualified Nonelective Contributions or Qualified Matching
Contributions, or both, used in satisfying the test.
The determination and treatment of the ADP amounts
of any Participant shall satisfy such other requirements as may
be prescribed by the Secretary of the Treasury.
Distribution of Excess Contributions. "Excess
Contributions" means, with respect to any Plan Year, the excess
of:
The aggregate amount of Employer contributions
actually taken into account in computing the ADP of Highly
Compensated Employees for the Plan Year, over
The maximum amount of Employer contributions permitted
by the ADP test, determined by reducing contributions made on
behalf of Highly Compensated Employees in order of their ADPs,
beginning with the highest of such percentages.
Notwithstanding any other provision of the Plan, Excess
Contributions, plus any income and minus any loss allocable
thereto, shall be distributed no later than the last day of each
Plan Year to Participants to whose Accounts Excess Contributions
were allocated for the preceding Plan Year; provided, however,
that in the case of a Variable Plan in which the Employer has
elected in the Plan Agreement to recharacterize Excess
Contributions pursuant to Section 5.10, distribution shall be
made pursuant to this Section 5.7 to the extent that Excess
Contributions are not so recharacterized. If such excess amounts
are distributed more than two and one-half months after the last
day of the Plan Year in which the excess amounts arose, an excise
tax equal to ten percent of the excess amounts will be imposed on
the Employer maintaining the Plan. Such distributions shall be
made to Highly Compensated Employees on the basis of the
respective portions of the Excess Contributions attributable to
each of them. Excess Contributions shall be allocated to
Participants who are subject to the family member aggregation
rules of Section 414(q)(6) of the Code in the manner prescribed
by the regulations under that Section. Excess Contributions
(including any amounts recharacterized in accordance with Section
5.10) shall be treated as Annual Additions under the Plan.
Excess Contributions shall be adjusted for any income or
loss up to the date of distribution. The income or loss
allocable to Excess Contributions is the sum of: (1) income or
loss allocable to the Participant's Elective Deferral Account
(and, if applicable, his Qualified Nonelective Account or
Qualified Matching Account or both) for the Plan Year multiplied
by a fraction, the numerator of which is the Participant's Excess
Contributions for the year and the denominator is the
Participant's account balance attributable to Elective Deferrals
(and Qualified Nonelective Contributions or Qualified Matching
Contributions, or both, if any of these are included in the ADP
test) without regard to any income or loss occurring during such
Plan Year; and (2) ten percent of the amount determined under
(1), multiplied by the number of whole calendar months between
the end of the Plan Year and the date of distribution, counting
the month of distribution if distribution occurs after the 15th
day of that month.
Excess Contributions shall be distributed from the
Participant's Elective Deferral Account and Qualified Matching
Account (if applicable) in proportion to the Participant's
Elective Deferrals and Qualified Matching Contributions (to the
extent used in the ADP test) for the Plan Year. Excess
Contributions shall be distributed from the Participant's
Qualified Nonelective Account only to the extent that such Excess
Contributions exceed the balance in the Participant's Elective
Deferral Account and Qualified Matching Account.
Employer Matching Contributions (Variable Plans Only).
If so specified in the Plan Agreement, the Employer will make
Employer Matching Contributions to the Plan in accordance with
the Plan Agreement. Employer Matching Contributions will be
allocated among the Employer Matching Accounts of Participants in
proportion to their Elective Deferrals or their Participant
Contributions, as specified by the Employer in the Plan
Agreement. Employer Matching Accounts shall become vested
according to the vesting schedule specified in the Plan
Agreement, but regardless of that schedule shall be fully vested
upon the Participant's Retirement (or, if earlier, his
fulfillment of the requirements for early retirement, if any, or
attainment the normal retirement age specified in the Plan
Agreement), his death during employment with an Affiliated
Employer, and in accordance with Section 19.3. Forfeitures of
Employer Matching Contributions, other than Excess Aggregate
Contributions, shall be made in accordance with Section 8.3.
Forfeitures of Employer Matching Accounts for a Plan Year shall
be applied to reduce the total Employer Matching Contribution for
the Plan Year, or allocated among the Employer Matching Accounts
of Participants in addition to the Employer Matching Contribution
for the Plan Year, as elected by the Employer in the Plan
Agreement.
Participant Contributions (Variable Plans Only). If so
specified in the Plan Agreement for a Variable Plan, a
Participant may make nondeductible Participant Contributions to
the Plan in accordance with the Plan Agreement and subject to the
terms and conditions of this Article 5. Participant
Contributions will be allocated to the Participant Contributions
<PAGE>
Account of the contributing Participant. All Participant
Contribution Accounts will be fully vested at all times.
Recharacterization of Excess Contributions (Variable
Plans Only). Provided that the Plan Agreement permits all
Participants to make Participant Contributions, the Employer may
treat a Participant's Excess Contributions to a Variable Plan as
an amount distributed to the Participant and then contributed by
the Participant to the Plan as a Participant Contribution.
Recharacterized amounts will remain nonforfeitable and subject to
the same distribution requirements as Elective Deferrals.
Amounts may not be recharacterized by a Highly Compensated
Employee to the extent that a recharacterized amount in
combination with other Participant Contributions made by that
Employee would exceed any stated limit under the Plan on
Participant Contributions. Recharacterization must occur no later
than two and one-half months after the last day of the Plan Year
in which the Excess Contributions arose, and is deemed to occur
no earlier than the date the last Highly Compensated Employee is
informed in writing by the Employer of the amount recharacterized
and the consequences thereof. Recharacterized amounts will be
taxable to the Participant for his tax year in which the
Participant would have received them in cash.
Average Contribution Percentage Test Limit and Aggregate
Limit. The Average Contribution Percentage (hereinafter "ACP")
for Participants who are Highly Compensated Employees for each
Plan Year and the ACP for Participants who are Non-Highly
Compensated Employees for the same Plan Year must satisfy one of
the following tests:
The ACP for Participants who are Highly
Compensated Employees for the Plan Year shall not exceed the ACP
for Participants who are Non-Highly Compensated Employees for the
same Plan Year multiplied by 1.25; or
The ACP for Participants who are Highly
Compensated Employees for the Plan Year shall not exceed the ACP
for Participants who are Non-Highly Compensated Employees for the
same Plan Year multiplied by two (2), provided that the ACP for
Participants who are Highly Compensated Employees does not exceed
the ACP for Participants who are Non-Highly Compensated Employees
by more than two percentage points.
The following rules shall apply to the computation of the
ACP:
Average Contribution Percentage means the average
of the Contribution Percentages of the Eligible Participants in a
group.
<PAGE>
Contribution Percentage means the ratio (expressed
as a percentage) of a Participant's Contribution Percentage
Amounts to the Participant's Earnings for the Plan Year (whether
or not the Employee was a Participant for the entire Plan Year).
Contribution Percentage Amounts means the sum of
the Participant Contributions, Employer Matching Contributions,
and Qualified Matching Contributions (to the extent not taken
into account for purposes of the ADP test) made under the Plan on
behalf of the Participant for the Plan Year. Such Contribution
Percentage Amounts shall include Forfeitures of Excess Aggregate
Contributions or Employer Matching Contributions allocated to the
Participant's Account, taken into account in the year in which
the allocation is made. If the Employer has elected in the Plan
Agreement to make Qualified Nonelective Contributions, such
amount of Qualified Nonelective Contributions, if any, as shall
be necessary to enable the Plan to satisfy the ACP test shall be
in the Contribution Percentage Amounts. Elective Deferrals shall
also be included in the Contribution Percentage Amounts to the
extent, if any, needed to enable the Plan to satisfy the ACP
test, so long as the ADP test is met before the Elective
Deferrals are used in the ACP test, and continues to
be met following the exclusion of those Elective Deferrals that
are used to meet the ACP test.
Eligible Participant means any Employee who is
eligible to make a Participant Contribution (or an Elective
Deferral, if Elective Deferrals are taken into account in the
calculation of the Contribution Percentage), or to receive an
Employer Matching Contribution (or a Forfeiture thereof) or a
Qualified Matching Contribution. If a Participant Contribution
is required as a condition of participation in the Plan, any
Employee who would be a Participant in the Plan if he made such a
contribution shall be treated as an Eligible Participant on
behalf of whom no Participant Contributions are made.
Aggregate Limit means the sum of (i) 125 percent
of the greater of the ADP of the Non-Highly Compensated Employees
for the Plan Year, or the ACP of Non-Highly Compensated Employees
under the Plan subject to Code Section 401(m) for the Plan Year
beginning with or within the Plan Year of the CODA, and (ii) the
lesser of 200 percent of, or two plus, the lesser of the ADP or
ACP.
If one or more Highly Compensated Employees
participate in both a CODA and a plan subject to the ACP test
maintained by an Affiliated Employer, and the sum of the ADP and
ACP of those Highly Compensated Employees subject to either or
both tests exceeds the Aggregate Limit, then the ACP of those
Highly Compensated Employees who also participate in a CODA will
be reduced (beginning with the Highly Compensated Employee whose
ACP is the highest) so that the Aggregate Limit is not exceeded.
The amount by which each Highly Compensated Employee's
Contribution Percentage Amounts is reduced shall be treated as an
Excess Aggregate Contribution. In determining the Aggregate
Limit, the ADP and ACP of Highly Compensated Employees are
determined after any corrections required to met the ADP and ACP
tests. The Aggregate Limit will be considered satisfied if both
the ADP and ACP of the Highly Compensated Employees does not
exceed 1.25 multiplied by the ADP and ACP of the Non-Highly
Compensated Employees.
For purposes of this section, the Contribution
Percentage for any Participant who is a Highly Compensated
Employee and who is eligible to have Contribution Percentage
Amounts allocated to his account under two or more plans
described in Section 401(a) of the Code, or CODAs described in
Section 401(k) of the Code, that are maintained by an Affiliated
Employer, shall be determined as if the total of such
Contribution Percentage Amounts was made under each plan. If a
Highly Compensated Employee participates in two or more CODAs
that have different plan years, all CODAs ending with or within
the same calendar year shall be treated as a single CODA.
In the event that the Plan satisfies the requirements
of Sections 401(m), 401(a)(4) or 410(b) of the Code only if
aggregated with one or more other plans, or if one or more other
plans satisfy the requirements of such sections of the Code only
if aggregated with the Plan, then this Section 5.10 shall be
applied by determining the Contribution Percentage of Employees
as if all such plans were a single plan. For Plan Years
beginning after December 31, 1989, plans may be aggregated in
order to satisfy Section 401(m) of the Code only if they have the
same Plan Year.
For purposes of determining the Contribution
Percentage of a Participant who is a five-percent owner or one of
the ten most highly-paid Highly Compensated Employers, the
Contribution Percentage Amounts and Compensation of the
Participant shall include the Contribution Percentage Amounts and
Compensation for the Plan Year of Family Members (as defined in
Section 414(q)(6) of the Code). Family Members of such Highly
Compensated Employees shall be disregarded as separate employees
in determining the Contribution Percentage both for Participants
who are Non-Highly Compensated Employees and for Participants who
are Highly Compensated Employees.
For purposes of the ACP test, Participant
Contributions are considered to have been made in the Plan Year
in which they were contributed to the Trust. Matching
Contributions and Qualified Nonelective Contributions will be
considered made for a Plan Year if made no later than the end of
<PAGE>
the 12-month period beginning on the day after the close of the
Plan Year.
The Employer shall maintain records sufficient to
demonstrate satisfaction of the ACP test and the amount of
Qualified Nonelective Contributions or Qualified Matching
Contributions, or both, used in the ACP test.
The determination and treatment of the
Contribution Percentage of any Participant shall satisfy such
other requirements as may be prescribed by the Secretary of the
Treasury.
Distribution of Excess Aggregate Contributions.
Notwithstanding any other provision of the Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable
thereto, shall be forfeited if forfeitable, or if not
forfeitable, distributed no later than the last day of each Plan
Year to Participants to whose accounts such Excess Aggregate
Contributions were allocated for the preceding Plan Year. Excess
Aggregate Contributions shall be allocated to Participants who
are subject to the family member aggregation rules of Section
414(q)(6) of the Code in the manner prescribed by the
regulations. If excess amounts attributable to Excess Aggregate
Contributions are distributed more than two and one-half months
after the last day of the Plan Year in which such excess amounts
arose, an excise tax
equal to ten percent of the excess amounts will be imposed on the
Employer maintaining the Plan. Excess Aggregate Contributions
shall be treated as Annual Additions under the Plan.
Excess Aggregate Contributions shall be adjusted for any
income or loss up to the date of distribution. The income or
loss allocable to Excess Aggregate Contributions is the sum of:
(1) income or loss allocable to the Participant's Participant
Contribution Account, Employer Matching Contribution Account (if
any, and if all amounts therein are not used in the ADP test)
and, if applicable, Qualified Nonelective Account and Elective
Deferral Account for the Plan Year, multiplied by a fraction, the
numerator of which is the Participant's Excess Aggregate
Contributions for the year and the denominator of which is the
Participant's account balance(s) attributable to Contribution
Percentage Amounts without regard to any income or loss occurring
during the Plan Year; and (2) ten percent of the amount
determined under (1), multiplied by the number of whole calendar
months between the end of the Plan Year and the date of
distribution, counting the month of distribution if distribution
occurs after the 15th of that month.
Forfeitures of Excess Aggregate Contributions shall either
be reallocated to the accounts of Non-Highly Compensated
<PAGE>
Employees or applied to reduce Employer contributions, as elected
by the Employer in the Plan Agreement.
Excess Aggregate Contributions shall be forfeited if
forfeitable, or distributed on a pro-rata basis from the
Participant's Participant Contribution Account, Employer Matching
Account, and Qualified Matching Account (and, if applicable, the
Participant's Qualified Nonelective Account or Elective Deferral
Account, or both).
Excess Aggregate Contributions means, with respect to any
Plan Year, the excess of:
The aggregate Contribution Percentage Amounts
taken into account in computing the numerator of the Contribution
Percentage and actually made on behalf of Highly Compensated
Employees for the Plan Year, over
The maximum Contribution Percentage Amounts
permitted by the ACP test (determined by reducing contributions
made on behalf of Highly Compensated Employees in order of their
Contribution Percentages, beginning with the highest of such
percentages).
Such determination shall be made after first determining
Excess Elective Deferrals pursuant to Section 5.4, and then
determining Excess Contributions pursuant to Section 5.7.
Restriction on Distributions. No distribution may be
made from a Participant's Elective Deferral Account, Qualified
Nonelective Account or Qualified Matching Account until the
occurrence of one of the following events:
The Participant's Disability, death or termination
of employment with the Affiliated Employers;
Termination of the Plan without the establishment
of another defined contribution plan;
If the Plan is a profit sharing plan, the
Participant's attainment of age 59\ (if the Employer has elected
in the Plan Agreement to permit such distributions); or
In the case of an Employer that is a corporation,
the disposition by the Employer to an unrelated entity of (i)
substantially all of the assets (within the meaning of Section
409(d)(2) of the Code) used in a trade or business of the
Employer, if the Employer continues to maintain the Plan after
the disposition, but only with respect to Employees who continue
employment with the entity acquiring such assets; or (ii) the
Employer's interest in a subsidiary (within the meaning of
Section 409(d)(3) of the Code), if the Employer continues to
maintain the Plan after the disposition, but only with respect to
Employees who continue employment with such subsidiary.
In addition, if the Employer has elected in the Plan
Agreement to permit such distributions, a distribution may be
made from a Participant's Elective Deferral Account in the event
of his financial hardship as described in Section 5.14. All
distributions upon any of the events listed above are subject to
the conditions of Article 10, Joint and Survivor Annuity
Requirements.
Hardship Distributions. If the Employer has so elected
in the Plan Agreement, upon a Participant's written request the
Employer may permit a distribution from his Elective Deferral
Account (and, in a Variable Plan, from his Employer Matching
Account). The terms and conditions of Section 12.2 and the
special vesting rule contained in Section 8.4 shall apply to
hardship distributions from an Employer Contribution Account or
an Employer Matching Account. The further terms of this Section
5.14 shall apply to hardship distributions from an Elective
Deferral Account. No hardship distribution shall be made from a
Qualified Nonelective Account or a Qualified Matching Account.
The maximum amount that may be distributed on
account of hardship from an Elective Deferral Account after
December 31, 1988, shall not exceed the sum of (1) the amount
credited to the Account as of December 31, 1988, and (2) the
aggregate amount of the Elective Deferrals made by the
Participant after December 31, 1988, and before the hardship
distribution.
Hardship distributions shall be permitted only on
account of the following financial needs:
Medical expenses (within the meaning of Section
213(d) of the Code) of the Participant, his spouse, children and
dependents, which are deductible for purposes of federal income
tax;
Purchase of the principal residence of the
Participant (excluding regular mortgage payments);
Payment of tuition for the upcoming quarter or
semester of post-secondary education for the Participant, his
spouse, children or dependents; or
Payments necessary to prevent the Participant's
eviction from, or the foreclosure of a mortgage on, his principal
residence.
Hardship distributions shall be subject to the
spousal consent requirements contained in Sections 401(a)(11) and
417 of the Code, to the same extent that those requirements apply
to a Participant pursuant to Section 10.1.
A hardship distribution will be made to a
Participant only upon satisfaction of the following conditions:
The Participant has obtained all nontaxable loans
and all distributions other than hardship distributions available
to him from all plans maintained by the Affiliated Employers;
The hardship distribution does not exceed the
amount of the Participant's financial need (as described in
paragraph (b));
All plans maintained by the Affiliated Employers
provide that the Participant's Elective Deferrals and Participant
Contributions will be suspended for a period of 12 months
following his receipt of a hardship distribution; and
All plans maintained by the Affiliated Employers
provide that the amount of Elective Deferrals that the
Participant may make in his taxable year immediately following
the year of a hardship distribution will not exceed the
applicable limit under Section 402(g) of the Code for the taxable
year, reduced by the amount of Elective Deferrals made by the
Participant in the taxable year of the hardship distribution.
If this Article 5 is adopted as an amendment of an
existing plan that at any time after the beginning of the first
Plan Year beginning after December 31, 1988, has determined the
existence of immediate and heavy financial need, or the
availability of other resources, or both, on the basis of all of
the facts and circumstances, such determinations shall continue
to be made by the Plan Administrator on the basis of all the
facts and circumstances, with respect to amounts attributable to
contributions made before the adoption of the Plan.
Special Effective Dates. If the Plan is adopted as an
amendment of an existing plan, the provisions of Sections 5.3 and
Section 5.7 through 5.11 are effective as of the first day of the
first Plan Year beginning after December 31, 1986.
ARTICLE
Limitations On Allocations
No Additional Plan. If the Participant does not
participate in and has never participated in another qualified
plan, or a welfare benefit fund, (as defined in Section 419(e) of
the Code), or an individual medical account (as defined in
Section 415(l)(2) of the Code) which provides an Annual Addition
<PAGE>
as defined in Section 6.5(a), maintained by an Affiliated
Employer:
The amount of Annual Additions which may be
credited to the Participant's accounts for any Limitation Year
will not exceed the lesser of the Maximum Annual Additions or any
other limitation contained in this Plan. If the Employer
contribution that would otherwise be contributed or allocated to
the Participant's Account would cause the Annual Additions for
the Limitation Year to exceed the Maximum Annual Additions, the
amount contributed or allocated will be reduced so that the
Annual Additions for the Limitation Year will equal the Maximum
Annual Additions.
Before determining a Participant's actual Section
415 compensation for a Limitation Year, the Employer may
determine the Maximum Annual Additions for the Participant on the
basis of a reasonable estimation of the Participant's Section 415
Compensation for the Limitation Year, uniformly determined for
all Participants similarly situated.
As soon as is administratively feasible after the
end of the Limitation Year, the Maximum Annual Additions for the
Limitation Year will be determined on the basis of the
Participant's actual Section 415 Compensation for the Limitation
Year.
If pursuant to paragraph (c) or as a result of the
reallocation of Forfeitures the Annual Additions exceed the
Maximum Annual Additions, the Excess Amount will be disposed of
as follows:
Any nondeductible voluntary Participant
contributions, to the extent they would reduce the Excess Amount,
will be returned to the Participant.
If after the application of (1) above an Excess
Amount still exists, and the Participant is covered by the Plan
at the end of the Limitation Year, the Excess Amount in the
Participant's Accounts will be used to reduce Employer
contributions (including any allocation of Forfeitures) for such
Participant in the next Limitation Year, and each succeeding
Limitation Year if necessary.
If after the application of (1) above an Excess
Amount still exists, and the Participant is not covered by the
Plan at the end of a Limitation Year, the Excess Amount will be
held unallocated in a suspense account. The suspense account
will be applied to reduce future Employer contributions
(including allocation of any Forfeitures) for all remaining
Participants in the next Limitation Year, and each succeeding
Limitation Year if necessary.
If a suspense account is in existence at any time
during a Limitation Year pursuant to this Section 6.1(d), it will
participate in the allocation of the Trust's investment gains and
losses. If a suspense account is in existence at any time during
a particular Limitation Year, all amounts in the suspense account
must be allocated and reallocated to Participants' Accounts
before any Employer or any Employee contributions may be made to
the Plan for that Limitation Year. Excess amounts may not be
distributed to Participants or former Participants.
Additional Master or Prototype Plan. If in addition to
this Plan a Participant is covered under another qualified Master
or Prototype defined contribution plan or a welfare benefit fund
(as defined in Section 419(e) of the Code), or an individual
medical account (as defined in Section 415(l)(2) of the Code)
which provides an Annual Addition as defined in Section 6.5(a),
maintained by an Affiliated Employer during any Limitation Year:
The Annual Additions which may be credited to a
Participant's Accounts under this Plan for any such Limitation
Year will not exceed the Maximum Annual Additions reduced by the
Annual Additions credited to a Participant's accounts under the
other plans and welfare benefit funds for the same Limitation
Year. If the Annual Additions with respect to the
Participant under other defined contribution plans and welfare
benefit funds maintained by an Affiliated Employer are less than
the Maximum Annual Additions, and the Employer contribution that
would otherwise be contributed or allocated to the Participant's
Accounts under this Plan would cause the Annual Additions for the
Limitation Year to exceed this limitation, the amount contributed
or allocated will be reduced so that the Annual Additions under
all such plans and funds for the Plan Year will equal the Maximum
Annual Additions. If the Annual Additions with respect to the
Participant under such other defined contribution plans and
welfare benefit funds in the aggregate are equal to or greater
than the Maximum Annual Additions, no amount will be contributed
or allocated to the Participant's Accounts under this Plan for
the Limitation Year.
Before determining a Participant's actual Section
415 Compensation for a Limitation Year, the Employer may
determine the Maximum Annual Additions for the Participant in the
manner described in Section 6.1(b).
As soon as is administratively feasible after the
end of the Plan Year, the Maximum Annual Additions for the Plan
Year will be determined on the basis of the Participant's actual
Section 415 Compensation for the Plan Year.
If, pursuant to Section 6.2(c) or as a result of
the allocation of Forfeitures, a Participant's Annual Additions
under this Plan and such other plans would result in an Excess
Amount for a Limitation Year, the Excess Amount will be deemed to
consist of the Annual Additions last allocated under any
qualified Master or Prototype defined contribution plan, except
that Annual Additions to any welfare benefit fund or individual
medical account will be deemed to have been allocated first
regardless of the actual allocation date.
If an Excess Amount was allocated to a Participant
on an allocation date of this Plan which coincides with an
allocation date of another plan, the Excess Amount attributed to
this Plan will be the product of X and Y, where (X) is the total
Excess Amount allocated as of such date, and (Y) is the ratio of:
(1) the Annual Additions allocated to the Participant for the
Limitation Year as of such date under this Plan to (2) the total
Annual Additions allocated to the Participant for the Limitation
Year as of such date under this and all the other qualified
Master or Prototype defined contribution plans.
Any Excess Amount attributed to this Plan will be
disposed of in the manner described in Section 6.1(d).
Additional Non-Master or Non-Prototype Plan. If the
Participant is covered under another qualified defined
contribution plan maintained by an Affiliated Employer which is
not a Master or
Prototype plan, Annual Additions which may be credited to the
Participant's Accounts under this Plan for any Limitation Year
will be limited in accordance with Section 6.2 as though the
other plan were a Master or Prototype plan, unless the Employer
provides other limitations in the Plan Agreement.
Additional Defined Benefit Plan. If an Affiliated
Employer maintains, or at any time maintained, a qualified
defined benefit plan covering any Participant in this Plan, the
sum of the Participant's Defined Benefit Plan Fraction and
Defined Contribution Plan Fraction will not exceed 1.0 in any
Limitation Year. The Annual Additions which may be credited to
the Participant's Accounts under this Plan for any Limitation
Year will be limited in accordance with the Plan Agreement.
Definitions.
Annual Additions means the sum of the following
amounts credited to a Participant's Accounts for the Limitation
Year:
Employer contributions;
For any Limitation Year beginning after December
31, 1986, after-tax Employee contributions;
Forfeitures;
Amounts allocated after March 31, 1984, to any
individual medical account, as defined in Section 415(l)(2) of
the Code, which is part of a pension or annuity plan maintained
by an Affiliated Employer;
Amounts derived from contributions paid or accrued
after December 31, 1985, in taxable years ending after such date,
which are attributable to post-retirement medical benefits
allocated to the separate account of a key Employee, as defined
in Section 419A(d)(3) of the Code, under a welfare benefit fund
as defined in Section 419(e) of the Code, maintained by an
Affiliated Employer; and
In a Plan that includes a CODA, Excess Elective
Deferrals, Excess Contributions (including recharacterized
Elective Deferrals) and Excess Aggregate Contributions.
For this purpose, any Excess Amount applied under Sections
6.1(d) or 6.2(e) in the Limitation Year to reduce Employer
contributions will be considered Annual Additions for such
Limitation Year. Any rollover contribution will not be
considered an Annual Addition.
Section 415 Compensation means a Participant's
earned income or wages, salaries, and fees for professional
services and other amounts received for personal services
actually rendered in the course of employment with the Employer
maintaining the Plan (including, but not limited, to commissions
paid salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips
and bonuses), and excluding the following:
Employer contributions to a plan of deferred
compensation which are not includible in the Participant's gross
income for the taxable year in which contributed, or Employer
contributions under a simplified Employee pension plan to the
extent such contributions are deductible by the Employee, or any
distributions from a plan of deferred compensations;
Amounts realized from the exercise of a non-
qualified stock option, or when restricted stock (or property)
held by the Participant either becomes freely transferable or is
no longer subject to a substantial risk of forfeiture;
Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
Other amounts which received special tax benefits,
or contributions made by the Employer (whether or not under a
salary reduction agreement) towards the purchase of an annuity
described in Section 403(b) of the Code (whether or not the
<PAGE>
amounts are actually excludable from the gross income of the
Participant).
For purposes of applying the limitations of this Article 6,
Section 415 Compensation for a Limitation Year is the Section 415
Compensation actually paid or includible in gross income during
such Limitation Year.
Defined Benefit Fraction means a fraction, the
numerator of which is the sum of the Participant's Projected
Annual Benefits under all the defined benefit plans (whether or
not terminated) maintained by the Affiliated Employers, and the
denominator of which is the lesser of 125 percent of the dollar
limitation in effect for the Limitation Year under Sections
415(b) and (d) of the Code, or 140 percent of the Participant's
Highest Average Compensation including any adjustments under
Section 415(b) of the Code. Notwithstanding the foregoing, if the
Participant was a Participant as of the first day of the first
Limitation Year beginning after December 31, 1986, in one or more
defined benefit plans maintained by an Affiliated Employer which
were in existence
on May 6, 1986, the denominator of this fraction will not be less
than 125 percent of the sum of the annual benefits under such
plans which the Participant had accrued as of the close of the
last Limitation Year beginning before January 1, 1987,
disregarding any change in the terms and conditions of the Plan
after May 5, 1986. The preceding sentence applies only if the
defined benefit plans individually and in the aggregate satisfied
the requirements of Section 415 of the Code for all Limitation
Years beginning before January 1, 1987.
Defined Contribution Dollar Limitation means
$30,000 or if greater, one-fourth of the defined benefit dollar
limitation set forth in Section 415(b)(1) of the Code as in
effect for the Limitation Year.
Defined Contribution Fraction means a fraction,
the numerator of which is the sum of the Annual Additions to the
Participant's accounts under all the defined contribution plans
(whether or not terminated) maintained by Affiliated Employers
for the current and all prior Limitation Years (including the
Annual Additions attributable to the Participant's nondeductible
Employee contributions to all defined benefit plans, whether or
not terminated, maintained by the Affiliated Employers, and the
Annual Additions attributable to all welfare benefit funds, as
defined in Section 419(e) of the Code, and individual medical
accounts, as defined in Section 415(l)(2) of the Code), and the
denominator of which is the sum of the Maximum Annual Additions
for the current and all prior Limitation Years of service with
the Affiliated Employers (regardless of whether a defined
contribution plan was maintained by any Affiliated Employer).
The Maximum Annual Additions in any Plan Year is the lesser of
125 percent of the dollar limitation determined under Sections
415(b) and (d) of the Code in effect under Section 415(c)(1)(A)
of the Code, or 35 percent of the Participant's Section 415
Compensation for such year. If the Employee was a Participant as
of the end of the first day of the first Limitation Year
beginning after December 31, 1986 in one or more defined
contribution plans maintained by an Affiliated Employer which
were in existence on May 6, 1986, the numerator of this fraction
will be adjusted if the sum of this fraction and the Defined
Benefit Fraction would otherwise exceed 1.0 under the terms of
this Plan. Under the adjustment, an amount equal to product of
the excess of the sum of the fractions over 1.0, multiplied by
the denominator of this fraction, will be permanently subtracted
from the numerator of this fraction. The adjustment is
calculated using the fractions as they would be computed as of
the end of the last Limitation Year beginning before January 1,
1987, and disregarding any changes in the terms and conditions of
the Plan after May 5, 1986, but using the Section 415 limitation
applicable to the first Limitation Year beginning on or after
January 1, 1987. The Annual Addition for any Limitation Year
beginning before January 1, 1987, shall not be recomputed to
treat 100% of nondeductible Employee contributions as Annual
Additions.
Excess Amount means, with respect to any
Participant, the amount by which Annual Additions exceed the
Maximum Annual Additions.
Highest Average Compensation means the average
compensation for the three consecutive Years of Service with the
Employer that produces the highest average. A Year of Service
with the Employer is the period of 12 consecutive months
specified as the Limitation Year in the Plan Agreement.
Limitation Year means the period of 12 consecutive
months specified in the Plan Agreement. All qualified plans
maintained by the Employer must use the same Limitation Year. If
the Limitation Year is amended to a different period of 12
consecutive months, the new Limitation Year must begin on a date
within the Limitation Year in which the amendment is made.
Master or Prototype plan means a plan the form of
which is the subject of a favorable opinion letter from the
Internal Revenue Service.
Maximum Annual Additions, which is the maximum
annual addition that may be contributed or allocated to a
Participant's account under the plan for any Limitation Year,
means an amount not exceeding the lesser of (a) the Defined
Contribution Dollar Limitation or (b) 25 percent of the
Participant's Section 415 Compensation for the Limitation Year.
The compensation limitation referred to in (b) shall not apply to
any contribution for medical benefits (within the meaning of
Section 401(h) or Section 419A(f)(2) of the Code) which is
otherwise treated as an Annual Addition under Section 415(l)(1)
or Section 419A(d)(2) of the Code.
If a short Limitation Year is created because of an
amendment changing the Limitation Year to a different period of
12 consecutive months, the Maximum Annual Additions will not
exceed the Defined Contribution Dollar Limitation multiplied by
the following fraction:
number of months in the
short Limitation Year
12
Projected Annual Benefit means the annual
retirement benefit (adjusted to an actuarially equivalent
straight life annuity if such benefit is expressed in a form
other than a straight life annuity or Qualified Joint and
Survivor Annuity) to which the Participant would be entitled
under the terms of the plan assuming:
the Participant will continue employment until normal
retirement age under the Plan (or current age, if later), and
The Participant's Section 415 Compensation for the
current Limitation Year and all other relevant factors used to
determine benefits under the plan will remain constant for all
future Limitation Years.
ARTICLE
Eligibility for Distribution of Benefits
Retirement. After his Retirement, the amount credited
to a Participant's Accounts will be distributed to him in
accordance with Article 9. The termination of a Participant's
employment with the Affiliated Employers after he has (i)
attained the normal retirement age specified in the Plan
Agreement, (ii) in a Variable Plan, fulfilled the requirements
for early retirement (if any) specified in the Plan Agreement, or
(iii) become Disabled, will constitute his Retirement. In a
Variable Plan, upon a Participant's Retirement (or, if earlier,
his attainment of the normal retirement age specified in the Plan
Agreement or fulfillment of the requirements for early
retirement, if any, specified in the Plan Agreement) the
Participant's Accounts shall become fully vested, regardless of
the vesting schedule specified by the Employer in the Plan
Agreement. In a Variable Plan, a Participant who separates from
service with any vested balance in his Accounts, after satisfying
the service requirements for early retirement (if any is
specified in the Plan Agreement) but before satisfying the age
requirement for early retirement (if any is specified in the Plan
Agreement), shall be entitled to a fully vested early retirement
benefit upon his satisfaction of such age requirement.
Death. If a Participant dies before the distribution
of his Accounts has been completed, his Beneficiary will be
entitled to distribution of benefits in accordance with Article
9. In a Variable Plan, a Participant's Accounts will become
fully vested upon his death before termination of his employment
with the Affiliated Employers, regardless of the vesting schedule
specified by the Employer in the Plan Agreement.
A Participant may designate a Beneficiary by completing and
returning to the Plan Administrator a form provided for this
purpose. The form most recently completed and returned to the
Plan Administrator before the Participant's death shall supersede
any earlier form. If a Participant has not designated any
Beneficiary before his death, or if no Beneficiary so designated
survives the Participant, his Beneficiary shall be his surviving
spouse, or if there is no surviving spouse, his estate. A
married Participant in a profit sharing plan may designate a
Beneficiary other than his
spouse only if his spouse consents in writing to the designation,
and the spouse's consent acknowledges the effect of the consent
and is witnessed by a notary public or a representative of the
Plan. The beneficiary or beneficiaries named in the designation
to which the spouse has so consented may not be changed without
further written spousal consent unless the terms of the spouse's
original written consent expressly permit such a change, and
acknowledge that the spouse voluntarily relinquishes the right to
limit the consent to a specific beneficiary. The marriage of a
Participant shall nullify any designation of a beneficiary
previously executed by the Participant. If it is established to
the satisfaction of the Plan Administrator that the Participant
has no spouse or that the spouse cannot be located, the
requirement of spousal consent shall not apply. Any spousal
consent, or establishment that spousal consent cannot be
obtained, shall apply only to the particular spouse involved.
Other Termination of Employment. A Participant whose
employment terminates for any reason other than his Retirement or
death will be entitled to distribution, in accordance with
Article 9, of benefits equal to the amount of the vested balance
of his Accounts as determined under Article 8.
ARTICLE
Vesting
Vested Balance. The vested balance of a Participant's
Accounts will be determined as follows:
General Rule. A Participant's Deductible Employee
Contribution Account, Participant Contribution Account and
Rollover Account, and in a Standard Plan, all of his Accounts,
shall be fully vested at all times. The vested portion of his
Employer Contribution Account in a Variable Plan shall be equal
to the percentage that corresponds, in the vesting schedule
specified in the Plan Agreement (or, if the Plan has become top-
heavy, the vesting schedule determined under Section 15.5), to
the number of Years of Service credited to the Participant as of
the end of the Plan Year in which his employment terminates.
Special Rules for CODA. In a Plan that includes a
CODA, a Participant's Elective Deferral Account, Qualified
Nonelective Account, and Qualified Matching Account shall be
fully vested at all times. The vested portion of his Employer
Matching Account in a Variable Plan shall be equal to the
percentage that corresponds, in the vesting schedule specified in
the Plan Agreement (or, if the Plan has become top-heavy, the
vesting schedule determined under Section 15.5), to the number of
Years of Service credited to the Participant as of the end of the
Plan Year in which his employment terminates.
Retirement. In a Variable Plan, all of a Participant's
Accounts shall become fully vested upon his Retirement or his
earlier attainment of early retirement age (if any) or the normal
retirement age elected by the Employer in the Plan Agreement.
For so long as a former Employee does not receive a
distribution (or a deemed distribution) of the vested portion of
his Accounts, the undistributed portion shall be held in a
separate account which shall be invested pursuant to Section 13.3
and shall share in earnings and losses of the Trust Fund pursuant
to Section 13.4 in the same manner as the Accounts of active
Participants.
Vesting of Accounts of Returned Former Employees
(Variable Plans Only). The following rules apply in determining
the vested portion of the Accounts of a Participant who incurs
one or more consecutive One-Year Vesting Breaks and then returns
to employment with an Affiliated Employer:
If the Participant incurred fewer than five
consecutive One-Year Vesting Breaks, then all of his Years of
Service will be taken into account in determining the vested
portion of his Accounts, as soon as he has completed one Year of
Service following his return to employment.
If the Participant incurred five or more
consecutive One-Year Vesting Breaks, then:
No Year of Service completed after his return to
employment will be taken into account in determining the vested
portion of his Accounts as of any time before he incurred the
first One-Year Vesting Break;
Years of Service completed before he incurred the
first One-Year Vesting Break will not be taken into account in
determining the vested portion of his Accounts as of any time
after his return to employment (i) unless some portion of his
Employer Contribution Account or Employer Matching Account had
become vested before he incurred the first One-Year Vesting
Break, and (ii) until he has completed one Year of Service
following his return to employment; and
Separate sub-accounts will be maintained for the
Participant's pre-break and post-break Employer Contribution
Account and Employer Matching Account, until both sub-accounts
become fully vested. Both sub-accounts will share in the
earnings and losses of the Trust Fund.
Forfeiture of Non-Vested Amounts (Variable Plans Only).
The portion of a former Employee's Accounts that has not become
vested under Section 8.1 shall become a Forfeiture in accordance
with the following rules, and shall be reallocated in accordance
with Section 4.2 or 4.3 or Article 5 (whichever applies) no later
than the end of the Plan Year in which it becomes a Forfeiture.
If Distribution Is Made. If any or all of the
vested portion of a Participant's Accounts is distributed in
accordance with Section 9.1 or 9.2 before the Participant incurs
five consecutive One-Year Vesting Breaks, the nonvested portion
of his Accounts shall become a Forfeiture in the Plan Year in
which the distribution occurs. For purposes of this Section 8.3,
if the value of the vested portion of a Participant's Accounts is
zero, he shall be deemed to have received a distribution of the
entire vested balance of his Accounts on the day his employment
terminates. If the Participant elects to have distributed less
than the entire vested portion of his Employer Contribution
Account or Employer Matching Accounts, the part of the nonvested
portion that will become a Forfeiture is the total nonvested
portion multiplied by a fraction, the numerator of which is the
amount of the distribution and the denominator of which is the
total value of the entire vested portion of such Accounts.
Right of Repayment. If a Participant who receives
a distribution pursuant to paragraph (a) returns to employment
with an Affiliated Employer, the balance of his Employer
Contribution Account and Employer Matching Account will be
restored to the amount of such balance on the date of
distribution, if he repays to the Plan the full amount of the
distribution, before the earlier of (i) the fifth anniversary of
his return to employment or (ii) the date he incurs five
consecutive One-Year Vesting Breaks following the date of
distribution. If an Employee is deemed to receive a distribution
pursuant to this Section 8.3, and he resumes employment covered
under this Plan before the date he incurs 5 consecutive One-Year
Vesting Breaks, upon his reemployment the Employer-derived
account balance of the Employee will be restored to the amount on
the date of such deemed distribution. Such restoration will be
made, first, from the amount of any Forfeitures available for
reallocation as the last day of the Plan Year in which repayment
is made, to the extent thereof; and to the extent that
Forfeitures are not available or are insufficient to restore the
balance, from contributions made by the Employer pursuant to
Section 4.1(f).
If No Distribution Is Made. If no distribution
(or deemed distribution) is made to a Participant before he
incurs five consecutive One-Year Vesting Breaks, the nonvested
portion of his Accounts shall become a Forfeiture in the Plan
Year that constitutes his fifth consecutive One-Year Vesting
Break.
Adjustment of Accounts. Before a Forfeiture is
incurred, a Participant's Accounts shall share in earnings and
losses of the Trust Fund pursuant to Section 13.4 in the same
manner as the Accounts of active Participants.
Accumulated Deductible Contributions. For Plan
Years beginning before January 1, 1989, a Participant's vested
Account balance shall not include accumulated deductible
contributions within the meaning of Section 72(o)(5)(B) of the
Code.
Special Rule in the Event of a Withdrawal (Variable
Plans Only). If a withdrawal pursuant to Section 12.2 or 12.3 is
made from a Participant's Employer Contribution Account or
Employer Matching Account before the Account is fully vested, and
the Participant may increase the vested percentage in the
Account, then a separate account will be established at the time
of the withdrawal, and at any relevant time after the withdrawal
the vested portion of the separate account will be equal to the
amount "X" determined by the following formula:
X = P(AB + D) - D
For purposes of the formula, P is the Participant's vested
percentage at the relevant time, AB is the account balance at the
relevant time, and D is the amount of the withdrawal.
Vesting Election. If the Plan is amended to change any
vesting schedule, or is amended in any way that directly or
indirectly affects the computation of a Participant's vested
percentage, or is deemed amended by an automatic change to a top
heavy vesting schedule pursuant to Article 15, each Participant
who has completed not less than three Years of Service may elect,
within a reasonable period after the adoption of the amendment or
change, in a writing filed with the Employer to have his vested
percentage computed under the Plan without regard to such
amendment. For a Participant who is not credited with at least
one Hour of Service in a Plan Year beginning after December 31,
1988, the preceding sentence shall be applied by substituting
"five Years of Service" for "three Years of Service." The period
during which the election may be made shall commence with the
date the amendment is adopted, or deemed to be made, and shall
end on the latest of 60 days after the amendment is adopted;
60 days after the amendment becomes effective; or 60 days after
the Participant is issued written notice of the amendment by the
Employer.
ARTICLE
Payment of Benefits
Distribution of Accounts. A Participant or Beneficiary
who has become eligible for a distribution of benefits pursuant
to Article 7 may elect to receive such benefits at any time,
subject to the terms and conditions of this Article 9, Article 10
and Article 11. Unless a Participant or Beneficiary elects
otherwise,
distribution of benefits will begin no later than the 60th day
after the end of the Plan Year in which the latest of the
following events occurs:
The Participant attains age 65 (or if earlier, the
normal retirement age specified by the Employer in the Plan
Agreement); or
The tenth anniversary of the year in which the
Participant commenced participation in the Plan; or
The Participant's employment with the Affiliated
Employers terminates.
A Beneficiary who is the surviving spouse of a Participant may
elect to have distribution of benefits begin within the 90-day
period following the Participant's death.
For purposes of this Section 9.1, the failure of a Participant
(and his spouse, if spousal consent is required pursuant to
Article 10) to consent to a distribution while a benefit is
"immediately distributable" within the meaning of Section 9.2
shall be considered an election to defer commencement of payment.
In a Variable Plan, if the Employer has so specified in the Plan
Agreement, the vested portion of a Participant's Accounts will be
distributed in a lump sum in cash no later than 60 days after the
end of the Plan Year in which his employment terminates, if at
the time the Participant first became entitled to a distribution
the value of such vested portion, derived from Employer and
Employee contributions, does not exceed $3,500. Commencement of
distributions in any case shall be subject to Section 9.4.
Restriction on Immediate Distributions. A
Participant's account balance is considered "immediately
distributable" if any part of the account balance could be
distributed to the Participant (or his surviving spouse) before
the Participant attains, or would have attained if not deceased,
the later of the normal retirement age specified in the Plan
Agreement or age 62.
If the value of a Participant's vested account balance
derived from Employer and Employee contributions exceeds (or at
the time of any prior distribution exceeded) $3,500, and the
account balance is immediately distributable, the Participant and
his spouse (or where either the Participant or the spouse has
died, the survivor) must consent to any such distribution, unless
an exception described in paragraph (b) applies. The consent of
the Participant and his spouse shall be obtained in writing
within the 90-day period ending on the annuity starting date,
which is the first day of the first period for which an amount is
paid as an annuity (or any other form). The Plan Administrator
shall notify the Participant and the spouse, no less than 30 days
and no more than 90 days before the annuity starting date, of the
right to defer any distribution until the Participant's account
balance is no longer immediately distributable. Such
notification shall include a general description of the material
features of the optional forms of benefit available under the
Plan and an explanation of their relative values, in a manner
that would satisfy the notice requirements of Section 417(a)(3)
of the Code.
Notwithstanding paragraph (a), only the Participant
need consent to the commencement of a distribution in the form of
a Qualified Joint and Survivor Annuity while the account balance
is immediately distributable. Furthermore, if payment in the form
of a Qualified Joint and Survivor Annuity is not required with
respect to the Participant pursuant to Section 10.1(b) of the
Plan, only the Participant need consent to the distribution of an
account balance that is immediately distributable. Neither the
consent of the Participant nor the spouse shall be required to
the extent that a distribution is required to satisfy Section
401(a)(9) or Section 415 of the Code. In addition, upon
termination of the Plan, if the Plan does not offer an annuity
option (purchased from a commercial provider), a Participant's
account balance may be distributed to the Participant or
transferred to another defined contribution plan (other than an
Employee stock ownership plan as defined in Section 4975(e)(7) of
the Code) maintained by an Affiliated Employer, without the
Participant's consent. For purposes of determining the
applicability of the foregoing consent requirements to
distributions made before the first day of the first Plan Year
beginning after December 31, 1988, the Participant's vested
account balance shall not include amounts attributable to
accumulated deductible employee contributions within the meaning
of section 72(o)(5)(B) of the Code.
Optional Forms of Distribution. If at the time a
Participant first becomes entitled to a distribution the value of
his vested Account balance derived from Employer and Employee
contributions does not exceed $3,500, distribution shall be made
in a lump sum in cash. Subject to the preceding sentence and to
the rules of Article 10 concerning joint and survivor annuities,
a Participant or Beneficiary may elect to receive benefits in any
of the following optional forms:
A lump sum payment in cash or in kind or in a
combination of both;
A series of installments over a period certain that
meets the requirements of Article 11; or
A nontransferable annuity contract, purchased from a
commercial provider, with terms complying with the requirements
of Article 11; provided, however, that an annuity for the life of
any person shall be available as an optional form of distribution
in a Profit Sharing Plan only if the Employer has so elected in
the Plan Agreement.
In the event that the Plan is adopted as an amendment
to an existing plan, each optional form of distribution available
under the existing plan shall be made available under the Plan
through the purchase of an appropriate annuity contract in
accordance with paragraph (c).
Distribution Procedure. The Trustee shall make or
commence distributions to or for the benefit of Participants only
on receipt of a written order from the Employer certifying that a
distribution of a Participant's benefits is payable pursuant to
the Plan, and specifying the time and manner of payment. The
amount to be distributed shall be determined as of the Valuation
Date coincident with or next following the Employer's written
order. The Trustee shall be fully protected in acting upon the
written directions of the Employer in making benefit
distributions, and shall have no duty to determine the rights or
benefits of any person under the Plan or to inquire into the
right or power of the Employer to direct any such distribution.
The Trustee shall be entitled to assume conclusively that any
determination by the Employer with respect to a distribution
meets the requirements of the Plan. The Trustee shall not be
required to make any payment hereunder in excess of the net
realizable value of the assets of the Account in question at the
time of such payment, nor to make any payment in cash unless the
Employer has furnished written instructions as to the assets to
be converted to cash for the purposes of making payment.
Lost Distributee. In the event that the Plan
Administrator is unable with reasonable effort to locate a person
entitled to distribution under the Plan, the Accounts
distributable to such a person shall become a Forfeiture at the
end of the third Plan Year after the Plan Administrator's efforts
to locate such person began; provided, however, that the amount
of the Forfeiture shall be restored in the event that such person
thereafter submits a claim for benefits under the Plan. Such
restoration will be made, first, from the amount of Forfeitures
available for reallocation as of the last day of the Plan Year in
which the claim is made, to the extent thereof; and to the extent
that Forfeiturers are not available or are insufficient to
restore the balance, from contributions made by the Employer
pursuant to Section 4.1(f). In a Standard Plan, a Forfeiture
occurring under this Section 9.5 shall be reallocated as though
it were an Employer contribution.
ARTICLE
Joint and Survivor Annuity Requirements
Applicability.
Generally. The provisions of Sections 10.2
through 10.5 shall generally apply to a Participant who is
credited with at least one Hour of Service on or after August 23,
1984, and such other Participants as provided in Section 10.6.
Exception for Certain Profit Sharing Plans. The
provisions of Sections 10.2 through 10.5 shall not apply to a
Participant in a profit sharing plan if: (i) the Participant
does not or cannot elect payment of benefits in the form of a
life annuity, and (ii) on the death of the Participant, his
Vested Account Balance will be paid to his surviving spouse
(unless there is no surviving spouse, or the surviving spouse has
consented to the designation of another Beneficiary in a manner
conforming to a Qualified Election) and the surviving spouse may
elect to have distribution of the Vested Account Balance
(adjusted in accordance with Section 13.4 for gains or losses
occurring after the Participant's death) commence within the 90-
day period following the date of the Participant's death. The
Participant may waive the spousal death benefit described in this
paragraph (b) at any time, provided that no such waiver shall be
effective unless it satisfies the conditions applicable under
Section 10.4(c) to a Participant's waiver of a Qualified
Preretirement Survivor Annuity. The exception in this paragraph
(b) shall not be operative with respect to a Participant in a
profit sharing plan if the Plan:
Is a direct or indirect transferee of a defined
benefit plan, money purchase pension plan, target benefit plan,
stock bonus plan, or profit sharing plan which is subject to the
survivor annuity requirements of Sections 401(a)(11) and 417 of
the Code; or
Is adopted as an amendment of a plan that did not
qualify for the exception in this paragraph (b) before the
amendment was adopted.
For purposes of this paragraph (b), Vested Account
Balance shall have the meaning provided in Section 10.4(f). The
provisions of Sections 10.2 through 10.6 set forth the survivor
annuity requirements of Sections 401(a)(11) and 417 of the Code.
Exception for Certain Amounts. The provisions of
Sections 10.2 through 10.5 shall not apply to any distribution
made on or after the first day of the first Plan Year beginning
after December 31, 1988, from or under a separate account
attributable solely to accumulated deductible employee
contributions as defined in Section 72(o)(5)(B) of the Code, and
maintained on behalf of a Participant in a money purchase pension
plan or a target benefit plan, provided that the exceptions
applicable to certain profit sharing plans under paragraph (b)
are applicable with respect to the separate account (for this
purpose, Vested Account Balance means the Participant's separate
account balance attributable solely to accumulated deductible
employee contributions within the meaning of Section 72(o)(5)(B)
of the Code).
Qualified Joint and Survivor Annuity. Unless an
optional form of benefit is selected pursuant to a Qualified
Election within the 90-day period ending on the Annuity Starting
Date, a married Participant's Vested Account Balance will be paid
in the form of a Qualified Joint and Survivor Annuity and an
unmarried Participant's Vested Account Balance will be paid in
the form of a life annuity. In either case, the Participant may
elect to have such an annuity distributed upon his attainment of
the Earliest Retirement Age under the Plan.
Qualified Preretirement Survivor Annuity. Unless an
optional form of benefit has been selected within the Election
Period pursuant to a Qualified Election, the Vested Account
Balance of a Participant who dies before the Annuity Starting
Date shall be applied toward the purchase of an annuity for the
life of his surviving spouse (a "Qualified Preretirement Survivor
Annuity"). The surviving spouse may elect to have such an
annuity distributed within a reasonable period after the
Participant's death. For purposes of this Article 10, the term
"spouse" means the current spouse or surviving spouse of a
Participant, except that a former spouse will be treated as the
spouse or surviving spouse (and a current spouse will not be
treated as the spouse or surviving spouse) to the extent provided
under a qualified domestic relations order as described in
Section 414(p) of the Code.
Definitions. The following definitions apply:
Election Period means the period beginning on the
first day of the Plan Year in which a Participant attains age 35
and ending on the date of the Participant's death. If a
Participant separates from service before the first day of the
Plan Year in which he reaches age 35, the Election Period with
respect to his account balance as of the date of separation shall
begin on the date of separation. A Participant who will not
attain age 35 as of the end of a Plan Year may make a special
Qualified Election to waive the Qualified Preretirement Survivor
Annuity for the period beginning on the date of such election and
ending on the first day of the Plan Year in which the Participant
will attain age 35. Such an election shall not be valid unless
the Participant receives a written explanation of the Qualified
Preretirement Survivor Annuity in such terms as are comparable to
the explanation required under Section 10.5. Qualified
Preretirement Survivor
Annuity coverage will be automatically reinstated as of the first
day of the Plan Year in which the Participant attains age 35.
Any new waiver on or after that date shall be subject to the full
requirements of this article.
Earliest Retirement Age means the earliest date on
which the Participant could elect to receive Retirement benefits
under the Plan.
Qualified Election means a waiver of a Qualified
Joint and Survivor Annuity or a Qualified Preretirement Survivor
Annuity. Any such waiver shall not be effective unless: (1) the
Participant's spouse consents in writing to the waiver; (2) the
waiver designates a specific Beneficiary, including any class of
beneficiaries or any contingent beneficiaries, which may not be
changed without spousal consent (unless the spouse's consent
expressly permits designations by the Participant without any
further spousal consent); (3) the spouse's consent acknowledges
the effect of the waiver; and (4) the spouse's consent is
witnessed by a plan representative or notary public.
Additionally, a Participant's waiver of the Qualified Joint and
Survivor Annuity shall not be effective unless the waiver
designates a form of benefit payment which may not be changed
without spousal consent (unless the spouse's consent expressly
permits designations by the Participant without any further
spousal consent). If it is established to the satisfaction of a
plan representative that there is no spouse or that the spouse
cannot be located, a waiver will be deemed a Qualified Election.
Any consent by a spouse obtained under these provisions (and any
establishment that the consent of a spouse may not be obtained)
shall be effective only with respect to the particular spouse
involved. A consent that permits designations by the Participant
without any requirement of further consent by the spouse must
acknowledge that the spouse has the right to limit the consent to
a specific Beneficiary and a specific form of benefit where
applicable, and that the spouse voluntarily elects to relinquish
either or both of those rights. A revocation of a prior waiver
may be made by a Participant without the consent of the spouse at
any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this
provision shall be valid unless the Participant has received
notice as provided in Section 10.5.
Qualified Joint and Survivor Annuity means an
immediate annuity for the life of a Participant, with a survivor
annuity for the life of the spouse which is not less than 50
percent and not more than 100 percent of the amount of the
annuity which is payable during the joint lives of the
Participant and the spouse, and which is the amount of benefit
that can be purchased with the Participant's Vested Account
Balance. The percentage of the survivor annuity under the Plan
shall be 50 percent.
Annuity Starting Date means the first day of the
first period for which an amount is paid as an annuity (or any
other form).
Vested Account Balance means the aggregate value
of the Participant's vested account balance derived from Employer
and Employee contributions (including rollovers), whether vested
before or upon death, including the proceeds of insurance
contracts, if any, on the Participant's life. The provisions of
this Article 10 shall apply to a Participant who is vested in
amounts attributable to Employer contributions, Employee
contributions or both at the time of death or distribution.
Notice Requirements. In the case of a Qualified Joint
and Survivor Annuity, no less than 30 days and no more than 90
days before a Participant's Annuity Starting Date the Plan
Administrator shall provide to him a written explanation of (i)
the terms and conditions of a Qualified Joint and Survivor
Annuity, (ii) the Participant's right to make, and the effect of,
an election to waive the Qualified Joint and Survivor Annuity
form of benefit, (iii) the rights of the Participant's spouse,
and (iv) the right to make, and the effect of, a revocation of a
previous election to waive the Qualified Joint and Survivor
Annuity.
In the case of a Qualified Preretirement Survivor Annuity,
within the applicable period for a Participant the Plan
Administrator shall provide to him a written explanation of the
Qualified Preretirement Survivor Annuity, in terms and manner
comparable to the requirements applicable to the explanation of a
Qualified Joint and Survivor Annuity as described in the
preceding paragraph. The applicable period for a Participant is
whichever of the following periods ends last: (i) the period
beginning with the first day of the Plan Year in which the
Participant attains age 32 and ending with the close of the Plan
Year preceding the Plan Year in which the Participant attains age
35; (ii) a reasonable period ending after an individual becomes a
Participant; (iii) a reasonable period ending after this Article
10 first applies to the Participant. Notwithstanding the
foregoing, in the case of a Participant who separates from
service before attaining age 35, notice must be provided within a
reasonable period ending after his separation from service.
For purposes of applying the preceding paragraph, a
reasonable period ending after the enumerated events described in
(ii) and (iii) is the end of the two-year period beginning one
year before the date the applicable event occurs, and ending one
year after that date. In the case of a Participant who separates
from service before the Plan Year in which he reaches age 35,
notice shall be provided within the two-year period beginning one
year before the separation and ending one year after the
separation. If such a Participant thereafter returns to
employment with the Employer, the applicable period for the
Participant shall be redetermined.
Transitional Rules.
Any living Participant not receiving benefits on
August 23, 1984, who would otherwise not receive the benefits
prescribed by the preceding sections of this Article 10, must be
given the opportunity to elect to have those sections apply if
the Participant is credited with at least one Hour of Service
under the Plan or a predecessor plan in a Plan Year beginning on
or after January 1, 1976, and the Participant had at least ten
years of vesting service when he or she separated from service.
Any living Participant not receiving benefits on
August 23, 1984, who was credited with at least one Hour of
Service under the Plan or a predecessor plan on or after
September 2, 1974, and who is not otherwise credited with any
service in a Plan Year beginning on or after January 1, 1976,
must be given the opportunity to have his benefits paid in
accordance with paragraph (d) of this Section 10.6.
The respective opportunities to elect (as
described in paragraphs (a) and (b) above) must be afforded to
the appropriate Participants during the period commencing on
August 23, 1984, and ending on the date benefits would otherwise
commence to be paid to those Participants.
<PAGE>
Any Participant who has so elected pursuant to
paragraph (b) of this Section 10.6, and any Participant who does
not elect under paragraph (a), or who meets the requirements of
paragraph (a) except that he does not have at least ten years of
vesting service when he separates from service, shall have his
benefits distributed in accordance with all of the following
requirements, if his benefits would otherwise have been payable
in the form of a life annuity:
Automatic joint and survivor annuity. If
benefits in the form of a life annuity become payable to a
married Participant who:
begins to receive payments under the Plan on
or after normal retirement age; or
dies on or after normal retirement age while
still working for the Employer; or
begins to receive payments on or after the
qualified early retirement age; or
separates from service on or after attaining
normal retirement age (or the qualified early retirement age) and
after satisfying the eligibility requirements for the payment of
benefits under the Plan and thereafter dies before beginning to
receive such benefits;
then such benefits will be received under the Plan in the form of
a Qualified Joint and Survivor Annuity, unless the Participant
has elected otherwise during the election period, which must
begin at least six months before the Participant attains
qualified early retirement age and end not more than 90 days
before the commencement of benefits. Any election hereunder will
be in writing and may be changed by the Participant at any time.
Election of early survivor annuity. A
Participant who is employed after attaining the qualified early
retirement age will be given the opportunity to elect during the
election period to have a survivor annuity payable on death. If
the Participant elects the survivor annuity, payments under such
annuity must not be less than the payments which would have been
made to the spouse under the Qualified Joint and Survivor Annuity
if the Participant had retired on the day before his death. Any
election under this provision will be in writing and may be
changed by the Participant at any time. The election period
begins on the later of (i) the 90th day before the Participant
attains the qualified early retirement age, or (ii) the date on
which participation begins, and ends on the date the Participant
terminates employment.
For purposes of this Section 10.6, qualified
early retirement age is the latest of the earliest date under the
Plan on which the Participant may elect to receive Retirement
benefits, the first day of the 120th month beginning before the
Participant reaches normal retirement age, or the date the
Participant begins participation.
ARTICLE
Minimum Distribution Requirements
General Rules. Subject to Article 10, Joint and
Survivor Annuity Requirements, the requirements of this Article
11 shall apply to any distribution of a Participant's interest
and will take precedence over any inconsistent provisions of the
Plan. Unless otherwise specified, the provisions of this Article
11 apply to calendar years beginning after December 31, 1984.
All distributions required under this Article 11 shall be
determined and made in accordance with the Income Tax Regulations
issued under Section 401(a)(9) of the Code (including proposed
regulations, until the adoption of final regulations), including
the minimum distribution incidental benefit requirement of
Section 1.401(a)(9)-2 of the proposed regulations.
Required Beginning Date. The entire interest of a
Participant must be distributed, or begin to be distributed, no
later than the Participant's required beginning date, determined
as follows.
General Rule. The required beginning date of a
Participant is the first day of April of the calendar year
following the calendar year in which the Participant attains age
70 1/2.
Transitional Rules. The required beginning date
of a Participant who attains age 70 1/2 before January 1, 1988,
shall be determined in accordance with (1) or (2) below:
Non-5-percent owners. The required beginning
date of a Participant who is not a 5-percent owner is the first
day of April of the calendar year following the calendar year in
which the later of his Retirement or his attainment of age 70 1/2
occurs.
5-percent owners. The required beginning
date of a Participant who is a 5-percent owner during any year
beginning after December 31, 1979, is the first day of April
following the later of :
the calendar year in which the
Participant attains age 70 1/2, or
the earlier of the calendar year with or
within which ends the Plan Year in which the Participant becomes
a 5-percent owner, or the calendar year in which the Participant
retires.
The required beginning date of a Participant who is not a 5-
percent owner, who attains age 70 1/2 during 1988 and who has not
retired as of January 1, 1989, is April 1, 1990.
Rules for 5-percent Owners. A Participant is
treated as a 5-percent owner for purposes of this Section 11.2 if
he is a 5-percent owner as defined in Section 416(i) of the Code
(determined in accordance with Section 416 but without regard to
whether the Plan is top heavy) at any time during the Plan Year
ending with or within the calendar year in which he attains age
66 1/2, or any subsequent Plan Year. Once distributions have
begun to a 5-percent owner under this Section 11.2, they must
continue, even if the Participant ceases to be a 5-percent owner
in a subsequent year.
Limits on Distribution Periods. As of the first
Distribution Calendar Year, distributions not made in a single
sum may be made only over one or a combination of the following
periods:
(a) the life of the Participant,
(b) the life of the Participant and his Designated
beneficiary,
(c) a period certain not extending beyond the Life
Expectancy of the Participant, or
(d) a period certain not extending beyond the Joint
and Last Survivor Expectancy of the Participant and his
Designated Beneficiary.
Designated Beneficiary means the individual who is
designated as the Beneficiary under the Plan in accordance with
Section 401(a)(9) of the Code and the regulations issued
thereunder (including proposed regulations, until the adoption of
final regulations) and Section 7.2.
Distribution Calendar Year means a calendar year for which a
minimum distribution is required under Section 401(a)(9) of the
Code and this Section 11.3. For distributions beginning before
the Participant's death, the first Distribution Calendar Year is
the calendar year immediately preceding the calendar year which
contains the Participant's required beginning date. For
distributions beginning after the Participant's death, the first
Distribution Calendar Year is the calendar year in which
distributions are required to begin pursuant to Section 11.5.
Life Expectancy and Joint and Last Survivor Expectancy are
computed by use of the expected return multiples in Tables V and
VI of Section 1.72-9 of the Income Tax Regulations. Unless
otherwise elected by the Participant (or his spouse, in the case
of distributions described in Section 11.5(b)) by the time
distributions are required to begin, Life Expectancies shall be
recalculated annually. Any such election shall be irrevocable as
to the Participant (or spouse) and shall apply to all subsequent
years. The Life Expectancy of a nonspouse beneficiary may not be
recalculated.
Determination of Amount To Be Distributed Each Year.
If the Participant's interest is to be distributed in other than
a single sum, the following minimum distribution rules shall
apply on or after the required beginning date. Paragraphs (a)
through (d) apply to distributions in forms other than the
purchase of an annuity contract.
If a Participant's Benefit is to be distributed
over (1) a period not extending beyond the Life Expectancy of the
Participant or the Joint Life and Last Survivor Expectancy of the
Participant and his Designated Beneficiary, or (2) a period not
extending beyond the Life Expectancy of the Designated
Beneficiary, the amount required to be distributed for each
calendar year, beginning with distributions for the first
Distribution Calendar Year, must at least equal the quotient
obtained by dividing the Participant's Benefit by the Applicable
Life Expectancy.
For calendar years beginning before January 1,
1989, if the Participant's spouse is not the Designated
Beneficiary, the method of distribution selected must assure that
at least 50 percent of the present value of the amount available
for distribution is paid within the Life Expectancy of the
Participant.
For calendar years beginning after December 31,
1988, the amount to be distributed each year, beginning with
distributions for the first Distribution Calendar Year, shall not
be less than the quotient obtained by dividing the Participant's
Benefit by the lesser of (1) the Applicable Life Expectancy or
(2) if the Participant's spouse is not the Designated
Beneficiary, the applicable divisor determined from the table set
forth in Q&A-4 of Section 1.401(a)(9)-2 of the Proposed Income
Tax Regulations. Distributions after the death of the
Participant shall be distributed using the Applicable Life
Expectancy in paragraph (a) above as the relevant divisor,
without regard to Proposed Regulations Section 1.401(a)(9)-2.
The minimum distribution required for the
Participant's first Distribution Calendar Year must be made on or
before the Participant's required beginning date. The minimum
distribution for other calendar years, including the minimum
distribution for the Distribution Calendar Year in which the
Employee's required beginning date occurs, must be made on or
before December 31 of that Distribution Calendar Year.
If the Participant's Benefit is distributed in the
form of an annuity contract purchased from an insurance company,
distributions thereunder shall be made in accordance with the
requirements of Section 401(a)(9) of the Code and the regulations
issued thereunder (including proposed regualtions, until the
adoption of final regulations).
Applicable Life Expectancy means the Life Expectancy (or
Joint and Last Survivor Expectancy) calculated using the attained
age of the Participant (or Designated Beneficiary) as of the
Participant's (or Designated Beneficiary's) birthday in the
applicable calendar year, reduced by one for each calendar year
which has elapsed since the date Life Expectancy was first
calculated. If Life Expectancy is being recalculated, the
Applicable Life Expectancy shall be the Life Expectancy as so
recalculated. The applicable calendar year shall be the first
Distribution Calendar Year, and if Life Expectancy is being
recalculated such succeeding calendar year. If annuity payments
commence in accordance with Section 11.4(e) before the required
beginning date, the applicable calendar year is the year such
payments commence. If distribution is in the form of an
immediate annuity purchased after the Participant's death with
the Participant's remaining interest in the Plan, the applicable
calendar year is the year of purchase.
Participant's Benefit means the account balance as of the
last valuation date in the calendar year immediately preceding
the Distribution Calendar Year (valuation calendar year),
increased by the amount of any contributions or Forfeitures
allocated to the account balance as of dates in the valuation
calendar year after the valuation date and decreased by
distributions made in the valuation calendar year after the
valuation date. For purposes of the preceding sentence, if any
portion of the minimum distribution for the first Distribution
Calendar Year is made in the second Distribution Calendar Year on
or before the required beginning date, the amount of the minimum
distribution made in the second Distribution Calendar Year shall
be treated as if it had been made in the immediately preceding
Distribution Calendar Year.
Death Distribution Provisions.
Distribution Beginning before Death. If the
Participant dies after distribution of his interest has begun,
the remaining portion of his interest will continue to be
distributed at least as rapidly as under the method of
distribution being used before the Participant's death.
Distribution Beginning after Death. If the
Participant dies before distribution of his interest begins,
distribution of his entire interest shall be completed by
December 31 of the calendar year containing the fifth anniversary
of the Participant's death, except to the extent that an election
is made to receive distributions in accordance with (1) or (2)
below:
If any portion of the Participant's interest
is payable to a Designated Beneficiary, distributions may be made
over the Designated Beneficiary's life, or over a period certain
not greater than the Life Expectancy of the Designated
Beneficiary, commencing on or before December 31 of the calendar
year immediately following the calendar year in which the
Participant died; or
If the Designated Beneficiary is the
Participant's surviving spouse, the date distributions are
required to begin in accordance with (1) above shall not be
earlier than the later of (i) December 31 of the calendar year
immediately following the calendar year in which the Participant
died, and (ii) December 31 of the calendar year in which the
Participant would have attained age 70 1/2.
If the Participant has not made an election
pursuant to this Section 11.5 by the time of his death, the
Participant's Designated Beneficiary must elect the method of
distribution no later than the earlier of (i) December 31 of the
calendar year in which distributions would be required to begin
under this Section 11.5, or (ii) December 31 of the calendar year
which contains the fifth anniversary of the date of death of the
Participant. If the Participant has no Designated Beneficiary,
or if the Designated Beneficiary does not elect a method of
distribution, distribution of the Participant's entire interest
must be completed by December 31 of the calendar year containing
the fifth anniversary of the Participant's death.
For purposes of paragraph (b), if the surviving
spouse dies after the Participant, but before payments to the
spouse begin, the provisions of paragraph (b), with the exception
of subparagraph (2) therein, shall be applied as if the surviving
spouse were the Participant.
For purposes of this Section 11.5, any amount paid
to a child of the Participant will be treated as if it had been
paid to the surviving spouse of the Participant if the amount
becomes payable to the surviving spouse when the child reaches
the age of majority.
For the purposes of this Section 11.5,
distribution of a Participant's interest is considered to begin
on the Participant's required beginning date (or, if paragraph
(c) above is applicable, the date distribution is required to
begin to the surviving spouse pursuant to paragraph (b) above).
If distribution in the form of an annuity contract described in
Section 11.4(e) irrevocably commences to the Participant before
the required beginning date, the date distribution is considered
to begin is the date distribution actually commences.
Transitional Rule. Notwithstanding the other
requirements of this Article 11, and subject to the requirements
of Article 10, Joint and Survivor Annuity Requirements,
distribution on behalf of any Participant, including a 5-percent
owner, may be made in accordance with all of the following
requirements (regardless of when such distribution commences):
The distribution is one which would not have
disqualified the Trust under Section 401(a)(9) of the Internal
Revenue Code of 1954 as in effect before its amendment by the
Deficit Reduction Act of 1984.
The distribution is in accordance with a method of
distribution designated by the Employee whose interest in the
Trust is being distributed or, if the Employee is deceased, by a
Beneficiary of the Employee.
The designation specified in paragraph (b) was in
writing, was signed by the Employee or the Beneficiary, and was
made before January 1, 1984.
The Employee had accrued a benefit under the plan as of
December 31, 1983.
The method of distribution designated by the
Employee or the Beneficiary specifies the time at which
distribution will commence, the period over which distributions
will be made, and in the case of any distribution upon the
Employee's death, the Beneficiaries of the Employee listed in
order of priority.
A distribution upon death will not be covered by this
transitional rule unless the information in the designation
contains the required information described above with respect to
the distributions to be made upon the death of the Employee. For
any distribution which commences before January l, 1984, but
continues after December 31, 1983, the Employee or the
Beneficiary to whom such distribution is being made will be
presumed to have designated the method of distribution under
which the distribution is being made, if the method of
distribution was specified in writing and the distribution
satisfies the requirements in paragraphs (a) and (e).
If a designation is revoked, any subsequent distribution
must satisfy the requirements of Section 401(a)(9) of the Code
and the regulations thereunder. If a designation is revoked
after the date distributions are required to begin, the Trust
must distribute by the end of the calendar year following the
calendar year in which the revocation occurs the total amount not
yet distributed which would have been required to have been
distributed to satisfy Section 401(a)(9) of the Code and the
regulations thereunder, but for the designation described in
paragraphs (b) through (e). For calendar years beginning after
December 31, 1988, such distributions must meet the minimum
distribution incidental benefit requirements in Section
1.401(a)(9)-2 of the Proposed Income Tax Regulations. Any
changes in the designation generally will be considered to be a
revocation of the designation, but the mere substitution or
addition of another beneficiary (one not named in the
designation) under the designation will not be considered to be a
revocation of the designation, so long as the substitution or
addition does not alter the period over which distributions are
to be made under the designation, directly or indirectly (for
example, by altering the relevant measuring life). In the case
of an amount transferred or rolled over from one plan to another
plan, the rules in Q&A J-2 and Q&A J-3 of Section 1.401(a)(9)-1
of the Proposed Income Tax Regulations shall apply.
ARTICLE
Withdrawals and Loans
Withdrawals from Participant Contribution Accounts.
Subject to the requirements of Article 10, a Participant may upon
written notice to the Employer withdraw any amount from his
Participant Contribution Account. A Participant may not make
more than one such withdrawal in any Plan Year, and a withdrawn
amount may not be repaid to the Plan. No forfeiture will occur
solely as a result of an Employee's withdrawal of Participant
contributions.
Withdrawals on Account of Hardship (Profit Sharing
Plans Only). If the Employer has so elected in the Plan
Agreement for a profit sharing plan, upon a Participant's written
request the Plan Administrator may permit a withdrawal of funds
from the vested portion of the Participant's Accounts on account
of the Participant's financial hardship, which must be
demonstrated to the satisfaction of the Plan Administrator. In
considering such requests, the Plan Administrator shall apply
uniform standards that do not discriminate in favor of Highly
Compensated Employees. In a Standard Plan with a CODA, if
hardship withdrawals are permitted from both the Employer
Contribution Account and the Elective Deferral Account, they
shall be made first from a Participant's Employer Contribution
Account and thereafter from a Participant's Elective Deferral
Account, subject to the additional requirements set forth in
Section 5.14. In a Standard Plan, the requirements of Section
5.14(b), (c), (d)(1) and (d)(2) shall also apply to hardship
distributions from a Participant's Employer Contribution Account.
In a Variable Plan with a CODA, if hardship withdrawals are
permitted from more than one of the Elective Deferral Account,
Employer Matching Account, and Employer Contribution Account,
they shall be made first from a Participant's Employer
Contribution Account, and thereafter from the Employer Matching
Account, and finally from the Elective Deferral Account, subject
to the additional requirement of Section 5.14. A withdrawn
amount may not be repaid to the Plan.
Withdrawals after Reaching Age 59 1/2 (Profit Sharing
Plans Only). If so specified by the Employer in the Plan
Agreement, a Participant who has reached age 59 1/2 may upon
written request to the Employer withdraw during his employment
any amount not exceeding the vested balance of his Accounts. A
withdrawn amount may not be repaid to the Plan.
Loans (Variable Plans Only). If the Employer has so
elected in the Plan Agreement, the Employer may direct the
Trustee to make a loan to a Participant or Beneficiary from the
vested portion of his Accounts, subject to the following terms
and conditions:
The Plan Administrator shall administer the loan
program subject to the terms and conditions of this Section 12.4
and to such reasonable additional rules and regulations as the
Plan Administrator may establish for the orderly operation of the
program.
A Participant's or Beneficiary's request for a
loan shall be submitted to the Plan Administrator by means of a
written application on a form supplied by the Plan Administrator.
Applications shall be approved or denied by
the Plan Administrator on the basis of its assessment of the
borrower's ability to collateralize and repay the loan, as
revealed in the loan application.
Loans shall be made to all Participants and
Beneficiaries on a reasonably equivalent basis. Loans shall not
be made available to highly compensated Employees (as defined in
Section 414(q) of the Code) in amounts greater than the amounts
made available to other Employees (relative to the borrower's
Account balance).
Loans must be adequately secured by assignment of
fifty percent (50%) of the Participant's entire right, title and
interest in and to the Trust Fund, evidenced by the Participant's
collateral promissory note for the amount of the loan payable to
the order of the Trustee.
<PAGE>
Loans must bear a reasonable interest rate
comparable to the rate charged by commercial lenders in the
geographical area for similar loans. The Plan Administrator
shall not discriminate among Participants in the matter of
interest rates, but loans may bear different interest rates if,
in the opinion of the Plan Administrator, the difference in rates
is justified by conditions that would customarily be taken into
account by a commercial lender in the Employer's geographical
area.
The period for repayment for any loan shall not
exceed five years, except in the case of a loan used to acquire a
dwelling unit which within a reasonable time is to be used as the
principal residence of the Participant, in which case the
repayment period shall not exceed ten years. The terms of a loan
shall require that it be repaid in level payments of principal
and interest not less frequently then quarterly throughout the
repayment period, except that alternative arrangements for
repayment may apply in the event that the borrower is on unpaid
leave of absence for a period not to exceed one year.
To the extent that a Participant would be required
under Article 10 to obtain the consent of his spouse to a
distribution of an immediately distributable benefit other than a
Qualified Joint and Survivor Annuity, the consent of the
Participant's spouse shall be required for the use of his Account
as security for a loan. The spouse's consent must be obtained no
earlier than the beginning of the 90-day period that ends on the
date on which the loan is to be so secured, and obtained in
accordance with the requirements of Section 10.4(c) for a
Qualified Election. Any such consent shall thereafter be binding
on the consenting spouse and any subsequent spouse of the
Participant. A new consent shall be required for use of the
Account as security for any extension, renewal, renegotiation or
revision of the original loan.
If valid spousal consent has been obtained in
accordance with Section 12.4(g), then notwithstanding any other
provision of the Plan the portion of the Participant's account
balance used as a security interest held by the Plan by reason of
a loan outstanding to the Participant shall be taken into account
for purposes of determining the amount of the account balance
payable at the time of death or distribution, but only if the
reduction is used as repayment of the loan. If less than 100%
of the Participant's vested account balance (determined without
regard to the preceding sentence) is payable to the surviving
spouse, then the account balance shall be adjusted by first
reducing the vested account balance by the amount of the security
used as repayment of the loan, and then determining the benefit
payable to the surviving spouse.
In the event of default on a loan by a Participant
who is an active Employee, foreclosure on the Participant's
Account as security will not occur until the Employer has
reported to the Trustee the occurrence of an event permitting
distribution from the Plan in accordance with Article 9 or
Section 5.13.
No loan shall be made to an Owner-Employee or a
Shareholder-Employee.
No loan to any Participant or Beneficiary can be
made to the extent that the amount of the loan, when added to the
outstanding balance of all other loans to the Participant or
Beneficiary, would exceed the lesser of (a) $50,000 reduced by
the excess (if any) of the highest outstanding balance of loans
during the one year period ending on the day before the loan is
made, over the outstanding balance of loans from the Plan on the
date the loan is made, or (b) one-half the value of the vested
account balance of the Participant. For the purpose of the above
limitation, all loans from all qualified plans of the Affiliated
Employers are aggregated.
Loans shall be considered investments directed by
a Participant pursuant to Section 13.3. The amount loaned shall
be charged solely against the Accounts of the Participant, and
repaid amounts and interest shall be credited solely thereto.
Procedure; Amount Available. Withdrawals and loans
shall be made subject to the terms and conditions applicable to
distributions pursuant to Section 9.4, except that the amount of
any withdrawal or loan shall be determined by reference to the
vested balance of the Participant's Account as of the most recent
Valuation Date preceding the withdrawal or loan, and shall not
exceed the amount of the vested account balance.
ARTICLE
Trust Fund and Investments
Establishment of Trust Fund. The Employer and the
Trustee hereby agree to the establishment of a Trust Fund
consisting of all amounts as shall be contributed or transferred
from time to time to the Trustee pursuant to the Plan, and all
earnings thereon. The Trustee shall hold the assets of the Trust
Fund for the exclusive purpose of providing benefits to
Participants and Beneficiaries and defraying the reasonable
expenses of administering the Plan, and no such assets shall ever
revert to the Employer, except that:
contributions made by the Employer by mistake of fact
may be returned to the Employer within one (1) year of the date
of payment,
contributions that are conditioned on their
deductibility under the Code may be returned to the Employer
within one (1) year of the disallowance of the deduction,
contributions that are conditioned on the initial
qualification of the Plan under the Code may be returned to the
Employer within one (1) year after such qualification is denied
by determination of the Internal Revenue Service, but only if an
application for determination of such qualification is made
within the time prescribed by law for filing the Employer's
federal income tax return for its taxable year in which the Plan
is adopted, or such later date as the Secretary of the Treasury
may prescribe, and
amounts held in a suspense account may be returned to
the Employer on termination of the Plan, to the extent that they
may not then be allocated to any Participant's Account in
accordance with Article 6.
All Employer contributions under the Plan other than those
made pursuant to Section 4.1(f) are hereby expressly conditioned
on the initial qualification of the Plan and their deductibility
under the Code.
Management of Trust Fund. Except to the extent of any
investment in Policies pursuant to Article 14, the assets of the
Trust Fund shall be held in trust by the Trustee and accounted
for in accordance with this Article 13, and shall be invested in
accordance with Section 13.3 in the Investment Products specified
by the Employer in the Plan Agreement and from time to time
thereafter in writing. The Employer shall have the exclusive
authority and discretion to select the Investment Products
available under the Plan. In making that selection, the Employer
shall use the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in a
like capacity and familiar with such matters would use in the
conduct of an enterprise of like character and with like aims.
The Employer shall cause the available Investment Products to be
diversified sufficiently to minimize the risk of large losses,
unless under the circumstances it is clearly prudent not to do
so. It is especially intended that the Trustee shall have no
discretionary authority to determine the investment of Trust
assets.
Investment Instructions. Except as Article 14 may
apply, all amounts held in the Trust Fund under the Plan shall be
invested in Investment Products. If the Employer has elected in
the Plan Agreement to make investment decisions for the Plan,
investment instructions as to Employer Contribution Accounts,
Employer Matching Accounts, Qualified Matching Accounts and
Qualified Nonelective Contribution Accounts shall be the
fiduciary responsibility of the Employer, and each of such
Accounts shall have a pro rata interest in all assets of the
Trust (other than life insurance policies under Article 14) to
which the Employer's instructions apply. If the Employer has not
elected to make investment decisions for the Plan, then assets of
the Trust shall be invested solely in accordance with the
instructions of the Participant to whose Accounts they are
allocable, as delivered by the Employer to Putnam. Instructions
shall apply to future contributions, past accumulations, or both,
according to their terms, and shall be communicated by the
Employer to Putnam in accordance with procedures prescribed by
Putnam. Instructions shall be effective prospectively, within a
reasonable time after their receipt in good order by Putnam. An
instruction once received shall remain in effect until it is
changed by the provision of a new instruction. New instructions
shall be accepted by Putnam at any Valuation Date.
Neither the Employer nor the Trustee nor Putnam shall be
responsible for questioning any instructions of a Participant or
for reviewing the investments selected therein, or for any loss
resulting from instructions of a Participant or from the failure
of a Participant to provide or to change instructions. Neither
Putnam nor the Trustee shall have any duty to question any
instructions received from the Employer or to review the
investments selected therein, nor shall Putnam or the Trustee be
responsible for any loss resulting from instructions received
from the Employer or from the failure of the Employer to provide
or to change instructions. In the event that Putnam or the
Trustee receives a contribution under the Plan as to which no
instructions are delivered, or such instructions as are delivered
are unclear to Putnam or the Trustee, such contribution shall be
invested in Putnam Daily Dividend Trust until clear instructions
are received. Neither Putnam nor the Trustee shall have any
discretionary authority or responsibility in the investment of
the assets of the Trust Fund.
Valuation of the Trust Fund. As of each Valuation
Date, the Trustee shall determine the fair market value of the
Trust Fund, and the net earnings or losses and expenses of the
Trust Fund for the period elapsed since the most recent previous
Valuation Date shall be allocated among the Accounts of
Participants. Earnings, losses and expenses which pertain to
investments which are specifically held for a given Participant's
Account shall be allocated solely to that Account. In the event
that an investment is not specifically held for a given
Participant's Account, the earnings, losses and expenses
pertaining to that investment shall be allocated among all
Participants' Accounts in the ratio that each such Account bears
to the total of all Accounts of all Participants. Each
Participant's Accounts shall be adjusted pursuant to this Section
13.4 until such time as they are either fully distributed or
forfeited, regardless of whether the Participant continues to be
an Employee.
Distributions on Investment Company Shares. Subject to
Section 9.3, all dividends and capital gains or other
distributions received on any Investment Company Shares credited
to Participant's Account will (unless received in additional
Investment Company Shares) be reinvested in full and fractional
shares of the same Investment Company at the price determined as
provided in the then current prospectus of the Investment
Company. The shares so received or purchased upon such
reinvestment will be credited to such accounts. If any dividends
or capital gain or other distributions may be received on such
Investment Company Shares at the election of the shareholder in
additional shares or in cash or other property, the Trustee will
elect to receive such dividends or distributions in additional
Investment Company Shares.
Registration and Voting of Investment Company Shares.
All Investment Company Shares shall be registered in the name of
the Trustee or its nominee. Subject to any requirements of
applicable law, the Trustee will transmit to Participants in a
Standard Plan, and to the Employer in a Variable Plan, copies of
any notices of shareholders' meetings, proxies and proxy-
soliciting materials, prospectuses and the annual or other
reports to shareholders, with respect to Investment Company
Shares held in the Trust Fund. The Trustee shall act in
accordance with directions received from such Participants or
Employer, as the case may be, with respect to matters to be voted
upon by the shareholders of the Investment Company. Such
directions must be in writing on a form approved by the Trustee,
signed by the addressee and delivered to the Trustee within the
time prescribed by it. The Trustee will not vote Investment
Company Shares as to which it receives no written directions.
Investment Manager (Variable Plans Only). The
Employer, with the consent of Putnam, may appoint an investment
manager, as defined in Section 3(38) of the Employee Retirement
Income Security Act of 1974, with respect to all or a portion of
the assets of the Trust Fund. The Trustee shall have no
liability in connection with any action or nonaction pursuant to
directions of such an investment manager.
ARTICLE
Insurance Policies
Purchase of Insurance Products. At the time of
establishment of the Plan, the Employer shall purchase for each
Participant such Policy or Policies, if any, as a Participant
shall request and annually thereafter such additional Policies as
a Participant shall request, subject to the limitations of
Section 14.2. All Policies shall have the same day and month of
issue, insofar as reasonably possible. The premiums on all
Policies shall be paid at the same intervals (for example,
annually, semi-annually, quarterly or monthly), but the interval
may be changed with respect to all Policies from time to time.
Limitation on Premiums. The premiums paid for Policies
in respect of any Participants shall be limited so that premiums
paid on any ordinary insurance Policies (that is, Policies with
both nonincreasing premiums and nondecreasing death benefits) on
the life of the Participant shall be 49 percent or less of the
Employer's total contributions for the Participant (and
Forfeitures allocated and amounts reapplied to his Employer
Contribution Account), and premiums paid on term insurance
Policies on the life of the Participant shall be less than 25
percent of such amount; provided that if both ordinary life
insurance Policies and term Policies are purchased for any
Participant, the total premiums on term Policies plus one-half
the premiums on ordinary life Policies shall be less than 25
percent of such amount. If at any time the total premiums to be
paid by the Employer for a Participant shall equal or exceed the
above limitations, then the life insurance coverage of that
Participant shall be reduced so that the total premiums shall not
equal or exceed the limitations. The required reduction shall be
made by changing all or a portion of the life insurance on the
Participant to paid-up life insurance or by cancelling all or a
portion of any term life insurance.
Policy Options. At the election of the Participant
covered hereunder, a Policy may contain a waiver of premium
disability benefit provision or a provision for additional
indemnity in the event of accidental death, or both, if available
on the type of Policy selected and if permitted by the insurer.
Insurability. If any Participant who has elected that
a Policy be purchased is found by the insurer not to be insurable
at standard rates, the Employer shall, if permitted by the rules
of the insurer, purchase a similar Policy which provides a lesser
death benefit and which can be purchased for the same premium.
Dividends on Policies. Dividends payable on any Policy
shall be applied to the purchase of additional benefits under the
Policy unless the Participant requests that they be applied in
reduction of premiums.
Trustee of Policy. The Insurance Trustee shall apply
for and be the owner of each Policy purchased under the terms of
the Plan. Each Policy must provide that proceeds will be payable
to the Insurance Trustee; however, the Insurance Trustee shall be
required to pay over all such proceeds to the Participant's
Designated Beneficiary in accordance with the distribution
provisions of the Plan including, without limitation, Section
10.3. Under no circumstances shall the Trust retain any part of
the proceeds. In the event of any conflict between the terms of
<PAGE>
the Plan and the terms of any Policy purchased hereunder, the
Plan provisions shall control.
Obligations with Respect to Policies. Except as may be
otherwise provided in any conditional or binding receipt issued
by an insurer, there shall be no coverage and no death benefit
payable under any Policy to be purchased from such insurer until
such Policy shall have been delivered and the premium therefor
shall have been paid. The Employer and the Insurance Trustee
shall not have any responsibility as to the effectiveness of any
Policy purchased from an insurer, nor shall either of them have
any liability or obligation to pay any amount to any Participant
or his beneficiary by reason of any failure or refusal by the
insurer to make such payment.
Distribution of Proceeds on Participant's Death. In
the event of the death of a Participant before the conversion
provided for in Section 14.9, there shall be payable to the
beneficiary named in any Policy on his life the benefits provided
by the terms of such Policy.
Conversion of Policies. Except as provided in Section
19.3, if any Policies of a Participant (other than retirement
income, endowment or annuity Policies) are held for his benefit
at the time distribution is to commence, the Policies may be
converted by the Insurance Trustee into cash, paid to the
Trustee, credited to the Employer Contribution Account of the
Participant, invested in accordance with the written instructions
of the Employer (and if no such instructions have been given or
if such instructions are not clear, invested in Investment
Company Shares in the same proportion as the most recent
contributions to the Participant's Accounts) and distributed
pursuant to Article 9, subject to the terms and conditions of
Article 10. Retirement income, endowment or annuity Policies
will be distributed directly to the Participant at the time
distribution is to commence.
Conflict with Policies. In the event of any conflict
between the terms of the Plan and the terms of any Policies
hereunder, the Plan provisions shall control.
Insurance Loans to Owner-Employees. If an Owner-
Employee or Shareholder-Employee receives, either directly or
indirectly, any amount from an Insurer as a loan under a Policy,
the amount so received shall be considered a distribution under
the Plan. Any assignment or pledge (or agreement to assign or
pledge)
by an Owner-Employee or Shareholder-Employee of any interest in
the Plan shall be considered a distribution of such interest.
<PAGE>
ARTICLE
Top-Heavy Plans
Superseding Effect. For any Plan Year beginning after
December 31, 1983, in which Plan is determined to be a Top-Heavy
Plan under Section 15.2(b), the provisions of this Article 15
will supersede any conflicting provisions in the Plan or the Plan
Agreement. These provisions will be deemed applicable to a
Standard Plan at all times, unless the Employer has affirmatively
elected in the Plan Agreement to perform top-heavy testing
annually.
Definitions. For purposes of this Article 13, the
terms below shall be defined as follows:
Key Employee means any Employee or former Employee
(and the Beneficiaries of such Employee) who at any time during
the determination period was: (1) an officer of the Employer
having annual compensation greater than 50 percent of the amount
in effect under Section 415(b)(1)(A) of the Code; (2) an owner
(or considered an owner under Section 318 of the Code) of one of
the ten largest interests in the Employer having annual
compensation exceeding the dollar limitation under Section
415(c)(1)(A) of the Code; (3) a 5-percent owner of the Employer;
or (4) a 1-percent owner of the Employer having annual
compensation of more than $150,000. Annual compensation means
compensation as defined in Section 415(c)(3) of the Code, but
including amounts contributed by the Employer pursuant to a
salary reduction agreement which are excludible from the
Employee's gross income under Section 125, Section 402(a)(8),
Section 402(h) or Section 403(b) of the Code. The determination
period is the Plan Year containing the Determination Date and the
four preceding Plan Years. The determination of who is a key
Employee will be made in accordance with Section 416(i)(1) of the
Code and the Regulations thereunder.
Top-Heavy: the Plan is Top-Heavy for any Plan
Year beginning after December 31, 1983, if any of the following
conditions exists:
If the Top-Heavy Ratio for this Plan exceeds
60 percent and this Plan is not part of any Required Aggregation
Group or Permissive Aggregation Group of plans.
If this Plan is a part of a Required
Aggregation Group of plans but not part of a Permissive
Aggregation Group and the Top-Heavy
Ratio for the group of plans exceeds 60 percent.
<PAGE>
If this Plan is part of a Required
Aggregation Group and part of a Permissive Aggregation Group of
plans and the Top-Heavy Ratio for the Permissive Aggregation
group exceeds 60 percent.
Top-Heavy Ratio means the following:
If the Employer maintains one or more
qualified defined contribution plans (or any simplified employee
pension plan) and the Employer has not maintained any qualified
defined benefit plan which during the 5-year period ending on the
Determination Date(s) has or has had accrued benefits, the Top-
Heavy Ratio for this Plan alone or for the Required or Permissive
Aggregation Group as appropriate is a fraction, the numerator of
which is the sum of the account balances of all Key Employees as
of the Determination Date(s) (including any part of any account
distributed in the 5-year period ending on the Determination
Date(s)), and the denominator of which is the sum of all account
balances (including any part of any account balance distributed
in the 5-year period ending on the Determination Date(s)), both
computed in accordance with Section 416 of the Code and the
regulations thereunder. Both the numerator and denominator of the
Top-Heavy Ratio are increased to reflect any contribution not
actually made as of the Determination Date, but which is required
to be taken into account on that date under Section 416 of the
Code and the regulations thereunder.
If the Employer maintains one or more
qualified defined contribution plans (or any simplified employee
pension plan) and the Employer maintains or has maintained one or
more qualified defined benefit plans which during the 5-year
period ending on the Determination Date(s) has or has had any
accrued benefits, the Top-Heavy Ratio for any Required or
Permissive Aggregation Group as appropriate is a fraction, the
numerator of which is the sum of account balances under the
aggregated qualified defined contribution plan or plans for all
Key Employees, determined in accordance with (1) above, and the
Present Value of accrued benefits under the aggregated qualified
defined benefit plan or plans for all Key Employees as of the
Determination Date(s), and the denominator of which is the sum of
the account balances under the aggregated qualified defined
contributions plan or plans for all Participants, determined in
accordance with (1) above, and the Present Value of accrued
benefits under the qualified defined benefit plan or plans for
all Participants as of the Determination Date(s), all determined
in accordance with Section 416 of the Code and the regulations
thereunder. The accrued benefits under a defined benefit plan in
both the numerator and denominator of the Top-Heavy Ratio are
increased for any distribution of an accrued benefit made in the
5-year period ending on the Determination Date.
For purposes of (1) and (2) above, the value
of account balances and the Present Value of accrued benefits
will be determined as of the most recent Valuation Date that
falls within or ends with the 12-month period ending on the
Determination Date; except as provided in Section 416 of the Code
and the regulations thereunder for the first and second Plan
Years of a defined benefit plan. The account balances and
accrued benefits of a Participant (A) who is not a Key Employee
but who was a Key Employee in a prior Plan Year, or (B) who has
not been credited with at least one Hour of Service for the
Employer during the 5-year period ending on the Determination
Date, will be disregarded. The calculation of the Top-Heavy
Ratio, and the extent to which distributions, rollovers and
transfers are taken into account will be made in accordance with
Section 416 of the Code and the regulations thereunder.
Deductible Employee contributions will not be taken into account
for purposes of computing the Top-Heavy Ratio. When aggregating
plans, the value of account balances and accrued benefits will be
calculated with reference to the Determination Dates that fall
within the same calendar year.
The accrued benefit of a participant other
than a Key Employee shall be determined under (a) the method, if
any, that uniformly applies for accrual purposes under all
defined benefit plans maintained by the Employer, or (b) if there
is no such method, as if such benefit accrued not more rapidly
than the slowest accrual rate permitted under the fractional rule
of Section 411(b)(1)(C) of the Code.
Permissive Aggregation Group means the Required
Aggregation Group of plans plus any other qualified plan or plans
(or simplified employee pension plan) of the Employer which, when
considered as a group with the Required Aggregation Group, would
continue to satisfy the requirements of Sections 401(a)(4) and
410 of the Code.
Required Aggregation Group means: each qualified
plan of the Employer in which at least one Key Employee
participates or participated at any time during the determination
period (regardless of whether the Plan has terminated) and any
other qualified plan of the Employer which enables a plan
described in (i) to meet the requirements of Section 401(a)(4) or
410 of the Code.
Determination Date means, for any Plan Year
subsequent to the first Plan Year, the last day of the preceding
Plan Year. For the first Plan Year of the Plan, the
Determination Date is the last day of that Plan Year.
Valuation Date means the last day of the Plan
Year.
Present Value means present value based only on
the interest and mortality rates specified in any defined benefit
plan maintained by the Employer and set forth in the Plan
Agreement.
Minimum Allocation.
Except as otherwise provided in paragraphs (c) and
(d) below, the Employer contributions and Forfeitures allocated
on behalf of any Participant who is not a Key Employee shall not
be less than the lesser of three percent of such Participant's
Earnings, or in the case where the Employer has no defined
benefit plan which designates this Plan to satisfy Section 401 of
the Code, the largest percentage of Employer contributions and
Forfeitures, as a percentage of the first $200,000 of the Key
Employee's Earnings , allocated on behalf of any Key Employee for
that year. The minimum allocation is determined without regard
to any Social Security contribution. This minimum allocation
shall be made even though, under other Plan provisions, the
Participant would not otherwise be entitled to receive an
allocation, or would have received a lesser allocation of the
Employer's contributions and Forfeitures for the Plan Year
because of the Participant's failure to be credited with at
least 1,000 Hours of Service, or the Participant's failure to
make mandatory Employee contributions to the Plan, or the
Participant's receiving Earnings less than a stated amount.
Neither Elective Deferrals, Employer Matching Contributions nor
Qualified Matching Contributions for non-key employees shall be
taken into account for purposes of satisfying the requirement of
this Section 15.3(a).
For purposes of computing the minimum allocation,
Earnings will mean Earnings as defined in Section 2.13 of the
Plan .
The provision in paragraph (a) above shall not
apply to any Participant who was not employed by the Employer on
the last day of the Plan Year.
The provision in paragraph (a) above shall not
apply to any Participant to the extent he is covered under any
other plan or plans of the Employer, and the Employer has
provided in the Plan Agreement that the minimum allocation
requirement applicable to Top-Heavy Plans will be met in the
other plan or plans.
The minimum allocation required (to the extent
required to be nonforfeitable under Section 416(b) of the Code)
may not be forfeited under Sections 411(a)(3)(B) or (D) of the
Code.
<PAGE>
Earnings Limitation. For any Plan Year in which the
Plan is Top-Heavy, only the first $200,000 (or such larger amount
as may be prescribed by the Secretary of the Treasury or his
delegate) of a Participant's annual Earnings shall be taken into
account for purposes of determining Employer contributions under
the Plan.
Minimum Vesting Schedules (Variable Plans Only). For
any Plan Year in which this Plan is Top-Heavy and any subsequent
Plan Year, a minimum vesting schedule will automatically apply to
the Plan, as follows:
If the Employer has selected in the Plan Agreement
as the Plan's regular vesting schedule the Three Year Cliff, Five
Year Graded or Six Year Graded schedule, then the schedule
selected in the Plan Agreement shall continue to apply for any
Plan Year to which this Section 15.5 applies.
If the Employer has selected in the Plan Agreement
as the Plan's regular vesting schedule the Five Year Cliff
schedule, then the Three Year Cliff schedule shall apply in any
Plan Year to which this Section 15.5 applies.
If the Employer has selected in the Plan Agreement
as the Plan's regular vesting schedule the Seven Year Graded
schedule, then the Six Year Graded schedule shall apply in any
Plan Year to which this Section 15.5 applies.
If the Employer has selected in the Plan Agreement
as the Plan's regular vesting schedule a schedule other than
those described in paragraphs (a), (b) and (c), then the schedule
specified by the Employer in the Plan Agreement for this purpose
shall apply in any Plan Year to which this Section 15.5 applies.
The minimum vesting schedule applies to all benefits within
the meaning of Section 411(a)(7) of the Code except those
attributable to Employee contributions, including benefits
accrued before the effective date of Section 416 of the Code and
benefits accrued before the Plan became Top-Heavy. Further, no
reduction in a Participant's nonforfeitable percentage may occur
in the event the Plan's status as Top-Heavy changes for any Plan
Year. However, the vested portion of the Employer Contribution
Account of any Employee who does not have an Hour of Service
after the Plan has initially become Top-Heavy will be determined
without regard to this Section 15.5.
Adjustment of Fractions. For any Plan Year in which
the Plan is Top-Heavy, the Defined Benefit Fraction and the
Defined Contribution Fraction in Article 6 shall each be computed
using 100 percent of the dollar limitations specified in Sections
415(b)(1)(A) and 415(c)(1)(A) instead of 125 percent. In a
Variable Plan, the foregoing requirement shall not apply if the
Top-Heavy Ratio does not exceed 90 percent and the Employer has
elected in the Plan Agreement to provide increased minimum
allocations or benefits satisfying Section 416(h)(2) of the Code.
ARTICLE
Administration of the Plan
Plan Administrator. The Plan shall be administered by
the Employer, as Plan Administrator and Named Fiduciary within
the meaning of ERISA, under rules of uniform application;
provided, however, that the Plan Administrator's duties and
responsibilities may be delegated to a person appointed by the
Employer or a committee established by the Employer for that
purpose, in which case the committee shall be the Plan
Administrator and Named Fiduciary. The members of such a
committee shall act by majority vote, and may by majority vote
authorize any one or ones of their number to act for the
committee. The person or committee (if any) initially appointed
by the Employer may be named in the Plan Agreement, but the
Employer may remove any such person or committee member by
written notice to him, and any such person or committee may
resign by written notice to the Employer, without the necessity
of amending the Plan Agreement. To the extent permitted under
applicable law, the Plan Administrator shall have the sole
authority to enforce the terms hereof on behalf of any and all
persons having or claiming any interest under the Plan, and shall
be responsible for the operation of the Plan in accordance with
its terms. The Plan Administrator shall have discretionary
authority to determine all questions arising out of the
administration, interpretation and application of the Plan, all
of which
determinations shall be conclusive and binding on all persons.
The Plan Administrator, in carrying out its responsibilities
under the Plan, may rely upon the written opinions of its counsel
and on certificates of physicians. Subject to the provisions of
the Plan and applicable law, the Plan Administrator shall have no
liability to any person as a result of any action taken or
omitted hereunder by the Plan Administrator.
Claims Procedure. Claims for participation in or
distribution under the Plan shall be made in writing to the Plan
Administrator, or an agent designated by the Plan Administrator
whose name shall have been communicated to all Participants and
other persons as required by law. If any claim so made is denied
in whole or in part, the claimant shall be furnished promptly by
the Plan Administrator with a written notice:
setting forth the reason for the denial,
making reference to pertinent Plan provisions,
describing any additional material or information
from the claimant which is necessary and why, and
explaining the claim review procedure set forth
herein.
Within 60 days after denial of any claim for participation
or distribution under the Plan, the claimant may request in
writing a review of the denial by the Plan Administrator. Any
claimant seeking review hereunder shall be entitled to examine
all pertinent documents and to submit issues and comments in
writing. The Plan Administrator shall render a decision on review
hereunder; provided, that if the Plan Administrator determines
that a hearing would be appropriate, its decision on review shall
be rendered within 120 days after receipt of the request for
review. The decision on review shall be in writing and shall
state the reason for the decision, referring to the Plan
provisions upon which it is based.
Employer's Responsibilities. The Employer shall be
responsible for:
Keeping records of employment and other matters
containing all relevant data pertaining to any person affected
hereby and his eligibility to participate, allocations to his
Accounts, and his other rights under the Plan;
Periodic, timely filing of all statements, reports
and returns required to be filed by ERISA;
Timely preparation and distribution of disclosure
materials required by ERISA;
Providing notice to interested parties as required by
Section 7476 of the Code;
Retention of records for periods required by law;
and
Seeing that all persons required to be bonded on
account of handling assets of the Plan are bonded.
Recordkeeper. The Recordkeeper is hereby designated as
agent of the Employer under the Plan to perform directly or
through agents certain ministerial duties in connection with the
Plan, in particular:
To keep and regularly furnish to the Employer a
detailed statement of each Participant's Accounts, showing
contributions thereto by the Employer and the Participant,
Investment Products purchased therewith, earnings thereon and
Investment Products purchased therewith, and each redemption or
distribution made for any reason, including fees or benefits; and
To the extent agreed between the Employer and the
Recordkeeper, to prepare for the Employer or to assist the
Employer to prepare such returns, reports or forms as the
Employer shall be required to furnish to Participants and
Beneficiaries or other interested persons and to the Internal
Revenue Service or the Department of Labor;
all as may be more fully set forth in a service agreement
executed by the Employer and the Recordkeeper. If the Employer
does not appoint another person or entity as Recordkeeper, the
Employer itself shall be the Recordkeeper.
Prototype Plan. Putnam is the sponsor of the Putnam
Basic Plan Document, a prototype plan approved as to form by the
Internal Revenue Service. Provided that an Employer's adoption
of the Plan is made known to and accepted by Putnam in accordance
with the Plan Agreement, Putnam will inform the Employer of
amendments to the prototype plan and provide such other services
in connection with the Plan as may be agreed between Putnam and
the Employer. Putnam may impose for its services as sponsor of
the prototype plan such fees as it may establish from time to
time in a fee schedule addressed to the Employer. Such fees
shall, unless paid by the Employer, be paid from the Trust Fund,
and shall in that case be charged pro rata against the Accounts
of all Participants. The Trustee is expressly authorized to
cause Investment Products to be sold or redeemed for the purpose
of paying such fees.
ARTICLE
Trustee and Insurance Trustee
Powers and Duties of the Trustee. The Trustee shall
have the authority, in addition to any authority given by law, to
exercise the following powers in the administration of the Trust:
To invest all or a part of the Trust Fund in
Investment Products in accordance with the investment
instructions delivered by the Employer pursuant to Section 13.3,
without restriction to investments authorized for fiduciaries,
including without limitation any common, collective or commingled
trust fund maintained by the Trustee (or any other such fund,
acceptable to Putnam and the Trustee, that qualifies for
exemption from federal income tax pursuant to Revenue Ruling 81-
100). Any investment in, and any terms and conditions of, any
such common, collective or commingled trust fund available only
to employee trusts which meet the requirements of the Code, or
corresponding provisions of subsequent income tax laws of the
<PAGE>
United States, shall constitute an integral part of this
Agreement;
If this is a Variable Plan and Putnam and the
Trustee have consented thereto in writing, to invest without
limit in stock of the Employer or any affiliated company;
To dispose of all or part of the investments,
securities or other property which may from time to time or at
any time constitute the Trust Fund in accordance with the written
directions furnished by the Employer for the investment of
Participants' separate Accounts or the payment of benefits or
expenses of the Plan, and to make, execute and deliver to the
purchasers thereof good and sufficient deeds of conveyance
therefore, and all assignments, transfers and other legal
instruments, either necessary or convenient for passing the title
and ownership thereto, free and discharged of all trusts and
without liability on the part of such purchasers to see to the
application of the purchase money;
To hold cash uninvested to the extent necessary to
pay benefits or expenses of the Plan;
To follow the directions of an investment manager
appointed pursuant to Section 13.7;
To cause any investment of the Trust Fund to be
registered in the name of the Trustee or the name of its nominee
or nominees or to retain such investment unregistered or in a
form permitting transfer by delivery; provided that the books and
records of the Trustee shall at all times show that all such
investments are part of the Trust Fund;
Upon the written direction of or through the Employer,
to vote in person or by proxy (in accordance with Section 13.6
and, in the case of stock of the Employer, at the direction of
the Employer) with respect to all securities that are part of the
Trust Fund;
To consult and employ any suitable agent to act on
behalf of the Trustee and to contract for legal, accounting,
clerical and other services deemed necessary by the Trustee to
manage and administer the Trust Fund according to the terms of
the Plan;
Upon the written direction of the Employer, to
make loans from the Trust Fund to Participants in amounts and on
terms approved by the Plan Administrator in accordance with the
provisions of the Plan; provided that the Employer shall have the
sole responsibility for computing and collecting all loan
repayments required to be made under the Plan; and
To pay from the Trust Fund all taxes imposed or
levied with respect to the Trust Fund or any part thereof under
existing or future laws, and to contest the validity or amount of
any tax assessment, claim or demand respecting the Trust Fund or
any part thereof.
Limitation of Responsibilities. Except as may
otherwise be required under applicable law, neither the Trustee
nor the Insurance Trustee nor any of their respective agents
shall have any responsibility for:
Determining the correctness of the amount of any
contribution for the sole collection or payment of contributions,
which shall be the sole responsibility of the Employer;
Loss or breach caused by any Participant's
exercise of control over his Accounts, which shall be the sole
responsibility of the Participant;
Loss or breach caused by the Employer's exercise
of control over Accounts pursuant to Section 13.3, which shall be
the sole responsibility of the Employer;
Sums paid to an insurer or the validity of any
Policy or the accuracy of information provided by an insurer,
which shall be the sole responsibility of the insurer;
Performance of any other responsibilities not
specifically allocated to them under the Plan.
Fees and Expenses. The Trustee's fees for performing
its duties hereunder shall be such reasonable amounts as shall be
established by the Trustee from time to time in a fee schedule
addressed to the Employer. Such fees, any taxes of any kind
which may be levied or assessed upon or in respect of the Trust
Fund and any and all expenses reasonably incurred by the Trustee
shall, unless paid by the Employer, be paid from the Trust Fund
and shall, unless allocable to the Accounts of specific
Participants, be charged pro rata against the Accounts of all
Participants. The Trustee is expressly authorized to cause
Investment Products to be sold or redeemed for the purpose of
paying such amounts. Charges and expenses incurred in connection
with a specific Investment Product, unless allocable to the
Accounts of specific Participants, shall be charged pro rata
against the Accounts of all Participants for whose benefit
amounts have been invested in the specific Investment Product.
Reliance on Employer. The Trustee and its agents (and
the Insurance Trustee, if any) shall rely upon any decision of
the Employer, or of any person authorized by the Employer,
purporting to be made pursuant to the terms of the Plan, and upon
any information or statements submitted by the Employer or such
person (including those relating to the entitlement of any
Participant to benefits under the Plan), and shall not inquire as
to the basis of any such decision or information or statements,
and shall incur no obligation or liability for any action taken
or omitted in reliance thereon. The Trustee and its agents shall
be entitled to rely on the latest written instructions received
from the Employer as to the person or persons authorized to act
for the Employer hereunder, and to sign on behalf of the Employer
any directions or instructions, until receipt from the Employer
of written notice that such authority has been revoked.
Action Without Instructions. If the Trustee receives
no instructions from the Employer in response to communications
sent by registered or certified mail to the Employer at its last
known address as shown on the books of the Trustee, then the
Trustee may make such determinations with respect to
administrative matters arising under the Plan as it considers
reasonable, notwithstanding any prior instructions or directions
given by or on behalf of the Employer, but subject to any
instruction or direction given by or on behalf of the
Participants. To the extent permitted by applicable law, any
determination so made will be binding on all persons having or
claiming any interest under the Plan or Trust, and the Trustee
will incur no obligation or responsibility for any such
determination made in good faith or for any action taken pursuant
thereto. In making any such determination the Trustee may
require that it be furnished with such relevant documents as it
reasonably considers necessary.
Advice of Counsel. The Trustee and the Insurance
Trustee may each consult with legal counsel (who may, but need
not be, counsel for the Employer) concerning any questions which
may arise with respect to their respective rights and duties
under the Plan, and the opinion of such counsel shall be full and
complete protection to the extent permitted by applicable law in
the respect of any action taken or omitted by the Trustee or the
Insurance Trustee, as the case may be, hereunder in accordance
with the opinion of such counsel.
Accounts. The Trustee shall keep full accounts of all
receipts and disbursements which pertain to investments in
Investment Products, and the Trustee and the Insurance Trustee
shall each keep accounts of such other transactions as it is
required to perform hereunder. Within a reasonable time
following the close of each Plan Year, or upon its removal or
resignation or upon termination of the Trust and at such other
times as may be appropriate, each shall render to the Employer
and any other persons as may be required by law an account of its
administration of the Plan and Trust during the period since the
last previous such accounting, including such information as may
be required by law. The written approval of any account by the
Employer and all other persons to whom an account is rendered
shall be final and binding as to all matters and transactions
stated or shown therein, upon the Employer and Participants and
all persons who then are or thereafter become interested in the
Trust. The failure of the Employer or any other person to whom
an account is rendered to notify the party rendering the account
within 60 days after the receipt of any account of his or its
objection to the account shall be the equivalent of written
approval. If the Employer or any other person to whom an account
is rendered files any objections within such 60-day period with
respect to any matters or transactions stated or shown in the
account and the Employer or such other person and the party
rendering the account cannot amicably settle the questions raised
by such objections, the party rendering the account and the
Employer or such person shall have the right to have such
questions settled by judicial proceedings, although the Employer
or such other person to whom an account is rendered shall have,
to the extent permitted by applicable law, only 60 days from
filing of written objection to the account to commence legal
proceedings. Nothing herein contained shall be construed so as to
deprive the Trustee or the Insurance Trustee of the right to have
a judicial settlement of its accounts. In any proceeding for a
judicial settlement of any account or for instructions, the only
necessary parties shall be the Trustee, the Insurance Trustee,
the Employer and persons to whom an account is required by law to
be rendered.
Access to Records. The Trustee and the Insurance
Trustee shall give access to their respective records with
respect to the Plan at reasonable times and on reasonable notice
to any person required by law to have access to such records.
Successors. Any corporation into which the Trustee may
merge or with which it may consolidate or any corporation
resulting from any such merger or consolidation shall be the
successor of the Trustee without the execution or filing of any
additional instrument or the performance of any further act.
Persons Dealing With Trustee or Insurance Trustee. No
person dealing with the Trustee or the Insurance Trustee shall be
bound to see to the application of any money or property paid or
delivered to such party or to inquire into the validity or
propriety of any transactions.
Resignation and Removal; Procedure. The Trustee or the
Insurance Trustee may resign at any time by giving 60 days'
written notice to the Employer and to Putnam. The Employer may
remove the Trustee or the Insurance Trustee at any time by giving
60 days' written notice to the party removed and to Putnam. In
any case of resignation or removal hereunder, the period of
notice may be reduced to such shorter period as is satisfactory
to the Trustee, the Insurance Trustee and the Employer.
Notwithstanding anything to the contrary herein, any resignation
hereunder shall take effect at the time notice thereof is given
if the Employer may no longer participate in the prototype Plan
and is deemed to have an individually designed plan at the time
notice is given.
Action of Trustee Following Resignation or Removal.
When the resignation or removal of the Trustee becomes effective,
the Trustee shall perform all acts necessary to transfer the
Trust Fund to its successor. However, the Trustee may reserve
such portion of the Trust Fund as it may reasonably determine to
be necessary for payment of its fees and any taxes and expenses,
and any balance of such reserve remaining after payment of such
fees, taxes and expenses shall be paid over to its successor.
The Trustee shall have no responsibility for acts or omissions
occurring after its resignation becomes effective.
Action of Insurance Trustee Following Resignation or
Removal. When the Insurance Trustee's resignation or removal
becomes effective, the Insurance Trustee shall perform all acts
necessary to transfer ownership of the Policies to its successor.
If no successor has accepted appointment, the Policies shall be
held and owned by the Employer acting as Insurance Trustee until
a successor is appointed.
Effect of Resignation or Removal. Resignation or
removal of the Trustee or the Insurance Trustee shall not
terminate the Trust. In the event of any vacancy in the position
of Trustee (or, in a Plan having amounts invested in Policies,
the position of Insurance Trustee), whether the vacancy occurs
because of the resignation or removal of the Trustee (or the
Insurance Trustee) the Employer shall appoint a successor to fill
the vacant position. If the Employer does not appoint such a
successor who accepts appointment by the later of 60 days after
notice of resignation or removal is given or by such later date
as the Trustee or the Insurance Trustee, as the case may be, and
Employer may agree in writing to postpone the effective date of
the Trustee or the Insurance Trustee's resignation or removal,
the Trustee or Insurance Trustee may apply to a court of
competent jurisdiction for such appointment of cause the Trust to
be terminated, effective as of the date specified by the Trustee
or Insurance Trustee, as the case may be, in writing delivered to
the Employer. Each successor trustee so appointed and accepting
a trusteeship hereunder shall have all of the rights and powers
and all of the duties and obligations of the original Trustee or
Insurance Trustee, as the case may be, under the provisions
hereof, but shall have no responsibility for acts or omissions
before he becomes a Trustee or Insurance Trustee.
Fiscal Year of Trust. The fiscal year of the Trust
will coincide with the Plan Year.
<PAGE>
Limitation of Liability. Except as may otherwise be
required by law and other provisions of the Plan, no fiduciary of
the Plan, within the meaning of Section 3(21) of ERISA, shall be
liable for any losses incurred with respect to the management of
this Plan nor shall he or it be liable for any acts or omissions
except those caused by his or its own negligence or bad faith in
failing to carry out his or its duties under the terms contained
in the Plan.
Indemnification. Subject to the limitations of
applicable law, the Employer agrees to indemnify and hold
harmless (i) all fiduciaries, within the meaning of ERISA
Sections 3(21) and 404, and (ii) Putnam, for all liability
occasioned by any act, of such party or omission to act, in good
faith and without gross negligence.
ARTICLE
Amendment
General. The Employer reserves the power at any time
or times to amend the provisions of the Plan and the Plan
Agreement to any extent and in any manner that it may deem
advisable. If, however, the Employer makes any amendment
(including an amendment occasioned by a waiver of the minimum
funding requirement under Section 412(d) of the Code) other than
a change in an election made in the Plan
Agreement,
amendments stated in the Plan Agreement which
allow the Plan to satisfy Section 415 and to avoid duplication of
minimums under Section 416 of the Code because of the required
aggregation of multiple plans, or
model amendments published by the Internal Revenue
Service which specifically provide that their adoption will not
cause the Plan to be treated as individually designed,
the Employer shall cease to participate in this prototype Plan
and will be considered to have an individually designed plan.
Any amendment shall be made by delivery to the Trustee (and the
Recordkeeper, if any) of a written instrument executed by the
Employer providing for such amendment. Upon the delivery of such
instrument to the Trustee, such instrument shall become effective
in accordance with its terms as to all Participants and all
persons having or claiming any interest hereunder, provided, that
the Employer shall not have the power:
To amend the Plan in such a manner as would cause or
permit any part of the assets of the Trust to be diverted to
purposes other than the exclusive benefit of Participants or
their Beneficiaries, or as would cause or permit any portion of
such assets to revert to or become the property of the Employer.
To amend the Plan retroactively in such a manner as
would have the effect of decreasing a Participant's accrued
benefit, except that a Participant's Account balance may be
reduced to the extent permitted under Section 412(c)(8) of the
Code. For purposes of this paragraph (2), an amendment shall be
treated as reducing a Participant's accrued benefit if it has the
effect of reducing his Account balance, or of eliminating an
optional form of benefit with respect to amounts attributable to
contributions made performed before the adoption of the
amendment; or
To amend the Plan so as to decrease the portion of a
Participant's Account balance that has become vested, as compared
to the portion that was vested, under the terms of the Plan
without regard to the amendment, as of the later of the date the
amendment is adopted or the date it becomes effective.
To amend the Plan in such a manner as would increase
the duties or liabilities of the Trustee or the Recordkeeper
unless the Trustee or the Recordkeeper consents thereto in
writing.
Delegation of Amendment Power. The Employer and all
sponsoring organizations of the Putnam Basic Plan Document
delegate to Putnam Financial Services, Inc., the power to amend
the Plan (including the power to amend this Section 18.2 to name
a successor to which such power of amendment shall be delegated),
for the purpose of adopting amendments which are certified to
Putnam Financial Services, Inc., by counsel satisfactory to it,
as necessary or appropriate under applicable law, including any
regulation or ruling issued by the United States Treasury
Department or any other federal or state department or agency;
provided that Putnam Financial Services, Inc., or such successor
may amend the Plan only if it has mailed a copy of the proposed
amendment to the Employer at its last known address as shown on
its books by the date on which it delivers a written instrument
providing for such amendment, and only if the same amendment is
made on said date to all plans in this form as to which Putnam
Financial Services, Inc., or such successor has a similar power
of
amendment. If a sponsoring organization does not adopt any
amendment made by Putnam Financial Services, Inc., such
sponsoring organization shall cease to participate in this
prototype Plan and will be considered to have an individually
designed plan.
<PAGE>
ARTICLE
Termination of the Plan and Trust
General. The Employer has established the Plan and the
Trust with the bona fide intention and expectation that
contributions will be continued indefinitely, but the Employer
shall have no obligation or liability whatsoever to maintain the
Plan for any given length of time and may discontinue
contributions under the Plan or terminate the Plan at any time by
written notice delivered to the Trustee and the Insurance
Trustee, without any liability whatsoever for any such
discontinuance or termination.
Events of Termination. The Plan will terminate upon
the happening of any of the following events:
Death of the Employer, if a sole proprietor, or
dissolution or termination of the Employer, unless within 60 days
thereafter provision is made by the successor to the business
with respect to which the Plan was established for the
continuation of the Plan, and such continuation is approved by
the Trustee;
Merger, consolidation or reorganization of the
Employer into one or more corporations or organizations, unless
the surviving corporations or organizations adopt the Plan by an
instrument in writing delivered to the Trustee within 60 days
after such a merger, consolidation and reorganization;
Sale of all or substantially all of the assets of
the Employer, unless the purchaser adopts the Plan by an
instrument in writing delivered to the Trustee within 60 days
after the sale;
The institution of bankruptcy proceedings by or
against the Employer, or a general assignment by the Employer to
or for the benefit of its creditors; or
Delivery of notice as provided in Section 19.1.
Effect of Termination. Notwithstanding any other
provisions of this Plan, other than Section 19.4, upon
termination of the Plan or complete discontinuance of
contributions thereunder, each Participant's Accounts will become
fully vested and nonforfeitable, and upon partial termination of
the Plan, the Accounts of each Participant affected by the
partial termination will become fully vested and nonforfeitable.
The Employer shall notify the Trustee and the Insurance Trustee
in writing of such termination, partial termination or complete
discontinuance of contributions. In the event of the complete
termination of the Plan or discontinuance of contributions, the
Trustee will, after payment of all expenses of the Trust Fund,
make distribution of the Trust assets to the Participants or
other persons entitled thereto, in such form as the Employer may
direct pursuant to Article 10 or, in the absence of such
direction, in a single payment in cash or in kind. Upon
completion of such distributions under this Article, the Trust
will terminate, the Trustee and the Insurance Trustee will be
relieved from their obligations under the Trust, and no
Participant or other person will have any further claim
thereunder.
Approval of Plan. Notwithstanding any other provision
of the Plan, if the Employer fails to obtain or to retain the
approval by the Internal Revenue Service of the Plan as a
qualified plan under Section 401(a) of the Code, then (i) the
Employer shall promptly notify the Trustee, and (ii) the Employer
may no longer participate in the Putnam prototype plan, but will
be deemed to have an individually designed plan. If it is
determined by the Internal Revenue Service that the Plan upon its
initial adoption does not qualify under Section 401(a) of the
Code, all assets then held under the Plan will be returned within
one year of the denial of initial qualification to the
Participants and the Employer to the extent attributable to their
respective contributions and any income earned thereon, but only
if the application for qualification is made by the time
prescribed by law for filing the Employer's federal income tax
return for the taxable year in which the Plan is adopted, or such
later date as the Secretary of the Treasury may prescribe. Upon
such distribution, the Plan will be considered to be rescinded
and to be of no force or effect.
ARTICLE
Transfers From Other Qualified Plans;
Mergers
General. Notwithstanding any other provision hereof,
subject to the approval of the Trustee there may be transferred
to the Trustee all or any of the assets held (whether by a
trustee, custodian or otherwise) in respect of any other plan
which satisfies the applicable requirements of Section 401(a) of
the Code and which is maintained for the benefit of any Employee
(provided, however, that the Employee is not a member of a class
of Employees excluded from eligibility to participate in the
Plan) except that insurance policies held in respect of such
other plan shall be transferred to the Insurance Trustee as
trustee if the Employer so determines. Any such assets so
transferred shall be accompanied by written instructions from the
Employer naming the persons for whose benefit such assets have
been transferred and showing separately the respective
<PAGE>
contributions made by the Employer and by the Participants and
the current value of the assets attributable thereto.
Amounts Transferred. The Employer shall credit any
assets transferred pursuant to Section 20.1 to the appropriate
Accounts of the persons for whose benefit such assets have been
transferred. Any amounts credited as contributions previously
made by an employer or by such persons under such other plan
shall be treated as contributions previously made under the Plan
by the Employer or by such persons, as the case may be.
Merger or Consolidation. The Plan shall not be merged
or consolidated with any other plan, nor shall any assets or
liabilities of the Trust Fund be transferred to any other plan,
unless each Participant would receive a benefit immediately after
the transaction, if the Plan then terminated, which is equal to
or greater than the benefit he would have been entitled to
receive immediately before the transaction if the Plan had then
terminated.
ARTICLE
Miscellaneous
Notice of Plan. The Plan shall be communicated to all
Participants by the Employer on or before the last day on which
such communication may be made under applicable law.
No Employment Rights. Neither the establishment of the
Plan and the Trust, nor any amendment thereof, nor the creation
of any fund or account, nor the purchase of Policies, nor the
payment of any benefits shall be construed as giving to any
Participant or any other person any legal or equitable right
against the Employer, the Trustee, or the Insurance Trustee,
except as provided herein or by ERISA; and in no event shall the
terms of employment or service of any Participant be modified or
in any way be affected hereby.
Distributions Exclusively From Plan. Participants and
Beneficiaries shall look solely to the assets held in the Trust
and any Policies purchased pursuant to the Plan for the payment
of any benefits under the Plan.
No Alienation. The benefits provided hereunder shall
not be subject to alienation, assignment, garnishment,
attachment, execution or levy of any kind, and any attempt to
cause such benefits to be so subjected shall not be recognized,
except as provided in Section 12.4 or in accordance with a
qualified domestic relations order within the meaning of Section
414(p) of the Code. The Plan Administrator shall determine
whether a domestic relations order is qualified in accordance
with written procedures adopted by the Plan Administrator.
Provision of Information. The Employer, Trustee and
Insurance Trustee shall furnish to each other such information
relating to the Plan and Trust as may be required under the Code
or ERISA and any regulations issued or forms adopted by the
Treasury Department or the Labor Department or otherwise
thereunder.
No Prohibited Transactions. The Employer, Trustee, and
Insurance Trustee shall, to the extent of their respective powers
and authority under the Plan, prevent the Plan from engaging in
any transaction known by that person to constitute a transaction
prohibited by Section 4975 of the Code and any rules or
regulations with respect thereto.
Governing Law. The Plan shall be construed,
administered, regulated and governed in all respects under and by
the laws of the United States, and to the extent permitted by
such laws, by the laws of the Commonwealth of Massachusetts
Gender. Whenever used herein, a pronoun in the
masculine gender includes the feminine gender unless the context
clearly indicates otherwise.
PUTNAM OVERSEAS GROWTH FUND
CLASS A DISTRIBUTION PLAN AND AGREEMENT
(As adopted November 2, 1990, and as amended on June 1, 1994)
This Plan and Agreement (the "Plan") constitutes the
Distribution Plan for the Class A shares of Putnam Overseas
Growth Fund, a Massachusetts business trust (the "Trust"),
adopted pursuant to the provisions of Rule 12b-1 under the
Investment Company Act of 1940 (the "Act") and the related
agreement between the Trust and Putnam Mutual Funds Corp.
("PMF"), the principal underwriter of the Trust's shares. During
the effective term of this Plan, the Trust may make payments to
PMF upon the terms and conditions hereinafter set forth:
SECTION 1. The Trust may make payments to PMF, in the form
of fees or reimbursements, to compensate PMF for services
provided and expenses incurred by it for purposes of promoting
the sale of Class A shares of the Fund, reducing redemptions of
Class A shares, or maintaining or improving services provided to
Class A shareholders by PMF and investment dealers. The amount
of such payments and the purposes for which they are made shall
be determined by the Qualified Trustees (as defined below).
Payments under this Plan shall not exceed in any fiscal year the
annual rate of 0.35% of the average net asset value of the Class
A shares of the Trust, as determined at the close of each
business day during the year. A majority of the Qualified
Trustees may, at any time and from time to time, reduce the
amount of such payments, or may suspend the operation of the Plan
for such period or periods of time as they may determine.
SECTION 2. This Plan shall not take effect until:
(a) it has been approved by a vote of a majority of
the outstanding Class A shares of the Trust; and
(b) it has been approved, together with any related
agreements, by votes of the majority (or whatever greater
percentage may, from time to time, be required by Section
12(b) of the Act or the rules and regulations thereunder) of
both (i) the Trustees of the Trust, and (ii) the Qualified
Trustees of the Trust, cast in person at a meeting called
for the purpose of voting on this Plan or such agreement.
SECTION 3. This Plan shall continue in effect for a period
of more than one year after it takes effect only so long as such
continuance is specifically approved at least annually in the
manner provided for approval of this Plan in Section 2(b).
<PAGE>
SECTION 4. PMF shall provide to the Trustees of the Trust,
and the Trustees shall review, at least quarterly, a written
report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 5. This Plan may be terminated at any time by vote
of a majority of the Qualified Trustees, or by vote of a majority
of the outstanding Class A shares of the Trust.
SECTION 6. All agreements with any person relating to
implementation of this Plan shall be in writing, and any
agreement related to this Plan shall provide:
(a) that such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the
Qualified Trustees or by vote of a majority of the
outstanding Class A shares of the Trust, on not more than 60
days' written notice to any other party to the agreement;
and
(b) that such agreement shall terminate automatically
in the event of its assignment.
SECTION 7. This Plan may not be amended to increase
materially the amount of distribution expenses permitted pursuant
to Section 1 hereof without the approval of a majority of the
outstanding Class A shares of the Trust, and all material
amendments to this Plan shall be approved in the manner provided
for approval of this Plan in Section 2(b).
SECTION 8. As used in this Plan, (a) the term "Qualified
Trustees" shall mean those Trustees of the Trust who are not
interested persons of the Trust, and have no direct or indirect
financial interest in the operation of this Plan or any
agreements related to it, (b) the term "majority of the
outstanding Class A shares of the Trust" means the affirmative
vote, at a duly called and held meeting of Class A shareholders
of the Trust, (i) of the holders of 67% or more of the Class A
shares of the Trust present (in person or by proxy) and entitled
to vote at such meeting, if the holders of more than 50% of the
outstanding Class A shares of the Trust entitled to vote at such
meeting are present in person or by proxy, or (ii) of the holders
of more than 50% of the outstanding Class A shares of the Trust
entitled to vote at such meeting, whichever is less, and (c) the
terms "assignment" and "interested person" shall have the
respective meanings specified in the Act and the rules and
regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission.
<PAGE>
SECTION 9. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and notice is hereby given that
this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually, and that the obligations
of or arising out of this instrument are not binding upon any of
the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the Trust.
Executed as of June 1, 1994
PUTNAM MUTUAL FUNDS CORP. PUTNAM OVERSEAS GROWTH FUND
/s/ William N. Shiebler Charles E. Porter
By: ---------------------- By: ------------------------
William N. Shiebler Charles E. Porter
President Executive Vice President
PUTNAM OVERSEAS GROWTH FUND
CLASS B
DISTRIBUTION PLAN AND AGREEMENT
This Plan and Agreement (the "Plan") constitutes the
Distribution Plan for the Class B shares of Putnam Overseas
Growth Fund, a Massachusetts business trust (the "Trust"),
adopted pursuant to the provisions of Rule 12b-1 under the
Investment Company Act of 1940 (the "Act") and the related
agreement between the Trust and Putnam Mutual Funds Corp.
("Putnam Mutual Funds"). During the effective term of this Plan,
the Trust may incur expenses primarily intended to result in the
sale of its Class B shares upon the terms and conditions
hereinafter set forth:
SECTION 1. The Trust shall pay to Putnam Mutual Funds a
monthly fee at the annual rate of 1.00% of the average net asset
value of the Class B shares of the Trust, as determined at the
close of each business day during the month, to compensate Putnam
Mutual Funds for services provided and expenses incurred by it in
connection with the offering of the Trust's Class B shares, which
may include, without limitation, the payment by Putnam Mutual
Funds to investment dealers of commissions on the sale of Class B
shares, as set forth in the then current Prospectus or Statement
of Additional Information of the Trust and the payment of a
service fee of up to 0.25% of such net asset value for the
purposes of maintaining or improving services provided to
shareholders by Putnam Mutual Funds and investment dealers. Such
fees shall be payable for each month within 15 days after the
close of such month. A majority of the Qualified Trustees, as
defined below, may, from time to time, reduce the amount of such
payments, or may suspend the operation of the Plan for such
period or periods of time as they may determine.
SECTION 2. This Plan shall not take effect until:
(a) it has been approved by a vote of a majority of
the outstanding Class B shares of the Trust;
(b) it has been approved, together with any related
agreements, by votes of the majority (or whatever
greater percentage may, from time to time, be
required by Section 12 (b) of the Act or the rules
and regulations thereunder) of both (i) the
Trustees of the Trust, and (ii) the Qualified
Trustees of the Trust, cast in person at a meeting
called for the purpose of voting on this Plan or
such agreement; and
<PAGE>
(c) the Trust has received the proceeds of the initial
public offering of its Class B shares.
SECTION 3. This Plan shall continue in effect for a period
of more than one year after it takes effect only so long as such
continuance is specifically approved at least annually in the
manner provided for approval of this Plan in Section 2 (b).
SECTION 4. Putnam Mutual Funds shall provide to the
Trustees of the Trust, and the Trustees shall review, at least
quarterly, a written report of the amounts so expended and the
purposes for which such expenditures were made.
SECTION 5. This Plan may be terminated at any time by vote
of a majority of the Qualified Trustees or by vote of the
majority of the outstanding Class B shares of the Trust.
SECTION 6. All agreements with any person relating to
implementation of this Plan shall be in writing, and any
agreement related to this Plan shall provide:
(a) that such agreement may be terminated at any time,
without payment of any penalty, by vote of a
majority of the Qualified Trustees or by vote of a
majority of the outstanding Class B shares of the
Trust, on not more than 60 days' written notice to
any other party to the agreement; and
(b) that such agreement shall terminate automatically
in the event of its assignment.
SECTION 7. This Plan may not be amended to increase
materially the amount of distribution expenses permitted pursuant
to Section 1 hereof without the approval of a majority of the
outstanding Class B shares of the Trust and all material
amendments to this Plan shall be approved in the manner provided
for approval of this Plan in Section 2(b).
SECTION 8. As used in this Plan, (a) the term "Qualified
Trustees" shall mean those Trustees of the Trust who are not
interested persons of the Trust, and have no direct or indirect
financial interest in the operation of this Plan or any
agreements related to it, and (b) the term "majority of the
outstanding Class B shares of the Trust" means the affirmative
vote, at a duly called and held meeting of Class B shareholders
of the Trust, (i) of the holders of 67% or more of the Class B
shares of the Trust present (in person or by proxy) and entitled
to vote at such meeting, if the holders of more than 50% of the
outstanding Class B shares of the Trust entitled to vote at such
meeting are present in person or by proxy, or (ii) of the holders
of more than 50% of the outstanding Class B shares of the Trust
entitled to vote at such meeting, whichever is less, and (c) the
terms "assignment" and "interested person" shall have the
respective meanings specified in the Act and the rules and
regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission.
SECTION 9. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and notice is hereby given that
this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually, and that the obligations
of or arising out of this instrument are not binding upon any of
the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the Trust.
Executed as of June 1, 1994.
PUTNAM MUTUAL FUNDS CORP. PUTNAM OVERSEAS GROWTH FUND
/s/ William N. Shiebler /s/ Charles E. Porter
By: -------------------------- By: ------------------------
William N. Shiebler Charles E. Porter
President Executive Vice President
PUTNAM OVERSEAS GROWTH FUND
FORM OF
CLASS M
DISTRIBUTION PLAN AND AGREEMENT
This Plan and Agreement (the "Plan") constitutes the
Distribution Plan for the Class M shares of Putnam Overseas
Growth Fund, a Massachusetts business trust (the "Trust"),
adopted pursuant to the provisions of Rule 12b-1 under the
Investment Company Act of 1940 (the "Act") and the related
agreement between the Trust and Putnam Mutual Funds Corp.
("PMF"). During the effective term of this Plan, the Trust may
incur expenses primarily intended to result in the sale of its
Class M shares upon the terms and conditions hereinafter set
forth:
SECTION 1. The Trust shall pay to PMF a monthly fee at the
annual rate of 1.00% of the average net asset value of the Class
M shares of the Trust, as determined at the close of each
business day during the month, to compensate PMF for services
provided and expenses incurred by it in connection with the
offering of the Trust's Class M shares, which may include,
without limitation, payments by PMF to investment dealers with
respect to Class M shares, as set forth in the then current
Prospectus or Statement of Additional Information of the Trust,
including the payment of a service fee of up to 0.25% of such net
asset value for the purpose of maintaining or improving services
provided to shareholders by PMF and investment dealers. Such
fees shall be payable for each month within 15 days after the
close of such month. A majority of the Qualified Trustees, as
defined below, may, from time to time, reduce the amount of such
payments, or may suspend the operation of the Plan for such
period or periods of time as they may determine.
SECTION 2. This Plan shall not take effect until:
(a) it has been approved by a vote of a majority of the
outstanding Class M shares of the Trust;
(b) it has been approved, together with any related
agreements, by votes of the majority (or whatever greater
percentage may, from time to time, be required by Section
12(b) of the Act or the rules and regulations thereunder)
of both (i) the Trustees of the Trust, and (ii) the
Qualified Trustees of the Trust, cast in person at a
meeting called for the purpose of voting on this Plan or
such agreement; and
(c) the Trust has received the proceeds of the initial
public offering of its Class M shares.
<PAGE>
SECTION 3. This Plan shall continue in effect for a period
of more than one year after it takes effect only so long as such
continuance is specifically approved at least annually in the
manner provided for approval of this Plan in Section 2(b).
SECTION 4. PMF shall provide to the Trustees of the Trust,
and the Trustees shall review, at least quarterly, a written
report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 5. This Plan may be terminated at any time by vote
of a majority of the Qualified Trustees or by vote of the
majority of the outstanding Class M shares of the Trust.
SECTION 6. All agreements with any person relating to
implementation of this Plan shall be in writing, and any
agreement related to this Plan shall provide:
(a) that such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority
of the Qualified Trustees or by vote of a majority of
the outstanding Class M shares of the Trust, on not
more than 60 days' written notice to any other party
to the agreement; and
(b) that such agreement shall terminate automatically in
the event of its assignment.
SECTION 7. This Plan may not be amended to increase
materially the amount of distribution expenses permitted pursuant
to Section 1 hereof without the approval of a majority of the
outstanding Class M shares of the Trust and all material
amendments to this Plan shall be approved in the manner provided
for approval of this Plan in Section 2(b).
SECTION 8. As used in this Plan, (a) the term "Qualified
Trustees" shall mean those Trustees of the Trust who are not
interested persons of the Trust, and have no direct or indirect
financial interest in the operation of this Plan or any
agreements related to it, and (b) the term "majority of the
outstanding Class M shares of the Trust" means the affirmative
vote, at a duly called and held meeting of Class M shareholders
of the Trust, (i) of the holders of 67% or more of the Class M
shares of the Trust present (in person or by proxy) and entitled
to vote at such meeting, if the holders of more than 50% of the
outstanding Class M shares of the Trust entitled to vote at such
meeting are present in person or by proxy, or (ii) of the holders
of more than 50% of the outstanding Class M shares of the Trust
entitled to vote at such meeting, whichever is less, and (c) the
terms "assignment" and "interested person" shall have the
respective meanings specified in the Act and the rules and
regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission.
SECTION 9. A copy of the Agreement and Declaration of
Trust of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and notice is hereby given that
this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually, and that the obligations
of or arising out of this instrument are not binding upon any of
the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the Trust.
Executed as of December , 1994.
PUTNAM MUTUAL FUNDS CORP. PUTNAM OVERSEAS GROWTH FUND
By ____________________ By: __________________________
William N. Shiebler Executive Vice President
President
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM PUTNAM OVERSEAS GROWTH CLASS A AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1994
<PERIOD-END> JUN-30-1994
<INVESTMENTS-AT-COST> $11,447,668
<INVESTMENTS-AT-VALUE> $12,135,460
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> $0
<TOTAL-ASSETS> $12,832,984
<PAYABLE-FOR-SECURITIES> $1,558,633
<SENIOR-LONG-TERM-DEBT> $0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 1,581,708
<SENIOR-EQUITY> $0
<PAID-IN-CAPITAL-COMMON> $10,221,101
<SHARES-COMMON-STOCK> 742,421
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> $0
<OVERDISTRIBUTION-NII> $0
<ACCUMULATED-NET-GAINS> 340,990
<OVERDISTRIBUTION-GAINS> $0
<ACCUM-APPREC-OR-DEPREC> $687,792
<NET-ASSETS> $11,251,276
<DIVIDEND-INCOME> $82,999
<INTEREST-INCOME> $491
<OTHER-INCOME> $0
<EXPENSES-NET> $91,136
<NET-INVESTMENT-INCOME> $(7,646)
<REALIZED-GAINS-CURRENT> $587,507
<APPREC-INCREASE-CURRENT> $227,688
<NET-CHANGE-FROM-OPS> $806,576
<EQUALIZATION> $0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> $(70,167)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> $507,115
<NUMBER-OF-SHARES-REDEEMED> $69,326
<SHARES-REINVESTED> $6,134
<NET-CHANGE-IN-ASSETS> $8,392,494
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> $0
<GROSS-ADVISORY-FEES> $32,861
<INTEREST-EXPENSE> $0
<GROSS-EXPENSE> $91,136
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> $9.58
<PER-SHARE-NII> (.06)
<PER-SHARE-GAIN-APPREC> 2.53
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.22)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.83
<EXPENSE-RATIO> 2.17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM PUTNAM OVERSEAS GROWTH CLASS B AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1994
<PERIOD-END> JUN-30-1994
<INVESTMENTS-AT-COST> $11,447,668
<INVESTMENTS-AT-VALUE> $12,135,460
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> $0
<TOTAL-ASSETS> $12,832,984
<PAYABLE-FOR-SECURITIES> $1,558,633
<SENIOR-LONG-TERM-DEBT> $0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 1,581,708
<SENIOR-EQUITY> $0
<PAID-IN-CAPITAL-COMMON> $10,221,101
<SHARES-COMMON-STOCK> 209,041
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> $0
<OVERDISTRIBUTION-NII> $0
<ACCUMULATED-NET-GAINS> 340,990
<OVERDISTRIBUTION-GAINS> $0
<ACCUM-APPREC-OR-DEPREC> $687,792
<NET-ASSETS> $11,251,276
<DIVIDEND-INCOME> $82,999
<INTEREST-INCOME> $491
<OTHER-INCOME> $0
<EXPENSES-NET> $91,136
<NET-INVESTMENT-INCOME> $(7,646)
<REALIZED-GAINS-CURRENT> $587,507
<APPREC-INCREASE-CURRENT> $227,688
<NET-CHANGE-FROM-OPS> $806,576
<EQUALIZATION> $0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> $209,041
<NUMBER-OF-SHARES-REDEEMED> $0
<SHARES-REINVESTED> $0
<NET-CHANGE-IN-ASSETS> $8,392,494
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> $0
<GROSS-ADVISORY-FEES> $32,861
<INTEREST-EXPENSE> $0
<GROSS-EXPENSE> $91,136
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> $11.78
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> .05
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.82
<EXPENSE-RATIO> 1.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS
Fund name: Putnam Overseas Growth Fund -- Class A Shares
Fiscal period ending: June 30, 1994
Inception date (if less than 10 years of performance):
February 28, 1991
TOTAL RETURN
Formula -- Average Annual Total Return: ERV = P(1+T)^n
n = Number of Time Periods 1 Year 5 Years 10 Years*
P = Initial Investment $1,000 n/a $1,000
ERV = Ending Redeemable Value $1,186.25 n/a $1,336.41
T = Average Annual
Total Return +18.63% n/a +9.07%*
*Life of fund, if less than 10 years
- -- Class B Shares
Fiscal period ending: June 30, 1994
Inception date (if less than 10 years of performance):
June 1, 1994
TOTAL RETURN
Formula -- Cumulative Total Return: ERV = P(1+T)^n
n = Number of Time Periods 1 Year 5 Years 10 Years*
P = Initial Investment n/a n/a $1,000
ERV = Ending Redeemable Value n/a n/a $953.40
$
T = Cumulative
Total Return n/a n/a -4.66%*
*Life of fund, if less than 10 years
