PUTNAM OVERSEAS GROWTH FUND
One Post Office Square, Boston, MA 02109
Class Y shares
INVESTMENT STRATEGY: GROWTH
PROSPECTUS- November 1, 1995, as revised December 1, 1995
This prospectus explains concisely what you should know before
investing in class Y 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, 1995 statement of additional information (the
"SAI"), as amended from time to time. For a free copy of the SAI
or other information, call Putnam Investor Services at 1-800-752-
9894. The SAI has been filed with the Securities and Exchange
Commission and is incorporated into this prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PUTNAMINVESTMENTS
Putnam Defined
Contribution Plans
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ABOUT THE FUND
Expenses summary . . . . . . . . . . . . . . . . . . 2
Objective. . . . . . . . . . . . . . . . . . . . . . 3
How the fund pursues its objective . . . . . . . . . 3
Risk factors . . . . . . . . . . . . . . . . . . 4
How performance is shown . . . . . . . . . . . . . . 9
How the fund is managed. . . . . . . . . . . . . . . 9
Organization and history . . . . . . . . . . . . . .10
ABOUT YOUR INVESTMENT
How to buy shares. . . . . . . . . . . . . . . . . .11
How to sell shares . . . . . . . . . . . . . . . . .12
How to exchange shares . . . . . . . . . . . . . . .13
How the fund values its shares . . . . . . . . . . .13
How the fund makes distributions to shareholders;
tax information. . . . . . . . . . . . . . . . .13
ABOUT PUTNAM INVESTMENTS, INC. . . . . . . . . . . .14<PAGE>
About the Fund
EXPENSES SUMMARY
Expenses are one of several factors to consider when investing in
the fund. The following table summarizes estimated expenses
attributable to class Y shares. The example shows the cumulative
expenses attributable to a hypothetical $1,000 investment in
class Y shares of the fund over specified periods.
Annual fund operating expenses
(as a percentage of average net assets)
Management fees 0.80%
Other expenses 0.61%
Total fund operating expenses 1.41%
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 "Other expenses" are
based on the operating expenses for the fund's class B shares.
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
$14 $45 $77 $169
The example does not represent past or future expense levels.
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 varies. The example does not reflect any
changes or expenses related to your employer's plan.
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 it will
achieve its objective.
<PAGE>
HOW THE FUND PURSUES ITS OBJECTIVE
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 than 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, including securities 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 with those in the United
States.
The securities of some foreign companies are less liquid and at
times more volatile than securities of comparable U. S.
companies. Foreign brokerage commissions and other fees are also
generally higher than those in the United States. Foreign
settlement procedures and trade regulations may involve certain
risks (such as delay in payment or delivery of securities or in
the recovery of fund assets held abroad) and expenses not present
in the settlement of domestic investments.
In addition, there may be a possibility of nationalization or
expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial
instability and diplomatic developments that could affect the
value of investments in certain foreign countries.
Legal remedies available to investors in certain foreign
countries may be more limited than those available with respect
to investments in the United States or in other foreign
countries. The laws of some foreign countries may limit
investments in securities of certain issuers located in those
foreign countries. Special tax considerations apply to foreign
securities.
The risks described above are typically increased for investments
in securities principally traded in, or issued by issuers located
in, underdeveloped and developing nations, which are sometimes
referred to as "emerging markets."
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. These transactions may result in realization
of taxable capital gains. Portfolio turnover rates for fiscal
1995 and 1994 were 25.83% and 96.13%, respectively.
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 contracts,
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 such positions, that hedging transactions may not
accomplish their purposes because of imperfect market
correlations, or that Putnam Management may not forecast market
movements correctly.
The effective use of options and futures strategies depends on
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 explanation of futures and options transactions,
including the risks associated with them, is included in the SAI.
Other investment practices
The fund may also engage in the following investment practices,
each of which involves certain special risks. The SAI contains
more detailed information about these practices, including
limitations designed to reduce these risks.
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.
Derivatives
Certain of the instruments in which the fund will invest, such as
futures contracts, options and forward contracts, are considered
to be "derivatives." Derivatives are financial instruments whose
value depends upon, or is derived from, the value of an
underlying asset, such as a security or an index. Further
information about these instruments and the risks involved in
their use is included elsewhere in this prospectus and in the
SAI.
Limiting investment risk
Specific investment restrictions help 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.* They also prohibit the fund from 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, in securities restricted as to resale
(excluding securities determined by the Trustees (or the person
designated by the Trustees to make such determinations) to be
readily marketable), and in repurchase agreements maturing in
more than seven days.
Restrictions marked with an asterisk (*) above are summaries of
fundamental investment policies. See the SAI for the full text
of these policies and the fund's other fundamental investment
policies. Except for investment policies designated as
fundamental in this prospectus or the SAI, the investment
policies described in this prospectus and in the SAI are not
fundamental policies. The Trustees may change any non-
fundamental investment 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
Investment performance may from time to time be included in
advertisements about class Y shares. "Total return" for the
one-, five- and ten-year periods (or for the life of the class Y
shares, 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. Total return may also be
presented for other periods.
All data are based on 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 the investor purchases. Investment performance also
often reflects the risks associated with the fund's investment
objective and policies. These factors should be considered when
comparing the fund's investment results with those of other
mutual funds and other investment vehicles.
Quotations of investment performance for any period when an
expense limitation was in effect will be greater than if the
limitation had not been in effect. The fund's performance may be
compared to that of various indexes. See the SAI.
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.
The fund pays Putnam Management a quarterly fee for these
services based on the fund's average net assets. See "Expenses
summary" and the SAI.
The following officer of Putnam Management has had primary
responsibility for the day-to-day management of the fund's
portfolio since the year stated below:
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Business experience
Year (at least 5 years)
------- -----------------
Justin Scott 1991 Employed as an investment
Managing Director professional 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 be divided without
shareholder approval 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 and special or relative rights and privileges as the
Trustees determine. The fund's shares are not currently divided
into series. The fund's shares are currently divided into four
classes. Only the fund's class Y shares are offered by this
prospectus. The fund also offers other classes of shares with
different sales charges and expenses. Because of these different
sales charges and expenses, the investment performance of the
classes will vary. For more information, including your
eligibility to purchase any other class of shares, contact your
investment dealer or Putnam Mutual Funds (at 1-800-225-1581).
Each share has one vote, with fractional shares voting
proportionally. Shares of each class will vote together as a
single class except when otherwise required by law or as
determined by the Trustees. Shares are freely transferable, are
entitled to dividends as declared by the Trustees, and, if the
fund were liquidated, would receive the net assets of the fund.
The fund may suspend the sale of shares at any time and may
refuse any order to purchase shares. Although the fund is not
required to hold annual meetings of its shareholders,
shareholders holding at least 10% of the outstanding shares
entitled to vote have the right to call a meeting to elect or
remove Trustees, or to take other actions as provided in the
Agreement and Declaration of Trust.
If you own fewer shares than a minimum amount set by the Trustees
(presently 20 shares), the fund may choose to redeem your shares.
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, Massachusetts Institute of Technology.; Jameson
Adkins Baxter, President, Baxter Associates, Inc.; Hans H. Estin,
Vice Chairman, North American Management Corp.; John A. Hill,
Principal and Managing Director, First Reserve Corporation;
Elizabeth T. Kennan, President Emeritus and Professor, Mount
Holyoke College; Lawrence J. Lasser,* Vice President of the
Putnam funds. President, Chief Executive Officer and Director of
Putnam Investments, Inc. and Putnam Management. Director, Marsh
& McLennan Companies, Inc.; Robert E. Patterson, Executive Vice
President, Cabot Partners Limited Partnership; Donald S.
Perkins,* Directors of various corporations, including AT&T,
Kmart Corporation and Time Warner Inc.; George Putnam, III,*
President, New Generation Research, Inc.; Eli Shapiro, Alfred P.
Sloan Professor of Management, Emeritus, Alfred P. Sloan School
of Management, Massachusetts Institute of Technology; A.J.C.
Smith,* Chairman, Chief Executive Officer and Director, Marsh &
McLennan Companies, Inc.; and W. Nicholas Thorndike, Director of
various corporations and charitable organizations, including Data
General Corporation, Bradley Real Estate, Inc. and Providence
Journal Co. Also, Trustee of Massachusetts General Hospital and
Eastern Utilities Associates. The fund's Trustees are also
Trustees of the other Putnam funds. Those marked with an
asterisk (*) are or may be deemed to be "interested persons" of
the fund, Putnam Management or Putnam Mutual Funds.
About Your Investment
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. Class Y shares are available
to defined contribution plans whose investment in Putnam funds
and other assets managed by Putnam Management or its affiliates,
combined with such investments by the plan's sponsor and the
sponsor's other employee benefit plans, equals at least $250
million. Defined contribution plans that elect to buy class Y
shares upon attaining eligibility will receive class Y shares in
place of any class A shares then owned. Class Y shares are also
available to defined contribution plans whose sponsor confirms a
good faith expectation that investments in Putnam-managed assets
by the sponsor and its employee benefit plans will attain $250
million (using the higher of purchase price or current market
value) within one year of the initial purchase of class Y shares,
and agrees that class Y shares may be redeemed and class A shares
purchased if that level is not attained. To eliminate the need
for safekeeping, the fund will not issue certificates for your
shares. Putnam Mutual Funds will from time to time, at its
expense, provide additional promotional incentives or payments to
dealers that sell shares of the Putnam funds. These incentives
or payments may include payments for travel expenses, including
lodging, incurred in connection with trips taken by invited
registered representatives and their guests to locations within
and outside the United States for meetings or seminars of a
business nature. In some instances, these incentives or payments
may be offered only to certain dealers who have sold or may sell
significant amounts of shares. Certain dealers may not sell all
classes of shares.
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 SAI 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.
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 SAI to find out more
about the exchange privilege.
HOW THE FUND VALUES ITS SHARES
The fund calculates the net asset value of a share of each class
by dividing the total value of its assets, less liabilities, by
the number of its shares outstanding. Shares are valued as of
the close of regular trading on the New York Stock Exchange each
day the Exchange is open.
Portfolio securities for which market quotations are readily
available are valued at market value. Short-term investments
that will mature in 60 days or less are valued at amortized cost,
which approximates market value. All other securities and assets
are valued at their fair value following procedures approved by
the Trustees.
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 THE FUND MAKES DISTRIBUTIONS TO SHAREHOLDERS; 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 you to receive fund
distributions from net investment income in cash while
reinvesting capital gains distributions in additional shares or
to receive all fund distributions 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 taxed 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.
