PUTNAM GROWTH & INCOME FUND II, 485BPOS, 2000-03-30

PUTNAM GROWTH & INCOME FUND II
485BPOS, 2000-03-30

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As filed with the Securities and Exchange Commission on

March 30, 2000

Registration No. 33-55979
811-7223
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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. 6 / 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 GROWTH AND INCOME FUND II
(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 March 30, 2000 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.

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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 GROWTH AND INCOME FUND II
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

Prospectus

March 30, 2000

Putnam Growth and Income Fund II

Class A, B, C and M shares
Investment Category: Growth and Income

This prospectus explains what you should know about this mutual fund
before you invest. Please read it carefully.

Putnam Investment Management, Inc. (Putnam Management), which has managed
mutual funds since 1937, manages the fund.

These securities have not been approved or disapproved by the Securities
and Exchange Commission nor has the Commission passed upon the accuracy or
adequacy of this prospectus. Any statement to the contrary is a crime.

CONTENTS

2 Fund summary

2 Goal

2 Main investment strategies

2 Main risks

2 Performance information

4 Fees and expenses

5 What are the fund's main investment strategies and related risks?

7 Who manages the fund?

7 How does the fund price its shares?

8 How do I buy fund shares?

11 How do I sell fund shares?

12 How do I exchange fund shares?

13 Fund distributions and taxes

14 Financial highlights

[SCALE LOGO OMITTED]

Fund summary

GOAL

The fund seeks capital growth. Current income is a secondary goal.

MAIN INVESTMENT STRATEGIES -- VALUE STOCKS

We invest mainly in common stocks of U.S. companies, with a focus on value
stocks that may also offer the potential for current income. Value stocks
are those we believe are currently undervalued by the market. We look for
companies undergoing positive change. If we are correct and other investors
recognize the value of the company, the price of the stock may rise. We
invest mainly in midsized and large companies.

MAIN RISKS

The main risks that could adversely affect the value of the fund's shares
and the total return on your investment include:

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to rise. Many factors can
adversely affect a stock's performance, including both general financial
market conditions and factors related to a specific company or industry.
This risk is generally greater for small and midsized companies, which tend
to be more vulnerable to adverse developments.

* The risk that movements in financial markets will adversely affect the
price of the fund's investments, regardless of how well the companies in
which we invest perform. The market as a whole may not favor the types of
investments we make.

You can lose money by investing in the fund. The fund may not achieve its
goal, and is not intended as a complete investment program. An investment
in the fund is not a deposit in a bank and is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.

PERFORMANCE INFORMATION

The following information provides some indication of the fund's risks. The
chart shows year-to-year changes in the performance of one of the fund's
classes of shares, class A shares. The table following the chart compares
the fund's performance to that of a broad measure of market performance. Of
course, a fund's past performance is not an indication of future
performance.

[GRAPHIC OMITTED: vertical bar chart CALENDAR YEAR TOTAL RETURNS FOR CLASS A
SHARES]

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES

1996 21.19%
1997 24.86%
1998 12.46%
1999 -0.91%

Performance figures in the bar chart do not reflect the impact of sales
charges. If they did, performance would be less than that shown. During the
periods shown in the bar chart, the highest return for a quarter was 17.02%
(quarter ending 12/31/98) and the lowest return for a quarter was -12.01%
(quarter ending 9/30/99).

Average Annual Total Returns (for periods ending 12/31/99)
- -------------------------------------------------------------------------------
Since
Past inception
1 year (1/5/95)
- -------------------------------------------------------------------------------
Class A -6.60% 16.27%
Class B -6.02% 16.55%
Class C -2.45% 16.80%
Class M -4.83% 16.23%
S&P 500 Index 21.04% 28.58%
- -------------------------------------------------------------------------------

Unlike the bar chart, this performance information reflects the impact of
sales charges. Both class A and class M share performance reflect the
current maximum initial sales charges; both class B and class C share
performance reflect the maximum applicable deferred sales charge if shares
had been redeemed on 12/31/99. For periods before the inception of class B
shares (1/5/95), class C shares (2/1/99) and class M shares (1/5/95),
performance shown for these classes in the table is based on the
performance of the fund's class A shares, adjusted to reflect the
appropriate sales charge and the higher 12b-1 fees paid by the class B,
class C and class M shares. The fund's performance is compared to the S&P
500 Index, an unmanaged index of common stocks frequently used as a general
measure of U.S. stock market performance.

FEES AND EXPENSES

This table summarizes the fees and expenses you may pay if you invest in
the fund. Expenses are based on the fund's last fiscal year.

Shareholder Fees (fees paid directly from your investment)
- -------------------------------------------------------------------------------
Class A Class B Class C Class M
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Maximum Sales Charge (Load)
Imposed on Purchases (as a
percentage of the offering price) 5.75% NONE NONE 3.50%

Maximum Deferred Sales Charge (Load)
(as a percentage of the original
purchase price or redemption
proceeds, whichever is lower) NONE* 5.00% 1.00% NONE
- -------------------------------------------------------------------------------

Annual Fund Operating Expenses
(expenses that are deducted from fund assets)
- -------------------------------------------------------------------------------
Total Annual
Management Distribution Other Fund Operating
Fees (12b-1) Fees Expenses Expenses
- -------------------------------------------------------------------------------
Class A 0.51% 0.25% 0.14% 0.90%
Class B 0.51% 1.00% 0.14% 1.65%
Class C 0.51% 1.00% 0.14% 1.65%
Class M 0.51% 0.75% 0.14% 1.40%
- -------------------------------------------------------------------------------

* A deferred sales charge of up to 1% may be imposed on certain redemptions
of class A shares bought without an initial sales charge.

EXAMPLE

The example translates the expenses shown in the preceding table into
dollar amounts. By doing this, you can more easily compare the cost of
investing in the fund to the cost of investing in other mutual funds. The
example makes certain assumptions. It assumes that you invest $10,000 in
the fund for the time periods shown and then, except as shown for class B
and class C shares, redeem all your shares at the end of those periods. It
also assumes a 5% return on your investment each year and that the fund's
operating expenses remain the same. The example is hypothetical; your
actual costs and returns may be higher or lower.

- -------------------------------------------------------------------------------
1 year 3 years 5 years 10 years
- -------------------------------------------------------------------------------
Class A $662 $845 $1,045 $1,619
Class B $668 $820 $1,097 $1,754*
Class B
(no redemption) $168 $520 $ 897 $1,754*
Class C $268 $520 $ 897 $1,955
Class C
(no redemption) $168 $520 $ 897 $1,955
Class M $488 $778 $1,089 $1,971
- -------------------------------------------------------------------------------

* Reflects the conversion of class B shares to class A shares, which pay
lower 12b-1 fees. Conversion occurs no more than eight years after
purchase.

What are the fund's main investment strategies and related risks?

Any investment carries with it some level of risk that generally reflects
its potential for reward. We pursue the fund's goal by investing mainly in
value stocks. Value stocks may also offer the potential for current income.
We will consider, among other things, a company's financial strength,
competitive position in its industry, projected future earnings, cash flows
and dividends when deciding whether to buy or sell investments. A
description of the risks associated with the fund's main investment
strategies follows.

* Common stocks. Common stock represents an ownership interest in a
company. The value of a company's stock may fall as a result of factors
relating directly to that company, such as decisions made by its management
or lower demand for the company's products or services. A stock's value may
also fall because of factors affecting not just the company, but also
companies in the same industry or in a number of different industries, such
as increases in production costs. The value of a company's stock may also
be affected by changes in financial markets that are relatively unrelated
to the company or its industry, such as changes in interest rates or
currency exchange rates. In addition, a company's stock generally pays
dividends only after the company invests in its own business and makes
required payments to holders of its bonds and other debt. For this reason,
the value of a company's stock will usually react more strongly than its
bonds and other debt to actual or perceived changes in the company's
financial condition or prospects. Stocks of smaller companies may be more
vulnerable to adverse developments than those of larger companies.

Companies whose stock we believe is undervalued by the market may have
experienced adverse business developments or may be subject to special
risks that have caused their stocks to be out of favor. If our assessment
of a company's prospects is wrong, or if other investors do not similarly
recognize the value of the company, then the price of the company's stock
may fall or may not approach the value that we have placed on it.

* Foreign investments. We may invest in securities of foreign issuers.
Foreign investments involve certain special risks. For example, their
values may decline in response to changes in currency exchange rates,
unfavorable political and legal developments, unreliable or untimely
information, and economic and financial instability. In addition, the
liquidity of these investments may be more limited than for U.S.
investments, which means we may at times be unable to sell them at
desirable prices. Foreign settlement procedures may also involve additional
risks. These risks are generally greater in the case of developing (also
known as emerging) markets with less developed legal and financial systems.

Certain of these risks may also apply to U.S. investments that are
denominated in foreign currencies or that are traded in foreign markets, or
to securities of U.S. companies that have significant foreign operations.

* Smaller companies. We may invest in smaller and midsized companies.
Smaller companies, which may have a market capitalization of less than $1
billion, are more likely than larger companies to have limited product
lines, markets or financial resources, or to depend on a small,
inexperienced management group. Stocks of these companies often trade less
frequently and in limited volume, and their prices may fluctuate more than
stocks of larger companies. Stocks of smaller and midsized companies may
therefore be more vulnerable to adverse developments than those of larger
companies.

* Other investments. In addition to the main investment strategies
described above, we may make other investments, such as investments in
preferred stocks, convertible securities, debt instruments and derivatives,
which may be subject to other risks, as described in the fund's statement
of additional information (SAI).

* Alternative strategies. At times we may judge that market conditions make
pursuing the fund's usual investment strategies inconsistent with the best
interests of its shareholders. We then may temporarily use alternative
strategies that are mainly designed to limit losses. However, we may choose
not to use these strategies for a variety of reasons, even in very volatile
market conditions. These strategies may cause the fund to miss out on
investment opportunities, and may prevent the fund from achieving its goal.

* Changes in policies. The fund's Trustees may change the fund's goal,
investment strategies and other policies without shareholder approval,
except as otherwise indicated.

Who manages the fund?

The fund's Trustees oversee the general conduct of the fund's business. The
Trustees have retained Putnam Management to be the fund's investment
manager, responsible for making investment decisions for the fund and
managing the fund's other affairs and business. The fund pays Putnam
Management a quarterly management fee for these services based on the
fund's average net assets. The fund paid Putnam Management a management fee
of 0.51% of average net assets for the fund's last fiscal year. Putnam
Management's address is One Post Office Square, Boston, MA 02109.

The following officer of Putnam Management has had primary responsibility
for the day-to-day management of the fund's portfolio since the year shown
below. Her experience as portfolio manager or investment analyst over at
least the last five years is also shown.

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Manager Since Experience
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Deborah Kuenstner 2000 March 1997 - Present Putnam Management
Managing Director Prior to March 1997 Senior Portfolio Manager at
Dupont Pension Fund
Investment
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How does the fund price its shares?

The price of the fund's shares is based on its net asset value (NAV). The
NAV per share of each class equals the total value of its assets, less its
liabilities, divided by the number of its outstanding shares. Shares are
only valued as of the close of regular trading on the New York Stock
Exchange each day the exchange is open.

The fund values its investments for which market quotations are readily
available at market value. It values short-term investments that will
mature within 60 days at amortized cost, which approximates market value.
It values all other investments and assets at their fair value.

The fund translates prices for its investments quoted in foreign currencies
into U.S. dollars at current exchange rates. As a result, changes in the
value of those currencies in relation to the U.S. dollar may affect the
fund's NAV. Because foreign markets may be open at different times than the
New York Stock Exchange, the value of the fund's shares may change on days
when shareholders are not able to buy or sell them. If events materially
affecting the values of the fund's foreign investments occur between the
close of foreign markets and the close of regular trading on the New York
Stock Exchange, these investments will be valued at their fair value.

How do I buy fund shares?

You can open a fund account with as little as $500 and make additional
investments at any time with as little as $50 ($25 through systematic
investing). The fund sells its shares at the offering price, which is the
NAV plus any applicable sales charge. Your financial advisor or Putnam
Investor Services generally must receive your completed buy order before
the close of regular trading on the New York Stock Exchange for your shares
to be bought at that day's offering price.

You can buy shares

* Through a financial advisor. Your advisor will be responsible for
furnishing all necessary documents to Putnam Investor Services, and may
charge you for his or her services.

* Through systematic investing. You can make regular investments of $25 or
more per month through automatic deductions from your bank checking or
savings account. Application forms are available through your advisor or
Putnam Investor Services at 1-800-225-1581.

You may also complete an order form and write a check for the amount you
wish to invest, payable to the fund. Return the check and completed form to
Putnam Mutual Funds.

The fund may periodically close to new purchases of shares or refuse any
order to buy shares if the fund determines that doing so would be in the
best interests of the fund and its shareholders.

WHICH CLASS OF SHARES IS BEST FOR ME?

This prospectus offers you a choice of four classes of fund shares: A, B, C
and M. This allows you to choose among different types of sales charges and
different levels of ongoing operating expenses, as illustrated in the "Fees
and expenses" section. The class of shares that is best for you depends on
a number of factors, including the amount you plan to invest and how long
you plan to hold the shares. Here is a summary of the differences among the
classes of shares:

Class A shares

* Initial sales charge of up to 5.75%

* Lower sales charge for investments of $50,000 or more

* No deferred sales charge (except on certain redemptions of shares bought
without an initial sales charge)

* Lower annual expenses, and higher dividends, than class B, C or M shares
because of lower 12b-1 fee

Class B shares

* No initial sales charge; your entire investment goes to work for you

* Deferred sales charge of up to 5.00% if you sell shares within 6 years
after purchase

* Higher annual expenses, and lower dividends, than class A or M shares
because of higher 12b-1 fee

* Convert automatically to class A shares after 8 years, reducing the
future 12b-1 fee (may convert sooner in some cases)

* Orders for class B shares for $250,000 or more are treated as orders for
class A shares or refused

Class C shares

* No initial sales charge; your entire investment goes to work for you

* Deferred sales charge of 1.00% if you sell shares within one year after
purchase

* Higher annual expenses, and lower dividends, than class A or M shares
because of higher 12b-1 fee

* No conversion to class A shares, so future 12b-1 fee does not decrease

* Orders of $1,000,000 or more and orders that, because of a right of
accumulation or statement of intent, would qualify for the purchase of
class A shares without an initial sales charge will be treated as orders
for class A shares or refused

Class M shares

* Initial sales charge of up to 3.50%

* Lower sales charge for investments of $50,000 or more

* No deferred sales charge

* Lower annual expenses, and higher dividends, than class B or C shares
because of lower 12b-1 fee

* Higher annual expenses, and lower dividends, than class A shares because
of higher 12b-1 fee

* No conversion to class A shares, so future 12b-1 fee does not decrease

- -------------------------------------------------------------------------------
Initial sales charges for class A and M shares
- -------------------------------------------------------------------------------
Class A sales charge Class M sales charge
as a percentage of: as a percentage of:
- -------------------------------------------------------------------------------
Amount of purchase Net amount Offering Net amount Offering
at offering price ($) invested price* invested price*
- -------------------------------------------------------------------------------
Under 50,000 6.10% 5.75% 3.63% 3.50%
50,000 but under
100,000 4.71 4.50 2.56 2.50
100,000 but under
250,000 3.63 3.50 1.52 1.50
250,000 but under
500,000 2.56 2.50 1.01 1.00
500,000 but under
1,000,000 2.04 2.00 NONE NONE
1,000,000 and above NONE NONE NONE NONE
- -------------------------------------------------------------------------------

* Offering price includes sales charge.

Deferred sales charges for class B, class C and certain
class A shares

If you sell (redeem) class B shares within six years after you bought them,
you will generally pay a deferred sales charge according to the following
schedule.

Year after purchase 1 2 3 4 5 6 7+
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Charge 5% 4% 3% 3% 2% 1% 0%

A deferred sales charge of 1% will apply to class C shares if redeemed
within one year of purchase. A deferred sales charge of up to 1% may apply
to class A shares purchased without an initial sales charge, if redeemed
within two years of purchase.

Deferred sales charges will be based on the lower of the shares' cost and
current NAV. Shares not subject to any charge will be redeemed first,
followed by shares held longest. You may sell shares acquired by
reinvestment of distributions without a charge at any time.

* You may be eligible for reductions and waivers of sales charges. Sales
charges may be reduced or waived under certain circumstances and for
certain groups. Information about reductions and waivers of sales charges
is included in the SAI. You may consult your financial advisor or Putnam
Mutual Funds for assistance.

* Distribution (12b-1) plans. The fund has adopted distribution plans to
pay for the marketing of fund shares and for services provided to
shareholders. The plans provide for payments at annual rates (based on
average net assets) of up to 0.35% on class A shares and 1.00% on class B,
class C and class M shares. The Trustees currently limit payments on class
A and class M shares to 0.25% and 0.75% of average net assets,
respectively. Because these fees are paid out of the fund's assets on an
ongoing basis, they will increase the cost of your investment. The higher
fees for class B, class C and class M shares may cost you more than paying
the initial sales charge for class A shares. Because class C and class M
shares, unlike class B shares, do not convert to class A shares, class C
and class M shares may cost you more over time than class B shares.

How do I sell fund shares?

You can sell your shares back to the fund any day the New York Stock
Exchange is open, either through your financial advisor or directly to the
fund. Payment for redemptions may be delayed until the fund collects the
purchase price of shares, which may take up to 15 calendar days after the
purchase date.

* Selling shares through your financial advisor. Your advisor must receive
your request in proper form before the close of regular trading on the New
York Stock Exchange for you to receive that day's NAV, less any applicable
deferred sales charge. Your advisor will be responsible for furnishing all
necessary documents to Putnam Investor Services on a timely basis and may
charge you for his or her services.

* Selling shares directly to the fund. Putnam Investor Services must
receive your request in proper form before the close of regular trading on
the New York Stock Exchange in order to receive that day's NAV, less any
applicable sales charge.

By mail. Send a letter of instruction signed by all registered owners or
their legal representatives to Putnam Investor Services. If you have
certificates for the shares you want to sell, you must include them along
with completed stock power forms.

By telephone. You may use Putnam's telephone redemption privilege to redeem
shares valued at less than $100,000 unless you have notified Putnam
Investor Services of an address change within the preceding 15 days, in
which case other requirements may apply. Unless you indicate otherwise on
the account application, Putnam Investor Services will be authorized to
accept redemption instructions received by telephone.

The telephone redemption privilege is not available if there are
certificates for your shares. The telephone redemption privilege may be
modified or terminated without notice.

* Additional requirements. In certain situations, for example, if you sell
shares with a value of $100,000 or more, the signatures of all registered
owners or their legal representatives must be guaranteed by a bank,
broker-dealer or certain other financial institutions. In addition, Putnam
Investor Services usually requires additional documents for the sale of
shares by a corporation, partnership, agent or fiduciary, or a surviving
joint owner. For more information concerning Putnam's signature guarantee
and documentation requirements, contact Putnam Investor Services.

* When will the fund pay me? 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.

* Redemption by the fund. If you own fewer shares than the minimum set by
the Trustees (presently 20 shares), the fund may redeem your shares without
your permission and send you the proceeds. The fund may also redeem shares
if you own more than a maximum amount set by the Trustees. There is
presently no maximum, but the Trustees could set a maximum that would apply
to both present and future shareholders.

How do I exchange fund shares?

If you want to switch your investment from one Putnam fund to another, you
can exchange your fund shares for shares of the same class of another
Putnam fund at NAV. Not all Putnam funds offer all classes of shares or are
open to new investors. If you exchange shares subject to a deferred sales
charge, the transaction will not be subject to the deferred sales charge.
When you redeem the shares acquired through the exchange, the redemption
may be subject to the deferred sales charge, depending upon when you
originally purchased the shares. The deferred sales charge 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 deferred sales charge
applicable to your class of shares. For purposes of computing the deferred
sales charge, 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
subsequent exchanges among funds.

To exchange your shares, complete an Exchange Authorization Form and send
it to Putnam Investor Services. The form is available from Putnam Investor
Services. A telephone exchange privilege is currently available for amounts
up to $500,000. The telephone exchange privilege is not available if the
fund issued certificates for your shares. Ask your financial advisor or
Putnam Investor Services for prospectuses of other Putnam funds. Some
Putnam funds are not available in 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 otherwise to promote 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. The fund
into which you would like to exchange may also reject your exchange. These
actions may apply to all shareholders or only to those shareholders whose
exchanges Putnam Management determines are likely to have a negative effect
on the fund or other Putnam funds. Consult Putnam Investor Services before
requesting an exchange.

Fund distributions and taxes

The fund normally distributes any net investment income quarterly and any
net realized capital gains annually. You may choose to:

* reinvest all distributions in additional shares;

* receive any distributions from net investment income in cash while
reinvesting capital gains distributions in additional shares; or

* receive all distributions in cash.

If you do not select an option when you open your account, all
distributions will be reinvested. If you do not cash a distribution check
within a specified period or notify Putnam Investor Services to issue a new
check, the distribution will be reinvested in the fund. You will not
receive any interest on uncashed distribution or redemption checks.
Similarly, if any 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.

For federal income tax purposes, distributions of investment income are
taxable as ordinary income. Taxes on distributions of capital gains are
determined by how long the fund owned the investments that generated them,
rather than how long you have owned your shares. Distributions are taxable
to you even if they are paid from income or gains earned by the fund before
your investment (and thus were included in the price you paid).
Distributions of gains from investments that the fund owned for more than
one year will be taxable as capital gains. Distributions of gains from
investments that the fund owned for one year or less will be taxable as
ordinary income. Distributions are taxable whether you received them in
cash or reinvested them in additional shares.

The fund's investments in foreign securities may be subject to foreign
withholding taxes. In that case, the fund's return on those investments
would be decreased. Shareholders generally will not be entitled to claim a
credit or deduction with respect to foreign taxes. In addition, the fund's
investment in foreign securities or foreign currencies may increase the
amount of taxes payable by shareholders.

Any gain resulting from the sale or exchange of your shares will generally
also be subject to tax. You should consult your tax advisor for more
information on your own tax situation, including possible foreign, state
and local taxes.

Financial highlights

The financial highlights table is intended to help you understand the
fund's recent financial performance. Certain information reflects financial
results for a single fund share. The total returns represent the rate that
an investor would have earned or lost on an investment in the fund,
assuming reinvestment of all dividends and distributions. This information
for the year ended November 30, 1999 has been derived from the fund's
financial statements, which have been audited by KPMG LLP. Its report and
the fund's financial statements are included in the fund's annual report to
shareholders, which is available upon request. The information for all
periods prior to the year ended November 30, 1999 has been derived from the
fund's financial statements which have been audited by the fund's previous
independent accountants.

FINANCIAL HIGHLIGHTS

CLASS A
(For a share outstanding throughout the period)

For the
period
Jan. 5,
1995+ to
Year ended November 30 Nov. 30
----------------------------------------------------------
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $14.82 $14.87 $13.11 $11.01 $8.53
- -------------------------------------------------------------------------------------
Investment operations
Net investment income .17c .15c .19c .23 .15
Net realized and unrealized
gain on investments .30 1.32 2.52 2.41 2.45
- -------------------------------------------------------------------------------------
Total from investment
operations .47 1.47 2.71 2.64 2.60
- -------------------------------------------------------------------------------------
Less distributions:
From net investment income (.17) (.14) (.20) (.21) (.12)
From net realized gain on
investments (1.17) (1.38) (.75) (.33) --
- -------------------------------------------------------------------------------------
Total distributions (1.34) (1.52) (.95) (.54) (.12)
- -------------------------------------------------------------------------------------
Net asset value,
end of period $13.95 $14.82 $14.87 $13.11 $11.01
- -------------------------------------------------------------------------------------
Ratios and supplemental
data
Total return at
net asset value (%)a 3.55 10.97 22.29 24.95 30.62*
Net assets end of
period (in thousands) $1,285,330 $1,241,384 $1,051,276 $637,204 $250,328
- -------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)b .90 .96 1.00 1.09 1.35*
Ratio of net investment
income to average net
assets (%) 1.19 1.04 1.40 1.92 2.03*
Portfolio turnover (%) 80.27 81.62 74.51 83.97 64.18*
- -------------------------------------------------------------------------------------

+ Commencement of operations.

* Not annualized.

a Total return assumes dividend reinvestment and does not reflect the effect of sales
charges.

b The ratio of expenses to average net assets includes amounts paid through expense
offset arrangements and brokerage service arrangements.

c Per share net investment income has been determined on the basis of the weighted
average number of shares outstanding during the period.

</TABLE>

FINANCIAL HIGHLIGHTS

CLASS B
(For a share outstanding throughout the period)

For the
period
Jan. 5,
1995+ to
Year ended November 30 Nov. 30
----------------------------------------------------------
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $14.70 $14.77 $13.03 $10.96 $8.53
- -------------------------------------------------------------------------------------
Investment operations
Net investment income .06c .04c .09c .15 .11
Net realized and
unrealized gain
on investments .29 1.30 2.51 2.39 2.42
- -------------------------------------------------------------------------------------
Total from investment
operations .35 1.34 2.60 2.54 2.53
- -------------------------------------------------------------------------------------
Less distributions:
From net investment
income (.06) (.03) (.11) (.14) (.10)
From net realized
gain on investments (1.17) (1.38) (.75) (.33) --
- -------------------------------------------------------------------------------------
Total distributions (1.23) (1.41) (.86) (.47) (.10)
- -------------------------------------------------------------------------------------
Net asset value,
end of period $13.82 $14.70 $14.77 $13.03 $10.96
- -------------------------------------------------------------------------------------
Ratios and supplemental
data
Total return at
net asset value (%)a 2.72 10.07 21.42 23.98 29.72*
Net assets, end of
period (in thousands) $1,406,793 $1,480,683 $1,242,817 $763,438 $259,789
- -------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)b 1.65 1.71 1.75 1.84 2.03*
Ratio of net
investment income
to average net assets (%) .44 .29 .65 1.17 1.36*
Portfolio turnover (%) 80.27 81.62 74.51 83.97 64.18*
- -------------------------------------------------------------------------------------

+ Commencement of operations.

* Not annualized.

a Total return assumes dividend reinvestment and does not reflect the effect of sales
charges.

b The ratio of expenses to average net assets includes amounts paid through expense
offset arrangements and brokerage service arrangements.

c Per share net investment income has been determined on the basis of the weighted
average number of shares outstanding during the period.

</TABLE>

FINANCIAL HIGHLIGHTS

CLASS C
(For a share outstanding throughout the period)

For the period
February 1, 1999+
to Nov. 30
1999
- -------------------------------------------------------------------------------------
<S> <C>
Net asset value,
beginning of period $14.21
- -------------------------------------------------------------------------------------
Investment operations
Net investment incomec .06
Net realized and unrealized gain
on investments (.25)
- -------------------------------------------------------------------------------------
Total from investment operations (.19)
- -------------------------------------------------------------------------------------
Less distributions:
From net investment income (.11)
From net realized gain on investments --
- -------------------------------------------------------------------------------------
Total distributions (.11)
- -------------------------------------------------------------------------------------
Net asset value,
end of period $13.91
- -------------------------------------------------------------------------------------
Ratios and supplemental data
Total return at
net asset value (%)a (1.36)*
Net assets, end of period
(in thousands) $33,369
- -------------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%)b 1.37*
Ratio of net investment income
to average net assets (%) .42*
Portfolio turnover (%) 80.27
- -------------------------------------------------------------------------------------

+ Commencement of operations.

* Not annualized.

a Total return assumes dividend reinvestment and does not reflect the effect of sales
charges.

b The ratio of expenses to average net assets includes amounts paid through expense
offset arrangements and brokerage service arrangements.

c Per share net investment income has been determined on the basis of the weighted
average number of shares outstanding during the period.

</TABLE>

FINANCIAL HIGHLIGHTS

CLASS M
(For a share outstanding throughout the period)

For the
period
Jan. 5,
1995+ to
Year ended November 30 Nov. 30
----------------------------------------------------------
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $14.75 $14.81 $13.06 $10.98 $8.53
- -------------------------------------------------------------------------------------
Investment operations
Net investment income .10c .08c .13c .18 .12
Net realized and
unrealized gain
on investments .29 1.31 2.51 2.39 2.43
- -------------------------------------------------------------------------------------
Total from investment
operations .39 1.39 2.64 2.57 2.55
- -------------------------------------------------------------------------------------
Less distributions:
From net investment
income (.10) (.07) (.14) (.16) (.10)
From net realized gain
on investments (1.17) (1.38) (.75) (.33) --
- -------------------------------------------------------------------------------------
Total distributions (1.27) (1.45) (.89) (.49) (.10)
- -------------------------------------------------------------------------------------
Net asset value,
end of period $13.87 $14.75 $14.81 $13.06 $10.98
- -------------------------------------------------------------------------------------
Ratios and supplemental
data
Total return at
net asset value (%)a 2.97 10.37 21.73 24.28 30.04*
Net assets, end of
period (in thousands) $164,524 $169,631 $151,359 $95,576 $33,406
- -------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)b 1.40 1.46 1.50 1.59 1.80*
Ratio of net investment
income to average net
assets (%) .69 .54 .90 1.42 1.58*
Portfolio turnover (%) 80.27 81.62 74.51 83.97 64.18*
- -------------------------------------------------------------------------------------

+ Commencement of operations.

* Not annualized.

a Total return assumes dividend reinvestment and does not reflect the effect of sales
charges.

b The ratio of expenses to average net assets includes amounts paid through expense
offset arrangements and brokerage service arrangements.

c Per share net investment income has been determined on the basis of the weighted
average number of shares outstanding during the period.

</TABLE>

Glossary of terms

Bond An IOU issued by a government or corporation that usually
pays interest.

Capital A profit or loss on the sale of securities (generally
gain/loss stocks or bonds).

Class A, B, C, M Types of shares, each class offering investors a different
shares way to pay sales charges and distribution fees. A fund's
prospectus explains the availability and attributes of
each type.

Common A unit of ownership of a corporation.
stock

Distribution A payment from a mutual fund to shareholders. It may include
interest from bonds and dividends from stocks (dividend
distributions). It may also include profits from the sale of
securities from the fund's portfolio (capital gains
distributions).

Net asset The value of one share of a mutual fund without value (NAV)
value (NAV) regard to sales charges. Some bond funds aim for a steady
NAV, representing stability; most stock funds aim to raise
NAV, representing growth in the value of an investment.

Public offering The purchase price of one class A or class M share of price
price (POP) (POP) a mutual fund, including the applicable "front-end"
sales charge.

Total return A measure of performance showing the change in the value of
an investment over a given period, assuming all earnings are
reinvested.

Yield The percentage rate at which a fund has earned income from
its investments over the indicated period.

Make the most of your Putnam privileges

As a Putnam mutual fund shareholder, you have access to a number of services
that can help you build a more effective and flexible financial program. Here
are some of the ways you can use these privileges to make the most of your
Putnam mutual fund investment.

* SYSTEMATIC INVESTMENT PLAN

Invest as much as you wish ($25 or more) on any business day of the month
except for the 29th, 30th, or 31st. The amount you choose will be
automatically transferred each month from your checking or savings account.

* SYSTEMATIC WITHDRAWAL

Make regular withdrawals of $50 or more monthly, quarterly, or semiannually
from your Putnam mutual fund account valued at $10,000 or more. Your automatic
withdrawal may be made on any business day of the month except for the 29th,
30th, or 31st.

* SYSTEMATIC EXCHANGE

Transfer assets automatically from one Putnam account to another on a
regular, prearranged basis. There is no additional charge for this service.

* FREE EXCHANGE PRIVILEGE

Exchange money between Putnam funds in the same class of shares without
charge. The exchange privilege allows you to adjust your investments as your
objectives change. A signature guarantee is required for exchanges of more
than $500,000 and shares of all Putnam funds may not be available to all
investors.

* DIVIDENDS PLUS

Diversify your portfolio by investing dividends and other distributions from
one Putnam fund automatically into another at net asset value.

* STATEMENT OF INTENTION

To reduce a front-end sales charge, you may agree to invest a minimum dollar
amount over 13 months. Depending on your fund, the minimum is $25,000,
$50,000, or $100,000. Whenever you make an investment under this arrangement,
you or your investment advisor should notify Putnam Mutual Funds that a
Statement of Intention is in effect.

Investors may not maintain, within the same fund, simultaneous plans for
systematic investment or exchange (into the fund) and system atic withdrawal
or exchange (out of the fund). These privileges are subject to change or
termination.

For more information about any of these services and privileges, call your
investment advisor or a Putnam customer service representative toll free at
1-800-225-1581.

Putnam Family of Fundsa

PUTNAM GROWTH FUNDS

Putnam Asia Pacific Growth Fund
Putnam Capital Appreciation Fundb
Putnam Capital Opportunities Fund
Putnam Emerging Markets Fund
Putnam Europe Growth Fund
Putnam Global Equity Fund
Putnam Global Growth Fund
Putnam Global Natural Resources Fund
Putnam Growth Opportunities Fund
Putnam Health Sciences Trust
Putnam International Growth Fund
Putnam International New Opportunities Fund
Putnam International Voyager Fund
Putnam Investors Fund
Putnam New Opportunities Fundb
Putnam OTC & Emerging Growth Fund
Putnam Research Fund
Putnam Vista Fund
Putnam Voyager Fund
Putnam Voyager Fund II

PUTNAM GROWTH AND INCOME FUNDS

Putnam Balanced Retirement Fund
Putnam Convertible Income-Growth Trust
Putnam Equity Income Fund
The George Putnam Fund of Boston
Putnam Global Growth and Income Fund
The Putnam Fund for Growth and Income
Putnam Growth and Income Fund II
Putnam International Growth and Income Fund
Putnam New Value Fund
Putnam Small Cap Value Fund
Putnam Utilities Growth and Income Fund

PUTNAM INCOME FUNDS

Putnam American Government Income Fund
Putnam Diversified Income Trust
Putnam Global Governmental Income Trust
Putnam High Yield Advantage Fundb
Putnam High Yield Trustb
Putnam High Yield Trust II
Putnam Income Fund
Putnam Intermediate U.S. Government Income Fund
Putnam Preferred Income Fund
Putnam Strategic Income Fund
Putnam U.S. Government Income Trust

PUTNAM TAX-FREE INCOME FUNDS

Putnam Municipal Income Fund
Putnam Tax Exempt Income Fund
Putnam Tax-Free High Yield Fund
Putnam Tax-Free Insured Fund
Putnam State tax-free income fundsc
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey,
New York, Ohio and Pennsylvania

LIFESTAGE SM FUNDS

Putnam Asset Allocation Funds--three investment portfolios that spread your
money across a variety of stocks, bonds, and money market investments
seeking to help maximize your return and reduce your risk.

The three portfolios:

Balanced Portfolio
Conservative Portfolio
Growth Portfolio

PUTNAM MONEY MARKET FUNDSd

Putnam Money Market Fund
Putnam California Tax Exempt Money Market Fund
Putnam New York Tax Exempt Money Market Fund
Putnam Tax Exempt Money Market Fund

a As of 12/31/99.

b New investments restricted; see your financial advisor for details.

c Not available in all states.

d Investments in money market funds are not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
Although these funds seek to preserve an investment's net asset value at
$1.00 per share, it is possible to lose money by investing in them.

Please call your financial advisor or Putnam Mutual Funds to obtain a
prospectus for any Putnam fund. It contains more complete information,
including charges and expenses. Read it carefully before you invest or
send money.

For more information
about Putnam Growth
and Income Fund II

The fund's statement of additional information (SAI) and annual and
semi-annual reports to shareholders include additional information about
the fund. The SAI, and the independent accountants' reports and financial
statements included in the fund's two most recent annual reports to its
shareholders, are incorporated by reference into this prospectus, which
means they are part of this prospectus for legal purposes. The fund's
annual report discusses the market conditions and investment strategies
that significantly affected the fund's performance during its last fiscal
year. You may get free copies of these materials, request other
information about the fund and other Putnam funds, or make shareholder
inquiries, by contacting your financial advisor, by visiting Putnam's Web
site, or by calling Putnam toll-free at 1-800-225-1581.

You may review and copy information about the fund, including its SAI, at
the Securities and Exchange Commission's public reference room in
Washington, D.C. You may call the Commission at 1-202-942-8090 for
information about the operation of the public reference room. You may also
access reports and other information about the fund on the EDGAR Database
on the Commission's Internet site at http://www.sec.gov. You may get
copies of this information, with payment of a duplication fee, by
electronic request at the following E-mail address: [email protected], or
by writing the Commission's Public Reference Section, Washington, D.C.
20549-0102. You may need to refer to the fund's file number.

P U T N A M I N V E S T M E N T S

One Post Office Square
Boston, Massachusetts 02109
1-800-225-1581

Address correspondence to
Putnam Investor Services
P.O. Box 989
Boston, Massachusetts 02103

www.putnaminv.com

File No. 811-7223 NP023 59624 3/00

Prospectus

March 30, 2000

Putnam Growth and Income Fund II

Class A shares -- for eligible retirement plans
Investment Category: Growth and Income

This prospectus explains what you should know about this mutual fund
before you invest. Please read it carefully. This prospectus only offers
class A shares of the fund without a sales charge to eligible retirement
plans.

Putnam Investment Management, Inc. (Putnam Management), which has managed
mutual funds since 1937, manages the fund.

CONTENTS

2 Fund summary

2 Goal

2 Main investment strategies

2 Main risks

2 Performance information

3 Fees and expenses

4 What are the fund's main investment strategies and related risks?

6 Who manages the fund?

6 How does the fund price its shares?

7 How do I buy fund shares?

8 How do I sell fund shares?

8 How do I exchange fund shares?

9 Fund distributions and taxes

10 Financial highlights

Putnam Defined Contribution Plans

[SCALE LOGO OMITTED]

Fund summary

GOAL

The fund seeks capital growth. Current income is a secondary goal.

MAIN INVESTMENT STRATEGIES -- VALUE STOCKS

MAIN RISKS

The main risks that could adversely affect the value of the fund's shares
and the total return on your investment include:

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to rise. Many factors can
adversely affect a stock's performance, including both general financial
market conditions and factors related to a specific company or industry.
This risk is generally greater for small a nd midsized companies, which
tend to be more vulnerable to adverse developments.

You can lose money by investing in the fund. The fund may not achieve its
goals, and is not intended as a complete investment program. An investment
in the fund is not a deposit in a bank and is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.

PERFORMANCE INFORMATION

The following information provides some indication of the fund's risks. The
chart shows year-to-year changes in the performance of the fund's class A
shares. The table following the chart compares the fund's performance to
that of a broad measure of market performance. Of course, a fund's past
performance is not an indication of future performance.

[GRAPHIC OMITTED: vertical bar chart CALENDAR YEAR TOTAL RETURNS FOR CLASS A
SHARES]

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES

1996 21.19%
1997 24.86%
1998 12.46%
1999 -0.91%

During the periods shown in the bar chart, the highest return for a quarter
was 17.02% (quarter ending 12/31/98) and the lowest return for a quarter
was -12.01% (quarter ending 9/30/99).

- ------------------------------------------------------------------------
Average Annual Total Returns (for periods ending 12/31/99)
- ------------------------------------------------------------------------
Past Since
1 year inception (1/5/95)
- ------------------------------------------------------------------------
Class A -0.91% 17.65%
S&P 500 Index 21.04% 28.58%
- ------------------------------------------------------------------------

Class A share performance reflects the waiver of sales charges for
purchases through eligible retirement plans. The fund's performance is
compared to the S&P 500 Index, an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.

FEES AND EXPENSES

This table summarizes the fees and expenses you may pay if you invest in
class A shares of the fund. Expenses are based on the fund's last fiscal
year.

- ------------------------------------------------------------------------
Shareholder Fees (fees paid directly from your investment)
- ------------------------------------------------------------------------
Maximum Sales Charge (Load) NONE
Maximum Deferred Sales Charge (Load) 0.75%*
- ------------------------------------------------------------------------

Annual Fund Operating Expenses
(expenses that are deducted from fund assets)
- ------------------------------------------------------------------------
Distribution Total Annual
Management (12b-1) Other Fund Operating
Fees Fees Expenses Expenses
- ------------------------------------------------------------------------
Class A 0.51% 0.25% 0.14% 0.90%
- ------------------------------------------------------------------------

* The deferred sales charge is applicable only to a plan that redeems 90%
or more of its cumulative purchases within two years of its initial
purchase, and only if Putnam Mutual Funds paid a commission on the plan's
purchases.

EXAMPLE

The example translates the expenses shown in the preceding
table into dollar amounts. By doing this, you can more easily compare the
cost of investing in the fund to the cost of investing in other mutual
funds. The example makes certain assumptions. It assumes that you invest
$10,000 in the fund for the time periods shown and then redeem all your
shares at the end of those periods. It also assumes a 5% return on your
investment each year and that the fund's operating expenses remain the
same. The example is hypothetical; your actual costs and returns may be
higher or lower.

- ------------------------------------------------------------------------
1 year 3 years 5 years 10 years
- ------------------------------------------------------------------------
Class A $167 $287 $498 $1,108
- ------------------------------------------------------------------------

What are the fund's main investment strategies and related risks?

* Common stocks. Common stock represents an ownership interest in a
company. The value of a company's stock may fall as a result of factors
relating directly to that company, such as decisions made by its management
or lower demand for the company's products or services. A stock's value may
also fall because of factors affecting not just the company, but also
companies in the same industry or in a number of different industries, such
as increases in production costs. The value of a company's stock may also
be affected by changes in financial markets that are relatively unrelated
to the company or its industry, such as changes in interest rates or
currency exchange rates. In addition, a company's stock generally pays
dividends only after the company invests in its own business and makes
required payments to holders of its bonds and other debt. For this reason,
the value of a company's stock will usually react more strongly than bonds
and other debt to actual or perceived changes in the company's financial
condition or prospects. Stocks of smaller companies may be more vulnerable
to adverse developments than those of larger companies.

* Changes in policies. The fund's Trustees may change the fund's goal,
investment strategies and other policies without shareholder approval,
except as otherwise indicated.

Who manages the fund?

- ------------------------------------------------------------------------------
Manager Since Experience
- ------------------------------------------------------------------------------
Deborah Kuenstner 2000 March 1997 - Present Putnam Management
Managing Director Prior to March 1997 Senior Portfolio
Manager at Dupont Pension Fund
Investment
- ------------------------------------------------------------------------------

How does the fund price its shares?

How do I buy fund shares?

All orders to purchase shares must be made through your employer's
retirement 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.

Putnam Mutual Funds Corp. (Putnam Mutual Funds) generally must receive your
plan's completed buy order before the close of regular trading on the New
York Stock Exchange for shares to be bought at that day's offering price.

To eliminate the need for safekeeping, the fund will not issue
certificates for shares.

The fund may periodically close to new purchases of shares or refuse any order
to buy shares if Putnam Management determines that doing so would be in the
best interests of the fund and its shareholders.

* Distribution (12b-1) plan. The fund has adopted a distribution plan to
pay for the marketing of class A shares and for services provided to
shareholders. The plan provides for payments at an annual rate (based on
average net assets) of up to 0.35%. The Trustees currently limit payments
on class A shares to 0.25% of average net assets. Because the fees are paid
out of the fund's assets on an ongoing basis, they will increase the cost
of your investment.

* Eligible retirement plans. An employer-sponsored retirement plan is
eligible to purchase class A shares without an initial sales charge through
this prospectus if it invests at least $1 million in class A shares. A
deferred sales charge of up to 0.75% will apply if the plan redeems 90% or
more of its cumulative purchases within two years of the plan's initial
purchase of class A shares, and only if Putnam Mutual Funds paid a
commission on the plan's purchase. Employer-sponsored plans may make
additional investments of any amount at any time.

How do I sell fund shares?

Subject to any restrictions imposed by your employer's plan, you can sell
your shares through the plan back 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 the plan may
impose, please consult your employer.

Your plan administrator must send a signed letter of instruction to Putnam
Investor Services. The price you will receive is the next NAV per share
calculated after the fund receives the instruction in proper form. In order
to receive that day's NAV, Putnam Investor Services must receive the
instruction before the close of regular trading on the New York Stock
Exchange.

The fund generally sends 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.

How do I exchange fund shares?

Subject to any restrictions your plan imposes, you can exchange your fund
shares for shares of other Putnam funds offered through your employer's
plan without a sales charge. Contact your plan administrator or Putnam
Investor Services for more information.

Fund distributions and taxes

The fund normally distributes any net investment income quarterly and any
net realized capital gains annually.

The terms of your employer's plan will govern how your employer's plan may
receive distributions from the fund. Generally, periodic distributions from
the fund to your employer's plan are reinvested in additional fund shares,
although your employer's 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.

Generally, for federal income tax purposes, fund distributions are taxable
as ordinary income, except that any distributions of long-term capital
gains will be taxed as such regardless of how long you have held your
shares. However, distributions by the fund to retirement 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 advisor 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. You should consult your tax advisor for more
information on your own tax situation, including possible foreign, state
and local taxes.

The fund's investments in foreign securities may be subject to foreign
withholding taxes. In that case, the fund's return on those investments
would be decreased.

Financial highlights

FINANCIAL HIGHLIGHTS

CLASS A
(For a share outstanding throughout the period)

For the
period
Jan. 5,
1995+ to
Year ended November 30 Nov. 30
------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $14.82 $14.87 $13.11 $11.01 $8.53
- ------------------------------------------------------------------------------------
Investment operations
Net investment income .17c .15c .19c .23 .15
Net realized and
unrealized gain on
investments .30 1.32 2.52 2.41 2.45
- ------------------------------------------------------------------------------------
Total from
investment
operations .47 1.47 2.71 2.64 2.60
- ------------------------------------------------------------------------------------
Less distributions:
From net investment
income (.17) (.14) (.20) (.21) (.12)
From net realized gain
on investments (1.17) (1.38) (.75) (.33) --
- ------------------------------------------------------------------------------------
Total distributions (1.34) (1.52) (.95) (.54) (.12)
- ------------------------------------------------------------------------------------
Net asset value,
end of period $13.95 $14.82 $14.87 $13.11 $11.01
- ------------------------------------------------------------------------------------
Ratios and
supplemental data
Total return at
net asset value (%)a 3.55 10.97 22.29 24.95 30.62*
Net assets,
end of period
(in thousands) $1,285,330 $1,241,384 $1,051,276 $637,204 $250,328
- ------------------------------------------------------------------------------------
Ratio of expenses to
average net assets
(%)b .90 .96 1.00 1.09 1.35*
Ratio of net investment
income to average
net assets (%) 1.19 1.04 1.40 1.92 2.03*
Portfolio turnover
(%) 80.27 81.62 74.51 83.97 64.18*
- ------------------------------------------------------------------------------------

+ Commencement of operations.

* Not annualized.

a Total return assumes dividend reinvestment and does not reflect the effect of sales
charges.

b The ratio of expenses to average net assets includes amounts paid through expense
offset arrangements and brokerage service arrangements

c Per share net investment income has been determined on the basis of the weighted
average number of shares outstanding during the period.

</TABLE>

For more information
about Putnam Growth and Income Fund II

P U T N A M I N V E S T M E N T S

Putnam Defined Contribution Plans
One Post Office Square
Boston, Massachusetts 02109

1-800-752-9894

Address correspondence to
Putnam Investor Services
P.O. Box 989
Boston, Massachusetts 02103

www.putnaminv.com

59526 3/00 File No. 811-7223

Prospectus

March 30, 2000

Putnam Growth and Income Fund II

Class Y shares
Investment Category: Growth and Income

This prospectus explains what you should know about this mutual fund
before you invest. Please read it carefully.

Putnam Investment Management, Inc. (Putnam Management), which has managed
mutual funds since 1937, manages the fund.

CONTENTS

2 Fund summary

2 Goal

2 Main investment strategies

2 Main risks

2 Performance information

3 Fees and expenses

4 What are the fund's main investment strategies and related risks?

6 Who manages the fund?

6 How does the fund price its shares?

7 How do I buy fund shares?

8 How do I sell fund shares?

8 How do I exchange fund shares?

9 Fund distributions and taxes

10 Financial highlights

Putnam Defined Contribution Plans

[SCALE LOGO OMITTED]

Fund summary

GOAL

The fund seeks capital growth. Current income is a secondary goal.

MAIN INVESTMENT STRATEGIES -- VALUE STOCKS

MAIN RISKS

The main risks that could adversely affect the value of the fund's shares
and the total return on your investment include:

* The risk that the stock price of one or more of the companies in the
fund's portfolio will fall, or will fail to rise. Many factors can
adversely affect a stock's performance, including both general financial
market conditions and factors related to a specific company or industry.
This risk is generally greater for small and midsized companies, which
tend to be more vulnerable to adverse developments.

PERFORMANCE INFORMATION

The following information provides some indication of the fund's risks. The
chart shows year-to-year changes in the performance of the fund's class Y
shares. The table following the chart compares the fund's performance to
that of a broad measure of market performance. Of course, the fund's past
performance is not an indication of future performance.

[GRAPHIC OMITTED: vertical bar chart CALENDAR YEAR TOTAL RETURN]

CALENDAR YEAR TOTAL RETURN

1996 23.13%
1997 23.10%
1998 13.19%
1999 -0.60%

During the periods shown in the bar chart, the highest return for a quarter
was 17.09% (quarter ending 12/31/98) and the lowest return for a quarter
was -11.95% (quarter ending 9/30/99).

Performance of class Y shares in the bar chart and table following the
chart, for periods prior to their inception on 10/1/98, is derived from the
historical performance of class A shares (not offered by this prospectus).
Performance of class Y shares prior to their inception does not reflect the
initial sales charge currently applicable to class A shares or differences
in operating expenses which, for class Y shares, are lower than the
operating expenses applicable to class A shares.

- ------------------------------------------------------------------------
Average Annual Total Returns (for periods ending 12/31/99)
- ------------------------------------------------------------------------
Past Since
1 year inception (1/5/95)
- ------------------------------------------------------------------------
Class Y -0.60% 17.91%
S&P 500 Index 21.04% 28.58%
- ------------------------------------------------------------------------

The fund's performance is compared to the S&P 500 Index, an unmanaged index
of common stocks frequently used as a general measure of U.S. stock market
performance.

FEES AND EXPENSES

This table summarizes the fees and expenses you may pay if you invest in
class Y shares of the fund. Expenses are based on the fund's last fiscal
year.

- ------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from fund assets)
- ------------------------------------------------------------------------
Total Annual
Management Other Fund Operating
Fees Expenses Expenses
- ------------------------------------------------------------------------
Class Y 0.51% 0.14% 0.65%
- ------------------------------------------------------------------------

EXAMPLE

The example translates the expenses shown in the preceding table into
dollar amounts. By doing this, you can more easily compare the cost of
investing in the fund to the cost of investing in other mutual funds. The
example makes certain assumptions. It assumes that you invest $10,000 in
the fund for the time periods shown and then redeem all your shares at the
end of those periods. It also assumes a 5% return on your investment each
year and that the fund's operating expenses remain the same. The example is
hypothetical; your actual costs and returns may be higher or lower.

- ------------------------------------------------------------------------
1 year 3 years 5 years 10 years
- ------------------------------------------------------------------------
Class Y $66 $208 $362 $810
- ------------------------------------------------------------------------

What are the fund's main investment strategies and related risks?

* Common stocks. Common stock represents an ownership interest in a
company. The value of a company's stock may fall as a result of factors
relating directly to that company, such as decisions made by its management
or lower demand for the company's products or services. A stock's value may
also fall because of factors affecting not just the company, but also
companies in the same industry or in a number of different industries, such
as increases in production costs. The value of a company's stock may also
be affected by changes in financial markets that are relatively unrelated
to the company or its industry, such as changes in interest rates or
currency exchange rates. In addition, a company's stock generally pays
dividends only after the company invests in its own business and makes
required payments to holders of its bonds and other debt. For this reason,
the value of a company's stock will usually react more strongly than bonds
and other debt to actual or perceived changes in the company's financial
condition or prospects. Stocks of smaller companies may be more vulnerable
to adverse developments than those of larger companies.

* Changes in policies. The fund's Trustees may change the fund's goal,
investment strategies and other policies without shareholder approval,
except as otherwise indicated.

Who manages the fund?

- ------------------------------------------------------------------------
Manager Since Experience
- ------------------------------------------------------------------------
Deborah Kuenstner 2000 March 1997 - Present Putnam Management
Managing Director Prior to March 1997 Senior Portfolio
Manager at Dupont
Pension Fund
Investment
- ------------------------------------------------------------------------

How does the fund price its shares?

How do I buy fund shares?

To eliminate the need for safekeeping, the fund will not issue certificates
for shares.

The fund may periodically close to new purchases of shares or refuse any
order to buy shares if Putnam Management determines that doing so would be
in the best interests of the fund and its shareholders.

* Eligible purchasers. A defined contribution plan (including a corporate
IRA) is eligible to purchase class Y shares if

* the plan, its sponsor and other employee benefit plans of the sponsor
invest at least $150 million in Putnam funds and other investments managed
by Putnam Management or its affiliates, or

* the plan's sponsor confirms a good faith expectation that investments in
Putnam-managed assets by the sponsor and its employee benefit plans will
attain $150 million (using the higher of purchase price or current market
value) within one year of initial purchase, and agrees that class Y shares
may be redeemed and class A shares purchased if that level is not attained.

How do I sell fund shares?

How do I exchange fund shares?

Fund distributions and taxes

The fund normally distributes any net investment income quarterly and any
net realized capital gains annually.

The fund's investments in foreign securities may be subject to foreign
withholding taxes. In that case, the fund's return on those investments
would be decreased.

Financial highlights

FINANCIAL HIGHLIGHTS

CLASS Y
(For a share outstanding throughout the period)

For the
period
Year Oct 1,
ended 1998+ to
Nov. 30 Nov. 30
- ---------------------------------------------------------------------------
1999 1998
- ---------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $14.83 $12.69
- ---------------------------------------------------------------------------
Investment operations
Net investment income .21c .03c
Net realized and unrealized
gain on investments .30 2.11
- ---------------------------------------------------------------------------
Total from
investment operations .51 2.14
- ---------------------------------------------------------------------------
Less distributions:
From net investment income (.21) --
From net realized gain
on investments (1.17) --
- ---------------------------------------------------------------------------
Total distributions (1.38) --
- ---------------------------------------------------------------------------
Net asset value,
end of period $13.96 $14.83
- ---------------------------------------------------------------------------
Ratios and
supplemental data
Total return at
net asset value (%)a 3.80 16.86*
Net assets,
end of period
(in thousands) $10,282 $5,949
- ---------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)b .65 .12*
Ratio of net investment
income to average
net assets (%) 1.45 1.82*
Portfolio turnover (%) 80.27 81.62
- ---------------------------------------------------------------------------

+ Commencement of operations.

* Not annualized.

a Total return assumes dividend reinvestment and does not reflect the effect
of sales charges.

b The ratio of expenses to average net assets includes amounts paid through
expense offset arrangements and brokerage service arrangements.

c Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.

</TABLE>

For more information
about Putnam Growth and Income Fund II

The fund's statement of additional information (SAI) and annual and
semi-annual reports to shareholders include additional information about
the fund. The SAI, and the independent accountants' reports and financial
statements included in the fund's two most recent annual reports to its
shareholders, are incorporated by reference into this prospectus, which
means they are part of this prospectus for legal purposes. The fund's
annual report discusses the market conditions and investment strategies
that significantly affected the fund's performance during its last fiscal
year. You may get free copies of these materials, request other
information about the fund, or make shareholder inquiries, by calling
1-800-752-9894.

P U T N A M I N V E S T M E N T S

Putnam Defined Contribution Plans
One Post Office Square
Boston, Massachusetts 02109

1-800-752-9894

Address correspondence to
Putnam Investor Services
P.O. Box 989
Boston, Massachusetts 02103

www.putnaminv.com

59528 3/00 File No. 811-7223

PUTNAM GROWTH AND INCOME FUND II

FORM N-1A
PART B

STATEMENT OF ADDITIONAL INFORMATION ("SAI")

March 30, 2000

This SAI is not a prospectus and is only authorized for distribution when
accompanied or preceded by the prospectus of the fund dated March 30,
2000, as revised from time to time. This SAI contains information that may
be useful to investors but that 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 the fund's prospectuses, unless
otherwise noted. The SAI should be read together with the applicable
prospectus. Certain disclosure has been incorporated by reference from
the fund's annual report. For a free copy of the fund's annual report or
prospectus , call Putnam Investor Services at 1-800-225-1581 or write
Putnam Investors 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.

Table of Contents

PART I

FUND ORGANIZATION AND CLASSIFICATION I-3
INVESTMENT RESTRICTIONS I-4

CHARGES AND EXPENSES I-5
INVESTMENT PERFORMANCE I-12
ADDITIONAL OFFICERS I-12
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS I-13

Part II

MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS. II-1
TAXES II-24

MANAGEMENT II-27

DETERMINATION OF NET ASSET VALUE II-35

HOW TO BUY SHARES II-36
DISTRIBUTION PLANS II-46

INVESTOR SERVICES II-50
SIGNATURE GUARANTEES II-54
SUSPENSION OF REDEMPTIONS II-54
SHAREHOLDER LIABILITY II-55
STANDARD PERFORMANCE MEASURES II-55
COMPARISON OF PORTFOLIO PERFORMANCE II-56
SECURITIES RATINGS II-61
DEFINITIONS II-65

SAI
PART I

FUND ORGANIZATION AND CLASSIFICATION

Putnam Growth and Income Fund II is a Massachusetts business trust
organized on October 5, 1994. A copy of the fund's 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 management investment company with an unlimited
number of authorized shares of beneficial interest. The Trustees may,
without shareholder approval, create two or more series of shares
representing separate investment portfolios. Any such series of shares may
be divided without shareholder approval into two or more classes of shares
having such preferences and special or relative rights and privileges as
the Trustees determine. The fund's shares are not currently divided into
series. The fund offers 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 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 all classes will vote together as a single class except when
otherwise required by law or as determined by the Trustees. Shares are
freely transferable, are entitled to dividends as declared by the Trustees,
and, if the fund were liquidated, would receive the net assets of the fund.
The fund may suspend the sale of shares at any time and may refuse any
order to purchase shares. Although the fund is not required to hold annual
meetings of its shareholders, shareholders holding at least 10% of the
outstanding shares entitled to vote have the right to call a meeting to
elect or remove Trustees, or to take other actions as provided in the
Agreement and Declaration of Trust.

The fund is a "diversified" investment company under the Investment Company
Act of 1940. This means that with respect to 75% of its total assets, the
fund may not invest more than 5% of its total assets in the securities of
any one issuer (except U.S. government securities). The remaining 25% of
its total assets is not subject to this restriction. To the extent the
fund invests a significant portion of its assets in the securities of a
particular issuer, it will be subject to an increased risk of loss if the
market value of such issuer's securities declines.

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) Underwrite securities issued by other persons except to the extent
that, in connection with the disposition of its portfolio investments, it
may be deemed to be an underwriter under certain federal securities laws.

(3) Purchase or sell real estate, although it may purchase securities of
issuers which deal in real estate, securities which are secured by
interests in real estate, and securities which represent interests in real
estate, and it may acquire and dispose of real estate or interests in real
estate acquired through the exercise of its rights as a holder of debt
obligations secured by real estate or interests therein.

(4) Purchase or sell commodities or commodity contracts, except that the
fund may purchase and sell financial futures contracts and options.

(5) Make loans, except by purchase of debt obligations in which the fund
may invest consistent with its investment policies, by entering into
repurchase agreements 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 (taken at current
value).

(6) Purchase securities the disposition of which is restricted under
federal securities law if, as a result, such investments would exceed 15%
of the value of the fund's net assets (excluding securities determined by
the Trustees (or the person designated by the Trustees) to make such
determinations) to be readily marketable.

(7) With respect to 75% of its total assets, 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 political subdivisions.

(8) With respect to 75% of its total assets, acquire more than 10% of the
voting securities of any issuer.

(9) 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.

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

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

The following non-fundamental investment policies may be changed without
shareholder approval:

The fund may not invest in (a) securities which 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.

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

All percentage limitations on investments (other than pursuant to the
non-fundamental restriction above) 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.

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

CHARGES AND EXPENSES

Management Fees

Under a Management Contract dated October 7, 1994, the fund pays a
quarterly fee to Putnam Management based on the average net assets of the
fund, as determined at the close of each business day during the quarter,
at an annual rate of 0.65% of the first $500 million of the fund's average
net assets, 0.55% of the next $500 million of such assets, 0.50% of the
next $500 million of such assets, 0.45% of the next $5 billion of such
assets, 0.425% of the next $5 billion of such assets, 0.405% of the next $5
billion of such assets, 0.39% of the next $5 billion of such assets and
0.38% of any excess thereafter. For the past three fiscal years, pursuant
to the Management Contract, the fund incurred the following fees:

Fiscal Management
year fee paid

1999 $15,491,468

1998 $14,029,026
1997 $10,743,729

Brokerage commissions

The following table shows brokerage commissions paid during the fiscal
periods indicated:

Fiscal Brokerage
year commission

1999 $4,691,873

1998 $4,132,812
1997 $2,956,692

The following table shows transactions placed with brokers and dealers
during the most recent fiscal year to recognize research, statistical and
quotation services received by Putnam Management and its affiliates:

Dollar value Percent of

of these total Amount of
transactions transactions commissions

$2,885,053,606 61.64% $2,974,128

Administrative expense reimbursement

The fund reimbursed Putnam Management for administrative services during
fiscal 1999, including compensation of certain fund officers and
contributions to the Putnam Investments, Inc. Profit Sharing Retirement
Plan for their benefit, as follows:

Portion of total
reimbursement for
compensation
Total and
reimbursement contributions

$32,073 $26,019

Trustee responsibilities and fees

The Trustees are responsible for generally overseeing the conduct of fund
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.

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 Board Policy
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 1999 and the fees paid to each Trustee by
all of the Putnam funds during calendar year 1999:

COMPENSATION TABLE

Pension or Estimated Total
Aggregate retirement annual benefits compensation
compensation benefits accrued from all from all
from the as part of Putnam funds Putnam
Trustees/Year fund(1) fund expenses upon retirement(2) funds(3)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Jameson A. Baxter/
1994(4) $2,918 $555 $95,000 $191,000

Hans H. Estin/
1972 2,901 1,306 95,000 190,000

John A. Hill/
1985(4)(5) 3,552 638 115,000 239,750

Ronald J. Jackson/
1996(4) 2,938 596 95,000 193,500

Paul L. Joskow/
1997(4) 2,901 186 95,000 191,000

Elizabeth T. Kennan/
1992 2,901 801 95,000 190,000

Lawrence J. Lasser/
1992 2,884 611 95,000 189,000

John H. Mullin, III/
1997(4) 2,976 280 95,000 196,000

Robert E. Patterson/
1984 2,909 432 95,000 190,250

William F. Pounds/
1971(5) 3,464 1,456 115,000 231,000

George Putnam/
1957 2,901 1,347 95,000 190,000

George Putnam, III/
1984 2,901 293 95,000 190,000

A.J.C. Smith/
1986 2,866 928 95,000 188,000

W. Thomas Stephens/
1997(4) 2,866 262 95,000 188,000

W. Nicholas Thorndike/
1992 2,890 1,125 95,000 190,000

</TABLE>

(1) Includes an annual retainer and an attendance fee for each meeting
attended.

(2) Assumes that each Trustee retires at the normal retirement date.
Estimated benefits for each Trustee are based on Trustee fee rates in
effect during calendar 1999.

(3) As of December 31, 1999, there were 114 funds in the Putnam family.

(4) Includes compensation deferred pursuant to a Trustee Compensation
Deferral Plan. The total amounts of deferred compensation payable by the
fund to Mr. Hill, Mr. Jackson, Mr. Stephens, Ms. Baxter, Mr. Joskow and
Mr. Mullin as of November 30, 1999 were $11,458, $9,751, $6,228, $3,107,
$5,346 and $5,414, respectively, including income earned on such amounts.

(5) Includes additional compensation for service as Vice Chairman of the
Putnam funds.

Under a Retirement Plan for Trustees of the Putnam funds (the "Plan"), each
Trustee who retires with at least five years of service as a Trustee of the
funds is entitled to receive an annual retirement benefit equal to one-half
of the average annual compensation paid to such Trustee for the last three
years of service prior to retirement. This retirement benefit is payable
during a Trustee's lifetime, beginning the year following retirement, for a
number of years equal to such Trustee's years of service. A death benefit
is also available under the Plan which assures that the Trustee and his or
her beneficiaries will receive benefit payments for the lesser of an
aggregate period of (i) ten years or (ii) such Trustee's total years of
service.

The Plan Administrator (a committee comprised of Trustees that are not
"interested persons" of the fund, as defined in the Investment Company Act
of 1940) may terminate or amend the Plan at any time, but no termination or
amendment will result in a reduction in the amount of benefits (i)
currently being paid to a Trustee at the time of such termination or
amendment, or (ii) to which a current Trustee would have been entitled had
he or she retired immediately prior to such termination or amendment.

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

Share ownership

At February 29, 2000, the officers and Trustees of the fund as a group
owned less than 1% of the outstanding shares of each class of the fund,
and, to the knowledge of the fund, no person owned of record or
beneficially 5% or more of any class of shares of the fund.

Shareholder name Percentage
Class and address* owned

A Edward D. Jones & Co. 27.80%
PO Box 2500
Maryland Heights, MO 63043

B Edward D. Jones & Co. 7.10%
PO Box 2500
Maryland Heights, MO 63043

C Edward D. Jones & Co. 11.50%
PO Box 2500
Maryland Heights, MO 63043

C Merril, Lynch, Pierce & Fenner 8.40%
4800 Deer Lake Drive E.
Floor 3
Jacksonville, FL 33060

M Edward D. Jones & Co. 15.60%
PO Box 2500
Maryland Heights, MO 63043

Y IT Corp. * 67.86%

Y Stone and Webster, Inc. * 19.82%

* The address for the names listed is: c/o Putnam Fiduciary Trust
Company, as trustee or agent, 859 Willard Street, Quincy, MA

Distribution fees

During fiscal 1999, the fund paid the following 12b-1 fees to Putnam
Mutual Funds:

Class A Class B Class C Class M

$3,300,355 $15,324,860 $178,521 $1,313,008

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

1999 $4,588,215 $747,057 $32,919

1998 $7,182,325 $1,145,486 $7,582

1997 $8,838,318 $1,390,662 $6,406

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

1999 $2,689,243

1998 $2,233,445

$1,466,211

Class C contingent deferred sales charges

Putnam Mutual Funds received contingent deferred sales charges upon
redemptions of class C shares in the following amount during the period
indicated:

Contingent deferred
Fiscal year sales charges

1999 $9,302

Class M sales charges

Putnam Mutual Funds received sales charges with respect to class M shares
in the following amounts during the periods indicated:

Sales charges
retained by Putnam
Mutual Funds
Total after
Fiscal year sales charges dealer concessions

1999 $216,305 $ 36,399

1998 $431,008 $ 73,547
1997 $613,649 $103,238

Investor servicing and custody fees and expenses

During the 1999 fiscal year, the fund incurred $3,460,805 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 November 30, 1999)

Class A Class B Class C Class M Class Y

Inception date: 1/5/95 1/5/95 2/1/99 1/5/95 10/1/98

Average annual total return

1 year -2.38% -1.98% 1.91% -0.60% 3.80%

Life of fund 17.03% 17.32% 17.59% 16.99% 18.71%

Yield

30-day yield 1.14% 0.45% 0.45% 0.68% 1.46%

Returns for class A and class M shares reflect the deduction of the current
maximum initial sales charges of 5.75% for class A shares and 3.50% for
class M shares.

Returns for class B and class C shares reflect the deduction of the
applicable contingent deferred sales charge ("CDSC"), which for class B is
5% in the first year, declining to 1% in the sixth year, and eliminated
thereafter, and for class C is 1% in the first year and eliminated
thereafter.

Returns shown for class C and class Y shares for periods prior to their
inception are derived from the historical performance of class A shares,
adjusted to reflect both the deduction of the initial sales charge or CDSC,
if any, currently applicable to each class and in the case of class C
shares, the higher operating expenses applicable to such shares.

All returns assume reinvestment of distributions at net asset value and
represent past performance; they do not guarantee future results.
Investment return and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.

See "Standard performance measures" in Part II of this SAI for information
on how performance is calculated.

ADDITIONAL OFFICERS

In addition to the persons listed as fund officers in Part II of this SAI,
each of the following persons is also a Vice President of the fund and
certain of the other Putnam funds, the total number of which is noted
parenthetically. Officers of Putnam Management hold the same offices in
Putnam Management's parent company, Putnam Investments, Inc.

Officer name (Age) (Number of funds)

Deborah Kuenster, (42)(11 funds), Managing Director of Putnam Management.

Thomas V. Reilly, (53)(17 funds), Managing Director of Putnam Management.

INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS

KPMG LLP, 99 High Street, Boston, Massachusetts 02110, 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
November 30, 1999, filed electronically on January 18, 2000 (File No.
811-7223), are incorporated by reference into this SAI. The financial
highlights included in the prospectuses and incorporated by reference into
this SAI and the financial statements incorporated by reference into the
prospectuses and this SAI have been so included and incorporated in
reliance upon the reports of the independent accountants and, for all
periods prior to the year ended November 30, 1999, the previous
accountants, PricewaterhouseCoopers LLP, given on their authority as
experts in auditing and accounting.

TABLE OF CONTENTS

MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS II-1

TAXES II-24
MANAGEMENT II-27
DETERMINATION OF NET ASSET VALUE II-35
HOW TO BUY SHARES II-36
DISTRIBUTION PLANS II-46
INVESTOR SERVICES II-50
SIGNATURE GUARANTEES II-54
SUSPENSION OF REDEMPTIONS II-54
SHAREHOLDER LIABILITY II-55
STANDARD PERFORMANCE MEASURES II-55
COMPARISON OF PORTFOLIO PERFORMANCE II-56
SECURITIES RATINGS II-61

DEFINITIONS II-65

THE PUTNAM FUNDS
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
PART II

As noted in the prospectus, in addition to the principal investment
strategies and the principal risks described in the prospectus, the fund
may employ other investment practices and may be subject to other risks,
which are described below. Because the following is a combined description
of investment strategies of all of the Putnam funds, certain matters
described herein may not apply to your fund. Unless a strategy or policy
described below is specifically prohibited by the investment restrictions
explained in a fund's prospectus or part I of this SAI, or by applicable
law, the fund may engage in each of the practices described below.
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 INVESTMENTS, INVESTMENT PRACTICES AND RISKS

Foreign Investments

The fund may invest in securities of foreign issuers. These foreign
investments involve certain special risks described below.

Foreign securities are normally denominated and traded in foreign
currencies. As a result, the value of the fund's foreign investments and
the value of its shares may be affected favorably or unfavorably by changes
in currency exchange rates relative to the U.S. dollar. There may be less
information publicly available about a foreign issuer than about a U.S.
issuer, and foreign issuers are not generally subject to accounting,
auditing and financial reporting standards and practices comparable to
those in the United States. The securities of some foreign issuers are
less liquid and at times more volatile than securities of comparable U.S.
issuers. 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 investments in U.S. markets.

In addition, the fund's investments in foreign securities may be subject to
the risk of nationalization or expropriation of assets, imposition of
currency exchange controls, foreign withholding taxes or restrictions on
the repatriation of foreign currency, confiscatory taxation, political or
financial instability and diplomatic developments which could affect the
value of the fund's investments in certain foreign countries. Dividends or
interest on, or proceeds from the sale of, foreign securities may be
subject to foreign withholding taxes, and special U.S. tax considerations
may apply.

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
organized under the laws of those foreign countries.

The risks described above, including the risks of nationalization or
expropriation of assets, are typically increased in connection with
investments in "emerging markets." For example, political and economic
structures in 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. High rates of inflation or currency devaluations may adversely
affect the economies and securities markets of such countries. Investments
in emerging markets may be considered speculative.

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

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

Certain of the foregoing risks may also apply to some extent to securities
of U.S. issuers that are denominated in foreign currencies or that are
traded in foreign markets, or securities of U.S. issuers having significant
foreign operations.

Foreign Currency Transactions

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 manage its exposure to foreign
currencies. 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." The fund may also engage in foreign currency transactions for
non-hedging purposes, subject to applicable law. 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.
If conditions warrant, for transaction hedging purposes 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. 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. In
addition, for transaction hedging purposes the fund may also purchase or
sell exchange-listed and over-the-counter call and put options on foreign
currency futures contracts and on foreign currencies.
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.

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

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."

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 fund may also engage in non-hedging currency transactions. For
example, Putnam Management may believe that exposure to a currency is in
the fund's best interest but that securities denominated in that currency
are unattractive. In that case the fund may purchase a currency forward
contract or option in order to increase its exposure to the currency. In
accordance with SEC regulations, the fund will segregate liquid assets in
its portfolio to cover forward contracts used for non-hedging purposes.

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.

The decision as to whether and to what extent the fund will engage in
foreign currency exchange transactions will depend on a number of factors,
including prevailing market conditions, the composition of the fund's
portfolio and the availability of suitable transactions. Accordingly, there
can be no assurance that the fund will engage in foreign currency exchange
transactions at any given time or from time to time.

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 amount 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 euro, the joint currency
of most countries in the European Union.

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.

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.

Investments in Miscellaneous Fixed-Income Securities

If the fund may invest in inverse floating obligations, premium securities,
or interest-only or principal-only classes of mortgage-backed securities
(IOs and POs), 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 or more than 35% of its assets in IOs and POs under normal
market conditions.

Lower-rated Securities

The fund may invest in lower-rated fixed-income securities (commonly known
as "junk bonds"). 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
agency) does not reflect an assessment of the volatility of the security's
market value or the liquidity of an investment in the security. See
"Securities 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 nationally recognized securities rating agencies
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 of which the fund, by itself or together with other funds and
accounts managed by Putnam Management or 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 of 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 securities of private issuers. 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.

The fund may invest without limit in so-called "zero-coupon" bonds and
"payment-in-kind" bonds. 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, it may be necessary at times for the fund 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.

Loan Participations

The fund may invest in "loan participations." By purchasing a loan
participation, the fund acquires some or all of the interest of a bank or
other lending institution in a loan to a particular borrower. Many such
loans are secured, and most impose restrictive covenants which must be met
by the borrower.

The loans in which the fund may invest are typically made by a syndicate of
banks, represented by an agent bank which has negotiated and structured the
loan and which is responsible generally for collecting interest, principal,
and other amounts from the borrower on its own behalf and on behalf of the
other lending institutions in the syndicate and for enforcing its and their
other rights against the borrower. Each of the lending institutions,
including the agent bank, lends to the borrower a portion of the total
amount of the loan, and retains the corresponding interest in the loan.

The fund's ability to receive payments of principal and interest and other
amounts in connection with loan participations held by it will depend
primarily on the financial condition of the borrower. The failure by the
fund to receive scheduled interest or principal payments on a loan
participation would adversely affect the income of the fund and would
likely reduce the value of its assets, which would be reflected in a
reduction in the fund's net asset value. Banks and other lending
institutions generally perform a credit analysis of the borrower before
originating a loan or participating in a lending syndicate. In selecting
the loan participations in which the fund will invest, however, Putnam
Management will not rely solely on that credit analysis, but will perform
its own investment analysis of the borrowers. Putnam Management's analysis
may include consideration of the borrower's financial strength and
managerial experience, debt coverage, additional borrowing requirements or
debt maturity schedules, changing financial conditions, and responsiveness
to changes in business conditions and interest rates. Because loan
participations in which the fund may invest are not generally rated by
independent credit rating agencies, a decision by the fund to invest in a
particular loan participation will depend almost exclusively on Putnam
Management's, and the original lending institution's, credit analysis of
the borrower.

Loan participations may be structured in different forms, including
novations, assignments, and participating interests. In a novation, the
fund assumes all of the rights of a lending institution in a loan,
including the right to receive payments of principal and interest and other
amounts directly from the borrower and to enforce its rights as a lender
directly against the borrower. The fund assumes the position of a
co-lender with other syndicate members. As an alternative, the fund may
purchase an assignment of a portion of a lender's interest in a loan. In
this case, the fund may be required generally to rely upon the assigning
bank to demand payment and enforce its rights against the borrower, but
would otherwise be entitled to all of such bank's rights in the loan. The
fund may also purchase a participating interest in a portion of the rights
of a lending institution in a loan. In such case, it will be entitled to
receive payments of principal, interest, and premium, if any, but will not
generally be entitled to enforce its rights directly against the agent bank
or the borrower, but must rely for that purpose on the lending institution.
The fund may also acquire a loan participation directly by acting as a
member of the original lending syndicate.

The fund will in many cases be required to rely upon the lending
institution from which it purchases the loan participation to collect and
pass on to the fund such payments and to enforce the fund's rights under
the loan. As a result, an insolvency, bankruptcy, or reorganization of the
lending institution may delay or prevent the fund from receiving principal,
interest, and other amounts with respect to the underlying loan. When the
fund is required to rely upon a lending institution to pay to the fund
principal, interest, and other amounts received by it, Putnam Management
will also evaluate the creditworthiness of the lending institution.

The borrower of a loan in which the fund holds a participation interest
may, either at its own election or pursuant to terms of the loan
documentation, prepay amounts of the loan from time to time. There is no
assurance that the fund will be able to reinvest the proceeds of any loan
prepayment at the same interest rate or on the same terms as those of the
original loan participation.

Corporate loans in which the fund may purchase a loan participation are
made generally to finance internal growth, mergers, acquisitions, stock
repurchases, leveraged buy-outs, and other corporate activities. Under
current market conditions, most of the corporate loan participations
purchased by the fund will represent interests in loans made to finance
highly leveraged corporate acquisitions, known as "leveraged buy-out"
transactions. The highly leveraged capital structure of the borrowers in
such transactions may make such loans especially vulnerable to adverse
changes in economic or market conditions. In addition, loan participations
generally are subject to restrictions on transfer, and only limited
opportunities may exist to sell such participations in secondary markets.
As a result, the fund may be unable to sell loan participations at a time
when it may otherwise be desirable to do so or may be able to sell them
only at a price that is less than their fair market value.

Certain of the loan participations acquired by the fund may involve
revolving credit facilities under which a borrower may from time to time
borrow and repay amounts up to the maximum amount of the facility. In such
cases, the fund would have an obligation to advance its portion of such
additional borrowings upon the terms specified in the loan participation.
To the extent that the fund is committed to make additional loans under
such a participation, it will at all times hold and maintain in a
segregated account liquid assets in an amount sufficient to meet such
commitments. Certain of the loan participations acquired by the fund may
also involve loans made in foreign currencies. The fund's investment in
such participations would involve the risks of currency fluctuations
described above with respect to investments in the foreign securities.

Floating Rate and Variable Rate Demand Notes

Certain funds may purchase floating rate and variable rate demand notes and
bonds. These securities may have a stated maturity in excess of one year,
but permit a holder to demand payment of principal plus accrued interest
upon a specified number of days notice. Frequently, such obligations are
secured by letters of credit or other credit support arrangements provided
by banks. The issuer has a corresponding right, after a given period, to
prepay in its discretion the outstanding principal of the obligation plus
accrued interest upon a specific number of days notice to the holders. The
interest rate of a floating rate instrument may be based on a known lending
rate, such as a bank's prime rate, and is reset whenever such rate is
adjusted. The interest rate on a variable rate demand note is reset at
specified intervals at a market rate.

Mortgage Related and Asset-backed 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.

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

Mortgage-backed 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 and asset-backed securities are less effective than other
types of securities as a means of "locking in" attractive long-term
interest rates. One reason is the need to reinvest prepayments of
principal; another is the possibility of significant unscheduled
prepayments resulting from declines in interest rates. These prepayments
would have to be reinvested at lower rates. As a result, these securities
may have less potential for capital appreciation during periods of
declining interest rates than other securities of comparable maturities,
although they may have a similar risk of decline in market value during
periods of rising interest rates. Prepayments may also significantly
shorten the effective maturities of these securities, especially during
periods of declining interest rates. Conversely, during periods of rising
interest rates, a reduction in prepayments may increase the effective
maturities of these securities, subjecting them to a greater risk of
decline in market value in response to rising interest rates than
traditional debt securities, and, therefore, potentially increasing the
volatility of the fund.

Prepayments may cause losses on securities purchased at a premium. At
times, some of the mortgage-backed and asset-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. Conversely, slower than anticipated prepayments
can extend the effective maturities of CMOs, subjecting them to a greater
risk of decline in market value in response to rising interest rates than
traditional debt securities, and, therefore, potentially increasing the
volatility of the fund.

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.

Structured notes

A fund may be able to invest in so-called structured notes. These
securities are generally derivative instruments whose value is tied to an
underlying index or other security or asset class. Such structured notes
may include, for example, notes that allow a fund to invest indirectly in
certain foreign investments which the fund would otherwise would not be
able to directly invest often because of restrictions imposed by local
laws.

Tax-exempt Securities

General description. As used in this SAI, the term "Tax-exempt securities"
includes debt obligations issued by a state, its political subdivisions
(for example, counties, cities, towns, villages, districts and authorities)
and their agencies, instrumentalities or other governmental units, the
interest from which is, in the opinion of bond counsel, exempt from federal
income tax and the appropriate state's personal income tax. Such
obligations are issued to obtain funds for various public purposes,
including the construction of a wide range of public facilities, such as
airports, bridges, highways, housing, hospitals, mass transportation,
schools, streets and water and sewer works. Other public purposes for
which Tax-exempt securities may be issued include the refunding of
outstanding obligations or the payment of general operating expenses.

Short-term Tax-exempt securities are generally issued by state and local
governments and public authorities as interim financing in anticipation of
tax collections, revenue receipts, or bond sales to finance such public
purposes.

In addition, certain types of "private activity" bonds may be issued by
public authorities to finance projects such as privately operated housing
facilities; certain local facilities for supplying water, gas or
electricity; sewage or solid waste disposal facilities; student loans; or
public or private institutions for the construction of educational,
hospital, housing and other facilities. Such obligations are included
within the term Tax-exempt securities if the interest paid thereon is, in
the opinion of bond counsel, exempt from federal income tax and state
personal income tax (such interest may, however, be subject to federal
alternative minimum tax). Other types of private activity bonds, the
proceeds of which are used for the construction, repair or improvement of,
or to obtain equipment for, privately operated industrial or commercial
facilities, may also constitute Tax-exempt securities, although the current
federal tax laws place substantial limitations on the size of such issues.

Participation interests (Money Market Funds only). The Money Market Fund
may invest in Tax-exempt securities either by purchasing them directly or
by purchasing certificates of accrual or similar instruments evidencing
direct ownership of interest payments or principal payments, or both, on
Tax-exempt securities, provided that, in the opinion of counsel to the
initial seller of each such certificate or instrument, any discount
accruing on a certificate or instrument that is purchased at a yield not
greater than the coupon rate of interest on the related Tax-exempt
securities will be exempt from federal income tax to the same extent as
interest on the Tax-exempt securities. The Money Market Fund may also
invest in Tax-exempt securities by purchasing from banks participation
interests in all or part of specific holdings of Tax-exempt securities.
These participations may be backed in whole or in part by an irrevocable
letter of credit or guarantee of the selling bank. The selling bank may
receive a fee from the Money Market Fund in connection with the
arrangement. The Money Market Fund will not purchase such participation
interests unless it receives an opinion of counsel or a ruling of the
Internal Revenue Service that interest earned by it on Tax-exempt
securities in which it holds such participation interests is exempt from
federal income tax. The Money Market Fund does not expect to invest more
than 5% of its assets in participation interests.

Stand-by commitments. When the fund purchases Tax-exempt securities, it
has the authority to acquire stand-by commitments from banks and
broker-dealers with respect to those Tax-exempt securities. A stand-by
commitment may be considered a security independent of the Tax-exempt
security to which it relates. The amount payable by a bank or dealer
during the time a stand-by commitment is exercisable, absent unusual
circumstances, would be substantially the same as the market value of the
underlying Tax-exempt security to a third party at any time. The fund
expects that stand-by commitments generally will be available without the
payment of direct or indirect consideration. The fund does not expect to
assign any value to stand-by commitments.

Yields. The yields on Tax-exempt securities depend on a variety of
factors, including general money market conditions, effective marginal tax
rates, the financial condition of the issuer, general conditions of the
Tax-exempt security market, the size of a particular offering, the maturity
of the obligation and the rating of the issue. The ratings of nationally
recognized securities rating agencies represent their opinions as to the
credit quality of the Tax-exempt securities which they undertake to rate.
It should be emphasized, however, that ratings are general and are not
absolute standards of quality. Consequently, Tax-exempt securities with
the same maturity and interest rate but with different ratings may have the
same yield. Yield disparities may occur for reasons not directly related
to the investment quality of particular issues or the general movement of
interest rates and may be due to such factors as changes in the overall
demand or supply of various types of Tax-exempt securities or changes in
the investment objectives of investors. Subsequent to purchase by the
fund, an issue of Tax-exempt securities or other investments may cease to
be rated, or its rating may be reduced below the minimum rating required
for purchase by the fund. Neither event will require the elimination of an
investment from the fund's portfolio, but Putnam Management will consider
such an event in its determination of whether the fund should continue to
hold an investment in its portfolio.

"Moral obligation" bonds. The fund does not currently intend to invest in
so-called "moral obligation" bonds, where repayment is backed by a moral
commitment of an entity other than the issuer, unless the credit of the
issuer itself, without regard to the "moral obligation," meets the
investment criteria established for investments by the fund.

Municipal leases. The fund may acquire participations in lease obligations
or installment purchase contract obligations (collectively, "lease
obligations") of municipal authorities or entities. Lease obligations do
not constitute general obligations of the municipality for which the
municipality's taxing power is pledged. Certain of these lease obligations
contain "non-appropriation" clauses, which provide that the municipality
has no obligation to make lease or installment purchase payments in future
years unless money is appropriated for such purpose on a yearly basis. In
addition to the "non-appropriation" risk, these securities represent a
relatively new type of financing that has not yet developed the depth of
marketability associated with more conventional bonds. In the case of a
"non-appropriation" lease, the fund's ability to recover under the lease in
the event of non-appropriation or default will be limited solely to the
repossession of the leased property, and in any event, foreclosure of that
property might prove difficult.

Additional risks. Securities in which the fund may invest, including
Tax-exempt securities, are subject to the provisions of bankruptcy,
insolvency and other laws affecting the rights and remedies of creditors,
such as the federal Bankruptcy Code (including special provisions related
to municipalities and other public entities), and laws, if any, that may be
enacted by Congress or state legislatures extending the time for payment of
principal or interest, or both, or imposing other constraints upon
enforcement of such obligations. There is also the possibility that, as a
result of litigation or other conditions, the power, ability or willingness
of issuers to meet their obligations for the payment of interest and
principal on their Tax-exempt securities may be materially affected.

From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on debt obligations issued by states and their political
subdivisions. Federal tax laws limit the types and amounts of tax-exempt
bonds issuable for certain purposes, especially industrial development
bonds and private activity bonds. Such limits may affect the future supply
and yields of these types of Tax-exempt securities. Further proposals
limiting the issuance of tax-exempt bonds may well be introduced in the
future. If it appeared that the availability of Tax-exempt securities for
investment by the fund and the value of the fund's portfolio could be
materially affected by such changes in law, the Trustees of the fund would
reevaluate its investment objective and policies and consider changes in
the structure of the fund or its dissolution.

Convertible Securities

Convertible securities include bonds, debentures, notes, preferred stocks
and other securities that may be converted into or exchanged for, at a
specific price or formula within a particular period of time, a prescribed
amount of common stock or other equity securities of the same or a
different issuer. Convertible securities entitle the holder to receive
interest paid or accrued on debt or dividends paid or accrued on preferred
stock until the security matures or is redeemed, converted or exchanged.

The market value of a convertible security is a function of its
"investment value" and its "conversion value." A security's "investment
value" represents the value of the security without its conversion feature
(i.e., a nonconvertible fixed income security). The investment value may
be determined by reference to its credit quality and the current value of
its yield to maturity or probable call date. At any given time, investment
value is dependent upon such factors as the general level of interest
rates, the yield of similar nonconvertible securities, the financial
strength of the issuer and the seniority of the security in the issuer's
capital structure. A security's "conversion value" is determined by
multiplying the number of shares the holder is entitled to receive upon
conversion or exchange by the current price of the underlying security.

If the conversion value of a convertible security is significantly below
its investment value, the convertible security will trade like
nonconvertible debt or preferred stock and its market value will not be
influenced greatly by fluctuations in the market price of the underlying
security. Conversely, if the conversion value of a convertible security is
near or above its investment value, the market value of the convertible
security will be more heavily influenced by fluctuations in the market
price of the underlying security.

The fund's investments in convertible securities may at times include
securities that have a mandatory conversion feature, pursuant to which the
securities convert automatically into common stock or other equity
securities at a specified date and a specified conversion ratio, or that
are convertible at the option of the issuer. Because conversion of the
security is not at the option of the holder, the fund may be required to
convert the security into the underlying common stock even at times when
the value of the underlying common stock or other equity security has
declined substantially.

The fund's investments in convertible securities, particularly securities
that are convertible into securities of an issuer other than the issuer of
the convertible security, may be illiquid. The fund may not be able to
dispose of such securities in a timely fashion or for a fair price, which
could result in losses to the fund.

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 asset value.

While such private placements may often offer attractive opportunities for
investment not otherwise available on the open market, the securities so
purchased are often "restricted securities," i.e., securities which
cannot be sold to the public without registration under the Securities Act
of 1933 or the availability of an exemption from registration (such as
Rules 144 or 144A), or which are "not readily marketable" because they are
subject to other legal or contractual delays in or restrictions on resale.

The absence of a trading market can make it difficult to ascertain a market
value for illiquid investments. Disposing of illiquid investments may
involve time-consuming negotiation and legal expenses, and it may be
difficult or impossible for the fund to sell them promptly at an acceptable
price. The fund may have to bear the extra expense of registering such
securities for resale and the risk of substantial delay in effecting such
registration. Also market quotations are less readily available. The
judgment of Putnam Management may at times play a greater role in valuing
these securities than in the case of unrestricted securities.

Generally speaking, restricted securities may be sold only to qualified
institutional buyers, or in a privately negotiated transaction to a limited
number of purchasers, or in limited quantities after they have been held
for a specified period of time and other conditions are met pursuant to an
exemption from registration, or in a public offering for which a
registration statement is in effect under the Securities Act of 1933. The
funds may be deemed to be an "underwriter" for purposes of the Securities
Act of 1933 when selling restricted securities to the public, and in such
event the fund may be liable to purchasers of such securities if the
registration statement prepared by the issuer, or the prospectus forming a
part of it, is materially inaccurate or misleading.

Futures Contracts and Related Options

Subject to applicable law the fund may invest without limit in futures
contracts and related options for hedging and non-hedging purposes, such as
to manage the effective duration of the fund's portfolio or as a substitute
for direct investment. 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 liquid assets. 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.

The fund does not intend to purchase or sell futures or related options for
other than hedging purposes, if, as a result, the sum of the initial margin
deposits on the fund's existing futures and related options positions and
premiums paid for outstanding options on futures contracts would exceed 5%
of the fund's net assets.

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.
In return for the premium paid, options on futures contracts give the
purchaser the right 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.

The use of options and futures strategies also involves the risk of
imperfect correlation among movements in the prices of the securities
underlying the futures and options purchased and sold by the fund, of the
options and futures contracts themselves, and, in the case of hedging
transactions, of the securities which are the subject of a hedge. The
successful use of these strategies further depends on the ability of Putnam
Management to forecast interest rates and market movements correctly.

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

Short-term Trading

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

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.

Repurchase Agreements

The fund, unless it is a money market fund, may enter into repurchase
agreements, amounting to not more than 25% of its total assets. Money
market funds may invest without limit in repurchase agreements. 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 the
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.

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.

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 sets aside, on the books and records of its custodian, liquid
assets 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.

Swap Agreements

The fund may enter into swap agreements and other types of over-the-counter
transactions with broker-dealers or other financial institutions.
Depending on their structures, swap agreements may increase or decrease a
fund's exposure to long-or short-term interest rates (in the United States
or abroad), foreign currency values, mortgage securities, corporate
borrowing rates, or other factors such as security prices or inflation
rates. The value of a fund's swap positions would increase or decrease
depending on the changes in value of the underlying rates, currency values,
or other indices or measures. A fund's ability to engage in certain swap
transactions may be limited by tax considerations.

The fund's ability to realize a profit from such transactions will depend
on the ability of the financial institutions with which it enters into the
transactions to meet their obligations to the fund. Under certain
circumstances, suitable transactions may not be available to the fund, or
the fund may be unable to close out its position under such transactions at
the same time, or at the same price, as if it had purchased comparable
publicly traded securities.

Derivatives

Certain of the instruments in which the fund may invest, such as futures
contracts, options and forward contracts, are considered to be
"derivatives." Derivatives are financial instruments whose value depends
upon, or is derived from, the value of an underlying asset, such as a
security or an index. Further information about these instruments and the
risks involved in their use is included elsewhere in the prospectus or in
this SAI. The fund's use of derivatives may cause the fund to recognize
higher amounts of short-term capital gains, generally taxed to shareholders
at ordinary income tax rates.

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 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) 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

(c) 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.

Fund distributions. Distributions from the fund (other than
exempt-interest dividends, as discussed below) will be taxable to
shareholders as ordinary income to the extent derived from the fund's
investment income and net short-term gains. Distributions of net capital
gains (that is, the excess of net gains from capital assets held more than
one year over net losses from capital assets held for not more than one
year) will be taxable to shareholders as such, regardless of how long a
shareholder has held the shares in the fund.

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 constructive sale, 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, convert long-term capital gains into
short-term capital gains 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.

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.

Dividends and distributions on a fund's shares are generally subject to
federal income tax as described herein to the extent they do not exceed the
fund's realized income and gains, even though such dividends and
distributions may economically represent a return of a particular
shareholder's investment. Such distributions are likely to occur in
respect of shares purchased at a time when the fund's net asset value
reflects gains that are either unrealized, or realized but not distributed.

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 generally
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
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 respect of foreign securities the fund has held for at least
the minimum period specified in the Code. 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. In
particular, shareholders must hold their fund shares (without protection
from risk of loss) on the ex-dividend date and for at least 15 additional
days during the 30-day period surrounding the ex-dividend date to be
eligible to claim a foreign tax credit with respect to a given dividend.
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 or more of the income of which for the taxable year is passive
income, or (ii) the average percentage of the assets of which (generally by
value, but by adjusted tax basis in certain cases) that produce or are held
for the production of passive income is at least 50 percent. Generally,
passive income for this purpose means dividends, interest (including income
equivalent to interest), royalties, rents, annuities, the excess of gains
over losses from certain property transactions and commodities
transactions, and foreign currency gains. Passive income for this purpose
does not include rents and royalties received by the foreign corporation
from active business and certain income received from related persons.

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.
Otherwise the gain or loss on the sale, exchange or redemption of fund
shares will be treated 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.

The Internal Revenue Service recently revised its regulations affecting the
application to foreign investors of the back-up withholding and withholding
tax rules described above. The new regulations will generally be effective
for payments made after December 31, 1999 (although transition rules will
apply). In some circumstances, the new rules will increase the
certification and filing requirements imposed on foreign investors in order
to qualify for exemption from the 31% back-up withholding tax rates under
income tax treaties. Foreign investors in a fund should consult their tax
advisors with respect to the potential application of these new
regulations.

MANAGEMENT

Trustees Name (Age)

*+George Putnam (73), Chairman and President. Chairman and Director of
Putnam Management and Putnam Mutual Funds. Director, Freeport Copper and
Gold, Inc. (a mining and natural resource company), Houghton Mifflin
Company (a major publishing company) and Marsh & McLennan Companies, Inc.

John A. Hill (58), Vice Chairman. Chairman and Managing Director, First
Reserve Corporation (a registered investment adviser investing in companies
in the world-wide energy industry on behalf of institutional investors).
Director of Snyder Oil Corporation, TransMontaigne Oil Company and various
private companies owned by First Reserve Corporation, such as James River
Coal and Anker Coal Corporation.

+William F. Pounds (71), Vice Chairman. Professor Emeritus of Management,
Alfred P. Sloan School of Management, Massachusetts Institute of
Technology. Director of IDEXX Laboratories, Inc. (a provider of diagnostic
products and services for the animal health and food and environmental
industries), Management Sciences for Health, Inc. (a non-profit
organization), and Sun Company, Inc. (a petroleum refining and marketing
company).

Jameson A. Baxter (56), Trustee. President, Baxter Associates, Inc. (a
management consulting and private investments firm). Director of MB
Financial, Inc., ASHTA Chemicals, Inc., Banta Corporation (printing and
digital imaging), and Ryerson Tull, Inc. (America's largest steel service
corporation). Chairman Emeritus of the Board of Trustees, Mount Holyoke
College.

+Hans H. Estin (71), Trustee. Chartered Financial Analyst and Vice
Chairman, North American Management Corp. (a registered investment
adviser).

Ronald J. Jackson (56), Trustee. Former Chairman, President and Chief
Executive Officer of Fisher-Price, Inc. (a major toy manufacturer).

*Paul L. Joskow (52), Trustee. Professor of Economics and Management and
Director of the Center for Energy and Environmental Policy Research,
Massachusetts Institute of Technology. Director, New England Electric
System (a public utility holding company), State Farm Indemnity Company (an
automobile insurance company) and the Whitehead Institute for Biomedical
Research (a non-profit research institution).

Elizabeth T. Kennan (62), Trustee. President Emeritus and Professor, Mount
Holyoke College. Director, Bell Atlantic (a telecommunications company),
the Kentucky Home Life Insurance Companies, Bell Atlantic, Northeast
Utilities and Talbots (a distributor of women's apparel).

*Lawrence J. Lasser (57), 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.
and the United Way of Massachusetts Bay.

John H. Mullin, III (58), Trustee. Chairman and CEO of Ridgeway Farm.
Director of ACX Technologies, Inc. (a company engaged in the manufacture of
industrial ceramics and packaging products), Alex. Brown Realty, Inc. , The
Liberty Corporation (a company engaged in the life insurance and
broadcasting industries) and Carolina Power & Light (a utility company).

+Robert E. Patterson (54), Trustee. President and Trustee of Cabot
Industrial Trust (a publicly traded real estate investment trust).
Director of Brandywine Trust Company.

*George Putnam III (48), Trustee. President, New Generation Research, Inc.
(a publisher of financial advisory and other research services relating to
bankrupt and distressed companies) and New Generation Advisers, Inc. (a
registered investment adviser). Director of The Boston Family Office,
L.L.C. (a registered investment advisor).

*A.J.C. Smith (65), Trustee. Chairman and Chief Executive Officer, Marsh &
McLennan Companies, Inc. Director, Trident Partnership (a $667 million
10-year limited partnership with over 30 institutional investors).

W. Thomas Stephens (57), Trustee. President and Chief Executive Officer of
MacMillan Bloedel Ltd. (a major forest products company). Director, Qwest
Communications (a fiber optics manufacturer) and New Century Energies (a
public utility company).

W. Nicholas Thorndike (66), Trustee. Director of various corporations and
charitable organizations, including Courier Corporation (a book
manufacturer), Data General Corporation (a provider of customized computer
solutions), Bradley Real Estate, Inc., and Providence Journal Co.

Officers Name (Age)

Charles E. Porter (61), Executive Vice President. Managing Director of
Putnam Investments, Inc. and Putnam Management.

Patricia C. Flaherty (53), Vice President. Senior Vice President of Putnam
Investments, Inc. and Putnam Management.

Gordon H. Silver (52), Vice President. Director and Senior Managing
Director of Putnam Investments, Inc. and Putnam Management.

Brett C. Browchuk (37), Vice President. Managing Director of Putnam
Management.

Ian C. Ferguson (42), Vice President. Senior Managing Director of Putnam
Investments, Inc. and Putnam Management.

Richard A. Monaghan (45), Vice President. Managing Director of Putnam
Investments, Inc., Putnam Management and Putnam Mutual Funds.

Richard G. Leibovtich (36), Vice President. Managing Director of Putnam
Management. Prior to February 1999, Mr. Leibovtich was a Managing Director
at J.P. Morgan.

John R. Verani (60) , Vice President. Senior Vice President of Putnam
Investments, Inc. and Putnam Management.

John D. Hughes (65), Senior Vice President and 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.

Messrs. Putnam, Lasser and Smith are deemed "interested persons" by virtue
of their positions as officers or shareholders of the fund, or directors of
Putnam Management, Putnam Mutual Funds, or Marsh & McLennan Companies,
Inc., the parent company of Putnam Management and Putnam Mutual Funds.

Mr. George Putnam, III, Mr. Putnam's son, is also an "interested person" of
the fund, Putnam Management, and Putnam Mutual Funds. Mr. Joskow is not
currently an "interested person" of the fund but could be deemed by the
Securities and Exchange Commission to be an "interested person" on account
of his prior consulting relationship with National Economic Research
Associates, Inc., a wholly-owned subsidiary of Marsh & McLennan Companies,
Inc., which was terminated as of August 31, 1998. The balance of the
Trustees are not "interested persons."

+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.

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

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 September 1998, Mr. Joskow was a consultant to
National Economic Research Associates. Prior to June 1995, Dr. Kennan was
President of Mount Holyoke College. Prior to 1996, Mr. Stephens was
Chairman of the Board of Directors, President and Chief Executive Officer
of Johns Manville Corporation. Prior to April 1996, Mr. Ferguson was CEO
at Hong Kong Shanghai Banking Corporation. Prior to February 1998, Mr.
Patterson was Executive Vice President and Director of Acquisitions of
Cabot Partners Limited Partnership. Prior to November 1998, Mr. Monaghan
was Managing Director at Merrill Lynch.

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. As of
December 31, 1999, the firm serves as the investment manager for the funds
in the Putnam Family, with over $289 billion in assets in nearly 12
million shareholder accounts . An affiliate, The Putnam Advisory Company,
Inc., manages domestic and foreign institutional accounts and mutual funds,
including the accounts of many Fortune 500 companies. Another affiliate,
Putnam Fiduciary Trust Company, provides investment advice to institutional
clients under its banking and fiduciary powers. At December 31, 1999,
Putnam Management and its affiliates managed $391 billion in assets,
including nearly $17 billion in tax-exempt securities and over $99
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 in
turn is, except for a minority stake owned by employees, 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.

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.

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 the prospectus and/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.

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 Conduct Rules 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.

Personal Investments by Employees of Putnam Management and Putnam Mutual
Funds and Officers and Trustees of the Fund

Employees of Putnam Management and Putnam Mutual Funds and officers and
Trustees of the fund are subject to significant restrictions on engaging in
personal securities transactions. These restrictions are set forth in the
Codes of Ethics adopted by Putnam Management and Putnam Mutual Funds (The
Putnam Investments' Code of Ethics) and by the fund (the Putnam Funds' Code
of Ethics). The Putnam Investments' Code of Ethics and the Putnam Funds'
Code of Ethics, in accordance with rule 17j-1 of the Investment Company Act
of 1940, as amended, contain provisions and requirements designed to
identify and address certain conflicts of interest between personal
investment activities and the interests of the fund.

The Putnam Investments' Code of Ethics does not prohibit personnel from
investing in securities that may be purchased or held by the fund. However,
the Putnam Investments' Code, consistent with standards recommended by the
Investment Company Institute's Advisory Group on Personal Investing and
requirements established by rule 17j-1, among other things, prohibits
personal securities investments without pre-clearance, imposes time periods
during which personal transactions may not be made in certain securities by
employees with access to investment information, and requires the timely
submission of broker confirmations and quarterly reporting of personal
securities transactions. Additional restrictions apply to portfolio
managers, traders, research analysts and others involved in the investment
advisory process.

The Putnam Funds' Code of Ethics incorporates and applies the restrictions
of Putnam Investments' Code of Ethics to officers and Trustees of the fund
who are affiliated with Putnam Investments. The Putnam Funds' Code does not
prohibit unaffiliated officers and Trustees from investing in securities
that may be held by the fund; however, the Putnam Funds' Code regulates the
personal securities transactions of unaffiliated Trustees of the fund,
including limiting the time periods during which they may personally buy
and sell certain securities and requiring them to submit quarterly reports
of personal securities transactions.

The fund's Trustees, in compliance with rule 17j-1, approve Putnam
Investments' and the Putnam Funds' Codes of Ethics and are required to
approve any material changes to these Codes. The Trustees also provide
continued oversight of personal investment policies and annually evaluate
the implementation and effectiveness of the Codes of Ethics.

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 Service Award eight
times in the past nine years. In 1997 and 1998, Putnam was the only
company to win all three DALBAR Awards: for service to investors, to
financial advisors, and to variable annuity contract holders. DALBAR, Inc.
an independent research firm, presents the awards to financial services
firms that provide consistently excellent service.

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, Rev. Dr. Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, the Fourth of July, Labor Day, Thanksgiving
and Christmas. The fund determines 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. In addition, securities held by some
of the funds may be traded in foreign markets that are open for business on
days that a fund is not, and the trading of such securities on those days
may have an impact on the value of a shareholder's investment at a time
when the shareholder cannot buy and sell shares of the fund.

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-sponsored retirement 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 no later than
the end of the month eight years after the purchase date, and may, in the
discretion of the Trustees, convert to class A shares earlier. 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. A shareholder may choose any day of the month
and, if a given month (for example, February) does not contain that
particular date, or if the date falls on a weekend or holiday, the draft
will be processed on the next business day. 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 last day of the period for which distributions are paid using the net
asset value determined on that date, and are credited to a shareholder's
account on the payment date.

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. 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 generally 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) employer-sponsored retirement 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 employer-sponsored
retirement 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 (other than a
tax-qualified retirement plan trust), through an arrangement approved by
Putnam Mutual Funds, 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 intermediaries who have entered into agreements
with Putnam Mutual Funds with respect to such accounts, which in all cases
shall be subject to a wrap fee economically comparable to a sales charge.
Fund shares offered pursuant to this waiver may not be advertised as "no
load," or otherwise offered for sale at NAV without a wrap fee.

In addition, each of the Putnam funds 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 post-purchase
disability of a shareholder or settlor of a living trust account and on
redemptions in connection with certain withdrawals from IRA or other
retirement plans and on redemptions to pay premiums for insurance under
Putnam's insured investor program. Up to 12% of the value of shares
subject to a systematic withdrawal plan may also be redeemed each year
without a CDSC. The fund may sell class A or class M shares at net asset
value to members of qualified groups. See "Group purchases of class A and
class M shares" below. Class A and class M shares are available without an
initial sales charge to "class A qualified benefit plans" and "class M
qualified benefit plans," respectively, as described below. See "Qualified
benefit plans; Individual account plans" 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.

The public offering price of class A and 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, in its discretion,
allocates the entire amount to your investment dealer.

For Growth Funds, Growth and Income Funds and Asset Allocation Funds only:

CLASS A CLASS M

Amount of Amount of
Sales charge sales charge Sales charge sales charge
as a reallowed to as a reallowed to
percentage dealers as a percentage dealers as a
Amount of transaction of offering percentage of of offering percentage of
at offering price ($) price offering price price offering price
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Under 50,000 5.75% 5.00% 3.50% 3.00%
50,000 but under 100,000 4.50 3.75 2.50 2.00
100,000 but under 250,000 3.50 2.75 1.50 1.00
250,000 but under 500,000 2.50 2.00 1.00 1.00
500,000 but under 1,000,000 2.00 1.75 NONE NONE
1,000,000 and above NONE NONE NONE NONE
- --------------------------------------------------------------------------------------

For Income Funds only (except for Putnam Intermediate U.S. Government
Income Fund and Putnam Preferred Income Fund):

CLASS A CLASS M

Amount of Amount of
Sales charge sales charge Sales charge sales charge
as a reallowed to as a reallowed to
percentage dealers as a percentage dealers as a
Amount of transaction of offering percentage of of offering percentage of
at offering price ($) price offering price price offering price
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Under 50,000 4.75% 4.25% 3.25% 3.00%
50,000 but under 100,000 4.50 4.00 2.25 2.00
100,000 but under 250,000 3.50 3.00 1.50 1.25
250,000 but under 500,000 2.50 2.25 1.00 1.00
500,000 but under 1,000,000 2.00 1.75 NONE NONE
1,000,000 and above NONE NONE NONE NONE
- --------------------------------------------------------------------------------------

For Putnam Intermediate U.S. Government Income Fund and Putnam Preferred
Income Fund only:

CLASS A CLASS M

Amount of Amount of
Sales charge sales charge Sales charge sales charge
as a reallowed to as a reallowed to
percentage dealers as a percentage dealers as a
Amount of transaction of offering percentage of of offering percentage of
at offering price ($) price offering price price offering price
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Under 100,000 3.25% 3.00% 2.00% 1.80%
100,000 but under 250,000 2.50 2.25 1.50 1.30
250,000 but under 500,000 2.00 1.75 1.00 1.00
500,000 but under 1,000,000 1.50 1.25 NONE NONE
1,000,000 and above NONE NONE NONE NONE
- --------------------------------------------------------------------------------------
For Tax Free Funds only:

CLASS A CLASS M

Amount of Amount of
Sales charge sales charge Sales charge sales charge
as a reallowed to as a reallowed to
percentage dealers as a percentage dealers as a
Amount of transaction of offering percentage of of offering percentage of
at offering price ($) price offering price price offering price
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Under 25,000 4.75% 4.50% 3.25% 3.00%
25,000 but under 50,000 4.50 4.25 3.25 3.00
50,000 but under 100,000 4.50 4.25 2.25 2.00
100,000 but under 250,000 3.75 3.50 1.50 1.25
250,000 but under 500,000 3.00 2.75 1.00 1.00
500,000 but under 1,000,000 2.00 1.85 NONE NONE
1,000,000 and above NONE NONE NONE NONE
- --------------------------------------------------------------------------------------

</TABLE>

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.

Qualified benefit plans; Individual account plans. The terms "class A
qualified benefit plan" and "class M qualified benefit plan" mean any
employer-sponsored plan or arrangement, whether or not tax-qualified and
whether or not Putnam Fiduciary Trust Company or its affiliates provide
recordkeeping or other services, that initially invest at least $1 million
or $500,000, respectively, in class A shares or class M shares of the fund
and other Putnam funds.

The fund may sell class A shares at net asset value to class A qualified
benefit plans and may sell class M shares at net asset value to class M
qualified benefit plans.

The table of sales charges in the prospectus applies to sales to
employer-sponsored retirement plans that choose not to be treated as class
A qualified benefit plans, except that the fund may sell class A shares at
net asset value to employee benefit plans, including plans with respect to
which separate accounts are maintained for each participant, of employers
or of affiliated (as defined in Section 2(a)(3)(C) of the Investment
Company Act of 1940) employers which have at least $1 million in assets 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.

Additional information about qualified benefit plans is available from
investment dealers or from Putnam Mutual Funds.

Contingent Deferred Sales Charges; Commissions

Class A shares. Except as described below, a CDSC of 0.50% (0.75% in the
case of plans with less than $5 million in Putnam funds and other
investments managed by Putnam Management or its affiliates) of the total
amount redeemed is imposed on redemptions of shares purchased by class A
qualified benefit plans if, within two years of a plan's initial purchase
of class A shares, it redeems 90% or more of its cumulative purchases.
Thereafter, such plan is no longer liable for any CDSC. Class A qualified
benefit plans whose dealer of record has, with Putnam Mutual Funds'
approval, waived its commission or agreed to refund its commission to
Putnam Mutual Funds in the event a CDSC would otherwise be applicable, are
not subject to any CDSC.

Similarly, class A shares purchased at net asset value by any investor
other than a class A qualified benefit plan, 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, unless the dealer
of record waived its commission with Putnam Mutual Funds' approval. The
class A CDSC is imposed on the lower of the cost and the current net asset
value of the shares redeemed.

Except as described below for sales to class A qualified benefit plans,
Putnam Mutual Funds pays investment dealers of record commissions on sales
of class A shares of $1 million or more, 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. 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 class A qualified benefit plan, Putnam
Mutual Funds pays commissions to the dealer of record at the time of the
sale on net monthly purchases up to the following rates: 1.00% of the
first $1 million, 0.75% of the next $1 million and 0.50% thereafter.

Different CDSC and commission rates may apply to shares purchased prior to
April 15, 1997 and to shares purchased by investment-only plans prior to
August 1, 1999.

All shares. Investors who set up an Automatic Cash Withdrawal Plan ("ACWP")
for a 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.

No CDSC is imposed on the redemption of shares of any class subject to a
CDSC to the extent that the shares redeemed (i) are no longer subject to
the holding period therefor, (ii) resulted from reinvestment of
distributions, 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,
shares not subject to a CDSC are redeemed first.

The fund will waive any CDSC on redemptions, in the case of individual,
joint or Uniform Transfers to Minors Act accounts, in the event of death or
post-purchase disability of a shareholder, for the purpose of paying
benefits pursuant to tax-qualified retirement plans ("Benefit Payments"),
or, in the case of living trust accounts, in the event of the death or
post-purchase disability of the settlor of the trust. Benefit 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. These waivers may be changed at any
time. Additional waivers may apply to IRA accounts opened prior to
February 1, 1994.

Additional Information About Class B Shares

Except as noted below, Putnam Mutual Funds will pay a 4% commission on
sales of class B shares of a fund only to those financial intermediaries
who have entered into service agreements with Putnam Mutual Funds. For
tax-exempt funds, this commission includes a 0.20% pre-paid service fee
(except for Putnam Municipal Income Fund, which has a 0.25% pre-paid
service fee). For Putnam Intermediate U.S. Government Income Fund, Putnam
Mutual Funds will pay a 2.75% commission to financial intermediaries
selling class B shares of the fund. For money market funds, class B shares
may only be purchased as part of an exchange to class B shares of another
Putnam fund or from class B shares of another Putnam fund. Class B share
purchases for money market funds are not subject to a separate CDSC, but a
if a shareholder exchanges class B shares from a non-money market fund to a
money market fund and then redeems the class B shares of the money market
fund, that redemption will be subject to the CDSC applicable to the class B
shares of the non-money market fund. Therefore no up-front commission is
paid on sales of class B shares for money market funds. Putnam Mutual
Funds will retain any contingent deferred sales charges imposed on
redemptions of class B shares to compensate it for the cost of paying the
up-front commissions paid to financial intermediaries for class B share
sales.

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.

Putnam Mutual Funds compensates qualifying dealers (including, for this
purpose, certain financial institutions) for sales of shares and the
maintenance of shareholder accounts.

Putnam Mutual Funds may suspend or modify its payments to dealers. The
payments are also subject to the continuation of the relevant distribution
plan, the terms of the service agreements between the dealers and Putnam
Mutual Funds and any applicable limits imposed by the National Association
of Securities Dealers, Inc.

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.

Except as otherwise agreed between Putnam Mutual Funds and a dealer, for
purposes of determining the amounts payable to dealers for shareholder
accounts for which such dealers are designated as the dealer of record,
"average net asset value" means the product of (i) the average daily share
balance in such account(s) and (ii) the average daily net asset value of
the relevant class of shares over the quarter.

Class A shares:

Putnam Mutual Funds makes quarterly payments to dealers at the annual rates
set forth below (as a percentage of the average net asset value of class A
shares for which such dealers are designated the dealer of record) except
that payments to dealers for shares held by class A qualified benefit plans
may be made at other rates, as described below. No payments are made
during the first year after purchase on shares purchased at net asset value
by shareholders that invest at least $1 million or that are class A
qualified benefit plans, unless the shareholder has made arrangements with
Putnam Mutual Funds and the dealer of record has waived the sales
commission.

Rate Fund
- ---- ------
<S> <C>
0.25% All funds currently making
payments under a class A
distribution plan, except for
those listed below

0.50% for shares purchased on Putnam Diversified Equity
or before 7/1/95; 0.25% for Trust
shares purchased after 7/1/95

0.20% Putnam Tax-Free High Yield
Fund Putnam Tax-Free Insured
Fund

0.20% for shares purchased on Putnam Balanced Retirement
or before 12/31/89; 0.25% for Fund Putnam Convertible
shares purchased after 12/31/89 Income-Growth Trust
The George Putnam Fund of
Boston
Putnam Global Growth Fund
Putnam Global Natural
Resources Fund
Putnam Health Sciences Trust
The Putnam Fund for Growth
and Income Putnam Investors
Fund
Putnam Vista Fund
Putnam Voyager Fund

0.20% for shares purchased on Putnam High Yield Trust
or before 3/31/90; 0.25% for Putnam U.S. Government Income
shares purchased after 3/31/90 Trust

0.20% for shares purchased on Putnam Income Fund
or before 3/31/91; 0.25% for
shares purchased after 3/31/91

0.20% for shares purchased on Putnam Municipal Income Fund
or before 5/7/92; 0.25% for
shares purchased after 5/7/92

0.15% for shares purchased on Putnam Michigan Tax Exempt
or before 3/9/92; 0.20% for Income Fund Putnam Minnesota
shares purchased after 3/9/92 Tax Exempt Income Fund
Putnam Ohio Tax Exempt Income
Fund

0.15% for shares purchased on Putnam Massachusetts Tax
or before 5/11/92; 0.20% for Exempt Income Fund
shares purchased after 5/11/92

0.15% for shares purchased on Putnam New York Tax Exempt
or before 7/13/92; 0.20% for Opportunities Fund
shares purchased after 7/13/92

0.15% for shares purchased on Putnam California Tax Exempt
or before 12/31/92; 0.20% for Income Fund
shares purchased after 12/31/92 Putnam New Jersey Tax Exempt
Income Fund
Putnam New York Tax Exempt
Income Fund
Putnam Tax Exempt Income Fund

0.15% for res purchased on Putnam Arizona Tax Exempt
or before 3/5/93; 0.20% for Income Fund
shares purchased after 3/5/93

0.15% for shares purchased on Putnam Florida Tax Exempt
or before 7/8/93; 0.20% for Income Fund
shares purchased after 7/8/93 Putnam Pennsylvania Tax
Exempt Income Fund

0.00% Putnam California Money
Market Fund
Putnam Money Market Fund
Putnam New York Money Market
Fund
Putnam Preferred Income Fund
Putnam Tax Exempt Money
Market Fund

Putnam Mutual Funds pays service fees to the dealer of record for plans at
the rate of up to 0.25% of average net assets, depending on the level of
service provided by Putnam Fiduciary Trust Company or its affiliates, by
the dealer of record, and by third parties. Service fees are paid
quarterly to the dealer of record for that quarter.

Class B shares:

Putnam Mutual Funds makes quarterly payments to dealers at the annual rates
set forth below (as a percentage of the average net asset value of class B
shares for which such dealers are designated the dealer of record).

Rate Fund
- ---- ------
<S> <C>
0.25% All funds currently making
payments under a
class B distribution plan,
except for those listed
below

0.25%, except that the first Putnam Municipal Income Fund
year's service fees of 0.25%
are prepaid at time of sale

0.25%, except that the first Putnam Arizona Tax Exempt
year's service fees of 0.20% Income Fund
are prepaid at time of sale Putnam California Tax Exempt
Income Fund
Putnam Florida Tax Exempt
Income Fund
Putnam Massachusetts Tax
Exempt Income Fund
Putnam Michigan Tax Exempt
Income Fund
Putnam Minnesota Tax Exempt
Income Fund
Putnam New Jersey Tax Exempt
Income Fund
Putnam New York Tax Exempt
Income Fund
Putnam New York Tax Exempt
Opportunities Fund
Putnam Ohio Tax Exempt Income
Fund
Putnam Pennsylvania Tax
Exempt Income Fund
Putnam Tax Exempt Income Fund

0.20% for shares purchased on Putnam Tax-Free Insured Fund
or before 3/31/90; 0.25% for Putnam Tax-Free High Yield
shares purchased after 3/31/90;
first year's service fees are prepaid
at time of sale

0.00% Putnam Money Market Fund

Class C shares:

Putnam Mutual Funds makes quarterly payments to dealers at the annual rates
set forth below (as a percentage of the average net asset value of class C
shares for which such dealers are designated the dealer of record).

Rate Fund
- ---- ------
<S> <C>
1.00% All funds currently making
payments under a class C
distribution plan, except
the fund listed below

0.50% Putnam Money Market Fund

Class M shares:

Putnam Mutual Funds makes quarterly payments to dealers at the annual rates
set forth below (as a percentage of the average net asset value of class M
shares for which such dealers are designated the dealer of record).

Rate Fund
- ---- ------
<S> <C>
0.65% All growth and growth and
income funds currently
making payments under a
class M distribution plan

0.45% Putnam Diversified Income
Trust

0.40% All income and money market
funds currently making payments
under a class M distribution
plan (except for Putnam
Diversified Income Trust,
Putnam Preferred Income Fund
and Putnam Money Market Fund)

0.25% Putnam Preferred Income Fund

0.15% Putnam Money Market Fund

</TABLE>

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 do I sell fund 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.

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

Requests to redeem shares having a net asset value of $100,000 or more , or
to transfer shares or make redemptions proceeds payable to anyone other
than the registered account owners, must be signed by all registered owners
or their legal representatives and must be guaranteed by a bank,
broker/dealer, municipal 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. In certain situations, for example, if you want your
redemption proceeds sent to an address other than your address as it
appears on Putnam's records, you may also need to 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 more information on Putnam's signature guarantee and documentation
requirements.

SUSPENSION OF REDEMPTIONS

The fund may not suspend shareholders' right of redemption, or postpone
payment for more than seven days, unless the 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 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. The amount of expenses used in determining the
fund's yield includes, in addition to expenses actually accrued by the
fund, an estimate of the amount of expenses that the fund would have
incurred if brokerage commissions had not been used to reduce such
expenses.

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
five fiscal years (or for the life of the fund, if shorter) is set forth in
the footnotes to 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 for periods including 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 , 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 1-year, 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 1-year, 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 for the utilities
industry.

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 Aggregate Bond Index is an index composed of securities
from The Lehman Brothers Government/Corporate Bond Index, The Lehman
Brothers Mortgage-Backed Securities Index and The Lehman Brothers
Asset-Backed Securities Index and is frequently used as a broad market
measure for fixed-income securities.

The Lehman Brothers Asset-Backed Securities Index is an index composed of
credit card, auto, and home equity loans. Included in the index are
pass-through, bullet (noncallable), and controlled amortization structured
debt securities; no subordinated debt is included. All securities have an
average life of at least one year.

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 Bond Index is an index of publicly issued
U.S. Treasury obligations and debt obligations of U.S. government agencies
(including mortgage-backed securities) frequently used as a general gauge
of the market for fixed-income, government 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 GNMA Index is an index of GNMA bonds frequently used as
a general gauge of the market for GNMA securities.

The Lehman Brothers Intermediate Government Bond Index is an index of
publicly issued U.S. Treasury obligations and debt obligations of U.S.
government agencies (excluding mortgage-backed securities) with maturities
of up to ten years frequently used as a general gauge of the market for
intermediate-term, fixed-income, government 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 is an index that
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 long-term,
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 $50 million.

The Lipper Money Market Average is an arithmetic average of the total
return of all money market mutual funds tracked by Lipper, Inc.

The Lipper Natural Resources Average is an arithmetic average of the total
return of all mutual funds tracked by Lipper, Inc. that invest more than
65% of their equity holdings in the natural resources industries.

The Lipper Tax Exempt Money Market Average is an arithmetic average of the
total return of all tax exempt money market mutual funds tracked by Lipper,
Inc.

The Merrill Lynch All-Convertible Index is an index of convertible
securities that is commonly used as a general measure of performance for
the convertible securities market.

The Merrill Lynch 91-Day Treasury Bill Index is an index that measures the
performance of U.S. Treasury bills currently available in the marketplace.

The Merrill Lynch Perpetual Preferred Index is an index of perpetual
preferred securities that is commonly used as a general measure of
performance for the preferred-stock market.

The Morgan Stanley Capital International Emerging Markets Index is an index
of equity securities issued by companies located in emerging markets with
all values expressed in U.S. dollars.

The Morgan Stanley Capital International Emerging Markets Free Index is an
index of equity securities issued by companies located in emerging
markets, available to non-domestic investors , with all values expressed in
U.S. dollars.

The Morgan Stanley Capital International EAFE Index is an index of equity
securities issued by companies located in Europe, Australasia and the Far
East, with all values expressed in U.S. dollars.

The Morgan Stanley Capital International Europe Index is an index of
equity securities issued by companies located in one of the 15 European
countries, with all values expressed in U.S. dollars.

The Morgan Stanley Capital International Pacific Index is an index of
equity securities issued by companies located in one of five Asian
countries and listed on the exchanges of Australia, New Zealand, Japan,
Hong Kong, Singapore/Malaysia, with all values expressed in U.S. dollars.

The Morgan Stanley Capital International World Index is an index of global
equity securities with all values expressed in U.S. dollars.

The Morgan Stanley Capital International World Free Index is an index of
global equity securities, available to non-domestic investors, with all
values 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 Russell 1000 Index is an index composed of the 1,000 largest companies
in the Russell 3000 Index, representing approximately 89% of the Russell
3000 total market capitalization.

The Russell 1000 Growth Index is an index composed of securities with
greater-than-average growth orientation within the Russell 1000 Index.
Companies in this index tend to exhibit higher price-to-book and
price-earnings ratios, lower dividend yields and higher forecasted growth
values than other companies in the Russell 1000 Index.

The Russell 2000 Index is an index composed of the 2,000 smallest companies
in the Russell 3000 Index, representing approximately 11% of the Russell
3000 total market capitalization.

The Russell 2000 Growth Index is an index composed of securities with
greater-than-average growth orientation within the Russell 2000 Index.
Companies in this index tend to exhibit higher price-to-book and
price-earnings ratios, lower dividend yields and higher forecasted growth
values than other companies in the Russell 2000 Index.

The Russell 3000 Index is an index composed of the 3,000 largest U.S.
companies ranked by total market capitalization, representing approximately
98% of the U.S. investable equity market.

The Russell Midcap Index is an index composed of the 800 smallest companies
in the Russell 1000 Index, representing approximately 26% of the Russell
1000 total market capitalization.

The Russell Midcap Growth Index is an index composed of securities with
greater-than-average growth orientation within the Russell Midcap Index.
Each security's growth orientation is determined by a composite score of
the security's price-to-book ratio and forecasted growth rate. Growth
stocks tend to have higher price-to-book ratios and forecasted growth rates
than value stocks.

The Salomon Brothers Extended Market Index is an index of global equity
securities of smaller companies with all values expressed in U.S. dollars.

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 18 government bond markets of Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Italy, Japan,
Netherlands, Ireland, Spain, Sweden, Switzerland, United Kingdom , United
States and Portugal. Country eligibility is determined by market
capitalization and investability criteria.

The Salomon Brothers Non-U.S. World Government Bond Index 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.

Standard & Poor's/Barra Value Index is an index constructed by ranking the
securities in the Standard & Poor's 500 Composite Stock Price Index by
price-to-book ratio and including the securities with the lowest
price-to-book ratios that represent approximately half of the market
capitalization of the Standard & Poor's 500 Composite Stock Price Index.

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.

SECURITIES RATINGS

The ratings of securities in which the fund may invest will be measured at
the time of purchase and, to the extent a security is assigned a different
rating by one or more of the various rating agencies, Putnam Management
will use the highest rating assigned by any agency. Putnam Management
will not necessarily sell an investment if its rating is reduced. The
following rating services describe rated securities as follows:

Moody's Investors Service, Inc.

Bonds

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

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

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

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

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

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

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

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

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

Notes (for Money Market funds only)

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

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

Commercial paper (for Money Market funds only)

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

- -- Leading market positions in well established industries.

- -- High rates of return on funds employed.

- -- Conservative capitalization structure with moderate reliance on debt and
ample asset protection.

- -- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.

- -- Well established access to a range of financial markets and assured sources
of alternate liquidity.

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

Standard & Poor's

Bonds

AAA -- An obligation rated AAA has the highest rating assigned by Standard
& Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.

AA -- An obligation rated AA differs from the highest-rated obligations
only in small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.

A -- An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher-rated categories. However, the obligor's capacity to
meet its financial commitment on the obligation is still strong.

BBB -- An obligation rated BBB exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.

Obligations rated BB, B, CCC, CC and C are regarded as having significant
speculative characteristics. BB indicates the lowest degree of speculation
and C the highest. While such obligations will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major exposures to adverse conditions.

BB -- An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.

B -- An obligation rated B is more vulnerable to nonpayment than
obligations rated BB, but the obligor currently has the capacity to meet
its financial commitment on the obligations. Adverse business, financial,
or economic conditions will likely impair the obligor's capacity or
willingness to meet its financial commitment on the obligation.

CCC -- An obligation rated CCC is currently vulnerable to nonpayment, and
is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor
is not likely to have the capacity to meet its financial commitment on the
obligation.

CC -- An obligation rated CC is currently highly vulnerable to nonpayment.

C -- The C rating may be used to cover a situation where a bankruptcy
petition has been filed, or similar action has been taken, but payments on
this obligation are being continued.

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

Notes (for Money Market funds only)

SP-1 -- Strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics are given a plus
(+) designation.

SP-2 -- Satisfactory capacity to pay principal and interest.

SP-3 -- Speculative capacity to pay principal and interest.

Commercial paper (for Money Market funds only)

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

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

A-3 -- Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.

Duff & Phelps Corporation

Long-Term Debt

AAA -- Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA+, AA, AA- -- High credit quality. Protection factors are strong. Risk
is modest but may vary slightly from time to time because of economic
conditions.

A+, A, A- -- Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic stress.

BBB+, BBB, BBB- -- Below-average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.

BB+, BB, BB- -- Below investment grade but deemed likely to meet
obligations when due. Present or prospective financial protection factors
fluctuate according to industry conditions or company fortunes. Overall
quality may move up or down frequently within this category.

B+, B, B- -- Below investment grade and possessing risk that obligations
will not be met when due. Financial protection factors will fluctuate
widely according to economic cycles, industry conditions and/or company
fortunes. Potential exists for frequent changes in the rating within this
category or into a higher or lower rating grade.

CCC -- Well below investment-grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred dividends.
Protection factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments.

DD -- Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or interest payments.

Fitch Investors Service, Inc.

AAA -- Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably
foreseeable events.

AA -- Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA.

A -- Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered to
be strong, but may be more vulnerable
to adverse changes in economic conditions and circumstances than bonds with
higher ratings.

BBB -- Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for
bonds with higher ratings.

BB -- Bonds considered to be speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified
which could assist the obligor in satisfying its debt service requirements.

B -- Bonds are considered highly speculative. Bonds in this class are
lightly protected as to the obligor's ability to pay interest over the life
of the issue and repay principal when due.

CCC -- Bonds have certain characteristics which, with passing of time,
could lead to the possibility of default on either principal or interest
payments.

CC -- Bonds are minimally protected. Default in payment of
interest and/or principal seems probable.

C -- Bonds are in actual or imminent default in payment of interest or
principal.

DDD -- Bonds are in default and in arrears in interest and/or principal
payments. Such bonds are extremely speculative and should be valued only on
the basis of their value in liquidation or reorganization of the obligor.

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, the fund's
Company" custodian.

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

PUTNAM GROWTH AND INCOME FUND II

FORM N-1A
PART C

OTHER INFORMATION

Item 23. Exhibits:

1. Agreement and Declaration of Trust dated October 5, 1994 -- Incorporated
by reference to the Registrant's Initial Registration Statement.

2. By-Laws -- Incorporated by reference to the Registrant's Initial
Registration Statement.

3a. Portions of Agreement and Declaration of Trust Relating to
Shareholders' Rights -- Incorporated by reference to the Registrant's
Initial Registration Statement.

3b. Portions of By-Laws Relating to Shareholders' Rights -- Incorporated by
reference to the Registrant's Initial Registration Statement.

4. Management Contract dated October 7, 1994 -- Incorporated by reference
to the Registrant's Initial Registration Statement.

5a. Distributor's Contract dated October 7, 1994 -- Incorporated by
reference to the Registrant's Initial Registration Statement.

5b. Form of Specimen Dealer Sales Contract -- Incorporated by reference to
Pre-Effective Amendment No. 1 to the Registrant's Registration Statement.

5c. Form of Specimen Financial Institution Sales Contract -- Incorporated
by reference to Pre-Effective Amendment No. 1 to the Registrant's
Registration Statement.

6. Trustee Retirement Plan dated October 4, 1996 -- Incorporated by
reference to Post-Effective Amendment No. 3 to the Registrant's
Registration Statement.

7. Custodian Agreement with Putnam Fiduciary Trust Company dated May 3,
1991, as amended July 13, 1992 -- Incorporated by reference to
Pre-Effective Amendment No. 1 to the Registrant's Registration Statement.

8. Investor Servicing Agreement dated June 3, 1991 with Putnam Fiduciary
Trust Company -- Incorporated by reference to Pre-Effective Amendment No. 1
to the Registrant's Registration Statement.

9. Opinion of Ropes & Gray, including consent -- Incorporated by reference
to Pre-Effective Amendment No. 1 to the Registrant's Registration
Statement.

10. Not applicable.

11. Not applicable.

12. Investment Letter from Putnam Investments, Inc. to the Registrant --
Incorporated by reference to Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement.

13a. Class A Distribution Plan and Agreement dated October 7, 1994 --
Incorporated by reference to the Registrant's Initial Registration
Statement.

13b. Class B Distribution Plan and Agreement dated October 7, 1994 --
Incorporated by reference to the Registrant's Initial Registration
Statement.

13c. Class C Distribution Plan and Agreement dated July 16, 1999 - Exhibit 1.

13d. Class M Distribution Plan and Agreement dated October 7, 1994 --
Incorporated by reference to the Registrant's Initial Registration
Statement.

13e. Form of Specimen Dealer Service Agreement -- Incorporated by reference
to Post-Effective Amendment No. 3 to the Registrant's Registration
Statement.

13f. Form of Specimen Financial Institution Service Agreement --
Incorporated by reference to Post-Effective Amendment No. 3 to the
Registrant's Registration Statement.

14. Rule 18f-3(d) Plan dated November 1, 1999 - Exhibit 2.

15a. Putnam Investments Code of Ethics-Exhibit 3.

15b. The Putnam Funds of Code of Ethics-Exhibit 4.

Item 24. Persons Controlled by or under Common Control with Registrant

None.

Item 25 . Indemnification

The information required by this item is incorporated herein by reference
to the Registrant's Initial Registration Statement on Form N-1A under the
Investment Company Act of 1940 (File No. 811-7223).

Item 26 and 27.

Item 26. 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
- ---- -----------------------------------------
<S> <C>
Pankaj Agrrawal Prior to April 1998, Quantitative Analyst, Vestek
Vice President Systems, 388 Market St., Suite 700, San Francisco, CA
94111

Lauren Allansmith Prior to August 1999, Analyst, Loomis Sayles,
Senior Vice President One Financial Center, Boston, MA 02111

Blake Anderson Trustee, Salem Female Charitable Society,
Managing Director Salem MA 01970

Paul A. Aston Prior to June, 1999, Senior Quantitative
Vice President Strategist, Santander Global Advisors, 28 State
Street, Boston, MA 02109

Jane N. Barlow Prior to January 2000, Office Management,
Assistant Vice President Distinction Resourcing Limited, 2/4 Great Eastern
Street, London, EC2A 3NT; Prior to January 1999,
Office Manager, D.E. Shaw Securities International,
Finsbury Dials, 20 Finsbury Street, London, EC3M

Robert R. Beck Director, Charles Bridge Publishing, 85 Main St.,
Senior Vice President Watertown, MA 02172; Board of Overseers, Beth Israel
Deaconess Medical Center, 330 Brookline Ave., Boston,
MA 02215

Kirsten A. Bjerklie Prior to June 1998, Assistant Vice President,
Assistant Vice President Scudder, Stevens & Clark, Two International Place,
Boston, MA 02110

Richard L. Block Prior to June 1998, Principal, Head International
Senior Vice President Equity Trader, Morgan Stanley Asset Management, 1221
Avenue of the Americas, New York, NY 10036

Rob A. Bloemker Prior to September 1999, Managing Director,
Senior Vice President Lehman Brothers, 555 California St., 30th floor,
San Francisco, CA 94104

Claudio Brocado Prior to August 1999, independent consultant by
Vice President Stires, O'Donnell & Co. 12 East 44th St., New York,
NY 10017; Prior to January 1999, independent
consultant by Coast Partners, 601 California St.,
San Francisco, CA 94108; Prior to November 1997, Head
of Latin America Business Development, Dresdner RCM
Global Investors, Four Embarcadero Center,
San Francisco, CA 94111

Anna Bulkovshteyn Prior to July 1999, Quantitative Analyst, Sun Life
Assistant Vice President Investment Management, 200 King Street West, Toronto,
Ontario M5H 3T4 Canada

David N. Burnham Prior to July 1998, Director - Finance, Fidelity
Vice President Investments, 82 Devonshire Street, Boston, MA 02109

Richard P. Cervone Prior to August 1998, Equity Analyst, Loomis,
Vice President Sayles & Co., One Financial Center, Boston, MA,
02216.

Christopher Ceruolo Prior to July 1998, Associate, Ropes & Gray,
Assistant Vice President One International Place, Boston, MA 02110

Mark Chameih Prior to May 1999, Vice President, Chase Manhattan,
Vice President 125 London Wall, London, UK

Bihua Chen Prior to July 1998, Research Associate, ProNeuron,
Assistant Vice President Inc., 1531 E. Jefferson St., Rockville, MD 20847

C. Beth Cotner Director, The Lyric Stage Theater, 140 Clarendon St.,
Senior Vice President Boston, MA 02116

Stephen P. Cotto Prior to March 1998, Facilities Supervisor,
Assistant Vice President Unicco Service Co., 4 Copley Place, Boston, MA 02116

Lindsey L. Curley Prior to June 1999, Portfolio Analyst, Standish,
Assistant Vice President Ayer & Wood, Inc., One Financial Center, Boston, MA
02110. Prior to March, 1998,. Fixed-Income Research
Assistant, Invesco Management & Research, Inc., 101
Federal St., Boston, MA 02110

Joseph F. Cushing Prior to June 1998, Investment Analyst - Fixed
Assistant Vice President Income, Metropolitan Life Insurance Company, 334
Madison Avenue, Convent Station, NJ 07961

John R.S. Cutler Member, Burst Media, L.L.C., 10 New England
Vice President Executive Park, Burlington, MA 01803

Kenneth Daly President, Andover River Rd. TMA, River Road
Managing Director Transportation Management Association, 7 Shattuck
Rd., Andover, MA 01810

Donna M. Daylor Prior to April 1998, Director of Training,
Vice President UniCare Life & Health Ins. Co., 1350 Main St.,
Springfield, MA

John C. Delano Prior to July 1998, Senior Foreign Exchange
Assistant Vice President Trader, Nationsbank, 233 So. Wacker Drive, Chicago,
IL 60606

Ralph C. Derbyshire Board Member, MSPCC, 399 Boylston St.,
Senior Vice President Boston, MA; Board Member, Winchester After School
Program, Skillings Rd., Winchester, MA

Stephen P. Dexter Prior to June 1999, Senior Vice President and
Senior Vice President Senior Portfolio Manger, Scudder Kemper, Inc. One
International Place, Boston, MA

Michael G. Dolan Chairman-Finance Council, St. Mary's Parish,
Assistant Vice President 44 Myrtle St., Melrose, MA 02176; Member, School
Advisory Board, St. Mary's School, 44 Myrtle St.,
Melrose, MA 02176

Edward Driscoll Prior to September 1999, Equity Trader, Fidelity
Vice President Research and Management, 82 Devonshire St., Boston,
MA 02109

Douglas Dunn Prior to November 1999, Director of Research,
Vice President Brandywine Asset Management, 381 Brinton Lake Road,
Thornton, PA 19317; Prior to May 1998, Quantitative
Analyst, Westpeak Investment Advisors, 1011 Walnut
St., Suite 400, Boulder, CO 80303

Emily Durbin Board of Directors, Family Service, Inc.,
Vice President Lawrence, MA 01840

Karnig H. Durgarian Board Member, EBRI, Suite 600, 2121 K St.,
Managing Director N.W., Washington, DC 20037-1896. Trustee, American
Assembly, 122 C. St., N.W., Suite 350, Washington, DC
20001

Christine Durkee Prior to June 1998, Project Manager, Foundation
Assistant Vice President Technologies, Inc., 78 4th Ave., Waltham, MA 02451

Nathan Eigerman Trustee, Flower Hill Trust, 298 Marlborough St.,
Senior Vice President #4, Boston, MA 02116

Tony H. Elavia Prior to September 1999, Executive Vice President,
Senior Vice President Voyageur Asset Management, 90 S. 7th Street, Minneapolis,
MN 55402

Lisa V. Emerick Prior to September 1998, Asian Sales Trader,
Vice President BWZ Securities Asia, Inc., Citibank Tower, 3 Garden Road,
Hong Kong

Irene M. Esteves Board of Director Member, American Management
Managing Director Association Finance council, 1601 Broadway, New York, NY;
Board of Director Member, First Night Boston, 20 Park
Plaza, Suite 927, Boston, MA; Board of Director Member,
SC Johnson Commercialmarkets, 8310 16th St., Stutevant,
WI 53177; Board of Director Member, Massachusetts
Taxpayers Foundation, 24 Province St., Boston, MA; Board
of Director Member, Mrs. Bairds Bakeries, 515 Jones St.,
Suite 200, Fort Worth, Texas 76102

Ian Ferguson Trustee, Park School, 171 Goddard Avenue, Brookline,
Senior Managing Director MA 02146

John Ferry Prior to September 1998, Vice President,
Vice President Scudder Kemper Investments, 101 California St.,
San Francisco, CA 94111.

Peter M. Fleisher Prior to July 1999, Senior Vice President, Fleet
Senior Vice President National Bank, 75 State Street, Boston, MA 02109

Henrietta Fraser Prior to October, 1998, Manager, Fleming Investment
Vice President Management, 25 Copthall Ave., London EC2R 7DR

Matthew R. Gage Prior to December, 1999, Audit Manager, Ernst
Assistant Vice President & Young LLP, 200 Clarendon St., Boston, MA 02116

Stephen C. Gibbs Prior to June 1998, Senior Financial Analyst,
Vice President Fidelity Investments, 82 Devonshire St., Boston,
MA 02109

Ken S. Gordon Prior to July, 1998, Vice President, Union Bank
Vice President of Switzerland, 2-2-2 Otemachi, Chiyoda-Ku, Tokyo,
Japan

Andrew Graham Prior to October 1999, Fund Manager, Scottish
Senior Vice President Widows Investment Management, Port Hamilton, 67
Morrison St., Edinburgh Scotland

J. Peter Grant Trustee, The Dover Church, Dover, MA 02030
Senior Vice President

Patrice Graviere Prior to March 1998, Regional Director for Latin
Senior Vice President America, MFS International, LTD, Buenos Aires, Brazil

Paul E. Haagensen Director, Haagensen Research Foundation, 630
Senior Vice President West 168th St., New York, NY 10032

Andrew J. Hachey Prior to July 1998. Associate, Skadden, Arps,
Assistant Vice President Slate, Meagher & Flom, LLP, One Beacon Street, Boston,
MA 02108

David E. Hamlin Prior to August 1998, Principal, The Vanguard Group,
Senior Vice President 100 Vanguard Blvd., Valley Forge, PA 19355

Deborah R. Healey Corporator, New England Baptist Hospital, 125
Senior Vice President Parker Hill Ave., Boston, MA 02120; Director, NEB
Enterprises, 125 Parket Hill Ave., Boston, MA 02120

Kim Heller Prior to April 1998, Senior Human Resources
Assistant Vice President Specialist, Fidelity Investments, 82 Devonshire St.,
Boston, MA 02109

Jonathan S. Horwitz Prior to August 1998, Vice President - Corporate
Senior Vice President Planning, Keystone Group, 200 Berkely St., Boston,
MA 02116

Ronald Hua Prior to August 1999, Quantitative Analyst,
Vice President Fidelity Investments, 82 Devonshire St., Boston,
MA 02109

Amrit Kanwal Prior to August 1999, Vice President, Corporate
Managing Director Development and Strategy, Sequa Corporation, 200 Park
Avenue, New York, NY 10166

Jeffrey Kaufman Prior to July 1998, Vice President and Portfolio
Senior Vice President Manager, MFS Investment Management, 500 Boylston St.,
Boston, MA 02116

Ira C. Kalus-Bystricky Prior to March 1998, Consultant, Arthur D. Little,
Vice President 25 Acorn Park, Cambridge, MA 02114

Hiroshi Kato Prior to August 1998, Manager, Senior Analyst,
Vice President Daiwa Institute of Research, 15-6 Fuyuki, Koutou-ku,
Tokyo, 135-8460

Kevin J. Keleher Prior to August 1998, Support Manager, Digital
Assistant Vice President Equipment Co., 111 Powder Mill Rd., Maynard, MA 01754

Richard T. Kircher Prior to April 1998, Assistant Vice President and
Assistant Vice President Compliance Manager, T. Rowe Price Associates, Inc.,
100 E. Pratt Street, Baltimore, MD 21202

Deborah F. Kuenstner Director, Board of Pensions, Presbyterian Church,
Managing Director 1001 Market St., Philadelphia, PA

Lawrence J. Lasser Director, Marsh & McLennan Companies, Inc., 1221 Avenue
President, Director and Chief Executive of the Americas, New York, NY 10020; Board of Governors
and Executive Committee, Investment Company Institute,
1401 H. St., N.W. Suite 1200, Washington, DC 20005; Board
of Overseers, Museum of Fine Arts, 465 Huntington, Ave.,
Boston, MA 02115; Trustee, Beth Israel Deaconess Medical
Center, 330 Brookline Ave., Boston, MA; Member of the
Council on Foreign Relations, 58 East 68th St., New York,
NY 10021; Member of the Board of Directors of the United Way
of Massachusetts Bay, 245 Summer St., Suite 1401, Boston, MA
02110; Trustee of the Vineyard Open Land Foundation, RFD Box
319X, Vineyard Haven, MA 02568

Gordon R. Lawrence Prior to July 1999, summer associate, J.P. Morgan Investment
Assistant Vice President Management, 522 Fifth Ave., New York, NY 10009, Prior to
July, 1997, Associate Lehman Brothers, 3 World Financial
Center, New York, NY 10285

Maura W. Leddy Prior to October 1998, Bookkeeper, Davol/Taunton Printing,
Vice President 330 Winthrop Street Taunton, MA 02780.

Richard Leibovitch Prior to February 1999, Managing Director, J.P. Morgan,
Managing Director 60 Wall St., New York, NY 10260

Mark G. Lohr Prior to March 1998, Senior Vice President, Fidelity
Managing Director Investmetns, 82 Devonshire St., Boston, MA 02109

Noboru Machida Prior to October 1998, Senior Analyst, The Nikko
Vice President Research Center Ltd., Nihonbashi Kayabacho, Chuou-ku Tokyo,
Japan 103

Kevin Maloney Institutional Director, Financial Management Association,
Managing Director University of South Florida, College of Business
Administration, Suite 3331, Tampa, FL 33620

Sarah Marshall Prior to August 1999, Associate, McKinsey & Company,
Vice President Inc., 55 E. 52nd St., New York, NY 10010

Paul McHugh Prior to June, 1998, Principal, Robertson Stephens &
Vice President Company, One International Place, Boston, MA 02110

Nicholas J. Melhuish Prior to August 1999, Assistant Director of Schroder
Vice President Investment Management, 31 Gresham St., London,England
ECZV8AQ

Krishna Memani Prior to September 1998, Principal, Morgan Stanley & Co.,
Managing Director 1585 Broadway, New York, NY 10039

Peter V. Meyer Prior to July 1999, Conseco Capital Management,
Vice President 11825 N. Pennsylvania Ave., Carmel, IN 46032

Stacy M. Mills Prior to April 1999, Vice President, Manager-Financial
Vice President Accounting and Internal Reporting, State Street
Corporation, 225 Franklin Street, Boston, MA 02110

Reena Mithal Prior to July 1999, Vice President, Deutsche Bank
Vice President Securities, 31 W. 52nd Street., New York, NY 10019

Jeanne L. Mockard Trustee, The Bryn Mawr School, 109, W. Melrose
Senior Vice President Avenue, Baltimore, MA 21210

Dirk Morris Prior to October 1999, Vice President-Global Strategist,
Managing Director Bankers Trust, Chifley Tower, Sydney NSW 2000 Australia

Donald E. Mullin Corporate Representative and Board Member, Delta Dental
Senior Vice President Plan of Massachusetts, 10 Presidents Landing, P.O.
Box 94104, Medford, MA 02155

Jennifer P. Murphy Prior to September 1999, Managing Director, Morgan
Managing Director Stanley, 1585 Broadway, New York, NY 10036

Kenneth W. Murphy, Jr. Prior to May 1998, Senior Financial Analyst, Merck &
Assistant Vice President Co., Inc., One Merck Drive, Whitehouse Station, NJ 08889

Philip M. Murphy Prior to June 1999, Marketing and Client Relations
Assistant Vice President Association, GE Investments, 3003 Summer Street, Stamford,
CT 06904. Prior to March 1998, Analyst, McLagan Partners,
Inc., Four Stamford Plaza, Suite 400, 107 Elm Street,
Stamford, CT 06902

Toshio Nagashima Prior to July 1999, General Manager, Product Dept.,
Managing Director Investment Trust Preparation, Sumitomo Bank, 1-3-2-
Marunouchi, Chiyoda-ku, Tokyo 100-0005 Japan

Maria Julia Nisbet Prior to May 1999, Project Manager, Cisalpina
Assistant Vice President Gestioni, Via Boito, 10, Milan, Italy 20121

Nancy O'Brien Prior to September 1999, Manager Corporate Disbursements,
Assistant Vice President Fidelity Investments, 82 Devonshire St., Boston, MA 02129

Teresa O'Day Prior to April 1999, Operations Manager, Compaq Computer
Vice President Corp., 334 South Street, Shrewsbury, MA 01545

Stephen M. Oristaglio Prior to July 1998, Managing Director Global Head
Senior Managing Director of Fixed Income, Swiss Bank Corp/UBS Organization, 222
Broadway, New York, NY 10022

Carlos Pampliega Prior to March 1998, Regional Manager, Massachusetts
Vice President Financial Services, 500 Boylston St., Boston, MA 02116

Jeffrey F. Peters Prior to June 1999, Principal, McKinsey & Company,
Managing Director 75 Park Plaza, Boston, MA 02116

Joseph P. Petitti Prior to May 1998, Senior Treasury Analyst, Liberty
Vice President Mutual Insurance Co., 175 Berkely St., Boston, MA 02122

Randolph Petralia Prior to May 1998, First Vice President, Lehman
Senior Vice President Brothers, 3 World Financial Center, New York, NY 10285

Keith Plapinger Chairman and Trustee, Advent School, 17 Brimmer St.,
Vice President Boston, MA 02108

Lisa M. Platia Prior toDecember 1999, Vice President, Windham
Assistant Vice President Capital Management, 5 Revere St., Cambridge MA 02138

James A. Polk Prior to June 1998, Investment Officer, Massachusetts
Vice President Financial Services, 500 Boylston St., Boston, MA 02116

Charles E. Porter Trustee, Anatolia College, 130 Bowdoin St., Suite 1201,
Executive Vice President Boston, MA 02108; Governor, Handel & Hayden Society,
Horticulture Hall, 300 Massachusetts Ave., Boston, MA
02115

Quintin R.S. Price Prior to December 1998, Corporate Development Director,
Managing Director The Boots Company PLC, Group Headquarters, Nottingham
NG2 3AA England; Prior to June 1998, Managing Director
of Pan European Equities and Global Head of Research,
HSBC Investment Bank PLC, Thames Exchange, 10 Queen St
Place, London, EC4R 1BL

George Putnam Chairman and Director, Putnam Mutual Funds Corp.;
Chairman and Director 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; Trustee, Massachusetts General Hospital, Fruit
Street, Boston, Ma 02114; McLean Hospital 115 Mill St.,
Belmont, MA 02178; The Colonial Williamsburg Foundation,
Post Office Box 1776, Williamsburg, VA 23187; The Museum
of Fine Arts, 465 Huntington Avenue, Boston, MA 02115;
WGBH Foundation, 125 Western Avenue, Boston, MA 02134; The
Nature Conservancy, Post Office Square Building, 79 Milk
St., Suite 300, Boston, MA 02109; Trustee, The Jackson
Laboratory, 600 Main St., Bar Harbor, ME

Nadine McQueen-Reed Prior to March, 1999, Key Account Executive, Fidelity
Assistant Vice President Investments, 130 Tonbridge Road, Hildenborough, Kent,
England, TN11 9DZ

Thomas V. Reilly Trustee, Knox College, 2 East South St., Galesburg,
Managing Director IL 61401

Kevin J. Rogers Prior to September 1998, Managing Director-Portfolio
Senior Vice President Manager, Invesco, NY Organization, 1066 Avenue of the
Americas, New York, NY 10036

Jeff B. Sacknowitz Investment Associate, Independence Investment Associates,
Vice President 53 State St., Boston, MA 02109

Paul D. Scanlon Prior to October 1999, Senior Vice President, Olympus
Vice President Healthcare Group, 775 Trapelo Road, Waltham, MA 02452

Saied Simozar Prior to March 1998, Manager, Portfolio Analytics,
Senior Vice President DuPont Pension fund Investment, One Righter Parkway,
Suite 3200, Wilmington, DE 198903

Justin M. Scott Director, DSI Proprieties (Neja) Ltd., Epping Rd.,
Managing Director Reydon, Essex CM19 5RD

Denise D. Selden Prior to June 1998, Managing Director, Lehman Brothers,
Senior Vice President 260 Franklin St., Boston, MA 02110

Jean I. Sievert Prior to October 1998, Vice President, Salomon Smith
Senior Vice President Barney, Seven World Trade Center, New York, NY 10048

Gordon H. Silver Trustee, Wang Center for the Performing Arts, 270
Managing Director Tremont St., Boston, MA 02116

David M. Silk Member of Board of Directors, Jobs for Bay State
Senior Vice President Graduates, 451 Andover St., Suite 305, North Andover,
MA 01845

Steven Spiegel Director, Ultra Diamond and Gold Outlet, 29 East
Senior Managing Director Madison St., Suite 1800, Chicago, IL 60602; Director,
FACES New York University Medical Center, 550 First
Avenue, New York, NY 10016; Trustee, Babson College, One
College Drive, Wellesley, MA 02157

Raman Srivastava Prior to July 1999, Market Risk Analyst, Bank of
Assistant Vice President Nova Scotia, 20 King St., W., Toronto, ON

James St. John Prior to July 1998, Investment Analyst, University of
Assistant Vice President Rochester, Rochester, NY 14627

Toshifumi Sugimoto Prior to October 1998, Portfolio Manager, Deputy
Senior Vice President General Manager, Nikko Securities Investment Trust &
Management, Fixed Income Department, 4-3 Nihonbashi,
Hakozakicho, Chuou-ku, Tokyo, Japan, 103-0015

William J. Sullivan Prior to June 1999, Executive Director, SBC Warburg
Senior Vice President Dillion Read, 677 Washington Blvd, Stamford, CT, 06901

John C. Talanian Member of Board of Directors, the Japan Society of
Managing Director Boston, One Milk Street, Boston, MA 02109

Nicole J. Thorpe Prior to February 1999, President/Owner, Thorpe
Assistant Vice President Resources, P.O. Box 1895, Brockton, MA 02301

Robert J. Ullman Prior to September, 1998, Assistant Vice President,
Assistant Vice President State Street Bank, Two International Place, Boston, MA
02109

Vincent Vliebergh Prior to May 1998, Senior Consultant, Garnett Consulting,
Vice President 30 Monument Square, Concord, MA 01742

Christopher C. Watt Prior to July 1999, Finance Manager, Procter &
Vice President Gamble, 1 Procter & Gamble Plaza, Cincinnati, OH 45202

Eric Wetlaufer President and Member of Board of Directors, The Boston
Managing Director Security Analysts Society, Inc., 100 Boylston St., Suite
1050, Boston, MA 02110

Edward F. Whalen Member of the Board of Directors, Hockomock Area YMCA,
Senior Vice President 300 Elmwood St., North Attleboro, MA 02760

Kelly A. Woolbert Prior to November 1999, Investment Analyst, MetLife
Assistant Vice President Investment Services, 99 High Street, Boston, MA 02110

Edmund F. Wright Jr. Prior to July 1998, Controller, CBE Technologies,
Assistant Vice President Inc., 50 Redfield St., Boston, MA 02122

Richard P. Wyke Director, Salem YMCA, One Sewall St., Salem, MA 01970
Senior Vice President

</TABLE>

Item 27. Principal Underwriter

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

Putnam American Government Income Fund, Putnam Arizona Tax Exempt Income Fund,
Putnam Asia Pacific Growth Fund, Putnam Asset Allocation Funds, Putnam Balanced
Retirement Fund, Putnam California Tax Exempt Income Fund, Putnam California
Tax Exempt Money Market Fund, Putnam Capital Appreciation Fund, Putnam
Convertible Income-Growth Trust, Putnam Diversified Income Trust, Putnam Equity
Income Fund, Putnam Europe Growth Fund, Putnam Florida Tax Exempt Income Fund,
Putnam Funds Trust, The George Putnam Fund of Boston, Putnam Global Equity
Fund, Putnam Global Governmental Income Trust, Putnam Global Growth Fund,
Putnam Global Natural Resources Fund, The Putnam Fund for Growth and Income,
Putnam Growth and Income Fund II, Putnam Health Sciences Trust, Putnam High
Yield Trust, Putnam High Yield Advantage Fund, Putnam Income Fund, Putnam
Intermediate U.S. Government Income Fund, Putnam International Growth Fund,
Putnam Investment Funds, Putnam Investors Fund, Putnam Massachusetts Tax Exempt
Income Fund, Putnam Michigan Tax Exempt Income Fund, Putnam Minnesota Tax
Exempt Income Fund, Putnam Money Market Fund, Putnam Municipal Income Fund,
Putnam New Jersey Tax Exempt Income Fund, Putnam New Opportunities Fund,
Putnam New York Tax Exempt Income Fund, Putnam New York Tax Exempt Money Market
Fund, Putnam New York Tax Exempt Opportunities Fund, Putnam Ohio Tax Exempt
Income Fund, Putnam OTC & Emerging Growth Fund, Putnam Pennsylvania Tax Exempt
Income Fund, Putnam Preferred Income Fund, Putnam Strategic Income Fund, Putnam
Tax Exempt Income Fund, Putnam Tax Exempt Money Market Fund, Putnam Tax-Free
Income Trust, Putnam Tax Smart Funds Trust, Putnam U.S. Government Income
Trust, Putnam Utilities Growth and Income Fund, Putnam Variable Trust, Putnam
Vista Fund, Putnam Voyager Fund, Putnam Voyager Fund II.

(b) The directors and officers of the Registrant's principal underwriter are
listed below. None of the officers are officers of the Registrant except:

Name Position and Offices with Registrant

Richard Monaghan Vice President
George Putnam Chairman and President
Gordon Silver Vice President

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

Name Position and
Offices with Underwriter
- -----------------------------------------------------------------------------
Adduci,John V. Vice President
Alberts,Richard W. Asst. Vice President
Alden,Donald F. Vice President
Alexander,Michael R. Vice President
Alpaugh,Christopher S. Vice President
Altomare,Mario P. Vice President
Amisano,Paulette C. Vice President
Arends,Michael K. Senior Vice President
Armon,Lori E. Asst. Vice President
Asher,Steven E. Senior Vice President
Avery,Scott A. Senior Vice President
Aymond,Christian E. Senior Vice President
Aymond,Colin C. Vice President
Babcock III,Warren W. Senior Vice President
Baltimore,Mark H.W. Asst. Vice President
Barlow,Jane Asst. Vice President
Barnett,William E. Asst. Vice President
Barrett,Thomas Vice President
Battit,Suzanne J Vice President
Beatty,Steven M. Senior Vice President
Bent,John J. Senior Vice President
Beringer,Thomas C. Vice President
Boester,Eric C. Asst. Vice President
Boneparth,John F. Managing Director
Bouchard,Keith R. Senior Vice President
Boudreau,Stephen T. Asst. Vice President
Bradford Jr.,Linwood E. Senior Vice President
Bresnahan,Leslee R. Managing Director
Brockelman,James D. Senior Vice President
Brookman,Joel S. Vice President
Brown,Timothy K. Senior Vice President
Buckner,Gail D. Senior Vice President
Burnham,David N. Vice President
Burrill,Gregory J. Vice President
Buzzell,Paul F. Asst. Vice President
Cabana,Susan D. Vice President
Cartwright,Patricia A. Asst. Vice President
Casey,David M. Vice President
Castle Jr.,James R. Senior Vice President
Chamieh,Mark Vice President
Chapman,Frederick Vice President
Chapman,Thomas E. Vice President
Chase,Mary Claire Senior Vice President
Chrostowski,Louis F. Senior Vice President
Church,Daniel J. Vice President
Clark,Richard B. Senior Vice President
Clermont,Mary Vice President
Clinton,John C. Asst. Vice President
Cohen,Jeff M. Asst. Vice President
Collman,Kathleen M. Sr Managing Director
Commane,Karen L. Asst. Vice President
Coneeny,Mark L. Senior Vice President
Connelly,Donald A. Senior Vice President
Connolly,William T. Managing Director
Cooper,John S. Vice President
Corbett,Dennis Vice President
Corvinus,F. Nicholas Senior Vice President
Cote,Marie C. Asst. Vice President
Cotto,Stephen P Asst. Vice President
Cotton,Rick Vice President
Crane III,George H. Senior Vice President
Cristo,Chad H. Vice President
Critchell Jr.,D.Alan Asst. Vice President
Curran,Peter J. Senior Vice President
Dahill,Jessica E. Vice President
Daly,Kenneth L. Managing Director
Daylor,Donna M. Vice President
Days,Nancy M. Asst. Vice President
Deluse,Laura R. Asst. Vice President
deMont,Lisa M. Vice President
Diaz,Roger Vice President
Dirstine,Michael T. Vice President
DiStasio,Karen E. Vice President
Divney,Kevin M. Senior Vice President
Dolan,Michael G. Vice President
Donaldson,Scott M. Vice President
Dougherty,Thomas Vice President
Durbin,Emily J. Vice President
Durkee,Christine Asst. Vice President
Edlin,David B. Managing Director
Eidelberg,Kathleen E. Asst. Vice President
Elder,Michael D. Vice President
Emhof,Joseph R. Vice President
English,James M. Senior Vice President
Esposito,Vincent Managing Director
Favaloro,Beth A. Vice President
Feldman,Susan H. Senior Vice President
Fisher,C. Nancy Managing Director
Fishman,Mitchell B. Senior Vice President
Fiumara,Joseph C. Vice President
Flaherty,Patricia C. Senior Vice President
Fleisher,Kate Vice President
Fleming,Ellen E. Asst. Vice President
Foley,Timothy P. Vice President
Foran,Carey L. Vice President
Frost,Karen T. Senior Vice President
Gage,Matthew R. Asst. Vice President
Gaudette,Marjorie B. Vice President
Gibbs,Stephen C. Vice President
Gindel,Caroline E. Asst. Vice President
Goodfellow,Mark D. Vice President
Goodman,Robert Managing Director
Gould,Carol J. Asst. Vice President
Grace,Linda K. Vice President
Grant,Mitchell T. Managing Director
Graviere,Patrice Senior Vice President
Grey,Eric M. Vice President
Grossberg,Jill Asst. Vice President
Grove,Denise Vice President
Guerin,Donnalee Vice President
Hachey,Andrew J Asst. Vice President
Hadley,Christopher Asst. Vice President
Halloran,James E. Vice President
Halloran,Thomas W. Senior Vice President
Hansen,Christine M. Asst. Vice President
Harring,Linda Senior Vice President
Harrington,Shannon W. Vice President
Hartig,Robert Vice President
Hartigan,Craig W. Vice President
Hartley,Deborah M. Asst. Vice President
Hayes-Castro,Deanna R. Vice President
Hedstrom,Gayle A. Asst. Vice President
Heller,Kim G. Asst. Vice President
Holmes,Maureen A. Vice President
Hooley Jr.,Daniel F. Vice President
Horwitz,Jonathan S. Senior Vice President
Hotchkiss,Michael F. Senior Vice President
Howes,Douglas E. Asst. Vice President
Hoyt,Paula J. Asst. Vice President
Hurley,William J. Managing Director & CFO
Hutcherson,Eric A. Asst. Vice President
Hutchins,Robert B. Vice President
Iino,Yoshiro Vice President
Jacobsen,Dwight D. Managing Director
Kaminsky,Gregory C. Vice President
Kanwal,Amrit Managing Director
Kapinos,Peter J. Vice President
Keleher,Kevin J. Asst. Vice President
Kelley,Brian J. Vice President
Kelly,David Vice President
Kennedy,Alicia C. Asst. Vice President
Kinsman,Anne Senior Vice President
Kircher,Richard T. Asst. Vice President
Kirk,Deborah H. Senior Vice President
Koontz,Jill A. Senior Vice President
Kringdon,Joseph D. Senior Vice President
Landers,Bruce M. Vice President
Lane,Linda L. Asst. Vice President
LaPierre,Christopher W Asst. Vice President
Lathrop,James D. Senior Vice President
Lawlor,Stephanie T. Asst. Vice President
Leary,Joan M. Vice President
Ledbetter,Charles C. Vice President
Leddy,Maura W. Vice President
Leipsitz,Margaret Asst. Vice President
Lemire,Kevin Vice President
Levy,Eric S. Senior Vice President
Levy,Norman S. Vice President
Lewandowski Jr.,Edward V. Vice President
Lewandowski,Edward V. Senior Vice President
Lewis,Paul Asst. Vice President
Li,Mei Asst. Vice President
Lieberman,Samuel L. Senior Vice President
Lifsitz,David M. Vice President
Lilien,David R. Vice President
Link,Christopher H. Asst. Vice President
Linquata,Louis K. Asst. Vice President
Litant,Lisa M. Vice President
Lockwood,Maura A. Senior Vice President
Loew,Christopher R. Asst. Vice President
Lohmeier,Andrew Asst. Vice President
Lohr,Mark G. Managing Director
Lomba,Rufino R. Senior Vice President
Lord,Caroline F. Asst. Vice President
Lucey,Robert F. Director
Lucey,Thomas J. Director
Luskin,James M. Asst. Vice President
Lyons,Robert F. Asst. Vice President
MacDonald,Richard A. Senior Vice President
Maloof,Renee L. Asst. Vice President
Mancini,Dana Asst. Vice President
Mancini,Jane M. Managing Director
Manthorne,Heather M. Asst. Vice President
Maravel,Alexi A. Asst. Vice President
Martens,Erwin W. Managing Director
Maxwell,Scott M. Managing Director
McAvoy,Bridget Vice President
McCafferty,Karen A. Vice President
McCarthy,Anne B. Asst. Vice President
McConville,Paul D. Senior Vice President
McCracken,Brian Asst. Vice President
McCutcheon,Bruce A Senior Vice President
McDermott,Robert J. Vice President
McKenna,Mark J. Senior Vice President
McNamara,Laura Vice President
McNamee,Mary G. Vice President
Meagher,Dorothy B. Vice President
Mehta,Ashok Vice President
Metelmann,Claye A. Vice President
Michejda,Marek A. Vice President
Miller,Bart D. Senior Vice President
Miller,Gregory T. Vice President
Miller,Jeffrey M. Managing Director
Mills,Ronald K. Vice President
Mills,Stacy M. Vice President
Minsk,Judith Asst. Vice President
Monaghan,Richard A. Director
Monahan,Kimberly A. Vice President
Moody,Paul R. Vice President
Moret,Mitchell L. Senior Vice President
Morey,John P. Senior Vice President
Mosher,Barry L. Vice President
Mullen,Donald E. Senior Vice President
Munson,Brian D. Vice President
Murphy Jr.,Kenneth W. Asst. Vice President
Murray,Brendan R. Senior Vice President
Nadherny,Robert Senior Vice President
Nagashima,Toshio Managing Director
Natale,Lisa A. Asst. Vice President
Nauen,Kimberly Page Vice President
Neary,Ellen R. Vice President
Neher,Stacey P. Asst. Vice President
Nelson,Andrew E. Vice President
Newell,Amy Jane Vice President
Nickodemus,John P. Senior Vice President
Nickse,Gail A. Asst. Vice President
Nicolazzo,Jon C. Vice President
Nisbet,M. Julia Asst. Vice President
O'Brien,Lois C. Vice President
O'Brien,Nancy M. Asst. Vice President
O'Connell,Gayle M. Vice President
O'Connor,Brian P. Vice President
O'Connor,Matthew P. Asst. Vice President
O'Day,Teresa S. Vice President
Orr,Kevin Vice President
Palmer,Patrick J. Vice President
Pampliega,Carlos Vice President
Panek,Raymond S. Asst. Vice President
Parker,Michael T. Asst. Vice President
Parr,Cynthia O. Senior Vice President
Patton,Robert J. Vice President
Perkins,Erin M. Asst. Vice President
Peters,Jeffrey F. Managing Director
Petitti,Joseph P. Vice President
Petralia,Randolph S. Senior Vice President
Phoenix,John G. Senior Vice President
Phoenix,Joseph Senior Vice President
Pilibosian,George J. Vice President
Plapinger,Keith Senior Vice President
Powers,Brian S. Asst. Vice President
Present,Howard B. Senior Vice President
Puddle,David G. Senior Vice President
Pulkrabek,Scott M. Vice President
Putnam,George Director
Quinn,Lisa F. Asst. Vice President
Reed,Nadine McQueen Asst. Vice President
Rider,Wendy A. Vice President
Riley,Megan G. Asst. Vice President
Rodammer,Kris Senior Vice President
Rodts,Jennifer M. Asst. Vice President
Rogers,Deborah A. Vice President
Rowe,Robert B. Vice President
Ryan,Carolyn M. Asst. Vice President
Ryan,Deborah A. Vice President
Ryan,William M. Vice President
Saccocia,Cynthia M Asst. Vice President
Saunders,Catherine A. Senior Vice President
Saur,Karl W. Vice President
Scanlon,Michael M. Vice President
Schlosberg,Alan R. Asst. Vice President
Schofield,Shannon D. Senior Vice President
Schultz,Mitchell D. Managing Director
Scordato,Christine A. Senior Vice President
Segers,Elizabeth R. Senior Vice President
Selden,Denise D. Senior Vice President
Shamburg,John B. Vice President
Shanahan,Christopher W. Vice President
Sharpless,Kathy G. Managing Director
Shelby,Robert Vice President
Short,Jonathan D. Senior Vice President
Siebold,Mark J. Asst. Vice President
Siemon Jr.,Frank E. Asst. Vice President
Silva,J. Paul Vice President
Silver,Gordon H. Sr Managing Director
Skistimas Jr,John J. Vice President
Smeglin,Maryann C. Asst. Vice President
Solan,Meenakshi S. Asst. Vice President
Soule,Scott W. Asst. Vice President
Spiegel,Steven Sr Managing Director
Sprague,David L. Vice President
Starishevsky,Daniel Vice President
Starr,Loren M. Managing Director
Statuta,Jason M. Vice President
Steinberg,Lauren B. Asst. Vice President
Stern,Derek A. Asst. Vice President
Stickney,Paul R. Senior Vice President
Strumpf,Casey Senior Vice President
Sugimoto,Toshifumi Senior Vice President
Sullivan,Brian L. Senior Vice President
Sullivan,Donna G Vice President
Sullivan,Elaine M. Senior Vice President
Sullivan,Maryann Asst. Vice President
Suzuki,Toshimi Senior Vice President
Sweeney,Janet C. Senior Vice President
Talanian,John C. Managing Director
Tanner,B Iris Vice President
Tavares,April M. Asst. Vice President
Telling,John R. Senior Vice President
Tibbetts,Richard B. Managing Director
Tirado,Patrice M. Vice President
Troped Blacker,Bonnie Senior Vice President
Upham,Scott E. Vice President
Veale,David B. Asst. Vice President
Wallack,William F. Asst. Vice President
Walsh,Stephen M. Vice President
Warde,Elizabeth A. Asst. Vice President
Washburn,Andrew O. Vice President
Waters,Mitchell J. Vice President
Watt,Christopher C. Vice President
Welch III,William A. Asst. Vice President
Whalen,Brian Vice President
Whalen,Edward F. Senior Vice President
Whitaker,J. Greg Vice President
White,Patrick J. Asst. Vice President
Wolfson,Jane Senior Vice President
Woodlock,Ronald J. Asst. Vice President
Woolbert,Kelly A. Asst. Vice President
Woolverton,William H. Managing Director
Wright Jr.,Edmund F. Asst. Vice President
Yan,Yanfang Vice President
Young,Jason P. Vice President
Zografos,Laura J. Senior Vice President
Zukowski,Virginia A. Senior Vice President

Item 28. 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 Associate Clerk,
Judith Cohen; 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 Associate Clerk, investment adviser,
principal underwriter, custodian and transfer and dividend disbursing agent is
One Post Office Square, Boston, Massachusetts 02109.

Item 29. Management Services

None.

Item 30. Undertakings

None.

CONSENT OF INDEPENDENT ACCOUNTANTS

The Board of Trustees and Shareholders
Putnam Growth and Income Fund II:

We consent to the use of our report dated January 4, 2000, incorporated in
this Registration Statement by reference, to the Putnam Growth and Income
Fund II and to the references to our firm under the captions "Financial
highlights" in the Prospectuses and "INDEPENDENT ACCOUNTANTS AND FINANCIAL
STATEMENTS" in the Statement of Additional Information.

KPMG LLP
Boston, Massachusetts
March 27, 2000

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the Prospectuses and
Statement of Additional Information constituting parts of Post-Effective
Amendment No. 6 to the Registration Statement of Putnam Growth and Income
Fund II on Form N-1A (File No. 33-55979) of our report dated January 12,
1999, on our audit of the financial statements and financial highlights of
the fund, which report is included in the Annual Report for Putnam Growth
and Income Fund II for the year ended November 30, 1998, 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.

PricewaterhouseCoopers LLP

Boston, Massachusetts

March 27, 2000

NOTICE

A copy of the Agreement and Declaration of Trust of Putnam Growth and
Income Fund II 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.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the fund certifies that it meets all of
the requirements for effectiveness of this Registration Statement under
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Amendment to its Registration Statement be signed on its behalf by the
undersigned, duly authorized, in the City of Boston, and The Commonwealth
of Massachusetts, on the 28th day of March, 2000.

PUTNAM GROWTH AND INCOME FUND II

By: Gordon H. Silver, Vice President

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement of Putnam Growth and Income Fund II 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

John D. Hughes Senior 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

Ronald J. Jackson Trustee

Paul L. Joskow Trustee

Elizabeth T. Kennan Trustee

Lawrence J. Lasser Trustee

John H. Mullin, III Trustee

Robert E. Patterson Trustee

William F. Pounds Trustee

George Putnam, III Trustee

A.J.C. Smith Trustee

W. Thomas Stevens Trustee

W. Nicholas Thorndike Trustee

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

March 28, 2000

Exhibit Index

13c. Class C Distribution Plan and Agreement -- Exhibit 1

14. Rule 18f-3(d) Plan -- Exhibit 2

15a. Putnam Investments Code of Ethics-Exhibit 3.

15b. The Putnam Funds of Code of Ethics-Exhibit 4.

PUTNAM GROWTH AND INCOME FUND II
CLASS C DISTRIBUTION PLAN AND AGREEMENT

This Plan and Agreement (the "Plan") constitutes the Distribution Plan for
the Class C shares of Putnam Growth and Income Fund II, 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 C 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 C 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 C shares, which may
include, without limitation, the payment by PMF to investment dealers of
commissions on the sale of Class C shares, as set forth in the then current
Prospectus or Statement of Additional Information of the Trust and the
payment of a service fee of up to 0.25% of such net asset value for the
purposes of maintaining or improving services provided to shareholders by
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 C
shares of the Fund, but only if the Plan is adopted after the commencement
of any public offering of the Fund's Class C shares or the sale of the
Fund's Class C shares to persons who are not affiliated persons of the
Fund, affiliated persons of such persons, promoters of the Fund or
affiliated persons of such promoters;

(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

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 C 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 C 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 C 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 C shares of the Trust" means the affirmative vote, at
a duly called and held meeting of Class C shareholders of the Trust, (i) of
the holders of 67% or more of the Class C 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 C 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 C 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 January 8, 1999.

PUTNAM MUTUAL FUNDS CORP. PUTNAM GROWTH AND INCOME
FUND II

/s/ Thomas J. Lucey /s/ Charles E. Porter
By: ---------------------- By: ------------------------
Thomas J. Lucey Charles E. Porter
President Executive Vice President

PUTNAM FUNDS

PLAN PURSUANT TO RULE 18F-3(D) UNDER THE
INVESTMENT COMPANY ACT OF 1940

EFFECTIVE NOVEMBER 1, 1999

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.

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.

- ---------------------------
*Class A shares of Putnam Global Equity Fund may pay up to
0.65% of average net assets attributable to Class A shares.

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.

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 two years of purchase are subject to a CDSC of up
to 1.00% 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.

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.

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.

Code of Ethics

PUTNAM INVESTMENTS

[SCALE LOGO OMITTED]

It is the personal responsibility of every Putnam employee to avoid any
conduct that could create a conflict, or even the appearance of a conflict,
with our clients, or to do anything that could damage or erode the trust
our clients place in Putnam and its employees.

44156 4/2000

* Table of Contents

<S> <C>
Overview iii

Preamble vii

Definitions: Code of Ethics ix

Section I. Personal Securities Rules for All Employees 1

A. Restricted List 1
B. Prohibited Purchases and Sales 6
C. Discouraged Transactions 9
D. Exempted Transactions 10

Section II. Additional Special Rules for Personal Securities Transactions
of Access Persons and Certain Investment Professionals 13

Section III. Prohibited Conduct for All Employees 19

Section IV. Special Rules for Officers and Employees of Putnam Europe Ltd. 29

Section V. Reporting Requirements for All Employees 31

Section VI. Education Requirements 35

Section VII. Compliance and Appeal Procedures 37

Appendix A 39

Preamble 41
Definitions: Insider Trading 43

Section 1. Rules Concerning Inside Information 45

Section 2. Overview of Insider Trading 49

Appendix B. Policy Statement Regarding Employee Trades in Shares of Putnam
Closed-End Funds 55

Appendix C. Clearance Form for Portfolio Manager Sales Out of Personal
Account of Securities Also Held by Fund (For compliance with
"Contra-Trading" Rule) 57

Appendix D. Procedures for Approval of New Financial Instruments 59

Index 61

</TABLE>

* Overview

Every Putnam employee is required, as a condition of continued employment,
to read, understand, and comply with the entire Code of Ethics. This
Overview is provided only as a convenience and is not intended to
substitute for a careful reading of the complete document.

It is the personal responsibility of every Putnam employee to avoid any
conduct that could create a conflict, or even the appearance of a conflict,
with our clients, or do anything that could damage or erode the trust our
clients place in Putnam and its employees. This is the spirit of the Code
of Ethics. In accepting employment at Putnam, every employee accepts the
absolute obligation to comply with the letter and the spirit of the Code of
Ethics. Failure to comply with the spirit of the Code of Ethics is just as
much a violation of the Code as failure to comply with the written rules of
the Code.

The rules of the Code cover activities, including personal securities
transactions, of Putnam employees, certain family members of employees, and
entities (such as corporations, trusts, or partnerships) that employees may
be deemed to control or influence.

Sanctions will be imposed for violations of the Code of Ethics. Sanctions
may include bans on personal trading, reductions in salary increases or
bonuses, disgorgement of trading profits, suspension of employment, and
termination of employment.

- -- Insider trading:

Putnam employees are forbidden to buy or sell any security while either
Putnam or the employee is in possession of non-public information ("inside
information") concerning the security or the issuer. A violation of
Putnam's insider trading policies may result in criminal and civil
penalties, including imprisonment and substantial fines.

- -- Conflicts of interest:

The Code of Ethics imposes limits on activities of Putnam employees where
the activity may conflict with the interests of Putnam or its clients.
These include limits on the receipt and solicitation of gifts and on
service as a fiduciary for a person or entity outside of Putnam.

For example, Putnam employees generally may not accept gifts over $50 in
total value in a calendar year from any entity or any supplier of goods or
services to Putnam. In addition, a Putnam employee may not serve as a
director of any corporation without prior approval of the Code of Ethics
Officer, and Putnam employees may not be members of investment clubs.

- -- Confidentiality:

Information about Putnam clients and Putnam investment activity and
research is proprietary and confidential and may not be disclosed or used
by any Putnam employee outside Putnam without a valid business purpose.

- -- Personal securities trading:

Putnam employees may not buy or sell any security for their own account
without clearing the proposed transaction in advance with the Code of
Ethics Administrator.

Certain securities are excepted from this requirement (e.g., Marsh &
McLennan stock and shares of open-end (not closed-end) Putnam Funds). The
Code of Ethics Officer will permit employees to purchase or sell up to
1,000 shares of stock of an issuer whose capitalization exceeds $5 billion,
but such purchases or sales must still be cleared.

Clearance must be obtained in advance, between 11:30 a.m. and 4:00 p.m. EST
on the day of the trade. Clearance may be obtained between 9:00 a.m. and
4:00 p.m. on the day of the trade for up to 1,000 shares of stock of an
issuer whose capitalization exceeds $5 billion. A clearance is valid only
for the day it is obtained. The Code also strongly discourages excessive
trading by employees for their own account (i.e., more than 10 trades in
any calendar quarter). Trading in excess of this level will be reviewed
with the Code of Ethics Oversight Committee.

- -- Short Selling:

Putnam employees are prohibited from short selling any security, whether or
not it is held in a Putnam client portfolio, except that short selling
against the S&P 100 and 500 indexes and "against the box" are permitted.

- -- Confirmations of trading and periodic account statements:

All Putnam employees must have their brokers send confirmations of personal
securities transactions, including transactions of immediate family members
and accounts over which the employee has investment discretion, to the Code
of Ethics Officer. Employees must contact the Code of Ethics Administrator
to obtain an authorization letter from Putnam for setting up a personal
brokerage account.

- -- Quarterly and annual reporting:

Certain Putnam employees (so-called "Access Persons" as defined by the SEC
and in the Code of Ethics) must report all their securities transactions in
each calendar quarter to the Code of Ethics Officer within 10 days after
the end of the quarter. All Access Persons must disclose all personal
securities holdings upon commencement of employment and thereafter on an
annual basis. You will be notified if these requirements apply to you. If
these requirements apply to you and you fail to report as required, salary
increases and bonuses will be reduced.

- -- IPOs and private placements:

Putnam employees may not buy any securities in an initial public offering
or in a private placement, except in limited circumstances when prior
written authorization is obtained.

- -- Procedures for Approval of New Financial Instruments:

No new types of securities or instruments may be purchased for any Putnam
fund or other client account without the prior approval of the Risk
Management Committee.

- -- Personal securities transactions by Access Persons and certain
investment professionals:

The Code imposes several special restrictions on personal securities
transactions by Access Persons and certain investment professionals, which
are summarized as follows:

- -- "60-Day Holding Period". No Access Person shall profit from the purchase
and sale, or sale and purchase, of any security or related derivative security
within 60 calendar days.

- -- "7-Day" Rule. Before a portfolio manager places an order to buy a security
for any portfolio he manages, he must sell from his personal account any such
security or related derivative security purchased within the preceding 7
calendar days and disgorge any profit from the sale.

- -- "Blackout" Rules. No portfolio manager may sell any security or related
derivative security for her personal account until 7 calendar days have passed
since the most recent purchase of that security or related derivative security
by any portfolio she manages. No portfolio manager may buy any security or
related derivative security for his personal account until 7 calendar days have
passed since the most recent sale of that security or related derivative
security by any portfolio he manages.

- -- "Contra-Trading" Rule. No portfolio manager may sell out of her personal
account any security or related derivative security that is held in any
portfolio she manages unless she has received the written approval of a CIO
and the Code of Ethics Officer.

- -- No manager may cause a Putnam client to take action for the manager's own
personal benefit.

- -- SIMILAR RULES LIMIT PERSONAL SECURITIES TRANSACTIONS BY ANALYSTS,
CO-MANAGERS, AND CHIEF INVESTMENT OFFICERS. PLEASE READ THESE RULES CAREFULLY.
YOU ARE RESPONSIBLE FOR UNDERSTANDING THE RESTRICTIONS.

This Overview is qualified in its entirety by the provisions of the Code of
Ethics. The Code requires that all Putnam employees read, understand, and
comply with the entire Code of Ethics.

* Preamble

It is the personal responsibility of every Putnam employee to avoid any
conduct that would create a conflict, or even the appearance of a conflict,
with our clients, or embarrass Putnam in any way. This is the spirit of the
Code of Ethics. In accepting employment at Putnam, every employee also
accepts the absolute obligation to comply with the letter and the spirit of
the Code of Ethics. Failure to comply with the spirit of the Code of Ethics
is just as much a violation of the Code as failure to comply with the
written rules of the Code.

Sanctions will be imposed for violations of the Code of Ethics, including
the Code's reporting requirements. Sanctions may include bans on personal
trading, reductions in salary increases or bonuses, disgorgement of trading
profits, suspension of employment and termination of employment.

Putnam Investments is required by law to adopt a Code of Ethics. The
purpose of the law is to prevent abuses in the investment advisory business
that can arise when conflicts of interest exist between the employees of an
investment adviser and its clients. Having an effective Code of Ethics is
good business practice, as well. By adopting and enforcing a Code of
Ethics, we strengthen the trust and confidence reposed in us by
demonstrating that, at Putnam, client interests come before personal
interests.

Putnam has had a Code of Ethics for many years. The first Putnam Code was
written more than 30 years ago by George Putnam. It has been revised
periodically, and was re-drafted in its entirety in 1989 to take account of
legal and regulatory developments in the investment advisory business.
Since 1989, the Code has been revised regularly to reflect developments in
our business.

The Code that follows represents a balancing of important interests. On the
one hand, as a registered investment adviser, Putnam owes a duty of
undivided loyalty to its clients, and must avoid even the appearance of a
conflict that might be perceived as abusing the trust they have placed in
Putnam. On the other hand, Putnam does not want to prevent conscientious
professionals from investing for their own account where conflicts do not
exist or are so attenuated as to be immaterial to investment decisions
affecting Putnam clients.

When conflicting interests cannot be reconciled, the Code makes clear that,
first and foremost, Putnam employees owe a fiduciary duty to Putnam
clients. In most cases, this means that the affected employee will be
required to forego conflicting personal securities transactions. In some
cases, personal investments will be permitted, but only in a manner which,
because of the circumstances and applicable controls, cannot reasonably be
perceived as adversely affecting Putnam client portfolios or taking unfair
advantage of the relationship Putnam employees have to Putnam clients.

The Code contains specific rules prohibiting defined types of conflicts.
Because every potential conflict cannot be anticipated in advance, the Code
also contains certain general provisions prohibiting conflict situations.
In view of these general provisions, it is critical that any individual who
is in doubt about the applicability of the Code in a given situation seek a
determination from the Code of Ethics Officer about the propriety of the
conduct in advance. The procedures for obtaining such a determination are
described in Section VII of the Code.

It is critical that the Code be strictly observed. Not only will adherence
to the Code ensure that Putnam renders the best possible service to its
clients, it will ensure that no individual is liable for violations of law.

It should be emphasized that adherence to this policy is a fundamental
condition of employment at Putnam. Every employee is expected to adhere to
the requirements of this Code of Ethics despite any inconvenience that may
be involved. Any employee failing to do so may be subject to such
disciplinary action, including financial penalties and termination of
employment, as determined by the Code of Ethics Oversight Committee or the
Chief Executive Officer of Putnam Investments.

* Definitions: Code of Ethics

The words given below are defined specifically for the purposes of Putnam's
Code of Ethics.

Gender references in the Code of Ethics alternate.

Rule of construction regarding time periods. Unless the context indicates
otherwise, time periods used in the Code of Ethics shall be measured
inclusively, i.e., including the dates from and to which the measurement is
made.

Access Persons. Access Persons are (i) all officers of Putnam Investment
Management, Inc. (the investment manager of Putnam's mutual funds), (ii)
all employees within Putnam's Investment Division, and (iii) all other
employees of Putnam who, in connection with their regular duties, have
access to information regarding purchases or sales of portfolio securities
by a Putnam mutual fund, or who have access to information regarding
recommendations with respect to such purchases or sales.

Code of Ethics Administrator. The individual designated by the Code of
Ethics Officer to assume responsibility for day-to-day, non-discretionary
administration of this Code. The current Code of Ethics Administrator is
Laura Rose, who can be reached at extension 11104.

Code of Ethics Officer. The Putnam officer who has been assigned the
responsibility of enforcing and interpreting this Code. The Code of Ethics
Officer shall be the General Counsel or such other person as is designated
by the President of Putnam Investments. If the Code of Ethics Officer is
unavailable, the Deputy Code of Ethics Officer (to be appointed by the Code
of Ethics Officer) shall act in his stead.

Code of Ethics Oversight Committee. Has oversight responsibility for
administering the Code of Ethics. Members include the Code of Ethics
Officer, the Head of Investments, and other members of Putnam's senior
management approved by the Chief Executive Officer of Putnam.

Immediate family. Spouse, minor children, or other relatives living in the
same household as the Putnam employee.

Policy Statements. The Policy Statement Concerning Insider Trading
Prohibitions attached to the Code as Appendix A and the Policy Statement
Regarding Employee Trades in Shares of Putnam Closed-End Funds attached to
the Code as Appendix B.

Private placement. Any offering of a security not to the public, but to
sophisticated investors who have access to the kind of information which
would be contained in a prospectus, and which does not require registration
with the relevant securities authorities.

Purchase or sale of a security. Any acquisition or transfer of any interest
in the security for direct or indirect consideration, and includes the
writing of an option.

Putnam. Any or all of Putnam Investments, Inc., and its subsidiaries, any
one of which shall be a "Putnam company."

Putnam client. Any of the Putnam Funds, or any advisory, trust, or other
client of Putnam.

Putnam employee (or "employee"). Any employee of Putnam.

Restricted List. The list established in accordance with Rule 1 of Section
I.A.

Security. Any type or class of equity or debt security and any rights
relating to a security, such as put and call options, warrants, and
convertible securities. Unless otherwise noted, the term "security" does
not include: currencies, direct and indirect obligations of the U.S.
government and its agencies, commercial paper, certificates of deposit,
repurchase agreements, bankers' acceptances, any other money market
instruments, shares of open-end mutual funds (including Putnam open-end
mutual funds), securities of The Marsh & McLennan Companies, Inc.,
commodities, and any option on a broad-based market index or an
exchange-traded futures contract or option thereon.

Transaction for a personal account (or "personal securities transaction").
Securities transactions: (a) for the personal account of any employee; (b)
for the account of a member of the immediate family of any employee; (c)
for the account of a partnership in which a Putnam employee or immediate
family member is a general partner or a partner with investment discretion;
(d) for the account of a trust in which a Putnam employee or immediate
family member is a trustee with investment discretion; (e) for the account
of a closely-held corporation in which a Putnam employee or immediate
family member holds shares and for which he has investment discretion; and
(f) for any account other than a Putnam client account which receives
investment advice of any sort from the employee or immediate family member,
or as to which the employee or immediate family member has investment
discretion.

* Section I. Personal Securities Rules for All Employees

A. Restricted List

RULE 1

No Putnam employee shall purchase or sell for his personal account any
security without prior clearance obtained through Putnam's Intranet
pre-clearance system or from the Code of Ethics Administrator. No clearance
will be granted for securities appearing on the Restricted List. Securities
shall be placed on the Restricted List in the following circumstances:

(a) when orders to purchase or sell such security have been entered for any
Putnam client, or the security is being actively considered for purchase or
sale for any Putnam client;

(b) with respect to voting securities of corporations in the banking,
savings and loan, communications, or gaming (i.e., casinos) industries,
when holdings of Putnam clients exceed 7% (for public utilities, the
threshold is 4%);

(c) when, in the judgment of the Code of Ethics Officer, other
circumstances warrant restricting personal transactions of Putnam employees
in a particular security;

(d) the circumstances described in the Policy Statement Concerning Insider
Trading Prohibitions, attached as Appendix A.

Reminder: Securities for an employee's "personal account" include
securities owned by certain family members of a Putnam employee. Thus, this
Rule prohibits certain trades by family members of Putnam employees. See
Definitions.

Compliance with this rule does not exempt an employee from complying with
any other applicable rules of the Code, such as those described in Section
III. In particular, Access Persons and certain investment professionals
must comply with the special rules set forth in Section II.

EXCEPTIONS

A. "Large Cap" Exception. If a security appearing on the Restricted List is
an equity security for which the issuer has a market capitalization
(defined as outstanding shares multiplied by current price per share) of
over $5 billion, then a Putnam employee may purchase or sell up to 1,000
shares of the security per day for his personal account. This exception
does not apply if the security appears on the Restricted List in the
circumstances described in subpart (b), (c), or (d) of Rule 1.

B. Investment Grade Or Higher Fixed-Income Exception. If a security being
traded or considered for trade for a Putnam client is a non-convertible
fixed-income security which bears a rating of BBB (Standard & Poor's) or
Baa (Moody's) or any comparable rating or higher, then a Putnam employee
may purchase or sell that security for his personal account without regard
to the activity of Putnam clients. This exception does not apply if the
security has been placed on the Restricted List in the circumstances
described in subpart (b), (c), or (d) of Rule 1.

C. Pre-Clearing Transactions Effected by Share Subscription. The purchase
and sale of securities made by subscription rather than on an exchange are
limited to issuers having a market capitalization of $5 billion or more and
are subject to a 1,000 share limit. The following are procedures to comply
with Rule 1 when effecting a purchase or sale of shares by subscription:

(a) The Putnam employee must pre-clear the trade on the day he or she
submits a subscription to the issuer, rather than on the actual day of the
trade since the actual day of the trade typically will not be known to the
employee who submits the subscription. At the time of pre-clearance, the
employee will be told whether the purchase is permitted (in the case of a
corporation having a market capitalization of $5 billion or more), or not
permitted (in the case of a smaller capitalization issuer).

(b) The subscription for any purchase or sale of shares must be reported on
the employee's quarterly personal securities transaction report, noting the
trade was accomplished by subscription.

(c) As no brokers are involved in the transaction, the confirmation
requirement will be waived for these transactions, although the Putnam
employee must provide the Legal and Compliance Department with any
transaction summaries or statements sent by the issuer.

SANCTION GUIDELINES

A. Failure to Pre-Clear a Personal Trade

1. First violation: One month trading ban with written warning that a
future violation will result in a longer trading ban.

2. Second violation: Three month trading ban and written notice to Managing
Director of the employee's division.

3. Third violation: Six month trading ban with possible longer or permanent
trading ban based upon review by Code of Ethics Oversight Committee.

B. Failure to Pre-Clear Securities on the Restricted List

1. First violation: Disgorgement of any profit from the transaction, one
month trading ban, and written warning that a future violation will result
in a longer trading ban.

2. Second violation: Disgorgement of any profit from the transaction, three
month trading ban, and written notice to Managing Director of the
employee's division.

3. Third violation: Disgorgement of any profit from the transaction, and
six month trading ban with possible longer or permanent trading ban based
upon review by Code of Ethics Oversight Committee.

NOTE: These are the sanction guidelines for successive failures to
pre-clear personal trades within a 2-year period. The Code of Ethics
Oversight Committee retains the right to increase or decrease the sanction
for a particular violation in light of the circumstances. The Committee's
belief that an employee intentionally has violated the Code of Ethics will
result in more severe sanctions than outlined in the guidelines above. The
sanctions described in Paragraph B apply to Restricted List securities that
are: (i) small cap stocks (i.e., stocks not entitled to the "Large Cap"
exception) and (ii) large cap stocks that exceed the daily 1,000 share
maximum permitted under the "Large Cap" exception. Failure to pre-clear an
otherwise permitted trade of up to 1,000 shares of a large cap security is
subject to the sanctions described above in Paragraph A.

IMPLEMENTATION

A. Maintenance of Restricted List. The Restricted List shall be maintained
by the Code of Ethics Administrator.

B. Consulting Restricted List. An employee wishing to trade any security
for his personal account shall first obtain clearance through Putnam's
Intranet pre-clearance system. The system may be accessed from your
desktop computer through Internet access software and following the
directions provided in the system. The current address of the Intranet
pre-clearance system can be obtained from the Code of Ethics Administrator.
Employees may pre-clear all securities between 11:30 a.m. and 4:00 p.m.
EST, and may pre-clear purchases or sales of up to 1,000 shares of issuers
having a market capitalization of more than $5 billion between 9:00 a.m.
and 4:00 p.m. EST. Requests to make personal securities transactions may
not be made using the system or presented to the Code of Ethics
Administrator after 4:00 p.m.

The pre-clearance system will inform the employee whether the security may
be traded and whether trading in the security is subject to the "Large Cap"
limitation. The response of the pre-clearance system as to whether a
security appears on the Restricted List and, if so, whether it is eligible
for the exceptions set forth after this Rule shall be final, unless the
employee appeals to the Code of Ethics Officer, using the procedure
described in Section VII, regarding the request to trade a particular
security.

A clearance is only valid for trading on the day it is obtained. Trades in
securities listed on Asian or European stock exchanges, however, may be
executed within one business day after pre-clearance is obtained.

If a security is not on the Restricted List, other classes of securities of
the same issuer (e.g., preferred or convertible preferred stock) may be on
the Restricted List. It is the employee's responsibility to identify with
particularity the class of securities for which permission is being sought
for a personal investment.

If the Intranet pre-clearance system does not recognize a security, or if
an employee is unable to use the system or has any questions with respect
to the system or pre-clearance, the employee may consult the Code of Ethics
Administrator. The Code of Ethics Administrator shall not have authority
to answer any questions about a security other than whether trading is
permitted. The response of the Code of Ethics Administrator as to whether
a security appears on the Restricted List and, if so, whether it is
eligible for the exceptions set forth after this Rule shall be final,
unless the employee appeals to the Code of Ethics Officer, using the
procedure described in Section VII, regarding the request to trade a
particular security.

C. Removal of Securities from Restricted List. Securities shall be removed
from the Restricted List when: (a) in the case of securities on the
Restricted List pursuant to Rule 1(a), they are no longer being purchased
or sold for a Putnam client or actively considered for purchase or sale for
a Putnam client; (b) in the case of securities on the Restricted List
pursuant to Rule 1(b), the holdings of Putnam clients fall below the
applicable threshold designated in that Rule, or at such earlier time as
the Code of Ethics Officer deems appropriate; or (c) in the case of
securities on the Restricted List pursuant to Rule 1(c) or 1(d), when
circumstances no longer warrant restrictions on personal trading.

COMMENTS

1. Pre-Clearance. Subpart (a) of this Rule is designed to avoid the
conflict of interest that might occur when an employee trades for his
personal account a security that currently is being traded or is likely to
be traded for a Putnam client. Such conflicts arise, for example, when the
trades of an employee might have an impact on the price or availability of
a particular security, or when the trades of the client might have an
impact on price to the benefit of the employee. Thus, exceptions involve
situations where the trade of a Putnam employee is unlikely to have an
impact on the market.

2. Regulatory Limits. Owing to a variety of federal statutes and
regulations in the banking, savings and loan, communications, and gaming
industries, it is critical that accounts of Putnam clients not hold more
than 10% of the voting securities of any issuer (5% for public utilities).
Because of the risk that the personal holdings of Putnam employees may be
aggregated with Putnam holdings for these purposes, subpart (b) of this
Rule limits personal trades in these areas. The 7% limit (4% for public
utilities) will allow the regulatory limits to be observed.

3. Options. For the purposes of this Code, options are treated like the
underlying security. See Definitions. Thus, an employee may not purchase,
sell, or "write" option contracts for a security that is on the Restricted
List. A securities index will not be put on the Restricted List simply
because one or more of its underlying securities have been put on the
Restricted List. The exercise of an options contract (the purchase or
writing of which was previously pre-cleared) does not have to be
pre-cleared. Note, however, that the sale of securities obtained through
the exercise of options must be pre-cleared.

4. Involuntary Transactions. "Involuntary" personal securities transactions
are exempted from the Code. Special attention should be paid to this
exemption. (See Section I.D.)

5. Tender Offers. This Rule does not prohibit an employee from tendering
securities from his personal account in response to an any-and-all tender
offer, even if Putnam clients are also tendering securities. A Putnam
employee is, however, prohibited from tendering securities from his
personal account in response to a partial tender offer, if Putnam clients
are also tendering securities.

B. Prohibited Purchases and Sales

RULE 1

Putnam employees are prohibited from short selling any security, whether or
not the security is held in a Putnam client portfolio.

EXCEPTIONS

Short selling against the S&P 100 and 500 indexes and "against the box" are
permitted.

RULE 2

No Putnam employee shall purchase any security for her personal account in
an initial public offering.

EXCEPTION

Pre-existing Status Exception. A Putnam employee shall not be barred by
this Rule or by Rule 1(a) of Section I.A. from purchasing securities for
her personal account in connection with an initial public offering of
securities by a bank or insurance company when the employee's status as a
policyholder or depositor entitles her to purchase securities on terms more
favorable than those available to the general public, in connection with
the bank's conversion from mutual or cooperative form to stock form, or the
insurance company's conversion from mutual to stock form, provided that the
employee has had the status entitling her to purchase on favorable terms
for at least two years. This exception is only available with respect to
the value of bank deposits or insurance policies that an employee owns
before the announcement of the initial public offering. This exception does
not apply, however, if the security appears on the Restricted List in the
circumstances set forth in subparts (b), (c), or (d) of Section I.A., Rule 1.

IMPLEMENTATION

A. General Implementation. An employee shall inquire, before any purchase
of a security for her personal account, whether the security to be
purchased is being offered pursuant to an initial public offering. If the
security is offered through an initial public offering, the employee shall
refrain from purchasing that security for her personal account unless the
exception applies.

B. Administration of Exception. If the employee believes the exception
applies, she shall consult the Code of Ethics Administrator concerning
whether the security appears on the Restricted List and if so, whether it
is eligible for this exception.

COMMENTS

1. The purpose of this rule is twofold. First, it is designed to prevent a
conflict of interest between Putnam employees and Putnam clients who might
be in competition for the same securities in a limited public offering.
Second, the rule is designed to prevent Putnam employees from being subject
to undue influence as a result of receiving "favors" in the form of special
allocations of securities in a public offering from broker-dealers who seek
to do business with Putnam.

2. Purchases of securities in the immediate after-market of an initial
public offering are not prohibited, provided they do not constitute
violations of other portions of the Code of Ethics. For example,
participation in the immediate after-market as a result of a special
allocation from an underwriting group would be prohibited by Section III,
Rule 3 concerning gifts and other "favors."

3. Public offerings subsequent to initial public offerings are not deemed
to create the same potential for competition between Putnam employees and
Putnam clients because of the pre-existence of a market for the securities.

RULE 3

No Putnam employee shall purchase any security for his personal account in
a limited private offering or private placement.

COMMENTS

1. The purpose of this Rule is to prevent a Putnam employee from investing
in securities for his own account pursuant to a limited private offering
that could compete with or disadvantage Putnam clients, and to prevent
Putnam employees from being subject to efforts to curry favor by those who
seek to do business with Putnam.

2. Exemptions to the prohibition will generally not be granted where the
proposed investment relates directly or indirectly to investments by a
Putnam client, or where individuals involved in the offering (including the
issuers, broker, underwriter, placement agent, promoter, fellow investors
and affiliates of the foregoing) have any prior or existing business
relationship with Putnam or a Putnam employee, or where the Putnam employee
believes that such individuals may expect to have a future business
relationship with Putnam or a Putnam employee.

3. An exemption may be granted, subject to reviewing all the facts and
circumstances, for investments in:

(a) Pooled investment funds, including hedge funds, subject to the
condition that an employee investing in a pooled investment fund would have
no involvement in the activities or decision-making process of the fund
except for financial reports made in the ordinary course of the fund's
business.

(b) Private placements where the investment cannot relate, or be expected
to relate, directly or indirectly to Putnam or investments by a Putnam
client.

4. Employees who apply for an exemption will be expected to disclose to the
Code of Ethics Officer in writing all facts and relationships relating to
the proposed investment.

5. Limited partnership interests are frequently sold in private placements.
An employee should assume that investment in a limited partnership is
barred by these rules, unless the employee has obtained, in advance of
purchase, a written exemption under the ad hoc exemption set forth in
Section I.D., Rule 2. The procedure for obtaining an ad hoc exemption is
described in Section VII, Part 4.

6. Applications to invest in private placements will be reviewed by the
Code of Ethics Oversight Committee. This review will take into account,
among other factors, the considerations described in the preceding
comments.

RULE 4

No Putnam employee shall purchase or sell any security for her personal
account or for any Putnam client account while in possession of material,
nonpublic information concerning the security or the issuer.

EXCEPTIONS

NONE. Please read Appendix A, Policy Statement Concerning Insider Trading
Prohibitions.

RULE 5

No Putnam employee shall purchase from or sell to a Putnam client any
securities or other property for his personal account, nor engage in any
personal transaction to which a Putnam client is known to be a party, or
which transaction may have a significant relationship to any action taken
by a Putnam client.

EXCEPTIONS

None.

IMPLEMENTATION

It shall be the responsibility of every Putnam employee to make inquiry
prior to any personal transaction sufficient to satisfy himself that the
requirements of this Rule have been met.

COMMENT

This rule is required by federal law. It does not prohibit a Putnam
employee from purchasing any shares of an open-end Putnam fund. The policy
with respect to employee trading in closed-end Putnam funds is attached as
Appendix B.

C. Discouraged Transactions

RULE 1

Putnam employees are strongly discouraged from engaging in naked option
transactions for their personal accounts.

EXCEPTIONS

None.

COMMENT

Naked option transactions are particularly dangerous, because a Putnam
employee may be prevented by the restrictions in this Code of Ethics from
"covering" the naked option at the appropriate time. All employees should
keep in mind the limitations on their personal securities trading imposed
by this Code when contemplating such an investment strategy. Engaging in
naked options transactions on the basis of material, nonpublic information
is prohibited. See Appendix A, Policy Statement Concerning Insider Trading
Prohibitions.

RULE 2

Putnam employees are strongly discouraged from engaging in excessive
trading for their personal accounts.

EXCEPTIONS

None.

COMMENTS

1. Although a Putnam employee's excessive trading may not itself constitute
a conflict of interest with Putnam clients, Putnam believes that its
clients' confidence in Putnam will be enhanced and the likelihood of Putnam
achieving better investment results for its clients over the long term will
be increased if Putnam employees rely on their investment -- as opposed to
trading -- skills in transactions for their own account. Moreover, excessive
trading by a Putnam employee for his or her own account diverts an
employee's attention from the responsibility of servicing Putnam clients,
and increases the possibilities for transactions that are in actual or
apparent conflict with Putnam client transactions.

2. Although this Rule does not define excessive trading, employees should
be aware that if their trades exceed 10 trades per quarter the trading
activity will be reviewed by the Code of Ethics Oversight Committee.

D. Exempted Transactions

RULE 1

Transactions which are involuntary on the part of a Putnam employee are
exempt from the prohibitions set forth in Sections I.A., I.B., and I.C.

EXCEPTIONS

None.

COMMENTS

1. This exemption is based on categories of conduct that the Securities and
Exchange Commission does not consider "abusive."

2. Examples of examples;involuntary personal securities transactions
include:

(a) sales out of the brokerage account of a Putnam employee as a result of
bona fide margin call, provided that withdrawal of collateral by the Putnam
employee within the ten days previous to the margin call was not a
contributing factor to the margin call;

(b) purchases arising out of an automatic dividend reinvestment program of
an issuer of a publicly traded security.

3. Transactions by a trust in which the Putnam employee (or a member of his
immediate family) holds a beneficial interest, but for which the employee
has no direct or indirect influence or control with respect to the
selection of investments, are involuntary transactions. In addition, these
transactions do not fall within the definition of "personal securities
transactions." See Definitions.

4. A good-faith belief on the part of the employee that a transaction was
involuntary will not be a defense to a violation of the Code of Ethics. In
the event of confusion as to whether a particular transaction is
involuntary, the burden is on the employee to seek a prior written
determination of the applicability of this exemption. The procedures for
obtaining such a determination appear in Section VII, Part 3.

RULE 2

Transactions which have been determined in writing by the Code of Ethics
Officer before the transaction occurs to be no more than remotely
potentially harmful to Putnam clients because the transaction would be very
unlikely to affect a highly institutional market, or because the
transaction is clearly not related economically to the securities to be
purchased, sold, or held by a Putnam client, are exempt from the
prohibitions set forth in Sections I.A., I.B., and I.C.

EXCEPTIONS

N.A.

IMPLEMENTATION

An employee may seek an ad hoc exemption under this Rule by following the
procedures in Section VII, Part 4.

COMMENTS

1. This exemption is also based upon categories of conduct that the
Securities and Exchange Commission does not consider "abusive."

2. The burden is on the employee to seek a prior written determination that
the proposed transaction meets the standards for an ad hoc exemption set
forth in this Rule.

* Section II. Additional Special Rules for Personal Securities Transactions
of Access Persons and Certain Investment Professionals

Access Persons (including all Investment
Professionals and other employees as defined on page ix)

RULE 1 ("60-DAY" RULE)

No Access Person shall profit from the purchase and sale, or sale and
purchase, of any security or related derivative security within 60 calendar
days.

EXCEPTIONS

None, unless prior written approval from the Code of Ethics Officer is
obtained. Exceptions may be granted on a case-by-case basis when no abuse
is involved and the equities of the situation support an exemption. For
example, although an Access Person may buy a stock as a long-term
investment, that stock may have to be sold involuntarily due to unforeseen
activity such as a merger.

IMPLEMENTATION

1. The 60-Day Rule applies to all Access Persons, as defined in the
Definitions section of the Code.

2. Calculation of whether there has been a profit is based upon the market
prices of the securities. The calculation is not net of commissions or
other sales charges.

3. As an example, an Access Person would not be permitted to sell a
security at $12 that he purchased within the prior 60 days for $10.
Similarly, an Access Person would not be permitted to purchase a security
at $10 that she had sold within the prior 60 days for $12. If the proposed
transaction would be made at a loss, it would be permitted if the
pre-clearance requirements are met. See, Section I, Rule 1.

COMMENTS

1. The prohibition against short-term trading profits by Access Persons is
designed to minimize the possibility that they will capitalize
inappropriately on the market impact of trades involving a client portfolio
about which they might possibly have information.

2. Although Chief Investment Officers, Portfolio Managers, and Analysts may
sell securities at a profit within 60 days of purchase in order to comply
with the requirements of the 7-Day Rule applicable to them (described
below), the profit will have to be disgorged to charity under the terms of
the 7-Day Rule.

3. Access Persons occasionally make a series of transactions in securities
over extended periods of time. For example, an Access Person bought 100
shares of Stock X on Day 1 at $100 per share and then bought 50 additional
shares on Day 45 at $95 per share. On Day 75, the Access Person sold 20
shares at $105 per share. The question arises whether the Access Person
violated the 60-Day Rule. The characterization of the employee's tax basis
in the shares sold determines the analysis. If, for personal income tax
purposes, the Access Person characterizes the shares sold as having a basis
of $100 per share (i.e., shares purchased on Day 1), the transaction would
be consistent with the 60-Day Rule. However, if the tax basis in the shares
is $95 per share (i.e., shares purchased on Day 45), the transaction would
violate the 60-Day Rule.

Certain Investment Professionals

RULE 2 ("7-DAY" RULE)

(a) Portfolio Managers: Before a portfolio manager places an order to buy a
security for any Putnam client portfolio that he manages, he shall sell any
such security or related derivative security purchased in a transaction for
his personal account within the preceding seven calendar days.

(b) Co-Managers: Before a portfolio manager places an order to buy a
security for any Putnam client he manages, his co-manager shall sell any
such security or related derivative security purchased in transaction for
his personal account within the preceding seven calendar days.

(c) Analysts: Before an analyst makes a buy recommendation for a security,
he shall sell any such security or related derivative security purchased in
a transaction for his personal account within the preceding seven calendar
days.

(d) Chief Investment Officers: The Chief Investment Officer of an
investment group must sell any security or related derivative security
purchased in a transaction for his personal account within the preceding
seven calendar days before any portfolio manager in the CIO's investment
group places an order to buy such security for any Putnam client account he
manages.

EXCEPTIONS

None.

COMMENTS

1. This Rule applies to portfolio managers and Chief Investment Officers
with respect to any purchase (no matter how small) in any client account
managed or overseen by that portfolio manager or CIO (even so-called "clone
accounts"). In particular, it should be noted that the requirements of
this rule also apply with respect to purchases in client accounts,
including "clone accounts," resulting from "cash flows." To comply with
the requirements of this rule, it is the responsibility of each portfolio
manager and CIO to be aware of the placement of all orders for purchases of
a security by client accounts that he or she manages or oversees for 7 days
following the purchase of that security for his or her personal account.

2. An investment professional who must sell securities to be in compliance
with the 7-Day Rule must absorb any loss and disgorge to charity any
profit resulting from the sale.

3. This Rule is designed to avoid even the appearance of a conflict of
interest between an investment professional and a Putnam client. A more
stringent rule is warranted because, with their greater knowledge and
control, these investment professionals are in a better position than other
employees to create an appearance of manipulation of Putnam client accounts
for personal benefit.

4. "Portfolio manager" is used in this Section as a functional label, and
is intended to cover any employee with authority to authorize a trade on
behalf of a Putnam client, whether or not such employee bears the title
"portfolio manager." "Analyst" is also used in this Section as a functional
label, and is intended to cover any employee who is not a portfolio manager
but who may make recommendations regarding investments for Putnam clients.

RULE 3 ("BLACKOUT RULE")

(a) Portfolio Managers: No portfolio manager shall: (i) sell any security
or related derivative security for her personal account until seven
calendar days have elapsed since the most recent purchase of that security
or related derivative security by any Putnam client portfolio she manages
or co-manages; or (ii) purchase any security or related derivative security
for her personal account until seven calendar days have elapsed since the
most recent sale of that security or related derivative security from any
Putnam client portfolio that she manages or co-manages.

(b) Analysts: No analyst shall: (i) sell any security or related derivative
security for his personal account until seven calendar days have elapsed
since his most recent buy recommendation for that security or related
derivative security; or (ii) purchase any security or related derivative
security for his personal account until seven calendar days have elapsed
since his most recent sell recommendation for that security or related
derivative security.

(c) Chief Investment Officers: No Chief Investment Officer shall: (i) sell
any security or related derivative security for his personal account until
seven calendar days have elapsed since the most recent purchase of that
security or related derivative security by a portfolio manager in his
investment group; or (ii) purchase any security or related derivative
security for his personal account until seven calendar days have elapsed
since the most recent sale of that security or related derivative security
from any Putnam client portfolio managed in his investment group.

EXCEPTIONS

None.

COMMENTS

1. This Rule applies to portfolio managers and Chief Investment Officers
with respect to any transaction (no matter how small) in any client account
managed or overseen by that portfolio manager or CIO (even so-called "clone
accounts"). In particular, it should be noted that the requirements of
this rule also apply with respect to transactions in client accounts,
including "clone accounts," resulting from "cash flows." In order to
comply with the requirements of this rule, it is the responsibility of each
portfolio manager and CIO to be aware of all transactions in a security by
client accounts that he or she manages or oversees that took place within
the 7 days preceding a transaction in that security for his or her personal
account.

2. This Rule is designed to prevent a Putnam portfolio manager or analyst
from engaging in personal investment conduct that appears to be counter to
the investment strategy she is pursuing or recommending on behalf of a
Putnam client.

3. Trades by a Putnam portfolio manager for her personal account in the
"same direction" as the Putnam client portfolio she manages, and trades by
an analyst for his personal account in the "same direction" as his
recommendation, do not present the same danger, so long as any "same
direction" trades do not violate other provisions of the Code or the Policy
Statements.

RULE 4 ("CONTRA TRADING" RULE)

(a) Portfolio Managers: No portfolio manager shall, without prior
clearance, sell out of his personal account securities or related
derivative securities held in any Putnam client portfolio that he manages
or co-manages.

(b) Chief Investment Officers: No Chief Investment Officer shall, without
prior clearance, sell out of his personal account securities or related
derivative securities held in any Putnam client portfolio managed in his
investment group.

EXCEPTIONS

None, unless prior clearance is given.

IMPLEMENTATION

A. Individuals Authorized to Give Approval. Prior to engaging in any such
sale, a portfolio manager shall seek approval, in writing, of the proposed
sale. In the case of a portfolio manager or director, prior written
approval of the proposed sale shall be obtained from a chief investment
officer to whom he reports or, in his absence, another chief investment
officer. In the case of a chief investment officer, prior written approval
of the proposed sale shall be obtained from another chief investment
officer. In addition to the foregoing, prior written approval must also be
obtained from the Code of Ethics Officer.

B. Contents of Written Approval. In every instance, the written approval
form attached as Appendix C (or such other form as the Code of Ethics
Officer shall designate) shall be used. The written approval should be
signed by the chief investment officer giving approval and dated the date
such approval was given, and shall state, briefly, the reasons why the
trade was allowed and why the investment conduct pursued by the portfolio
manager, director, or chief investment officer was deemed inappropriate for
the Putnam client account controlled by the individual seeking to engage in
the transaction for his personal account. Such written approval shall be
sent by the chief investment officer approving the transaction to the Code
of Ethics Officer within twenty-four hours or as promptly as circumstances
permit. Approvals obtained after a transaction has been completed or while
it is in process will not satisfy the requirements of this Rule.

COMMENT

This Rule, like Rule 3 of this Section, is designed to prevent a Putnam
portfolio manager from engaging in personal investment conduct that appears
to be counter to the investment strategy that he is pursuing on behalf of a
Putnam client.

RULE 5

No portfolio manager shall cause, and no analyst shall recommend, a Putnam
client to take action for the portfolio manager's or analyst's own personal
benefit.

EXCEPTIONS

None.

COMMENTS

1. A portfolio manager who trades in, or an analyst who recommends,
particular securities for a Putnam client account in order to support the
price of securities in his personal account, or who "front runs" a Putnam
client order is in violation of this Rule. Portfolio managers and analysts
should be aware that this Rule is not limited to personal transactions in
securities (as that word is defined in "Definitions"). Thus, a portfolio
manager or analyst who "front runs" a Putnam client purchase or sale of
obligations of the U.S. government is in violation of this Rule, although
U.S. government obligations are excluded from the definition of "security."

2. This Rule is not limited to instances when a portfolio manager or
analyst has malicious intent. It also prohibits conduct that creates an
appearance of impropriety. Portfolio managers and analysts who have
questions about whether proposed conduct creates an appearance of
impropriety should seek a prior written determination from the Code of
Ethics Officer, using the procedures described in Section VII, Part 3.

Section III. Prohibited Conduct for All Employees

RULE 1

All employees must comply with applicable laws and regulations as well as
company policies. This includes tax, antitrust, political contribution, and
international boycott laws. In addition, no employee at Putnam may engage
in fraudulent conduct of any kind.

EXCEPTIONS

None.

COMMENTS

1. Putnam may report to the appropriate legal authorities conduct by Putnam
employees that violates this rule.

2. It should also be noted that the U.S. Foreign Corrupt Practices Act
makes it a criminal offense to make a payment or offer of payment to any
non-U.S. governmental official, political party, or candidate to induce
that person to affect any governmental act or decision, or to assist
Putnam's obtaining or retaining business.

RULE 2

No Putnam employee shall conduct herself in a manner which is contrary to
the interests of, or in competition with, Putnam or a Putnam client, or
which creates an actual or apparent conflict of interest with a Putnam
client.

EXCEPTIONS

None.

COMMENTS

1. This Rule is designed to recognize the fundamental principle that Putnam
employees owe their chief duty and loyalty to Putnam and Putnam clients.

2. It is expected that a Putnam employee who becomes aware of an investment
opportunity that she believes is suitable for a Putnam client who she
services will present it to the appropriate portfolio manager, prior to
taking advantage of the opportunity herself.

RULE 3

No Putnam employee shall seek or accept gifts, favors, preferential
treatment, or special arrangements of material value from any
broker-dealer, investment adviser, financial institution, corporation, or
other entity, or from any existing or prospective supplier of goods or
services to Putnam or Putnam Funds. Specifically, any gift over $50 in
value, or any accumulation of gifts which in aggregate exceeds $50 in value
from one source in one calendar year, is prohibited. Any Putnam employee
who is offered or receives an item prohibited by this Rule must report the
details in writing to the Code of Ethics Officer.

EXCEPTIONS

None.

COMMENTS

1. This rule is intended to permit only proper types of customary business
amenities. Listed below are examples of items that would be permitted under
proper circumstances and of items that are prohibited under this rule.
These examples are illustrative and not all-inclusive. Notwithstanding
these examples, a Putnam employee may not, under any circumstances, accept
anything that could create the appearance of any kind of conflict of
interest. For example, acceptance of any consideration is prohibited if it
would create the appearance of a "reward" or inducement for conducting
Putnam business either with the person providing the gift or his employer.

2. This rule also applies to gifts or "favors" of material value that an
investment professional may receive from a company or other entity being
researched or considered as a possible investment for a Putnam client
account.

3. Among items not considered of "material value" which, under proper
circumstances, would be considered permissible are:

(a) Occasional lunches or dinners conducted for business purposes;

(b) Occasional cocktail parties or similar social gatherings conducted for
business purposes;

(d) Small gifts, usually in the nature of reminder advertising, such as
pens, calendars, etc., with a value of no more than $50.

4. Among items which are considered of "material value" and which are
prohibited are:

(a) Entertainment of a recurring nature such as sporting events, theater,
golf games, etc.;

(b) The cost of transportation to a locality outside the Boston
metropolitan area, and lodging while in another locality, unless such
attendance and reimbursement arrangements have received advance written
approval of the Code of Ethics Officer;

(c) Personal loans to a Putnam employee on terms more favorable than those
generally available for comparable credit standing and collateral; and

(d) Preferential brokerage or underwriting commissions or spreads or
allocations of shares or interests in an investment for the personal
account of a Putnam employee.

5. As with any of the provisions of the Code of Ethics, a sincere belief by
the employee that he was acting in accordance with the requirements of this
Rule will not satisfy his obligations under the Rule. Therefore, an
employee who is in doubt concerning the propriety of any gift or "favor"
should seek a prior written determination from the Code of Ethics Officer,
as provided in Part 3 of Section VII.

RULE 4

No Putnam employee may pay, offer, or commit to pay any amount of
consideration which might be or appear to be a bribe or kickback in
connection with Putnam's business.

EXCEPTIONS

None.

COMMENT

Although the rule does not specifically address political contributions,
Putnam employees should be aware that it is against corporate policy to use
company assets to fund political contributions of any sort, even where such
contributions may be legal. No Putnam employee should offer or agree to
make any political contributions (including political dinners and similar
fund-raisers) on behalf of Putnam, and no employee will be reimbursed by
Putnam for such contributions made by the employee personally.

RULE 5

No contributions may be made with corporate funds to any political party or
campaign, whether directly or by reimbursement to an employee for the
expense of such a contribution. No Putnam employee shall solicit any
charitable, political or other contributions using Putnam letterhead or
making reference to Putnam in the solicitation. No Putnam employee shall
personally solicit any such contribution while on Putnam business.

EXCEPTIONS

None.

COMMENT

1. Putnam has established a political action committee (PAC) that
contributes to worthy candidates for political office. Any request received
by a Putnam employee for a political contribution must be directed to
Putnam's Legal and Compliance Department.

2. This rule does not prohibit solicitation on personal letterhead by
Putnam employees. Nonetheless, Putnam employees should use discretion in
soliciting contributions from individuals or entities who provide services
to Putnam. There should never be a suggestion that any service provider
must contribute to keep Putnam's business.

RULE 6

No unauthorized disclosure may be made by any employee or former employee
of any trade secrets or proprietary information of Putnam or of any
confidential information. No information regarding any Putnam client
portfolio, actual or proposed securities trading activities of any Putnam
client, or Putnam research shall be disclosed outside the Putnam
organization without a valid business purpose.

EXCEPTIONS

None.

COMMENT

All information about Putnam and Putnam clients is strictly confidential.
Putnam research information should not be disclosed unnecessarily and never
for personal gain.

RULE 7

No Putnam employee shall serve as officer, employee, director, trustee or
general partner of a corporation or entity other than Putnam, without prior
approval of the Code of Ethics Officer.

EXCEPTION

Charitable or Non-profit Exception. This Rule shall not prevent any Putnam
employee from serving as officer, director, or trustee of a charitable or
not-for-profit institution, provided that the employee abides by the spirit
of the Code of Ethics and the Policy Statements with respect to any
investment activity for which she has any discretion or input as officer,
director, or trustee. The pre-clearance and reporting requirements of the
Code of Ethics do not apply to the trading activities of such charitable or
not-for-profit institutions for which an employee serves as an officer,
director, or trustee.

COMMENTS

1. This Rule is designed to ensure that Putnam cannot be deemed an
affiliate of any issuer of securities by virtue of service by one of its
officers or employees as director or trustee.

2. Certain charitable or not-for-profit institutions have assets (such as
endowment funds or employee benefit plans) which require prudent
investment. To the extent that a Putnam employee (because of her position
as officer, director, or trustee of an outside entity) is charged with
responsibility to invest such assets prudently, she may not be able to
discharge that duty while simultaneously abiding by the spirit of the Code
of Ethics and the Policy Statements. Employees are cautioned that they
should not accept service as an officer, director, or trustee of an outside
charitable or not-for-profit entity where such investment responsibility is
involved, without seriously considering their ability to discharge their
fiduciary duties with respect to such investments.

RULE 8

No Putnam employee shall serve as a trustee, executor, custodian, any other
fiduciary, or as an investment adviser or counselor for any account outside
Putnam.

EXCEPTIONS

Charitable or Religious Exception. This Rule shall not prevent any Putnam
employee from serving as fiduciary with respect to a religious or
charitable trust or foundation, so long as the employee abides by the
spirit of the Code of Ethics and the Policy Statements with respect to any
investment activity over which he has any discretion or input. The
pre-clearance and reporting requirements of the Code of Ethics do not apply
to the trading activities of such a religious or charitable trust or
foundation.

Family Trust or Estate Exception. This Rule shall not prevent any Putnam
employee from serving as fiduciary with respect to a family trust or
estate, so long as the employee abides by all of the Rules of the Code of
Ethics with respect to any investment activity over which he has any
discretion.

COMMENT

The roles permissible under this Rule may carry with them the obligation to
invest assets prudently. Once again, Putnam employees are cautioned that
they may not be able to fulfill their duties in that respect while abiding
by the Code of Ethics and the Policy Statements.

RULE 9

No Putnam employee may be a member of any investment club.

EXCEPTIONS

None.

COMMENT

This Rule guards against the danger that a Putnam employee may be in
violation of the Code of Ethics and the Policy Statements by virtue of his
personal securities transactions in or through an entity that is not bound
by the restrictions imposed by this Code of Ethics and the Policy
Statements. Please note that this restriction also applies to the spouse
of a Putnam employee and any relatives of a Putnam employee living in the
same household as the employee, as their transactions are covered by the
Code of Ethics (see page x).

RULE 10

No Putnam employee may become involved in a personal capacity in
consultations or negotiations for corporate financing, acquisitions or
other transactions for outside companies (whether or not held by any Putnam
client), nor negotiate nor accept a fee in connection with these activities
without obtaining the prior written permission of the president of Putnam
Investments.

EXCEPTIONS

None.

RULE 11

No new types of securities or instruments may be purchased for a Putnam
fund or other client account without following the procedures set forth in
Appendix D.

EXCEPTIONS

None.

COMMENT

See Appendix D.

RULE 12

No employee may create or participate in the creation of any record that is
intended to mislead anyone or to conceal anything that is improper.

EXCEPTIONS

None.

COMMENT

In many cases, this is not only a matter of company policy and ethical
behavior but also required by law. Our books and records must accurately
reflect the transactions represented and their true nature. For example,
records must be accurate as to the recipient of all payments; expense
items, including personal expense reports, must accurately reflect the true
nature of the expense. No unrecorded fund or asset shall be established or
maintained for any reason.

RULE 13

No employee should have any direct or indirect (including by a family
member or close relative) personal financial interest (other than normal
investments not material to the employee in the entity's publicly traded
securities) in any business, with which Putnam has dealings unless such
interest is disclosed and approved by the Code of Ethics Officer.

RULE 14

No employee shall, with respect to any affiliate of Putnam that provides
investment advisory services and is listed below in Comment 4 to this Rule,
as revised from time to time (each an "NPA"),

(a) directly or indirectly seek to influence the purchase, retention, or
disposition of, or exercise of voting, consent, approval or similar rights
with respect to, any portfolio security in any account or fund advised by
the NPA and not by Putnam,

(b) transmit any information regarding the purchase, retention or
disposition of, or exercise of voting, consent, approval or similar rights
with respect to, any portfolio security held in a Putnam or NPA client
account to any personnel of the NPA,

(c) transmit any trade secrets, proprietary information, or confidential
information of Putnam to the NPA without a valid business purpose,

(d) use confidential information or trade secrets of the NPA for the
benefit of the employee, Putnam, or any other NPA, or

(e) breach any duty of loyalty to the NPA by virtue of service as a
director or officer of the NPA.

COMMENT

1. Sections (a) and (b) of the Rule are designed to help ensure that the
portfolio holdings of Putnam clients and clients of the NPA need not be
aggregated for purposes of determining beneficial ownership under Section
13(d) of the Securities Exchange Act or applicable regulatory or
contractual investment restrictions that incorporate such definition of
beneficial ownership. Persons who serve as directors or officers of both
Putnam and an NPA would take care to avoid even inadvertent violations of
Section (b). Section (a) does not prohibit a Putnam employee who serves as
a director or officer of the NPA from seeking to influence the modification
or termination of a particular investment product or strategy in a manner
that is not directed at any specific securities. Sections (a) and (b) do
not apply when a Putnam affiliate serves as an adviser or subadviser to the
NPA or one of its products, in which case normal Putnam aggregation rules
apply.

2. As a separate entity, any NPA may have trade secrets or confidential
information that it would not choose to share with Putnam. This choice must
be respected.

3. When Putnam employees serve as directors or officers of an NPA, they are
subject to common law duties of loyalty to the NPA, despite their Putnam
employment. In general, this means that when performing their duties as NPA
directors or officers, they must act in the best interest of the NPA and
its shareholders. Putnam's Legal and Compliance Department will assist any
Putnam employee who is a director or officer of an NPA and has questions
about the scope of his or her responsibilities to the NPA.

4. Entities that are currently non-Putnam affiliates within the scope of
this Rule are: Cisalpina Gestioni, S.p.A., PanAgora Asset Management Inc.,
PanAgora Asset Management Ltd., Nissay Asset Management Co., Ltd., and
Thomas H. Lee Partners, L.P.

RULE 15

No employee shall use computer hardware, software, data, Internet,
electronic mail, voice mail, electronic messaging ("e-mail" or "cc: Mail"),
or telephone communications systems in a manner that is inconsistent with
their use as set forth in policy statements governing their use that are
adopted from time to time by Putnam. No employee shall introduce a computer
"virus" or computer code that may result in damage to Putnam's information
or computer systems.

EXCEPTIONS

None.

COMMENT

1. Internet and Electronic Messaging Policies. As more and more employees
of Putnam Investments use the Internet to connect with Putnam's customers,
vendors, suppliers and other key organizations, it is important that all
Putnam employees understand the appropriate use guidelines and how to
protect assets of Putnam and its clients whenever using the Internet.
Internet access is provided to designated employees to connect with
worldwide information resources for the benefit of the company and its
clients. Such access is not intended for personal use. Employees using the
Internet or any electronic messaging system must do so in a responsible,
ethical and lawful manner.

* Putnam has adopted a Policy and Guidelines on Internet Use. A copy of this
policy statement is included in the Putnam Employee Handbook and is available
online (you may contact Putnam's Human Resources Department for the on-line
address). Failure to comply with this policy statement is a violation of
Putnam's Code of Ethics.

2. System Security Policy Statement. It is the policy of Putnam Investments
to secure its computer hardware, software, data, electronic mail, voice
mail and Internet access by placing strict controls and restrictions on
their access and use.

* Putnam has adopted a System Security Policy Statement. This policy statement
governs the use of computer hardware and software, data, electronic mail,
voice mail, Internet and commercial online services, computer passwords and
logon Ids, and workstation security. A copy of this policy statement is
included in the Putnam Employee Handbook and is available online (you may
contact Putnam's Human Resources Department for the on-line address). Failure
to comply with this policy statement is a violation of Putnam's Code of Ethics.

3. Computer Virus Policy and Procedure. Putnam has adopted a Computer Virus
Policy and Procedure. This policy sets forth guidelines to prevent computer
viruses, procedures to be followed in the event a computer may be infected
with a virus, and a description of virus symptoms. A copy of this policy
statement is included in the Putnam Employee Handbook and is available
online (you may contact Putnam's Human Resources Department for the on-line
address). Failure to comply with this policy statement is a violation of
Putnam's Code of Ethics.

* Section IV. Special Rules for Officers and Employees of Putnam Europe Ltd.

RULE 1

In situations subject to Section I.A., Rule 1 (Restricted List Personal
Securities Transactions), the Putnam Europe Ltd. ("PEL") employee must
obtain clearance not only as provided in that rule, but also from PEL's
Compliance Officer or her designee, who must approve the transaction before
any trade is placed and record the approval.

EXCEPTIONS

None.

IMPLEMENTATION

Putnam's Code of Ethics Administrator in Boston (the "Boston
Administrator") has also been designated the Assistant Compliance Officer
of PEL and has been delegated the right to approve or disapprove personal
securities transactions in accordance with the foregoing requirement.
Therefore, approval from the Code of Ethics Administrator for PEL employees
to make personal securities investments constitutes approval under the Code
of Ethics and also for purposes of compliance with IMRO, the U.K.
self-regulatory organization that regulates PEL.

The position of London Code of Ethics Administrator (the "London
Administrator") has also been created (Jane Barlow is the current London
Administrator). All requests for clearances must be made by e-mail to the
Boston Administrator copying the London Administrator. The e-mail must
include the number of shares to be bought or sold and the name of the
broker(s) involved. Where time is of the essence clearances can be made by
telephone to the Boston Administrator but they must be followed up by
e-mail.

Both the Boston and London Administrators will maintain copies of all
clearances for inspection by senior management and regulators.

RULE 2

No PEL employee may trade with any broker or dealer unless that broker or
dealer has sent a letter to the London Administrator agreeing to deliver
copies of trade confirmations to PEL. No PEL employee may enter into any
margin or any other special dealing arrangement with any broker-dealer
without the prior written consent of the PEL Compliance Officer.

EXCEPTIONS

None.

IMPLEMENTATION

PEL employees will be notified separately of this requirement once a year
by the PEL Compliance Officer, and are required to provide an annual
certification of compliance with the Rule.

All PEL employees must inform the London Administrator of the names of all
brokers and dealers with whom they trade prior to trading. The London
Administrator will send a letter to the broker(s) in question requesting
them to agree to deliver copies of confirms to PEL. The London
Administrator will forward copies of the confirms to the Boston
Administrator. PEL employees may trade with a broker only when the London
Administrator has received the signed agreement from that broker.

RULE 3

For purposes of the Code of Ethics, including Putnam's Policy Statement on
Insider Trading Prohibitions, PEL employees must also comply with Part V of
the Criminal Justice Act 1993 on insider dealing.

EXCEPTIONS

None.

IMPLEMENTATION

To ensure compliance with U.K. insider dealing legislation, PEL employees
must observe the relevant procedures set forth in PEL's Compliance Manual,
a copy of which is sent to each PEL employee, and sign an annual
certification as to compliance.

* Section V. Reporting Requirements for All Employees

Reporting of Personal Securities Transactions

RULE 1

Each Putnam employee shall ensure that broker-dealers send all
confirmations of securities transactions for his personal accounts to the
Code of Ethics Officer. (For the purpose of this Rule, "securities" shall
include securities of The Marsh & McLennan Companies, Inc., and any option
on a security or securities index, including broad-based market indexes.)

EXCEPTIONS

None.

IMPLEMENTATION

1. Putnam employees must instruct their broker-dealers to send
confirmations to Putnam and must follow up with the broker-dealer on a
reasonable basis to ensure that the instructions are being followed. Putnam
employees should contact the Code of Ethics Administrator to obtain a
letter from Putnam authorizing the setting up of a personal brokerage
account. Confirmations should be submitted to the Code of Ethics
Administrator. (Specific procedures apply to employees of Putnam Europe
Ltd. ("PEL"). Employees of PEL should contact the London Code of Ethics
Administrator.) Failure of a broker-dealer to comply with the instructions
of a Putnam employee to send confirmations shall be a violation by the
Putnam employee of this Rule.

COMMENTS

1. "Transactions for personal accounts" is defined broadly to include more
than transaction in accounts under an employee's own name. See Definitions.

2. A confirmation is required for all personal securities transactions,
whether or not exempted or excepted by this Code.

3. To the extent that a Putnam employee has investment authority over
securities transactions of a family trust or estate, confirmations of those
transactions must also be made, unless the employee has received a prior
written exception from the Code of Ethics Officer.

RULE 2

Every Access Person shall file a quarterly report, within ten calendar days
of the end of each quarter, recording all purchases and sales of any
securities for personal accounts as defined in the Definitions. (For the
purpose of this Rule, "securities" shall include securities of The Marsh &
McLennan Companies, Inc., and any option on a security or securities index,
including broad-based market indexes.)

EXCEPTIONS

None.

IMPLEMENTATION

All employees required to file such a report will receive a blank form at
the end of the quarter from the Code of Ethics Administrator. The form will
specify the information to be reported. The form shall also contain a
representation that employees have complied fully with all provisions of
the Code of Ethics.

COMMENT

1. The date for each transaction required to be disclosed in the quarterly
report is the trade date for the transaction, not the settlement date.

2. If the requirement to file a quarterly report applies to you and you
fail to report within the required 10-day period, salary increases and
bonuses will be reduced in accordance with guidelines stated in the form.

Reporting of Personal Securities Holdings

RULE 3

Access Persons must disclose all personal securities holdings to the Code
of Ethics Officer upon commencement of employment and thereafter on an
annual basis.

EXCEPTIONS

None.

COMMENT

These requirements are mandated by SEC regulations and are designed to
facilitate the monitoring of personal securities transactions. Putnam's
Code of Ethics Administrator will provide Access Persons with the form for
making these reports and the specific information that must be disclosed at
the time that the disclosure is required.

Other Reporting Policies

The following rules are designed to ensure that Putnam's internal Control
and Reporting professionals are aware of all items that might need to be
addressed by Putnam or reported to appropriate entities.

RULE 4

If a Putnam employee suspects that fraudulent or other irregular activity
might be occurring at Putnam, the activity must be reported immediately to
the Managing Director in charge of that employee's business unit. Managing
Directors who are notified of any such activity must immediately report it
in writing to Putnam's Chief Financial Officer or Putnam's General Counsel.

RULE 5

Putnam employees must report all communications from regulatory or
government agencies (federal, state, or local) to the Managing Director in
charge of their business unit. Managing Directors who are notified of any
such communication must immediately report it in writing to Putnam's Chief
Financial Officer or Putnam's General Counsel.

RULE 6

All claims, circumstances or situations that come to the attention of a
Putnam employee must be reported through the employee's management
structure up to the Managing Director in charge of the employee's business
unit. Managing Directors who are notified of any such claim, circumstance
or situation that might give rise to a claim against Putnam for more than
$100,000 must immediately report in writing it to Putnam's Chief Financial
Officer or Putnam's General Counsel.

RULE 7

All possible violations of law or regulations at Putnam that come to the
attention of a Putnam employee must be reported immediately to the Managing
Director in charge of the employee's business unit. Managing Directors who
are notified of any such activity must immediately report it in writing to
Putnam's Chief Financial Officer or Putnam's General Counsel.

RULE 8

Putnam employees must report all requests by anyone for Putnam to
participate in or cooperate with an international boycott to the Managing
Director in charge of their business unit. Managing Directors who are
notified of any such request must immediately report it in writing to
Putnam's Chief Financial Officer or Putnam's General Counsel.

* Section VI. Education Requirements

Every Putnam employee has an obligation to fully understand the
requirements of the Code of Ethics. The Rules set forth below are designed
to enhance this understanding.

RULE 1

A copy of the Code of Ethics will be distributed to every Putnam employee
periodically. All Access Persons will be required to certify periodically
that they have read, understood, and will comply with the provisions of the
Code of Ethics, including the Code's Policy Statement Concerning Insider
Trading Prohibitions.

RULE 2

Every investment professional will attend a meeting periodically at which
the Code of Ethics will be reviewed.

* Section VII. Compliance and Appeal Procedures

1. Assembly of Restricted List. The Code of Ethics Administrator will
coordinate the assembly and maintenance of the Restricted List. The list
will be assembled each day by 11:30 a.m. EST. No employee may engage in a
personal securities transaction without prior clearance on any day, even if
the employee believes that the trade will be subject to an exception. Note
that pre-clearance may be obtained after 9:00 a.m. for purchases or sales
of up to 1,000 shares of issuers having a market capitalization in excess
of $5 billion.

2. Consultation of Restricted List. It is the responsibility of each
employee to pre-clear through the Intranet pre-clearance system or consult
with the Code of Ethics Administrator prior to engaging in a personal
securities transaction, to determine if the security he proposes to trade
is on the Restricted List and, if so, whether it is subject to the "Large
Cap" limitation. The Intranet pre-clearance system and the Code of Ethics
Administrator will be able to tell an employee whether a security is on the
Restricted List. No other information about the Restricted List is
available through the Intranet pre-clearance system. The Code of Ethics
Administrator shall not be authorized to answer any questions about the
Restricted List, or to render an opinion about the propriety of a
particular personal securities transaction. Any such questions shall be
directed to the Code of Ethics Officer.

3. Request for Determination. An employee who has a question concerning the
applicability of the Code of Ethics to a particular situation shall request
a determination from the Code of Ethics Officer before engaging in the
conduct or personal securities transaction about which he has a question.

If the question pertains to a personal securities transaction, the request
shall state for whose account the transaction is proposed, the relationship
of that account to the employee, the security proposed to be traded, the
proposed price and quantity, the entity with whom the transaction will take
place (if known), and any other information or circumstances of the trade
that could have a bearing on the Code of Ethics Officer's determination. If
the question pertains to other conduct, the request for determination shall
give sufficient information about the proposed conduct to assist the Code
of Ethics Officer in ascertaining the applicability of the Code. In every
instance, the Code of Ethics Officer may request additional information,
and may decline to render a determination if the information provided is
insufficient.

The Code of Ethics Officer shall make every effort to render a
determination promptly.

No perceived ambiguity in the Code of Ethics shall excuse any violation.

Any person who believes the Code to be ambiguous in a particular situation
shall request a determination from the Code of Ethics Officer.

4. Request for Ad Hoc Exemption. Any employee who wishes to obtain an ad
hoc exemption under Section I.D., Rule 2, shall request from the Code of
Ethics Officer an exemption in writing in advance of the conduct or
transaction sought to be exempted. In the case of a personal securities
transaction, the request for an ad hoc exemption shall give the same
information about the transaction required in a request for determination
under Part 3 of this Section, and shall state why the proposed personal
securities transaction would be unlikely to affect a highly institutional
market, or is unrelated economically to securities to be purchased, sold,
or held by any Putnam client. In the case of other conduct, the request
shall give information sufficient for the Code of Ethics Officer to
ascertain whether the conduct raises questions of propriety or conflict of
interest (real or apparent).

The Code of Ethics Officer shall make every effort to promptly render a
written determination concerning the request for an ad hoc exemption.

5. Appeal to Code of Ethics Officer with Respect to Restricted List. If an
employee ascertains that a security that he wishes to trade for his
personal account appears on the Restricted List, and thus the transaction
is prohibited, he may appeal the prohibition to the Code of Ethics Officer
by submitting a written memorandum containing the same information as would
be required in a request for a determination. The Code of Ethics Officer
shall make every effort to respond to the appeal promptly.

6. Information Concerning Identity of Compliance Personnel. The names of
Code of Ethics personnel are available by contacting the Legal and
Compliance Department.

Appendix A

Policy Statement Concerning Insider Trading Prohibitions

PUTNAM INVESTMENTS

[SCALE LOGO OMITTED]

* Preamble

Putnam has always forbidden trading on material nonpublic information
("inside information") by its employees. Tougher federal laws make it
important for Putnam to restate that prohibition in the strongest possible
terms, and to establish, maintain, and enforce written policies and
procedures to prevent the misuse of material nonpublic information.

Unlawful trading while in possession of inside information can be a crime.
Today, federal law provides that an individual convicted of trading on
inside information go to jail for some period of time. There is also
significant monetary liability for an inside trader; the Securities and
Exchange Commission can seek a court order requiring a violator to pay back
profits and penalties of up to three times those profits. In addition,
private plaintiffs can seek recovery for harm suffered by them. The inside
trader is not the only one subject to liability. In certain cases,
"controlling persons" of inside traders (including supervisors of inside
traders or Putnam itself) can be liable for large penalties.

Section 1 of this Policy Statement contains rules concerning inside
information. Section 2 contains a discussion of what constitutes unlawful
insider trading.

Neither material nonpublic information nor unlawful insider trading is easy
to define. Section 2 of this Policy Statement gives a general overview of
the law in this area. However, the legal issues are complex and must be
resolved by the Code of Ethics Officer. If an employee has any doubt as to
whether she has received material nonpublic information, she must consult
with the Code of Ethics Officer prior to using that information in
connection with the purchase or sale of a security for his own account or
the account of any Putnam client, or communicating the information to
others. A simple rule of thumb is if you think the information is not
available to the public at large, don't disclose it to others and don't
trade securities to which the inside information relates. If an employee
has failed to consult the Code of Ethics Officer, Putnam will not excuse
employee misuse of inside information on the ground that the employee
claims to have been confused about this Policy Statement or the nature of
the information in his possession.

If Putnam determines, in its sole discretion, that an employee has failed
to abide by this Policy Statement, or has engaged in conduct that raises a
significant question concerning insider trading, he will be subject to
disciplinary action, including termination of employment.

THERE ARE NO EXCEPTIONS TO THIS POLICY STATEMENT AND NO ONE IS EXEMPT.

* Definitions: Insider Trading

Gender references in Appendix A alternate.

Code of Ethics Administrator. The individual designated by the Code of
Ethics Officer to assume responsibility for day-to-day, non-discretionary
administration of this Policy Statement.

Code of Ethics Officer. The Putnam officer who has been assigned the
responsibility of enforcing and interpreting this Policy Statement. The
Code of Ethics Officer shall be the General Counsel or such other person as
is designated by the President of Putnam Investments. If he is unavailable,
the Deputy Code of Ethics Officer (to be appointed by the Code of Ethics
Officer) shall act in his stead.

Immediate family. Spouse, minor children or other relatives living in the
same household as the Putnam employee.

Purchase or sale of a security. Any acquisition or transfer of any interest
in the security for direct or indirect consideration, including the writing
of an option.

Putnam. Any or all of Putnam Investments, Inc., and its subsidiaries, any
one of which shall be a "Putnam company."

Putnam client. Any of the Putnam Funds, or any advisory or trust client of
Putnam.

Putnam employee (or "employee"). Any employee of Putnam.

Security. Anything defined as a security under federal law. The term
includes any type of equity or debt security, any interest in a business
trust or partnership, and any rights relating to a security, such as put
and call options, warrants, convertible securities, and securities indices.
(Note: The definition of "security" in this Policy Statement varies
significantly from that in the Code of Ethics. For example, the definition
in this Policy Statement specifically includes securities of The Marsh &
McLennan Companies, Inc.)

Transaction for a personal account (or "personal securities transaction").
Securities transactions: (a) for the personal account of any employee; (b)
for the account of a member of the immediate family of any employee; (c)
for the account of a partnership in which a Putnam employee or immediate
family member is a partner with investment discretion; (d) for the account
of a trust in which a Putnam employee or immediate family member is a
trustee with investment discretion; (e) for the account of a closely-held
corporation in which a Putnam employee or immediate family member holds
shares and for which he has investment discretion; and (f) for any account
other than a Putnam client account which receives investment advice of any
sort from the employee or immediate family member, or as to which the
employee or immediate family member has investment discretion.
Officers and employees of Putnam Europe Ltd. ("PEL") must also consult the
relevant procedures on compliance with U.K. insider dealing legislation set
forth in PEL's Compliance Manual (see Rule 3 of Section IV of the Code of
Ethics).

* Section 1. Rules Concerning Inside Information

RULE 1

No Putnam employee shall purchase or sell any security listed on the Inside
Information List (the "Red List") either for his personal account or for a
Putnam client.

IMPLEMENTATION

When an employee contacts the Code of Ethics Administrator seeking
clearance for a personal securities transaction, the Code of Ethics
Administrator's response as to whether a security appears on the Restricted
List will include securities on the Red List.

COMMENT

This Rule is designed to prohibit any employee from trading a security
while Putnam may have inside information concerning that security or the
issuer. Every trade, whether for a personal account or for a Putnam client,
is subject to this Rule.

RULE 2

No Putnam employee shall purchase or sell any security, either for a
personal account or for the account of a Putnam client, while in possession
of material, nonpublic information concerning that security or the issuer,
without the prior written approval of the Code of Ethics Officer.

IMPLEMENTATION

In order to obtain prior written approval of the Code of Ethics Officer, a
Putnam employee should follow the reporting steps prescribed in Rule 3.

COMMENTS

1. Rule 1 concerns the conduct of an employee when Putnam possesses
material nonpublic information. Rule 2 concerns the conduct of an employee
who herself possesses material, nonpublic information about a security that
is not yet on the Red List.

2. If an employee has any question as to whether information she possesses
is material and/or nonpublic information, she must contact the Code of
Ethics Officer in accordance with Rule 3 prior to purchasing or selling any
security related to the information or communicating the information to
others. The Code of Ethics Officer shall have the sole authority to
determine what constitutes material, nonpublic information for the purposes
of this Policy Statement. An employee's mistaken belief that the
information was not material nonpublic information will not excuse a
violation of this Policy Statement.

RULE 3

Any Putnam employee who believes he may have received material, nonpublic
information concerning a security or the issuer shall immediately report
the information to the Code of Ethics Officer and to no one else. After
reporting the information, the Putnam employee shall comply strictly with
Rule 2 by not trading in the security without the prior written approval of
the Code of Ethics Officer and shall: (a) take precautions to ensure the
continued confidentiality of the information; and (b) refrain from
communicating the information in question to any person.

EXCEPTION

This rule shall not apply to material, nonpublic information obtained by
Putnam employees who are directors or trustees of publicly traded
companies, to the extent that such information is received in their
capacities as directors or trustees, and then only to the extent such
information is not communicated to anyone else within the Putnam
organization.

IMPLEMENTATION

1. In order to make any use of potential material, nonpublic information,
including purchasing or selling a security or communicating the information
to others, an employee must communicate that information to the Code of
Ethics Officer in a way designed to prevent the spread of such information.
Once the employee has reported potential material, nonpublic information to
the Code of Ethics Officer, the Code of Ethics Officer will evaluate
whether information constitutes material, nonpublic information, and
whether a duty exists that makes use of such information improper. If the
Code of Ethics Officer determines either (a) that the information is not
material or is public, or (b) that use of the information is proper, he
will issue a written approval to the employee specifically authorizing
trading while in possession of the information, if the employee so
requests. If the Code of Ethics Officer determines (a) that the information
may be nonpublic and material, and (b) that use of such information may be
improper, he will place the security that is the subject of such
information on the Red List.

2. An employee who reports potential inside information to the Code of
Ethics Officer should expect that the Code of Ethics Officer will need
significant information to make the evaluation described in the foregoing
paragraph, including information about (a) the manner in which the employee
acquired the information, and (b) the identity of individuals to whom the
employee has revealed the information, or who have otherwise learned the
information. The Code of Ethics Officer may place the affected security or
securities on the Red List pending the completion of his evaluation.

3. If an employee possesses documents, disks, or other materials containing
the potential inside information, an employee must take precautions to
ensure the confidentiality of the information in question. Those
precautions include (a) putting documents containing such information out
of the view of a casual observer, and (b) securing files containing such
documents or ensuring that computer files reflecting such information are
secure from viewing by others.

* Section 2. Overview of Insider Trading

A. Introduction

This section of the Policy Statement provides guidelines for employees as
to what may constitute inside information. It is possible that in the
course of her employment, an employee may receive inside information. No
employee should misuse that information, either by trading for her own
account or by communicating the information to others.

B. What constitutes unlawful insider trading?

The basic definition of unlawful insider trading is trading on material,
nonpublic information (also called "inside information") by an individual
who has a duty not to "take advantage" of the information. What does this
definition mean? The following sections help explain the definition.

1. What is material information?

Trading on inside information is not a basis for liability unless the
information is material. Information is "material" if a reasonable person
would attach importance to the information in determining his course of
action with respect to a security. Information which is reasonably likely
to affect the price of a company's securities is "material," but effect on
price is not the sole criterion for determining materiality. Information
that employees should consider material includes but is not limited to:
dividend changes, earnings estimates, changes in previously released
earnings estimates, reorganization, recapitalization, asset sales, plans to
commence a tender offer, merger or acquisition proposals or agreements,
major litigation, liquidity problems, significant contracts, and
extraordinary management developments.

Material information does not have to relate to a company's business. For
example, a court considered as material certain information about the contents
of a forthcoming newspaper column that was expected to affect the market price
of a security. In that case, a reporter for The Wall Street Journal was found
criminally liable for disclosing to others the dates that reports on various
companies would appear in the Journal's "Heard on the Street" column and
whether those reports would be favorable or not.

2. What is nonpublic information?

Information is nonpublic until it has been effectively communicated to, and
sufficient opportunity has existed for it to be absorbed by, the marketplace.
One must be able to point to some fact to show that the information is
generally public. For example, information found in a report filed with the
Securities and Exchange Commission, or appearing in Dow Jones, Reuters
Economic Services, The Wall Street Journal, or other publications of general
circulation would be considered public.

3. Who has a duty not to "take advantage" of inside information?

Unlawful insider trading occurs only if there is a duty not to "take
advantage" of material nonpublic information. When there is no such duty,
it is permissible to trade while in possession of such information.
Questions as to whether a duty exists are complex, fact-specific, and must
be answered by a lawyer.

a. Insiders and Temporary Insiders. Corporate "insiders" have a duty not to
take advantage of inside information. The concept of "insider" is broad. It
includes officers, directors, and employees of a corporation. In addition,
a person can be a "temporary insider" if she enters into a special
confidential relationship with a corporation and as a result is given
access to information concerning the corporation's affairs. A temporary
insider can include, among others, accounting firms, consulting firms, law
firms, banks and the employees of such organizations. Putnam would
generally be a temporary insider of a corporation it advises or for which
it performs other services, because typically Putnam clients expect Putnam
to keep any information disclosed to it confidential.

Example

An investment adviser to the pension fund of a large publicly-traded
corporation, Acme, Inc., learns from an Acme employee that Acme will not be
making the minimum required annual contribution to the pension fund because
of a serious downturn in Acme's financial situation. The information
conveyed is material and nonpublic.

Comment

Neither the investment adviser, its employees, nor clients can trade on the
basis of that information, because the investment adviser and its employees
could be considered "temporary insiders" of Acme.

b. Misappropriators. Certain people who are not insiders (or temporary
insiders) also have a duty not to deceptively take advantage of inside
information. Included in this category is an individual who
"misappropriates" (or takes for his own use) material, nonpublic
information in violation of a duty owed either to the corporation that is
the subject of inside information or some other entity. Such a
misappropriator can be held liable if he trades while in possession of that
material, nonpublic information.

Example

The chief financial officer of Acme, Inc., is aware of Acme's plans to
engage in a hostile takeover of Profit, Inc. The proposed hostile takeover
is material and nonpublic.

COMMENT

The chief financial officer of Acme cannot trade in Profit, Inc.'s stock
for his own account. Even though he owes no duty to Profit, Inc., or its
shareholders, he owes a duty to Acme not to "take advantage" of the
information about the proposed hostile takeover by using it for his
personal benefit.

c. Tippers and Tippees. A person (the "tippee") who receives material,
nonpublic information from an insider or misappropriator (the "tipper") has
a duty not to trade while in possession of that information if he knew or
should have known that the information was provided by the tipper for an
improper purpose and in breach of a duty owed by the tipper. In this
context, it is an improper purpose for a person to provide such information
for personal benefit, such as money, affection, or friendship.

Example

The chief executive officer of Acme, Inc., tells his daughter that
negotiations concerning a previously-announced acquisition of Acme have
been terminated. This news is material and, at the time the father tells
his daughter, nonpublic. The daughter sells her shares of Acme.

Comment

The father is a tipper because he has a duty to Acme and its shareholders
not to "take advantage" of the information concerning the breakdown of
negotiations, and he has conveyed the information for an "improper" purpose
(here, out of love and affection for his daughter). The daughter is a
"tippee" and is liable for trading on inside information because she knew
or should have known that her father was conveying the information to her
for his personal benefit, and that her father had a duty not to "take
advantage" of Acme information.

A person can be a tippee even if he did not learn the information directly
from the tipper, but learned it from a previous tippee.

Example

An employee of a law firm which works on mergers and acquisitions learns at
work about impending acquisitions. She tells her friend and her friend's
stockbroker about the upcoming acquisitions on a regular basis. The
stockbroker tells the brother of a client on a regular basis, who in turn
tells two friends, A and B. A and B buy shares of the companies being
acquired before public announcement of the acquisition, and regularly
profit from such purchases. A and B do not know the employee of the law
firm. They do not, however, ask about the source of the information.

Comment

A and B, although they have never heard of the tipper, are tippees because
they did not ask about the source of the information, even though they were
experienced investors, and were aware that the "tips" they received from
this particular source were always right.

C. Who can be liable for insider trading?

The categories of individuals discussed above (insiders, temporary
insiders, misappropriators or tippees) can be liable if they trade while in
possession of material nonpublic information.

In addition, individuals other than those who actually trade on inside
information can be liable for trades of others. A tipper can be liable if
(a) he provided the information in exchange for a personal benefit in
breach of a duty and (b) the recipient of the information (the "tippee")
traded while in possession of the information.

Most importantly, a controlling person can be liable if the controlling
person "knew or recklessly disregarded" the fact that the controlled person
was likely to engage in misuse of inside information and failed to take
appropriate steps to prevent it. Putnam is a "controlling person" of its
employees. In addition, certain supervisors may be "controlling persons" of
those employees they supervise.

EXAMPLE

A supervisor of an analyst learns that the analyst has, over a long period
of time, secretly received material inside information from Acme, Inc.'s
chief financial officer. The supervisor learns that the analyst has engaged
in a number of trades for his personal account on the basis of the inside
information. The supervisor takes no action.

COMMENT

Even if he is not liable to a private plaintiff, the supervisor can be
liable to the Securities and Exchange Commission for a civil penalty of up
to three times the amount of the analyst's profit. (Penalties are discussed
in the following section.)

D. Penalties for Insider Trading

Penalties for misuse of inside information are severe, both for individuals
involved in such unlawful conduct and their employers. A person who
violates the insider trading laws can be subject to some or all of the
penalties below, even if he does not personally benefit from the violation.

Penalties include:

- -- jail sentences (of which at least one to three years must be served)

- -- criminal penalties for individuals of up to $1,000,000, and for corporations
of up to $2,500,000

- -- injunctions permanently preventing an individual from working in the
securities industry

- -- injunctions ordering an individual to pay over profits obtained from
unlawful insider trading

- -- civil penalties of up to three times the profit gained or loss avoided by
the trader, even if the individual paying the penalty did not trade or did not
benefit personally

- -- civil penalties for the employer or other controlling person of up to the
greater of $1,000,000 or three times the amount of profit gained or loss
avoided

- -- damages in the amount of actual losses suffered by other participants in
the market for the security at issue.

Regardless of whether penalties or money damages are sought by others,
Putnam will take whatever action it deems appropriate (including dismissal)
if Putnam determines, in its sole discretion, that an employee appears to
have committed any violation of this Policy Statement, or to have engaged
in any conduct which raises significant questions about whether an insider
trading violation has occurred.

* Appendix B. Policy Statement Regarding Employee Trades in Shares of Putnam
Closed-End Funds

1. Pre-clearance for all employees

Any purchase or sale of Putnam closed-end fund shares by a Putnam employee
must be pre-cleared by the Code of Ethics Officer or, in his absence, the
Deputy Code of Ethics Officer. A list of the closed-end funds can be
obtained from the Code of Ethics Administrator. Trading in shares of
closed-end funds is subject to all the rules of the Code of Ethics.

2. Special Rules Applicable to Managing Directors of Putnam Investment
Management, Inc. and officers of the Putnam Funds

Please be aware that any employee who is a Managing Director of Putnam
Investment Management, Inc. (the investment manager of the Putnam mutual
funds) and officers of the Putnam Funds will not receive clearance to
engage in any combination of purchase and sale or sale and purchase of the
shares of a given closed-end fund within six months of each other.
Therefore, purchases should be made only if you intend to hold the shares
more than six months; no sales of fund shares should be made if you intend
to purchase additional shares of that same fund within six months.

You are also required to file certain forms with the Securities and
Exchange Commission in connection with purchases and sales of Putnam
closed-end funds. Please contact the Code of Ethics Officer or Deputy Code
of Ethics Officer for further information.

3. Reporting by all employees

As with any purchase or sale of a security, duplicate confirmations of all
such purchases and sales must be forwarded to the Code of Ethics Officer by
the broker-dealer utilized by an employee. If you are required to file a
quarterly report of all personal securities transactions, this report
should include all purchases and sales of closed-end fund shares.

Please contact the Code of Ethics Officer or Deputy Code of Ethics Officer
if there are any questions regarding these matters.

*Appendix C. Clearance Form for Portfolio Manager Sales Out of Personal
Account of Securities Also Held by Fund (For compliance with
"Contra-Trading" Rule)

TO: Code of Ethics Officer

FROM:
---------------------------------
DATE:
---------------------------------

RE: Personal Securities Transaction of
---------------------------------

This serves as prior written approval of the personal securities
transaction described below:

NAME OF PORTFOLIO MANAGER CONTEMPLATING PERSONAL TRADE:

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

SECURITY TO BE TRADED:

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

AMOUNT TO BE TRADED:
---------------------------------

FUND HOLDING SECURITIES:
---------------------------------

AMOUNT HELD BY FUND:
---------------------------------

REASON FOR PERSONAL TRADE:
---------------------------------

SPECIFIC REASON SALE OF SECURITIES IS INAPPROPRIATE FOR FUND:

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

(Please attach additional sheets if necessary.)

CIO APPROVAL: DATE:
-------------------------------------- ----------------

LEGAL/COMPLIANCE APPROVAL: DATE:
------------------------- ----------------

* Appendix D. Procedures for Approval of New Financial Instruments

1. Summary

a. Putnam has adopted procedures for the introduction of new instruments
and securities, focusing on, but not limited to, derivatives.

b. No new types of securities or instruments may be purchased for any
Putnam fund or other client account without the approval of Putnam's New
Securities Review Committee ("NSRC").

c. Putnam publishes from time to time a list of approved derivatives. The
purchase of any derivative not listed is prohibited without specific
authorization from the NSRC.

2. Procedures

a. Introduction. The purchase and sale of financial instruments that have
not been used previously at Putnam raise significant investment, business,
operational, and compliance issues. In order to address these issues in a
comprehensive manner, Putnam has adopted the following procedures for
obtaining approval of the use of new instruments or investments. In
addition, to provide guidance regarding the purchase of derivatives, Putnam
publishes from time to time a list of approved derivatives. Only
derivatives listed may be used for Putnam funds or accounts unless
specifically authorized by the NSRC.

b. Process of approval. An investment professional wishing to purchase a
new type of investment should discuss it with the Investment Division's
Administrative office (the current contact is Julie Malloy). Investment
Division Administration will coordinate a review of a new instrument by
appropriate NSRC members from an investment, operational and compliance
perspective, including the review of instruments by the Administrative
Services Division of PFTC. Based on this review, the NSRC will then approve
or disapprove the proposed new investment. Investment professionals must
build in adequate time for this review before planned use of a new
instrument. Further, the approval of the NSRC is only a general one.
Individual fund and account guidelines must be reviewed in accordance with
standard compliance procedures to determine whether purchase is permitted.
In addition, if the instrument involves legal documentation, that
documentation must be reviewed and be completed before trading. The NSRC
may prepare a compliance and operational manual for the new derivative.

3. Violations

a. Putnam's Operating Committee has determined that adherence to rigorous
internal controls and procedures for novel securities and instruments is
necessary to protect Putnam's business standing and reputation. Violation
of these procedures will be treated as violation of both compliance
guidelines and Putnam's Code of Ethics. Putnam encourages questions and
expects that these guidelines will be interpreted conservatively.

* Index

"7-Day Rule"
for transactions by managers, analysts and CIOs, 14

"60-Day Rule", 13

Access Persons

definition, ix
special rules on trading, 13, 32

Analysts
special rules on trading by, 13

Appeals
Procedures, 37

Bankers' acceptances
excluded from securities, x

Blackout rule
on trading by portfolio managers, analysts and CIOs, 15

Boycotts
reporting of requests to participate, 33

Bribes, 21

CDs
excluded from securities, x

Claims against Putnam
reporting of, 33

Clearance
how long pre-clearance is valid, 4
required for personal securities transactions, 1

Closed-end funds
rules on trading, 55

Commercial paper
excluded from securities, x

Commodities (other than securities indices)
excluded from securities, x

Computer use
compliance with corporate policies required, 27

Confidentiality
required of all employees, 22

Confirmations
of personal transactions required, 31

Conflicts of interest
with Putnam and Putnam clients prohibited, 19

Contra-trading rule
transactions by managers and CIOs, 17

Convertible securities
defined as securities, x

Currencies
excluded as securities, x

Director
serving as for another entity prohibited, 23

Employee
serving as for another entity prohibited, 23

Excessive trading (over 10 trades)
by employees strongly discouraged, 10

Exemptions
basis for, 10

Family members
covered in personal securities transactions, x, 43

Fiduciary
serving as for another entity prohibited, 23

Fraudulent or irregular activities
reporting of, 33

Gifts
restrictions on receipt of by employees, 19

Government or regulatory agencies
reporting of communications from, 33

Holdings
disclosure of by Access Persons, 32

Initial public offerings/IPOs
purchases in prohibited, 6

Insider trading
policy statement and explanations, 39
prohibited, 9

Investment clubs
prohibited, 24

Investment Grade Exception
for clearance of fixed income securities on Restricted List, 2

Involuntary personal securities transactions
exempted, 10
exemption defined, 6

Large Cap Exception
for clearance of securities on Restricted List, 1

Marsh & McLennan Companies stock
excluded from securities, x

Money market instruments
excluded from securities, x

Mutual fund shares (open end)
excluded from securities, x

Naked options
by employees discouraged, 9

New financial instruments
procedures for approval, 59

Non-Putnam affiliates (NPAs)
transactions and relationships with, 25

Officer
serving as for another entity prohibited, 23

Options
defined as securities, x
relationship to securities on Restricted or Red Lists, 5

Partner
serving as general partner of another entity prohibited, 23

Partnerships
covered in personal securities transactions, x, 43

Personal securities transaction
defined, x, 43

Pink sheet reports
quarterly reporting requirements, 32

Political contributions, 22

Portfolio managers
special rules on trading by, 13

Private offerings or placements
purchases of prohibited, 7

Putnam Europe Ltd.
special rules for, 29

Repurchase agreements
excluded from securities, x

Sale
defined, x, 43

Sanctions, vii
for failure to pre-clear properly, 3

Shares by subscription
procedures to preclear the purchase and sales of Shares by Subscription, 2

Short sales
by employees prohibited conduct, 6

Solicitations
by Putnam employees restricted, 21

Tender offers
partial exemption from clearance rules, 6

Trustee
serving as for another entity prohibited, 23

Trusts
covered in personal securities transactions, x, 43

U.S. government obligations
excluded from securities, x

Violations of Law
reporting of, 33

Warrants
defined as securities, x

THE PUTNAM FUNDS

Code of Ethics

Each of The Putnam Funds (the "Funds") has determined to adopt this Code of
Ethics with respect to certain types of personal securities transactions by
officers and Trustees of the Funds which might be deemed to create possible
conflicts of interest and to establish reporting requirements and
enforcement procedures with respect to such transactions.

I. Rules Applicable to Officers and Trustees
Affiliated with Putnam Investments, Inc.

A. Incorporation of Adviser's Code of Ethics. The provisions of the Code
of Ethics for employees of Putnam Investments, Inc. and its Subsidiaries
(the "Putnam Investments Code of Ethics"), which is attached as Appendix A
hereto, are hereby incorporated herein as the Funds' Code of Ethics
applicable to officers and Trustees of the Funds who are employees of the
Funds or officers, directors or employees of Putnam Investments, Inc. or
its subsidiaries. A violation of the Putnam Investments Code of Ethics
shall constitute a violation of the Funds' Code.

B. Reports. Officers and Trustees of each of the Funds who are made
subject to the Putnam Investments Code of Ethics pursuant to the preceding
paragraph shall file the reports required by the Putnam Investments Code of
Ethics with the Compliance Director designated therein. A report filed
with the Compliance Director shall be deemed to be filed with each of the
Funds of which the reporting individual is an officer or Trustee.

C. Review. (1) The Compliance Director shall compare the reported
personal securities transactions with completed and contemplated portfolio
transactions of each of the Funds to determine whether a violation of this
Code may have occurred. Before making any determination that a violation
has been committed by any person, the Compliance Director shall give such
person an opportunity to supply additional explanatory material.

(2) If the Compliance Director determines that a violation of this Code has
or may have occurred, he shall submit his written determination, together
with the confidential quarterly report and any additional explanatory
material provided by the individual, to the Chairman of the Funds, who
shall make an independent determination of whether a violation has
occurred.

D. Sanctions. If the Chairman of the Funds finds that a violation has
occurred, he shall report the violation and any sanction imposed under the
Putnam Code of Ethics to the Trustees of the Funds who may impose such
additional sanctions as they deem appropriate. If a securities transaction
of the Chairman is under consideration, the Vice Chairman of the Funds
shall act in all respects in the manner prescribed herein for the Chairman.

II. Rules Applicable to Unaffiliated Trustees

A. Definitions.

(1) "Beneficial ownership" shall be interpreted in the same manner as it
would be in determining whether a person is subject to the provisions of
Section 16 of the Securities Exchange Act of 1934 and the rules and
regulations thereunder. Application of this definition is explained in
more detail in Exhibit A hereto.

(2) "Control" means the power to exercise a controlling influence over the
management or policies of a company, unless such power is solely the result
of an official position with such company.

(3) "Interested Trustee" means a Trustee of a Fund who is an "interested
person" of the Fund within the meaning of the Investment Company Act.

(4) "Purchase or sale of a security" includes, among other things, the
writing of an option to purchase or sell a security.

(5) "Security" shall have the same meaning as that set forth in Section
2(a)(36) of the Investment Company Act (in effect, all securities) except
that it shall not include securities issued by the Government of the United
States or an agency thereof, bankers' acceptances, bank certificates of
deposit, commercial paper and shares of registered open-end investment
companies.

(6) "Unaffiliated Trustee" means a Trustee who is not made subject to the
Putnam Investments Code of Ethics pursuant to Part I hereof.

B. Prohibited Purchases and Sales. No Unaffiliated Trustee of any of the
Funds shall purchase or sell, directly or indirectly, any security in which
he has or by reason of such transaction acquires, any direct or indirect
beneficial ownership and which to his actual knowledge at the time of such
purchase or sale:

(1) is being considered for purchase or sale by the Fund;

(2) is being purchased or sold by the Fund; or

(3) was purchased or sold by the Fund within the most recent five days if
such person participated in the recommendation to, or the decision by,
Putnam Management to purchase or sell such security for the Fund.

C. Exempted Transactions. The prohibitions of Section II-B of this Code
shall not apply to:

(1) purchases or sales effected in any account over which the Unaffiliated
Trustee has no direct or indirect influence or control;

(2) purchases or sales which are non-volitional on the part of either the
Unaffiliated Trustee or the Fund;

(3) purchases which are part of an automatic dividend reinvestment plan;

(4) purchases effected upon the exercise of rights issued by an issuer pro
rata to all holders of a class of its securities, to the extent such rights
were acquired from such issuer, and sales of such rights so acquired;

(5) purchases or sales other than those exempted in (1) through (4) above
which do not cause the Unaffiliated Trustee to gain improperly a personal
benefit through his relationship with the Fund and are only remotely
potentially harmful to a Fund because they would be very unlikely to affect
a highly institutional market, and are previously approved by the
Compliance Director under the Putnam Code of Ethics or the Chairman of the
Funds, which approval shall be confirmed in writing.

D. Reporting. (1) Whether or not one of the exemptions listed in Section
II-C applies, every Unaffiliated Trustee of a Fund shall file with the
Chairman of the Funds a report containing the information described in
Section II-D(2) of this Code with respect to transactions in any security
in which such Unaffiliated Trustee has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership, if such Trustee, at
the time of that transaction, knew or, in the ordinary course of fulfilling
his official duties as a Trustee of the Fund, should have known that,
during the 15-day period immediately preceding or after the date of the
transaction by the Trustee:

(a) such security was or is to be purchased or sold by the Fund or

(b) such security was or is being considered for purchase or sale by the
Fund;

provided, however, that an Unaffiliated Trustee shall not be required to
make a report with respect to transactions effected for any account over
which such person does not have any direct or indirect influence or
control.

(2) Every report shall be made not later than 10 days after the end of the
calendar quarter in which the transaction to which the report relates was
effected, and shall contain the following information:

(a) The date of the transaction, the title and the number of shares, and
the principal amount of each security involved;

(b) The nature of the transaction (i.e., purchase, sale or any other type
of acquisition or disposition);

(d) The name of the broker, dealer or bank with or through whom the
transaction was effected.

(3) Every report concerning a purchase or sale prohibited under Section
II-B hereof with respect to which the reporting person relies upon one of
the exemptions provided in Section IIC shall contain a brief statement of
the exemption relied upon and the circumstances of the transaction.

(4) Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he has any
direct or indirect beneficial ownership in the security to which the report
relates.

(5) Notwithstanding anything to the contrary contained herein, an
Unaffiliated Trustee who is an Interested Trustee shall also file the
reports required by Rule 17j-1(c)(1) under the Investment Company Act of
1940.

E. Review. (1) The Chairman of the Funds shall compare the reported
personal securities transactions with completed and contemplated portfolio
transactions of the Funds to determine whether any transaction ("Reviewable
Transactions") listed in Section II-B (disregarding exemptions provided by
Section II-C(1) through (5)) may have occurred.

(2) If the Chairman determines that a Reviewable Transaction may have
occurred, he shall then determine whether a violation of this Code may have
occurred, taking into account all the exemptions provided under Section
II-C. Before making any determination that a violation has occurred, the
Chairman shall give the person involved an opportunity to supply additional
information regarding the transaction in question.

F. Sanctions. If the Chairman determines that a violation of this Code
has occurred, he shall so advise a committee consisting of the Unaffiliated
Trustees, other than the person whose transaction is under consideration,
and shall provide the committee with a report of the matter, including any
additional information supplied by such person. The committee may impose
such sanction as it deems appropriate.

III. Miscellaneous.

A. Amendments to The Putnam Companies Code of Ethics. Any amendment to
the Putnam Companies Code of Ethics shall be deemed an amendment to Section
I-A of this Code effective 30 days after written notice of such amendment
shall have been received by the Chairman of the Funds, unless the Trustees
of the Funds expressly determine that such amendment shall become effective
at an earlier or later date or shall not be adopted.

B. Records. The Funds shall maintain records in the manner and to the
extent set forth below, which records may be maintained on microfilm under
the conditions described in Rule 31a-2(f)(1) under the Investment Company
Act and shall be available for examination by representatives of the
Securities and Exchange Commission.

(1) A copy of this Code and any other code which is, or at any time within
the past five years has been, in effect shall be preserved in an easily
accessible place;

(2) A record of any violation of this Code and of any action taken as a
result of such violation shall be preserved in an easily accessible place
for a period of not less than five years following the end of the fiscal
year in which the violation occurs;

(3) A copy of each report made by an officer or Trustee pursuant to this
Code shall be preserved for a period of not less than five years from the
end of the fiscal year in which it is made, the first two years in an
easily accessible place; and

(4) A list of all person who are, or within the past five years have been,
required to make reports pursuant to this Code shall be maintained in an
easily accessible place.

C. Confidentiality. All reports of securities transactions and any other
information filed with any Fund pursuant to this Code shall be treated as
confidential, but are subject to review as provided herein and by personnel
of the Securities and Exchange Commission.

D. Interpretation of Provisions. The Directors and Trustees may from time
to time adopt such interpretations of this Code as they deem appropriate.

E. Delegation by Chairman. The Chairman of the Funds may from time to
time delegate any or all of his responsibilities under this Code, either
generally or as to specific instances, to such officer or Trustee of the
Funds as he may designate.

As revised
July 8, 1994