As filed with the Securities and Exchange Commission on
October 31 , 1995
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. 5 / X /
and ----
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X /
ACT OF 1940 ----
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Amendment No. 7 / 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
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It is proposed that this filing will become effective
(check appropriate box):
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/ / immediately upon filing pursuant to paragraph (b)
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/ X / on November 1, 1995 pursuant to paragraph
(b)
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/ / 60 days after filing pursuant to paragraph
(a)(1)
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/ / on (date) pursuant to paragraph (a)(1)
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/ / 75 days after filing pursuant to paragraph
(a)(2)
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/ / on (date) pursuant to paragraph (a)(2) 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
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, 1995 was filed on August 29, 1995 .
<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 the
fund pursues its
objective ;
Organization and history
5. Management of the Fund........... Expenses summary; How the
fund is managed;
About Putnam Investments,
Inc.
5A.Management's Discussion of Fund. . . . (Contained in the
Performance
annual report of the
Registrant)
6. Capital Stock and Other
Securities....................... Cover page ;
Organization and
history; How the fund
makes distributions
to shareholders ;
tax information
7. Purchase of Securities Being
Offered.......................... How to buy shares;
Distribution p
lans ;
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
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 the fund pursues
its objective
(Part A);
Investment
restrictions;
Miscellaneous
investment
practices
14. Management of the Registrant..... Management
(Trustees;
Officers); Additional
officers
15. Control Persons and Principal
Holders of Securities............ Management
(Trustees;
Officers);
Charges and expenses
(Shares ownership)
16. Investment Advisory and Other
Services......................... Management
(Trustees ;
Officers; The
management
contract; Principal
underwriter;
Investor servicing
agent and custodian);
Charges and
expenses;
Distribution
plans; Independent
accountants and
financial statements
17. Brokerage Allocation............. Management
(Portfolio
transactions);
Charges and
expenses
<PAGE>
18. Capital Stock and Other
Securities....................... Organization and history
(Part A); How the fund
makes distributions
to shareholders ;
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 the fund makes
distributions to
shareholders ; tax
information (Part A);
Taxes
21. Underwriters..................... Management
(Principal
underwriter);
Charges and
expenses
22. Calculation of Performance Data.. How performance is shown
(Part A); Investment
performance;
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.
S:\SHARED\FUNDS\NEW\A31N1A.1<PAGE>
Prospectus
November 1,
1995
Putnam Overseas Growth Fund
Class A, B and M shares
INVESTMENT STRATEGY: GROWTH
This prospectus explains concisely what you should know
before investing in Putnam Overseas Growth Fund (the
"fund") . Please read it carefully and keep it for future
reference. You can find more detailed information 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
1-800-225-1581. The SAI has been filed with the
Securities and Exchange Commission and is incorporated into this
prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE 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 AMOUNT INVESTED .
BOSTON * LONDON * TOKYO
<PAGE>
ABOUT THE FUND
Expenses summary 4
............................................................
This section describes the sales charge, management fees,
and annual operating expenses that apply to the fund's
various classes of shares. Use it to help you estimate the
impact of transaction costs on your investment over time.
Financial highlights 5
............................................................
Study this table to see, among other things, how the fund
performed each year for the past 10 years or since it began
investment operations if it has been in operation for less
than 10 years.
Objective 7
..........................................................
. Read this section to make sure the fund's objective is
consistent with your own.
How the fund pursues its objective 7
...........................................................
. This section explains in detail how the fund seeks its
investment objective. Risk factors. All investments entail
some risk. Read this section to make sure you understand
certain risks that may be involved when investing in the
fund.
How performance is shown 13
...........................................................</R
>
This section describes and defines the measures used to
assess the fund's performance. All data are based on the
fund's past investment results and do not predict future
performance.
How the fund is managed 14
............................................................
Consult this section for information about the fund's
management, allocation of the fund's expenses, and how
purchases and sales of securities are made for the
fund.
Organization and history
15
.........................................................
..
In this section, you will learn when the fund was
introduced, how it is organized, how it may offer shares,
and who its Trustee are.
<PAGE>
ABOUT YOUR INVESTMENT
Alternative sales arrangements 16
............................................................
Read this section for descriptions of the classes of shares
this prospectus offers and for points you should consider
when making your choice.
How to buy shares
17
............................................................
This section describes the ways you may purchase shares and
tells you the minimum amounts required to open various types
of accounts. It explains how sales charges are determined
and how you may become eligible for reduced sales charges on
each class of shares.
Distribution plans 21
.........................................................
... This section tells you what distribution fees are charged
against each class of shares.
How to sell shares 23
............................................................
In this section you can learn how to sell shares of the
fund, either directly to the fund or through an investment
dealer.
How to exchange shares 24
.........................................................
... Find out in this section how you may exchange shares of the
fund for shares of other Putnam funds. The section also
explains how exchanges can be made without sales charges and
the condition under which sales charges may be required.
How the fund values its shares 25
............................................................
This section explains how the fund determines the value of
its shares.
How the fund makes distributions to
shareholders; tax 26
information
...........................................................
This section describes the various options you have in
choosing how to receive dividends from the fund. It also
discusses the federal tax status of the payments and
counsels shareholders to seek specific advice about their
own situation.
<PAGE>
ABOUT PUTNAM INVESTMENTS, INC.
27
Read this section to learn more about the companies that
provide marketing, investment management, and shareholder
account services to Putnam funds and their shareholders.
<PAGE>
About the fund
EXPENSES SUMMARY
Expenses are one of several factors to consider when investing
. The following table summarizes your maximum transaction
costs from investing in the fund and expenses incurred
based on the 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
<PAGE>
Annual fund operating expenses
(as a percentage of average net assets)
Total fund
Management 12b-1 Otheroperating
fees fees expenses expenses
---------- ----- -------------------
Class A 0.80% 0.25% 0.56% 1.61%
Class B 0.80% 1.00% 0.61% 2.41%
Class M 0.80% 0.75% 0.61% 2.16%
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. The 12b-1 fees
for class M shares reflect amounts currently
payable under the class M distribution plan. For class M
shares management fees and "Other expenses" are based on
the corresponding expenses for class B
shares.
Examples
Your investment of $1,000 would incur the following expenses,
assuming 5% annual return and , except as indicated,
redemption at the end of each period:
1 3 5 10
year years years years
Class A $73 $105 $140 $238
Class B $74 $105 $149 $255***
Class B
(no redemption) $24 $ 75
$129 $255***
Class M $56 $100 $147 $276
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 varies .
<PAGE>
* The higher 12b-1 fees borne by 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."
*** Reflects conversion of class B shares to
class A shares (which pay lower ongoing expenses)
approximately eight years after purchase. See
"Alternative sales arrangements."
FINANCIAL HIGHLIGHTS
The following table presents per share financial
information for class A , B and M shares.
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
1995 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)
For the period For the period
December 1, 1994 December 1, 1994
(commencement (commencemnt
of operations) to Year ended of operations) to
June 30 June 30 June 30
1995 1995 1994
Class M Class B
Net asset value,
beginning of period $11.87 $11.82 $11.78
Investment operations
Net investment income (loss).03 .01 (.01)(a)(b)
Net realized and unrealized
gain (loss) on investments .36 .34 .05
Total from investments
operations .39 .35 .04
Distributions to
shareholders from:
Net investment income -- -- --
Net realized gain on
investment (.11) (.11) --
In excess of net realized
gains on investments (.06) (.06) --
Total distributions (.17) (.17) --
Net asset value,
end of period $12.09 $12.00 $11.82
Total investment return at
net asset value (%)(c) 3.33(d) 3.00 .34(d)
Net assets, end of period
(in thousands) $1,777 $25,892 $2470
Ratio of expenses to
average net assets (%) 1.61(a)(d) 2.41(a) .15(a)(b)(d)
Ratio of net investment
income (loss) to average
net assets (%) .58(a)(d) .23(a) (.06)(a)(b)(d)
Portfolio turnover (%) 25.83 25.83 96.13
<PAGE>
Financial highlights (continued)
For the period
February 28, 1991
(commencement
of operations) to
Year ended June 30 June 30
1995 1994 1993 1992 1991
Class A
$11.83 $9.58 $8.82 $8.18 $8.63
.08 (.06)(a) .07(a) .06 .07(a)
.36 2.53 .69 .71 (.52)
.44 2.47 .76 .77 (.45)
- -- -- -- (.13) --
(.11) (.22) -- -- --
(.06) -- -- -- --
(.17) (.22) -- (.13) --
$12.10 $11.83 $9.58 $8.82 $8.18
3.76 25.81 8.62 9.52 (5.21)(d)
$32,856 $8,781 $2,859 $2,502 $2,054
1.61(a) 2.17(a) 1.80(a) 1.98 .78(a)(d)
.97(a) (.17)(a) .81(a) .76 .86(a)(d)
25.83 96.13 80.92 82.45 14.54(d)
(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. 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. Expenses for classes A,
B, and M shares of the fund for the period ended June 30, 1995 reflect a
reduction of less than $0.01 per share.
(b) Per share net investment income for class B shares 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) Not annualized.
Putnam Overseas Growth Fund seeks capital appreciation.<PAGE>
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.
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 , 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 the fund's assets held abroad) and
expenses not present in the settlement of domestic investments.
In addition, there may be a possibility of nationalization
or expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial
instability and diplomatic developments that could affect
the value of investments in those 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 investment in securities of certain
issuers located in those 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 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.
<PAGE>
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 such positions, that
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 risk 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 the
Trustees 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 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 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
class 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
contingent deferred sales charge would be reduced if the
sales charge were used.
All data are based on past investment results and
do not predict future performance.
Investment performance, which will vary, is based on many
factors, including market conditions, the composition of 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:
Year Recent experience
(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 <PAGE>
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 three
classes. Only the fund's class A, B and M shares are offered
by this prospectus. The fund may also offer 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, <PAGE>
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
ALTERNATIVE SALES ARRANGEMENTS
This prospectus offers investors three
classes of shares that bear sales charges in different
forms and amounts and that 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
that are subject to a contingent deferred sales charge
("CDSC") . Certain purchases of class A shares
qualify for reduced sales charges. Class A shares bear a
lower 12b-1 fee than class B and class M shares.
See "How to buy shares -- Class A shares " and
"Distribution plans."
Class B shares. Class B shares are sold without an initial sales
charge, but are subject to a CDSC if redeemed within a
specified period after purchase . Class B shares also bear a
higher 12b-1 fee than class A and class M shares. Class B
shares automatically convert into class A shares,
based on relative net asset value, approximately eight years
after purchase. For more information about the conversion of
class B shares, see the SAI. This discussion will include
information about how shares acquired through reinvestment of
distributions are treated for conversion purposes. The
discussion will also note certain circumstances under which a
conversion may not occur. 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 . Until conversion, class B
shares will have a higher expense ratio and pay lower
dividends than class A and class M shares
because of the higher 12b-1 fee. See "How to buy shares -
- - Class B shares " and "Distribution plans."
Class M shares. An investor who purchases class M shares
pays a sales charge at the time of purchase that is lower
than the sales charge applicable to class A shares.
Certain purchases of class M shares qualify for
reduced sales charges. Class M shares bear a 12b-1 fee
that is lower than class B shares but higher than class A
shares. Class M shares are not subject to any CDSC and do
not convert into any other class of shares . See "How to buy
shares - - Class M shares " and "Distribution
plans."
Which arrangement is best for you? The decision as to
which class of shares provides a more 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
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.
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 write a check for the amount you wish to
invest, payable to the fund. Return the completed form
and check 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 $25 or more per month through automatic deductions
from your bank checking account. Application forms are available
from your investment dealer or through Putnam Investor Services.
Shares are sold at the public offering price based on the net
asset value next determined after Putnam Investor Services
receives your order. In most cases, in order to receive
that day's public offering price, Putnam Investor Services must
receive your order before the close of regular trading on the New
York Stock Exchange. If you buy shares through your investment
dealer, the dealer must receive your order before the close of
regular trading on the New York Stock Exchange to receive that
day's public offering price.
Class A shares
The public offering price of class A shares is the net
asset value plus a sales charge that varies depending on
the size of your purchase . The fund receives the net asset
value. The sales charge is allocated between your investment
dealer and Putnam Mutual Funds as shown in the following table,
except when Putnam Mutual Funds, in its discretion, allocates the
entire amount to your investment dealer:
<PAGE>
<TABLE>
<CAPTION>
Sales charge Amount of
as a percentage of: sales charge
------------------ reallowed
Net to dealers
Amount of transaction amount Offering as a percentage
at offering price ($) invested price of offering
price
-----------------------------------------------------------------------------------
- -------
<C> <C> <C> <C> <C> <C>
Under 50,000 6.10% 5.75% 5.00%
$ 50,000 under 100,000 4.71 4.50 3.75
100,000 under 250,000 3.63 3.50 2.75
250,000 under 500,000 2.56 2.50 2.00
500,000 under 1,000,000 2.04 2.00 1.75
- ------------------------------------------------------------------------------------------
<PAGE>
</TABLE>
There is no initial sales charge on purchases of class A
shares of $1 million or more. However, a CDSC of 1.00% or
0.50%, respectively, will be imposed if you redeem
these 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 certain investors investing $1
million or more who have made arrangements with Putnam
Mutual Funds and whose dealer of record waived the commission
as described below 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
SAI for more information about the CDSC.
In addition, there are no sales charges on shares purchased by
participant-directed employee benefit plans with at least 200
eligible employees (prior to December 1, 1995, of companies with
more than 750 employees).
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 . Each subsequent one-year
measuring period for these purposes will begin 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 with at least
200 eligible employees, or prior to December 1, 1995, a plan
sponsored by an employer with more than 750 employees), Putnam
Mutual Funds pays commissions during each one-year measuring
period, determined as described above at the rate of 1.00% of the
first $2 million, 0.80% of the next $1 million and 0.50%
thereafter, except that commissions on sales prior to December 1,
1995 are based on cumulative purchases during the life of the
account and are paid 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%.
Class B shares
Class B shares are sold without an initial sales charge, although
a CDSC will be imposed if you redeem shares within a specified
period after purchase , as shown in the table below .
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 shares being redeemed.
Year 1 2 3 4 5 6 7+
- ----------------------------------------------------------------- --------
Charge 5% 4% 3% 3% 2% 1% 0%
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 CDSC 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 CDSC period, a CDSC is assessed
only 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.
Class M shares
The public offering price of class M shares is the net
asset value plus a sales charge that varies depending on
the size of your purchase . The fund receives the net asset
value. The sales charge is allocated between your investment
dealer and Putnam Mutual Funds as shown in the following table,
except when Putnam Mutual Funds, at its discretion, allocates the
entire amount to your investment dealer.
<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>
under $50,00 3.63% 3.50%3.00%
$50,000 under 100,000 2.56 2.50 2.00
100,000 under 250,000 1.52 1.50 1.00
250,000 under 500,000 1.01 1.00 1.00
500,000 and above 1,000,000 NONE NONE NONE
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE>
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.
A participant-directed employee benefit plan participating in
a "multi-fund" program approved by Putnam Mutual Funds may
include amount invested in the other mutual funds
participating in such program for purposes of determining whether
the plan may purchase class A shares at net asset value. These
investments will also be included for purposes of the discount
privileges and programs described above.
Sales charges will not apply to class M shares
purchased with redemption proceeds received within the prior
90 days from non-Putnam mutual funds on which the investor
paid a front-end or a contingent deferred sales
charge and to class M shares purchased beginning December 1,
1995 by participant-directed qualified retirement plans with at
least 50 eligible employees. The fund may also sell class M
shares at net asset value to members of qualified groups.
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, 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 <PAGE>
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 SAI. The SAI contains
additional information about purchasing the fund's shares at
reduced sales charges .
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 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.
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 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.
Putnam Mutual Funds makes quarterly payments to
qualifying dealers (including, for this purpose,
certain financial institutions) to compensate them for
services provided in connection with sales of class A
shares and the maintenance of shareholder accounts . The
payments are based on the average net asset value of
class A shares 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 , known as "NAV
shares," by shareholders investing $1 million . Also
excluded until one year after purchase are NAV shares
purchased by participant-directed qualified retirement plans
with at least 200 eligible employees, or prior to December 1,
1995, plans sponsored by employers with than 750
employees . NAV shares are not subject to the one-year
exclusion provision in cases where certain shareholders
who invested $1 million or more have made
arrangements with Putnam Mutual Funds and the dealer of
record waived the sales commission.
Except as stated below, Putnam Mutual Funds makes the
quarterly payments at the annual rate of 0.25% of such
average net asset value for class A shares .
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 under $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 and class
M plans provide for payments by the fund to Putnam
Mutual Funds at the annual rate of up to 1.00% of average
net assets attributable to class B shares and
class M shares, as the case may be. The Trustees
currently limit payments under the class M plan
to the annual rate of 0.75% of such assets .
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 or on 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, to further compensate
dealers (including qualifying 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 .
The payments are based on the average net asset value of
class B shares and class M shares
attributable to shareholders for whom the dealers are designated
as the dealer of record. Putnam Mutual Funds makes the
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.
<PAGE>
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. Payment under the plans are intended to
compensate Putnam Mutual Funds for services provided and expenses
incurred by it as principal underwriter of fund shares,
including the payments to dealers mentioned above. Putnam Mutual
Funds may suspend or modify such payments to
dealers .
The 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 SAI 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 your
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 this event, 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 shares that 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 you 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 . The CDSC will be computed 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.
The form is available from 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 that
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
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 at least
annually 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 on class A shares will generally be
greater than those paid on class B and class M shares
because expenses attributable to class B and
class M shares will generally be higher.
You can choose from three distribution options:
- Reinvest all distributions in additional
shares
without a sales charge;
- Receive distributions from net investment income
in cash while reinvesting capital gains distributions in
additional shares without a sales charge; or
- Receive all distributions in cash.
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 distributions are paid. You
will receive a statement confirming reinvestment of distributions
in additional 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," 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.
<PAGE>
Early in each year Putnam Investor Services will notify
you of the amount and tax status of distributions paid to you
for the preceding year.
Fund transactions in foreign currencies and hedging
activities will likely produce a difference between book
income and taxable income. This difference may cause a portion
of 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 for tax purposes .
Shareholders who are U.S. citizens or residents may be able to
claim a foreign tax credit or deduction on their U.S. income tax
returns with respect to foreign taxes paid by the fund.
If at the end of the fund's fiscal year
more than 50% of the value of the fund's total assets
represents securities of foreign corporations, the
fund intends to make an election permitted by the Internal
Revenue Code to treat any foreign taxes it paid as paid by its
shareholders. In this case, shareholders who are U.S.
citizens, U.S. corporations and, in some cases, U.S.
residents generally will be required to include in U.S. taxable
income their pro rata share of such taxes, but may then
generally be entitled to claim a foreign tax credit or
deduction (but not both) for their share of such taxes.
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 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>
<PAGE>
PUTNAM OVERSEAS GROWTH FUND
One Post Office Square, Boston, MA 02109
Class A shares
INVESTMENT STRATEGY: GROWTH
PROSPECTUS-NOVEMBER 1, 1995
This prospectus explains concisely what you should know
before investing in class A shares of Putnam Overseas
Growth Fund (the "fund") which are 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, 1995 statement
of additional information (the "SAI") , as amended from time
to time. For a free copy of the SAI or for other
information, including a prospectus regarding class
A shares for other investors, 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
<PAGE>
ABOUT THE FUND
Expenses
summary. .........................................2
Financial
highlights......................................3
Objective. ................................................4</R
>
How
the fund pursues its
objective ........................4
Risk
factors. ... .....................................
..4
How performance is
shown. .................................9
How the fund is
managed. ...............................10
Organization and
history. ...............................11
ABOUT YOUR INVESTMENT
How to buy
shares. .......................................12
Distribution
plan.......................................13
How to sell
shares. ......................................14
How to exchange
shares. ..................................14
How the fund values its
shares..........................15
How the fund makes distributions to
shareholders ;
tax
information. .......................................15
ABOUT PUTNAM INVESTMENTS,
INC. ............................16
<PAGE>
About the Fund
EXPENSES SUMMARY
Expenses are one of several factors to consider when investing in
the fund . The following table summarizes expenses
attributable to class A shares based. 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 0.80%
12b-1 fees 0.25%
Other expenses 0.56%
Total fund operating expenses 1.61%
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.
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
$16 $51 $88 $191
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 varies. The example does not reflect any
charges or expenses related to your employer's plan.
FINANCIAL HIGHLIGHTS
The following table 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 1995 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.
<PAGE>
Financial highlights (for share outstanding throughout the
period)<TABLE><CAPTION>
For the period
February 28, 1991
(commencement
of operations) to
Year ended June 30 June 30
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Class A
Net asset value,
Beginning of period$11.83 $9.58 $8.82 $8.18 $8.63
Investment operations
Net investment income (loss) .08 (.06)(a) .07(a)
.06 .07(a)
Net realized and unrealized
gain (loss) on investments .36 2.53 .69
.71 (.52)
Total from investment
operations .44 2.47 .76 .77 (.45)
Distributions to
shareholders from:
Net investment income -- -- -- (.13) --
Net realized gain on
investments (.11) (.22) -- -- --
In excess of net realized
gain on investments (.06) -- -- -- --
Total distributions (.17) (.22) -- (.13) --
Net asset value,
end of period $12.10 $11.83 $9.58 $8.82 $8.18
Total investment return at
net asset value (%)(c) 3.76 25.81 8.62 9.52 (5.21)(c)
Net assets, end of period
(in thousands) $32,856 $8,781 $2,859 $2,502 $2,054
Ratio of expenses to
average net assets (%) 1.61(a) 2.17(a) 1.80(a) 1.98 .78(a)(c)
Ratio of net investment
income (loss) to average
net assets (%) .97(a) (.17)(a) .81(a) .76 .86(a)(c)
Portfolio turnover (%) 25.83 96.13 80.92 82.45 14.54(c)
(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. Expenses for class A shares
of the fund for the period ended June 30, 1995 reflect a
reduction of less than $0.01 per share.
(b)Total investment return assumes dividend reinvestment and does
not reflect the effect of sales charge.
(c) 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 than 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 , 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 the 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 the 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, 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. These 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.
<PAGE>
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 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
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 involve 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 risk involved in
their use is included elsewhere in this prospectus and in the
SAI.
<PAGE>
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 that have been determined by the
Trustees (or the person designated by the Trustees
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 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
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 the
class A shares 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 the sales charge were used.
<PAGE>
All data are based on past investment results and do not predict
future performance.
Investment performance, which will vary, is based on many
factors, including market conditions, the composition of 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 .
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.
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:
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 shareholders 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 three classes. Only the fund's class A
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,* Director 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. In order to be eligible to
purchase shares at net asset value, defined contribution plans
must initially invest at least $1 million or have at least 200
eligible employees (prior to December 1, 1995, plans must be
sponsored by companies with more than 750 employees ). Defined
contribution plans participating in a "multi-fund" program
approved by Putnam Mutual Funds may include amounts invested in
the other mutual funds participating in such program for purposes
of determining whether the plan may purchase class A shares at
net asset value . 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.
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 with at least
200 eligible employees, or prior to December 1, 1995, a plan
sponsored by an employer with more than 750 employees), Putnam
Mutual Funds pays commissions based on a plan's cumulative
purchases during the one-year period beginning with the date of
the initial purchase at net asset value. Each subsequent one-
year measuring period for these purposes will begin 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
first $2 million, 0.80% of the next $1 million and 0.50%
thereafter, except that commissions on sales prior to December 1,
1995 are based on cumulative purchases during the life of the
account and are paid 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 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.
DISTRIBUTION PLAN
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 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.
Putnam Mutual Funds makes quarterly payments to qualifying
dealers (including, for this purpose, certain financial
institutions) to compensate them for services provided in
connection with sales of class A shares and the
maintenance of shareholder accounts. The payments are based on
the average net asset value of class A shares 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, known as "NAV
shares " , by shareholders investing $1 million or
more . Also excluded until one year after purchase are NAV
shares purchased by participant-directed qualified retirement
plans with at least 200 eligible employees, or prior to
December 1, 1995 plans sponsored by employers with more than
750 employees. NAV shares are not subject to the one-year
exclusion provision in cases where certain shareholders who
invested $1 million or more have made arrangements with Putnam
Mutual Funds and the dealer of record waived the sales
commission.
Except as stated below, Putnam Mutual Funds makes the quarterly
payments at the annual rate of 0.25% of such average net asset
value for class A shares .
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 under $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.
Payment under the plan is intended to compensate Putnam Mutual
Funds for services provided and expenses incurred by it as
principal underwriter of fund shares, including the
payments to dealers mentioned above. Putnam Mutual Funds may
suspend or modify such payments to dealers.
The payments are also subject to the continuation of the
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 your plan sells shares having a net asset value of
$100,000 or more, the signatures of registered owners or their
legal representatives must be guaranteed by a bank, broker-dealer
or certain other financial institutions. 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.
<PAGE>
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.
<PAGE>
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 ("SAI")
November 1, 1995
This SAI is not a prospectus and is only authorized
for distribution when accompanied or preceded by the
prospectus of the fund dated November 1,
1995 , as revised from time to time. This SAI
contains information which may be useful to investors but which
is not included in the prospectus. If the fund has
more than one form of current prospectus , each reference
to the prospectus in this SAI shall include all
of the fund's prospectuses , unless otherwise noted.
The SAI should be read together with the applicable
prospectus . Investors may obtain a free copy of the
applicable prospectus from Putnam Investor Services,
Mailing address: P.O. Box 41203, Providence, RI 02940-1203.
Part I of this SAI 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. . . . . . . . . . . . . . . . . . . . . I-3
CHARGES AND EXPENSESI - 6 . . . . . . . . . . . . . . . . . .
INVESTMENT PERFORMANCE . . . . . . . . . . . . . . . . . . . . . I-10
ADDITIONAL OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . I-11
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS . . . . . . . I-
11
Part II
MISCELLANEOUS INVESTMENT PRACTICES . . . . . . . . . . . . . . . . . . II-1
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-25
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . .II-30
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . .II-40
HOW TO BUY SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-41
DISTRIBUTION PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . .II-54
INVESTOR SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-55
SIGNATURE GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . .II-60
SUSPENSION OF REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . . .II-61
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . .II- 61
STANDARD PERFORMANCE MEASURES. . . . . . . . . . . . . . . . . . . . .II-61
COMPARISON OF PORTFOLIO PERFORMANCE. . . . . . . . . . . . . . . . . .II-63
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-67
SAI
PART I
INVESTMENT RESTRICTIONS
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 it to borrow money to a limited
extent, it 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 of the fund are represented at the
meeting in person or by proxy.
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
the 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 the past three fiscal years , pursuant
to the Management Contract, the fund incurred the
following fees:
Reflecting a
reduction in the
following amounts
pursuant to an
Fiscal Management expense
year fee paid limitation
------ ---------- -----------------
1995 $295,925 $ 1,767
1994 $ 10,001 $22,860
1993 $ 4,701 $15,364
<PAGE>
Brokerage commissions
The following table shows brokerage commissions paid during the
fiscal periods indicated.
Fiscal Brokerage
year commissions
------ -----------
1995 $206,547
1994 $ 49,103
1993 $ 17,477
The following table shows transactions placed with brokers
and dealers during the most recent fiscal year to
recognize research, statistical and quotation services Putnam
Management considered to be particularly useful to it and its
affiliates.
Dollar
value Percent of
of these total Amount of
transactions transactions commissions
- ------------ ------------ -----------
$47,590,950 88.12% $184,783
Administrative expense reimbursement
The fund reimbursed Putnam Management in the following amounts
for administrative services during fiscal 1995, including the
following amounts for compensation of certain officers of the
fund and contributions to the Putnam Investments, Inc. Profit
Sharing Retirement Plan for their benefit:
Portion of total
reimbursement for
Total compensation and
reimbursement contributions
------------- ----------------
$4,707 $4,465
Trustee fees
Each Trustee receives a fee for his or her services. Each
Trustee also receives fees for serving as Trustee of other Putnam
funds. The Trustees periodically review their fees to assure
that such fees continue to be appropriate in light of their
responsibilities as well as in relation to fees paid to trustees
of other mutual fund complexes. The Trustees meet monthly over a
two-day period, except in August. The Compensation Committee,
which consists solely of Trustees not affiliated with Putnam
Management and is responsible for recommending Trustee
compensation, estimates that Committee and Trustee meeting time
together with the appropriate preparation requires the equivalent
of at least three business days per Trustee meeting. The
following table shows the year each Trustee was first elected a
Trustee of the Putnam funds, the fees paid to each Trustee by the
fund for fiscal 1995 and the fees paid to each Trustee by all of
the Putnam funds during calendar year 1994:
COMPENSATION TABLE
Total
Aggregate compensation
compensation from all
Trustees from the fund* Putnam funds**
- -----------------------------------------------------------------
Jameson A. Baxter/1994 $130 $135,850
Hans H. Estin/1972 $131 141,850
John A. Hill/1985 $129 143,850
Elizabeth T. Kennan/1992 $130 141,850
Lawrence J. Lasser/1992 $131 141,850
Robert E. Patterson/1984 $132 144,850
Donald S. Perkins/1982 $131 139,850
William F. Pounds/1971 $131 143,850
George Putnam/1957 $131 141,850
George Putnam, III/1984 $131 141,850
Eli Shapiro/1995*** $0 N/A
A.J.C. Smith/1986 $129 137,850
W. Nicholas Thorndike/1992 $132 144,850
* Includes an annual retainer and an attendance fee for each
meeting attended.
** Reflects total payments received from all Putnam funds in
the most recent calendar year. As of December 31, 1994,
there were 86 funds in the Putnam family.
*** Elected as a Trustee in April 1995. For the calendar year
ended December 31, 1994, Dr. Shapiro received $38,577 in
retirement benefits from the Putnam funds in respect of his
prior service as a Trustee from 1984 to 1989, which benefits
terminated at the end of 1994.
The Trustees have approved Retirement Guidelines for Trustees of
the Putnam funds. These Guidelines provide generally that a
Trustee who retires after reaching age 72 and who has at least 10
years of continuous service will be eligible to receive a
retirement benefit from each Putnam fund for which he or she
served as a Trustee. The amount and form of such benefit is
subject to determination annually by the Trustees and, unless
otherwise determined by the Trustees, will be an annual cash
benefit payable for life equal to one-half of the Trustee
retainer fees paid by each fund at the time of retirement.
Several retired Trustees are currently receiving benefits
pursuant to the Guidelines and it is anticipated that the current
Trustees will receive similar benefits upon their retirement. A
Trustee who retired in calendar 1994 and was eligible to receive
benefits under these Guidelines would have received an annual
benefit of $60,425, based upon the aggregate retainer fees paid
by the Putnam funds for such year. The Trustees reserve the
right to amend or terminate such Guidelines and the related
payments at any time, and may modify or waive the foregoing
eligibility requirements when deemed appropriate.
For additional information concerning the Trustees, see
"Management" in Part II of this SAI.
Share ownership
At September 30, 1995, the officers and Trustees of the fund as a
group owned less than 1% of the outstanding shares of each class,
and, except as noted below, 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.
Shareholder name Percentage
Class and address owned
----- -------------------- --------
A TORO Retirement Program* 5.93%
A TTE Construction Inc.* 9.86%
M Donaldson Lufkin Jenrette** 5.00%
M Putnam Investments*** 8.90%
* c/o Putnam Fiduciary Trust Company, as trustee or agent, 859
Willard Street, Quincy, MA 02269
**
c/o Donaldson Lufkin Jenrette, P.O. Box 2052, Jersey City,
NJ 07303-9998
*** c/o Putnam Investments, One Post Office Square, Boston, MA
02109
Distribution fees
During fiscal 1995, the fund paid the following 12b-1 fees to
Putnam Mutual Funds:
Class A Class B Class M
------- ------- -------
$55,299 $145,547 $3,718
<PAGE>
Class A sales charges and contingent deferred sales charges
Putnam Mutual Funds received sales charges with respect to class
A shares in the following amounts during the periods indicated:
Sales charges
retained by Putnam Contingent
Total Mutual Funds deferred
front-end after sales
Fiscal year sales charges dealer concessions charges
- ----------- ------------- ------------------ --------
1995 $360,087 $48,353 $16,856
1994 $ 65,752 $ 6,203 $0
1993 $0 $0 $0
Class B contingent deferred sales charges
Putnam Mutual Funds received contingent deferred sales charges
upon redemptions of class B shares in the following amounts
during the periods indicated:
Contingent deferred
Fiscal year sales charges
----------- -------------------
1995 $13,612
1994 $0
1993 N/A
Class M sales charges
Putnam Mutual Funds received sales charges with respect to class
M shares in the following amount during the 1995 fiscal year:
Sales charges
retained by Putnam
Mutual Funds
Total after
sales charges dealer concessions
------------- ------------------
$25,486 $3,908
Investor servicing and custody fees and expenses
During the 1995 fiscal year, the fund incurred
$122,230 in fees and out-of-pocket expenses for investor
servicing and custody services provided by Putnam
Fiduciary Trust Company.
INVESTMENT PERFORMANCE
Standard performance measures
(for periods ended June 30, 1995)
Class A Class B Class M
Inception date: 02/28/91 06/01/94 12/01/94
Total
return NAV* POP* NAV CDSC POP NAV***
- -----------------------------------------------------------------
1 year 3.76% -2.19% 3.00% -2.00% - -
Life of class 9.31 7.82 3.10 -0.60 3.33% -0.28%
* net asset value
** public offering price
*** Performance data shown for class M shares for the period
from December 14, 1994 to June 30, 1995 represents
cumulative, rather than average annual, total return.
Data represent past performance and are not indicative of future
results. Total return at POP for class A and class M shares
reflect the deduction of the maximum sales charge of
5.75% and 3.50%, respectively. Total return at
CDSC for class B shares reflects the deduction
of the applicable contingent deferred sales charge
(CDSC) . The maximum class B CDSC is 5.0%. See
"Financial highlights" in the prospectus for the inception
date of each class. See "Standard performance
measures " in Part II of this SAI for information on
how performance is calculated. Past performance is
no guarantee of future results.
ADDITIONAL OFFICERS
In addition to the persons listed as officers of the fund in Part
II of this SAI, each of the following persons is also a Vice
President of the fund and Vice President of certain of the Putnam
funds. Officers of Putnam Management hold the same offices
in Putnam Management's parent company, Putnam Investments, Inc.
Anthony W. Regan, Senior Managing Director, Putnam
Management. Director, Putnam Investments, Inc. Vice President
and Trust Officer, Putnam Fiduciary Trust Company.
Peter Carman, Senior Managing Director of Putnam Management.
Prior to August 1, 1993, Mr. Carman was Chief Investment Officer,
Chairman of the U.S. Equity Investment Policy Committee and a
Director of Sanford C. Bernstein & Company, Inc .
Justin M. Scott, Senior Vice President, Putnam
Management.
Brett C. Browchuk, Managing Director of Putnam Management.
Prior to April, 1994, Mr. Browchuk was employed by Fidelity
Management & Research Company.
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 , financial
highlights and financial statements included in the
fund's Annual Report for the fiscal year ended June 30,
1995 , filed electronically on August 30, 1995 (File
No. 811-6190), are incorporated by reference into this
SAI. The financial highlights in the prospectus and
incorporated by reference into this SAI and the financial
statements incorporated by reference into the prospectus and
this SAI have been so included and incorporated in reliance
upon the report of the independent accountants, given on their
authority as experts in auditing and accounting.<PAGE>
<PAGE>
TABLE OF CONTENTS
MISCELLANEOUS INVESTMENT PRACTICES . . . . . . . . . . . . . . . . . . II-1
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-25
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-30
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . .II-40
HOW TO BUY SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-41
DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . .II-54
INVESTOR SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-55
SIGNATURE GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . .II-60
SUSPENSION OF REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . . .II-61
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . .II-61
STANDARD PERFORMANCE MEASURES. . . . . . . . . . . . . . . . . . . . .II-61
COMPARISON OF PORTFOLIO PERFORMANCE. . . . . . . . . . . . . . . . . .II-63
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-67
<PAGE>
THE PUTNAM FUNDS
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
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 objectives(s), Putnam Management will buy
or sell portfolio securities whenever Putnam Management believes
it appropriate to do so. In deciding whether to sell a portfolio
security, Putnam Management does not consider how long the fund
has owned the security. From time to time the fund will buy
securities intending to seek short-term trading profits. A
change in the securities held by the fund is known as "portfolio
turnover" and generally involves some expense to the fund. This
expense may include brokerage commissions or dealer markups and
other transaction costs on both the sale of securities and the
reinvestment of the proceeds in other securities. If sales of
portfolio securities cause the fund to realize net short-term
capital gains, such gains will be taxable as ordinary income. As
a result of the fund's investment policies, under certain market
conditions the fund's portfolio turnover rate may be higher than
that of other mutual funds. Portfolio turnover rate for a fiscal
year is the ratio of the lesser of purchases or sales of
portfolio securities to the monthly average of the value of
portfolio securities -- excluding securities whose maturities at
acquisition were one year or less. 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 at times may be unable to establish the fair value
of such securities.
Securities ratings are based largely on the issuer's historical
financial condition and the rating agencies' analysis at the time
of rating. Consequently, the rating assigned to any particular
security is not necessarily a reflection of the issuer's current
financial condition, which may be better or worse than the rating
would indicate. In addition, the rating assigned to a security
by Moody's Investors Service, Inc. or Standard & Poor's (or by
any other nationally recognized securities rating organization)
does not reflect an assessment of the volatility of the
security's market value or the liquidity of an investment in the
security. See the prospectus or Part I of this SAI for a
description of security ratings.
Like those of other fixed-income securities, the values of
lower-rated securities fluctuate in response to changes in
interest rates. A decrease in interest rates will generally
result in an increase in the value of the fund's assets.
Conversely, during periods of rising interest rates, the value of
the fund's assets will generally decline. The values of lower-
rated securities may often be affected to a greater extent by
changes in general economic conditions and business conditions
affecting the issuers of such securities and their industries.
Negative publicity or investor perceptions may also adversely
affect the values of lower-rated securities. Changes by
recognized rating services in their ratings of any fixed-income
security and changes in the ability of an issuer to make payments
of interest and principal may also affect the value of these
investments. Changes in the value of portfolio securities
generally will not affect income derived from these securities,
but will affect 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. However, Putnam
Management will monitor the investment to determine whether its
retention will assist in meeting the fund's investment
objective(s).
Issuers of lower-rated securities are often highly leveraged, so
that their ability to service their debt obligations during an
economic downturn or during sustained periods of rising interest
rates may be impaired. Such issuers may not have more
traditional methods of financing available to them and may be
unable to repay outstanding obligations at maturity by
refinancing. The risk of loss due to default in payment of
interest or repayment of principal by such issuers is
significantly greater because such securities frequently are
unsecured and subordinated to the prior payment of senior
indebtedness.
At times, a substantial portion of 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 all or a major portion.
Although Putnam Management generally considers such securities to
be liquid because of the availability of an institutional market
for such securities, it is possible that, under adverse market or
economic conditions or in the event of adverse changes in the
financial condition of the issuer, the fund could find it more
difficult to sell these securities when Putnam Management
believes it advisable to do so or may be able to sell the
securities only at prices lower than if they were more widely
held. Under these circumstances, it may also be more difficult
to determine the fair value of such securities for purposes of
computing 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 participate in various legal proceedings or
take possession of and manage assets securing the issuer's
obligations on such securities. This could increase the fund's
operating expenses and adversely affect the fund's net asset
value. In the case of tax-exempt funds, any income derived from
the fund's ownership or operation of such assets would not be
tax-exempt. The ability of a holder of a tax-exempt security to
enforce the terms of that security in a bankruptcy proceeding may
be more limited than would be the case with respect to privately-
issued securities. 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 and payment-in-
kind bonds do not pay current interest in cash, their value is
subject to greater fluctuation in response to changes in market
interest rates than bonds that 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 in cash. The fund is required to
accrue interest income on such investments and to distribute such
amounts at least annually to shareholders even though such bonds
do not pay current interest in cash. Thus, the fund could be
required at times to liquidate investments in order to satisfy
its dividend requirements.
To the extent the fund invests in 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. This may be particularly true with respect to tax-
exempt securities, as 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.
INVESTMENTS IN MISCELLANEOUS FIXED INCOME SECURITIES
Unless otherwise specified in the prospectus or elsewhere in this
SAI, if the fund may invest in inverse floating obligations,
premium securities, or interest-only or principal-only classes of
mortgage-backed securities, it may do so without limit. The
fund, however, currently does not intend to invest more than 15%
of its assets in inverse floating obligations under normal market
conditions.
PRIVATE PLACEMENTS
The fund may invest in securities that are purchased in private
placements and, accordingly, are subject to restrictions on
resale as a matter of contract or under federal securities laws.
Because there may be relatively few potential purchasers for such
investments, especially under adverse market or economic
conditions or in the event of adverse changes in the financial
condition of the issuer, 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. At times,
it may also be more difficult to determine the fair value of such
securities for purposes of computing the fund's net assets value.
MORTGAGE RELATED SECURITIES
The fund may invest in mortgage-backed securities, including
collateralized mortgage obligations ("CMOs") and certain stripped
mortgage-backed securities. CMOs and other mortgage-backed
securities represent a participation in, or are secured by,
mortgage loans.
Mortgage-backed securities have yield and maturity
characteristics corresponding to the underlying assets. Unlike
traditional debt securities, which may pay a fixed rate of
interest until maturity, when the entire principal amount comes
due, payments on certain mortgage-backed securities include both
interest and a partial repayment of principal. Besides the
scheduled repayment of principal, repayments of principal may
result from the voluntary prepayment, refinancing, or foreclosure
of the underlying mortgage loans. If property owners make
unscheduled prepayments of their mortgage loans, these
prepayments will result in early payment of the applicable
mortgage-related securities. In that event the fund may be
unable to invest the proceeds from the early payment of the
mortgage-related securities in an investment that provides as
high a yield as the mortgage-related securities. Consequently,
early payment associated with mortgage-related securities may
cause these securities to experience significantly greater price
and yield volatility than that experienced by traditional fixed-
income securities. The occurrence of mortgage prepayments is
affected by factors including the level of interest rates,
general economic conditions, the location and age of the mortgage
and other social and demographic conditions. During periods of
falling interest rates, the rate of mortgage prepayments tends to
increase, thereby tending to decrease the life of mortgage-
related securities. During periods of rising interest rates, the
rate of mortgage prepayments usually decreases, thereby tending
to increase the life of mortgage-related securities. If the life
of a mortgage-related security is inaccurately predicted, the
fund may not be able to realize the rate of return it expected.
Mortgage-backed securities are less effective than other types of
securities as a means of "locking in" attractive long-term
interest rates. One reason is the need to reinvest prepayments
of principal; another is the possibility of significant
unscheduled prepayments resulting from declines in interest
rates. These prepayments would have to be reinvested at lower
rates. As a result, these securities may have less potential for
capital appreciation during periods of declining interest rates
than other securities of comparable maturities, although they may
have a similar risk of decline in market value during periods of
rising interest rates.
Prepayments may cause losses in securities purchased at a
premium. At times, some of the mortgage-backed securities in
which the fund may invest will have higher than market interest
rates and therefore will be purchased at a premium above their
par value. Unscheduled prepayments, which are made at par, will
cause the fund to experience a loss equal to any unamortized
premium.
CMOs may be issued by a U.S. government agency or instrumentality
or by a private issuer. Although payment of the principal of,
and interest on, the underlying collateral securing privately
issued CMOs may be guaranteed by the U.S. government or its
agencies or instrumentalities, these CMOs represent obligations
solely of the private issuer and are not insured or guaranteed by
the U.S. government, its agencies or instrumentalities or any
other person or entity.
Prepayments could cause early retirement of CMOs. CMOs are
designed to reduce the risk of prepayment for investors by
issuing multiple classes of securities, each having different
maturities, interest rates and payment schedules, and with the
principal and interest on the underlying mortgages allocated
among the several classes in various ways. Payment of interest
or principal on some classes or series of CMOs may be subject to
contingencies or some classes or series may bear some or all of
the risk of default on the underlying mortgages. CMOS of
different classes or series are generally retired in sequence as
the underlying mortgage loans in the mortgage pool are repaid.
If enough mortgages are repaid ahead of schedule, the classes or
series of a CMO with the earliest maturities generally will be
retired prior to their maturities. Thus, the early retirement of
particular classes or series of a CMO held by the fund would have
the same effect as the prepayment of mortgages underlying other
mortgage-backed securities.
Prepayments could result in losses on stripped mortgage-backed
securities. Stripped mortgage-backed securities are usually
structured with two classes that receive different portions of
the interest and principal distributions on a pool of mortgage
loans. The fund may invest in both the interest-only or "IO"
class and the principal-only or "PO" class. The yield to
maturity on an IO class of stripped mortgage-backed securities is
extremely sensitive not only to changes in prevailing interest
rates but also to the rate of principal payments (including
prepayments) on the underlying assets. A rapid rate of principal
prepayments may have a measurable adverse effect on the fund's
yield to maturity to the extent it invests in IOs. If the assets
underlying the IO experience greater than anticipated prepayments
of principal, the fund may fail to recoup fully its initial
investment in these securities. Conversely, POs tend to increase
in value if prepayments are greater than anticipated and decline
if prepayments are slower than anticipated.
The secondary market for stripped mortgage-backed securities may
be more volatile and less liquid than that for other mortgage-
backed securities, potentially limiting the fund's ability to buy
or sell those securities at any particular time.
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 the loans be continuously secured by
collateral consisting of cash or short-term debt obligations at
least equal at all times to the value of the securities on loan,
"marked-to-market" daily. The borrower pays to the fund an
amount equal to any dividends or interest received on securities
lent. The fund retains all or a portion of the interest received
on investment of the cash collateral or receives a fee from the
borrower. Although voting rights, or rights to consent, with
respect to the loaned securities may pass to the borrower, the
fund retains the right to call the loans at any time on
reasonable notice, and it will do so to enable the fund to
exercise voting rights on any matters materially affecting the
investment. The fund may also call such loans in order to sell
the securities.
FORWARD COMMITMENTS
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 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
objective(s) 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. 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.
Foreign-traded options are subject to many of the same risks
presented by internationally-traded securities. In addition,
because of time differences between the United States and 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 for hedging and non-hedging purposes. The use of
futures and options transactions for purposes other than hedging
entails greater risks. A financial futures contract sale creates
an obligation by the seller to deliver the type of financial
instrument called for in the contract in a specified delivery
month for a stated price. A financial futures contract purchase
creates an obligation by the purchaser to take delivery of the
type of financial instrument called for in the contract in a
specified delivery month at a stated price. The specific
instruments delivered or taken, respectively, at settlement date
are not determined until on or near that date. The determination
is made in accordance with the rules of the exchange on which the
futures contract sale or purchase was made. Futures contracts
are traded in the United States only on commodity exchanges or
boards of trade -- known as "contract markets" -- approved for
such trading by the 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. If the fund is unable to enter into
a closing transaction, the amount of the fund's potential loss is
unlimited. The closing out of a futures contract purchase is
effected by the purchaser's entering into a futures contract
sale. If the offsetting sale price exceeds the purchase price,
the purchaser realizes a gain, and if the purchase price exceeds
the offsetting sale price, 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 various
factors affecting securities markets, including interest rates.
Compared to the purchase or sale of futures contracts, the
purchase of call or put options on futures contracts involves
less potential risk to 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 position held by the fund, the fund may
seek to close out such position. The ability to establish and
close out positions will be subject to the development and
maintenance of a liquid secondary market. It is not certain that
this market will develop or continue to exist for a particular
futures contract or option. Reasons for the absence of a liquid
secondary market on an exchange include the following: (i) there
may be insufficient trading interest in certain contracts or
options; (ii) restrictions may be imposed by an exchange on
opening transactions or closing transactions or both; (iii)
trading halts, suspensions or other restrictions may be imposed
with respect to particular classes or series of contracts or
options, or underlying securities; (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v)
the facilities of an exchange or a clearing corporation may not
at all times be adequate to handle current trading volume; or
(vi) one or more exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the
trading of contracts or options (or a particular class or series
of contracts or options), in which event the secondary market on
that exchange for such contracts or options (or in the class or
series of contracts or options) would cease to exist, although
outstanding contracts or options on the exchange that had been
issued by a clearing corporation as a result of trades on that
exchange would continue to be exercisable in accordance with
their terms.
U.S. TREASURY SECURITY FUTURES CONTRACTS AND OPTIONS. U.S.
Treasury security futures contracts require the seller to
deliver, or the purchaser to take delivery of, the type of U.S.
Treasury security called for in the contract at a specified date
and price. Options on U.S. Treasury security futures contracts
give the purchaser the right in return for the premium paid to
assume a position in a U.S. Treasury security futures contract at
the specified option exercise price at any time during the period
of the option.
Successful use of U.S. Treasury security futures contracts by 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 securities held in its portfolio,
and the prices of the fund's securities increase instead as a
result of a decline in interest rates, the fund will lose part or
all of the benefit of the increased value of its securities which
it has hedged because it will have offsetting losses in its
futures positions. In addition, in such situations, if the fund
has insufficient cash, it may have to sell securities to meet
daily maintenance margin requirements at a time when it may be
disadvantageous to do so.
There is also a risk that price movements in U.S. Treasury
security futures contracts and related options will not correlate
closely with price movements in markets for particular
securities. For example, if 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.
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(s). 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. 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 is also subject to
Putnam Management's ability to predict movements in the direction
of the market. For example, 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 profitable position over a short time period.
OPTIONS ON STOCK INDEX FUTURES. Options on index futures are
similar to options on securities except that options on index
futures give the purchaser the right, in return for the premium
paid, to assume a position in an index futures contract (a long
position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during
the period of the option. Upon exercise of the option, the
delivery of the futures position by the writer of the option to
the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account which
represents the amount by which the market price of the index
futures contract, at exercise, exceeds (in the case of a call) or
is less than (in the case of a put) the exercise price of the
option on the index future. If an option is exercised on the
last trading day prior to its expiration date, the settlement
will be made entirely in cash equal to the difference between the
exercise price of the option and the closing level of the index
on which the future is based on the expiration date. Purchasers
of options who fail to exercise their options prior to the
exercise date suffer a loss of the premium paid.
OPTIONS ON INDICES
As an alternative to purchasing call and put options on index
futures, 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. Since foreign securities are normally
denominated and traded in foreign currencies, the value of the
fund's assets may be affected favorably or unfavorably by changes
in currency exchange rates, exchange control regulations and
restrictions or prohibitions on the repatriation of foreign
currencies. There may be less information publicly available
about a foreign company than about a U.S. company, and foreign
companies are not generally subject to accounting, auditing and
financial reporting standards and practices comparable to those
in the United States. The securities of some foreign companies
are less liquid and at times more volatile than securities of
comparable U.S. companies. Foreign brokerage commissions and
other fees are also generally higher than in the United States.
Foreign settlement procedures and trade regulations may involve
certain risks (such as delay in payment or delivery of securities
or in the recovery of the fund's assets held abroad) and expenses
not present in the settlement of domestic investments.
In addition, there may be a possibility of nationalization or
expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial
instability and diplomatic developments which could affect the
value of the fund's investments in certain foreign countries.
Legal remedies available to investors in certain foreign
countries may be more limited than those available with respect
to investments in the United States or in other foreign
countries. The laws of some foreign countries may limit the
fund's ability to invest in securities of certain issuers located
in those foreign countries. Special tax considerations apply to
foreign securities.
The risks described above, including the risks of nationalization
or expropriation of assets, are typically increased to the extent
that the fund invests in issuers located in less developed and
developing nations, whose securities markets are sometimes
referred to as "emerging securities markets." Investments in
securities located in such countries are speculative and subject
to certain special risks. Political and economic structures in
many of these countries may be in their infancy and developing
rapidly, and such countries may lack the social, political and
economic stability characteristic of more developed countries.
Certain of these countries have in the past failed to recognize
private property rights and have at times nationalized and
expropriated the assets of private companies.
In addition, unanticipated political or social developments may
affect the values of the fund's investments in these countries
and the availability to the fund of additional investments in
these countries. The small size, limited trading volume and
relative inexperience of the securities markets in these
countries may make the fund's investments in such countries
illiquid and more volatile than investments in more developed
countries, and the fund may be required to establish special
custodial or other arrangements before making investments in
these countries. There may be little financial or accounting
information available with respect to issuers located in these
countries, and it may be difficult as a result to assess the
value or prospects of an investment in such issuers.
FOREIGN CURRENCY TRANSACTIONS
Unless otherwise specified in the prospectus or Part I of this
SAI, the fund may engage without limit in currency exchange
transactions, including purchasing and selling foreign currency,
foreign currency options, foreign currency forward contracts and
foreign currency futures contracts and related options, to
protect against uncertainty in the level of future currency
exchange rates. In addition, 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). 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.
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. See "Risk factors in options
transactions" above.
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.
The value of any currency, including U.S. dollars and foreign
currencies, may be affected by complex political and economic
factors applicable to the issuing country. In addition, the
exchange rates of foreign currencies (and therefore the values of
foreign currency options, forward contracts and futures
contracts) may be affected significantly, fixed, or supported
directly or indirectly by U.S. and foreign government actions.
Government intervention may increase risks involved in purchasing
or selling foreign currency options, forward contracts and
futures contracts, since exchange rates may not be free to
fluctuate in response to other market forces.
The value of a foreign currency option, forward contract or
futures contract reflects the value of an exchange rate, which in
turn reflects relative values of two currencies, the U.S. dollar
and the foreign currency in question. Because foreign currency
transactions occurring in the interbank market involve
substantially larger amounts than those that may be involved in
the exercise of foreign currency options, forward contracts and
futures contracts, investors may be disadvantaged by having to
deal in an odd-lot market for the underlying foreign currencies
in connection with options at prices that are less favorable than
for round lots. Foreign governmental restrictions or taxes could
result in adverse changes in the cost of acquiring or disposing
of foreign currencies.
There is no systematic reporting of last sale information for
foreign currencies and there is no regulatory requirement that
quotations available through dealers or other market sources be
firm or revised on a timely basis. Available quotation
information is generally representative of very large round-lot
transactions in the interbank market and thus may not reflect
exchange rates for smaller odd-lot transactions (less than $1
million) where rates may be less favorable. The interbank market
in foreign currencies is a global, around-the-clock market. To
the extent that options markets are closed while the markets for
the underlying currencies remain open, significant price and rate
movements may take place in the underlying markets that cannot be
reflected in the options markets.
CURRENCY FORWARD AND FUTURES CONTRACTS. A forward foreign
currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number
of days from the date of the contract as agreed by the parties,
at a price set at the time of the contract. In the case of a
cancelable forward contract, the holder has the unilateral right
to cancel the contract at maturity by paying a specified fee.
The contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial
banks) and their customers. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage
for trades. A foreign currency futures contract is a
standardized contract for the future delivery of a specified
amount of a foreign currency at a price set at the time of the
contract. Foreign currency futures contracts traded in the
United States are designed by and traded on exchanges regulated
by the CFTC, such as the New York Mercantile Exchange.
Forward foreign currency exchange contracts differ from foreign
currency futures contracts in certain respects. For example, the
maturity date of a forward contract may be any fixed number of
days from the date of the contract agreed upon by the parties,
rather than a predetermined date in a given month. Forward
contracts may be in any amounts agreed upon by the parties rather
than predetermined amounts. Also, forward foreign exchange
contracts are traded directly between currency traders so that no
intermediary is required. A forward contract generally requires
no margin or other deposit.
At the maturity of a forward or futures contract, the fund 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 of the risks described above. Foreign currency
options are traded primarily in the over-the-counter market,
although options on foreign currencies are also listed on several
exchanges. Options are traded not only on the currencies of
individual nations, but also on the European Currency Unit
("ECU"). The ECU is composed of amounts of a number of
currencies, and is the official medium of exchange of the
European Community's European Monetary System.
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.
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 currencies may occur within a foreign country, and the
fund may be required to accept or make delivery of the underlying
securities or currency in conformity with any applicable U.S. or
foreign restrictions or regulations, and may be required to pay
any fees, taxes or charges associated with such delivery. Such
investments may also involve the risk that an entity involved in
the settlement may not meet its obligations.
FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers
do not charge a fee for currency conversion, they do realize a
profit based on the difference (the "spread") between prices at
which they are buying and selling various currencies. Thus, a
dealer may offer to sell a foreign currency to 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 delegation by the
Trustees of the authority to determine that a restricted security
is readily marketable (as described in the investment
restrictions of the funds) must be pursuant to written procedures
established by the Trustees. It is the present intention of the
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 as interest excludable from
shareholders' 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 hedging
transactions, including hedging transactions in options, futures
contracts, and straddles, or other similar transactions, it will
be subject to special tax rules (including mark-to-market,
straddle, wash sale, and short sale rules), the effect of which
may be to accelerate income to the fund, defer losses to the
fund, cause adjustments in the holding periods of the fund's
securities, or convert short-term capital losses into long-term
capital losses. These rules could therefore affect the amount,
timing and character of 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 (i) a
dividend to the extent of the fund's remaining earnings and
profits (including earnings and profits arising from tax-exempt
income), (ii) thereafter as a return of capital to the extent of
the recipient's basis in the shares, and (iii) thereafter as gain
from the sale or exchange of a capital asset. 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. Distributions from capital gains are
made after applying any available capital loss carryovers. 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 SAI or
incorporated by reference into this SAI.
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 "passive foreign investment companies"
could subject the fund to a U.S. federal income tax or other
charge on the proceeds from the sale of its investment in such a
company; however, this tax can be avoided by making an election
to mark such investments to market annually or to treat the
passive foreign investment company as a "qualified electing
fund."
A "passive foreign investment company" is any foreign
corporation: (i) 75 percent of more of the income of which for
the taxable year is passive income, or (ii) the average
percentage of the assets of which (generally by value, but by
adjusted tax basis in certain cases) that produce or are held for
the production of passive income is at least 50 percent.
Generally, passive income for this purpose means dividends,
interest (including income equivalent to interest), royalties,
rents, annuities, the excess of gains over losses from certain
property transactions and commodities transactions, and foreign
currency gains. Passive income for this purpose does not include
rents and royalties received by the foreign corporation from
active business and certain income received from related persons.
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 shares of
the same fund are purchased within 30 days before or after the
disposition. In such a case, the basis of the newly purchased
shares will be adjusted to reflect the disallowed loss.
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 under-reported dividends or interest income, or
who fails to certify to the fund that he or she is not subject to
such withholding. Shareholders who fail to furnish their correct
TIN are subject to a penalty of $50 for each such failure unless
the failure is due to reasonable cause and not wilful neglect.
An individual's taxpayer identification number is his or her
social security number.
MANAGEMENT
TRUSTEES NAME (AGE)
*+GEORGE PUTNAM (69), 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 (67), Vice Chairman. Professor of Management,
Alfred P. Sloan School of Management, Massachusetts Institute of
Technology. Director of EG&G, Inc., Fisher Price, Inc., IDEXX,
M/A-COM, Inc., and Sun Company, Inc.
JAMESON A. BAXTER (52), Trustee. President, Baxter Associates,
Inc. (consultants to management). Director of Avondale Federal
Savings Bank, ASHTA Chemicals, Inc. and Banta Corporation.
Chairman Emeritus of the Board of Trustees, Mount Holyoke
College.
+HANS H. ESTIN (67), Trustee. Vice Chairman, North American
Management Corp. (a registered investment adviser). Director of
The Boston Company, Inc. and Boston Safe Deposit and Trust
Company.
ELIZABETH T. KENNAN (57), Trustee. President Emeritus and
Professor, Mount Holyoke College. Director, the Kentucky Home
Life Insurance Companies, NYNEX Corporation, Northeast Utilities
and Talbots. Trustee of the University of Notre Dame.
*LAWRENCE J. LASSER (52), Trustee and Vice President. President,
Chief Executive Officer and Director of Putnam Investments, Inc.
and Putnam Investment Management, Inc. Director of Marsh &
McLennan Companies, Inc.
JOHN A. HILL (53), Trustee. Chairman and Managing Director,
First Reserve Corporation (a registered investment adviser).
Director, Lantana Corporation, Maverick Tube Corporation, Snyder
Oil Corporation and various First Reserve Funds.
+ROBERT E. PATTERSON (50), Trustee. Executive Vice President,
Cabot Partners Limited Partnership (a registered investment
adviser).
*DONALD S. PERKINS (68), Trustee. Director of various
corporations, including American Telephone & Telegraph Company,
AON Corp., Cummins Engine Company, Inc., Illinois Power Company,
Inland Steel Industries, Inc., Kmart Corporation, LaSalle Street
Fund, Inc., Springs Industries, Inc., TBG, Inc. and Time Warner
Inc.
*#GEORGE PUTNAM III (44), Trustee. President, New Generation
Research, Inc. (publisher of bankruptcy information). Director,
World Environment Center.
ELI SHAPIRO (79), Trustee. Alfred P. Sloan Professor of
Management, Emeritus, Alfred P. Sloan School of Management,
Massachusetts Institute of Technology. Director of Nomura
Dividend Fund, Inc. (a privately held registered investment
company managed by Putnam Management) and former Trustee of the
Putnam funds (1984-1990).
*A.J.C. SMITH (61), Trustee. Chairman, Chief Executive Officer
and Director, Marsh & McLennan Companies, Inc.
W. NICHOLAS THORNDIKE (62), Trustee. Director of various
corporations and charitable organizations, including 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 NAME (AGE)
CHARLES E. PORTER (57), Executive Vice President. Managing
Director of Putnam Investments, Inc. and Putnam Management.
PATRICIA C. FLAHERTY (48), Senior Vice President. Senior Vice
President of Putnam Investments, Inc. and Putnam Management.
WILLIAM N. SHIEBLER (53), Vice President. Director and Senior
Managing Director of Putnam Investments, Inc. President and
Director of Putnam Mutual Funds.
GORDON H. SILVER (48), Vice President. Director and Senior
Managing Director of Putnam Investments, Inc. and Putnam
Management.
JOHN R. VERANI (56), Vice President. Senior Vice President of
Putnam Investments, Inc. and Putnam Management.
PAUL M. O'NEIL (42), Vice President. Vice President of Putnam
Investments, Inc. and Putnam Management.
JOHN D. HUGHES (60), Vice President and Treasurer.
BEVERLY MARCUS (51), Clerk and Assistant Treasurer.
*Trustees who are or may be deemed to be "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 the
fund. SEE "ADDITIONAL OFFICERS" IN PART I OF THIS SAI. 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. Prior to January, 1992, Ms.
Baxter was Vice President and Principal, Regency Group, Inc. and
Consultant, The First Boston Corporation. Prior to May, 1991,
Dr. Pounds was Senior Advisor to the Rockefeller Family and
Associates, Chairman of Rockefeller Trust Company and Director of
Rockefeller Group, Inc. During the past five years Dr. Shapiro
has provided economic and financial consulting services to
various clients. 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 AND INFORMATION
CONCERNING RETIREMENT GUIDELINES FOR THE TRUSTEES, SEE "CHARGES
AND EXPENSES" IN PART I OF THIS SAI.
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 AND ITS AFFILIATES
Putnam Management is one of America's oldest and largest money
management firms. Putnam Management's staff of experienced
portfolio managers and research analysts selects securities and
constantly supervises the fund's portfolio. By pooling an
investor's money with that of other investors, a greater variety
of securities can be purchased than 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 $78 billion in assets
in nearly 4.5 million shareholder accounts at June 30, 1995. An
affiliate, The Putnam Advisory Company, Inc., manages domestic
and foreign institutional accounts and mutual funds, including
the accounts of many Fortune 500 companies. Another affiliate,
Putnam Fiduciary Trust Company, provides investment advice to
institutional clients under its banking and fiduciary powers. At
June 30, 1995, Putnam Management and its affiliates managed over
$109 billion in assets, including over $16 billion in tax-exempt
securities and over $47 billion in retirement plan assets.
Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust
Company are subsidiaries of Putnam Investments, Inc., a holding
company which is in turn wholly owned by Marsh & McLennan
Companies, Inc., a publicly-owned holding company whose principal
operating subsidiaries are international insurance and
reinsurance brokers, investment managers and management
consultants.
Trustees and officers of 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, custodian fees and transfer
agency fees paid or allowed by the fund.
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 "CHARGES AND EXPENSES" IN PART I OF THIS
SAI. 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 SAI (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. 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. THE TERMS OF ANY
EXPENSE LIMITATION FROM TIME TO TIME IN EFFECT ARE DESCRIBED IN
EITHER THE PROSPECTUS OR PART I OF THIS SAI.
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 Putnam funds, 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 "CHARGES AND EXPENSES" IN PART I OF THIS SAI.
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.
PERSONAL INVESTMENTS BY EMPLOYEES OF PUTNAM MANAGEMENT
Employees of Putnam Management are permitted to engage in
personal securities transactions, subject to requirements and
restrictions set forth in Putnam Management's Code of Ethics.
The Code of Ethics contains provisions and requirements designed
to identify and address certain conflicts of interest between
personal investment activities and the interests of investment
advisory clients such as the funds. Among other things, the Code
of Ethics, consistent with standards recommended by the
Investment Company Institute's Advisory Group on Personal
Investing, prohibits certain types of transactions absent prior
approval, imposes time periods during which personal transactions
may not be made in certain securities, and requires the
submission of duplicate broker confirmations and quarterly
reporting of securities transactions. Additional restrictions
apply to portfolio managers, traders, research analysts and
others involved in the investment advisory process. Exceptions
to these and other provisions of the Code of Ethics may be
granted in particular circumstances after review by appropriate
personnel.
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 "CHARGES AND EXPENSES" IN PART I
OF THIS SAI 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 "CHARGES AND EXPENSES" IN PART I
OF THIS SAI 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 on the basis of the number of shareholder accounts,
the number of transactions and the assets of the fund. Putnam
Investor Services has won the DALBAR Quality Tested Service Seal
every year since the award's 1990 inception. Over 10,000 tests
of 38 separate shareholder service components demonstrated that
Putnam Investor Services tied for highest scores, with two other
mutual fund companies, 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 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 "CHARGES AND EXPENSES" IN PART I OF THIS SAI 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 and other fixed-income securities
and index options held by the fund are priced as of their close
of trading at 4:15 p.m.
Securities for which market quotations are readily available are
valued at prices which, in the opinion of 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 securities are valued at the mean between the
last reported bid and asked prices. Short-term investments
having remaining maturities of 60 days or less are valued at
amortized cost, which approximates market value. All other
securities and assets are valued at their fair value following
procedures approved by the Trustees. Liabilities are deducted
from the total, and the resulting amount is divided by the number
of shares of the class outstanding.
Reliable market quotations are not considered to be readily
available for long-term corporate bonds and notes, certain
preferred stocks, tax-exempt securities, and certain foreign
securities. These investments are valued at fair value on the
basis of valuations furnished by pricing services, which
determine valuations for normal, institutional-size trading units
of such securities using methods based on market transactions for
comparable securities and various relationships between
securities which are generally recognized by institutional
traders.
If any securities held by the fund are restricted as to resale,
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 SAI contains additional
information which may be of interest to investors.
Class A shares and class M shares are generally 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 SAI
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 or class
M 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 B shares will automatically convert into class A shares at
the end of the month eight years after the purchase date. 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 condition that such conversions
will not constitute taxable events for Federal tax purposes.
Class Y shares, which are not subject to sales charges or a CDSC,
are available only to certain defined contribution plans. See
the prospectus that offers class Y shares for more information.
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. Pre-authorized 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 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 all other 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 is subject to additional
requirements. In the case of Putnam American Government Income
Fund, Putnam Asia Pacific Growth Fund, Putnam Asset Allocation
Funds, Putnam Capital Appreciation Fund, Putnam Preferred Income
Fund, Putnam Diversified Equity Trust, Putnam Equity Income Fund,
Putnam Europe Growth Fund, The Putnam Fund for Growth & Income,
Putnam Global Governmental Income Trust, Putnam Growth and Income
Fund II, Putnam High Yield Advantage Fund, Putnam Investment
Funds, Putnam Intermediate Tax Exempt Fund, Putnam Investment-
Grade Bond Fund, Putnam Municipal Income Fund, Putnam Natural
Resources Fund, Putnam OTC Emerging Growth Fund, Putnam Overseas
Growth Fund, Putnam Tax Exempt Income Fund and Putnam Tax-Free
Income 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 objective(s)
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 The
Nasdaq Stock Market, Inc. 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 on The
Nasdaq Stock Market, Inc. 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
without an initial sales charge or a CDSC in connection with the
acquisition of substantially all of the securities owned by other
investment companies or personal holding companies, 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. The fund may sell class M shares at net
asset value to members of qualified groups. See "Group
purchases of class A and class M shares" below.
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 of 1986, as amended (the
"Code"));
(iv) tax-exempt organizations qualifying under Section
501(c)(3) of the Internal Revenue Code (not including tax-
exempt organizations qualifying under Section 403(b)(7) (a
"403(b) plan") of the Code; 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 of Intention. 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 of Intention 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 of Intention 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 of Intention
which are eligible for purchase under a Statement of Intention
(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.
GROUP PURCHASES OF CLASS A AND CLASS M SHARES. Members of
qualified groups may purchase class A shares of the fund at a
group sales charge rate of 4.50% 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. Members of qualified
groups may also purchase class M shares at net asset value.
To receive the class A or class M group rate, group members must
purchase 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 shares directly to
Putnam Investor Services. Purchases of 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 shares purchased under the class A group discount
are included in calculating the purchased amount for the purposes
of these requirements.
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, with respect to the class
A discount only, 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) with respect to the class A discount
only, 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, with respect to the class A
discount only, 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 participant-
directed qualified retirement plans with at least 200 eligible
employees, or prior to December 1, 1995, a plan sponsored by an
employer or by affiliated employers which have at least 750
employees and, beginning December 1, 1995, the fund may sell
class M shares at net asset value to participant-directed
qualified retirement plans with at least 50 eligible employees.
A participant-directed qualified retirement plan participating in
a "multi-fund" program approved by Putnam Mutual Funds may
include amounts invested in the other mutual funds participating
in such program for purposes of determining whether the plan may
purchase class A shares at net asset value based on the size of
the purchase as described in the prospectus. These investments
will also be included for purposes of the discount privileges and
programs described above.
Additional information about participant-directed qualified
retirement plans and individual account plans is available from
investment dealers or from Putnam Mutual Funds.
<PAGE>
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 with at least 200 eligible employees, or prior
to December 1, 1995, a plan sponsored by an employer with more
than 750 employees), Putnam Mutual Funds pays commissions during
each one-year measuring period, determined as described above, at
the rate of 1.00% of the first $2 million, 0.80% of the next $1
million and 0.50% thereafter, except that commissions on sales
prior to December 1, 1995 are based on cumulative purchases
during the life of the account and are paid 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 an
ACWP and recalculated thereafter on a pro rata basis at the time
of each ACWP payment. Therefore, shareholders who have chosen an
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) of the Code
or from a 403(b) plan 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 PLANS
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 SAI 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.
<PAGE>
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 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 1 year after the date of the
check.
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. 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 sell shares" in the
prospectus. Money market funds and certain other funds will not
issue share certificates. A shareholder may send to Putnam
Investor Services any certificates which have been previously
issued 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.
REINSTATEMENT PRIVILEGE
An investor who has redeemed shares of the fund may reinvest
(within 1 year) the proceeds of such sale in shares of the same
class of the fund, or may be able to reinvest (within 1 year) the
proceeds in shares of the same class of one of the other
continuously offered Putnam funds (through the Exchange Privilege
described in the prospectus), including, in the case of shares
subject to a CDSC, the amount of CDSC charged on the redemption.
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. The
time that the previous investment was held will be included in
determining any applicable CDSC due upon redemptions and, in the
case of class B shares, the eight-year period for conversion to
class A shares. Shareholders will receive from Putnam Mutual
Funds the amount of any CDSC paid at the time of redemption as
part of the reinstated investment, which may be treated as
capital gains to the shareholder for tax purposes. 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 the Reinstatement 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 paying the distribution 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 the fund paying
the distribution 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 ("ACWP"). An investor who owns or
buys shares of the fund valued at $10,000 or more at the current
public offering price may open an ACWP 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 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 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 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 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 plan at any
time. A 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 SAI 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 the Government National Mortgage Association ("GNMAs"),
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 highlights" 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, generally reflecting
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, including 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 in its broad investment class as
determined by Morningstar, Inc. Morningstar ratings cover
a variety of performance periods, including 3-year, 5-
year, 10-year and overall performance. The performance
factor for the overall rating 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 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. The fund may from time to time refer to results
published in various periodicals, including Barrons, Financial
World, Forbes, Fortune, Investor's Business Daily, Kiplinger's
Personal Finance Magazine, Money, U.S. News and World Report and
The Wall Street Journal.
Independent, unmanaged indexes, such as those listed below, may
be used to present a comparative benchmark of fund performance.
The performance figures of an index reflect changes in market
prices, reinvestment of all dividend and interest payments and,
where applicable, deduction of foreign withholding taxes, and do
not take into account brokerage commissions or other costs.
Because the fund is a managed portfolio, the securities it owns
will not match those in an index. Securities in an index may
change from time to time.
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 change in the
cost of selected consumer goods and services and does not
represent a return on an investment vehicle.
THE DOW JONES INDUSTRIAL AVERAGE is an index of 30 common
stocks frequently used as a general measure of stock
market performance.
THE DOW JONES UTILITIES AVERAGE is an index of 15 utility
stocks frequently used as a general measure of stock
market performance.
CS FIRST BOSTON HIGH YIELD INDEX is a market-weighted
index including publicly traded bonds having a rating
below BBB by Standard & Poor's and Baa by Moody's.
THE LEHMAN BROTHERS CORPORATE BOND INDEX is an index of
publicly issued, fixed-rate, non-convertible
investment-grade domestic corporate debt securities
frequently used as a general measure of the performance of
fixed-income securities.
THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX is an
index of publicly issued U.S. Treasury obligations, debt
obligations of U.S. government agencies (excluding
mortgage-backed securities), fixed-rate, non-convertible,
investment-grade corporate debt securities and U.S.
dollar-denominated, SEC-registered non-convertible debt
issued by foreign governmental entities or international
agencies used as a general measure of the performance of
fixed-income securities.
THE LEHMAN BROTHERS INTERMEDIATE TREASURY BOND INDEX is an
index of publicly issued U.S. Treasury obligations with
maturities of up to ten years and is used as a general
gauge of the market for intermediate-term fixed-income
securities.
THE LEHMAN BROTHERS LONG-TERM TREASURY BOND INDEX is an
index of publicly issued U.S. Treasury obligations
(excluding flower bonds and foreign-targeted issues) that
are U.S. dollar-denominated and have maturities of 10
years or greater.
THE LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX
includes 15- and 30-year fixed rate securities backed by
mortgage pools of the Government National Mortgage
Association, Federal Home Loan Mortgage Corporation, and
Federal National Mortgage Association.
THE LEHMAN BROTHERS MUNICIPAL BOND INDEX is an index of
approximately 20,000 investment-grade, fixed-rate
tax-exempt bonds.
THE LEHMAN BROTHERS TREASURY BOND INDEX is an index of
publicly issued U.S. Treasury obligations (excluding
flower bonds and foreign-targeted issues) that are U.S.
dollar denominated, have a minimum of one year to
maturity, and are issued in amounts over $100 million.
THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX is an
index 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.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX is an
index of approximately 1,045 equity securities issued by
companies located in 18 countries and listed on the stock
exchanges of Europe, Australia, and the Far East. All
values are expressed in U.S. dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE INDEX is
an index of approximately 627 equity securities issued by
companies located in one of 13 European countries, with
all values expressed in U.S. dollars.
THE MORGAN STANLEY CAPITAL INTERNATIONAL PACIFIC INDEX is
an index of approximately 418 equity securities issued by
companies located in 5 countries and listed on the
exchanges of Australia, New Zealand, Japan, Hong Kong,
Singapore/Malaysia. All values are expressed in U.S.
dollars.
THE NASDAQ INDUSTRIAL AVERAGE is an index of stocks traded
in The Nasdaq Stock Market, Inc. National Market System.
THE SALOMON BROTHERS LONG-TERM HIGH-GRADE CORPORATE BOND
INDEX is an index of publicly traded corporate bonds
having a rating of at least AA by Standard & Poor's or Aa
by Moody's and is frequently used as a general measure of
the performance of fixed-income securities.
THE SALOMON BROTHERS LONG-TERM TREASURY INDEX is an index
of U.S. government securities with maturities greater than
10 years.
THE SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX is an
index that tracks the performance of the 14 government
bond markets of Australia, Austria, Belgium Canada,
Denmark, France, Germany, Italy, Japan, Netherlands,
Spain, Sweden, United Kingdom and the United States.
Country eligibility is determined by market capitalization
and investability criteria.
THE SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX (non
$U.S.) is an index of foreign government bonds calculated
to provide a measure of performance in the government bond
markets outside of the United States.
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX is an
index of common stocks frequently used as a general
measure of stock market performance.
STANDARD & POOR'S 40 UTILITIES INDEX is an index of 40
utility stocks.
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.
<PAGE>
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
Schedules:
(1) Financial Statements:
Statement of assets and liabilities --
June 30, 1995(a).
Statement of operations -- year ended
June 30, 1995(a).
Statement of changes in net assets -- years
ended June 30, 1995 and June 30, 1994 (a).
Financial highlights (a)(b).
Notes to financial statements(a).
(2) Supporting Schedules:
Schedule I -- Portfolio of investments
owned -- June 30, 1995(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.
2. By-Laws, as amended through June 1, 1994 --
Incorporated by reference to Post-Effective
Amendment No. 4 to the Registrant's
Registration Statement.
3. Not applicable.
4a. Class A Specimen share certificate --
Incorporated by reference to Post-Effective
Amendment No. 4 to the Registrant's
Registration Statement.
4b. Class B Specimen share certificate --
Incorporated by reference to Post-Effective
Amendment No. 4 to the Registrant's
Registration Statement.
4c. Class M Specimen share certificate --
Incorporated by reference to Post-Effective
Amendment No. 4 to the Registrant's
Registration Statement.
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 -- Incorporated by reference to Post-
Effective Amendment No. 4 to the Registrant's
Registration Statement.
5. Management Contract dated February 7, 1991 --
Incorporated by reference to Pre-Effective
Amendment No. 2 to the Registrant's
Registration Statement.
6a. Distributor's Contract dated June 1, 1994 --
Incorporated by reference to Post-Effective
Amendment No. 4 to the Registrant's
Registration Statement.
6b. Form of Specimen Dealer Sales Contract --
Exhibit 1.
6c. Form of Specimen Financial Institution Sales
Contract -- Exhibit 2.
7. Not applicable.
8. Custodian Agreement with Putnam Fiduciary
Trust Company dated May 3, 1991, as amended
July 13, 1992 -- Exhibit 3.
9. Investor Servicing Agreement dated June 3,
1991 with Putnam Fiduciary Trust Company --
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. Form of Prototype Individual Retirement
Account Plan -- Incorporated by reference to
Post-Effective Amendment No. 4 to the
Registrant's Registration Statement.
14b. Form of Prototype Basic Plan Document and
related Plan Agreements -- Incorporated by
reference to Post-Effective Amendment No. 4
to the Registrant's Registration Statement.
15a. Class A Distribution Plan and Agreement dated
June 1, 1994 -- Incorporated by reference to
Post-Effective Amendment No. 4 to the
Registrant's Registration Statement.
15b. Class B Distribution Plan and Agreement dated
June 1, 1994 -- Incorporated by reference to
Post-Effective Amendment No. 4 to the
Registrant's Registration Statement.
15c. Class M Distribution Plan and Agreement
dated November 28, 1994, -- Exhibit 4.
15d. Form of Specimen Dealer Service Agreement --
Exhibit 5.
15e. Form of Specimen Financial Institution
Service Agreement -- Exhibit 6.
16. Schedules for computation of performance
quotations -- Exhibit 7.
17a. Financial Data Schedule for Class A shares
-- Exhibit 8.
17b. Financial Data Schedule for Class B shares
-- Exhibit 9.
17c. Financial Data Schedule for Class M shares
-- Exhibit 10.
18. Rule 18f-3(d) -- Exhibit 11.
Item 25. Persons Controlled by or under Common Control with
Registrant
None.
<PAGE>
Item 26. Number of Holders of Securities
As of September 30, 1995 the number of record holders
of each class of securities of the Registrant are as follows:
Number of record holders
Class A Class B Class M Class Y
169,331 162,820 3569 1
Item 27. Indemnification
The information required by this item is incorporated
herein by reference from the Registrant's Registration Statement
on Form N-1A under the Investment Company Act of 1940 (File No.
811-6190).<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
Gail S. Attridge Prior to November, 1993, International
Vice President Analyst, Keystone Custodian Funds,
200 Berkeley Street, Boston, MA
02116
James D. Babcock Prior to June, 1994, Interest
Assistant Vice President Supervisor, Salomon Brothers, Inc.
7 World Trade Center, New York, NY
10048
Robert K. Baumbach Prior to August, 1994, Vice President
Vice President and Analyst, Keystone Custodian
Funds, 200 Berkeley St., Boston, MA
02110
Janet S. Becker Prior to July, 1995, National Account
Assistant Vice President Manager for Booz-Allen & Hamilton,
American Express Travel Management
Services, 100 Cambridge Park Drive,
02140; Prior to August, 1994,
Account Manager, Hilton at Dedham
Place, Dedham, MA 02026
Sharon A. Berka Prior to January, 1994, Vice
Vice President President - Compensation Manager,
BayBanks, Inc., 175 Federal Street,
Boston, MA 02110
Matthew G. Bevin Prior to February, 1995, Consultant,
Assistant Vice President SEI Corporation, 680 East Swedesford
Road, Wayne, PA 19807
Thomas Bogan Prior to November, 1994, Analyst
Senior Vice President Lord, Abbett & Co., 767 Fifth
Avenue, New York, NY 10153
Michael F. Bouscaren Prior to May, 1994, President and
Senior Vice President Chairman of the Board of Directors
at Salomon Series Funds, Inc. and a
Director of Salomon Brothers Asset
Management, 7 World Trade Center,
New York, NY 10048
Brett Browchuk Prior to April, 1994, Managing
Managing Director Director, Fidelity Investments, 82
Devonshire St., Boston, MA 02109
Andrea Burke Prior to August, 1994, Vice President
Vice President and Portfolio Manager, Back Bay
Advisors, 399 Boylston St., Boston,
MA 02116
Susan Chapman Prior to June, 1995, Vice President,
Senior Vice President Forbes, Walsh, Kelly & Company,
Inc., 17 Battery Place, New York, NY
10004
Steven Cheshire Prior to January, 1994, Assistant
Vice President Vice President, Wellington
Management, 75 State Street, Boston,
MA 02109
Louis F. Chrostowski Prior to August, 1995, Manager of
Vice President Compensation and Benefits, Itek
Optical Systems, 10 MacGuire Rd.,
Lexington, MA 02173
Judith S. Deming Prior to May, 1995, Asset Manager,
Assistant Vice President Fidelity Management & Research
Company, 82 Devonshire St., Boston,
MA 02109
John A. DeTore Prior to January, 1994, Director of
Managing Director Quantitative Portfolio Management,
Wellington Management, 75 State
Street, Boston, MA 02109
Theodore J. Deutz Prior to January, 1995, Senior Vice
Vice President President, Metropolitan West
Securities, Inc. 10880 Wilshire
Blvd., Suite 200, Los Angeles, CA
90024
Michael G. Dolan Prior to February, 1994, Senior
Assistant Vice President Financial Analyst, General Electric
Company, 1000 Western Ave., Lynn, MA
01905
Joseph J. Eagleeye Prior to August, 1994, Associate,
Assistant Vice President David Taussig & Associates, 424
University Ave., Sacramento, CA
95813
Michael T. Fitzgerald Prior to September, 1994, Senior
Senior Vice President Vice President, Vantage Global
Advisers, 1201 Morningside Dr.,
Manhattan Beach, CA 90266
Roland Gillis Prior to March, 1995, Vice President
Senior Vice President and Senior Portfolio Manager,
Keystone Group, Inc., 200 Berkeley
St., Boston, MA 02116
Mark D. Goodwin Prior to May, 1994, Manager, Audit &
Assistant Vice President Operations Analysis, Mitre
Corporation, 202 Burlington Rd.,
Bedford, MA 01730
Stephen A. Gorman Prior to July, 1994, Financial
Assistant Vice President Analyst, Boston Harbor Trust
Company, 100 Federal St., Boston, MA
02110
Jill Grossberg Prior to March, 1995, Associate
Assistant Vice President Counsel, 440 Financial Group of
and Associate Counsel Worcester, Inc., 440 Lincoln St.,
Worcester, MA 01653; Prior to
November, 1993, Counsel, Berman
DeValerio & Pease, One Liberty
Square, Boston, MA 02109
Deborah R. Healey Prior to June, 1994, Senior Equity
Senior Vice President Trader, Fidelity Management &
Research Company, 82 Devonshire St.,
Boston, MA 02109
Lisa A. Heitman Prior to July, 1994, Securities
Senior Vice President Analyst, Lord, Abbett & Company, 767
Fifth Ave., New York, NY 10153
Pamela Holding Prior to May, 1995, Senior Securities
Vice President Analyst, Kemper Financial Services,
Inc., 120 South LaSalle St.,
Chicago, IL 60603
Michael F. Hotchkiss Prior to May, 1994, Vice President,
Vice President Massachusetts Financial Services,
500 Boylston St., Boston, MA 02116
<PAGE>
Walter Hunnewell, Jr. Prior to April, 1994, Managing
Vice President Director, Veronis, Suhler &
Associates, 350 Park Avenue, New
York, NY 10022
Joseph Joseph Prior to October, 1994, Managing
Vice President Director, Vert Independent Capital
Research, 53 Wall St., New York, NY
10052
Mary E. Kearney Prior to February, 1995, Partner,
Managing Director Price Waterhouse, 160 Federal St.,
Boston, MA 02110
D. William Kohli Prior to September, 1994, Executive
Managing Director Vice President and Co-Director of
Global Bond Management, Franklin
Advisors/Templeton Investment
Counsel, 777 Mariners Island Blvd.,
San Mateo, CA 94404
Karen R. Korn Prior to June, 1994, Vice President,
Vice President Assistant to the President, Designs,
Inc. 1244 Boylston St., Chestnut
Hill, MA 02167
Peter B. Krug Prior to January, 1995, Owner and
Vice President Director, Griswold Special Care, 42
Ethan Allen Drive, Acton, MA 01720
Catherine A. Latham Prior to August, 1995, Director of
Vice President Human Resources, Electronic Data
Systems, 1601 Trapello Rd., Waltham,
MA 02154
Kevin Lemire Prior to March, 1995, Corporate
Assistant Vice President Facilities Manager, Bose
Corporation, The Mountain,
Framingham, MA 01701; Prior to June,
1994, Facilities Manager, The
Pioneer Group, 60 State St., Boston,
MA 02109
Lawrence J. Lasser Director, Marsh & McLennan Companies,
President, Director Inc., 1221 Avenue of the Americas,
and Chief Executive New York, NY 10020; Director,
Officer INROADS/Central New England, Inc.,
99 Bedford St., Boston,MA 02111
Jeffrey R. Lindsey Prior to April, 1994, Vice President
Vice President and Board Member, Strategic
Portfolio Management, 900 Ashwood
Parkway, Suite 290, Atlanta, GA
30338
James W. Lukens Prior to February, 1995, Vice
Senior Vice President President of Institutional
Marketing, Keystone Group, Inc., 200
Berkeley St., Boston, MA 02116
Michael Martino Prior to January, 1994, Executive
Managing Director Vice President and Chief Investment
Officer until 1992
Helen Mazareas Prior to May, 1995, Librarian,
Assistant Vice President Scudder, Stevens & Clark, 2
International Place, Boston, MA
02110; Prior to January, 1994,
Systems Librarian, Goodwin, Procter
& Hoar, Exchange Place, Boston, MA
02109
Alexander J. McAuley Prior to June, 1995, Vice President,
Senior Vice President Deutsche Bank Securities Corp. -
Deutsche Asset Management, 1290
Avenue of the Americas, New York, NY
10019
Susan A. McCormack Prior to May, 1994, Associate
Vice President Investment Banker, Merrill Lynch &
Co., 350 South Grand Ave., Suite
2830, Los Angeles, CA 90071
Carol McMullen Prior to June, 1995, Senior Vice,
Managing Director President and Senior Portfolio
Manager, Baring Asset Management,
125 High Street, Boston, MA 02110
Darryl Mikami Prior to June, 1995, Vice President,
Senior Vice President Fidelity Management & Research
Company, 82 Devonshire St., Boston,
MA 02109
Carol H. Miller Prior to July, 1995, Business
Assistant Vice President Development Officer, Bank of Boston
- Connecticut, 100 Pearl St.,
Hartford, CT 06101
Seung H. Minn Prior to June, 1995, Vice President
Vice President in Portfolio Management and
Research, Templeton Quantitative
Advisors, Inc.,
Maziar Minovi Prior to January, 1995, Associate
Vice President Privatization Specialist, The
International Bank for
Reconstruction and Development, 1818
H St. N.W., Washington, DC 20433
Kenneth Mongtomery Prior to July, 1995, Senior Vice
Managing Director President and Director of World Wide
Sales, Chemcial Banking Corporation,
Paul G. Murphy Prior to January, 1995, Section
Assistant Vice President Manager, First Data Corp., 53 State
Street, Boston, MA 02109
C. Patrick O'Donnell, Jr. Prior to May, 1994, President,
Managing Director Exeter Research, Inc., 163 Water
Street, Exeter, New Hampshire, 03833
Brian O'Keefe Prior to December, 1993, Vice
Vice President President - Foreign Exchange Trader,
Bank of Boston, 100 Federal Street,
Boston, MA 02109
Margaret Pietropaolo Prior to January, 1994, Data Base/
Assistant Vice President Production Analyst, Wellington
Management, 75 State Street, Boston,
MA 02109
Jane E. Price Prior to February, 1995, Associate
Assistant Vice President ERISA Attorney, Hale & Dorr,
60 State St., Boston, MA 02109
Keith Quinton Prior to July, 1995, Vice President,
Senior Vice President Falconwood Securities Corporation.,
Paul T. Quistberg Prior to July, 1995, Assistant
Assistant Vice President Investment Officer, The Travelers
Insurance Group.,
George Putnam Chairman and Director, Putnam Mutual
Chairman and Director Funds Corp.; Director, The Boston
Company, Inc., One Boston Place,
Boston, MA 02108; Director, Boston
Safe Deposit and Trust Company, One
Boston Place, Boston, MA 02108;
Director, Freeport-McMoRan, Inc.,
200 Park Avenue, New York, NY 10166;
Director, General Mills, Inc., 9200
Wayzata Boulevard, Minneapolis, MN
55440; Director, Houghton Mifflin
Company, One Beacon Street, Boston,
MA 02108; Director, Marsh & McLennan
Companies, Inc., 1221 Avenue of the
Americas, New York, NY 10020;
Director, Rockefeller Group, Inc.,
1230 Avenue of the Americas, New
York, NY 10020
Thomas Rosalanko Prior to February, 1995, Senior
Senior Vice President Account Manager, SEI Corporation,
680 East Swedesford Road, Wayne, PA
19807
Michael Scanlon Prior to February, 1995, Senior
Assistant Vice President Financial Analyst, Massachusetts
Financial Services, 500 Boylston
St., Boston, MA 02116
Robert M. Shafto Prior to January, 1995, Account
Assistant Vice President Manager, IBM Corporation, 404 Wyman
St., Waltham, MA 02254
Karen F. Smith Prior to May, 1994, Consultant and
Assistant Vice President Portfolio Manager, Wyatt Asset
Services, Inc., 1211 W.W. 5th Ave.,
Portland, OR 97204
Margaret Smith Prior to September, 1995, Vice
Senior Vice President President, State Street Research,
One Financial Center, Boston, MA
02111
Steven Spiegel Prior to December, 1994, Managing
Senior Managing Director Director/Retirement, Lehman
Brothers, Inc., 200 Vesey St., World
Financial Center, New York, NY 10285
George W. Stairs Prior to July, 1994, Equity Research
Vice President Analyst, ValueQuest Limited,
Roundy's Hill, Marblehead, MA 01945
James H. Steggall Prior to May, 1995, Senior Municipal
Assistant Vice President Analyst, Colonial Management
Associates, Inc., One Financial
Center, Boston, MA 02111; Prior to
May, 1994, Controller, Wheelabrator
Environmental Systems, Libery Lane,
Hampton, NH 03842
Karen Stewart Prior to May, 1995, Equity Research
Assistant Vice President Analyst, Chancellor Capital
Management, 1166 Avenue of the
Americas, New York, NY 10036
Roger Sullivan Prior to December, 1994, Vice
Senior Vice President President, State Street Research &
Management Co., One Financial
Center, Boston, MA 02111
Robert Swift Prior to August, 1995, Far East Team
Senior Vice President Leader and Portfolio Manager, IAI
International/Hill Samuel Investment
Advisors, 10 Fleet Place, London,
England
Jerry H. Tempelman Prior to May, 1994, Senior Money
Assistant Vice President Market Trader, State Street Bank &
Trust Co., 225 Franklin, Street,
Boston, MA 02110
Michael Temple Prior to June, 1995, Vice President,
Vice President Duff & Phelps, 55 East Monroe,
Chicago, IL 60613
Hillary F. Till Prior to May, 1994, Fixed-Income
Vice President Derivative Trader, Bank of Boston,
100 Federal Street, Boston, MA
02109; Prior to December, 1993,
Equity Analyst, Harvard Management
Company, 600 Atlantic St., Boston,
MA 02109
Lisa L. Trubiano Prior to July, 1995, Senior Marketing
Vice President Consultant, John Hancock Mutual Life
Insurance Company,
Elizabeth A. Underhill Prior to August, 1994, Vice President
Senior Vice President and Senior Equity Analyst, State
Street Bank and Trust Company, 225
Franklin St., Boston, MA 02110
Charles C. Van Vleet Prior to August, 1994, Vice President
Senior Vice President and Fixed-Income Manager, Alliance
Capital Management, 1345 Avenue of
the Americas, New York, NY 10105
Francis P. Walsh Prior to November, 1994, Research
Vice President Analyst, Furman, Selz, Inc. 230 Park
Avenue, New York, NY 10169; Prior to
December, 1993, Strategic Marketing
Analyst, Lotus Development,
Corporation 55 Cambridge Parkway,
Cambridge, MA 02142
Michael R. Weinstein Prior to March, 1994, Management
Vice President Consultant, Arthur D. Little, Acorn
Park, Cambridge, MA 02140
<PAGE>
Item 29. Principal Underwriter
(a) Putnam Mutual Funds Corp. is the principal underwriter for
each of the following investment companies, including the
Registrant:
Putnam Adjustable Rate U.S. Government Fund, Putnam American
Government Income Fund, Putnam American Renaissance Fund, Putnam
Arizona Tax Exempt Income Fund, Putnam Asia Pacific Growth Fund,
Putnam Asset Allocation Funds, Putnam Balanced Retirement Fund,
Putnam California Tax Exempt Income Trust, Putnam California Tax
Exempt Money Market Fund, Putnam Capital Appreciation Fund,
Putnam Capital Manager Trust, Putnam Convertible Income-Growth
Trust, Putnam Diversified Equity Trust, Putnam Diversified Income
Trust, Putnam Equity Income Fund, Putnam Europe Growth Fund,
Putnam Federal Income Trust, Putnam Florida Tax Exempt Income
Fund, The Putnam Fund for Growth and Income, The George Putnam
Fund of Boston, Putnam Global Governmental Income Trust, Putnam
Global Growth Fund, Putnam Growth Fund, Putnam Growth and Income
Fund, Putnam Health Sciences Trust, Putnam High Yield Trust,
Putnam High Yield Advantage Fund, Putnam Income Fund, Putnam
Intermediate Tax Exempt Income Fund, Putnam Intermediate U.S.
Government Income Fund, Putnam Investment Funds, Putnam
Investment-Grade Bond Fund, Putnam Investors Fund, Putnam
Massachusetts Tax Exempt Income Fund, Putnam Michigan Tax Exempt
Income Fund, Putnam Minnesota Tax Exempt Income Fund, Putnam
Money Market Fund, Putnam Municipal Income Fund, Putnam Natural
Resources Fund, Putnam New Jersey Tax Exempt Income Fund, Putnam
New Opportunities Fund, Putnam New York Tax Exempt Income Trust,
Putnam New York Tax Exempt Money Market Fund, Putnam New York Tax
Exempt Opportunities Fund, Putnam Ohio Tax Exempt Income Fund,
Putnam OTC Emerging Growth Fund, Putnam Overseas Growth Fund,
Putnam Pennsylvania Tax Exempt Income Fund, Putnam Preferred
Income Fund, Putnam Research 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<PAGE>
<TABLE>
<CAPTION>
(b) The directors and officers of the Registrant's principal underwriter are:
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
<C> <C> <C>
John V. Adduci Assistant Vice President None
Christopher S. Alpaugh Vice President None
Paulette C. Amisano Vice President None
Ronald J. Anwar Vice President None
Steven E. Asher Senior Vice President None
Scott A. Avery Vice President None
Hallie L. Baron Assistant Vice President None
Ira G. Baron Senior Vice President None
John L. Bartlett Senior Vice President None
Dale Beardon Senior Vice President None
Steven M. Beatty Vice President None
Matthew F. Beaudry Vice President None
Janet S. Becker Assistant Vice President None
John J. Bent Vice President None
Thomas A. Beringer Vice President None
Sharon A. Berka Vice President None
Maureen L. Boisvert Vice President None
John F. Boneparth Managing Director None
Keith R. Bouchard Vice President None
Linda M. Brady Assistant Vice President None
Leslee R. Bresnahan Senior Vice President None
James D. Brockelman Senior Vice President None
Scott C. Brown Vice President None
Gail D. Buckner Senior Vice President None
Robert W. Burke Senior Managing Director None
Ellen S. Callahan Vice President None
Thomas C. Callahan Assistant Vice President None
Peter J. Campagna Vice President None
Robert Capone Vice President None
Charles A. Carey Vice President None
Patricia A. Cartwright Assistant Vice President None
Janet Casale-Sweeney Vice President None
Stephen J. Chaput Assistant Vice President None
Louis F. Chrostowski Vice President None
Daniel J. Church Vice President None
James E. Clinton Assistant Vice President None
Kathleen M. Collman Managing Director None
Mark L. Coneeny Vice President None
Donald A. Connelly Senior Vice President None
Karen E. Connolly Assistant Vice President None
Anna Coppola Vice President None
F. Nicholas Corvinus Senior Vice President None
Thomas A. Cosmer Vice President None
Chad H. Cristo Assistant Vice President None
Lisa M. D'Allesandro Assistant vice President None
Jessica E. Dahill Vice President None
Kenneth L. Daly Senior Vice President None
Edward H. Dane Vice President None
Nancy M. Days Assistant Vice President None
Pamela De Oliveira-Smith Assistant Vice President None
Richard D. DeSalvo Vice President None
Joseph C. DeSimone Assistant Vice President None
Daniel J. Delianedis Vice President None
Judith S. Deming Assistant Vice President None
Teresa F. Dennehy Assistant Vice President None
J. Thomas Despres Senior Vice President None
Michael G. Dolan Assistant Vice President None
Scott M. Donaldson Vice President None
Emily J. Durbin Vice President None
Dwyer Cabana, Susan Vice President None
David B. Edlin Senior Vice President None
James M. English Senior Vice President None
Vincent Esposito Managing Director None
Mary K. Farrell Assistant Vice President None
Michael J. Fechter Vice President None
Susan H. Feldman Vice President None
Paul F. Fichera Senior Vice President None
C. Nancy Fisher Senior Vice President None
Mitchell B. Fishman Senior Vice President None
Joseph C. Fiumara Vice President None
Patricia C. Flaherty Senior Vice President None
Samuel F. Gagliardi Vice President None
Karen M. Gardner Assistant Vice President None
Judy S. Gates Vice President None
Richard W. Gauger Assistant Vice President None
Joseph P. Gennaco Vice President None
Stephen E. Gibson Managing Director None
Mark P. Goodfellow Assistant Vice President None
Robert Goodman Managing Director None
Mark D. Goodwin Assistant Vice President None
Anthony J. Grace Assistant Vice President None
Linda K. Grace Assistant Vice President None
Robert G. Greenly Vice President None
Jill Grossberg Assistant Vice President None
Jeffrey P. Gubala Vice President None
James E. Halloran Vice President None
Thomas W. Halloran Vice President None
Meghan C. Hannigan Assistant Vice President None
Bruce D. Harrington Assistant Vice President None
Marilyn M. Hausammann Senior Vice President None
Howard W. Hawkins, III Vice President None
Deanna R. Hayes-Castro Vice President None
Paul P. Heffernan Vice President None
Susan M. Heimanson Vice President None
Joanne Heyman Assistant Vice President None
Bess J.M. Hochstein Vice President None
Maureen A. Holmes Assistant Vice President None
Paula J. Hoyt Assistant Vice President None
William J. Hurley Senior Vice President None
Gregory E. Hyde Senior Vice President None
Dwight D. Jacobsen Senior Vice President None
Douglas B. Jamieson Senior Managing Director, Director None
Jay M. Johnson Vice President None
Kevin M. Joyce Senior Vice President None
Karen R. Kay Senior Vice President None
Mary E. Kearney Managing Director None
John P. Keating Vice President None
A. Siobahn Kelly Assistant Vice President None
Brian J. Kelly Vice President None
Anne Kinsman Assistnat Vice President None
Deborah H. Kirk Senior Vice President None
Jill A. Koontz Assistant Vice President None
Linda G. Kraunelis Assistant Vice President None
Howard H. Kreutzberg Senior Vice President None
Marjorie B. Krieger Assistant Vice President None
Charles Lacasia Assistant Vice President None
Arthur B. Laffer, Jr. Vice President None
Catherine A. Lathan Vice President None
James D. Lathrop Vice President None
Charles C. Ledbetter Vice President None
Kevin Lemire Assistant Vice President None
Eric S. Levy Vice President None
Edward V. Lewandowski Senior Vice President None
Edward V. Lewandowski, Jr. Vice President None
Samuel L. Lieberman Vice President None
David M. Lifsitz Assistant Vice President None
Ann Marie Linehan Assistant Vice President None
Maura A. Lockwood Vice President None
Rufino R. Lomba Vice President None
Peter V. Lucas Senior Vice President None
Robert F. Lucey Senior Managing Director, Director None
Kathryn A. Lucier Assistant Vice President None
Alana Madden Vice President None
Ann Malatos Assistant Vice President None
Bonnie Mallin Vice President None
Renee L. Maloof Assistant Vice President None
Frederick S. Marius Assistant Vice President None
Karen E. Marotta Vice President None
Kathleen M. McAnulty Assistant Vice President None
Anne B. McCarthy Assistant Vice President None
Paul McConville Vice President None
Marla J. McDougall Assistant Vice President None
Walter S. McFarland Vice President None
Mark J. McKenna Senior Vice President None
Gregory J. McMillan Vice President None
Claye A. Metelmann Vice President None
J. Chris Meyer Senior Vice President None
Bart D. Miller Vice President None
Douglas W. Miller Vice President None
Jeffery M. Miller Senior Vice President None
Ronald K. Mills Vice President None
Peter M. Moore Assistant Vice President None
Mitchell Moret Senior Vice President None
Donald E. Mullen Vice President None
Paul G. Murphy Assistant Vice President None
Brendan R. Murray Vice President None
Robert Nadherny Vice President None
Alexander L. Nelson Managing Director None
John P. Nickodemus Vice President None
Michael C. Noonis Assistant Vice President None
Kristen P. O'Brien Vice President None
Kevin L. O'Shea Senior Vice President None
Nathan D. O'Steen Assistant Vice President None
Joseph R. Palombo Managing Director None
Scott A. Papes Vice President None
Cynthia O. Parr Vice President None
John D. Pataccoli Vice President None
John G. Phoenix Vice President None
Joseph Phoenix Senior Vice President None
Jeffrey E. Place Senior Vice President None
Keith Plapinger Vice President None
Jane E. Price Assistant Vice President None
Douglas H. Powell Vice President None
Susannah Psomas Vice President None
Scott M. Pulkrabek Vice President None
George Putnam Director Chairman & President
George A. Rio Senior Vice President None
Debra V. Rothman Vice President None
Robert B. Rowe Vice President None
Kevin A. Rowell Senior Vice President None
Thomas C. Rowley Vice President None
Charles A. Ruys de Perez Senior Vice President None
Deborah A. Ryan Assistant Vice President None
Robert M. Santosuosso Assistant Vice President None
Debra J. Sarkisian Assistant Vice President None
Catherine A. Saunders Senior Vice President None
Robbin L. Saunders Assistant Vice President None
Karl W. Saur Vice President None
Michael Scanlon Assistant Vice President None
Shannon D. Schofield Vice President None
Christine A. Scordato Vice President None
Joseph W. Scott Assistant Vice President None
John B. Shamburg Vice President None
Kathleen G. Sharpless Managing Director None
John F. Sharry Managing Director None
Stuart D. Sheppard Assistant Vice President None
William N. Shiebler Director and President Vice President
Daniel S. Shore Vice President None
Mark J. Siebold Assistant Vice President None
Gordon H. Silver Senior Managing Director Vice President
John Skistimas, Jr. Assistant Vice President None
Steven Spiegel Senior Managing Director None
Nicholas T. Stanojev Senior Vice President None
Paul R. Stickney Vice President None
Brian L. Sullivan Vice President None
Guy Sullivan Seniior Vice President None
Kevin J. Sullivan Vice President None
Moira Sullivan Vice President None
James S. Tambone Managing Director None
B. Iris Tanner Assistant Vice President None
Louis Tasiopoulos Managing Director None
David S. Taylor Vice President None
John R. Telling Vice President None
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
Christine M. Twigg Assistant Vice Presient None
Larry R. Unger Vice President None
Douglas J. Vander Linde Senior Vice President None
Edward F. Whalen Vice President None
Robert J. Wheeler Senior Vice President None
John B. White Vice President None
Kirk E. Williamson Senior Vice President None
Leigh T. Williamson Vice President None
Jane Wolfson Vice President None
Benjamin I. Woloshin Vice President None
William H. Woolverton Senior Vice President None
Timothy R. Young Vice President None
SooHee L. Zebedee Vice President None
Laura J. Zografos Vice President None
</TABLE>
The principal business address of each person listed above is One
Post Office Square, Boston, MA 02109, except for:
Mr. Alpaugh, 5980 Richmond Highway, Alexandria, VA 22303
Mr. Anwar, 131 Crystal Road, Colmar, PA 18915
Mr. Avery, 7031 Spring Ridge Rd., Cary NC 27511
Mr. Baron, 31 Cala Moreya, Laguna Niguel, CA 92667
Mr. Bartlett, 7 Fairfield St., Boston, MA 02116
Mr. Beatty, 200 High St., Winchester, MA 01890
Mr. Beringer, 4915 Dupont Avenue South, Minneapolis, MN 55409
Ms. Besset, 1140 North LaSalle Blvd, Chicago, IL 60610
Mr. Bouchard, 18 Brice Rd., Annapolis, MD 21401
Mr. Brockelman, 94 Middleton Rd., Boxford, MA 01921
Mr. Brown, 2012 West Grove Drive, Gibson, PA 15044
Ms. Buckner, 21012 West Grove Drive, Gibsonia, PA 15044
Mr. Campagna, 2091-B Lake Park Drive, Smyrna, GA 30080
Ms. Castro, 26 Gould Road, Andover, MA 01810
Mr. Church, 4504 Sir Winston Place, Charlotte, NC 28211
Mr. Cristo, 11 Schenck Ave., Great Neck, NY 11021
Mr. Coneeny, 10 Amherst St., Arlington, MA 02174
Mr. Connelly, 4634 Mirada Way, Sarasota, FL 34238
Mr. Corvinus, 208 Water St., Newburyport, MA 01950
Ms. Dahill, 270-1 C Iven Ave., St. David's, PA 19087
Mr. Deliandis, 206 Promontory Drive, Newport Beach, CA 92660
Mr. DeSalvo, 54 Morriss Place, Maddison, NJ 07940
Mr. DeSimone, Pheasant Run Apartments, Inlet Ridge Drive,
Maryland Heights, MO 63043
Ms. Dwyer-Cabana, 7730 Herrick Park, Hudson, OH 44236
Mr. Edlin, 7 River Road, 305 Palmer Point, Cos Cob, CT 06807
Mr. English, 1184 Pintail Circle, Boulder, CO 80303
Mr. Goodman, 14 Clover Place, Cos Cob, CT 06807
Mr. Gubala, 4308 Rickover Drive, Dallas, TX 75244
Mr. J. Halloran, 978 W. Creek Lane, Westlake Village, CA 91362
Mr. T. Halloran, 19449 Misty Lake Dr., Strongsville, OH 44136
Mr. Hyde, 3305 Sulky, Marietta, GA 30067
Mr. Jacobsen, 2744 Joyce Ridge Drive, Chesterfield, MO 63017
Mr. Johnson, 200 Clock Tower Place, Carmel, CA 93923
Mr. Keating, 5521 Greenville Avenue, Dallas, TX 75206
Mr. Kelley, 3356 North Lakeharbor Lane, Boise, ID 83703
Ms. Kelly, 31 Jeffrey's Neck Road, Ipswich, MA 01938
Ms. Kinsman, 9599 Brookview Circle, Woodbury, MN 55125
Ms. Kirk, 124 Rivermist Dr., Buffalo, NY 14202
Ms. Kraunelis, 584 East Eighth St., South Boston, MA 02127
Mr. Lathrop, 14814 Straub Hill Lane, Chesterfield, MO 63017
Mr. Lewandowski, 805 Darrell Road, Hillsborough, CA 94010
Mr. Lewandowski, Jr., 1 Kara East, Irvine, CA 92720
Mr. Lieberman, 200 Roy St., Seattle, WA 98109
Ms. Madden, 8649 North Himes Avenue, Tampa, FL 33614
Mr. McConville, 515 S. Arlington Heights Rd., Arlington
Heights, IL 6005
Mr. McFarland, 8012 Dancing Fern Trail, Chattanooga, TN 37421
Mr. McMillan, 203 D. Zigler St., Zelienople, PA 16063
Mr. McMurtrie, 14529 Glastonbury, Detroit, MI 48223
Mr. B. Miller, 24815 Acropolis Drive, Mission Viejo, CA 92691
Mr. D. Miller, 70 Williams St., Greenwich, CT 06380
Mr. Moret, 4519 Lawn Avenue, Western Springs, IL 60558
Mr. Murray, 710 Cheyenne Drive, Franklin Lakes, NJ 07417
Mr. Nadherny, 9714 Marmount Drive, Seattle, WA 98117
Mr. Nickodemus, 463 Village Oaks Court, Ann Arbor, MI 48103
Mr. O'Steen, 2091-B Lake Park Drive, Smyrna, GA 30080
Mr. Papes, 3102 Wood View Bridge Drive, Kansas City, KS 66103
Mr. Pataccoli, 333 39th St., Manhattan Beach, CA 90266
Mr. Joe Phoenix, 1426 Asbury Avenue, Hubbard Woods, IL 60093
Mr. John Phoenix, 709 South Rome Avenue, Tampa, FL 33606
Mr. Place, 4211 Loch Highland Parkway, Roswell, GA 30075
Mr. Pulkrabek, 190 Jefferson Lane, Streamwood, IL 60107
Mr. Powell, 1508 Ruth Lane, Newport Beach, CA 92660
Mr. Rowe, 109 Shore Drive, Longwood, FL 32779
Mr. Rowell, 2240 Union St., San Francisco, CA 94123
Mr. Rowley, 237 Peeke Avenue, Kirkwood, MO 63122
Ms. Sarkisian, 1 Goodridge Ct., Boston, MA 02113
Ms. Saunders, 39939 Stevenson Common, Freemont, CA 94538
Ms. Schofield, 618 Rimington Lane, Decatur, GA 30030
Mr. Shamburg, 10603 N. 100th Street, Scottsdale, AZ 85260
Mr. Shore, 2870 Pharr Court South, N.W., Atlanta, GA 30305
Mr. Stickney, 1314 Log Cabin Lane, St. Louis, MO 63124
Mr. B. Sullivan, 777 Pinoake Road, Pittsburgh, PA 15243
Mr. G. Sullivan, 35 Marlborough St., Boston, MA 02116
Ms. M. Sullivan, 493 Zinfandel Lane, St. Helena, CA 94574
Ms. Sweeney, 31 Heritage Way, Marblehead, MA 01945
Mr. Tambone, 10 Commercial Wharf, Boston, MA 02110
Mr. Tasiopolous, 5 Homestead Farms Drive, Norwell, MA 02061
Mr. Tredinnick, 2995 Glenwood Drive, Boulder, CO 80301
Mr. Telling, 5 Spindriff Court, Williamsville, NY 14221
Mr. Unger, 212 E. Broadway, New York, NY 10002
Mr. Williamson, 111 Maple Ridge Way, Covington, LA 70433
Mr. White, 10 Mannion Place, Littleton, MA 01460
Mr. Woloshin, 100 West 89th St., New York, NY 10024
Ms. Zografos, 12712 Coeur de Monde Ct., St. Louis, MO 63146
<PAGE>
Item 30. Location of Accounts and Records
Persons maintaining physical possession of accounts,
books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules
promulgated thereunder are Registrant's Clerk, Beverly Marcus;
Registrant's investment adviser, Putnam Investment Management,
Inc.; Registrant's principal underwriter, Putnam Mutual Funds
Corp.; Registrant's custodian, Putnam Fiduciary Trust Company
("PFTC"); and Registrant's transfer and dividend disbursing
agent, Putnam Investor Services, a division of PFTC. The address
of the Clerk, investment adviser, principal underwriter,
custodian and transfer and dividend disbursing agent is One Post
Office Square, Boston, Massachusetts 02109.
Item 31. Management Services
None.
Item 32. Undertakings
(a) 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. 5 to the Registration Statement of
Putnam Overseas Growth Fund on Form N-1A (File No. 33-37214) of
our report dated August 15, 1995, 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, 1995, which is incorporated by
reference in the Registration Statement.
We also consent to the references to our firm under the
caption "Independent Accountants and Financial Statements" in the
Statement of Additional Information and under the heading
"Financial highlights" in such Prospectuses.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
October 27, 1995
<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 therewith, 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 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/ Eli Shapiro
- --------------------- Trustee April 29, 1995
Eli Shapiro
nf-34.94
<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 its
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston,
and The Commonwealth of Massachusetts, on the th day of
October, 1995.
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; 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
Eli Shapiro Trustee
A.J.C. Smith Trustee
W. Nicholas Thorndike Trustee
By: Gordon H. Silver,
as Attorney-in-Fact
October 31, 1995
S:\SHARED\FUNDS\NEW\A31N1A.1
DEALER SALES CONTRACT
Between: PUTNAM MUTUAL FUNDS CORP. and
General Distributor of
The Putnam Family of Mutual Funds
One Post Office Square
Boston, MA 02109
As general distributor of The Putnam Family of Mutual Funds (the
"Funds"), we agree to sell you shares of beneficial interest
issued by the Funds (the "Shares"), subject to any limitations
imposed by any of the Funds and to confirmation by us in each
instance of such sales. By your acceptance hereof, you agree to
all of the following terms and conditions:
1. Offering Price and Fees
The public offering price at which you may offer the Shares is
the net asset value thereof, as computed from time to time, plus
any applicable sales charge described in the then-current
Prospectus of the applicable Fund. As compensation for each sale
of Shares made by you, you will be allowed the dealer discount if
any, on such Shares described in the then-current Prospectus of
the Fund whose Shares are sold. We reserve the right to revise
the dealer discount referred to herein upon ten days' written
notice to you. We will furnish you upon request with the public
offering prices for the Shares, and you agree to quote such
prices in connection with any Shares offered by you for sale.
Your attention is specifically called to the fact that each sale
is always made subject to confirmation by us at the public
offering price next computed after receipt of the order. There
is no sales charge or dealer discount to dealers on the
reinvestment of dividends and distributions.
In addition to the dealer discount, if any, allowed pursuant to
the foregoing provisions of this Section 1, we may, at our
expense, provide additional promotional incentives or payments to
dealers. If non-cash concessions are provided, each dealer
earning such a concession may elect to receive an amount in cash
equivalent to the cost of providing such concessions. Notice of
the availability of concessions will be given to you by us. All
dealer discounts, promotional incentives, payments and
concessions will be made by us in accordance with National
Association of Securities Dealers, Inc. ("NASD") guidelines and
rules.
<PAGE>
2. Manner of Offering,
Selling and Purchasing Shares
We have delivered to you a copy of each Fund's current Prospectus
and will provide you with such number of copies of each Fund's
Prospectus, Statement of Additional Information and shareholder
reports and of supplementary sales materials prepared by us, as
you may reasonably request. You will offer and sell the Shares
only in accordance with the terms and conditions of the current
Prospectus and Statement of Additional Information of the
applicable Fund. Neither you nor any other person is authorized
to give any information or to make any representations other than
those contained in such Prospectuses, Statements of Additional
Information and shareholder reports or in such supplementary
sales materials. You agree that you will not use any other
offering materials for the Funds without our written consent.
You hereby agree:
(i) to exercise your best efforts to find purchasers for
the Shares of the Funds,
(ii) to furnish to each person to whom any sale is made a
copy of the then-current Prospectus of the applicable fund,
(iii) to transmit to us promptly upon receipt any and all
orders received by you, and
(iv) to pay to us the offering price, less any dealer
discount to which you are entitled, within three (3)
business days of our confirmation of your order, or such
shorter time as may be required by law. If such payment is
not received within said time period, we reserve the right,
without prior notice, to cancel the sale, or at our option
to return the Shares to the issuer for redemption or
repurchase. In the latter case, we shall have the right to
hold you responsible for any loss resulting to us. Should
payment be made by check on your local bank, liquidation of
Shares may be delayed pending clearance of your check. You
agree to issue confirmations promptly for all accepted
purchase orders for accounts held in street name. You shall
make all sales subject to our confirmation. All orders are
subject to acceptance or rejection by us in our sole
discretion, and by the Funds in their sole discretion. The
procedure stated herein relating to the pricing and handling
of orders shall be subject to instructions which we may
forward to you from time to time.
3. Compliance With Law
You hereby represent that you are registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended, and are
licensed and qualified as a broker-dealer or otherwise authorized
to offer and sell the Shares under the laws of each jurisdiction
in which the Shares will be offered and sold by you. You further
confirm that you are a member in good standing of the NASD and
agree to maintain such membership in good standing or, in the
alternative, you are a foreign dealer not eligible for membership
in the NASD.
You agree that in selling Shares you will comply with all
applicable laws, rules and regulations, including the applicable
provisions of the Securities Act of 1933, as amended, the
applicable rules and regulations of the NASD, and the applicable
rules and regulations of any jurisdiction in which you sell,
directly or indirectly, any Shares. You agree not to offer for
sale or sell the Shares in any jurisdiction in which the Shares
are not qualified for sale or in which you are not qualified as a
broker-dealer.
4. Relationship with Dealers
In offering and selling Shares under this Contract, you shall be
acting as principal and nothing herein shall be construed to
constitute you or any of your agents, employees or
representatives as our agent or employee, or as an agent or
employee of the Funds. As general distributor of the Funds, we
shall have full authority to take such action as we may deem
advisable in respect of all matters pertaining to the
distribution of the Shares. We shall not be under any obligation
to you, except for obligations expressly assumed by us in this
Contract.
5. Termination
Either party hereto may terminate this Contract, without cause,
upon ten days' written notice to the other party. We may
terminate this Contract for cause upon the violation by you of
any of the provisions hereof, such termination to become
effective on the date such notice of termination is mailed to
you. This Contract shall terminate automatically if either Party
ceases to be a member of the NASD.
6. Assignability
This Contract is not assignable or transferable, except that we
may assign or transfer this Contract to any successor which
becomes general distributor of the Funds.
7. Governing Law
This Contract and the rights and obligations of the parties
hereunder shall be governed by and construed under the laws of
The Commonwealth of Massachusetts.
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for
that purpose, whereupon this letter shall constitute a binding
agreement between us.
Very truly yours,
PUTNAM MUTUAL FUNDS CORP.
By:
------------------------------
William N. Shiebler, President
and Chief Executive Officer
We accept and agree to the foregoing Contract as of the date set
forth below.
Please indicate which best Dealer:-------------
describes your firm's entity:
/ / Partnership --------------------
/ / Corporation
By: --------------------
/ / Other - please specify: Authorized
Signature, Title
---------------------
-------------------------
Please provide your organization's
Tax Identification Number on the -------------------------
following line: Address
- ---------------------------- Dated:-------------------
Please return the signed Putnam copy to Putnam Mutual Funds
Corp., P.O. Box 41203, Providence, RI 02940-1203
Approval:---------------------
Date required:----------------
NF-22.94
FINANCIAL INSTITUTION SALES CONTRACT
Between: and
PUTNAM MUTUAL FUNDS CORP.
General Distributor of
The Putnam Family of Mutual Funds
One Post Office Square
Boston, MA 02109
As general distributor of The Putnam Family of Mutual Funds (the
"Funds"), we agree that you will make available to your
customers, under an agency relationship with your customers,
shares of beneficial interest issued by the Funds (the "Shares"),
subject to any limitations imposed by any of the Funds and to
confirmation by us of each transaction. By your acceptance
hereof, you agree to all of the following terms and conditions:
1. Offering Prices and Fees
The public offering price at which you may make the Shares
available to your customers is the net asset value thereof, as
computed from time to time, plus any applicable sales charge
described in the then-current Prospectus of the applicable Fund.
In the case of purchases by you, as agent for your customers, of
Shares sold with a sales charge, you shall receive an agency
commission consisting of a portion of the public offering price,
determined on the same basis as the "dealer discount" described
in the then-current Prospectus of the Fund, and such other
compensation to dealers as may be described therein, which shall
be payable to you at the same time and on the same basis as the
same is paid to such dealers, consistent with applicable law,
rules and regulations. In determining the amount of any agency
commission payable to you hereunder, we reserve the right to
exclude any purchases for any accounts which we reasonably
determine are not made in accordance with the terms of the
applicable Fund Prospectus and the provisions of this Contract.
We reserve the right to revise the agency commission referred to
herein upon ten days' written notice to you. We will furnish you
upon request with the public offering prices for the Shares, and
you agree to quote such prices in connection with any Shares made
available by you as agent for your customers. Your attention is
specifically called to the fact that each purchase of Shares by
your customers is always made subject to confirmation by us at
the public offering price next computed after receipt of the
order. There is no sales charge or agency commission to you on
the reinvestment of dividends and distributions.
<PAGE>
2. Manner of Making Shares Available for Purchase
We will, upon request, deliver to you a copy of each Fund's then-
current Prospectus and will provide you with such number of
copies of each Fund's then-current Prospectus, Statement of
Additional Information and shareholder reports and of
supplementary sales materials prepared by us, as you may
reasonably request. It shall be your obligation to ensure that
all such information and materials are distributed to your
customers who own Shares, in accordance with securities and/or
banking law and regulations and any other applicable regulations.
Neither you nor any other person is authorized to give any
information or to make any representations other than those
contained in such Prospectuses, Statements of Additional
Information and shareholder reports or in such supplementary
sales materials. You shall not furnish or cause to be furnished
to any person, display or publish any information or materials
relating to any Fund (including, without limitation, promotional
materials and sales literature, advertisements, press releases,
announcements, statements, posters, signs or other similar
material), except such information and materials as may be
furnished to you by us or the Fund, and such other information
and materials as may be approved in writing by us.
You hereby agree:
(i) to not purchase any Shares as agent for any customer,
unless you deliver or cause to be delivered to such
customer, at or prior to the time of such purchase, a copy
of the then-current Prospectus of the applicable Fund unless
such customer has acknowledged receipt of the Prospectus of
such Fund. You hereby represent that you understand your
obligation to deliver a prospectus to customers who purchase
Shares pursuant to federal securities laws and you have
taken all necessary steps to comply with such prospectus
delivery requirements;
(ii) to transmit to us promptly upon receipt any
and all
orders received by you, it being understood that no
conditional orders will be accepted;
(iii) to obtain from each customer for whom you act as agent
for the purchase of Shares any taxpayer identification
number certification and backup withholding information
required under the Internal Revenue Code of 1986, as amended
from time to time (the "Code"), and the regulations
promulgated thereunder, or other sections of the Code which
may become applicable, and to provide us or our designee
with timely written notice of any failure to obtain such
taxpayer identification number certification or information
in order to enable the implementation of any required backup
withholding in accordance with the Code and the regulations
thereunder; and
(iv) to pay to us the offering price, less any agency
commission to which you are entitled, within three (3)
business days of our confirmation of your customer's order,
or such shorter time as may be required by law. You may,
subject to our approval, remit the total public offering
price to us, and we will return to you your agency
commission. If such payment is not received within said
time period, we reserve the right, without prior notice, to
cancel the sale, or at our option to return the Shares to
the issuer for redemption or repurchase. In the latter
case, we shall have the right to hold you responsible for
any loss resulting to us. Should payment be made by local
bank check, liquidation of Shares may be delayed pending
clearance of your check.
Unless otherwise mutually agreed in writing or except as provided
below, each transaction placed by you shall be promptly confirmed
by us in writing to you, and shall be confirmed to the customer
promptly upon receipt by us of instructions from you as to such
customer. In the case of a purchase order by customer's
application, each transaction shall be promptly confirmed in
writing directly to the customer and a copy of each confirmation
shall be sent simultaneously to you. We reserve the right, at
our discretion and without notice, to suspend the sale of Shares
or withdraw entirely the sale of Shares of any or all of the
Funds. All orders are subject to acceptance or rejection by us
in our sole discretion, and by the Funds in their sole
discretion. The procedure stated herein relating to the pricing
and handling of orders shall be subject to instructions which we
may forward to you from time to time.
3. Compliance With Law
You hereby represent that you are either (1) a "bank" as defined
in Section 3(a)(6) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and at the time of each transaction
in shares of the Funds, are not required to register as a broker-
dealer under the Exchange Act or regulations thereunder; or (2)
registered as a broker-dealer under the Exchange Act, a member in
good standing of the National Association of Securities Dealers,
Inc. ("NASD") and affiliated with a bank.
(a) If you are a bank, not required to register
as a broker-
dealer under the Exchange Act: You further represent and warrant
to us that with respect to any sales in the United States, you
will use your best efforts to ensure that any purchase of Shares
by your customers constitutes a suitable investment for such
customers. You shall not effect any transaction in, or induce
any purchase or sale of, any Shares by means of any manipulative,
deceptive or other fraudulent device or contrivance, and shall
otherwise deal equitably and fairly with your customers with
respect to transactions in Shares of a Fund.
(b) If you are a NASD member broker-dealer
affiliated with a
bank and registered under the Exchange Act: You further
represent and warrant to us that with respect to any sales in the
United States, you agree to abide by all of the applicable laws,
rules and regulations including applicable provisions of the
Securities Act of 1933, as amended, and the applicable rules and
regulations of the NASD, including, without limitation, its Rules
of Fair Practice, and the applicable rules and regulations of any
jurisdiction in which you make Shares available for sale to your
customers. You agree not to make available for sale to your
customers the Shares in any jurisdiction in which the Shares are
not qualified for sale or in which you are not qualified as a
broker-dealer. We shall have no obligation or responsibility as
to your right to make Shares of any Funds available to your
customers in any jurisdiction. You agree to notify us
immediately in the event of (i) your expulsion or suspension from
the NASD or your becoming subject to any enforcement action by
the Securities and Exchange Commission, NASD, or any other self-
regulatory organization, or (ii) your violation of any applicable
federal or state law, rule or regulation including, but not
limited to, those of the SEC, NASD or other self-regulatory
organization, arising out of or in connection with this
Agreement, or which may otherwise affect in any material way your
ability to act in accordance with the terms of this Contract.
You shall not make Shares of any Fund available to your
customers, including your fiduciary customers, except in
compliance with all federal and state laws and rules and
regulations of regulatory agencies or authorities applicable to
you, or any of your affiliates engaging in such activity, which
may affect your business practices. You confirm that you are not
in violation of any banking law or regulations as to which you
are subject.
4. Relationship with Customer
With respect to any and all transactions in the Shares of any
Fund pursuant to this Contract, it is understood and agreed in
each case that: (a) you shall be acting solely as agent for the
account of your customer; (b) each transaction shall be initiated
solely upon the order of your customer; (c) we shall execute
transactions only upon receiving instructions from you acting as
agent for your customer or upon receiving instructions directly
from your customer; (d) as between you and your customer, your
customer will have full beneficial ownership of all Shares; (e)
each transaction shall be for the account of your customer and
not for your account; and (f) unless otherwise agreed in writing
we will serve as a clearing broker for you on a fully disclosed
basis, and you shall serve as the introducing agent for your
customers' accounts. Subject to the foregoing, however, and
except for Shares sold subject to a contingent deferred sales
charge, you may maintain record ownership of such customers'
Shares in an account registered in your name or the name of your
nominee, for the benefit of such customers. With respect to
Shares sold subject to a contingent deferred sales charge, you
agree not to hold shares of such Funds in an account registered
in your name or in the name of your nominee for the benefit of
certain of your customers. You understand that such Shares must
be held in a separate account for each shareholder of such Funds.
Each transaction shall be without recourse to you provided that
you act in accordance with the terms of this Agreement. You
represent and warrant to us that you will have full right, power
and authority to effect transactions (including, without
limitation, any purchases and redemptions) in Shares on behalf of
all customer accounts provided by you.
5. Relationship With Financial Institution
Neither this Contract nor the performance of the services of the
respective parties hereunder shall be considered to constitute an
exclusive arrangement, or to create a partnership, association or
joint venture between you and us. In making available Shares of
the Funds under this Contract, nothing herein shall be construed
to constitute you or any of your agents, employees or
representatives as our agent or employee, or as an agent or
employee of the Funds, and you shall not make any representations
to the contrary. As general distributor of the Funds, we shall
have full authority to take such action as we may deem advisable
in respect of all matters pertaining to the distribution of the
Shares. We shall not be under any obligation to you, except for
obligations expressly assumed by us in this Contract.
6. Termination
Either party hereto may terminate this Contract, without cause,
upon ten days' written notice to the other party. We may
terminate this Contract for cause upon the violation by you of
any of the provisions hereof, such termination to become
effective on the date such notice of termination is mailed to
you. If you are registered as a broker-dealer and affiliated
with a bank, this Contract shall terminate automatically if
either Party ceases to be a member of the NASD.
7. Assignability
This Contract is not assignable or transferable, except that we
may assign or transfer this Contract to any successor which
becomes general distributor of the Funds.
<PAGE>
8. Miscellaneous
(a) All communications mailed to us should be
sent to the above
address. Any notice to you shall be duly given if mailed or
delivered to you at the address specified by you below.
(b) This Contract constitutes the entire
agreement and
understanding between the parties and supercedes any and all
prior agreements between the parties.
(c) This Contract and the rights and obligations
of the parties
hereunder shall be governed by and construed under the laws of
The Commonwealth of Massachusetts.
Very truly yours,
PUTNAM MUTUAL FUNDS CORP.
By: ------------------------------
William N. Shiebler, President
and Chief Executive Officer
We accept and agree to the foregoing Contract as of the date
set forth below.
Financial Institution: ---------------------------
By: ----------------------------
Authorized Signature, Title
----------------------------
----------------------------
Address
Dated: ----------------------------
Please return the signed Putnam copy of this sales Contract to
Putnam Mutual Funds Corp., P. O. Box 41203, Providence, RI
02940-1203
NF-59.94
CUSTODIAN AGREEMENT
AGREEMENT made as of the 3rd day of May, 1991, as amended
July 13, 1992, between each of the Putnam Funds listed in
Schedule A, each of such Funds acting on its own behalf
separately from all the other Funds and not jointly or jointly
and severally with any of the other Funds (each of the Funds
being hereinafter referred to as the "Fund"), and Putnam
Fiduciary Trust Company (the "Custodian").
WHEREAS, the Custodian represents to the Fund that it is
eligible to serve as a custodian for a management investment
company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), and
WHEREAS, the Fund wishes to appoint the Custodian as the
Fund's custodian.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. Appointment of Custodian. The Fund hereby employs and
appoints the Custodian as custodian of its assets for the term
and subject to the provisions of this Agreement. At the
direction of the Custodian, the Fund agrees to deliver to the
Sub-Custodians appointed pursuant to Section 2 below (the "Sub-
Custodians") securities, funds and other property owned by it.
The Custodian shall have no responsibility or liability for or on
account of securities, funds or other property not so delivered
to the Sub-Custodians. Upon request, the Fund shall deliver to
the Custodian or to such Sub-Custodians as the Custodian may
direct such proxies, powers of attorney or other instruments as
may be reasonably necessary or desirable in connection with the
performance by the Custodian or any Sub-Custodian of their
respective obligations under this Agreement or any applicable
Sub-Custodian Agreement.
2. Appointment of Sub-Custodians. The Custodian may at any
time and from time to time appoint, at its own cost and expense,
as a Sub-Custodian for the Fund any bank or trust company which
meets the requirements of the 1940 Act and the rules and
regulations thereunder to act as a custodian, provided that the
Fund shall have approved in writing any such bank or trust
company and the Custodian gives prompt written notice to the Fund
of any such appointment. The agreement between the Custodian and
any Sub-Custodian shall be substantially in the form of the Sub-
Custodian agreement attached hereto as Exhibit 1 (the "Sub-
Custodian Agreement") unless otherwise approved by the Fund,
provided, however, that the agreement between the Custodian and
any Sub-Custodian appointed primarily for the purpose of holding
foreign securities of the Fund shall be substantially in the form
of the Sub-Custodian Agreement attached hereto as Exhibit 1(A)
(the "Foreign Sub-Custodian Agreement"; the "Sub-Custodian
Agreement" and the "Foreign Sub-Custodian Agreement" are herein
referred to collectively and each individually as the "Sub-
Custodian Agreement"). All Sub-Custodians shall be subject to
the instructions of the Custodian and not the Fund. The
Custodian may, at any time in its discretion, remove any bank or
trust company which has been appointed as a Sub-Custodian but
shall in such case promptly notify the Fund in writing of any
such action. Securities, funds and other property of the Fund
delivered pursuant to this Agreement shall be held exclusively by
Sub-Custodians appointed pursuant to the provisions of this
Section 2.
The Sub-Custodians which the Fund has approved to date are
set forth in Schedule B hereto. Schedule B shall be amended from
time to time as Sub-Custodians are changed, added or deleted. The
Fund shall be responsible for informing the Custodian
sufficiently in advance of a proposed investment which is to be
held at a location not listed on Schedule B, in order that there
shall be sufficient time for the Custodian to put the appropriate
arrangements in place with such Sub-Custodian pursuant to such
Sub-Custodian Agreement.
With respect to the securities, funds or other property held
by a Sub-Custodian, the Custodian shall be liable to the Fund if
and only to the extent that such Sub-Custodian is liable to the
Custodian. The Custodian shall nevertheless be liable to the
Fund for its own negligence in transmitting any instructions
received by it from the Fund and for its own negligence in
connection with the delivery of any securities, funds or other
property of the Fund to any such Sub-Custodian.
In the event that any Sub-Custodian appointed pursuant to
the provisions of this Section 2 fails to perform any of its
obligations under the terms and conditions of the applicable Sub-
Custodian Agreement, the Custodian shall use its best efforts to
cause such Sub-Custodian to perform such obligations. In the
event that the Custodian is unable to cause such Sub-Custodian to
perform fully its obligations thereunder, the Custodian shall
forthwith terminate such Sub-Custodian and, if necessary or
desirable, appoint another Sub-Custodian in accordance with the
provisions of this Section 2. The Custodian may with the
approval of the Fund commence any legal or equitable action which
it believes is necessary or appropriate in connection with the
failure by a Sub-Custodian to perform its obligations under the
applicable Sub-Custodian Agreement. Provided the Custodian shall
not have been negligent with respect to any such matter, such
action shall be at the expense of the Fund. The Custodian shall
keep the Fund fully informed regarding such action and the Fund
may at any time upon notice to the Custodian elect to take
responsibility for prosecuting such action. In such event the
Fund shall have the right to enforce and shall be subrogated to
the Custodian's rights against any such Sub-Custodian for loss or
damage caused the Fund by such Sub-Custodian.
At the written request of the Fund, the Custodian will
terminate any Sub-Custodian appointed pursuant to the provisions
of this Section 2 in accordance with the termination provisions
of the applicable Sub-Custodian Agreement. The Custodian will
not amend any Sub-Custodian Agreement in any material manner
except upon the prior written approval of the Fund and shall in
any case give prompt written notice to the Fund of any amendment
to the Sub-Custodian Agreement.
3. Duties of the Custodian with Respect to Property of the Fund
Held by Sub-Custodians.
3.1 Holding Securities - The Custodian shall cause one or
more Sub-Custodians to hold and, by book-entry or otherwise,
identify as belonging to the Fund all non-cash property delivered
to such Sub-Custodian.
3.2 Delivery of Securities - The Custodian shall cause Sub-
Custodians holding securities of the Fund to release and deliver
securities owned by the Fund held by the Sub-Custodian or in a
Securities System account of the Sub-Custodian only upon receipt
of Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties, and only in the following
cases:
3.2.1 Upon sale of such securities for the account
of the Fund and receipt of payment therefor;
provided, however, that a Sub-Custodian may
release and deliver securities prior to the
receipt of payment therefor if (i) in the
Sub-Custodian's judgment, (A) release and
delivery prior to payment is required by the
terms of the instrument evidencing the
security or (B) release and delivery prior
to payment is the prevailing method of
settling securities transactions between
institutional investors in the applicable
market and (ii) release and delivery prior
to payment is in accordance with generally
accepted trade practice and with any
pplicable governmental regulations and the
rules of Securities Systems or other
securities depositories and clearing
agencies in the applicable market. The
Custodian agrees, upon request, to advise
the Fund of all pending transactions
in <PAGE>
which release and delivery will be made
prior to the receipt of payment therefor;
3.2.2 Upon the receipt of payment in connection
with any repurchase agreement related to
such securities entered into by the Fund;
3.2.3 In the case of a sale effected through a
Securities System, in accordance with the
provisions of Section 3.12 hereof;
3.2.4 To the depository agent in connection with
tender or other similar offers for portfolio
securities of the Fund; provided that, in
any such case, the cash or other
consideration is thereafter to be delivered
to the Sub-Custodian;
3.2.5 To the issuer thereof or its agent, when
such securities are called, redeemed,
retired or otherwise become payable;
provided that, in any such case, the cash or
other consideration is to be delivered to
the Sub-Custodian;
3.2.6 To the issuer thereof, or its agent for
transfer into the name of the Fund or into
the name of any nominee or nominees of the
Sub-Custodian or into the name or nominee
name of any agent appointed pursuant to
Section 3.11 or any other name permitted
pursuant to Section 3.3; or for exchange for
a different number of bonds, certificates or
other evidence representing the same
aggregate face amount or number of units;
provided that, in any such case, the new
securities are to be delivered to the Sub-
Custodian;
3.2.7 Upon the sale of such securities for the
account of the Fund, to the broker or its
clearing agent, against a receipt, for
examination in accordance with "street
delivery" custom; provided that in any such
case, the Sub-Custodian shall have no
responsibility or liability for any loss
arising from the delivery of such securities
prior to receiving payment for such
securities except as may arise from the Sub-
Custodian's own negligence or willful
misconduct;
3.2.8 For exchange or conversion pursuant to any
plan of merger, consolidation,
recapitalization, reorganization or
readjustment of the securities of the issuer
of such securities, or pursuant to
provisions for conversion contained in such
securities, or pursuant to any deposit
agreement; provided that, in any such case,
the new securities and cash, if any, are to
be delivered to the Sub-Custodian;
3.2.9 In the case of warrants, rights or similar
securities, the surrender thereof in the
exercise of such warrants, rights or similar
securities or the surrender of interim
receipts or temporary securities for
definitive securities; provided that, in any
such case, the new securities and cash, if
any, are to be delivered to the Sub-
Custodian;
3.2.10 For delivery in connection with any loans of
securities made by the Fund, but only
against receipt of adequate collateral as
agreed upon from time to time by the
Custodian and the Fund, which may be in the
form of cash or obligations issued by the
United States government, its agencies or
instrumentalities; except that in connection
with any loan of securities held in a
Securities System for which collateral is to
credited to the Sub-Custodian's account in
another Securities System, the Sub-Custodian
will not be held liable or responsible for
delivery of the securities prior to the
receipt of such collateral.
3.2.11 For delivery as security in connection with
any borrowings by the Fund requiring a
pledge of assets by the Fund, but only
against receipt of amounts borrowed;
3.2.12 Upon receipt of instructions from the
transfer agent ("Transfer Agent") for the
Fund, for delivery to such Transfer Agent or
to the shareholders of the Fund in
connection with distributions in kind, as
may be described from time to time in the
Fund's Declaration of Trust and currently
effective registration statement, if any, in
satisfaction of requests by Fund
shareholders for repurchase or redemption;
3.2.13 For delivery to another Sub-Custodian of the
Fund; and
3.2.14 For any other proper corporate purpose, but
only upon receipt of, in addition to Proper
Instructions, a certified copy of a
resolution of the Trustees or of the
Executive Committee of the Fund signed by an
officer of the Fund and certified by its
Clerk or an Assistant Clerk, specifying the
securities to be delivered, setting forth
the purpose for which such delivery is to be
made, declaring such purposes to be proper
corporate purposes, and naming the person or
persons to whom delivery of such securities
shall be made.
3.3 Registration of Securities. Securities of the
Fund held by the Sub-Custodians hereunder (other than bearer
securities) shall be registered in the name of the Fund or
in the name of any nominee of the Fund or of any nominee of
the Sub-Custodians or any 17f-5 Sub-Custodian or Foreign
Depository (as each of those terms is defined in the Foreign
Sub-Custodian Agreement, which nominee shall be assigned
exclusively to the Fund, unless the Fund has authorized in
writing the appointment of a nominee to be used in common
with other registered investment companies having the same
investment adviser as the Fund, or in the name or nominee
name of any agent appointed pursuant to Section 3.12.
Notwithstanding the foregoing, a Sub-Custodian, agent, 17f-5
Sub-Custodian or Foreign Depository may hold securities of
the Fund in a nominee name which is used for its other
clients provided that such name is not used by the Sub-
Custodian, agent, 17f-5 Sub-Custodian or Foreign Depository
for its own securities and that securities of the Fund are,
by book-entry or otherwise, at all times identified as
belonging to the Fund and distinguished from other
securities held for other clients using the same nominee
name. In addition, and notwithstanding the foregoing, a
Sub-Custodian or agent thereof or 17f-5 Sub-Custodian or
Foreign Depository may hold securities of the Fund in its
own name if such registration is the prevailing method in
the applicable market by which custodians register
securities of institutional clients and provided that
securities of the Fund are, by book-entry or otherwise, at
all times identified as belonging to the Fund and
distinguished from other securities held for other clients
or for the Sub-Custodian or agent thereof or 17f-5 Sub-
Custodian or Foreign Depository. All securities accepted by
a Sub-Custodian under the terms of a Sub-Custodian Agreement
shall be in good delivery form.
3.4 Bank Accounts. The Custodian shall cause one or
more Sub-Custodians to open and maintain a separate bank account
or accounts in the name of the Fund or the Custodian, subject
only to draft or order by the Sub-Custodian acting pursuant to
the terms of a Sub-Custodian Contract or by the Custodian acting
pursuant to this Agreement, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by
it from or for the account of the Fund, other than cash
maintained by the Fund in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act of
1940. Funds held by the Sub-Custodian for the Fund may be
deposited by it to its credit as sub-custodian or to the
Custodian's credit as custodian in the Banking Department of the
Sub-Custodian or in such other banks or trust companies as it may
in its discretion deem necessary or desirable; provided, however,
that every such bank or trust company shall be qualified to act
as a custodian under the Investment Company Act of 1940 and that
each such bank or trust company and the funds to be deposited
with each such bank or trust company shall be approved by vote of
a majority of the Trustees of the Fund. Such funds shall be
deposited by the Sub-Custodian or the Custodian in its capacity
as sub-custodian or custodian, respectively, and shall be
withdrawable by the Sub-Custodian or the Custodian only in that
capacity. The Sub-Custodian shall be liable for actual losses
incurred by the Fund attributable to any failure on the part of
the Sub-Custodian to report accurate cash availability
information with respect to the Fund's or the Custodian's bank
accounts maintained by the Sub-Custodian or any of its agents.
3.5 Payments for Shares. The Custodian shall cause one or
more Sub-Custodians to deposit into the Fund's account amounts
received from the Transfer Agent of the Fund for shares of the
Fund issued by the Fund and sold by its distributor. The
Custodian will provide timely notification to the Fund of any
receipt by the Sub-Custodian from the Transfer Agent of payments
for shares of the Fund.
3.6 Availability of Federal Funds. Upon mutual agreement
between the Fund and the Custodian, the Custodian shall cause one
or more Sub-Custodians, upon the receipt of Proper Instructions,
to make federal funds available to the Fund as of specified times
agreed upon from time to time by the Fund and the Custodian with
respect to amounts received by the Sub-Custodians for the
purchase of shares of the Fund.
3.7 Collection of Income. The Custodian shall cause one or
more Sub-Custodians to collect on a timely basis all income and
other payments with respect to registered securities held
hereunder, including securities held in a Securities System, to
which the Fund shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a timely
basis all income and other payments with respect to bearer
securities if, on the date of payment by the issuer, such
securities are held by the Sub-Custodian or agent thereof and
shall credit such income, as collected, to the Fund's account.
Without limiting the generality of the foregoing, the Custodian
shall cause the Sub-Custodian to detach and present for payment
all coupons and other income items requiring presentation as and
when they become due and shall collect interest when due on
securities held under the applicable Sub-Custodian Agreement.
Arranging for the collection of income due the Fund on securities
loaned pursuant to the provisions of Section 3.2.10 shall be the
responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the
Fund with such information or data as may be necessary to assist
the Fund in arranging for the timely delivery to the Sub-
Custodian of the income to which the Fund is properly entitled.
3.8 Payment of Fund Monies. Upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, the Custodian shall cause one or more
Sub-Custodians to pay out monies of the Fund in the following
cases only:
3.8.1 Upon the purchase of securities for the
account of the Fund but only (a) against the
delivery of such securities to the Sub-
Custodian (or any bank, banking firm or
trust company doing business in the United
States or abroad which is qualified under
the Investment Company Act of 1940, as
amended, to act as a custodian and has been
designated by the Sub-Custodian as its agent
for this purpose) or any 17f-5 Sub-Custodian
or any Foreign Depository registered in the
name of the Fund or in the name of a nominee
of the Sub-Custodian referred to in Section
3.3 hereof or in proper form for transfer;
provided, however, that the Sub-Custodian
may cause monies of the Fund to be paid out
prior to delivery of such securities if (i)
in the Sub-Custodian's judgment, (A) payment
prior to delivery is required by the terms
of the instrument evidencing the security or
(B) payment prior to delivery is the
prevailing method of settling securities
transactions between institutional investors
in the applicable market and (ii) payment
prior to delivery is in accordance with
generally accepted trade practice and with
any applicable governmental regulations and
the rules of Securities Systems or other
securities depositories and clearing
agencies in the applicable market; the
Custodian agrees, upon request, to advise
the Fund of all pending transactions in
which payment will be made prior to the
receipt of securities in accordance with the
provision to the foregoing sentence; (b) in
the case of a purchase effected through a
Securities System, in accordance with the
conditions set forth in Section 3.13 hereof;
or (c)(i) in the case of a repurchase
agreement entered into between the Fund and
the Sub-Custodian, another bank, or a
broker-dealer against delivery of the
securities either in certificate form or
through an entry crediting the Sub-
Custodian's account at the Federal Reserve
Bank with such securities or (ii) in the
case of a repurchase agreement entered into
between the Fund and the Sub-Custodian,
against delivery of a receipt evidencing
purchase by the Fund of Securities owned by
the Sub-Custodian along with written
evidence of the agreement by the Sub-
Custodian to repurchase such securities from
the Fund; or (d) for transfer to a time
deposit account of the Fund in any bank,
whether domestic or foreign, which transfer
may be effected prior to receipt of a
confirmation of the deposit from the
applicable bank or a financial intermediary;
3.8.2 In connection with conversion, exchange or
surrender of securities owned by the Fund as
set forth in Section 3.2 hereof;
3.8.3 For the redemption or repurchase of Shares
issued by the Fund as set forth in Section
3.10 hereof;
3.8.4 For the payment of any expense or liability
incurred by the Fund, including but not
limited to the following payments for the
account of the Fund: interest, taxes,
management, accounting, transfer agent and
legal fees, including the Custodian's fee;
and operating expenses of the Fund whether
or not such expenses are to be in whole or
part capitalized or treated as deferred
expenses;
3.8.5 For the payment of any dividends or other
distributions declared to shareholders of
the Fund;
3.8.6 For transfer to another Sub-Custodian of the
Fund;
3.8.7 For any other proper purpose, but only upon
receipt of, in addition to Proper
Instructions, a certified copy of a
resolution of the Trustees or of the
Executive Committee of the Fund signed by an
officer of the Fund and certified by its
Clerk or an Assistant Clerk, specifying the
amount of such payment, setting forth the
purpose for which such payment is to be
made, declaring such purpose to be a proper
purpose, and naming the person or persons to
whom such payments is to be made.
3.9 Liability for Payment in Advance of Receipt of
Securities Purchased. Except as otherwise provided in this
Agreement, in any and every case where payment for purchase of
securities for the account of the Fund is made by a Sub-Custodian
in advance of receipt of the securities purchased in the absence
of specific written instructions from the Fund to so pay in
advance, the Custodian shall cause the Sub-Custodian to be
absolutely liable to the Fund in the event any loss results to
the Fund from the payment by the Sub-Custodian in advance of
delivery of such securities.
3.10 Payments for Repurchase or Redemptions of Shares of
the Fund. From such funds as may be available, the Custodian
shall, upon receipt Proper Instructions, cause one or more Sub-
Custodians to make funds available for payment to a shareholder
who has delivered to the Transfer Agent a request for redemption
or repurchase of shares of the Fund. In connection with the
redemption or repurchase of shares of the Fund, the Custodian is
authorized, upon receipt of Proper Instructions, to cause one or
more Sub-Custodian, to wire funds to or through a commercial bank
designated by the redeeming shareholder. In connection with the
redemption or repurchase of Shares of the Fund, the Custodian,
upon receipt of Proper Instructions, shall cause one or more Sub-
Custodians to honor checks drawn on the Sub-Custodian by a
shareholder when presented to the Sub-Custodian in accordance
with such procedures and controls as are mutually agreed upon
from time to time among the Fund, the Custodian and the Sub-
Custodian.
3.11 Appointment of Agents. The Custodian may permit
any Sub-Custodian at any time or times in its discretion to
appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company
Act of 1940, as amended, to act as a custodian, as its agent to
carry out such of the provisions of this Section 3 as the Sub-
Custodian may from time to time direct; provided, however, that
the appointment of any agent shall not relieve the Custodian or
any Sub-Custodian of its responsibilities or liabilities
hereunder and provided that any such agent shall have been
approved by vote of the Trustees of the Fund. The Custodian may
also permit any Sub-Custodian to which foreign securities of the
Fund have been delivered to direct such securities to be held by
17f-5 Sub-Custodians and to use the facilities of Foreign
Depositories, as those terms are defined in the Foreign Sub-
Custodian Agreement, in accordance with the terms of the Foreign
Sub-Custodian Agreement.
The agents which the Fund and the Custodian have approved to
date are set forth in Schedule B hereto. Schedule B shall be
amended from time to time as agents are changed, added or
deleted. The Fund shall be responsible for informing the
Custodian, and the Custodian shall be responsible for informing
the appropriate Sub-Custodian, sufficiently in advance of a
proposed investment which is to be held at a location not listed
on Schedule B, in order that there shall be sufficient time for
the Sub-Custodian to complete the appropriate contractual and
technical arrangements with such agent. Any Sub-Custodian
Agreement shall provide that the engagement by the Sub-Custodian
of one or more agents shall not relieve the Sub-Custodian of its
responsibilities or liabilities thereunder.
3.12 Deposit of Fund Assets in Securities Systems. The
Custodian may permit any Sub-Custodian to deposit and/or maintain
securities owned by the Fund in a clearing agency registered with
the Securities and Exchange Commission under Section 17A of the
Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System" in
accordance with applicable rules and regulations (including Rule
17f-4 of the 1940 Act) and subject to the following provisions:
3.12.1 The Sub-Custodian may, either directly or
through one or more agents, keep securities
of the Fund in a Securities System provided
that such securities are represented in an
account ("Account") of the Sub-Custodian in
the Securities System which shall not
include any assets of the Sub-Custodian
other than assets held as a fiduciary,
custodian or otherwise for customers;
3.12.2 The records of the Sub-Custodian with
respect to securities of the Fund which are
maintained in a Securities System shall
identify by book-entry those securities
belonging to the Fund;
3.12.3 The Sub-Custodian shall pay for securities
purchased for the account of the Fund upon
(i) receipt of advice from the Securities
System that such securities have been
transferred to the Account, and (ii) the
making of an entry on the records of the
Sub-Custodian to reflect such payment and
transfer for the account of the Fund. The
Sub-Custodian shall transfer securities sold
for the account of the Fund upon (i) receipt
of advice from the Securities System that
payment for such securities has been
transferred to the Account, and (ii) the
making of an entry on the records of the
Sub-Custodian to reflect such transfer and
payment for the account of the Fund. Copies
of all advices from the Securities System of
transfers of securities for the account of
the Fund shall identify the Fund, be
maintained for the Fund by the Sub-Custodian
or such an agent and be provided to the Fund
at its request. The Sub-Custodian shall
furnish the Fund confirmation of each
transfer to or from the account of the Fund
in the form of a written advice or notice
and shall furnish to the Fund copies of
daily transaction sheets reflecting each
day's transactions in the Securities System
for the account of the Fund on the next
business day;
3.12.4 The Sub-Custodian shall provide the Fund
with any report obtained by the Sub-
Custodian on the Securities System's
accounting system, internal accounting
controls and procedures for safeguarding
securities deposited in the Securities
System;
3.12.5 The Sub-Custodian shall utilize only such
Securities Systems as are approved by the
Board of Trustees of the Fund, and included
on a list maintained by the Custodian;
3.12.6 Anything to the contrary in this Agreement
notwithstanding, the Sub-Custodian shall be
liable to the Fund for any loss or damage to
the Fund resulting from use of the
Securities System by reason of any
negligence, misfeasance or misconduct of the
Sub-Custodian or any of its agents or of any
of its or their employees or from failure of
the Sub-Custodian or any such agent to
enforce effectively such rights as it may
have against the Securities System; at the
election of the Fund, it shall be entitled
to be subrogated to the rights of the Sub-
Custodian with respect to any claim against
the Securities System or any other person
which the Sub-Custodian may have as a
consequence of any such loss or damage if
and to the extent that the Fund has not been
made whole for any such loss or damage.
3.12A Depositary Receipts. Only upon receipt of Proper
Instructions, the Sub-Custodian shall instruct a 17f-5 Sub-
Custodian or an agent of the Sub-Custodian appointed pursuant to
the applicable Foreign Sub-Custodian Agreement (an "Agent") to
surrender securities to the depositary used by an issuer of
American Depositary Receipts or International Depositary Receipts
(hereinafter collectively referred to as "ADRs") for such
securities against a written receipt therefor adequately
describing such securities and written evidence satisfactory to
the 17f-5 Sub-Custodian or Agent that the depositary has
acknowledged receipt of instructions to issue with respect to
such securities ADRs in the name of the Sub-Custodian, or a
nominee of the Sub-Custodian, for delivery to the Sub-Custodian.
Only upon receipt of Proper Instructions, the Sub-Custodian
shall surrender ADRs to the issuer thereof against a written
receipt therefor adequately describing the ADRs surrendered and
written evidence satisfactory to the Sub-Custodian that the
issuer of the ADRs has acknowledged receipt of instructions to
cause its depository to deliver the securities underlying such
ADRs to a 17f-5 Sub-Custodian or an Agent.
3.12B Foreign Exchange Transactions and Futures
Contracts. Only upon receipt of Proper Instructions, the Sub-
Custodian shall enter into foreign exchange contracts or options
to purchase and sell foreign currencies for spot and future
delivery on behalf and for the account of the Fund or shall enter
into futures contracts or options on futures contracts. Such
transactions may be undertaken by the Sub-Custodian with such
banking institutions, including the Sub-Custodian and 17f-5 Sub-
Custodian(s) appointed pursuant to the applicable Foreign Sub-
Custodian Agreement, as principals, as approved and authorized by
the Fund. Foreign exchange contracts, futures contracts and
options, other than those executed with the Sub-Custodian, shall
for all purposes of this Agreement be deemed to be portfolio
securities of the Fund.
3.12C Option Transactions. Only upon receipt of Proper
Instructions, the Sub-Custodian shall enter into option
transactions in accordance with the provisions of any agreement
among the Fund, the Custodian and/or the Sub-Custodian and a
broker-dealer.
3.13 Ownership Certificates for Tax Purposes. The
Custodian shall cause one or more Sub-Custodians as may be
appropriate to execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection
with receipt of income or other payments with respect to
securities of the Fund held by the Sub-Custodian and in
connection with transfers of securities.
3.14 Proxies. The Custodian shall, with respect to the
securities held by the Sub-Custodians, cause to be promptly
executed by the registered holder of such securities, if the
securities are registered other than in the name of the Fund or a
nominee of the fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly
deliver to the Fund such proxies, all proxy soliciting materials
and all notices relating to such securities.
3.15 Communications Relating to Fund Portfolio
Securities. The Custodian shall cause the Sub-Custodians to
transmit promptly to the Custodian, and the Custodian shall
transmit promptly to the Fund, all written information
(including, without limitation, pendency of calls and maturities
of securities and expirations of rights in connection therewith)
received by the Sub-Custodian from issuers of the securities
being held for the account of the Fund. With respect to tender
or exchange offers, the Custodian shall cause the Sub-Custodian
to transmit promptly to the Fund, all written information
received by the Sub-Custodian from issuers of the securities
whose tender or exchange is sought and from the party (or his
agents) making the tender or exchange offer. If the Fund desires
to take action with respect to any tender offer, exchange offer
or any other similar transaction, the Fund shall notify the
Custodian of the action the Fund desires such Sub-Custodian to
take, provided, however, neither the Custodian nor the Sub-
Custodian shall be liable to the Fund for the failure to take any
such action unless such instructions are received by the
Custodian at least four business days prior to the date on which
the Sub-Custodian is to take such action or, in the case of
foreign securities, such longer period as shall have been agreed
upon in writing by the Custodian and the Sub-Custodian.
3.16 Proper Instructions. Proper Instructions as used
throughout this Agreement means a writing signed or initialed by
one or more person or persons who are authorized by the Trustees
of the Fund and the Custodian. Each such writing shall set forth
the specific transaction or type of transaction involved,
including a specific statement of the purpose for which such
action is requested. Oral instructions will be considered Proper
Instructions if the Custodian or Sub-Custodian, as the case may
be, reasonably believes them to have been given by a person
authorized to give such instructions with respect to the
transaction involved. All oral instructions shall be confirmed
in writing. Proper Instructions also include communications
effected directly between electro-mechanical or electronic
devices provided that the Trustees have approved such procedures.
Notwithstanding the foregoing, no Trustee, officer, employee or
agent of the Fund shall be permitted access to any securities or
similar investments of the Fund deposited with any Sub-Custodian
or any agent of any Sub-Custodian for any reason except in
accordance with the provisions of Rule 17f-2 under the 1940 Act.
3.17 Actions Permitted Without Express Authority. The
Custodian may in its discretion, and may permit one or more Sub-
Custodians in their discretion, without express authority from
the Fund to:
3.17.1 make payments to itself or others for minor
expenses of handling securities or other
similar items relating to its duties under
this Agreement, or in the case of a Sub-
Custodian, under the applicable Sub-
Custodian Agreement, provided that all such
payments shall be accounted for to the Fund;
3.17.2 surrender securities in temporary form for
securities in definitive form;
3.17.3 endorse for collection, in the name of the
Fund, checks, drafts and other negotiable
instruments; and
3.17.4 in general, attend to all non-discretionary
details in connection with the sale,
exchange, substitution, purchase, transfer
and other dealings with the securities and
property of the Fund except as otherwise
directed by the Trustees of the Fund.
3.18 Evidence of Authority. The Custodian shall be
protected in acting upon any instructions, notice, request,
consent, certificate or other instrument or paper believed by it
to be genuine and to have been properly executed by or on behalf
of the Fund.
3.19 Investment Limitations. In performing its duties
generally, and more particularly in connection with the purchase,
sale and exchange of securities made by or for the Fund, the
Custodian may assume, unless and until notified in writing to the
contrary, that Proper Instructions received by it are not in
conflict with or in any way contrary to any provisions of the
Fund's Declaration of Trust or By-Laws (or comparable documents)
or votes or proceedings of the shareholders or Trustees of the
Fund. The Custodian shall in no event be liable to the Fund and
shall be indemnified by the Fund for any violation of any
investment limitations to which the Fund is subject or other
limitations with respect to the Fund's powers to expend funds,
encumber securities, borrow or take similar actions affecting its
portfolio.
4. Performance Standards. The Custodian shall use its best
efforts to perform its duties hereunder in accordance with the
standards set forth in Schedule C hereto. Schedule C may be
amended from time to time as agreed to by the Custodian and the
Trustees of the Fund.
5. Records. The Custodian shall create and maintain all
records relating to the Custodian's activities and obligations
under this Agreement and cause all Sub-Custodians to create and
maintain all records relating to the Sub-Custodian's activities
and obligations under the appropriate Sub-Custodian Agreement in
such manner as will meet the obligations of the Fund under the
1940 Act, with particular attention to Sections 17(f) and 31
thereof and Rules 17f-2, 31a-1 and 31a-2 thereunder, applicable
federal and state tax laws, and any other law or administrative
rules or procedures which may be applicable to the Fund. All
such records shall be the property of the Fund and shall at all
times during the regular business hours of the Custodian or
during the regular business hours of the Sub-Custodian, as the
case may be, be open for inspection by duly authorized officers,
employees or agents of the Custodian and Fund and employees and
agents of the Securities and Exchange Commission. At the Fund's
request, the Custodian shall supply the Fund and cause one or
more Sub-Custodians to supply the Custodian with a tabulation of
securities owned by the Fund and held under this Agreement. When
requested to do so by the Fund and for such compensation as shall
be agreed upon, the Custodian shall include and cause one or more
Sub-Custodians to include certificate numbers in such
tabulations.
6. Opinion and Reports of Fund's Independent Accountants. The
Custodian shall take all reasonable actions, as the Fund may from
time to time request, to furnish such information with respect to
its activities hereunder as the Fund's independent public
accountants may request in connection with the accountant's
verification of the Fund's securities and similar investments as
required by Rule 17f-2 under the 1940 Act, the preparation of the
Fund's registration statement and amendments thereto, the Fund's
reports to the Securities and Exchange Commission, and with
respect to any other requirements of such Commission.
The Custodian shall also direct any Sub-Custodian to take
all reasonable actions, as the Fund may from time to time
request, to furnish such information with respect to its
activities under the applicable Sub-Custodian Agreement as the
Fund's independent public accountant may request in connection
with the accountant's verification of the Fund's securities and
similar investments as required by Rule 17f-2 under the 1940 Act,
the preparation of the Fund's registration statement and
amendments thereto, the Fund's reports to the Securities and
Exchange Commission, and with respect to any other requirements
of such Commission.
7. Reports of Custodian's and Sub-Custodians' Independent
Accountants. The Custodian shall provide the Fund, at such times
as the Fund may reasonably require, with reports by its
independent public accountant on its accounting system, internal
accounting controls and procedures for safeguarding securities,
including securities deposited and/or maintained in Securities
Systems, relating to services provided by the Custodian under
this Agreement. The Custodian shall also cause one or more of
the Sub-Custodians to provide the Fund, at such time as the Fund
may reasonably require, with reports by independent public
accountants on their accounting systems, internal accounting
controls and procedures for safeguarding securities, including
securities deposited and/or maintained in Securities Systems,
relating to services provided by those Sub-Custodians under their
respective Sub-Custody Agreements. Such reports, which shall be
of sufficient scope and in sufficient detail as may reasonably be
required by the Fund, shall provide reasonable assurance that any
material inadequacies would be disclosed by such examinations,
and, if there is no such inadequacies, shall so state.
8. Compensation. The Custodian shall be entitled to reasonable
compensation for its services and expenses as custodian, as
agreed upon from time to time between the Fund and the Custodian.
Such expenses shall not include, however, the fees paid by the
Custodian to any Sub-Custodian.
9. Responsibility of Custodian. The Custodian shall exercise
reasonable care and diligence in carrying out the provisions of
this Agreement and shall not be liable to the Fund for any action
taken or omitted by it in good faith without negligence. So long
as and to the extent that it is in the exercise of reasonable
care, neither the Custodian nor any Sub-Custodian shall be
responsible for the title, validity or genuineness of any
property or evidence of title thereto received by it or delivered
by it pursuant to this Agreement and shall be held harmless in
acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and, if in
writing, reasonably believed by it to be signed by the proper
party or parties. It shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all
matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice. Notwithstanding the
foregoing, the responsibility of the Custodian or a Sub-Custodian
with respect to redemptions effected by check shall be in
accordance with a separate Agreement entered into between the
Custodian and the Fund. It is also understood that the Custodian
shall not be liable for any loss resulting from a Sovereign Risk.
A "Sovereign Risk" shall mean nationalization, expropriation,
devaluation, revaluation, confiscation, seizure, cancellation,
destruction or similar action by any governmental authority, de
facto or de jure; or enactment, promulgation, imposition or
enforcement by any such governmental authority of currency
restrictions, exchange controls, taxes, levies or other charges
affecting the Fund's property; or acts of war, terrorism,
insurrection or revolution; or any other similar act or event
beyond the Custodian's control.
If the Fund requires the Custodian which in turn may require
a Sub-Custodian to take any action with respect to securities,
which action involves the payment of money or which action may,
in the opinion of the Custodian or the Sub-Custodian result in
the Custodian or its nominee or a Sub-Custodian or its nominee
being liable for the payment of money or incurring liability of
some other form, the Fund, as a prerequisite to requiring the
Custodian or the Custodian requiring any Sub-Custodian to take
such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
The Fund agrees to indemnify and hold harmless the Custodian
and its nominee from and against all taxes, charges, expenses,
assessments, claims and liabilities (including counsel fees)
incurred or assessed against it or its nominee or any Sub-
Custodian or its nominee in connection with the performance of
this Agreement, or any Sub-Custodian Agreement except, as to the
Custodian, such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct,
and as to a Sub-Custodian, such as may arise from such Sub-
Custodian's or its nominee's own negligent action, negligent
failure to act or willful misconduct. The negligent action,
negligent failure to act or willful misconduct of the Custodian
shall not diminish the Fund's obligation to indemnify the
Custodian in the amount, but only in the amount, of any indemnity
required to be paid to a Sub-Custodian under its Sub-Custodian
Agreement. The Custodian may assign this indemnity from the Fund
directly to, and for the benefit of, any Sub-Custodian. The
Custodian is authorized, and may authorize any Sub-Custodian, to
charge any account of the Fund for such items and such fees. To
secure any such authorized charges and any advances of cash or
securities made by the Custodian or any Sub-Custodian to or for
the benefit of the Fund for any purpose which results in the Fund
incurring an overdraft at the end of any business day or for
extraordinary or emergency purposes during any business day, the
Fund (except a Fund specified in Schedule D to this Agreement)
hereby grants to the Custodian a security interest in and pledges
to the Custodian securities up to a maximum of 10% of the value
of the Fund's net assets for the purpose of securing payment of
any such advances and hereby authorizes the Custodian on behalf
of the Fund to grant to any Sub-Custodian a security interest in
and pledge of securities held for the Fund (including those which
may be held in a Securities System) up to a maximum of 10% of the
value of the net assets held by such Sub-Custodian. The specific
securities subject to such security interest may be designated in
writing from time to time by the Fund or its investment adviser.
In the absence of any designation of securities subject to such
security interest, the Custodian or the Sub-Custodian, as the
case may be, may designate securities held by it. Should the
Fund fail to repay promptly any authorized charges or advances of
cash or securities, the Custodian or the Sub-Custodian shall be
entitled to use such available cash and to dispose of pledged
securities and property as is necessary to repay any such
authorized charges or advances and to exercise its rights as a
secured party under the U.C.C. The Fund agrees that a Sub-
Custodian shall have the right to proceed directly against the
Fund and not solely as subrogee to the Custodian with respect to
any indemnity hereunder assigned to a Sub-Custodian, and in that
regard, the Fund agrees that it shall not assert against any Sub-
Custodian proceeding against it any defense or right of set-off
the Fund may have against the Custodian arising out of the
negligent action, negligent failure to act or willful misconduct
of the Custodian, and hereby waives all rights it may have to
object to the right of a Sub-Custodian to maintain an action
against it.
10. Successor Custodian. If a successor custodian shall be
appointed by the Trustees of the Fund, the Custodian shall, upon
termination, cause to be delivered to such successor custodian,
duly endorsed and in the form for transfer, all securities, funds
and other properties then held by the Sub-Custodians and all
instruments held by the Sub-Custodians relative thereto and cause
the transfer to an account of the successor custodian all of the
Fund's securities held in any Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy
of a vote of the Trustees of the Fund, cause to be delivered at
the office of the Custodian and transfer such securities, funds
and other properties in accordance with such vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Trustees shall have
been delivered to the Custodian on or before the date when such
termination shall become effective, then the Custodian shall have
the right to deliver to a bank or trust company, which meets the
requirements of the 1940 Act and the rules and regulations
thereunder, such securities, funds and other properties.
Thereafter, such bank or trust company shall be the successor of
the Custodian under this Agreement.
In the event that such securities, funds and other
properties remain in the possession of the Custodian or any Sub-
Custodian after the date of termination hereof owing to failure
of the Fund to procure the certified copy of the vote referred to
or of the Trustees to appoint a successor custodian, the
Custodian shall be entitled to fair compensation for its services
during such period as the Sub-Custodians retain possession of
such securities, funds and other properties and the provisions of
this Agreement relating to the duties and obligations of the
Custodian shall remain in full force and effect.
11. Effective Period, Termination and Amendment. This Agreement
shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided,
may be amended at any time by mutual agreement of the parties
hereto and may be terminated by either party by an instrument in
writing delivered or mailed, postage prepaid to the other party,
such termination to take effect not sooner than thirty (30) days
after the date of such delivery or mailing; provided either party
may at any time immediately terminate this Agreement in the event
of the appointment of a conservator or receiver for the other
party or upon the happening of a like event at the direction of
an appropriate regulatory agency or court of competent
jurisdiction. No provision of this Agreement may be amended or
terminated except by a statement in writing signed by the party
against which enforcement of the amendment or termination is
sought.
Upon termination of the Agreement, the Fund shall pay to the
Custodian such compensation as may be due as of the date of such
termination and shall likewise reimburse the Custodian and
through the Custodian any Sub-Custodian for its costs, expenses
and disbursements.
12. Interpretation. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to
the subject matter hereof. In connection with the operation of
this Agreement, the Custodian and the Fund may from time to time
agree in writing on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their
joint opinion be consistent with the general tenor of this
Agreement. No interpretive or additional provisions made as
provided in the preceding sentence shall be deemed to be an
amendment of this Agreement.
13. Governing Law. This instrument is executed and delivered in
The Commonwealth of Massachusetts and shall be governed by and
construed according to the internal laws of said Commonwealth,
without regard to principles of conflicts of law.
14. Notices. Notices and other writings delivered or mailed
postage prepaid to the Fund addressed to the Fund attention: John
Hughes, or to such other person or address as the Fund may have
designated to the Custodian in writing, or to the Custodian at
One Post Office Square, Boston, Massachusetts 02109 attention:
George Crane, or to such other address as the Custodian may have
designated to the Fund in writing, shall be deemed to have been
properly delivered or given hereunder to the respective
addressee.
15. Binding Obligation. This Agreement shall be binding on and
shall inure to the benefit of the Fund and the Custodian and
their respective successors and assigns, provided that neither
party hereto may assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of the
other party.
16. Declaration of Trust. A copy of the Declaration of Trust of
each of the Funds is on file with the Secretary of The
Commonwealth of Massachusetts and notice is hereby given that
this instrument is executed on behalf of the Trustees of each of
the Funds as Trustees and not individually and that the
obligations of this instrument are not binding on any of the
Trustees or officers or shareholders individually, but are
binding only on the assets and property of each Fund with respect
to its obligations hereunder.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf as of the day
and year first above written.
THE PUTNAM FUNDS LISTED
IN SCHEDULE A
/s/ John D. Hughes
By ----------------------------
Vice President and Treasurer
PUTNAM FIDUCIARY TRUST COMPANY
/s/ Robert F. Lucey
By ----------------------------
President
Putnam Investments, Inc. ("Putnam"), the sole owner of the
Custodian, agrees that Putnam shall be the primary obligor with
respect to compensation due the Sub-Custodians pursuant to the
Sub-Custodian Agreements in connection with the Sub-Custodians'
performance of their responsibilities thereunder and agrees to
take all actions necessary and appropriate to assure that the
Sub-Custodians shall be compensated in the amounts and on the
schedules agreed to by the Custodian and the Sub-Custodians
pursuant to those Agreements.
PUTNAM INVESTMENTS, INC.
/s/ Douglas B. Jamieson
By ------------------------------
<PAGE>
EXHIBIT 1
MASTER SUB-CUSTODIAN AGREEMENT
AGREEMENT made this day of , 199 , between
Putnam Fiduciary Trust Company, a Massachusetts-chartered trust
company (the "Custodian"), and , a
(the "Sub-Custodian").
WHEREAS, the Sub-Custodian represents to the Custodian that
it is eligible to serve as a custodian for a management
investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), and
WHEREAS, the Custodian has entered into a Custodian
Agreement between it and each of the Putnam Funds listed in
Schedule A, each of such Funds acting on its own behalf
separately from all the other Funds and not jointly or jointly
and severally with any of the other Funds (each of the Funds
being hereinafter referred to as the "Fund"), and
WHEREAS, the Custodian and the Fund desire to utilize sub-
custodians for the purpose of holding cash and securities of the
Fund, and
WHEREAS, the Custodian wishes to appoint the Sub-Custodian
as the Fund's Sub-Custodian,
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. Appointment of Custodian. The Custodian hereby employs
and appoints the Sub-Custodian as a Sub-Custodian for the Fund
for the term and subject to the provisions of this Agreement.
Upon request, the Custodian shall deliver to the Sub-Custodian
such proxies, powers of attorney or other instruments as may be
reasonably necessary or desirable in connection with the
performance by the Sub-Custodian of its obligations under this
Agreement on behalf of the Fund.
2. Duties of the Sub-Custodian with Respect to Property of
the Fund Held by It. The Custodian may from time to time deposit
securities or cash owned by the Fund with the Sub-Custodian. The
Sub-Custodian shall have no responsibility or liability for or on
account of securities, funds or other property of the Fund not so
delivered to it. The Sub-Custodian shall hold and dispose of the
securities hereafter held by or deposited with the Sub-Custodian
as follows:
2.1 Holding Securities. The Sub-Custodian shall hold and
physically segregate for the account of the Fund all non-cash
property, including all securities owned by the Funds, other than
securities which are maintained pursuant to Section 2.13 in a
Securities System. All such securities are to be held or
disposed of for, and subject at all times to the instructions of,
the Custodian pursuant to the terms of this Agreement. The Sub-
Custodian shall maintain adequate records identifying the
securities as being held by it as Sub-Custodian of the Fund.
2.2 Delivery of Securities. The Sub-Custodian shall
release and deliver securities of the Fund held by it hereunder
(or in a Securities System account of the Sub-Custodian) only
upon receipt of Proper Instructions (as defined in Section 2.17),
which may be continuing instructions when deemed appropriate by
the parties, and only in the following cases:
1) Upon sale of such securities for the account of
the Fund and receipt of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered into by
the Fund;
3) In the case of a sale effected through a
Securities System, in accordance with the provisions of Section
2.13 hereof;
4) To the depository agent in connection with tender
or other similar offers for portfolio securities of the Fund;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or otherwise become
payable; provided that, in any such case, the cash or other
consideration is to be delivered to the Sub-Custodian;
6) To the issuer thereof, or its agent, for transfer
into the name of the Fund or into the name of any nominee or
nominees of the Sub-Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.12; or for exchange for
a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be
delivered to the Sub-Custodian;
7) Upon the sale of such securities for the account
of the Fund, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that, in any such case, the Sub-Custodian shall
have no responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Sub-Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such securities,
or pursuant to provisions for conversion contained in such
securities, or pursuant to any deposit agreement; provided that,
in any such case, the new securities and cash, if any, are to be
delivered to the Sub-Custodian;
9) In the case of warrants, rights or similar
securities, the surrender thereof in the exercise of such
warrants, rights or similar securities or the surrender of
interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Sub-Custodian;
10) For delivery in connection with any loans of
securities made by the Fund, but only against receipt of adequate
collateral as agreed upon from time to time by the Custodian and
the Sub-Custodian, which may be in the form of cash or
obligations issued by the United States government, its agencies
or instrumentalities;
11) For delivery as security in connection with any
borrowings by the Fund requiring a pledge of assets by the Fund,
but only against receipt of amounts borrowed;
12) Upon receipt of instructions from the transfer
agent for the Fund (the "Transfer Agent"), for delivery to such
Transfer Agent or to the shareholders of the Fund in connection
with distributions in kind, as may be described from time to time
in the Fund's Declaration of Trust and currently effective
registration statement, if any, in satisfaction of requests by
shareholders for repurchase or redemption;
13) For delivery to another Sub-Custodian of the Fund;
and
14) For any other proper purpose, but only upon
receipt of, in addition to Proper Instructions, a certified copy
of a resolution of the Trustees or of the Executive Committee of
the Fund signed by an officer of the Fund and certified by its
Clerk or an Assistant Clerk, specifying the securities to be
delivered, setting forth the purpose for which such delivery is
to be made, declaring such purposes to be proper corporate
purposes, and naming the person or persons to whom delivery of
such securities is to be made.
2.3 Registration of Securities. Securities of the Fund
held by the Sub-Custodian hereunder (other than bearer
securities) shall be registered in the name of the Fund or in the
name of any nominee of the Fund or of any nominee of the Sub-
Custodian, which nominee shall be assigned exclusively to the
Fund, unless the Fund has authorized in writing the appointment
of a nominee to be used in common with other registered
investment companies having the same investment adviser as the
Fund, or in the name or nominee name of any agent appointed
pursuant to Section 2.12. Notwithstanding the foregoing, a Sub-
Custodian or agent thereof may hold securities of the Fund in a
nominee name which is used for its other clients provided such
name is not used by the Sub-Custodian or agent for its own
securities and that securities of the Fund are physically
segregated at all times from other securities held for other
clients using the same nominee name. All securities accepted by
the Sub-Custodian under the terms of this Agreement shall be in
"street name" or other good delivery form.
2.4 Bank Accounts. The Sub-Custodian shall open and
maintain a separate bank account or accounts in the name of the
Fund, subject only to draft or order by the Sub-Custodian acting
pursuant to the terms of this Agreement, and shall hold in such
account or accounts, subject to the provisions hereof, all cash
received for the account of the Funds, other than cash maintained
by the Fund in a bank account established and used in accordance
with Rule 17f-3 under the 1940 Act. Funds held by the Sub-
Custodian for the Fund shall be deposited by it to its credit as
Sub-Custodian of the Fund in the Banking Department of the Sub-
Custodian or other banks. Such funds shall be deposited by the
Sub-Custodian in its capacity as Sub-Custodian and shall be
withdrawable by the Sub-Custodian only in that capacity. The
Sub-Custodian shall be liable for losses incurred by the Fund
attributable to any failure on the part of the Sub-Custodian to
report accurate cash availability information with respect to the
Fund's bank accounts maintained by the Sub-Custodian or any of
its agents, provided that such liability shall be determined
solely on a cost-of-funds basis.
2.5 Payments for Shares. The Sub-Custodian shall receive
from any distributor of the Fund's shares or from the Transfer
Agent of the Fund and deposit into the Fund's account such
payments as are received for shares of the Fund issued or sold
from time to time by the Fund. The Sub-Custodian will provide
timely notification to the Custodian, and the Transfer Agent of
any receipt by it of payments for shares of the Fund.
2.6 Investment and Availability of Federal Funds. Upon
mutual agreement between the Custodian and the Sub-Custodian, the
Sub-Custodian shall, upon the receipt of Proper Instructions,
1) invest in such instruments as may be set forth in
such instructions on the same day as received all federal funds
received after a time agreed upon between the Sub-Custodian and
the Custodian; and
2) make federal funds available to the Fund as of
specified times agreed upon from time to time by the Custodian
and the Sub-Custodian in the amount of checks, when cleared
within the Federal Reserve System, received in payment for shares
of the Fund which are deposited into the Fund's account or
accounts.
2.7 Collection of Income. The Sub-Custodian shall collect
on a timely basis all income and other payments with respect to
registered securities held hereunder to which the Fund shall be
entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and
other payments with respect to bearer securities if, on the date
of payment by the issuer, such securities are held hereunder and
shall credit such income, as collected, to the Fund's account.
Without limiting the generality of the foregoing, the Sub-
Custodian shall detach and present for payment all coupons and
other income items requiring presentation as and when they become
due and shall collect interest when due on securities held
hereunder. Arranging for the collection of income due the Fund
on securities loaned pursuant to the provisions of Section
2.2(10) shall be the responsibility of the Custodian. The Sub-
Custodian will have no duty or responsibility in connection
therewith, other than to provide the Custodian with such
information or data as may be necessary to assist the Custodian
in arranging for the timely delivery to the Sub-Custodian of the
income to which the Fund is properly entitled.
2.8 Payment of Fund Monies. Upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, the Sub-Custodian shall cause monies
of a Fund to be paid out in the following cases only:
1) Upon the purchase of securities for the account of
the Fund but only (a) against the delivery of such securities to
the Sub-Custodian (or any bank, banking firm or trust company
doing business in the United States or abroad which is qualified
under the 1940 Act, as amended, to act as a custodian and has
been designated by the Sub-Custodian as its agent for this
purpose) registered in the name of the Fund or in the name of a
nominee referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set forth in
Section 2.13 hereof; or (c) in the case of repurchase agreements
entered into between the Fund and the Sub-Custodian, or another
bank, (i) against delivery of the securities either in
certificate form or through an entry crediting the Sub-
Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt evidencing
purchase by the Fund of securities owned by the Sub-Custodian
along with written evidence of the agreement by the Sub-Custodian
to repurchase such securities from the Fund;
2) In connection with conversion, exchange or
surrender of securities owned by the Fund as set forth in Section
2.2 hereof;
3) For the redemption or repurchase of shares issued
by the Fund as set forth in Section 2.10 hereof;
4) For the payment of any expense or liability
incurred by the Fund, including but not limited to the following
payments for the account of the Fund: interest, taxes,
management, accounting, custodian and Sub-Custodian, transfer
agent and legal fees, including the Custodian's fee; and
operating expenses of the Fund whether or not such expenses are
to be in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends declared pursuant
to the governing documents of the Fund;
6) For transfer to another Sub-Custodian of the Fund;
and
7) For any other proper purpose, but only upon
receipt of, in addition to Proper Instructions, a certified copy
of a resolution of the Trustees or of the Executive Committee of
the Fund signed by an officer of the Fund and certified by its
Clerk or an Assistant Clerk, specifying the amount of such
payment, setting forth the purpose for which such payment is to
be made, declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is to be made.
2.9 Liability for Payment in Advance of Receipt of
Securities Purchased. In any and every case where payment for
purchase of securities for the account of a Fund is made by the
Sub-Custodian in advance of receipt of the securities purchased
in the absence of specific written instructions from the
Custodian to so pay in advance, the Sub-Custodian shall be
absolutely liable to the Fund and the Custodian in the event any
loss results to the Fund or the Custodian from the failure of the
Sub-Custodian to make such payment against delivery of such
securities, except that in the case of repurchase agreements
entered into by the Fund with a bank which is a member of the
Federal Reserve System, the Sub-Custodian may transfer funds to
the account of such bank prior to the receipt of written evidence
that the securities subject to such a repurchase agreement have
been transferred by book-entry into a segregated non-proprietary
account of the Sub-Custodian maintained with any Federal Reserve
Bank or of the safe-keeping receipt, provided that such
securities have in fact been so transferred by book-entry.
2.10 Payments for Repurchases or Redemptions of Shares
of the Fund. From such funds as may be available for the purpose
but subject to the limitations of the Declaration of Trust and
By-Laws and any applicable votes of the Trustees of the Fund
pursuant thereto, the Sub-Custodian shall, upon receipt of
instructions from the Custodian, make funds available for payment
to shareholders of the Fund who have delivered to the Transfer
Agent a request for redemption or repurchase of their shares. In
connection with the redemption or repurchase of shares of the
Fund, the Sub-Custodian, upon receipt of Proper Instructions, is
authorized to wire funds to or through a commercial bank
designated by the redeeming shareholders. In connection with the
redemption or repurchase of shares of the Fund, the Sub-
Custodian, upon receipt of Proper Instructions, shall honor
checks drawn on the Sub-Custodian by a shareholder, when
presented to the Sub-Custodian in accordance with such procedures
and controls as are mutually agreed upon from time to time among
the Fund, the Custodian and the Sub-Custodian.
2.11 Variances. The Sub-Custodian may accept
securities or cash delivered in settlement of trades
notwithstanding variances between the amount of securities or
cash so delivered and the amount specified in the instructions
furnished to it by the Custodian, provided that the variance in
any particular transaction does not exceed (i) $25 in the case of
transactions of $1,000,000 or less, and (ii) $50 in the case of
transactions exceeding $1,000,000. The Sub-Custodian shall
maintain a record of any such variances and notify the Custodian
of such variances in periodic transaction reports submitted to
the Custodian. The Sub-Custodian will not advise any party with
whom the Fund effects securities transactions of the existence of
these variance provisions without the consent of the Fund and the
Custodian.
2.12 Appointment of Agents. Without limiting its own
responsibility for its obligations assumed hereunder, the Sub-
Custodian may at any time and from time to time engage, at its
own cost and expense, as an agent to act for the Fund on the Sub-
Custodian's behalf with respect to any such obligations any bank
or trust company which meets the requirements of the 1940 Act,
and the rules and regulations thereunder, to perform services
delegated to the Sub-Custodian hereunder, provided that the Fund
shall have approved in writing any such bank or trust company and
the Sub-Custodian shall give prompt written notice to the
Custodian and the Fund of any such engagement. All agents of the
Sub-Custodian shall be subject to the instructions of the Sub-
Custodian and not the Custodian. The Sub-Custodian may, at any
time in its discretion, and shall at the Custodian's direction,
remove any bank or trust company which has been appointed as an
agent, and shall in either case promptly notify the Custodian and
the Fund in writing of the completion of any such action.
The agents which the Fund has approved to date are set forth
in Schedule B hereto. Schedule B shall be amended from time to
time as approved agents are changed, added or deleted. The
Custodian shall be responsible for informing the Sub-Custodian
sufficiently in advance of a proposed investment which is to be
held at a location not listed on Schedule B, in order that there
shall be sufficient time for the Fund to give the approval
required by the preceding paragraph and for the Sub-Custodian to
complete the appropriate contractual and technical arrangements
with such agent. The engagement by the Sub-Custodian of one or
more agents to carry out such of the provisions of this Section 2
shall not relieve the Sub-Custodian of its responsibilities or
liabilities hereunder.
2.13 Deposit of Fund Assets in Securities Systems. The
Sub-Custodian may deposit and/or maintain securities owned by the
Fund in a clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities Exchange
Act of 1934, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of the
Treasury (collectively referred to herein as "Securities System")
in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations
(including Rule 17f-4 of the 1940 Act), and subject to the
following provisions:
1) The Sub-Custodian may keep securities of the Fund
in a Securities System provided that such securities are
represented in an account ("Account") of the Sub-Custodian in the
Securities System which shall not include any assets other than
assets held as a fiduciary, custodian or otherwise for customers;
2) The records of the Sub-Custodian with respect to
securities of the Fund which are maintained in a Securities
System shall identify by book-entry those securities belonging to
the Fund;
3) The Sub-Custodian shall pay for securities
purchased for the account of the Fund upon (i) receipt of advice
from the Securities System that such securities have been
transferred to the Account, and (ii) the making of an entry on
the records of the Sub-Custodian to reflect such payment and
transfer for the account of the Fund. The Sub-Custodian shall
transfer securities sold for the account of the Fund upon (a)
receipt of advice from the Securities System that payment for
such securities has been transferred to the Account, and (b) the
making of an entry on the records of the Sub-Custodian to reflect
such transfer and payment for the account of the Fund. Copies of
all advices from the Securities System of transfers of securities
for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Sub-Custodian and be provided to
the Fund or the Custodian at the Custodian's request. The Sub-
Custodian shall furnish the Custodian confirmation of each
transfer to or from the account of the Fund in the form of a
written advice or notice and shall furnish to the Custodian
copies of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of the Fund
on the next business day;
4) The Sub-Custodian shall provide the Custodian with
any report obtained by the Sub-Custodian on the Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the
Securities System;
5) The Sub-Custodian shall have received the initial
or annual certificate, as the case may be, required by Section
2.10 hereof;
6) Anything to the contrary in this Agreement
notwithstanding, the Sub-Custodian shall be liable to the Fund
and the Custodian for any loss or damage to the Fund or the
Custodian resulting from use of the Securities System by reason
of any negligence, misfeasance or misconduct of the Sub-Custodian
or any of its agents or of any of its or their employees or from
failure of the Sub-Custodian or any such agent to enforce
effectively such rights as it may have against the Securities
System; at the election of the Custodian, it shall be entitled to
be subrogated to the rights of the Sub-Custodian with respect to
any claim against the Securities System or any other person which
the Sub-Custodian may have as a consequence of any such loss or
damage if and to the extent that the Fund and the Custodian have
not been made whole for any such loss or damage.
2.14 Ownership Certificates for Tax Purposes. The Sub-
Custodian shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection
with receipt of income or other payments with respect to
securities held by it hereunder and in connection with transfers
of securities.
2.15 Proxies. The Sub-Custodian shall, with respect to
the securities held hereunder, cause to be promptly executed by
the registered holder of such securities, if the securities are
registered otherwise than in the name of a Fund, all proxies,
without indication of the manner in which such proxies are to be
voted, and shall promptly deliver to the Custodian such proxies,
all proxy soliciting materials and all notices relating to such
securities.
2.16 Communications Relating to Fund Portfolio
Securities. The Sub-Custodian shall transmit promptly to the
Custodian all written information (including, without limitation,
pendency of calls and maturities of securities and expirations of
rights in connection therewith) received by the Sub-Custodian
from issuers of the securities being held for the account of the
Fund. With respect to tender or exchange offers, the Sub-
Custodian shall transmit promptly to the Custodian all written
information received by the Sub-Custodian from issuers of the
securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the Fund
desires to take action with respect to any tender offer, exchange
offer or any other similar transactions, the Custodian shall
notify the Sub-Custodian of the action the Fund desires the Sub-
Custodian to take; provided, however, that the Sub-Custodian
shall not be liable to the Fund or the Custodian for the failure
to take any such action unless such instructions are received by
the Sub-Custodian at least two business days prior to the date on
which the Sub-Custodian is to take such action.
2.17 Proper Instructions. Proper Instructions as used
throughout this Agreement means a writing signed or initialed by
one or more persons who are authorized by the Trustees of the
Fund and by vote of the Board of Directors of the Custodian.
Each such writing shall set forth the specific transaction or
type of transaction involved, including a specific statement of
the purpose for which such action is requested. Oral
instructions will be considered Proper Instructions if the Sub-
Custodian reasonably believes them to have been given by a person
authorized to give such instructions with respect to the
transaction involved. The Custodian shall cause all oral
instructions to be confirmed in writing. Upon receipt of a
certificate of the Clerk or an Assistant Clerk as to the
authorization by the Trustees of the Funds accompanied by a
detailed description of procedures approved by the Trustees,
Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices, provided that
the Trustees, the Custodian and the Sub-Custodian are satisfied
that such procedures afford adequate safeguards for the Fund's
assets. Notwithstanding the foregoing, no Trustee, officer,
employee or agent of the Fund shall be permitted access to any
securities or similar investments of the Fund deposited with the
Sub-Custodian or any agent for any reason except in accordance
with the provisions of Rule 17f-2 under the 1940 Act.
2.18 Actions Permitted without Express Authority. The
Sub-Custodian may in its discretion, without express authority
from the Custodian:
1) make payments to itself or others for minor
expenses of handling securities or other similar items relating
to its duties under this Agreement, provided that all such
payments shall be accounted for to the Fund and the Custodian;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the Fund,
checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary
details in connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the securities and
property of the Fund held by the Sub-Custodian hereunder except
as otherwise directed by the Custodian or the Trustees of the
Fund.
2.19 Evidence of Authority. The Sub-Custodian shall be
protected in acting upon any instruction, notice, request,
consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to have been properly executed
by or on behalf of the Fund or the Custodian as custodian of the
Fund. The Sub-Custodian may receive and accept a certified copy
of a vote of the Trustees of the Fund or the Board of Directors
of the Custodian, as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any
determination or of any action by the Trustees pursuant to the
Declaration of Trust and By-Laws and the Board of Directors of
the Custodian, as the case may be as described in such vote, and
such vote may be considered as in full force and effect until
receipt by the Sub-Custodian of written notice to the contrary.
3. Performance Standards; Protection of the Fund. The
Sub-Custodian shall use its best efforts to perform its duties
hereunder in accordance with the standards set forth in Schedule
C hereto. Schedule C may be amended from time to time as agreed
to by the Custodian and the Trustees of the Fund.
4. Records. The Sub-Custodian shall cooperate with and
supply necessary information to the entity or entities appointed
by the Trustees of the Fund to keep the books of account of the
Funds or, if directed in writing to do so by the Custodian, shall
itself keep such books of account. The Sub-Custodian shall
create and maintain all records relating to its activities and
obligations under this Agreement in such manner as will meet the
obligations of the Custodian under its Custodian Agreement with
the Fund under the 1940 Act, with particular attention to
Sections 17(f) and 31 thereof and Rules 17f-2, 31a-1 and 31a-2
thereunder, applicable federal and state tax laws, and any other
law or administrative rules or procedures which may be applicable
to the Fund or the Custodian. All such records shall be the
property of the Fund and shall at all times during the regular
business hours of the Sub-Custodian be open for inspection by
duly authorized officers, employees or agents of the Custodian
and the Fund and employees and agents of the Securities and
Exchange Commission. The Sub-Custodian shall, at the Custodian's
request, supply the Custodian with a tabulation of securities
owned by the Fund and held under this Agreement and shall, when
requested to do so by the Custodian and for such compensation as
shall be agreed upon between the Custodian and Sub-Custodian,
include certificate numbers in such tabulations.
5. Opinion and Reports of the Fund's Independent
Accountants. The Sub-Custodian shall take all reasonable
actions, as the Custodian may from time to time request, to
obtain from year to year favorable opinions from the Fund's
independent public accountants with respect to its activities
hereunder in connection with the preparation of the Fund's
registration statements and amendments thereto, the Fund's
reports to the Securities and Exchange Commission and with
respect to any other requirements of such Commission.
6. Reports of Sub-Custodian's Independent Accountants.
The Sub-Custodian shall provide the Custodian, at such times as
the Custodian may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, including
securities deposited and/or maintained in a Securities System,
relating to the services provided by the Sub-Custodian under this
Agreement; such reports, which shall be of sufficient scope and
in sufficient detail as may reasonably be required by the
Custodian, shall provide reasonable assurance that any material
inadequacies would be disclosed by such examination, and, if
there are no such inadequacies, shall so state.
7. Compensation. The Sub-Custodian shall be entitled to
reasonable compensation for its services and expenses as Sub-
Custodian, as agreed upon from time to time between the Custodian
and the Sub-Custodian.
8. Responsibility of Sub-Custodian. The Sub-Custodian
shall exercise reasonable care and diligence in carrying out the
provisions of this Agreement and shall not be liable to the Fund
or the Custodian for any action taken or omitted by it in good
faith without negligence. So long as and to the extent that it
is in the exercise of reasonable care, the Sub-Custodian shall
not be responsible for the title, validity or genuineness of any
property or evidence of title thereto received by it or delivered
by it pursuant to this Agreement and shall be held harmless in
acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be
signed by the proper party or parties. It shall be entitled to
rely on and may act upon advice of counsel (who may be counsel
for the Fund) on all matters, and shall be without liability for
any action reasonably taken or omitted pursuant to such advice.
Notwithstanding the foregoing, the responsibility of the Sub-
Custodian with respect to redemptions effected by check shall be
in accordance with a separate agreement entered into between the
Custodian and the Sub-Custodian.
The Sub-Custodian shall protect the Fund and the Custodian
from direct losses to the Fund resulting from any act or failure
to act of the Sub-Custodian in violation of its duties hereunder
or of law and shall maintain customary errors and omissions and
fidelity insurance policies in an amount not less than $25
million to cover losses to the Fund resulting from any such act
or failure to act.
If the Custodian requires the Sub-Custodian to take any
action with respect to securities, which action involves the
payment of money or which action may, in the opinion of the Sub-
Custodian, result in the Sub-Custodian's being liable for the
payment of money or incurring liability of some other form, the
Custodian, as a prerequisite to requiring the Sub-Custodian to
take such action, shall provide indemnity to the Sub-Custodian in
an amount and form satisfactory to it.
The Custodian agrees to indemnify and hold harmless the Sub-
Custodian from and against all taxes, charges, expenses,
assessments, claims and liabilities (including counsel fees)
incurred or assessed against it or its nominee in connection with
the performance of this Agreement, except such as may arise from
its own negligent action, negligent failure to act or willful
misconduct. To secure any such authorized charges and any
advances of cash or securities made by the Sub-Custodian to or
for the benefit of the Fund for any purpose which results in the
Fund's incurring an overdraft at the end of any business day or
for extraordinary or emergency purposes during any business day,
the Custodian on behalf of the Fund, unless prohibited from doing
so by one or more of the Fund's fundamental investment
restrictions, hereby represents that it has obtained from the
Fund authorization to apply available cash in any account
maintained by the Sub-Custodian on behalf of the Fund and a
security interest in and pledge to it of securities held for the
Fund by the Sub-Custodian, in an amount not to exceed the amount
not prohibited by such restrictions, for the purposes of securing
payment of any such advances, and that the Fund has agreed, from
time to time, to designate in writing, or to cause its investment
adviser to designate in writing, the specific securities subject
to such security interest and pledge. The Custodian hereby
assigns the benefits of such security interest and pledge to the
Sub-Custodian, and agrees that, should the Fund or the Custodian
fail to repay promptly any advances of cash or securities, the
Sub-Custodian shall be entitled to use such available cash and to
dispose of such pledged securities as is necessary to repay any
such advances.
9. Successor Sub-Custodian. If a successor Sub-Custodian
shall be appointed by the Custodian, the Sub-Custodian shall,
upon termination, cause to be delivered to such successor Sub-
Custodian, duly endorsed and in the form for transfer, all
securities then held by it, shall cause the transfer to an
account of the successor Sub-Custodian all of the Fund's
securities held in a Securities System and shall cause to be
delivered to such successor Sub-Custodian all funds and other
property held by it or any of its agents.
If no such successor Sub-Custodian shall be appointed, the
Sub-Custodian shall, in like manner, upon receipt of a certified
copy of a vote of the Trustees of the Fund, cause to be delivered
at the office of the Sub-Custodian and transfer such securities,
funds and other properties in accordance with such vote.
In the event that no written order designating a successor
Sub-Custodian or certified copy of a vote of the Trustees shall
have been delivered to the Sub-Custodian on or before the date
when such termination shall become effective, then the Sub-
Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the 1940 Act, doing
business in Boston, Massachusetts, of its own selection, having
an aggregate capital, surplus, and undivided profits, as shown by
its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Sub-Custodian
and its agents and all instruments held by the Sub-Custodian and
its agents relative thereto and all other property held by it and
its agents under this Agreement and to cause to be transferred to
an account of such successor Sub-Custodian all of the Fund's
securities held in any Securities System. Thereafter, such bank
or trust company shall be the successor of the Sub-Custodian
under this Agreement.
In the event that securities, funds and other properties
remain in the possession of the Sub-Custodian after the date of
termination hereof owing to failure of the Custodian to obtain
the certified copy of vote referred to or of the Trustees to
appoint a successor Sub-Custodian, the Sub-Custodian shall be
entitled to fair compensation for its services during such period
as the Sub-Custodian retains possession of such securities, funds
and other properties and the provisions of this Agreement
relating to the duties and obligations of the Sub-Custodian shall
remain in full force and effect.
Upon termination, the Sub-Custodian shall, upon receipt of a
certified copy of a vote of the Trustees of the Fund, cause to be
delivered to any other Sub-Custodian designated in such vote such
assets, securities and other property of the Fund as are
designated in such vote, or pursuant to Proper Instructions,
cause such assets, securities and other property of the Fund as
are designated by the Custodian to be delivered to one or more of
the sub-custodians designated on Schedule D hereto, as from time
to time amended.
10. Effective Period; Termination and Amendment. This
Agreement shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement of the
parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed, postage prepaid, to
the other party, such termination to take effect not sooner than
thirty (30) days after the date of mailing; provided, however,
that the Sub-Custodian shall not act under Section 2.13 hereof in
the absence of receipt of an initial certificate of the Clerk or
an Assistant Clerk that the Trustees of the Fund have approved
the initial use of a particular Securities System and the receipt
of an annual certificate of the Clerk or an Assistant Clerk that
the Trustees have reviewed the use by the Fund of such Securities
System, as required in each case by Rule 17f-4 under the
Investment Company Act of 1940; and provided, further, however,
that the Custodian shall not amend or terminate this Agreement in
contravention of any applicable federal or state regulations or
any provision of the Declarations of Trust or By-Laws of the
Fund; and provided, further, that the Custodian may at any time,
by action of its Board of Directors, or the Trustees of the Fund,
as the case may be, immediately terminate this Agreement in the
event of the appointment of a conservator or receiver for the
Sub-Custodian by the Comptroller of the Currency or upon the
happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
Upon termination of this Agreement, the Custodian shall pay
to the Sub-Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Sub-
Custodian for its reimbursable costs, expenses and disbursements.
11. Amendment and Interpretation. This Agreement
constitutes the entire understanding and agreement of the parties
hereto with respect to the subject matter hereof. No provision
of this Agreement may be amended or terminated except by a
statement in writing signed by the party against which
enforcement of the amendment or termination is sought.
In connection with the operation of this Agreement, the Sub-
Custodian and the Custodian may from time to time agree in
writing on such provisions interpretive of or in addition to the
provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. No
interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this
Agreement.
12. Governing Law. This Agreement is executed and
delivered in The Commonwealth of Massachusetts and shall be
governed by and construed according to the laws of said
Commonwealth.
13. Notices. Notices and other writings delivered or
mailed postage prepaid to the Custodian addressed to the
Custodian attention: , or to such other person or
address as the Custodian may have designated to the Sub-Custodian
in writing, or to the Sub-Custodian at , or to such
other address as the Sub-Custodian may have designated to the
Custodian in writing, shall be deemed to have been properly
delivered or given hereunder to the respective addressee.
14. Binding Obligation. This Agreement shall be binding on
and shall inure to the benefit of the Custodian and the Sub-
Custodian and their respective successors and assigns, provided
that neither party hereto may assign this Agreement or any of its
rights or obligations hereunder without the prior written consent
of the other party.
15. Prior Agreements. This Agreement supersedes and
terminates, as of the date hereof, all prior contracts between
the Fund or the Custodian and the Sub-Custodian relating to the
custody of the Fund's assets.
16. Declaration of Trust. A copy of the Agreement and
Declaration of Trust of the Fund is on file with the Secretary of
The Commonwealth of Massachusetts, and notice is hereby given
that the obligations of or arising out of this instrument are not
binding upon any of the Trustees or beneficiaries individually
but binding only upon the assets and property of the Funds.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the day of , 199 .
PUTNAM FIDUCIARY TRUST COMPANY
By ---------------------------
(SUB-CUSTODIAN)
By ---------------------------
<PAGE>
EXHIBIT 1(A)
MASTER FOREIGN SUB-CUSTODIAN AGREEMENT
AGREEMENT made this day of , 199 , between
Putnam Fiduciary Trust Company, a Massachusetts-chartered trust
company (the "Custodian"), and ,
(the "Sub-Custodian").
WHEREAS, the Sub-Custodian represents to the Custodian that
it is eligible to serve as a custodian for a management
investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), and
WHEREAS, the Custodian has entered into a Custodian
Agreement between it and each of the Putnam Funds listed in
Schedule A to this Agreement, each of such Funds acting on its
own behalf separately from all the other Funds and not jointly or
jointly and severally with any of the other Funds (each of the
Funds being hereinafter referred to as the "Fund"), and
WHEREAS, the Custodian and the Fund desire to utilize
sub-custodians for the purpose of holding cash and securities of
the Fund, and
WHEREAS, the Custodian wishes to appoint the Sub-Custodian
as the Fund's Sub-Custodian,
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. Appointment of Sub-Custodian. The Custodian hereby employs
and appoints the Sub-Custodian as a sub-custodian for safekeeping
of securities and other assets of the Fund for the term and
subject to the provisions of this Agreement. Upon request, the
Custodian shall deliver to the Sub-Custodian such proxies, powers
of attorney or other instruments as may be reasonably necessary
or desirable in connection with the performance by the
Sub-Custodian of its obligations under this Agreement on behalf
of the Fund.
2. Duties of the Sub-Custodian with Respect to Property of
the Fund Held by It. The Custodian may from time to time deposit
or direct the deposit of securities or cash owned by the Fund
with the Sub-Custodian. The Sub-Custodian shall have no
responsibility or liability for or on account of securities,
funds or other property of the Fund not so delivered to it.
Except for securities and funds held by 17f-5 Sub-Custodians (as
defined in Section 2.11(b)) the Sub-Custodian shall hold and
dispose of the securities or cash hereafter held by or deposited
with the Sub-Custodian as follows:
2.1. Holding Securities. The Sub-Custodian shall hold
and, by book-entry or otherwise, identify as belonging to the
Fund all non-cash property which has been delivered to the
Sub-Custodian. All such securities are to be held or disposed of
for, and subject at all times to the instructions of, the
Custodian pursuant to the terms of this Agreement. The
Sub-Custodian shall maintain adequate records identifying the
securities as being held by it as sub-custodian of the Fund.
2.2. Delivery of Securities. The Sub-Custodian shall
release and deliver securities of the Fund held by it hereunder
(or in a Securities System account of the Sub-Custodian) only
upon receipt of Proper Instructions (as defined in Section 2.19),
which may be continuing instructions when deemed appropriate by
the parties, and only in the following cases:
1) Upon sale of such securities for the account
of the Fund and receipt of payment therefor, provided, however,
that the Sub-Custodian may release and deliver securities prior
to the receipt of payment therefor if (i) in the Sub-Custodian's
judgment, (A) release and delivery prior to payment is required
by the terms of the instrument evidencing the security or (B)
release and delivery prior to payment is the prevailing method of
settling securities transactions between institutional investors
in the applicable market and (ii) release and delivery prior to
payment is in accordance with generally accepted trade practice
and with any applicable governmental regulations and the rules of
Securities Systems or other securities depositories and clearing
agencies in the applicable market. The Sub-Custodian agrees,
upon request, to advise the Custodian of all pending transactions
in which release and delivery will be made prior to the receipt
of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered into by
the Fund;
3) In the case of a sale effected through a Securities
System, in accordance with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender
or other similar offers for such securities; provided that, in any
such case, the cash or other consideration is thereafter to be
delivered to the Sub-Custodian;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or otherwise become
payable; provided that, in any such case, the cash or other
consideration is thereafter to be delivered to the Sub-Custodian;
6) To the issuer thereof, or its agent, for
transfer into the name of the Fund or into the name of any nominee
or nominees of the Sub-Custodian or into the name or nominee name
of any agent appointed pursuant to Section 2.11 or any other name
permitted pursuant to Section 2.3; or for exchange for a different
number of bonds, certificates or other evidence representing the
same aggregate face amount or number of units; provided that, in
any such case, the new securities are thereafter to be delivered
to the Sub-Custodian;
7) Upon the sale of such securities for the
account of the Fund, to the broker or its clearing agent, against
a receipt, for examination in accordance with "street delivery"
custom; provided that, in any such case, the Sub-Custodian shall
have no responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Sub-Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan
of merger, consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such securities,
or pursuant to provisions for conversion contained in such
securities, or pursuant to any deposit agreement; provided that,
in any such case, the new securities and cash, if any, thereafter
are to be delivered to the Sub-Custodian;
9) In the case of warrants, rights or similar
securities, the surrender thereof in the exercise of such
warrants, rights or similar securities or the surrender of interim
receipts or temporary securities for definitive securities;
provided that, in any such case, the now securities and cash, if
any, are thereafter to be delivered to the Sub-Custodian;
10) For delivery in connection with any loans of
securities made by the Fund, but only against receipt of
collateral the adequacy and timing of receipt of which shall be as
agreed upon from time to time in writing by the Custodian and the
Sub-Custodian, which may be in the form of cash or obligations
issued by the United States government, its agencies or
instrumentalities;
11) For delivery as security in connection with
any borrowings by the Fund requiring a pledge of assets by the
Fund, but only against receipt of amounts borrowed;
12) Upon receipt of instructions from the transfer
agent for the Fund (the "Transfer Agent"), for delivery to such
Transfer Agent or to the shareholders of the Fund in connection
with distributions in kind, in satisfaction of requests by
shareholders for repurchase or redemption;
13) For delivery to the Custodian or another
sub-custodian of the Fund; and
14) For any other proper purpose, but only upon
receipt of, in addition to Proper Instructions, a certified copy
of a resolution of the Trustees or of the Executive Committee of
the Fund signed by an officer of the Fund and certified by its
Clerk or an Assistant Clerk, specifying the securities to be
delivered, setting forth the purpose for which such delivery is to
be made, declaring such purposes to be proper corporate purposes,
and naming the person or persons to whom delivery of such
securities is to be made.
2.3. Registration of Securities. Securities of the
Fund held by the Sub-Custodian hereunder (other than bearer
securities) shall be registered in the name of the Fund or in the
name of any nominee of the Fund or of any nominee of the
Sub-Custodian or any 17f-5 Sub-Custodian or Foreign Depository (as
each of those terms is defined in Section 2.11(b)), which nominee
shall be assigned exclusively to the Fund, unless the Fund has
authorized in writing the appointment of a nominee to be used in
common with other registered investment companies having the same
investment adviser as the Fund, or in the name or nominee name of
any agent appointed pursuant to Section 2.11(a). Notwithstanding
the foregoing, the Sub-Custodian or agent thereof or any 17f-5
Sub-Custodian or Foreign Depository may hold securities of the
Fund in a nominee name which is used for its other clients
provided that such name is not used by the Sub-Custodian, agent,
17f-5 Sub-Custodian or Foreign Depository for its own securities
and that securities of the Fund are, by book-entry or otherwise,
at all times identified as belonging to the Fund and distinguished
from other securities held for other clients using the same
nominee name. In addition, and notwithstanding the foregoing, the
Sub-Custodian or agent thereof or 17f-5 Sub-Custodian or Foreign
Depository may hold securities of the Fund in its own name if such
registration is the prevailing method in the applicable market by
which custodians register securities of institutional clients and
provided that securities of the Fund are, by book-entry or
otherwise, at all times identified as belonging to the Fund and
distinguished from other securities held for other clients or for
the Sub-Custodian or agent thereof or 17f-5 Sub-Custodian or
Foreign Depository. All securities accepted by the Sub-Custodian
under the terms of this Agreement shall be in good delivery form.
2.4. Bank Accounts. The Sub-Custodian shall open and
maintain a separate bank account or accounts in the name of the
Fund or of the Custodian for the benefit of the Fund, subject only
to draft or order by the Sub-Custodian acting pursuant to the
terms of this Agreement or by the Custodian acting pursuant to the
Custodian Agreement, and shall hold in such account or accounts,
subject to the provisions hereof, to the Sub-Custodian's credit as
sub-custodian of the Fund or the Custodian's credit as custodian
for the Fund, cash received for the account of the Fund other than
cash maintained by the Fund in a bank account established and used
in accordance with Rule 17f-3 under the 1940 Act or cash held as
deposits with 17f-5 Sub-Custodians in accordance with the
following paragraph. The responsibilities of the Sub-Custodian
for cash, including foreign currency, of the Fund accepted on the
Sub-Custodian's books as a deposit shall be that of a U.S. bank
for a similar deposit.
The Sub-Custodian may open a bank account on the books of a
17f-5 Sub-Custodian in the name of the Fund or of the Sub-
Custodian as a sub-custodian for the Fund, and may deposit cash,
including foreign currency, of the Fund in such account, and such
funds shall be withdrawable only pursuant to draft or order of the
Sub-Custodian. The records for such account will be maintained by
the Sub-Custodian but such account shall not constitute a deposit
liability of the Sub-Custodian. The responsibilities of the Sub-
Custodian for deposits maintained in such account shall be the
same as and no greater than the Sub-Custodian's responsibility in
respect of other portfolio securities of the Fund.
The Sub-Custodian shall be liable for actual losses incurred
by the Fund attributable to any failure on the part of the Sub-
Custodian to report accurate cash availability information with
respect to the bank accounts referred to in this Section 2.4.
2.5. Payments for Shares. The Sub-Custodian shall
maintain custody of amounts received from the Transfer Agent of
the Fund for shares of the Fund issued by the Fund and sold by its
distributor and deposit such amounts into the Fund's account. The
Sub-Custodian will provide timely notification to the Custodian
and the Transfer Agent of any receipt by it of payments for shares
of the Fund.
2.6. Availability of Federal Funds. Upon mutual
agreement between the Custodian and the Sub-Custodian, the
Sub-Custodian shall, upon the receipt of Proper Instructions, make
federal funds available to the Custodian for the account of the
Fund as of specified times agreed upon from time to time by the
Custodian and the Sub-Custodian with respect to amounts received
by the Sub-Custodian for the purchase of shares of the Fund.
2.7. Collection of Income. The Sub-Custodian shall
collect on a timely basis all income and other payments with
respect to registered securities held hereunder, including
securities held in a Securities System, to which the Fund shall be
entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and other
payments with respect to bearer securities if, on the date of
payment by the issuer, such securities are held hereunder and
shall credit such income, as collected, to the Fund's account.
Without limiting the generality of the foregoing, the
Sub-Custodian shall detach and present for payment all coupons and
other income items requiring presentation as and when they become
due and shall collect interest when due on securities held
hereunder. Arranging for the collection of income due the Fund on
securities loaned pursuant to the provisions of Section 2.2(10)
shall be the responsibility of the Custodian. The Sub-Custodian
will have no duty or responsibility in connection therewith, other
than to provide the Custodian with such information or data as may
be necessary to assist the Custodian in arranging for the timely
delivery to the Sub-Custodian of the income to which the Fund is
properly entitled.
2.8. Payment of Fund Monies. Upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, the Sub-Custodian shall cause monies
of the Fund to be paid out in the following cases only:
1) Upon the purchase of securities for the account
of the Fund but only (a) against the delivery of such securities
to the Sub-Custodian (or any bank, banking firm or trust company
doing business in the United States or abroad which is qualified
under the 1940 Act, as amended, to act as a custodian and has been
designated by the Sub-Custodian as its agent for this purpose) or
any 17f-5 Sub-Custodian or any Foreign Depository (as each of
those terms is defined in Section 2.11(b)) registered in the name
of the Fund or in the name of a nominee referred to in Section 2.3
hereof or in proper form for transfer, provided, however, that the
Sub-Custodian may cause monies of the Fund to be paid out prior to
delivery of such securities if (i) in the Sub-Custodian's
judgment, (A) payment prior to delivery is required by the terms
of the instrument evidencing the security or (B) payment prior to
delivery is the prevailing method of settling securities
transactions between institutional investors in the applicable
market and (ii) payment prior to delivery is in accordance with
generally accepted trade practice and with any applicable
governmental regulations and the rules of Securities Systems or
other securities depositories and clearing agencies in the
applicable market. The Sub-Custodian agrees, upon request, to
advise the Custodian of all pending transactions in which payment
will be made prior to the receipt of securities in accordance with
the proviso to the foregoing sentence; (b) in the case of a
purchase effected through a Securities System, in accordance with
the conditions set forth in Section 2.12 hereof; or (c) (i) in the
case of a repurchase agreement entered into between the Fund and
the Sub-Custodian, another bank or a broker-dealer, against
delivery of the securities either in certificate form or through
an entry crediting the Sub-Custodian's or its agent's
non-proprietary account at any Federal Reserve Bank with such
securities or (ii) in the case of a repurchase agreement entered
into between the Fund and the Sub-Custodian, against delivery of a
receipt evidencing purchase by the Fund of securities owned by the
Sub-Custodian along with written evidence of the agreement by the
Sub-Custodian to repurchase such securities from the Fund; or (d)
for transfer to a time deposit account of the Fund in any bank,
whether domestic or foreign, which transfer may be effected prior
to receipt of a confirmation of the deposit from the applicable
bank or a financial intermediary;
2) In connection with conversion, exchange or
surrender or tender or exercise of securities owned by the Fund as
set forth in Section 2.2 hereof;
3) For the redemption or repurchase of shares
issued by the Fund as set forth in Section 2.10 hereof;
4) For the payment of any expense or liability
incurred by the Fund, including but not limited to the following
payments for the account of the Fund: interest, taxes, management,
accounting, custodian and sub-custodian, transfer agent and legal
fees, including the Custodian's fee; and operating expenses of the
Fund whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends or other
distributions declared to shareholders of the Fund;
6) For transfer to the Custodian or another
sub-custodian of the Fund; and
7) For any other proper purpose, but only upon
receipt of, in addition to Proper Instructions, a certified copy
of a resolution of the Trustees or of the Executive Committee of
the Fund signed by an officer of the Fund and certified by its
Clerk or Assistant Clerk, specifying the amount of such payment,
setting forth the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and naming the
person or persons to whom such payment is to be made.
2.9. Liability for Payment in Advance of Receipt of
Securities Purchased. Except as otherwise provided in this
Agreement, in any and every case where payment for purchase of
securities for the account of the Fund is made by the
Sub-Custodian in advance of receipt of the securities purchased in
the absence of Proper Instructions from the Custodian to so pay in
advance, the Sub-Custodian shall be absolutely liable to the Fund
and the Custodian in the event any loss results to the Fund or the
Custodian from the payment by the Sub-Custodian in advance of
delivery of such securities.
2.10. Payments for Repurchases or Redemptions of Shares
of the Fund. From such funds as may be available, the
Sub-custodian shall, upon receipt of Proper Instructions, make
funds available for payment to a shareholder of the Fund who has
delivered to the Transfer Agent a request for redemption or
repurchase of shares of the Fund. In connection with the
redemption or repurchase of shares of the Fund, the Sub-Custodian,
upon receipt of Proper Instructions, is authorized to wire funds
to or through a commercial bank designated by the redeeming
shareholder. In connection with the redemption or repurchase of
shares of the Fund, the Sub-Custodian, upon receipt of Proper
Instructions, shall honor checks drawn on the Sub-Custodian by a
shareholder, when presented to the Sub-Custodian in accordance
with such procedures and controls as are mutually agreed upon from
time to time among the Fund, the Custodian and the Sub-Custodian.
2.11. Appointment of Agents and Sub-Custodians Pursuant
to Rule 17f-5.
(a) Agents. Without limiting its own responsibility
for its obligations assumed hereunder, the Sub-Custodian may at
any time and from time to time engage, at its own cost and
expense, as an agent to act for the Fund on the Sub-Custodian's
behalf with respect to any such obligations any bank or trust
company which meets the requirements of the 1940 Act, and the
rules and regulations thereunder, to perform services delegated to
the Sub-Custodian hereunder, provided that the Fund and the
Custodian shall have approved in writing any such bank or trust
company. All agents of the Sub-Custodian shall be subject to the
instructions of the Sub-Custodian and not the Custodian. The Sub-
Custodian may, at any time in its discretion, and shall at the
Custodian's direction, remove any bank or trust company which has
been appointed as an agent, and shall in either case promptly
notify the Custodian and the Fund in writing of the completion of
any such action.
The agents which the Fund has approved to date are set forth
in Schedule B hereto. Schedule B shall be amended from time to
time as approved agents are changed, added or deleted. The
Custodian shall be responsible for informing the Sub-Custodian
sufficiently in advance of a proposed investment which is to be
held at a location not listed on Schedule B, in order that there
shall be sufficient time for the Fund to give the approval
required by the preceding paragraph and for the Sub-Custodian to
complete the appropriate contractual and technical arrangements
with such agent. The engagement by the Sub-Custodian of one or
more agents shall not relieve the Sub-Custodian of its
responsibilities or liabilities hereunder.
(b) 17f-5 Sub-Custodians. Securities, funds and other
property of the Fund may be held by sub-custodians appointed
pursuant to the provisions of this Section 2.11 (each, a "17f-5
Sub-Custodian"). The Sub-Custodian may, at any time and from time
to time, appoint any bank or trust company (that meets the
requirements of a custodian or a foreign custodian under the
Investment Company Act of 1940 and the rules and regulations
thereunder, including without limitation Rule 17f-5 thereunder, or
that has received an order of the Securities and Exchange
Commission ("SEC") exempting it from any of such requirements that
it does not meet) to act as a 17f-5 Sub-Custodian for the Fund,
provided that the Fund shall have approved in writing (1) any such
bank or trust company and the sub-custodian agreement to be
entered into between such bank or trust company and the Sub-
Custodian, and (2) the 17f-5 Sub-Custodian's offices or branches
at which the 17f-5 Sub-Custodian is authorized to hold securities,
cash and other property of the Fund. Upon such approval by the
Fund, the Sub-Custodian is authorized on behalf of the Fund to
notify each 17f-5 Sub-Custodian of its appointment as such. The
Sub-Custodian may, at any time in its discretion, remove any bank
or trust company that has been appointed as a 17f-5 Sub-Custodian.
Those 17f-5 Sub-Custodians and their offices or branches
which the Fund has approved to date are set forth on Schedule C
hereto. Such Schedule C shall be amended from time to time as
17f-5 Sub-Custodians, branches or offices are changed, added or
deleted. The Custodian shall be responsible for informing the
Sub-Custodian sufficiently in advance of a proposed investment
which is to be held at a location not listed on Schedule C, in
order that there shall be sufficient time for the Fund to give the
approval required by the preceding paragraph and for the Sub-
Custodian to put the appropriate arrangements in place with such
17f-5 Sub-Custodian pursuant to such sub-custodian agreement.
With respect to the securities and funds held by a 17f-5 Sub-
Custodian, either directly or indirectly, including demand and
interest bearing deposits, currencies or other deposits and
foreign exchange contracts, the Sub-Custodian shall be liable to
the Custodian and the Fund if and only to the extent that such
17f-5 Sub-Custodian is liable to the Sub-Custodian and the Sub-
Custodian recovers under the applicable sub-custodian agreement,
provided, however, that the foregoing limitation shall not apply
if such 17f-5 Sub-Custodian's liability to the Sub-Custodian is
limited because the applicable sub-custodian agreement does not
contain provisions substantially similar to the provisions of
Section 2 (but not including Section 2.12) of this Agreement. The
Sub-Custodian shall also be liable to the Custodian and the Fund
for its own negligence in transmitting any instructions received
by it from the Fund or the Custodian and for its own negligence in
connection with the delivery of any securities or funds held by it
to any such 17f-5 Sub-Custodian.
The Custodian or the Fund may authorize the Sub-Custodian or
one or more of the 17f-5 Sub-Custodians to use the facilities of
one or more foreign securities depositories or clearing agencies
(each, a "Foreign Depository") that is permitted to be used by
registered investment companies by a Rule or Rules of the SEC or
that has received an order of the SEC exempting it from any of
such requirements that it does not meet. The records of the Sub-
Custodian or a 17f-5 Sub-Custodian employing a Foreign Depository
or clearing agency shall identify those securities belonging to
the Fund which are maintained in such a Foreign Depository. The
engagement by the Sub-Custodian of one or more Foreign
Depositories shall not relieve the Sub-Custodian of its
responsibilities or liabilities hereunder. The Foreign
Depositories which the Fund has approved to date are set forth in
Schedule C hereto. Schedule C shall be amended from time to time
as approved Foreign Depositories are changed, added or deleted.
The Custodian shall be responsible for informing the Sub-Custodian
sufficiently in advance of a proposed investment which is to be
held at a location not listed on Schedule C, in order that there
shall be sufficient time for the Fund to give the approval
required by the preceding paragraph and for the Sub-Custodian to
complete the appropriate contractual and technical arrangements
with such Foreign Depository.
In the event that any 17f-5 Sub-Custodian appointed pursuant
to the provisions of this Section 2.11 fails to perform any of its
obligations under the terms and conditions of the applicable sub-
custodian agreement, the Sub-Custodian shall use its best efforts
to cause such 17f-5 Sub-Custodian to perform such obligations. In
the event that the Sub-Custodian is unable to cause such 17f-5
Sub-Custodian to perform fully its obligations thereunder, the
Sub-Custodian shall forthwith upon the Custodian's request
terminate such 17f-5 Sub-Custodian as a sub-custodian for the Fund
and, if necessary or desirable, appoint another 17f-5 Sub-
Custodian in accordance with the provisions of this Section 2.11.
At the election of the Custodian, it shall have the right to
enforce and shall be subrogated to the Sub-Custodian's rights
against any such 17f-5 Sub-Custodian for loss or damage caused the
Fund by such 17f-5 Sub-Custodian.
At the written request of the Fund, the Sub-Custodian will
terminate as a sub-custodian for the Fund any 17f-5 Sub-Custodian
appointed pursuant to the provisions of this Section 2.11 in
accordance with the termination provisions under the applicable
sub-custodian agreement. The Sub-Custodian will not amend any
sub-custodian agreement or agree to change or permit any changes
thereunder except upon the prior written approval of the Fund.
In the event the Sub-Custodian makes any payment to a 17f-5
Sub-Custodian under the indemnification provisions of any sub-
custodian agreement, no more than thirty days after written notice
to the Custodian of the Sub-Custodian's having made such payment,
the Custodian will reimburse the Sub-Custodian the amount of such
payment except in respect of any negligence or misconduct of the
Sub-Custodian.
2.12. Deposit of Fund Assets in Securities Systems.
The Sub-Custodian may deposit and/or maintain securities owned by
the Fund in a clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities Exchange
Act of 1934, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of the
Treasury or by a federal agency (collectively referred to herein
as "Securities System") in accordance with applicable rules and
regulations (including Rule 17f-4 of the 1940 Act), and subject to
the following provisions:
1) The Sub-Custodian may, either directly or
through one or more agents, keep securities of the Fund in a
Securities System provided that such securities are represented in
an account ("Account") of the Sub-Custodian or such an agent in
the Securities System which shall not include any assets other
than assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Sub-Custodian with respect
to securities of the Fund which are maintained in a Securities
System shall identify by book-entry those securities belonging to
the Fund;
3) The Sub-Custodian shall pay for securities
purchased for the account of the Fund upon (i) receipt of advice
from the Securities System that such securities have been
transferred to the Account, and (ii) the making of an entry on the
records of the Sub-Custodian to reflect such payment and transfer
for the account of the Fund. The Sub-Custodian shall transfer
securities sold for the account of the Fund upon (i) receipt of
advice from the Securities System that payment for such securities
has been transferred to the Account, and (ii) the making of an
entry on the records of the Sub-Custodian to reflect such transfer
and payment for the account of the Fund. Copies of all advices
from the Securities System of transfers of securities for the
account of the Fund shall identify the Fund, be maintained for the
Fund by the Sub-Custodian or such an agent and be provided to the
Fund or the Custodian at the Custodian's request. The
Sub-Custodian shall furnish the Custodian confirmation of each
transfer to or from the account of the Fund in the form of a
written advice or notice and shall furnish to the Custodian copies
of daily transaction statements reflecting each day's transactions
in the Securities System for the account of the Fund on the next
business day;
4) The Sub-Custodian shall provide the Custodian
with any report obtained by the Sub-Custodian on the Securities
System's accounting system, internal accounting controls and
procedures for safeguarding securities deposited in the Securities
System;
5) The Sub-Custodian shall utilize only such
Securities Systems as are set forth in a list provided by the
Custodian of Securities Systems approved for use by the Board of
Trustees of the Fund, which list will be amended from time to time
by the Custodian as may be necessary to reflect any subsequent
action taken by the Trustees of the Fund;
6) Anything to the contrary in this Agreement
notwithstanding, the Sub-Custodian shall be liable to the Fund and
the Custodian for any loss or damage to the Fund or the Custodian
resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Sub-Custodian or any
of its agents or of any of its or their employees or from failure
of the Sub-Custodian or any such agent or employee to enforce
effectively such rights as it may have against the Securities
System. At the election of the Custodian, it shall be entitled to
be subrogated to the rights of the Sub-Custodian with respect to
any claim against the Securities System or any other person which
the Sub-Custodian may have as a consequence of any such loss or
damage if and to the extent that the Fund and the Custodian have
not been made whole for any such loss or damage.
2.13. Depositary Receipts. Only upon receipt of Proper
Instructions, the Sub-Custodian shall instruct a 17f-5 Sub-
Custodian appointed pursuant to Section 2.11(b) hereof or an agent
of the Sub-Custodian appointed pursuant to Section 2.11(a) hereof
(an "Agent") to surrender securities to the depositary used by an
issuer of American Depositary Receipts or International Depositary
Receipts (hereinafter collectively referred to as "ADRs") for such
securities against a written receipt therefor adequately
describing such securities and written evidence satisfactory to
the 17f-5 Sub-Custodian or Agent that the depositary has
acknowledged receipt of instructions to issue with respect to such
securities ADRs in the name of the Sub-Custodian, or a nominee of
the Sub-Custodian, for delivery to the Sub-Custodian in Boston,
Massachusetts, or at such other place as the Sub-Custodian may
from time to time designate.
Only upon receipt of Proper Instructions, the Sub-Custodian
shall surrender ADRs to the issuer thereof against a written
receipt therefor adequately describing the ADRs surrendered and
written evidence satisfactory to the Sub-Custodian that the issuer
of the ADRs has acknowledged receipt of instructions to cause its
depository to deliver the securities underlying such ADRs to a
17f-5 Sub-Custodian or an Agent.
2.14. Foreign Exchange Transactions and Futures
Contracts. Only upon receipt of Proper Instructions, the Sub-
Custodian shall enter into foreign exchange contracts or options
to purchase and sell foreign currencies for spot and future
delivery on behalf and for the account of the Fund or shall enter
into futures contracts or options on futures contracts. Such
transactions may be undertaken by the Sub-Custodian with such
banking institutions, including the Sub-Custodian and 17f-5 Sub-
Custodian(s) appointed pursuant to Section 2.11(b), as principals,
as approved and authorized by the Fund. In connection with such
transaction, the Sub-Custodian is authorized to make free outgoing
payments of cash in the form of U.S. Dollars or foreign currency
without receiving confirmation of a foreign exchange contract,
futures contract or option thereon or confirmation that the
countervalue currency completing the foreign exchange contract or
futures contract has been delivered or received or that the option
has been delivered or received. Foreign exchange contracts,
futures contracts and options, other than those executed with the
Sub-Custodian as principal, shall for all purposes of this
Agreement be deemed to be portfolio securities of the Fund.
2.15. Option Transactions. Only upon receipt of Proper
Instructions, the Sub-Custodian shall enter into option
transactions in accordance with the provisions of any agreement
among the Fund, the Custodian, and/or the Sub-Custodian and a
broker-dealer.
2.16. Ownership Certificates for Tax Purposes. The
Sub-Custodian shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection
with receipt of income or other payments with respect to
securities held by it hereunder and in connection with transfers
of securities.
2.17. Proxies. The Sub-Custodian shall, with respect
to the securities held hereunder, cause to be promptly executed by
the registered holder of such securities, if the securities are
registered other than in the name of the Fund, all proxies that
are received by the Sub-Custodian, without indication of the
manner in which such proxies are to be voted, and shall promptly
deliver to the Custodian such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.18. Communications Relating to Fund Portfolio
Securities. The Sub-Custodian shall transmit promptly to the
Custodian all written information (including, without limitation,
pendency of calls and maturities of securities and expirations of
rights in connection therewith) received by the Sub-Custodian from
issuers of the securities being held for the account of the Fund.
With respect to tender or exchange offers, the Sub-Custodian shall
transmit promptly to the Custodian all written information
received by the Sub-Custodian from issuers of the securities whose
tender or exchange is sought and from the party (or his agents)
making the tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer or any
other similar transactions, the Custodian shall notify the
Sub-Custodian of the action the Fund desires the Sub-Custodian to
take; provided, however, that the Sub-Custodian shall not be
liable to the Fund or the Custodian for the failure to take any
such action unless Proper Instructions are received by the
Sub-Custodian at least two business days prior to the date on
which the Sub-Custodian is to take such action, or in the case of
foreign securities, such longer periods as shall have been agreed
upon in writing by the Custodian and the Sub-Custodian, which may
be in the form of written operating procedures or standards.
2.19. Proper Instructions. Proper Instructions as used
throughout this Agreement means a writing signed or initialed by
one or more persons who are authorized by the Trustees of the Fund
and by the Custodian. Each such writing shall set forth the
specific transaction or type of transaction involved. Oral
instructions will be considered Proper Instructions if the
Sub-Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the
transaction involved. The Custodian shall cause all oral
instructions to be confirmed in writing. Proper Instructions
shall also include communications effected directly between the
Custodian and Sub-Custodian by electro-mechanical or electronic
devices, provided that the Custodian and the Sub-Custodian have
approved such procedures. Notwithstanding the foregoing, no
Trustee, officer, employee or agent of the Fund
shall be permitted access to any securities or similar investments
of the Fund deposited with the Sub-Custodian or any agent for any
reason except in accordance with the provisions of Rule 17f-2
under the 1940 Act.
2.20. Actions Permitted without Express Authority. The
Sub-Custodian may in its discretion, without express authority
from the Custodian:
1) make payments to itself or others for minor
expenses of handling securities or other similar items relating to
its duties under this Agreement, provided that all such payments
shall be accounted for to the Custodian;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the
Fund, checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary
details in connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the securities and
property of the Fund held by the Sub-Custodian hereunder except as
otherwise directed by the Custodian.
2.21. Evidence of Authority. The Sub-Custodian shall
be protected in acting upon any instruction, notice, request,
consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to have been properly executed by
or on behalf of the Fund or the Custodian as custodian of the
Fund.
2.22. Performance Standards. The Sub-Custodian shall
use its best efforts to perform its duties hereunder in accordance
with such standards as are agreed upon from time to time by the
Custodian and the Sub-Custodian.
3. Records. The Sub-Custodian shall cooperate with and
supply necessary information to the entity or entities appointed
by the Trustees of the Fund to keep the books of account of the
Fund or, if directed in writing to do so by the Custodian, shall
itself keep such books of account. The Sub-Custodian shall create
and maintain all records relating to its activities and
obligations under this Agreement in such manner as will meet the
obligations of the Fund under the 1940 Act, with particular
attention to Sections 17(f) and 31 thereof and Rules 17f-2, 31a-1
and 31a-2 thereunder; the Sub-Custodian shall also create and
maintain such records as are required by applicable federal and
state tax laws, and any other law or administrative rules or
procedures which may be applicable to the Fund or the Custodian,
such laws, rules or procedures to be specified by the Custodian
from time to time. All such records shall be the property of the
Fund and shall at all times during the regular business hours of
the Sub-Custodian be open for inspection by duly authorized
officers, employees or agents of the Custodian and the Fund and
employees and agents of the Securities and Exchange Commission.
The Sub-Custodian shall, at the Custodian's request, supply the
Custodian with a tabulation of securities owned by the Fund and
held under this Agreement and shall, when requested to do so by
the Custodian and for such compensation as shall be agreed upon
between the Custodian and Sub-Custodian, include certificate
numbers in such tabulations.
4. Opinion and Reports of the Fund's Independent Accountant.
The Sub-Custodian shall take all reasonable actions, as the
Custodian may from time to time request, to furnish such
information with respect to its activities hereunder as the Fund's
independent public accountant may request in connection with the
accountant's verification of the Fund's securities and similar
investments as required by Rule 17f-2 under the 1940 Act, the
preparation of the Fund's registration statement and amendments
thereto, the Fund's reports to the Securities and Exchange
Commission and with respect to any other requirements of such
Commission.
5. Reports of Sub-Custodian's Independent Accountant. The
Sub-Custodian shall provide the Custodian, at such times as the
Custodian may reasonably require, with reports by an independent
public accountant on the accounting system, internal accounting
controls and procedures for safeguarding securities, including
securities deposited and/or maintained in a Securities System,
relating to the services provided by the Sub-Custodian under this
Agreement; such reports, which shall be of sufficient scope and in
sufficient detail as may reasonably be required by the Custodian,
shall provide reasonable assurance that any material inadequacies
would be disclosed by such examination, and if there are no such
inadequacies, shall so state.
6. Compensation. The Sub-Custodian shall be entitled to
reasonable compensation for its services and expenses as
sub-custodian, as agreed upon from time to time between the
Custodian and the Sub-Custodian.
7. Responsibility of Sub-Custodian. The Sub-Custodian shall
exercise reasonable care and diligence in carrying out the
provisions of this Agreement and shall not be liable to the Fund
or the Custodian for any action taken or omitted by it in good
faith without negligence or willful misconduct. So long as and to
the extent that it is in the exercise of reasonable care, the
Sub-Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received
by it or delivered by it pursuant to this Agreement and shall be
held harmless in acting upon any notice, request, consent,
certificate or other instrument reasonably believed by it to be
genuine and, if in writing, reasonably believed to be signed by
the proper party or parties. It shall be entitled to rely on and
may act upon advice of counsel (who may be counsel for the Fund)
on all matters and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
Notwithstanding the foregoing, the responsibility of the
Sub-Custodian with respect to redemptions effected by check shall
be in accordance with a separate agreement entered into between
the Custodian and the Sub-Custodian. It is also understood that
the Sub-Custodian shall not be liable for any loss resulting from
a Sovereign Risk. A "Sovereign Risk" shall mean nationalization,
expropriation, devaluation, revaluation, confiscation, seizure,
cancellation, destruction or similar action by any governmental
authority, de facto or de jure; or enactment, promulgation,
imposition or enforcement by any such governmental authority of
currency restrictions, exchange controls, taxes, levies or other
charges affecting the Fund's property; or acts of war, terrorism,
insurrection or revolution; or any other similar act or event
beyond the Sub-Custodian's control.
The Sub-Custodian shall protect the Fund and the Custodian
from losses to the Fund resulting from any act or failure to act
of the Sub-Custodian in violation of its duties hereunder or of
any law applicable to the Sub-Custodian's duties hereunder.
If the Custodian requires the Sub-Custodian to take any
action with respect to securities, which action involves the
payment of money or which action may, in the opinion of the
Sub-Custodian, result in the Sub-Custodian's being liable for the
payment of money or incurring liability of some other form, the
Custodian, as a prerequisite to requiring the Sub-Custodian to
take such action, shall provide indemnity to the Sub-Custodian in
an amount and form satisfactory to the Sub-Custodian.
The Custodian agrees to indemnify and hold harmless the
Sub-Custodian from and against all taxes, charges, expenses,
assessments, claims and liabilities (including counsel fees)
(collectively, "Authorized Charges") incurred or assessed against
it or its nominee in connection with the performance of this
Agreement, except such as may arise from its own negligent action,
negligent failure to act or willful misconduct. The Sub-Custodian
is authorized to charge any account of the Fund for such items and
such fees. To secure any such Authorized Charges and any advances
of cash or securities made by the Sub-Custodian to or for the
benefit of the Fund for any purpose which results in the Fund's
incurring an overdraft at the end of any business day or for
extraordinary or emergency purposes during any business day, the
Custodian on behalf of the Fund hereby represents that it has
obtained from the Fund authorization to apply available cash in
any account maintained by the Sub-Custodian on behalf of the Fund
and a security interest in and pledge to the Sub-Custodian of
securities of the Fund held by the Sub-Custodian (including those
which may be held in a Securities System) up to a maximum of 10%
of the value of the net assets held by the Sub-Custodian for the
purposes of securing payment of any Authorized Charges and any
advances of cash or securities, and that the Fund has agreed, from
time to time, to designate in writing, or to cause its investment
adviser to, or permit the Custodian to, designate in writing, the
securities subject to such security interest and pledge with such
specificity and detail as the Sub-Custodian may reasonably request
(and in the absence of such designation to permit the Sub-
Custodian so to designate securities). The Custodian hereby
grants on behalf of the Fund a security interest and pledge to the
Sub-Custodian, as aforesaid, in securities and available cash, as
security for any Authorized Charges and any advances of cash or
securities and agrees that, should the Fund or the Custodian fail
to repay promptly any Authorized Charges and any advances of cash
or securities, the Sub-Custodian shall be entitled to use such
available cash and to dispose of such pledged securities as is
necessary to repay any such Authorized Charges or any advances of
cash or securities and to exercise the rights of a secured party
under the Uniform Commercial Code.
The Custodian agrees not to amend the third paragraph of
Section 9 of the Custodian Agreement unless it provides the Sub-
Custodian with at least thirty (30) days' prior written notice of
the substance of any proposed amendments, provided that the
foregoing shall not be construed to in any way to provide that the
Sub-Custodian's consent shall be required to make such an
amendment effective or that the Sub-Custodian's failure to give
such consent shall in any way affect its obligations under this
Agreement.
8. Successor Sub-Custodian. If a successor sub-custodian
shall be appointed by the Custodian, the Sub-Custodian shall, upon
termination and upon receipt of Proper Instructions, cause to be
delivered to such successor sub-custodian, duly endorsed and in
the form for transfer, all securities, funds and other property of
the Fund then held by it and all instruments held by the
Sub-Custodian related thereto and cause the transfer to an account
of the successor sub-custodian all of the Fund's securities held
in any Securities Systems.
If no such successor sub-custodian shall be appointed, the
Sub-Custodian shall, in like manner, upon receipt of a certified
copy of a vote of the Trustees of the Fund, cause to be
transferred such securities, funds and other property in
accordance with such vote.
In the event that no written order designating a successor
sub-custodian or certified copy of a vote of the Trustees shall
have been delivered to the Sub-Custodian on or before the date
when such termination shall become effective, then the Sub-
Custodian shall have the right to deliver to a bank or trust
company, which meets the requirements of the 1940 Act and the
rules and regulations thereunder, all securities, funds and other
properties of the Fund. Thereafter, such bank or trust company
shall be the successor of the Sub-Custodian under this Agreement.
In the event that securities, funds and other property remain
in the possession of the Sub-Custodian after the date of
termination hereof owing to failure of the Custodian to obtain a
certified copy of the Trustees appointing a successor sub-
custodian, the Sub-Custodian shall be entitled to fair
compensation for its services during such period as the Sub-
Custodian retains possession of such securities, funds and other
property and the provisions of this Agreement relating to the
duties and obligations of the Sub-Custodian shall remain in full
force and affect.
9. Effective Period; Termination and Amendment. This
Agreement shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement of the
parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed, postage prepaid, to the
other party, such termination to take effect not sooner than
thirty (30) days after the date of mailing; provided, that either
party may at any time immediately terminate this Agreement in the
event of the appointment of a conservator or receiver for the
other party or upon the happening of a like event at the direction
of an appropriate regulatory agency or court of competent
jurisdiction. No provision of this Agreement may be amended or
terminated except by a statement in writing signed by the party
against which enforcement of the amendment or termination is
sought.
Upon termination of this Agreement, the Custodian shall pay
to the Sub-Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the
Sub-Custodian for its reimbursable costs, expenses and
disbursements. The provisions of Section 7, including, until any
Authorized Charges and any advances of cash or securities referred
to therein are repaid, all liens and security interests created
pursuant thereto, and all rights to indemnification, shall survive
any termination of this Agreement.
10. Interpretation. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to
the subject matter hereof. In connection with the operation of
this Agreement, the Sub-Custodian and the Custodian may from time
to time agree in writing on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint
opinion be consistent with the general tenor of this Agreement.
No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this
Agreement.
11. Governing Law. This Agreement is executed and delivered
in The Commonwealth of Massachusetts and shall be governed by and
construed according to the internal laws of said Commonwealth,
without regard to principles of conflicts of law.
12. Notices. Notices and other writings delivered or mailed
postage prepaid to the Custodian addressed to the Custodian
attention: George H. Crane, Senior Vice President, The Putnam
Companies, 99 High Street, Boston, MA 02109 or to such other
person or address as the Custodian may have designated to the Sub-
Custodian in writing, or to the Sub-Custodian attention:
or to such other address as the SubCustodian may have designated
to the Custodian in writing, shall be deemed to have been properly
delivered or given hereunder to the respective addressee.
13. Binding Obligation. This Agreement shall be binding on
and shall inure to the benefit of the Custodian and the Sub-
Custodian and their respective successors and assigns, provided
that neither party hereto may assign this Agreement or any of its
rights or obligations hereunder without the prior written consent
of the other party.
14. Prior Agreements. This Agreement supersedes and
terminates, as of the date hereof, all prior contracts between the
Fund or the Custodian and the Sub-Custodian relating to the
custody of the Fund's assets.
15. Declaration of Trust. A copy of the Declaration of
Trust of the Fund is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that the
obligations of or arising out of this instrument are not binding
upon any of the Trustees or beneficiaries individually but binding
only upon the assets and property of the Fund.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the day of , 199 .
PUTNAM FIDUCIARY TRUST COMPANY
By--------------------------------
Name:
Title:
(Sub-Custodian)
By---------------------------------
Name:
Title:
The Sub-Custodian and Putnam Investments, Inc. ("Putnam"),
the sole owner of the Custodian, agree that Putnam shall be the
primary obligor with respect to compensation due the Sub-Custodian
pursuant to Section 6 of this Agreement in connection with the
Sub-Custodian's performance of its responsibilities hereunder.
The Custodian and Putnam agree to take all actions necessary and
appropriate to assure that the Sub-Custodian shall be
compensatedin the amounts and on the schedule agreed to by the
Custodian and the Sub-Custodian pursuant to Section 6.
PUTNAM INVESTMENTS, INC.
By:-------------------------------
Name:
Title:
PUTNAM FIDUCIARY TRUST COMPANY
By:--------------------------------
Name:
Title:
<PAGE>
(Sub-Custodian)
By:----------------------------------
Name:
Title:
PUTNAM OVERSEAS GROWTH FUND
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 November 28, 1994.
PUTNAM MUTUAL FUNDS CORP. PUTNAM OVERSEAS GROWTH FUND
By: /William N. Shiebler/ By: /Charles E. Porter/
William N. Shiebler Charles E. Porter
President Executive Vice President
DEALER SERVICE AGREEMENT
Between: and
Putnam Mutual Funds Corp.
General Distributor of
The Putnam Family of Mutual Funds
One Post Office Square
Boston, MA 02109
We are pleased to inform you that, pursuant to the terms of this
Dealer Service Agreement, we are authorized to pay you service
fees in connection with the accounts of your customers that hold
shares of certain Putnam funds listed in Schedule 1 that have
adopted distribution plans pursuant to Rule 12b-1 (the "12b-1
Funds"). Payment of the service fees is subject to your initial
and continuing satisfaction of the following terms and conditions
which may be revised by us from time to time:
1. Qualification Requirements
(a) You have entered into a Sales Contract with us with respect
to the Putnam Family of Mutual Funds (the "Putnam Funds").
(b) You are the dealer of record for accounts in Putnam Funds
having an aggregate average net asset value of at least the
minimum amount set forth in Schedule 2 (Dealer Firm Requirements)
during the period for which a service fee is to be paid. Putnam
Fund accounts are accounts in any open-end Putnam Fund, but
excluding any accounts for your firm's own retirement plans.
(c) One or more of your current employees must be the designated
registered representative(s) on accounts in Putnam Funds having
an aggregate average net asset value of at least the minimum
amount set forth in Schedule 2 (Registered Representative
Requirements) during the period for which a service fee is to be
paid.
(d) You will provide the following information and agree that we
will be entitled to rely on the accuracy of such information in
updating our records for determining the levels of service fees
payable to you under the terms of this Agreement. You understand
that such payments will be based solely on Putnam's records.
For each Putnam Fund account registered in the name of
one of your customers, you will advise us, preferably
by electronic means, before the end of the second month
in each calendar quarter, of the registered
representative's name, identification number, branch
number, and telephone number.
2. Service Fees
(a) If you meet the qualification requirements set forth above
in Paragraph 1, you will be paid a service fee on assets in the
12b-1 Funds for which you are the dealer of record and which are
serviced by a registered representative of your firm meeting the
Registered Representative Requirements, if any, at the annual
rates specified in Schedule 3 (excluding any accounts for your
firm's own retirement plans).
(b) You understand and agree that:
(i) all service fee payments are subject to the
limitations contained in each 12b-1 Fund's Distribution
Plan, which may be varied or discontinued at any time;
(ii) your failure to provide the services described in
Paragraph 4 below as may be amended by us from time to
time, or otherwise comply with the terms of this
Agreement, will render you ineligible to receive
service fees; and
(iii) failure of an assigned registered representative
to provide services required by this Agreement will
render that representative's accounts ineligible as
accounts on which service fees are paid.
3. Payments and Communications to Registered Representatives
(a) You will pass through to your registered representatives a
significant share of the service fees paid to you pursuant to
this Agreement.
(b) You will assist us in distributing to your registered
representatives periodic statements which we will have prepared
showing the aggregate average net asset value of shares in Putnam
Funds with which they are credited on our records.
<PAGE>
4. Required Services
(a) You will assign one of your registered representatives to
each Putnam Fund account on your records and reassign the Putnam
Fund account should that representative leave your firm.
(b) You and your registered representatives will assist us and
our affiliates in providing the following services to
shareholders of the Putnam Funds:
(i) Maintain regular contact with shareholders in
assigned accounts and assist in answering inquiries
concerning the Putnam Funds.
(ii) Assist in distributing sales and service
literature provided by us, particularly to the
beneficial owners of accounts registered in your name
(nominee name accounts).
(iii) Assist us and our affiliates in the establishment
and maintenance of shareholder accounts and records.
(iv) Assist shareholders in effecting administrative
changes, such as changing dividend options, account
designations, address, automatic investment programs or
systematic investment plans.
(v) Assist in processing purchase and redemption
transactions.
(vi) Provide any other information or services as the
customer or we may reasonably request.
(c) You will support our marketing efforts by granting
reasonable requests for visits to your offices by our wholesalers
and by including all Putnam Funds on your "approved" list.
(d) Your compliance with the service requirements set forth in
this Agreement will be evaluated by us from time to time by
surveying shareholder satisfaction with service, by monitoring
redemption levels of shareholder accounts assigned to you and by
such other methods as we deem appropriate.
(e) The provisions of this Paragraph 4 may be amended by us from
time to time upon notice to you.
5. Amendment
This Agreement, including any Schedule hereto, shall be deemed
amended as provided in any written notice delivered by us to you.
6. Effective Period and Termination
The provisions of this Agreement shall remain in effect for not
more than one year from the date of its execution or adoption and
thereafter for successive annual periods only so long as such
continuance is specifically approved at least annually by the
Trustees of each of the 12b-1 Funds in conformity with Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act"). This
Agreement shall automatically terminate in the event of its
assignment (as defined by the 1940 Act). In addition, this
Agreement may be terminated at any time, without the payment of
any penalty, by either party upon written notice delivered or
mailed by registered mail, postage prepaid, to the other party,
or, as provided in Rule 12b-1 under the 1940 Act, by the Trustees
of any 12b-1 Fund or by the vote of the holders of the
outstanding voting securities of any 12b-1 Fund.
7. Written Reports
Putnam Mutual Funds Corp. shall provide the Trustees of each of
the 12b-1 Funds, and such Trustees shall review at least
quarterly, a written report of the amounts paid to you under this
Agreement and the purposes for which such expenditures were made.
8. Miscellaneous
(a) All communications mailed to us should be sent to the
address listed below. Any notice to you shall be duly given if
mailed or delivered to you at the address specified by you below.
(b) The provisions of this Agreement shall be governed by and
construed in accordance with the laws of The Commonwealth of
Massachusetts.
Very truly yours,
PUTNAM MUTUAL FUNDS CORP.
By: ------------------------------
William N. Shiebler, President
and Chief Executive Officer
<PAGE>
We accept and agree to the foregoing Agreement as of the date set
forth below.
Dealer: -------------------------
By: ----------------------------
Authorized Signature, Title
------------------------------
------------------------------
Address
Dated: -------------------------
Please return the signed Putnam copy of this Agreement to Putnam
Mutual Funds Corp., P.O. Box 41203, Providence, RI 02940-1203.
FINANCIAL INSTITUTION
SERVICE AGREEMENT
Between: and
Putnam Mutual Funds Corp.
General Distributor of
The Putnam Family of Mutual Funds
One Post Office Square
Boston, MA 02109
We are pleased to inform you that, pursuant to the terms of this
Financial Institution Service Agreement, we are authorized to pay
you service fees in connection with the accounts of your
customers that hold shares of certain Putnam funds listed in
Schedule 1 that have adopted distribution plans pursuant to Rule
12b-1 (the "12b-1 Funds"). Payment of the service fees is
subject to your initial and continuing satisfaction of the
following terms and conditions which may be revised by us from
time to time:
1. Qualification Requirements
(a) You have entered into a Financial Institution Sales Contract
with us with respect to the Putnam Family of Mutual Funds (the
"Putnam Funds"), whose shares you have agreed to make available
to your customers on an agency basis.
(b) You are the financial institution of record for accounts in
Putnam Funds having an aggregate average net asset value of at
least the minimum amount set forth in Schedule 2 (Financial
Institution Requirements) during the period for which a service
fee is to be paid. Putnam Fund accounts are accounts in any
open-end Putnam Fund but excluding any accounts for your
organization's own retirement plans.
(c) One or more of your current employees must be the designated
registered representative(s) in the case of a bank affiliated
dealer, or agent representative(s) in the case of a bank (both
referred to as "representatives"), on accounts in Putnam Funds
having an aggregate average net asset value of at least the
minimum amount set forth in Schedule 2 (Representative
Requirements) during the period for which a service fee is to be
paid.
(d) You will provide the following information and agree that we
will be entitled to rely on the accuracy of such information in
updating our records for determining the levels of service fees
payable to you under the terms of this Agreement. You understand
that such payments will be based solely on Putnam's records:
<PAGE>
For each Putnam Fund account registered in the name of one
of your customers, you will advise us, preferably by
electronic means, before the end of the second month in each
calendar quarter, of the representative's name,
identification number, branch number, and telephone number.
2. Service Fees
(a) If you meet the qualification requirements set forth above in
Paragraph 1, you will be paid, at the end of each calendar
quarter, a service fee on assets of your customers in the 12b-1
Funds for which you are the financial institution of record and
which are serviced by a representative of your organization
meeting the Representative Requirements, if any at the annual
rates specified in Schedule 3 (excluding any accounts for your
organization's own retirement plans), provided that you have
evaluated such service fees and have concluded that it is
consistent with applicable laws, rules, regulations and
regulatory interpretations for you to receive such service fees.
(b) You understand and agree that:
(i) all service fee payments are subject to the limitations
contained in each 12b-1 Fund's Distribution Plan, which may
be varied or discontinued at any time;
(ii) your failure to provide the services described in
Paragraph 4 below as may be amended by us from time to time,
or otherwise comply with the terms of this Agreement, will
render you ineligible to receive service fees; and
(iii) failure of an assigned representative to provide
services required by this Agreement will render that
representative's accounts ineligible as accounts on which
service fees are paid.
3. Payments and Communications to Representatives
(a) Where consistent with applicable laws, rules, regulations and
regulatory interpretations, you will pass through to your
representatives a significant share of the service fees paid to
you pursuant to this Agreement, or you will otherwise use the
payments of service fees to advance the objective of providing
and improving service to shareholders of the Putnam Funds in a
manner specifically approved by Putnam Mutual Funds (for example,
via training courses for representatives or shareholder
seminars).
(b) You will assist us in distributing to your representatives
periodic statements which we will have prepared showing the
aggregate average net asset value of shares in Putnam Funds with
which they are credited on our records.
4. Required Services
(a) You will assign one of your representatives to each Putnam
Fund account on your records and reassign the Putnam Fund account
should that representative leave your organization.
(b) You and your representatives will assist us and our
affiliates in providing the following services to shareholders of
the Putnam Funds:
(i) Maintain regular contact with shareholders in assigned
accounts and assist in answering inquiries concerning the
Putnam Funds.
(ii) Assist in distributing sales and service literature
provided by us, particularly to the beneficial owners of
accounts registered in your name (nominee name accounts).
(iii) Assist us and our affiliates in the establishment and
maintenance of shareholder accounts and records.
(iv) Assist shareholders in effecting administrative
changes, such as changing dividend options, account
designations, address, automatic investment programs or
systematic investment plans.
(v) Assist in processing purchase and redemption
transactions.
(vi) Provide any other information or services as the
customer or we may reasonably request.
(c) You will grant reasonable requests for visits to your offices
by our wholesalers and include all Putnam Funds on your menu or
list of investments made available by you to your customers.
(d) Your compliance with the service requirements set forth in
this Agreement will be evaluated by us from time to time by
surveying shareholder satisfaction with service, by monitoring
redemption levels of shareholder accounts assigned to you and by
such other methods as we deem appropriate.
(e) The provisions of this Paragraph 4 may be amended by us from
time to time upon notice to you.
5. Amendment
This Agreement, including any Schedule hereto, shall be deemed
amended as provided in any written notice delivered by us to you.
6. Effective Period and Termination
The provisions of this Agreement shall remain in effect for one
year from the date of its execution or adoption and thereafter
for successive annual periods only so long as such continuance is
specifically approved at least annually by the Trustees of each
of the 12b-1 Funds in conformity with Rule 12b-1 under the
Investment Company Act of 1940 (the "1940 Act"). This Agreement
shall automatically terminate in the event of its assignment (as
defined by the 1940 Act). In addition, this Agreement may be
terminated at any time, without the payment of any penalty, by
either party upon written notice to the other party, or, as
provided in Rule 12b-1 under the 1940 Act, by the Trustees of any
12b-1 Fund or by the vote of the holders of the outstanding
voting securities of any 12b-1 Fund.
7. Written Reports
Putnam Mutual Funds Corp. shall provide the Trustees of each of
the 12b-1 Funds, and such Trustees shall review at least
quarterly, a written report of the amounts paid to you under this
Agreement and the purposes for which such expenditures were made.
8. Compliance with Laws
With respect to the receipt of service fees under the terms of
this Agreement, you will comply with all applicable federal and
state laws and rules, and all applicable regulations and
interpretations of regulatory agencies or authorities, which may
affect your business practices, including any requirement of
written authorization or consent by your customers to your
receipt of service fees, and any requirement to provide
disclosure to your customers of such service fees.
9. Miscellaneous
(a) All communications mailed to us should be sent to the address
listed below. Any notice to you shall be duly given if mailed or
delivered to you at the address specified by you below.
<PAGE>
(b) The provisions of this Agreement shall be governed by and
construed in accordance with the laws of The Commonwealth of
Massachusetts.
Very truly yours,
PUTNAM MUTUAL FUNDS CORP.
By: --------------------------
William N. Shiebler,
President and
Chief Executive Officer
We accept and agree to the foregoing Agreement as of the date set
forth below.
Financial Institution: --------------------------
By: --------------------------
Authorized Signature, Title
--------------------------
--------------------------
Address
Dated: --------------------------
Please return the signed Putnam copy of this Agreement to Putnam
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS
Fund name: Putnam Overseas Growth Fund -- Class A Shares
Fiscal period ending: June 30, 1995
Inception date February 28, 1991:
TOTAL RETURN
Formula -- Average Annual Total Return: ERV = P(1+T)^n
n = Number of Time Periods 1 Year Life
P = Initial Investment $1,000 $1,000
ERV = Ending Redeemable Value $978.10 $1,386.71
T = Average Annual
Total Return -2.19% +7.82%
*Life of fund, if less than 10 years
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS
Fund name: Putnam Overseas Growth Fund -- Class B Shares
Fiscal period ending: June 30, 1995
Inception date: June 1, 1994
TOTAL RETURN
Formula -- Average Annual Total Return: ERV = P(1+T)^n
n = Number of Time Periods 1 Year Life
P = Initial Investment $1,000 $1,000
ERV = Ending Redeemable Value $979.98 $993.50
T = Average Annual
Total Return -2.00% -0.65%
*Life of fund, if less than 10 years
<PAGE>
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS
Fund name: Putnam Overseas Growth Fund -- Class M Shares
Fiscal period ending: June 30, 1995
Inception date December 1, 1991:
TOTAL RETURN
Formula -- Average Annual Total Return: ERV = P(1+T)^n
n = Number of Time Periods Life
P = Initial Investment $1,000
ERV = Ending Redeemable Value $997.17
T = Average Annual
Total Return -0.28%
*Life of fund, if less than 10 years
<PAGE>
PUTNAM FUNDS
Plan pursuant to Rule 18f-3(D) under the
Investment Company act of 1940
Effective July 1, 1995*
Each of the open-end investment companies managed by Putnam
Investment Management, Inc. (each a "Fund" and, together, the
"Funds") may from time to time issue one or more of the following
classes of shares: Class A shares, Class B shares, Class C
shares, Class M shares and Class Y shares. Each class is subject
to such investment minimums and other conditions of eligibility
as are set forth in the Funds' registration statements as from
time to time in effect. The differences in expenses among these
classes of shares, and the conversion and exchange features of
each class of shares, are set forth below in this Plan. Except
as noted below, expenses are allocated among the classes of
shares of each Fund based upon the net assets of each Fund
attributable to shares of each class. This Plan is subject to
change, to the extent permitted by law and by the Agreement and
Declaration of Trust and By-laws of each Fund, by action of the
Trustees of each Fund.
- ---------------------------
*The Funds have been offering multiple classes of shares,
prior to the effectiveness of this Plan, pursuant to an exemptive
order of the Securities and Exchange Commission. This Plan is
intended to permit the Funds to offer multiple classes of shares
pursuant to Rule 18f-3 under the Investment Company Act of 1940,
without any change in the arrangements and expense allocations
that have previously been approved by the Trustees of each Fund
under such order of exemption.
<PAGE>
CLASS A SHARES
DISTRIBUTION AND SERVICE FEES
Class A shares pay distribution and service fees pursuant to
plans (the "Class A Plans") adopted pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (the "1940 Act"). Class A
shares also bear any costs associated with obtaining shareholder
approval of the Class A Plans (or an amendment to a Class A
Plan). Pursuant to the Class A Plans, Class A shares may pay up
to 0.35% of the relevant Fund's average net assets attributable
to the Class A shares* (which percentage may be less for certain
Funds, as described in the Funds' registration statements as from
time to time in effect). Amounts payable under the Class A Plans
are subject to such further limitations as the Trustees may from
time to time determine and as set forth in the registration
statement of each Fund as from time to time in effect.
CONVERSION FEATURES
Class A shares do not convert to any other class of shares.
EXCHANGE FEATURES
Class A shares of any Fund may be exchanged, at the holder's
option, for Class A shares of any other Fund that offers Class A
shares without the payment of a sales charge beginning 15 days
after purchase, provided that Class A shares of such other Fund
are available to residents of the relevant state. The holding
period for determining any contingent deferred sales charge (a
"CDSC") will include the holding period of the shares exchanged,
and will be calculated using the schedule of any Fund into or
from which shares have been exchanged that would result in the
highest CDSC applicable to such Class A shares.
- ---------------------------
*Class A shares of Putnam Diversified Equity Trust may pay
up to 0.65% of average net assets attributable to Class A shares.
<PAGE>
INITIAL SALES CHARGE
Class A shares are offered at a public offering price that
is equal to their net asset value ("NAV") plus a sales charge of
up to 5.75% of the public offering price (which maximum may be
less for certain Funds, as described in each Fund's registration
statement as from time to time in effect). The sales charges on
Class A shares are subject to reduction or waiver as permitted by
Rule 22d-1 under the 1940 Act and as described in the Funds'
registration statements as from time to time in effect.
CONTINGENT DEFERRED SALES CHARGE
Purchases of Class A shares of $1 million or more that are
redeemed within one or two years of purchase are subject to a
CDSC of 1.00% and 0.50%, respectively, of either the purchase
price or the NAV of the shares redeemed, whichever is less.
Class A shares are not otherwise subject to a CDSC.
The CDSC on Class A shares is subject to reduction or waiver
in certain circumstances, as permitted by Rule 6c-10 under the
1940 Act and as described in the Funds' registration statements
as from time to time in effect.
CLASS B SHARES
DISTRIBUTION AND SERVICE FEES
Class B shares pay distribution and service fees pursuant to
plans adopted pursuant to Rule 12b-1 under the 1940 Act (the
"Class B Plans"). Class B shares also bear any costs associated
with obtaining shareholder approval of the Class B Plans (or an
amendment to a Class B Plan). Pursuant to the Class B Plans,
Class B shares may pay up to 1.00% of the relevant Fund's average
net assets attributable to Class B shares (which percentage may
be less for certain Funds, as described in the Funds'
registration statements as from time to time in effect). Amounts
payable under the Class B Plans are subject to such further
limitations as the Trustees may from time to time determine and
as set forth in the registration statement of each Fund as from
time to time in effect.
CONVERSION FEATURES
Class B shares automatically convert to Class A shares of
the same Fund at the end of the month eight years after purchase
(or such earlier date as the Trustees of a Fund may authorize),
except that Class B shares purchased through the reinvestment of
dividends and other distributions on Class B shares convert to
Class A shares at the same time as the shares with respect to
which they were purchased are converted and Class B shares
acquired by the exchange of Class B shares of another Fund will
convert to Class A shares based on the time of the initial
purchase.
EXCHANGE FEATURES
Class B shares of any Fund may be exchanged, at the holder's
option, for Class B shares of any other Fund that offers Class B
shares without the payment of a sales charge beginning 15 days
after purchase, provided that Class B shares of such other Fund
are available to residents of the relevant state. The holding
period for determining any CDSC will include the holding period
of the shares exchanged, and will be calculated using the
schedule of any Fund into or from which shares have been
exchanged that would result in the highest CDSC applicable to
such Class B shares.
INITIAL SALES CHARGE
Class B shares are offered at their NAV, without an initial
sales charge.
CONTINGENT DEFERRED SALES CHARGE
Class B shares that are redeemed within 6 years of purchase
are subject to a CDSC of up to 5.00% of either the purchase price
or the NAV of the shares redeemed, whichever is less (which
period may be shorter and which percentage may be less for
certain Funds, as described in the Funds' registration statements
as from time to time in effect); such percentage declines the
longer the shares are held, as described in the Funds'
registration statements as from time to time in effect. Class B
shares purchased with reinvested dividends or capital gains are
not subject to a CDSC.
The CDSC on Class B shares is subject to reduction or waiver
in certain circumstances, as permitted by Rule 6c-10 under the
1940 Act and as described in the Funds' registration statements
as from time to time in effect.
CLASS C SHARES
DISTRIBUTION AND SERVICE FEES
Class C shares pay distribution and service fees pursuant to
plans adopted pursuant to Rule 12b-1 under the 1940 Act (the
"Class C Plans"). Class C shares also bear any costs associated
with obtaining shareholder approval of the Class C Plans (or an
amendment to a Class C Plan). Pursuant to the Class C Plans,
Class C shares may pay up to 1.00% of the relevant Fund's average
net assets attributable to the Class C shares (which percentage
may be less for certain Funds, as described in the Funds'
registration statements as from time to time in effect). Amounts
payable under the Class C Plans are subject to such further
limitations as the Trustees may from time to time determine and
as set forth in the registration statement of each Fund as from
time to time in effect.
CONVERSION FEATURES
Class C shares do not convert to any other class of shares.
EXCHANGE FEATURES
Class C shares of any Fund may be exchanged, at the holder's
option, for Class C shares of any other Fund that offers Class C
shares without the payment of a sales charge beginning 15 days
after purchase, provided that Class C shares of such other Fund
are available to residents of the relevant state. The holding
period for determining any CDSC will include the holding period
of the shares exchanged, and will be calculated using the
schedule of any Fund into or from which shares have been
exchanged that would result in the highest CDSC applicable to
such Class C shares.
<PAGE>
INITIAL SALES CHARGE
Class C shares are offered at their NAV, without an initial
sales charge.
CONTINGENT DEFERRED SALES CHARGE
Class C shares are subject to a 1.00% CDSC if the shares are
redeemed within one year of purchase. The CDSC on Class C shares
is subject to reduction or waiver in certain circumstances, as
permitted by Rule 6c-10 under the 1940 Act and as described in
the Funds' registration statements as from time to time in
effect.
CLASS M SHARES
DISTRIBUTION AND SERVICE FEES
Class M shares pay distribution and service fees pursuant to
plans adopted pursuant to Rule 12b-1 under the 1940 Act (the
"Class M Plans"). Class M shares also bear any costs associated
with obtaining shareholder approval of the Class M Plans (or an
amendment to a Class M Plan). Pursuant to the Class M Plans,
Class M shares may pay up to 1.00% of the relevant Fund's average
net assets attributable to Class M shares (which percentage may
be less for certain Funds, as described in the Funds'
registration statements as from time to time in effect). Amounts
payable under the Class M Plans are subject to such further
limitations as the Trustees may from time to time determine and
as set forth in the registration statement of each Fund as from
time to time in effect.
CONVERSION FEATURES
Class M shares do not convert to any other class of shares.
EXCHANGE FEATURES
Class M shares of any Fund may be exchanged, at the holder's
option, for Class M shares of any other Fund that offers Class M
shares without the payment of a sales charge beginning 15 days
after purchase, provided that Class M shares of such other Fund
are available to residents of the relevant state.
INITIAL SALES CHARGE
Class M shares are offered at a public offering price that
is equal to their NAV plus a sales charge of up to 3.50% of the
public offering price (which maximum may be less for certain
Funds, as described in each Fund's registration statement as from
time to time in effect). The sales charges on Class M shares are
subject to reduction or waiver as permitted by Rule 22d-1 under
the 1940 Act and as described in the Funds' registration
statements as from time to time in effect.
CONTINGENT DEFERRED SALES CHARGE
Class M shares are not subject to any CDSC.
CLASS Y SHARES
DISTRIBUTION AND SERVICE FEES
Class Y shares do not pay a distribution fee.
CONVERSION FEATURES
Class Y shares do not convert to any other class of shares.
EXCHANGE FEATURES
Class Y shares of any Fund may be exchanged, at the holder's
option, for Class Y shares of any other Fund that offers Class Y
shares without the payment of a sales charge beginning 15 days
after purchase, provided that Class Y shares of such other Fund
are available to residents of the relevant state, and further
provided that shares of such other Fund are available through the
relevant employer's plan.
<PAGE>
INITIAL SALES CHARGE
Class Y shares are offered at their NAV, without an initial
sales charge.
CONTINGENT DEFERRED SALES CHARGE
Class Y shares are not subject to any CDSC.
s:\shared\boiler\newfunds\nf-69
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-30-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 58,032,593
<INVESTMENTS-AT-VALUE> 61,744,709
<RECEIVABLES> 606,491
<ASSETS-OTHER> 837
<OTHER-ITEMS-ASSETS> 1,872
<TOTAL-ASSETS> 62,353,909
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,828,481
<TOTAL-LIABILITIES> 1,828,481
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 58,777,836
<SHARES-COMMON-STOCK> 2,714,515
<SHARES-COMMON-PRIOR> 742,421
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 108,932
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (577,743)
<ACCUM-APPREC-OR-DEPREC> 2,434,267
<NET-ASSETS> 60,525,428
<DIVIDEND-INCOME> 740,166
<INTEREST-INCOME> 240,597
<OTHER-INCOME> 0
<EXPENSES-NET> 727,850
<NET-INVESTMENT-INCOME> 252,913
<REALIZED-GAINS-CURRENT> (738,996)
<APPREC-INCREASE-CURRENT> 1,745,082
<NET-CHANGE-FROM-OPS> 1,258,999
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (199,229)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (47,199)
<NUMBER-OF-SHARES-SOLD> 3,343,986
<NUMBER-OF-SHARES-REDEEMED> (1,399,240)
<SHARES-REINVESTED> 27,348
<NET-CHANGE-IN-ASSETS> 49,274,152
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 340,990
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 297,692
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 727,850
<AVERAGE-NET-ASSETS> 22,112,617
<PER-SHARE-NAV-BEGIN> 11.83
<PER-SHARE-NII> .08
<PER-SHARE-GAIN-APPREC> .36
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.17)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.10
<EXPENSE-RATIO> 1.61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
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 B AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 58,032,593
<INVESTMENTS-AT-VALUE> 61,744,709
<RECEIVABLES> 606,491
<ASSETS-OTHER> 837
<OTHER-ITEMS-ASSETS> 1,872
<TOTAL-ASSETS> 62,353,909
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,828,481
<TOTAL-LIABILITIES> 1,828,481
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 58,777,836
<SHARES-COMMON-STOCK> 2,157,480
<SHARES-COMMON-PRIOR> 2,090,041
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (108,932)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (577,743)
<ACCUM-APPREC-OR-DEPREC> 2,434,267
<NET-ASSETS> 60,525,428
<DIVIDEND-INCOME> 740,166
<INTEREST-INCOME> 240,597
<OTHER-INCOME> 0
<EXPENSES-NET> 727,850
<NET-INVESTMENT-INCOME> 252,913
<REALIZED-GAINS-CURRENT> (738,996)
<APPREC-INCREASE-CURRENT> 1,745,082
<NET-CHANGE-FROM-OPS> 1,258,999
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (141,301)
<DISTRIBUTIONS-OTHER> (83,122)
<NUMBER-OF-SHARES-SOLD> 2,667,962
<NUMBER-OF-SHARES-REDEEMED> (737,746)
<SHARES-REINVESTED> 18,223
<NET-CHANGE-IN-ASSETS> 49,274,152
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 340,990
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 297,692
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 727,850
<AVERAGE-NET-ASSETS> 14,818,780
<PER-SHARE-NAV-BEGIN> 11.82
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> .34
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.17)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.00
<EXPENSE-RATIO> 2.41
<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 M AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 58,032,593
<INVESTMENTS-AT-VALUE> 61,744,709
<RECEIVABLES> 606,491
<ASSETS-OTHER> 837
<OTHER-ITEMS-ASSETS> 1,872
<TOTAL-ASSETS> 62,353,909
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,828,481
<TOTAL-LIABILITIES> 1,828,481
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 58,777,836
<SHARES-COMMON-STOCK> 147,023
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (108,932)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (577,743)
<ACCUM-APPREC-OR-DEPREC> 2,434,267
<NET-ASSETS> 60,525,428
<DIVIDEND-INCOME> 740,166
<INTEREST-INCOME> 240,597
<OTHER-INCOME> 0
<EXPENSES-NET> 727,850
<NET-INVESTMENT-INCOME> 252,913
<REALIZED-GAINS-CURRENT> (738,996)
<APPREC-INCREASE-CURRENT> 1,745,082
<NET-CHANGE-FROM-OPS> 1,258,999
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (460)
<DISTRIBUTIONS-OTHER> (271)
<NUMBER-OF-SHARES-SOLD> 153,859
<NUMBER-OF-SHARES-REDEEMED> (6,899)
<SHARES-REINVESTED> 63
<NET-CHANGE-IN-ASSETS> 49,274,152
<ACCUMULATED-NII-PRIOR> 0
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<AVERAGE-NET-ASSETS> 854,256
<PER-SHARE-NAV-BEGIN> 11.87
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> .36
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.17)
<RETURNS-OF-CAPITAL> 0
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</TABLE>
