-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
QdJPLBCG9MT38/N6XiJ2guLk5qAP7h1eB9qCHj0eaerWRleEriC2T/jho3V+Hxi9
IPVRPBmDD4elqnJDk4J9UQ==
Putnam Prospectus </R> Fund summary Goal <R> Putnam Voyager Fund seeks capital appreciation. Fees and expenses The following table describes the fees and expenses you may pay if you buy and hold shares of the fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Putnam funds. More information about these and other discounts is available from your financial advisor and in How do I buy fund shares? beginning on page 13 of the funds prospectus and in How to buy shares beginning on page II-1 of the funds statement of additional information (SAI). Shareholder fees (fees paid directly from your investment) Annual fund operating expenses * A deferred sales charge of 1.00% on class A shares and of 0.65% on class M shares may be imposed on certain redemptions of shares bought without an initial sales charge. ** This charge is phased out over six years. Example The following hypothetical example is intended to help you compare the cost of investing in the fund with the cost of investing in other funds. It assumes that you invest $10,000 in the fund for the time periods indicated and then, except as indicated, redeem all your shares at the end of those periods. It assumes a 5% return on your investment each year and that the funds operating expenses remain the same. Your actual costs may be higher or lower. Portfolio turnover The fund pays transaction-related costs when it buys and sells securities (or turns over its portfolio). A higher turnover rate may indicate higher transaction costs and may result in higher taxes when the funds shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or the above example, affect fund performance. The funds turnover rate in the most recent fiscal year was 177%. Investments, risks, and performance Investments We invest mainly in common stocks of midsize and large U.S. companies, with a focus on growth stocks. Growth stocks are issued by companies whose earnings are expected to grow faster than those of similar firms and whose business growth and other characteristics may lead to an increase in stock price. We may consider, among other factors, a companys valuation, financial strength, growth potential, competitive position in its industry, projected future earnings, cash flows and dividends when deciding whether to buy or sell investments. Risks It is important to understand that you can lose money by investing in the fund. The prices of stocks in the funds portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including both general financial market conditions and factors related to a specific issuer or industry. These risks are generally greater for small and midsize companies. Growth stocks may be more susceptible to earnings disappointments, and the market may not favor growth-style investing. The fund may not achieve its goal, and it is not intended to be a complete investment program. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Performance The performance information below gives some indication of the risks associated with an investment in the fund by showing the funds performance year to year and over time. The bar chart does not reflect the impact of sales charges. If it did, performance would be lower. Please remember that past performance is not necessarily an indication of future results. Monthly performance figures for the fund are available at putnam.com.
Average annual total returns after sales charges After-tax returns reflect the historical highest individual federal marginal income tax rates and do not reflect state and local taxes. Actual after-tax returns depend on an investors tax situation and may differ from those shown. After-tax returns are shown for class A shares only and will vary for other classes. These after-tax returns do not apply if you hold your fund shares through a 401(k) plan, an IRA, or another tax-advantaged arrangement. Class B share performance does not reflect conversion to class A shares. Your funds management Investment advisor Putnam Investment Management, LLC Portfolio manager Nick Thakore, Head of U.S. Equities, portfolio manager of the fund since 2008 Purchase and sale of fund shares You can open an account, purchase and/or sell fund shares, or exchange them for shares of another Putnam fund by contacting your financial advisor or by calling Putnam Investor Services at 1-800-225-1581. When opening an account, you must complete and mail a Putnam account application, along with a check made payable to the fund, to: Putnam Investor Services, P.O. Box 8383, Boston, MA 02266-8383. The minimum initial investment of $500 is currently waived, although Putnam reserves the right to reject initial investments under $500 at its discretion. There is no minimum for subsequent investments. You can sell your shares back to the fund or exchange them for shares of another Putnam fund any day the New York Stock Exchange is open. Shares may be sold or exchanged by mail, by phone, or online at putnam.com. Some restrictions may apply. Tax information The fund normally distributes any net investment income monthly and any net realized capital gains annually. These distributions will be taxed as ordinary income or as capital gains, unless the shares are held through a qualified retirement plan. Financial intermediary compensation If you purchase the fund through a broker/dealer or other financial intermediary (such as a bank or financial advisor), the fund and its related companies may pay that intermediary for the sale of fund shares and related services. Please bear in mind that these payments may create a conflict of interest by influencing the broker/dealer or other intermediary to recommend the fund over another investment. Ask your advisor or visit your advisors Web site for more information. </R> What are the funds main investment strategies and related risks? <R> This section contains greater detail on the funds main investment strategies and the related risks you would face as a fund shareholder. It is important to keep in mind that risk and reward generally go hand in hand; the higher the potential reward, the greater the risk. As mentioned in the fund summary, we pursue the funds goal by investing mainly in growth stocks. </R> Common stocks. Common stock represents an ownership interest in a company. The value of a companys stock may fall as a result of factors directly relating to that company, such as decisions made by its management or lower demand for the companys products or services. A stocks value may also fall because of factors affecting not just the company, but also other companies in the same industry or in a number of different industries, such as increases in production costs. From time to time, the fund may invest a significant portion of its assets in companies in one or more related industries or sectors which would make the fund more vulnerable to adverse developments affecting those industries or sectors. The value of a companys 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 companys 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 companys stock will usually react more strongly than its bonds and other debt to actual or perceived changes in the companys financial condition or prospects. Stocks of smaller companies may be more vulnerable to adverse developments than those of larger companies. <R> Growth stocks Stocks of companies we believe are fast-growing may trade at a higher multiple of current earnings than other stocks. The values of these stocks may be more sensitive to changes in current or expected earnings than the values of other stocks. If our assessment of the prospects for a companys earnings growth is wrong, or if our judgment of how other investors will value the companys earnings growth is wrong, then the price of the companys stock may fall or not approach the value that we have placed on it. </R> Small and midsize companies. These companies, some of 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 small and midsize companies may therefore be more vulnerable to adverse developments than those of larger companies. <R> Foreign investments. We may invest in foreign investments, although they do not represent a primary focus of the fund. 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 most 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, which typically have less developed legal and financial systems. </R> Certain of these risks may also apply to some extent to U.S.-traded investments that are denominated in foreign currencies, investments in U.S. companies that are traded in foreign markets or investments in U.S. companies that have significant foreign operations. <R> Derivatives. We may engage in a variety of transactions involving derivatives, such as futures, options, warrants and swap contracts, although they do not represent a primary focus of the fund. Derivatives are financial instruments whose value depends upon, or is derived from, the value of something else, such as one or more underlying investments, pools of investments, indexes or currencies. We may make use of short derivatives positions, the values of which move in the opposite direction from the price of the underlying investment, pool of investments, index or currency. We may use derivatives both for hedging and non-hedging purposes, including as a substitute for a direct investment in the securities of one or more issuers. </R> However, we may also choose not to use derivatives, based on our evaluation of market conditions or the availability of suitable derivatives. Investments in derivatives may be applied toward meeting a requirement to invest in a particular kind of investment if the derivatives have economic characteristics similar to that investment. Derivatives involve special risks and may result in losses. The successful use of derivatives depends on our ability to manage these sophisticated instruments. Some derivatives are leveraged, which means that they provide the fund with investment exposure greater than the value of the funds investment in the derivatives. As a result, these derivatives may magnify or otherwise increase investment losses to the fund. The risk of loss from certain short derivative positions is theoretically unlimited. The prices of derivatives may move in unexpected ways due to the use of leverage or other factors, especially in unusual market conditions, and may result in increased volatility. Other risks arise from the potential inability to terminate or sell derivatives positions. A liquid secondary market may not always exist for the funds derivatives positions at any time. In fact, many over-the-counter instruments (investments not traded on an exchange) will not be liquid. Over-the-counter instruments also involve the risk that the other party to the derivatives transaction will not meet its obligations. For further information about the risks of derivatives, see the SAI. Other investments. In addition to the main investment strategies described above, we may make other types of investments, such as investments in preferred stocks, convertible securities and debt instruments. The fund may also loan its portfolio securities to earn income. These practices may be subject to other risks, as described in the SAI. <R> Alternative strategies. At times we may judge that market conditions make pursuing the funds usual investment strategies inconsistent with the best interests of its shareholders. We then may temporarily invest some or all of the funds assets using 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. </R> Changes in policies. The Trustees may change the funds goal, investment strategies and other policies without shareholder approval, except as otherwise indicated. Portfolio turnover rate. The funds portfolio turnover rate measures how frequently the fund buys and sells investments. A portfolio turnover rate of 100%, for example, would mean that the fund sold and replaced securities valued at 100% of the funds assets within a one-year period. From time to time the fund may engage in frequent trading. Funds with high turnover may be more likely to realize capital gains that must be distributed to shareholders as taxable income. High turnover may also cause a fund to pay more brokerage commissions and other transaction costs, which may detract from performance. The funds portfolio turnover rate and the amount of brokerage commissions it pays will vary over time based on market conditions. <R> Portfolio holdings. The SAI includes a description of the funds policies with respect to the disclosure of its portfolio holdings. For more specific information on the funds portfolio, you may visit the Putnam Investments Web site, putnam.com/individual, where the funds top 10 holdings and related portfolio information may be viewed monthly beginning approximately 15 days after the end of each month, and full portfolio holdings may be viewed beginning on the last business day of the month after the end of each calendar quarter. This information will remain available on the Web site until the fund files a Form N-CSR or N-Q with the Securities and Exchange Commission (SEC) for the period that includes the date of the information, after which such information can be found on the SECs Web site at http://www.sec.gov. </R> Who oversees and manages the fund? The funds Trustees <R> As a shareholder of a mutual fund, you have certain rights and protections, including representation by a Board of Trustees. The Putnam Funds Board of Trustees oversees the general conduct of the funds business and represents the interests of the Putnam fund shareholders. At least 75% of the members of the Putnam Funds Board of Trustees are independent, which means they are not an officer of the fund or affiliated with Putnam Investment Management, LLC (Putnam Management). </R> The Trustees periodically review the funds investment performance and the quality of other services such as administration, custody, and investor services. At least annually, the Trustees review the fees paid to Putnam Management and its affiliates for providing or overseeing these services, as well as the overall level of the funds operating expenses. In carrying out their responsibilities, the Trustees are assisted by an administrative staff, auditors and legal counsel that are selected by the Trustees and are independent of Putnam Management and its affiliates. Contacting the funds Trustees The funds investment manager <R> The Trustees have retained Putnam Management, which has managed mutual funds since 1937, to be the funds investment manager, responsible for making investment decisions for the fund and managing the funds other affairs and business. The basis for the Trustees approval of the funds management contract and the sub-management contract described below is discussed in the funds annual report to shareholders dated July 31, 2010. Under a management contract approved by shareholders and eff ective January 1, 2010, the fund pays a monthly fee to Putnam Management at an annual rate (as a percentage of the funds average net assets for the month) that varies based on the average of the aggregate net assets of all open-end funds sponsored by Putnam Management (excluding Putnam Global Sector Fund, Putnam RetirementReady® Funds and Putnam Money Market Liquidity Fund), as determined at the close of each business day during the
month. In addition, beginning with the funds thirteenth complete calendar month of operation under the management contract, the monthly management fee will consist of the monthly base fee plus or minus a performance adjustment for the month. The amount of the performance adjustment will be calculated monthly based on a performance adjustment rate that is equal to 0.03 multiplied by the difference between the funds annualized performance (measured by the funds class A shares) and the annualized performance of the benchmark index, the Russell 1000 Growth Index, each measured over the performance period. The maximum annualized performance adjustment rates are +/ 0.12%. The performance period will be the thirty-six month period then ended or, if the new management contract has not yet been effective for thirty-six complete calendar months, the period from the date the new management contract became effective to the end of the month for whi
ch the fee adjustment is being computed. Each month, the performance adjustment rate will be multiplied by the funds average net assets over the performance period and the result will be divided by twelve. The resulting dollar amount will be added to, or subtracted from, the base fee for that month. The monthly base fee is determined based on the funds average net assets for the month, while the performance adjustment will be determined based on the funds average net assets over the performance period of up to thirty-six months. This means it is possible that, if the fund underper-forms significantly over the performance period, and the funds assets have declined significantly over that period, the negative performance adjustment may exceed the base fee. In this event, Putnam Management would make a payment to the fund. Under the funds prior management contract, the fund paid a quarterly management fee at a rate based solely on the average net assets of the fund, as determined at the close of each business day during the quarter. Based on the current management contract and the funds prior management contract, the fund paid Putnam Management a management fee (after any applicable waivers) of 0.56% of average net assets for the funds last fiscal year. Putnam Managements address is One Post Office Square, Boston, MA 02109. </R> Putnam Management has retained its affiliate Putnam Investments Limited (PIL) to make investment decisions for such fund assets as may be designated from time to time for its management by Putnam Management. Putnam Management (and not the fund) will pay a quarterly sub-management fee to PIL for its services at the annual rate of 0.35% of the average aggregate net asset value of any fund assets managed by PIL. PIL, which provides a full range of international investment advisory services to institutional clients, is located at Cassini House, 5759 St Jamess Street, London, England, SW1A 1LD. Pursuant to this arrangement, Putnam investment professionals who are based in foreign jurisdictions may serve as portfolio managers of the fund or provide other investment services, consistent with local regulations. <R> Portfolio manager. The officer of Putnam Management identified below is primarily responsible for the day-to-day management of the funds portfolio. The SAI provides information about this individuals compensation, other accounts managed by this individual and this individuals ownership of securities in the fund. How does the fund price its shares? The price of the funds 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 (NYSE) each day the exchange is open. <R> The fund values its investments for which market quotations are readily available at market value. It values all other investments and assets at their fair value, which may differ from recent market prices. For example, the fund may value a stock traded on a U.S. exchange at its fair value when the exchange closes early or trading in the stock is suspended. It may also value a stock at fair value if recent transactions in the stock have been very limited or if, in the case of a security traded on a market that closes before the NYSE closes, material information about the issuer becomes available after the close of the relevant market. The fund translates prices for its investments quoted in foreign currencies into U.S. dollars at current exchange rates, which are generally determined as of 3:00 p.m. Eastern time each day the NYSE is open. As a result, changes in the value of those currencies in relation to the U.S. dollar may affect the funds NAV. Because foreign markets may be open at different times than the NYSE, the value of the funds shares may change on days when shareholders are not able to buy or sell them. Many securities markets and exchanges outside the U.S. close before the close of the NYSE and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the NYSE. As a result, the fund has adopted fair value pricing procedures, which, among other things, require the fund to assess the fair value of foreign equity securities if there has been a movement in the
U.S. market that exceeds a specified threshold that may change from time to time. As noted above, the value determined for an investment using the funds fair value pricing procedures may differ from recent market prices for the investment. </R> How do I buy fund shares? Opening an account You can open a fund account and purchase class A, B, C, and M shares by contacting your financial representative or Putnam Investor Services at 1-800-225-1581 and obtaining a Putnam account application. The completed application, along with a check made payable to the fund, must then be returned to Putnam Investor Services at the following address: Putnam Investor Services <R> You can open a fund account with as little as $500. The minimum investment is waived if you make regular investments weekly, semi-monthly or monthly through automatic deductions from your bank checking or savings account. Although Putnam is currently waiving the minimum, it reserves the right to reject initial investments under the minimum at its discretion. </R> The fund sells its shares at the offering price, which is the NAV plus any applicable sales charge (class A and class M shares only). Your financial representative or Putnam Investor Services generally must receive your completed buy order before the close of regular trading on the NYSE for your shares to be bought at that days offering price. If you participate in a retirement plan that offers the fund, please consult your employer for information on how to purchase shares of the fund through the plan, including any restrictions or limitations that may apply. Mutual funds must obtain and verify information that identifies investors opening new accounts. If the fund is unable to collect the required information, Putnam Investor Services may not be able to open your fund account. Investors must provide their full name, residential or business address, Social Security or tax identification number, and date of birth. Entities, such as trusts, estates, corporations and partnerships, must also provide other identifying information. Putnam Investor Services may share identifying information with third parties for the purpose of verification. If Putnam Investor Services cannot verify identifying information after opening your account, the fund reserves the right to close your account. Also, 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. While the fund no longer issues certificates for fund shares, previously issued share certificates remain valid. Purchasing additional shares Once you have an existing account, you can make additional investments at any time in any amount in the following ways: Through a financial representative. Your representative will be responsible for furnishing all necessary documents to Putnam Investor Services and may charge you for his or her services. Through Putnams Systematic Investing Program. You can make regular investments weekly, semi-monthly or monthly through automatic deductions from your bank checking or savings account. Via the Internet or phone. If you have an existing Putnam fund account and you have completed and returned an Electronic Investment Authorization Form, you can buy additional shares online at putnam.com or by calling Putnam Investor Services at 1-800-225-1581. By mail. You may also request a book of investment stubs for your account. Complete an investment stub and write a check for the amount you wish to invest, payable to the fund. Return the check and investment stub to Putnam Investor Services. By wire transfer. You may buy fund shares by bank wire transfer of same-day funds. Please call Putnam Investor Services at 1-800-225-1581 for wiring instructions. Any commercial bank can transfer same-day funds by wire. The fund will normally accept wired funds for investment on the day received if they are received by the funds designated bank before the close of regular trading on the NYSE. Your bank may charge you for wiring same-day funds. Although the funds designated bank does not currently charge you for receiving same-day funds, it reserves the right to charge for this service. You cannot buy shares for tax-qualified retirement plans by wire transfer. Which class of shares is best for me? This prospectus offers you four classes of fund shares: A, B, C and M. Qualified employee-benefit plans may also choose class R shares, and certain investors described below may also choose class Y shares. Each share class represents investments in the same portfolio of securities, but each class has its own sales charge and expense structure, allowing you and your financial representative to choose the class that best suits your investment needs. When you purchase shares of a fund, you must choose a share class. Deciding which share class best suits your situation depends on a number of factors that you should discuss with your financial representative, including: How long you expect to hold your investment. Class B shares charge a contingent deferred sales charge (CDSC) on redemptions that is phased out over the first six years; class C shares charge a CDSC on redemptions in the first year. How much you intend to invest. While investments of less than $100,000 can be made in any share class, classes A and M offer sales charge discounts starting at $50,000. <R> Total expenses associated with each share class. As shown in the section entitled Fund summary Fees and expenses, each share class offers a different combination of up-front and ongoing expenses. Generally, the lower the up-front sales charge, the greater the ongoing expenses. </R> 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 charges available for investments of $50,000 or more No deferred sales charge (except that a deferred sales charge of 1.00% may be imposed 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 fees. Class B shares No initial sales charge; your entire investment goes to work immediately Deferred sales charge of up to 5.00% if shares are sold within six years of purchase Higher annual expenses, and lower dividends, than class A or M shares because of higher 12b-1 fees Convert automatically to class A shares after eight years, thereby reducing the future 12b-1 fees Orders for class B shares of one or more Putnam funds will be refused when the total value of the purchase, plus existing account balances that are eligible to be linked under a right of accumulation for purchases of class A shares (as described below), is $100,000 or more. Investors considering cumulative purchases of $100,000 or more should consider whether class A shares would be more advantageous and consult their financial representative. Class C shares No initial sales charge; your entire investment goes to work immediately Deferred sales charge of 1.00% if shares are sold within one year of purchase Higher annual expenses, and lower dividends, than class A or M shares because of higher 12b-1 fees No conversion to class A shares, so future 12b-1 fees do not decline over time Orders for class C shares of one or more Putnam funds, other than class C shares sold to qualified employee-benefit plans, will be refused when the total value of the purchase, plus existing account balances that are eligible to be linked under a right of accumulation for purchases of class A shares (as described below), is $1,000,000 or more. Investors considering cumulative purchases of $1,000,000 or more should consider whether class A shares would be more advantageous and consult their financial representative. Class M shares Initial sales charge of up to 3.50% Lower sales charges available for investments of $50,000 or more No deferred sales charge (except that a deferred sales charge of 0.65% may be imposed on certain redemptions of shares bought without an initial sales charge) Lower annual expenses, and higher dividends, than class B or C shares because of lower 12b-1 fees Higher annual expenses, and lower dividends, than class A shares because of higher 12b-1 fees No conversion to class A shares, so future 12b-1 fees do not decline over time Orders for class M shares of one or more Putnam funds, other than class M shares sold to qualified employee-benefit plans, will be refused when the total value of the purchase, plus existing account balances that are eligible to be linked under a right of accumulation for purchases of class M shares (as described below), is $1,000,000 or more. Investors considering cumulative purchases of $1,000,000 or more should consider whether class A shares would be more advantageous and consult their financial representative. Class R shares (available to qualified plans only) No initial sales charge; your entire investment goes to work immediately No deferred sales charge Lower annual expenses, and higher dividends, than class B, C or M shares because of lower 12b-1 fees Higher annual expenses, and lower dividends, than class A shares because of higher 12b-1 fees No conversion to class A shares, so future 12b-1 fees do not decline over time. Class Y shares (available only to investors listed below) The following investors may purchase class Y shares if approved by Putnam: qualified retirement plans that are clients of third-party administrators (including affiliates of Putnam) that have entered into agreements with Putnam and offer institutional share class pricing (no sales charge or 12b-1 fee); bank trust departments and trust companies that have entered into agreements with Putnam and offer institutional share class pricing to their clients; corporate IRAs administered by Putnam, if another retirement plan of the sponsor is eligible to purchase class Y shares; college savings plans that qualify for tax-exempt treatment under Section 529 of the Internal Revenue Code; other Putnam funds and Putnam investment products; investors purchasing shares through an asset-based fee program which regularly offers institutional share classes and which is sponsored by a registered broker-dealer or other financial institution that has entered into an agreement with Putnam; <R> clients of a financial representative who are charged a fee for consulting or similar services; corporations, endowments, and foundations that have entered into an arrangement with Putnam; and </R> fee-paying clients of a registered investment advisor (RIA) who initially invests for clients an aggregate of at least $100,000 in Putnam funds through a fund supermarket or other mutual fund trading platform sponsored by a broker-dealer or trust company of which the RIA is not an affiliated or associated person and which has entered into an agreement with Putnam. Trust companies or bank trust departments that purchased class Y shares for trust accounts may transfer them to the beneficiaries of the trust accounts, who may continue to hold them or exchange them for class Y shares of other Putnam funds. Defined contribution plans (including corporate IRAs) that purchased class Y shares under prior eligibility criteria may continue to purchase class Y shares. No initial sales charge; your entire investment goes to work immediately No deferred sales charge Lower annual expenses, and higher dividends, than class A, B, C, M or R shares because of no 12b-1 fees. Initial sales charges for class A and M shares * Because of rounding in the calculation of offering price and the number of shares purchased, actual sales charges you pay may be more or less than these percentages. ** Offering price includes sales charge. Reducing your class A or class M sales charge The fund offers two principal ways for you to qualify for discounts on initial sales charges on class A and class M shares, often referred to as breakpoint discounts: Right of accumulation. You can add the amount of your current purchases of class A or class M shares of the fund and other Putnam funds to the value of your existing accounts in the fund and other Putnam funds. Individuals can also include purchases by, and accounts owned by, their spouse and minor children, including accounts established through different financial representatives. For your current purchases, you will pay the initial sales charge applicable to the total value of the linked accounts and purchases, which may be lower than the sales charge otherwise applicable to each of your current purchases. Shares of Putnam money market funds, other than money market fund shares acquired by exchange from other Putnam funds, are not included for purposes of the right of accumulation. <R> To calculate the total value of your existing accounts and any linked accounts, the fund will use the higher of (a) the current maximum public offering price of those shares or (b) if you purchased the shares after December 31, 2007, the initial value of the total purchases, or, if you held the shares on December 31, 2007, the market value at maximum public offering price on that date, in either case, less the market value on the applicable redemption date of any of those shares that you have redeemed. </R> Statement of intention. A statement of intention is a document in which you agree to make purchases of class A or class M shares in a specified amount within a period of 13 months. For each purchase you make under the statement of intention, you will pay the initial sales charge applicable to the total amount you have agreed to purchase. While a statement of intention is not a binding obligation on you, if you do not purchase the full amount of shares within 13 months, the fund will redeem shares from your account in an amount equal to the difference between the higher initial sales charge you would have paid in the absence of the statement of intention and the initial sales charge you actually paid. Account types that may be linked with each other to obtain breakpoint discounts using the methods described above include: Individual accounts Joint accounts Accounts established as part of a retirement plan and IRA accounts (some restrictions may apply) Shares of Putnam funds owned through accounts in the name of your dealer or other financial intermediary (with documentation identifying beneficial ownership of shares) Accounts held as part of a Section 529 college savings plan managed by Putnam Management (some restrictions may apply) In order to obtain a breakpoint discount, you should inform your financial representative at the time you purchase shares of the existence of other accounts or purchases that are eligible to be linked for the purpose of calculating the initial sales charge. The fund or your financial representative may ask you for records or other information about other shares held in your accounts and linked accounts, including accounts opened with a different financial representative. Restrictions may apply to certain accounts and transactions. Further details about breakpoint discounts can be found on Putnam Investments Web site at putnam.com/individual by selecting Investment Choices, then Mutual Funds, then Pricing policies,
and in the SAI. </R> Additional reductions and waivers of sales charges. In addition to the breakpoint discount methods described above, sales charges may be reduced or waived under certain circumstances and for certain categories of investors. For instance, an employer-sponsored retirement plan is eligible to purchase class A shares without sales charges if its plan administrator or dealer of record has entered into an agreement with Putnam Retail Management or it invests at least $1 million in class A shares of the fund or other Putnam funds. Information about reductions and waivers of sales charges, including deferred sales charges, is included in the SAI. You may consult your financial representative or Putnam Retail Management for assistance. How do I sell or exchange fund shares? <R> You can sell your shares back to the fund or exchange them for shares of another Putnam fund any day the NYSE is open, either through your financial representative or directly to the fund. Payment for redemption may be delayed until the fund collects the purchase price of shares, which may be up to 10 calendar days after the purchase date. </R> Regarding exchanges, not all Putnam funds offer all classes of shares or may be open to new investors. If you exchange shares otherwise 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, however, 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. <R> Selling or exchanging shares through your financial representative. Your representative must receive your request in proper form before the close of regular trading on the NYSE for you to receive that days NAV, less any applicable deferred sales charge. Your representative 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 or exchanging shares directly with the fund. Putnam Investor Services must receive your request in proper form before the close of regular trading on the NYSE in order to receive that days NAV, less any applicable deferred sales charge. </R> 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 or exchange, you must return them unendorsed with your letter of instruction. By telephone. You may use Putnams 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. A telephone exchange privilege is currently available for amounts up to $500,000. Sale or exchange of shares by telephone is not permitted if there are certificates for your shares. The telephone redemption and exchange privileges may be modified or terminated without notice. Via the Internet. You may also exchange shares via the Internet at putnam.com/individual. Shares held through your employers retirement plan. For information on how to sell or exchange shares of the fund that were purchased through your employers retirement plan, including any restrictions and charges that the plan may impose, please consult your employer. 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 surviving joint owner. For more information concerning Putnams signature guarantee and documentation requirements, contact Putnam Investor Services. The fund also 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. Ask your financial representative or Putnam Investor Services for prospectuses of other Putnam funds. Some Putnam funds are not available in all states. <R> Deferred sales charges for class B, class C and certain class A and class M shares </R> If you sell (redeem) class B shares within six years of purchase, you will generally pay a deferred sales charge according to the following schedule: A deferred sales charge of 1.00% will apply to class C shares if redeemed within one year of purchase. Unless otherwise agreed with Putnam Retail Management, class A shares that are part of a purchase of $1 million or more (other than by a qualified retirement plan) will be subject to a 1.00% deferred sales charge if redeemed within nine months of purchase. A deferred sales charge of 0.65% may apply to class M shares purchased without a sales charge for certain rollover IRA accounts if redeemed within one year of purchase. </R> 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. Payment information. The fund generally sends you payment for your shares the business day after your request is received. Under unusual circumstances, the fund may suspend redemptions, or postpone payment for more than seven days, as permitted by federal securities law. You will not receive interest on uncashed redemption checks. 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 after providing you with at least 60 days notice to attain the minimum. To the extent permitted by applicable law, 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. Policy on excessive short-term trading Risks of excessive short-term trading. Excessive short-term trading activity may reduce the funds performance and harm all fund shareholders by interfering with portfolio management, increasing the funds expenses and diluting the funds net asset value. Depending on the size and frequency of short-term trades in the funds shares, the fund may experience increased cash volatility, which could require the fund to maintain undesirably large cash positions or buy or sell portfolio securities it would not have bought or sold otherwise. The need to execute additional portfolio transactions due to these cash flows may also increase the funds brokerage and administrative costs and, for investors in taxable accounts, may increase the taxable distributions received from the fund. When the fund invests in foreign securities, its performance may be adversely impacted and the interests of longer-term shareholders may be diluted as a result of time-zone arbitrage, a short-term trading practice that seeks to exploit changes in the value of the funds investments that result from events occurring after the close of the foreign markets on which the investments trade, but prior to the later close of trading on the NYSE, the time as of which the fund determines its net asset value. If an arbitrageur is successful, he or she may dilute the interests of other shareholders by trading shares at prices that do not fully reflect their fair value. When the fund invests in securities that may trade infrequently or may be more difficult to value, such as securities of smaller companies, it may be susceptible to trading by short-term traders who seek to exploit perceived price inefficiencies in the funds investments. In addition, the market for securities of smaller companies may at times show market momentum, in which positive or negative performance may continue from one day to the next for reasons unrelated to the fundamentals of the issuer. Short-term traders may seek to capture this momentum by trading frequently in the funds shares, which will reduce the funds performance and may dilute the interests of other shareholders. Because securities of smaller companies may be less liquid than securities of larger companies, the fund may also be unable to buy or sell these securities at desirable prices when the need arises (for example, in response to volatile cash flow
s caused by short-term trading). Similar risks may apply if the fund holds other types of less liquid securities, including below-investment-grade bonds. <R> Fund policies. In order to protect the interests of long-term shareholders of the fund, Putnam Management and the funds Trustees have adopted policies and procedures intended to discourage excessive short-term trading. The fund seeks to discourage excessive short-term trading by using fair value pricing procedures to value investments under some circumstances. In addition, Putnam Management monitors activity in those shareholder accounts about which it possesses the necessary information in order to detect excessive short-term trading patterns and takes steps to deter excessive short-term traders. </R> Account monitoring. Putnam Managements Compliance Department currently uses multiple reporting tools to monitor activity in retail customer accounts for which Putnam Investor Services maintains records. This review is based on the funds internal parameters for detecting excessive short-term trading, which consider the number of round trip transactions above a specified dollar amount within a specified period of time. These parameters may change from time to time. If a monitored account engages in short-term trading that Putnam Management or the fund considers to be excessive or inappropriate, Putnam Management will issue the investor and his or her financial intermediary, if any, a written warning. Continued excessive short-term trading activity by an investor or intermediary that has received a warning may lead to the termination of the exchan
ge privilege. The fund also reserves the right to terminate the exchange privilege without a warning. In addition, Putnam Management will also communicate instances of excessive short-term trading to the compliance staff of an investors broker, if one is identified. Account restrictions. In addition to enforcing these exchange parameters, Putnam Management and the fund reserve the right to reject or restrict purchases or exchanges for any reason. Putnam Management or the fund may determine that an investors trading activity is excessive or otherwise potentially harmful based on various factors, including an investors or financial intermediarys trading history in the fund, other Putnam funds or other investment products, and may aggregate activity in multiple accounts under common ownership or control. If the fund identifies an investor or intermediary as a potential excessive trader, it may, among other things, require further trades to be submitted by mail rather than by phone or over the Internet, impose limitations on the amount, number, or frequency of future purchases or exchanges, or temporarily or permane
ntly bar the investor or intermediary from investing in the fund or other Putnam funds. The fund may take these steps in its discretion even if the investors activity may not have been detected by the funds current monitoring parameters. Limitations on the funds policies. There is no guarantee that the fund will be able to detect excessive short-term trading in all accounts. For example, Putnam Management currently does not have access to suffi cient information to identify each investors trading history, and in certain circumstances there are operational or technological constraints on its ability to enforce the funds policies. In addition, even when Putnam Management has sufficient information, its detection methods may not capture all excessive short-term trading. In particular, many purchase, redemption and exchange orders are received from financial intermediaries that hold omnibus accounts with the fund. Omnibus accounts, in which shares are held in the name of an intermediary on behalf of multiple beneficial owners, are a common form of holding shares among retirement plans and financial intermediaries such as brokers, advisers and third-party administrators. The fund is generally not able to identify trading by a particular beneficial owner within an omnibus account, which makes it difficult or impossible to determine if a particular shareholder is engaging in excessive short-term trading. Putnam Management monitors aggregate cash flows in omnibus accounts on an ongoing basis. If high cash flows or other information indicate that excessive short-term trading may be taking place, Putnam Management will contact the financial intermediary, plan sponsor or recordkeeper that maintains accounts for the underlying
beneficial owner and attempt to identify and remedy any excessive trading. However, the funds ability to monitor and deter excessive short-term traders in omnibus accounts ultimately depends on the capabilities and cooperation of these third-party financial firms. A financial intermediary or plan sponsor may impose different or additional limits on short-term trading. Distribution plans and payments to dealers <R> Putnam funds are distributed primarily through dealers (including any broker, dealer, bank, bank trust department, registered investment advisor, financial planner, retirement plan administrator, and any other institution having a selling, services, or any similar agreement with Putnam Retail Management or one of its affiliates). In order to pay for the marketing of fund shares and services provided to shareholders, the fund has adopted distribution and service (12b-1) plans, which increase the annual operating expenses you pay each year in certain share classes, as shown in the table of annual fund operating expenses in the section Fund summary Fees and expenses. Putnam Retail Management and its affiliates also make additional payments to dealers that do not increase your fund expenses, as described below. </R> Distribution and service (12b-1) plans. The funds 12b-1 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, class M and class R shares. The Trustees currently limit payments on class A, class M and class R shares to 0.25%, 0.75% and 0.50% of average net assets, respectively. Because these fees are paid out of the funds assets on an ongoing basis, they will increase the cost of your investment. The higher fees for class B, class C, class M and class R shares may cost you more over time 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. Class R shares will generally be less expensive than class B shares
for shareholders who are eligible to purchase either class. Class Y shares, for shareholders who are eligible to purchase them, will be less expensive than other classes of shares because they do not bear sales charges or 12b-1 fees. <R> Payments to dealers. If you purchase your shares through a dealer, your dealer generally receives payments from Putnam Retail Management representing some or all of the sales charges and distribution and service (12b-1) fees, if any, shown in the tables under the heading Fund summary Fees and expenses at the front of this prospectus. Putnam Retail Management and its affiliates also pay additional compensation to selected dealers in recognition of their marketing support and/ or program servicing (each of which is described in more detail below). These payments may create an incentive for a dealer firm or its representatives to recommend or offer shares of the fund or other Putnam funds to its customers. These additional payments are made by Putnam Retail Management and its affiliates and do not increase the amount paid by you or the fund as shown under the heading Fund summary Fees and expenses. </R> The additional payments to dealers by Putnam Retail Management and its affiliates are generally based on one or more of the following factors: average net assets of a fund attributable to that dealer, sales or net sales of a fund attributable to that dealer, or reimbursement of ticket charges (fees that a dealer firm charges its representatives for effecting transactions in fund shares), or on the basis of a negotiated lump sum payment for services provided. Marketing support payments, which are generally available to most dealers engaging in significant sales of Putnam fund shares, are not expected, with certain limited exceptions, to exceed 0.085% of the average assets of Putnams retail mutual funds attributable to that dealer on an annual basis. These payments are made for marketing support services provided by the dealers, including business planning assistance, educating dealer personnel about the Putnam funds and shareholder financial planning needs, placement on the dealers preferred or recommended fund company list, and access to sales meetings, sales representatives and management representatives of the dealer. Program servicing payments, which are paid in some instances to dealers in connection with investments in the fund by retirement plans and other investment programs, are not expected, with certain limited exceptions, to exceed 0.20% of the total assets in the program on an annual basis. These payments are made for program services provided by the dealer, including participant recordkeeping, reporting, or transaction processing, as well as services rendered in connection with fund/investment selection and monitoring, employee enrollment and education, plan balance rollover or separation, or other similar services. Other payments. Putnam Retail Management and its affiliates may make other payments (including payments in connection with educational seminars or conferences) or allow other promotional incentives to dealers to the extent permitted by SEC and NASD (as adopted by FINRA) rules and by other applicable laws and regulations. Certain dealers also receive additional payments from the funds transfer agent in recognition of subaccounting or other services they provide to shareholders or plan participants who invest in the fund or other Putnam funds through their retirement plan. These payments are not expected, with certain exceptions for affiliated and unaffiliated entities noted in the SAI, to exceed 0.13% of the total assets of such shareholders or plan participants in the fund or other Putnam funds on an annual basis. See the discussion in the SAI under the heading
Management Investor Servicing Agent for more details. <R> You can find a list of all dealers to which Putnam made marketing support and/or program servicing payments in 2009 in the SAI, which is on file with the SEC and is also available on Putnams Web site at putnam.com. You can also find other details in the SAI about the payments made by Putnam Retail Management and its affiliates and the services provided by your dealer. Your dealer may charge you fees or commissions in addition to those disclosed in this prospectus. You can also ask your dealer about any payments it receives from Putnam Retail Management and its affi liates and any services your dealer provides, as well as about fees and/or commissions it charges. </R> Fund distributions and taxes The fund normally distributes any net investment income and any net realized capital gains annually. You may choose to reinvest distributions from net investment income, capital gains or both in additional shares of this fund or other Putnam funds, or you may receive them in cash in the form of a check or an electronic deposit to your bank account. If you do not select an option when you open your account, all distributions will be reinvested. If you choose to receive distributions in cash, but correspondence from the fund or Putnam Investor Services is returned as undeliverable, the distribution option on your account may be converted to reinvest future distributions in the fund. You will not receive interest on uncashed distribution checks. For shares purchased through your employers retirement plan, the terms of the plan will govern how the plan may receive distributions from the fund. Generally, periodic distributions from the fund to the plan are reinvested in additional fund shares, although the 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 you do not select another option, all distributions will be reinvested in additional fund shares. <R> For federal income tax purposes, distributions of net investment income are generally taxable to you as ordinary income. Taxes on distributions of capital gains are determined by how long the fund owned the investments that generated them, rather than by how long you have owned your shares. Properly designated distributions of gains from investments that the fund owned for more than one year are generally taxable to you as long-term capital gains. Distributions of gains from investments that the fund owned for one year or less are generally taxable to you as ordinary income. For taxable years beginning before January 1, 2011, properly designated distributions of qualified dividend income are generally taxable to you at the rate applicable to long-term capital gains provided that both you and the fund meet certain holding period and other requirements. At this point, it is unclear whether Congress will extend the treatment of certain dividends as qualified dividend income that is taxed at the long-term capital gain rate for one or more tax years beginning on or after January 1, 2011. Distributions are taxable in the manner described in this paragraph whether you receive them in cash or reinvest them in additional shares of this fund or other Putnam funds. </R> 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. <R> Unless you are investing through a tax-advantaged retirement account (such as an IRA), you should consider avoiding a purchase of fund shares shortly before the fund makes a distribution, because doing so may cost you money in taxes. 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). Contact your financial representative or Putnam to find out the distribution schedule for your fund. </R> The funds investments in foreign securities, if any, may be subject to foreign withholding taxes. In that case, the funds return on those investments would be decreased. Shareholders generally will not be entitled to claim a credit or deduction with respect to these foreign taxes. In addition, the funds investment in foreign securities or foreign currencies may increase or accelerate the funds recognition of ordinary income and may affect the timing or amount of the funds distributions. The funds use of derivatives, if any, may affect the amount, timing and character of distributions to shareholders and, therefore, may increase the amount of taxes payable by shareholders. Any gain resulting from the sale or exchange of your shares generally also will be subject to tax. The above is a general summary of the tax implications of investing in the fund. Please refer to the SAI for further details. 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 tables are intended to help you understand the funds 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 has been derived from the funds financial statements, which have been audited by PricewaterhouseCoopers LLP. Its report and the funds financial statements are included in the funds annual report to shareholders, which is available upon request.
As filed with the Securities and Exchange Commission on
<R>
November 24, 2010
</R>
Registration No. 2-29546
811-01682
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM N-1A
----
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
/ X /
----
----
Pre-Effective Amendment No.
/ /
----
----
<R>
Post-Effective Amendment No. 64
/ X /
</R>
and/or
----
----
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
/ X /
ACT OF 1940
----
----
<R>
Amendment No. 42
/ X /
</R>
(Check appropriate box or boxes)
----
---------------
PUTNAM VOYAGER FUND
(Exact Name of Registrant as Specified in Charter)
One Post Office Square, Boston, Massachusetts 02109
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code
(617) 292-1000
It is proposed that this filing will become effective
(check appropriate box)
----
/ /
immediately upon filing pursuant to paragraph (b)
----
----
<R>
/ X /
on November 30, 2010 pursuant to paragraph (b)
</R>
----
----
/ /
60 days after filing pursuant to paragraph (a)(1)
----
----
/ /
on (date) pursuant to paragraph (a)(1)
----
----
/ /
75 days after filing pursuant to paragraph (a)(2)
----
----
/ /
on (date) pursuant to paragraph (a)(2) of Rule 485.
----
If appropriate, check the following box:
----
/ /
this post-effective amendment designates a new
----
effective date for a previously filed post-effective amendment.
-----------------------
BETH S. MAZOR, Vice President
PUTNAM VOYAGER FUND
One Post Office Square
Boston, Massachusetts 02109
(Name and address of agent for service)
---------------
Copy to:
JOHN W. GERSTMAYR, Esquire
ROPES & GRAY LLP
Prudential Tower
800 Boylston Street
Boston, MA 02199-3600
FUND SYMBOLS
CLASS A
CLASS B
CLASS C
CLASS M
CLASS R
CLASS Y
PVOYX
PVOBX
PVFCX
PVOMX
PVYRX
PVYYX
Voyager
Fund
<R>
11 | 30 | 10
</R>
Fund summary
2
What are the funds main investment strategies and related risks?
6
Who oversees and manages the fund?
9
<R>
How does the fund price its shares?
12
How do I buy fund shares?
13
How do I sell or exchange fund shares?
20
Policy on excessive short-term trading
22
Distribution plans and payments to dealers
25
Fund distributions and taxes
27
Financial highlights
29
Investment Category: Growth
These securities have not been approved
or disapproved by the Securities and
This prospectus explains what
Exchange Commission nor has the
you should know about this
Commission passed upon the accuracy
mutual fund before you invest.
or adequacy of this prospectus. Any
Please read it carefully.
statement to the contrary is a crime.
Maximum deferred sales
charge (load) (as a percentage
Maximum sales charge (load)
of original purchase price
imposed on purchases (as a
or redemption proceeds,
Share class
percentage of offering price)
whichever is lower)
Class A
5.75%
NONE*
Class B
NONE
5.00%**
Class C
NONE
1.00%
Class M
3.50%
NONE*
Class R
NONE
NONE
Class Y
NONE
NONE
(expenses you pay each year as a percentage of the value of your investment)
Distribution
Acquired fund
Total annual
Management
and service
Other
operating
fund operating
Share class
fees
(12b-1) fees
expenses
expenses
expenses
Class A
0.56%
0.25%
0.43%
0.06%
1.30%
Class B
0.56%
1.00%
0.43%
0.06%
2.05%
Class C
0.56%
1.00%
0.43%
0.06%
2.05%
Class M
0.56%
0.75%
0.43%
0.06%
1.80%
Class R
0.56%
0.50%
0.43%
0.06%
1.55%
Class Y
0.56%
N/A
0.43%
0.06%
1.05%
2
Prospectus
Share class
1 year
3 years
5 years
10 years
Class A
$700
$963
$1,247
$2,053
Class B
$708
$943
$1,303
$2,187
Class B (no redemption)
$208
$643
$1,103
$2,187
Class C
$308
$643
$1,103
$2,379
Class C (no redemption)
$208
$643
$1,103
$2,379
Class M
$526
$897
$1,291
$2,392
Class R
$158
$490
$845
$1,845
Class Y
$107
$334
$579
$1,283
Prospectus
3
(for periods ending 12/31/09)
Share class
1 year
5 years
10 years
Class A before taxes
54.57%
2.63%
3.43%
Class A after taxes on distributions
54.34%
2.58%
3.79%
Class A after taxes on distributions and
sale of fund shares
35.75%
2.25%
2.96%
Class B before taxes
57.81%
2.72%
3.58%
Class C before taxes
61.77%
3.08%
3.58%
Class M before taxes
57.61%
2.61%
3.68%
Class R before taxes
63.61%
3.59%
3.09%
Class Y before taxes
64.47%
4.12%
2.61%
Russell 1000 Growth Index (no deduction
for fees, expenses or taxes)
37.21%
1.63%
3.99%
4
Prospectus
Prospectus
5
6
Prospectus
Prospectus
7
8
Prospectus
Prospectus
9
Address correspondence to:
The Putnam Funds Trustees
One Post Office Square
Boston, MA 02109
10
Prospectus
Portfolio manager
Joined fund
Employer
Positions over past five years
Nick Thakore
2008
Putnam Management
Head of U.S. Equities
2008 Present
RiverSource
Manager
Investments
2002 2008
Prospectus
11
12
Prospectus
P.O. Box 8383
Boston, MA 02266-8383
Prospectus
13
14
Prospectus
Prospectus
15
16
Prospectus
Prospectus
17
Class A sales charge as
Class M sales charge as
a percentage of*:
a percentage of*:
Amount of purchase at offering
Net amount
Offering
Net amount
Offering
price ($)
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
1.01
1.00
1,000,000 and above
NONE
NONE
NONE
NONE
18
Prospectus
Prospectus
19
20
Prospectus
Year after purchase
1
2
3
4
5
6
7+
Charge
5%
4%
3%
3%
2%
1%
0%
Prospectus
21
22
Prospectus
Prospectus
23
24
Prospectus
Prospectus
25
26
Prospectus
Prospectus
27
28
Prospectus
Prospectus
29
<R>
Financial highlights (For a common share outstanding throughout the period)
INVESTMENT OPERATIONS: | LESS DISTRIBUTIONS: | RATIOS AND SUPPLEMENTAL DATA: | ||||||||||||
| ||||||||||||||
Ratio of net | ||||||||||||||
Net asset | Net realized | Ratio of | investment | |||||||||||
value, | and unrealized | Total from | From | Net asset | Total return | Net assets, | expenses | income (loss) | ||||||
beginning of | Net investment | gain (loss) on | investment | net investment | Total | Redemption | Non-recurring | value, end | at net asset | end of period | to average | to average | Portfolio | |
Period ended | period | income (loss) a | investments | operations | income | distributions | feese | reimbursements | of period | value (%)b | (in thousands) | net assets (%) c | net assets (%) | turnover (%) |
| ||||||||||||||
Class A | ||||||||||||||
July 31, 2010 | $16.85 | e | 3.46 | 3.46 | (.19) | (.19) | | e,f | $20.12 | 20.58 | $3,111,020 | 1.26 | (.03) | 177.37 |
July 31, 2009 | 16.93 | .08 | (.16) h | (.08) | | | | e, i | 16.85 | (.47) h | 2,715,001 | 1.26 d | .61d | 186.67 |
July 31, 2008 | 18.54 | (.01) | (1.60) | (1.61) | | | | | 16.93 | (8.68) | 3,213,102 | 1.20 d | (.08) d | 67.79 |
July 31, 2007 | 16.20 | (.06) | 2.40 | 2.34 | | | | | 18.54 | 14.44 | 4,790,506 | 1.14 d | (.33) d | 65.48 |
July 31, 2006 | 17.16 | (.04) g | (.79) | (.83) | (.13) | (.13) | | | 16.20 | (4.93) g | 5,528,893 | 1.04 d,g | (.23) d,g | 75.88 |
| ||||||||||||||
Class B | ||||||||||||||
July 31, 2010 | $14.35 | (.13) | 2.94 | 2.81 | (.07) | (.07) | | e,f | $17.09 | 19.64 | $182,569 | 2.01 | (.77) | 177.37 |
July 31, 2009 | 14.52 | (.02) | (.15) h | (.17) | | | | e, i | 14.35 | (1.17) h | 217,981 | 2.01 d | (.13) d | 186.67 |
July 31, 2008 | 16.03 | (.13) | (1.38) | (1.51) | | | | | 14.52 | (9.42) | 368,079 | 1.95 d | (.84) d | 67.79 |
July 31, 2007 | 14.12 | (.17) | 2.08 | 1.91 | | | | | 16.03 | 13.53 | 726,751 | 1.89 d | (1.08) d | 65.48 |
July 31, 2006 | 14.95 | (.15) g | (.68) | (.83) | | | | | 14.12 | (5.55) g | 1,089,121 | 1.79 d,g | (.98) d,g | 75.88 |
| ||||||||||||||
Class C | ||||||||||||||
July 31, 2010 | $15.76 | (.15) | 3.24 | 3.09 | (.11) | (.11) | | e,f | $18.74 | 19.63 | $87,221 | 2.01 | (.79) | 177.37 |
July 31, 2009 | 15.95 | (.02) | (.17) h | (.19) | | | | e, i | 15.76 | (1.19) h | 37,356 | 2.01 d | (.14) d | 186.67 |
July 31, 2008 | 17.60 | (.14) | (1.51) | (1.65) | | | | | 15.95 | (9.38) | 45,990 | 1.95 d | (.82) d | 67.79 |
July 31, 2007 | 15.50 | (.19) | 2.29 | 2.10 | | | | | 17.60 | 13.55 | 59,248 | 1.89 d | (1.08) d | 65.48 |
July 31, 2006 | 16.42 | (.16) g | (.76) | (.92) | | | | | 15.50 | (5.60) g | 72,213 | 1.79 d,g | (.98) d,g | 75.88 |
| ||||||||||||||
Class M | ||||||||||||||
July 31, 2010 | $15.60 | (.10) | 3.21 | 3.11 | (.12) | (.12) | | e,f | $18.59 | 19.94 | $28,857 | 1.76 | (.53) | 177.37 |
July 31, 2009 | 15.74 | .01 | (.15) h | (.14) | | | | e, i | 15.60 | (.89) h | 25,635 | 1.76 d | .11 d | 186.67 |
July 31, 2008 | 17.34 | (.10) | (1.50) | (1.60) | | | | | 15.74 | (9.23) | 32,089 | 1.70 d | (.58) d | 67.79 |
July 31, 2007 | 15.22 | (.14) | 2.26 | 2.12 | | | | | 17.34 | 13.93 | 47,801 | 1.64 d | (.83) d | 65.48 |
July 31, 2006 | 16.12 | (.12) g | (.75) | (.87) | (.03) | (.03) | | | 15.22 | (5.42) g | 60,394 | 1.54 d,g | (.73) d,g | 75.88 |
| ||||||||||||||
Class R | ||||||||||||||
July 31, 2010 | $16.61 | (.06) | 3.41 | 3.35 | (.16) | (.16) | | e,f | $19.80 | 20.23 | $5,573 | 1.51 | (.29) | 177.37 |
July 31, 2009 | 16.72 | .05 | (.16) h | (.11) | | | | e, i | 16.61 | (.66) h | 2,156 | 1.51 d | .35 d | 186.67 |
July 31, 2008 | 18.37 | (.05) | (1.60) | (1.65) | | | | | 16.72 | (8.98) | 2,363 | 1.45 d | (.30) d | 67.79 |
July 31, 2007 | 16.09 | (.10) | 2.38 | 2.28 | | | | | 18.37 | 14.17 | 2,243 | 1.39 d | (.58) d | 65.48 |
July 31, 2006 | 17.06 | (.09) g | (.77) | (.86) | (.11) | (.11) | | | 16.09 | (5.12) g | 1,740 | 1.29 d,g | (.50) d,g | 75.88 |
| ||||||||||||||
Class Y | ||||||||||||||
July 31, 2010 | $17.54 | .04 | 3.62 | 3.66 | (.23) | (.23) | | e,f | $20.97 | 20.91 | $313,583 | 1.01 | .21 | 177.37 |
July 31, 2009 | 17.58 | .14 | (.18) h | (.04) | | | | e, i | 17.54 | (.23) h | 122,966 | 1.01 d | .96 d | 186.67 |
July 31, 2008 | 19.21 | .03 | (1.66) | (1.63) | | | | | 17.58 | (8.49) | 935,875 | .95 d | .18 d | 67.79 |
July 31, 2007 | 16.74 | (.02) | 2.49 | 2.47 | | | | | 19.21 | 14.76 | 1,297,987 | .89 d | (.08) d | 65.48 |
July 31, 2006 | 17.73 | e,g | (.82) | (.82) | (.17) | (.17) | | | 16.74 | (4.69) g | 1,579,957 | .79 d,g | .02 d,g | 75.88 |
|
</R>
See notes to financial highlights at the end of this section.
30 | Prospectus | Prospectus | 31 |
Financial highlights (Continued)
a Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding during the period.
b Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
c Includes amounts paid through expense offset and brokerage/service arrangements.
d Reflects an involuntary contractual expense limitation and/or waivers of certain fund expenses in connection with investments in Putnam Prime Money Market Fund in effect during the period. As a result of such limitation and/or waivers, the expenses of each class reflect a reduction of the following amounts:
<R>
Percentage of | |
average net | |
assets | |
| |
July 31, 2009 | 0.03% |
| |
July 31, 2008 | <0.01 |
| |
July 31, 2007 | <0.01 |
| |
July 31, 2006 | <0.01 |
|
</R>
e Amount represents less than $0.01 per share.
<R>
f Reflects a non-recurring reimbursement pursuant to a settlement between the Securities and Exchange Commission (SEC) and Prudential Securities, Inc., which amounted to less than $0.01 per share outstanding as of March 30, 2010.
g Reflects a non-recurring reimbursement from Putnam Investments relating to the calculation of certain amounts paid by the fund to Putnam in previous years for transfer agent services, which amounted to $0.01 per share and 0.06% of average net assets for the period ended July 31, 2006.
h Reflects a non-recurring litigation payment from Enron Corporation which amounted to the following amounts per share outstanding as of December 29, 2008:
</R>
Per share | |
| |
Class A | $0.11 |
| |
Class B | 0.10 |
| |
Class C | 0.11 |
| |
Class M | 0.10 |
| |
Class R | 0.11 |
| |
Class Y | 0.12 |
|
<R>
This payment resulted in an increase to total returns of 0.71% for the year ended July 31, 2009.
i Reflects a non-recurring reimbursement pursuant to a settlement between the SEC and Millennium Partners, L.P., Millennium Management, L.L.C., and Millennium International Management, L.L.C., which amounted to less than $0.01 per share outstanding as of June 23, 2009.
</R>
32 | Prospectus |
Make the most of your Putnam privileges
<R>
The following services are available to you as a Putnam mutual fund shareholder.
</R>
Systematic investment plan
Invest as much as you wish. The amount you choose will be automatically transferred weekly, semi-monthly or monthly from your checking or savings account.
Systematic withdrawal
Make regular withdrawals monthly, quarterly, semiannually, or annually from your Putnam mutual fund account.
Systematic exchange
Transfer assets automatically from one Putnam account to another on a regular, prearranged basis.
Exchange privilege
Exchange money between Putnam funds. 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.
<R>
A short-term trading fee of 1.00% may apply to exchanges of certain fund shares within the time period specified in the applicable funds prospectus.
Investors may not maintain, within the same fund, simultaneous plans for systematic investment or exchange (into the fund) and systematic withdrawal or exchange (out of the fund). These privileges are subject to change or termination.
</R>
Many of these services can be accessed online at putnam.com.
<R>
For more information about any of these services and privileges, call your financial representative or a Putnam customer service representative toll-free at 1-800-225-1581.
</R>
Prospectus | 33 |
Putnam family of fundsa
The following is a list of Putnams open-end mutual funds offered to the public. Investors should carefully consider the investment objective, risks, charges, and expenses of a fund before investing. For a prospectus containing this and other information for any Putnam fund or product, call your financial advisor at 1-800-225-1581 and ask for a prospectus. Please read the prospectus carefully before investing.
<R>
Growth | Value |
Growth Opportunities Fund | Convertible Securities Fundd |
International Growth Fundb | Equity Income Fund |
Multi-Cap Growth Fundc | George Putnam Balanced Funde |
Small Cap Growth Fund | The Putnam Fund for Growth |
Voyager Fund | and Income |
International Value Fundf | |
Blend | Multi-Cap Value Fundg |
Asia Pacific Equity Fund | Small Cap Value Fund |
Capital Opportunities Fund | |
Capital Spectrum Fund | Income |
Emerging Markets Equity Fund | American Government Income Fund |
Equity Spectrum Fund | Diversified Income Trust |
Europe Equity Fund | Floating Rate Income Fund |
Global Equity Fund | Global Income Trust |
International Capital Opportunities | High Yield Advantage Fund |
Fund | High Yield Trust |
International Equity Fund | Income Fund |
Investors Fund | Money Market Fundh |
Multi-Cap Core Fund | U.S. Government Income Trust |
Research Fund | |
a As of 11/30/10.
b Prior to January 1, 2010, the fund was known as Putnam International New Opportunities Fund.
c Prior to September 1, 2010, the fund was known as Putnam New Opportunities Fund.
d Prior to September 30, 2010, the fund was known as Putnam Convertible Income-Growth Trust.
e Prior to September 30, 2010, the fund was known as The George Putnam Fund of Boston.
f Prior to January 1, 2010, the fund was known as Putnam International Growth and Income Fund.
g Prior to September 1, 2010, the fund was known as Putnam Mid Cap Value Fund.
34 | Prospectus |
Tax-free income | Asset allocation |
AMT-Free Municipal Fundi | Income Strategies Fund |
Tax Exempt Income Fund | Putnam Asset Allocation Funds three |
Tax Exempt Money Market Fundh | investment portfolios that spread your |
Tax-Free High Yield Fund | money across a variety of stocks, bonds, |
and money market investments. | |
State tax-free income funds: j | |
Arizona, California, Massachusetts, | The three portfolios: |
Michigan, Minnesota, New Jersey, | Asset Allocation: Balanced Portfolio |
New York, Ohio, and Pennsylvania | Asset Allocation: Conservative Portfolio |
Asset Allocation: Growth Portfolio | |
Absolute Return | |
Absolute Return 100 Fund | Putnam RetirementReady® |
Absolute Return 300 Fund | Putnam RetirementReady Funds |
Absolute Return 500 Fund | 10 investment portfolios that offer |
Absolute Return 700 Fund | diversification among stocks, bonds, |
and money market instruments and | |
Global Sector | adjust to become more conservative |
Global Consumer Fund | over time based on a target date for |
Global Energy Fund | withdrawing assets. |
Global Financials Fund | |
Global Health Care Fundk | The 10 funds: |
Global Industrials Fund | Putnam RetirementReady 2055 Fund |
Global Natural Resources Fund | Putnam RetirementReady 2050 Fund |
Global Technology Fund | Putnam RetirementReady 2045 Fund |
Global Telecommunications Fund | Putnam RetirementReady 2040 Fund |
Global Utilities Fundl | Putnam RetirementReady 2035 Fund |
Putnam Global Sector Fund | Putnam RetirementReady 2030 Fund |
Putnam RetirementReady 2025 Fund | |
Putnam RetirementReady 2020 Fund | |
Putnam RetirementReady 2015 Fund | |
Putnam RetirementReady Maturity Fund |
h An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.
i Prior to November 30, 2008, the fund was known as Putnam AMT-Free Insured Municipal Fund.
j Not available in all states.
k Prior to January 2, 2009, the fund was known as Putnam Health Sciences Trust.
l Prior to January 2, 2009, the fund was known as Putnam Utilities Growth and Income Fund.
</R>
Prospectus | 35 |
For more information about Putnam Voyager Fund
<R>
The funds SAI and annual and semi-annual reports to shareholders include additional information about the fund. The SAI is incorporated by reference into this prospectus, which means it is part of this prospectus for legal purposes. The funds annual report discusses the market conditions and investment strategies that significantly affected the funds performance during its last fiscal year. You may get free copies of these materials, request other information about any Putnam fund, or make shareholder inquiries, by contacting your financial representative, by visiting Putnams Web site at putnam.com/individual, or by calling Putnam toll-free at 1-800-225-1581.
You may review and copy information about a fund, including its SAI, at the Securities and Exchange Commissions Public Reference Room in Washington, D.C. You may call the Commission at 1-202-551-8090 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 Commissions Web 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: publicinfo@sec.gov, or by writing the Commissions Public Reference Section, Washington, D.C. 20549-1520. You may need to refer to the funds file number.
</R>
Putnam Investments
One Post Office Square
Boston, MA 02109
1-800-225-1581
Address correspondence to
Putnam Investor Services
P.O. Box 8383
Boston, MA 02266-8383
putnam.com
<R>
File No. 811-01682 | SP016 264433 11/10 |
</R>
FUND SYMBOLS | CLASS A | CLASS B | CLASS C | CLASS M | CLASS R | CLASS Y |
PVOYX | PVOBX | PVFCX | PVOMX | PVYRX | PVYYX | |
Putnam Voyager Fund |
FORM N-1A |
PART B |
STATEMENT OF ADDITIONAL INFORMATION (SAI) |
<R> |
11/30/10 |
This SAI is not a prospectus. If the fund has more than one form of current prospectus, each reference to the prospectus in this SAI shall include all of the funds prospectuses, unless otherwise noted. The SAI should be read together with the applicable prospectus. For a free copy of the funds annual report or a prospectus dated 11/30/10, as revised from time to time, call Putnam Investor Services at 1-800-225-1581, visit Putnams Web site at putnam.com or write Putnam Investor Services, P.O. Box 8383, Boston, MA 02266-8383.
</R>
Part I of this SAI contains specific information about the fund. Part II includes information about the fund and the other Putnam funds.
<R>
</R>
I- 1 | sai_104-2010/11 |
Table of Contents | |
PART I | |
FUND ORGANIZATION AND CLASSIFICATION | I-3 |
INVESTMENT RESTRICTIONS | I-4 |
CHARGES AND EXPENSES | I-5 |
<R> | |
PORTFOLIO MANAGERS | I-15 |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND FINANCIAL | I-17 |
STATEMENTS | |
</R> | |
PART II | |
<R> | |
HOW TO BUY SHARES | II-1 |
DISTRIBUTION PLANS | II-11 |
MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS | II-19 |
TAXES | II-53 |
MANAGEMENT | II-63 |
DETERMINATION OF NET ASSET VALUE | II-82 |
INVESTOR SERVICES | II-84 |
SIGNATURE GUARANTEES | II-87 |
REDEMPTIONS | II-88 |
SHAREHOLDER LIABILITY | II-88 |
DISCLOSURE OF PORTFOLIO INFORMATION | II-88 |
PROXY VOTING GUIDELINES AND PROCEDURES | II-90 |
SECURITIES RATINGS | II-90 |
CLAIMS - PAYING ABILITY RATINGS | II-94 |
APPENDIX A - PROXY VOTING GUIDELINES OF THE PUTNAM FUNDS | II-98 |
APPENDIX B - FINANCIAL STATEMENTS | II-114 |
</R> |
I- 2 | sai_104-2010/11 |
SAI |
PART I |
FUND ORGANIZATION AND CLASSIFICATION
Putnam Voyager Fund is a Massachusetts business trust organized on August 13, 1982 as the successor to Putnam Voyager Fund, Inc., a Massachusetts corporation organized on June 10, 1968. A copy of the Agreement and Declaration of Trust, which is governed by Massachusetts law, is on file with the Secretary of The Commonwealth of Massachusetts.
The fund is an open-end management investment company with an unlimited number of authorized shares of beneficial interest which 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 offers classes of shares with different sales charges and expenses.
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.
<R>
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 has voluntarily undertaken to hold a shareholder meeting at least every five years. The most recent shareholder meeting was in 2009.
The fund is a "diversified" investment company under the Investment Company Act of 1940. This means, among other things, 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 and securities issued by other investment companies). 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 issuers securities declines.
</R>
I- 3 | sai_104-2010/11 |
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) 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 agencies or instrumentalities or to securities issued by other investment companies.
(2) With respect to 75% of its total assets, acquire more than 10% of the outstanding voting securities of any issuer.
(3) Borrow money in excess of 33 1/3% of the value of its total assets (not including the amount borrowed) at the time the borrowing is made.
(4) Make loans, except by purchase of debt obligations in which the fund may invest consistent with its investment policies (including without limitation debt obligations issued by other Putnam funds), by entering into repurchase agreements, or by lending its portfolio securities.
(5) Purchase or sell commodities or commodity contracts, except that the fund may purchase and sell financial futures contracts and options and may enter into foreign exchange contracts and other financial transactions not involving physical commodities.
(6) Purchase or sell real estate, although it may purchase securities of issuers which deal in real estate, securities which are secured by interests in real estate, and securities 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.
(7) 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.
(8) 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 funds total assets would be invested in any one industry.
The Investment Company Act of 1940 provides that a "vote of a majority of the outstanding voting securities" of the fund means the affirmative vote of the lesser of (1) more than 50% of the outstanding fund shares, or (2) 67% or more of the shares present at a meeting if more than 50% of the outstanding fund shares are represented at the meeting in person or by proxy.
I- 4 | sai_104-2010/11 |
The following non-fundamental investment policies may be changed by the Trustees without shareholder approval:
(1) The fund will 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 funds net assets (taken at current value) would be invested in securities described in (a), (b) and (c).
<R>
(2) The fund will not issue any class of securities which is senior to the funds shares of beneficial interest, except for permitted borrowings.
</R>
All percentage limitations on investments (other than pursuant to non-fundamental restriction (1)) will apply at the time of the making of an investment and shall not be considered violated unless an excess or deficiency occurs or exists immediately after and as a result of such investment.
<R>
</R>
CHARGES AND EXPENSES
Management fees
<R>
Under a management contract effective January 1, 2010, the fund pays a monthly base fee to Putnam Investment Management, LLC (Putnam Management), the funds investment manager, at an annual rate (as a percentage of the funds average net assets for the month) that varies based on the average of the aggregate net assets of all open-end funds sponsored by Putnam Management (excluding the net assets of funds investing in, or invested in by, other Putnam open-end funds, such as Putnam Global Sector Fund, Putnam RetirementReady® Funds and Putnam Money Market Liquidity Fund, to the extent necessary to avoid "double-counting" of net assets), as determined at the close of each business day during the month, as set forth below.
In addition, beginning with the funds thirteenth complete calendar month of operation under the management contract, the monthly management fee will consist of the monthly base fee plus or minus a performance adjustment for the month. The performance adjustment will be determined based on performance over the thirty-six-month period then ended or, if the management contract has not yet been effective for thirty-six complete calendar months, the period from the date the management contract became effective to the end of the month for which the fee adjustment is being computed. Each month, the performance adjustment will be calculated by multiplying the
I- 5 | sai_104-2010/11 |
performance adjustment rate and the funds average net assets over the performance period and dividing the result by twelve. The resulting dollar amount will be added to, or subtracted from, the base fee for that month. The performance adjustment rate is equal to 0.03 multiplied by the difference between the funds annualized performance (measured by the funds class A shares) and the annualized performance of the benchmark index described below, each measured over the performance period. The maximum annualized performance adjustment rates are also set forth below.
</R>
The monthly base fee is determined based on the funds average net assets for the month, while the performance adjustment will be determined based on the funds average net assets over the performance period of up to thirty-six months. This means it is possible that, if the fund underperforms significantly over the performance period, and the funds assets have declined significantly over that period, the negative performance adjustment may exceed the base fee. In this event, Putnam Management would make a payment to the fund.
<R>
Base Fee
0.710% of the first $5 billion of Total Open-End Mutual Fund Average Net Assets;
0.660% of the next $5 billion of Total Open-End Mutual Fund Average Net Assets;
0.610% of the next $10 billion of Total Open-End Mutual Fund Average Net Assets;
0.560% of the next $10 billion of Total Open-End Mutual Fund Average Net Assets;
0.510% of the next $50 billion of Total Open-End Mutual Fund Average Net Assets;
0.490% of the next $50 billion of Total Open-End Mutual Fund Average Net Assets;
0.480% of the next $100 billion of Total Open-End Mutual Fund Average Net Assets;
</R>
0.475% of any excess thereafter.
Benchmark | Maximum | ||
performance | |||
adjustment rate | |||
|
|||
Russell 1000 Growth Index | +/- 0.12% | ||
|
<R>
Under the funds prior management contract dated August 3, 2007, the fund paid a quarterly fee to Putnam Management based on the average net assets of the fund, as determined at the close of each business day during the quarter, at the annual rate of:
I- 6 | sai_104-2010/11 |
0.70% of the first $500 million of average net assets;
0.60% of the next $500 million of average net assets;
0.55% of the next $500 million of average net assets;
0.50% of the next $5 billion of average net assets;
0.475% of the next $5 billion of average net assets;
0.455% of the next $5 billion of average net assets;
0.44% of the next $5 billion of average net assets;
0.43% of the next $5 billion of average net assets;
0.42% of the next $5 billion of average net assets;
0.41% of the next $5 billion of average net assets;
0.40% of the next $5 billion of average net assets;
0.39% of the next $5 billion of average net assets;
0.38% of the next $8.5 billion of average net assets; and
0.37% above $55 billion of average net assets.
For the past three fiscal years, pursuant to the applicable management contract, the fund incurred the following fees:
Amount | |||
management | |||
fee would | |||
Amount of | have been | ||
Management | management | without | |
Fiscal year | fee paid | fee waived | waivers |
2010 | $20,218,222 | $0 | $20,218,222 |
2009 | $15,637,008 | $820,667 | $16,457,675 |
2008 | $30,291,378 | $177,887 | $30,469,265 |
Brokerage commissions |
The following table shows brokerage commissions paid during the fiscal years indicated:
Brokerage | |||
Fiscal year | commissions | ||
<R> | |||
2010 | $17,808,344 | ||
</R> | |||
2009 | $21,499,117 | ||
2008 | $5,986,587 |
<R>
The brokerage commissions for the funds 2009 and 2010 fiscal years were higher than the commissions for the funds 2008 fiscal year due to increased market volatility and the appointment of a new portfolio manager for the fund in 2008.
</R>
I- 7 | sai_104-2010/11 |
The following table shows transactions placed with brokers and dealers during the most recent fiscal year to recognize research services received by Putnam Management and its affiliates:
Dollar value | Percentage | |
of these | of total | Amount of |
transactions | transactions | commissions |
<R> | ||
$7,050,448,674 | 59.24% | $10,456,660 |
At the end of fiscal 2010, the fund held the following securities of its regular broker-dealers (or affiliates of such broker-dealers): </R>
Broker-dealers or affiliates Value of securities held
<R>
Barclays PLC | $10,117,417 | |
Citigroup, Inc. | $3,743,710 | |
Goldman Sachs Group, Inc. (The) | $39,869,418 | |
Morgan Stanley | $7,775,819 | |
</R> |
Administrative expense reimbursement
<R>
The fund reimbursed Putnam Management for administrative services during fiscal 2010, including compensation of certain fund officers and contributions to the Putnam Investments Profit Sharing Retirement Plan for their benefit, as follows: </R>
Portion of total | |||
reimbursement | |||
for | |||
compensation | |||
Total | and | ||
reimbursement | contributions | ||
<R> | |||
$174,433 | $149,238 | ||
</R> |
I- 8 | sai_104-2010/11 |
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 funds other affairs and business.
<R>
The table below shows the value of each Trustees holdings in the fund and in all of the Putnam Funds as of December 31, 2009.
</R>
Dollar range of Putnam | Aggregate dollar range of shares | |
Name of Trustee | Voyager Fund shares owned | held in all of the Putnam funds |
overseen by Trustee | ||
<R> | ||
Ravi Akhoury | $1-$10,000 | over $100,000 |
*Barbara M. Baumann | N/A | N/A |
Jameson A. Baxter | over $100,000 | over $100,000 |
</R> | ||
Charles B. Curtis | $1-$10,000 | over $100,000 |
Robert J. Darretta | $1-$10,000 | over $100,000 |
Myra R. Drucker | $1-$10,000 | over $100,000 |
John A. Hill | over $100,000 | over $100,000 |
<R> | ||
Paul L. Joskow | $50,001-$100,000 | over $100,000 |
Kenneth R. Leibler | $1-$10,000 | over $100,000 |
</R> | ||
Robert E. Patterson | $10,001-$50,000 | over $100,000 |
George Putnam, III | $10,001-$50,000 | over $100,000 |
**W. Thomas Stephens | $1-$10,000 | over $100,000 |
<R> | ||
Richard B. Worley | $1-$10,000 | over $100,000 |
| ||
</R> | ||
***Robert L. Reynolds | $1-$10,000 | over $100,000 |
<R> |
* Ms. Baumann was elected to the Board of Trustees after December 31, 2009.
** Mr. Stephens, who retired from the Board of Trustees on March 2008, was re elected to the Board of Trustees on May 14, 2009. </R>
*** Trustee who is an "interested person" (as defined in the Investment Company Act of 1940) of the fund, Putnam Management and/or Putnam Retail Management. Mr. Reynolds is deemed an "interested person" by virtue of his positions as an officer of the fund, Putnam Management and/or Putnam Retail Management. Mr. Reynolds is the President and Chief Executive Officer of Putnam Investments, LLC and President of your fund and each of the other Putnam funds. None of the other Trustees is an "interested person."
I- 9 | sai_104-2010/11 |
<R>
Each independent Trustee of the fund receives an annual retainer fee and an additional fee for each Trustees meeting attended. Independent Trustees also are reimbursed for costs incurred relating to their services as Trustees. All of the current independent Trustees of the fund are Trustees of all the Putnam funds and receive fees for their services.
</R>
The Trustees periodically review their fees to ensure 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 Board Policy and Nominating Committee, which consists solely of independent Trustees of the fund, 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 standing committees of the Board of Trustees, and the number of times each committee met during your funds most recently completed fiscal year, are shown in the table below:
<R> | |
Audit and Compliance Committee | 11 |
Board Policy and Nominating Committee | 9 |
</R> | |
Brokerage Committee | 7 |
<R> | |
Communications, Service and Marketing | 3 |
Committee+ | |
Contract Committee | 13 |
Distributions Committee | 10 |
</R> | |
Executive Committee | 1 |
<R> | |
Investment Oversight Committees | |
Investment Oversight Committee A | 9 |
Investment Oversight Committee B | 9 |
Investment Oversight Committee C+ | 9 |
Investment Oversight Committee D+ | 9 |
Investment Oversight Committee E+ | 9 |
Investment Oversight Coordinating Committee+ | 5 |
Pricing Committee | 8 |
+ As of July 1, 2010, the Boards Committee structure changed, resulting in the elimination of these committees.
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 2010, and the fees paid to each Trustee by all of the Putnam funds during calendar year 2009:
I-10 | sai_104-2010/11 |
COMPENSATION TABLE | ||||
Pension or | ||||
retirement | Estimated | |||
benefits | annual | Total | ||
Aggregate | accrued as | benefits from | compensation | |
compensation | part of | all Putnam | from all | |
from the | fund | funds upon | Putnam | |
Trustees/Year | fund | expenses | retirement(1) | funds(2) |
<R> | ||||
Ravi Akhoury/2009(3) | $16,100 | N/A | N/A | $259,167 |
Barbara M. | ||||
Baumann/2010(4) | $2,564 | N/A | N/A | N/A |
Jameson A. Baxter/1994(5) | $16,381 | $2,226 | $110,500 | $295,000 |
Charles B. Curtis/2001 | $15,819 | $1,560 | $113,900 | $285,000 |
Robert J. Darretta/2007 | $16,381 | N/A | N/A | $290,000 |
Myra R. Drucker/2004(5) | $16,381 | N/A | N/A | $295,000 |
John A. Hill/1985(5)(6) | $19,220 | $3,775 | $161,700 | $374,376 |
Paul L. Joskow/1997(5) | $16,381 | $1,482 | $113,400 | $295,000 |
Elizabeth T. | ||||
Kennan/1992(5)(7) | $13,817 | $3,002 | $108,000 | $295,000 |
Kenneth R. Leibler/2006 | $16,381 | N/A | N/A | $295,000 |
Robert E. Patterson/1984 | $16,381 | $2,122 | $106,500 | $295,000 |
George Putnam, III/1984 | $16,381 | $1,922 | $130,300 | $295,000 |
W. Thomas | ||||
Stephens/1997(8) | $15,836 | $1,902 | $107,100 | $139,167 |
Richard B. Worley/2004 | $15,819 | N/A | N/A | $285,000 |
| ||||
Charles E. Haldeman, | ||||
Jr./2004 (9) | N/A | N/A | N/A | N/A |
Robert L. Reynolds/2008 | ||||
(10) | N/A | N/A | N/A | N/A |
</R> |
(1) Estimated benefits for each Trustee are based on Trustee fee rates for calendar years 2003, 2004 and 2005.
<R>
(2) As of December 31, 2009, there were 104 funds in the Putnam family.
(3) Mr. Akhoury was elected to the Board of Trustees of the Putnam funds on February 12, 2009.
(4) Ms. Baumann was elected to the Board of Trustees of the Putnam funds on July 1, 2010.
I-11 | sai_104-2010/11 |
(5) Certain Trustees are also owed compensation deferred pursuant to a Trustee Compensation Deferral Plan. As of July 31, 2010, the total amounts of deferred compensation payable by the fund, including income earned on such amounts, to these Trustees were: Ms. Baxter - $83,910; Ms. Drucker - $27,393; Mr. Hill - $300,586; Dr. Joskow - $74,119; and Dr. Kennan - $9,771.
(6) Includes additional compensation to Mr. Hill for service as Chairman of the Trustees of the Putnam funds.
(7) Dr. Kennan retired from the Board of Trustees of the Putnam funds on June 30, 2010.
(8) Mr. Stephens, who retired from the Board of Trustees of the Putnam funds on March 31, 2008, was re-elected to the Board of Trustees on May 14, 2009. Upon his retirement, Mr. Stephens became entitled to receive annual retirement benefit payments from the funds commencing on January 15, 2009. In connection with his re-election to the Board of Trustees, Mr. Stephens has agreed to suspend the balance of his retirement benefit payments for the duration of his service as a Trustee.
(9) Mr. Haldeman was an interested person of the fund, Putnam Management and/or Putnam Retail Management. He retired from the Board of Trustees of the Putnam funds on June 30, 2009.
(10) Mr. Reynolds is an interested person of the fund, Putnam Management and/or Putnam Retail Management.
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 attendance and retainer fees paid to such Trustee for calendar years 2003, 2004 and 2005. This retirement benefit is payable during a Trustees lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. A death benefit, also available under the Plan, ensures 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 Trustees total years of service.
</R>
I-12 | sai_104-2010/11 |
The Plan Administrator (currently the Board Policy and Nominating Committee) 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. The Trustees have terminated the Plan with respect to any Trustee first elected to the board after 2003.
For additional information concerning the Trustees, see "Management" in Part II of this SAI.
Share ownership
<R>
At October 31, 2010, 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, except as noted below, no person owned of record or to the knowledge of the fund beneficially 5% or more of any class of shares of the fund.
</R>
Shareholder name | Percentage | |
Class | and address | owned |
| ||
<R> | ||
A | MLPF&S | 5.21% |
4800 Deer Lake Drive E FL 3 | ||
Jacksonville, FL 32246-6484 | ||
| ||
C | Citigroup Global Markets | 5.04% |
333 W 34th Street | ||
New York, NY 10001 | ||
| ||
C | MLPF&S | 34.04% |
4800 Deer Lake Drive E FL 3 | ||
Jacksonville, FL 32246-6484 | ||
| ||
C | UBS WM USA | 7.22% |
1000 Harbor Blvd | ||
Weehawken, NJ 07086 | ||
| ||
C | Wells Fargo Advisors | 6.91% |
2801 Market Street | ||
Saint Louis, MO 63103 | ||
| ||
M* | CKS Packaging Inc. 401(k) Plan | 5.54% |
| ||
R | Capital Bank & Trust CO | 10.96% |
8515 E Orchard Road # 2T2 | ||
Greenwood Village, CO 80111-5002 | ||
| ||
R | MLPF&S | 28.98% |
4800 Deer Lake Drive E FL 3 | ||
Jacksonville, FL 32246-6484 | ||
| ||
R** | Orchard Trust Company | 7.47% |
8515 E. Orchard Road | ||
Greenwood Village, CO 80111 | ||
|
I-13 | sai_104-2010/11 |
Shareholder name | Percentage | |
Class | and address | owned |
| ||
Y | MLPF&S | 21.15% |
4800 Deer Lake Drive E FL 3 | ||
Jacksonville, FL 32246-6484 | ||
| ||
Y** | Profit Sharing Plan | 8.91% |
| ||
Y | LPL Financial | 8.69% |
PO Box 509046 | ||
San Diego, CA 92150 | ||
| ||
Y | NFS LLC FBO | 7.23% |
7 Easton Oval # EA4E70 | ||
Columbus, OH 43219 | ||
| ||
Y | Citigroup Global Markets Inc. | 5.41% |
333 W 34th Street | ||
New York, NY 10001 | ||
| ||
Y | Wells Fargo Advisors | 5.36% |
2801 Market Street | ||
Saint Louis, MO 63103 | ||
|
* The address for the name listed is: c/o Mercer Trust Company, as trustee or agent, Investors Way, Norwood, MA 02062.
</R>
**The address for the name listed is: c/o Orchard Trust Company, LLC, as trustee or agent, 8515 E. Orchard Road, Greenwood Village, CO 80111.
Distribution fees
<R>
During fiscal 2010, the fund paid the following 12b-1 fees to Putnam Retail Management:
</R>
Class A | Class B | Class C | Class M | Class R |
<R> | ||||
$7,725,953 | $2,131,963 | $633,962 | $216,360 | $17,522 |
</R> |
I-14 | sai_104-2010/11 |
Class A sales charges and contingent deferred sales charges
Putnam Retail Management received sales charges with respect to class A shares in the following amounts during the periods indicated:
Sales | |||
charges | |||
retained by | |||
Putnam | |||
Retail | Contingent | ||
Total front- | Management | deferred | |
end sales | after dealer | sales | |
Fiscal year | charges | concessions | charges |
<R> | |||
2010 | $2,701,653 | $459,127 | $3,048 |
</R> | |||
2009 | $1,029,661 | $178,858 | $264 |
2008 | $1,347,987 | $187,270 | $2,261 |
<R> | |||
</R> |
Class B contingent deferred sales charges
Putnam Retail Management received contingent deferred sales charges upon redemptions of class B shares in the following amounts during the periods indicated:
Contingent | |||
deferred | |||
sales | |||
Fiscal year | charges | ||
<R> | |||
2010 | $173,654 | ||
</R> | |||
2009 | $304,404 | ||
2008 | $592,459 | ||
<R> | |||
</R> |
I-15 | sai_104-2010/11 |
Class C contingent deferred sales charges
Putnam Retail Management received contingent deferred sales charges upon redemptions of class C shares in the following amounts during the periods indicated:
Contingent | |||
deferred | |||
sales | |||
Fiscal year | charges | ||
<R> | |||
2010 | $12,721 | ||
</R> | |||
2009 | $2,361 | ||
2008 | $3,431 | ||
<R> | |||
</R> |
Class M sales charges and contingent deferred sales charges
Putnam Retail Management received sales charges with respect to class M shares in the following amounts during the periods indicated:
Sales | |||
charges | |||
retained by | Contingent | ||
Putnam | deferred | ||
Retail | sales | ||
Total front- | Management | charges | |
end sales | after dealer | ||
Fiscal year | charges | concessions | |
<R> | |||
2010 | $28,382 | $4,782 | $0 |
</R> | |||
2009 | $10,590 | $1,714 | $0 |
2008 | $14,553 | $1,954 | $0 |
<R> | |||
</R> | |||
Investor servicing fees |
<R>
During the 2010 fiscal year, the fund incurred $13,515,569 in fees for investor servicing provided by Putnam Investor Services, Inc.
PORTFOLIO MANAGER
</R>
I-16 | sai_104-2010/11 |
Other accounts managed
The following table shows the number and approximate assets of other investment accounts (or portions of investment accounts) that the funds portfolio manager managed as of the funds most recent fiscal year-end. The other accounts may include accounts for which the individual was not designated as a portfolio manager. Unless noted, none of the other accounts pays a fee based on the accounts performance.
Other accounts | ||||||
(including separate | ||||||
accounts, managed | ||||||
account programs and | ||||||
Other SEC-registered | Other accounts that | single-sponsor defined | ||||
Portfolio | open-end and closed- | pool assets from more | contribution plan | |||
manager | end funds | than one client | offerings) | |||
| ||||||
Number | Number | Number | ||||
of | of | of | ||||
accounts | Assets | accounts | Assets | accounts | Assets | |
| ||||||
<R> | ||||||
| ||||||
Nick Thakore | 1 | $975,600,000 | 0 | 0 | 1 | $1,500,000 |
| ||||||
</R> |
See "Management - Portfolio Transactions - Potential conflicts of interest in managing multiple accounts" in Part II of this SAI for information on how Putnam Management addresses potential conflicts of interest resulting from an individuals management of more than one account.
Compensation of portfolio manager
<R>
Putnams goal for our products and investors is to deliver strong performance versus peers or performance ahead of benchmark, depending on the product, over a rolling 3-year period. Portfolio managers are evaluated and compensated, in part, based on their performance relative to this goal across the products they manage. In addition to their individual performance, evaluations take into account the performance of their group and a subjective component.
Each portfolio manager is assigned an industry competitive incentive compensation target consistent with this goal and evaluation framework. Actual incentive compensation may be higher or lower than the target, based on individual, group, and subjective performance, and may also reflect the performance of Putnam as a firm. Typically, performance is measured over the lesser of three years or the length of time a portfolio manager has managed a product.
I-17 | sai_104-2010/11 |
Incentive compensation includes a cash bonus and may also include grants of deferred cash, stock or options. In addition to incentive compensation, portfolio managers receive fixed annual salaries typically based on level of responsibility and experience.
For this fund, Putnam evaluates performance based on the funds peer ranking in the Lipper Large-Cap Growth Funds Category, which is based on pre-tax performance.
</R>
Ownership of securities
<R>
The dollar range of shares of the fund owned by the portfolio manager at the end of the funds last fiscal year, including investments by immediate family members and amounts invested through retirement and deferred compensation plans, was $500,001-$1,000,000.
</R>
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND FINANCIAL STATEMENTS
<R>
PricewaterhouseCoopers LLP, 125 High Street, Boston, Massachusetts 02110, is the funds independent registered public accounting firm 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 Registered Public Accounting Firm, financial highlights and financial statements included in the funds Annual Report for the funds most recent fiscal year are included in Appendix B to this SAI. The financial highlights included in the prospectus and this SAI and the financial statements included in this SAI (which is incorporated by reference in this prospectus) have been so included and incorporated in reliance upon the report of the independent registered public accounting firm, given on their authority as experts in auditing and accounting.
</R>
I-18 | sai_104-2010/11 |
THE PUTNAM FUNDS |
STATEMENT OF ADDITIONAL INFORMATION (SAI) |
PART II |
HOW TO BUY SHARES
Each prospectus describes briefly how investors may buy shares of the fund and identifies the share classes offered by that prospectus. Because of different sales charges and expenses, the investment performance of the classes will vary. This section of the SAI contains more information on how to buy shares. For more information, including your eligibility to purchase certain classes of shares, contact your investment dealer or Putnam Investor Services at 1-800-225-1581. Investors 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 in this section and in the sections that follow apply to them.
General Information
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. (The public offering price is thus calculable by dividing the net asset value by 100% minus the sales charge, expressed as a percentage.) 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 or a registered transfer agent or registered clearing agent receives the order, together with all required identifying information, before the close of regular trading on the New York Stock Exchange (the Exchange). If the dealer or registered transfer agent or registered clearing agent 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 all required identifying information has been collected. 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 purchases are subject to the minimums stated in the prospectus, except that (i) individual investments under certain employee benefit plans or Tax Qualified Retirement Plans may be lower, and (ii) the minimum investment is waived for investors participating in systematic investment plans or military allotment plans. Information about these plans is available from investment dealers or Putnam Investor Services. Currently Putnam is waiving the minimum for all initial purchases, but reserves the right to reject initial purchases under the minimum in the future, except as noted in the first sentence of this paragraph.
Systematic investment plan. As a convenience to investors, shares may be purchased through a systematic investment plan. Pre-authorized monthly, semi-monthly, or weekly bank drafts for a fixed amount ($200,000 or less) are used to purchase fund shares at the applicable public offering price next determined after Putnam Retail Management Limited Partnership (Putnam Retail Management) receives the proceeds from the draft. A shareholder may choose any date or dates in the month for these drafts, but 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 the investment dealers or from Putnam Retail Management.
Reinvestment of distributions. 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 shareholders account on the payment date. Dividends for Putnam money market funds are credited to a shareholders account on the payment date. Distributions for all other funds that declare a distribution daily are
October 20, 2010 | II-1 |
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 shareholders account on the payment date.
Purchasing shares with securities (in-kind purchases). In addition to cash, the fund will consider accepting 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 Investment Management, LLC (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 that are delivered in proper form. The fund will not accept certain securities, for example, 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 Retail Management. Investors should not send securities to the fund except when authorized to do so and in accordance with specific instructions received from Putnam Retail Management.
Sales Charges and Other Share Class FeaturesRetail Investors
This section describes certain key features of share classes offered to retail investors and retirement plans that do not purchase shares at net asset value. Much of this information addresses the sales charges, including initial sales charges and contingent deferred sales charges (CDSCs) imposed on the different share classes and various commission payments made by Putnam to dealers and other financial intermediaries facilitating shareholders investments. This information supplements the descriptions of these share classes and payments included in the prospectus.
Initial sales charges, dealer commissions and CDSCs on shares sold outside the United States may differ from those applied to U.S. sales.
Initial sales charges for class A and class M shares. 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 (calculable as described above). The fund receives the net asset value. The tables below indicate the sales charges applicable to purchases of class A and class M shares of the funds by style category. The variations in sales charges reflect the varying efforts required to sell shares to different categories of purchasers.
The sales charge is allocated between your investment dealer and Putnam Retail Management as shown in the tables below, except when Putnam Retail Management, in its discretion, allocates the entire amount to your investment dealer.
The underwriters commission, or dealer reallowance, is the sales charge shown in the prospectus less any applicable dealer discount. Putnam Retail Management will give dealers ten days notice of any changes in the dealer discount. Putnam Retail Management retains the entire sales charge on any retail sales made by it.
II-2 |
For purchases of class A shares by retail investors that qualify for the highest sales charge breakpoint described in the prospectus, Putnam Retail Management pays commissions on sales during the one-year period beginning with the date of the initial purchase qualifying for that breakpoint. Each subsequent one-year measuring period for these purposes begins with the first qualifying purchase following the end of the prior period. These commissions are paid at the rate of 1.00% of the amount of qualifying purchases up to $4 million, 0.50% of the next $46 million of qualifying purchases and 0.25% of qualifying purchases thereafter.
For Growth Funds, Blend Funds, Value Funds, Asset Allocation Funds, Global Sector Funds and RetirementReady® Funds only:
<R> | ||||
CLASS A | CLASS M | |||
Amount of sales | Amount of sales | |||
charge | charge | |||
reallowed to | reallowed to | |||
Sales charge as | dealers as a | Sales charge as | dealers as a | |
Amount of transaction at | a percentage of | percentage of | a percentage of | percentage of |
offering price ($) | offering price | offering price | offering price | offering price |
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 | 1.00 | 1.00 |
1,000,000 and above | NONE | NONE | N/A* | N/A* |
</R> |
For Putnam Absolute Return 500 Fund and Putnam Absolute Return 700 Fund only:
<R> | ||||
CLASS A | CLASS M | |||
Amount of sales | Amount of sales | |||
charge | charge | |||
reallowed to | reallowed to | |||
Sales charge as | dealers as a | Sales charge as | dealers as a | |
Amount of transaction at | a percentage of | percentage of | a percentage of | percentage of |
offering price ($) | offering price | offering price | offering price | offering price |
Under 50,000 | 5.75% | 5.00% | 3.50% | 3.00% |
50,000 but under 100,000 | 4.50 | 3.75 | 2.50 | 2.00 |
100,000 but under 250,000 | 3.50 | 2.75 | 1.50 | 1.00 |
250,000 but under 500,000 | 2.50 | 2.00 | 1.00 | 1.00 |
500,000 and above | NONE | NONE | N/A** | N/A** |
</R> |
For Taxable and Tax-Free Income Funds only (except for Money Market Funds and Putnam Floating Rate Income Fund):
<R>
II-3 |
CLASS A | CLASS M | |||
Amount of sales | Amount of sales | |||
charge | charge | |||
reallowed to | reallowed to | |||
Sales charge as | dealers as a | Sales charge as | dealers as a | |
Amount of transaction at | a percentage of | percentage of | a percentage of | percentage of |
offering price ($) | offering price | offering price | offering price | offering price |
Under 50,000 | 4.00% | 3.50% | 3.25% | 3.00% |
50,000 but under 100,000 | 4.00 | 3.50 | 2.25 | 2.00 |
100,000 but under 250,000 | 3.25 | 2.75 | 1.25 | 1.00 |
250,000 but under 500,000 | 2.50 | 2.00 | 1.00 | 1.00 |
500,000 and above | NONE | NONE | N/A** | N/A** |
</R> |
For Putnam Floating Rate Income Fund, Putnam Absolute Return 100 Fund and Putnam Absolute Return 300 Fund only:
<R> | ||||
CLASS A | CLASS M | |||
Amount of sales | Amount of sales | |||
charge | charge | |||
reallowed to | reallowed to | |||
Sales charge as | dealers as a | Sales charge as | dealers as a | |
Amount of transaction at | a percentage of | percentage of | a percentage of | percentage of |
offering price ($) | offering price | offering price | offering price | offering price |
Under 500,000 | 1.00% | 1.00% | 0.75% | 0.75% |
500,000 and above | NONE | NONE | N/A** | N/A** |
</R> |
*The funds will not accept purchase orders for class M shares (other than by qualified employee-benefit plans) where the total of the current purchase, plus existing account balances that are eligible to be linked under a right of accumulation (as described below) is $1 million or more.
**The funds will not accept purchase orders for class M shares (other than by qualified employee-benefit plans) where the total of the current purchase, plus existing account balances that are eligible to be linked under a right of accumulation (as described below) is $500,000 or more.
Purchases of $500,000 or more of class A shares. (For Taxable and Tax-Free Income Funds and Absolute Return Funds only) Purchases of class A shares of one or more Putnam funds of $500,000 or more are not subject to an initial sales charge, but shares purchased by investors other than qualified benefit plans are subject to a CDSC of 1.00% if redeemed before the first day of the month in which the nine-month anniversary of that purchase falls. The conditions above will apply unless the dealer of record has, with Putnam Retail Managements approval, (i) waived its commission or (ii) agreed to refund its commission to Putnam Retail Management if a CDSC would otherwise apply.
II-4 |
Subject to the exceptions stated in the preceding paragraph, a deferred sales charge of 1.00% will apply to class A shares and class T shares of Putnam Money Market Fund and Putnam Tax Exempt Money Market Fund that are obtained by exchanging shares from another Putnam fund that were originally purchased without an initial sales charge (if such original purchase was made at net asset value because it was in an amount equal to $500,000 or more), if the shares are redeemed before the first day of the month in which the nine-month anniversary of the original purchase falls.
The CDSC assessed on redemptions of fewer than all of an investors class A shares (or, for Putnam Money Market Fund, class T shares) subject to a CDSC will be based on the amount of the redemption minus the amount of any appreciation on the investors CDSC-subject shares since the purchase of such shares. The CDSC assessed on full redemptions of CDSC-subject shares will be based on the lower of the shares cost and current NAV. Putnam Retail Management will retain any CDSC imposed on redemptions of such shares to compensate it for the up-front commissions paid to financial intermediaries for such share sales.
Purchases of $1,000,000 or more of class A shares. (For Growth Funds, Blend Funds, Value Funds, Asset Allocation Funds, Global Sector Funds and RetirementReady® Funds only) Purchases of class A shares of one or more Putnam funds of $1 million or more are not subject to an initial sales charge, but shares purchased by investors other than qualified benefit plans are subject to a CDSC of 1.00% if redeemed before the first day of the month in which the nine-month anniversary of that purchase falls. The conditions above will apply unless the dealer of record has, with Putnam Retail Managements approval, (i) waived its commission or (ii) agreed to refund its commission to Putnam Retail Management if a CDSC would otherwise apply.
Subject to the exceptions stated in the preceding paragraph, a deferred sales charge of 1.00% will apply to class A shares and class T shares of Putnam Money Market Fund and Putnam Tax Exempt Money Market Fund that are obtained by exchanging shares from another Putnam fund that were originally purchased without an initial sales charge (if such original purchase was made at net asset value because it was in an amount equal to $1 million or more), if the shares are redeemed before the first day of the month in which the nine-month anniversary of the original purchase falls.
The CDSC assessed on redemptions of fewer than all of an investors class A shares (or, for Putnam Money Market Fund, class T shares) subject to a CDSC will be based on the amount of the redemption minus the amount of any appreciation on the investors CDSC-subject shares since the purchase of such shares. The CDSC assessed on full redemptions of CDSC-subject shares will be based on the lower of the shares cost and current NAV. Putnam Retail Management will retain any CDSC imposed on redemptions of such shares to compensate it for the up-front commissions paid to financial intermediaries for such share sales.
Purchases of class A shares for rollover IRAs. Purchases of class A shares for a Putnam Rollover IRA or a rollover IRA of a Putnam affiliate, from a retirement plan for which an affiliate of Putnam Management or a business partner of such affiliate is the administrator, including subsequent contributions, are not subject to an initial sales charge or CDSC. Putnam Retail Management may pay commissions or finders fees of up to 1.00% of the proceeds for such Putnam Rollover IRA purchases to the dealer of record or other third party.
Contingent sales charges for class M shares (rollover IRAs). Purchases of class M shares for a Putnam Rollover IRA with proceeds in any amount from a retirement plan for which an affiliate of Putnam Management or a business partner of such affiliate is the administrator are not subject to an initial sales charge but may be subject to a CDSC on shares redeemed within one year of purchase at the rates set forth below, which are equal to commissions Putnam Retail Management pays to the dealer of record at the time of the sale of class M shares. These purchases will not be subject to a CDSC if the dealer of record has, with Putnam Retail Managements approval, waived its commission or agreed to refund its commission to Putnam Retail Management if a CDSC would otherwise apply.
<R>
II-5 |
Class M CDSC and dealer commission | |
All growth, blend, value, global sector and asset allocation | |
funds, Putnam Absolute Return 500 Fund and Putnam | 0.65% |
Absolute Return 700 Fund: | |
All income funds (except Putnam Floating Rate Income | 0.40% |
Fund and Putnam Money Market Fund): | |
Putnam Absolute Return 100 Fund, Putnam Absolute | 0.30% |
Return 300 Fund and Putnam Floating Rate Income Fund | |
Putnam Money Market Fund | 0.15% |
</R> |
Commission payments and CDSCs for class B and class C shares. Except in the case of Putnam Money Market Fund and as noted below, Putnam Retail Management will pay a 4% commission on sales of class B shares of the fund only to those financial intermediaries who have entered into service agreements with Putnam Retail Management. For tax-exempt funds, this commission includes a 0.20% pre-paid service fee (except for Putnam Tax-Free High Yield Fund and Putnam AMT-Free Municipal Fund, each of which has a 0.25% pre-paid service fee). For Putnam Floating Rate Income Fund, Putnam Absolute Return 100 Fund and Putnam Absolute Return 300 Fund, Putnam Retail Management will pay a 1.00% commission to financial intermediaries selling class B shares of the fund.
Except in the case of Putnam Money Market Fund, Putnam Retail Management pays financial intermediaries a 1.00% commission on sales of class C shares of a fund.
Putnam Retail Management will retain any CDSC imposed on redemptions of class B and class C shares to compensate it for the cost of paying the up-front commissions paid to financial intermediaries for class B or class C share sales. Purchases of class C shares may be made without a CDSC if the dealer of record has, with Putnam Retail Managements approval, waived its commission or agreed to refund its commission to Putnam Retail Management.
Conversion of class B shares into class A shares. Class B shares will automatically convert to class A shares on or around the end of the month eight years after the purchase date (for Putnam Small Cap Value Fund, on or around the end of the month six years after the purchase date; for Putnam Small Cap Growth Fund, on or around the end of the month five years after the purchase date; and for Mid Cap Value Fund, on or around the end of the month five and one half years after the purchase date). Class B shares acquired by exchanging class B shares of another Putnam fund will convert to class A shares based on the time of the initial purchase. The conversion period of the acquired fund will apply, unless the initial funds CDSC schedule is higher than that of the acquired fund. In that case, the conversion period and CDSC schedule of the initial fund will apply. Class B shares acquired through reinvestment o f distributions will convert to 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. Shareholders should consult with their tax advisers regarding the state and local tax consequences of the conversion of class B shares to class A shares, or any other exchange or conversion of shares. Average annual total return performance information for class B shares shown in the funds prospectus does not assume conversion to class A shares.
II-6 |
Sales without sales charges, contingent deferred sales charges or short-term trading fees
The fund may sell shares without a sales charge or CDSC to the following categories of investors:
(i) current and former Trustees of the fund, their family members, business and personal associates; current and former employees of Putnam Management and certain current and former corporate affiliates, their family members, business and personal associates; 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 applicable to tax-exempt funds);
(iii) clients of administrators or other service providers of tax-qualified employer-sponsored retirement plans which have entered into agreements with Putnam Retail Management (not applicable to tax-exempt funds);
(iv) registered representatives and other employees of broker-dealers having sales agreements with Putnam Retail Management; employees of financial institutions having sales agreements with Putnam Retail Management or otherwise having an arrangement with any such broker-dealer or financial institution with respect to sales of fund shares; and their immediate family members (spouses and children under age 21, including step-children and adopted children);
(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 Retail Management, 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;
(vii) "wrap accounts" maintained for clients of broker-dealers, financial institutions or financial intermediaries who have entered into agreements with Putnam Retail Management with respect to such accounts;
(viii) college savings plans that qualify for tax-exempt treatment under section 529 of the Internal Revenue Code of 1986, as amended (the Code); and
(ix) investors who invest liquidation proceeds from Putnam closed-end funds.
In the case of paragraph (i) above, the availability of shares at NAV has been determined to be appropriate because involvement by Putnam Retail Management and other brokers in purchases by these investors is typically minimal.
In addition to the categories enumerated above, in connection with settlements reached between certain firms and the Financial Industry Regulating Authority (FINRA) and/or Securities and Exchange Commission (the SEC) regarding sales of class B and class C shares in excess of certain dollar thresholds, the fund will permit shareholders who are clients of these firms (and applicable affiliates of such firms) to redeem class B and class C shares of the fund and concurrently purchase class A shares (in an amount to be determined by the dealer of record and Putnam Retail Management in accordance with the terms of the applicable settlement) without paying an initial sales charge.
II-7 |
The fund may issue its shares at net asset value without an initial sales charge or a CDSC in connection with the acquisition of substantially all of the securities owned by other investment companies or personal holding companies. The CDSC will be waived on redemptions to pay premiums for insurance under Putnams insured investor program.
Application of CDSC to Systematic Withdrawal Plans (SWP). Investors who set up a SWP for a share account (see "INVESTOR SERVICES Plans Available to Shareholders -- Systematic Withdrawal Plan") may withdraw through the SWP 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 SWP and recalculated thereafter on a pro rata basis at the time of each SWP payment. Therefore, shareholders who have chosen an SWP based on a percentage of the net asset value of their account of up to 12% will be able to receive SWP payments without incurring a CDSC. However, shareholders who have chosen a specific dollar amount (for example, $100 per month from the fund that pays income distributions monthly) for their periodic SWP 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 SWP privilege may be revised or terminated at any time.
Other exceptions to application of CDSC. 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 post-purchase 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.
Exceptions to application of short-term trading fee. In addition to the exceptions noted in the funds prospectus, the short-term trading fee will not apply to automatic rebalancing arrangements entered into by Putnam Retail Management and dealers and also will not be imposed in cases of shareholder death or post-purchase disability or other circumstances in which a CDSC would be waived as stated above under Other exceptions to application of CDSC. In addition, the short-term trading fee will not apply to shares sold or exchanged by a Putnam fund-of-funds or a Section 529 college savings plan.
II-8 |
Ways to Reduce Initial Sales ChargesClass A and M Shares
There are several ways in 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 provisions may be altered or discontinued at any time.
Right of accumulation. A purchaser of class A shares or class M shares may qualify for a right of accumulation discount by combining all current purchases by such person with the value of certain other shares of any class of Putnam funds already owned. The applicable sales charge is based on the total of:
(i) the investors current purchase(s); and
(ii) the higher of (x) the maximum public offering price (at the close of business on the previous day) or (y) the initial value of total purchases (less the value of shares redeemed on the applicable redemption date) of:
(a) all shares held in accounts registered to the investor and other accounts eligible to be linked to the investors accounts (as described below) in all of the Putnam funds (except closed-end and money market funds, unless acquired as described in (b) below); and
(b) any shares of money market funds acquired by exchange from other Putnam funds.
For shares held on December 31, 2007, the initial value will be the value of those shares at the maximum public offering price on that date.
The following persons may qualify for a right of accumulation discount:
(i) an individual, or a "company" as defined in Section 2(a)(8) of the Investment Company Act of 1940, as amended (the 1940 Act) (which includes corporations which are corporate affiliates of each other);
(ii) an individual, his or her spouse and their children under age 21, 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 Code and Simplified Employer Pension Plans (SEPs) created pursuant to Section 408(k) of the Code);
(iv) tax-exempt organizations qualifying under Section 501(c)(3) of the 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, if the dealer places the order for such shares directly with Putnam Retail Management.
For individual investors, Putnam Investor Services automatically links accounts the registrations of which are under the same last name and address. Account types eligible to be linked for the purpose of qualifying for a right of accumulation discount include the following (in each case as registered to the investor, his or her spouse and his or her children under the age of 21):
(i) individual accounts;
II-9 |
(ii) joint accounts;
(iii) accounts established as part of a plan established pursuant to Section 403(b) of the Code (403(b) plans) or an IRA other than a Simple IRA, SARSEP or SEP IRA;
(iv) shares owned through accounts in the name of the investors (or spouses or minor childs) dealer or other financial intermediary (with documentation identifying to the satisfaction of Putnam Investor Services the beneficial ownership of such shares); and
(v) accounts established as part of a Section 529 college savings plan managed by Putnam Management.
Shares owned by a plan participant as part of an employee benefit plan of a single employer or of affiliated employers (other than 403(b) plans) or a single fiduciary account opened by a trustee or other fiduciary (including a pension, profit-sharing, or other employee benefit trust created pursuant to a plan qualified under Section 401 of the Code) are not eligible for linking to other accounts attributable to such person to qualify for the right of accumulation discount, although all current purchases made by each such plan may be combined with existing aggregate balances of such plan in Putnam funds for purposes of determining the sales charge applicable to shares purchased at such time by the plan.
To obtain the right of accumulation discount on a purchase through an investment dealer, when each purchase is made the investor or dealer must provide Putnam Retail Management 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. Sales charge discounts under a right of accumulation apply only to current purchases. No credit for right of accumulation purposes is given for any higher sales charge paid with respect to previous purchases for the investors account or any linked accounts.
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 (also referred to as a Letter of Intention), which expresses the investors 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), including through an account established as part of a Section 529 college savings plan managed by Putnam Management. Each purchase of class A shares or class M shares under a Statement of Intention will be made at the lesser of (i) the public offering price applicable at the time of such purchase and (ii) the public offering price applicable on the date the Statement of Intention is executed to a single transaction of the total dollar amount indicated in the Statement of Intention.
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, or which are eligible to be linked for purposes of the right of accumulation described above, 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.
II-10 |
If 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 investors 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 investors dealer returns any excess commissions previously received.
If 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 investors dealer and Putnam Retail Management. Putnam Retail Management will make a corresponding downward adjustment to the amount of the reallowance payable to the dealer with respect to purchases made prior to the investors failure to fulfill the conditions of the Statement of Intention. If the account exceeds an amount that would otherwise qualify for a reduced sales charge, that reduced sales charge will be applied. Adjustments to sales charges and dealer reallowances will not be made in the case of the shareholders death prior to the expiration of the 13-month period.
Statements of Intention are not available for certain employee benefit plans.
Statement of Intention forms may be obtained from Putnam Retail Management or from investment dealers. In addition, shareholders may complete the applicable portion of the funds standard account application. Interested investors should read the Statement of Intention carefully.
Commissions on Sales to Employee Benefit Plans
Purchases of class A and class R shares. On sales of class A shares at net asset value to certain qualified benefit plans and health reimbursement accounts and sales of class R shares, Putnam Retail Management may, at its discretion, pay commissions to the dealer of record 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.
For commission payments made by Putnam Retail Management to dealers and other financial intermediaries with respect to other classes of shares offered to employee benefit plans and other tax-favored plan investors, see the corresponding sub-heading under Sales Charges and Other Share Class FeaturesRetail Investors.
DISTRIBUTION PLANS
If the fund or a class of shares of the fund has adopted a distribution (12b-1) 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
II-11 |
vote of a majority of the outstanding voting securities of the fund or the relevant class of the fund, as the case may be.
The fund makes payments under each plan to Putnam Retail Management to compensate Putnam Retail Management for services provided and expenses incurred by it for purposes of promoting the sale of the relevant class of shares, reducing redemptions of shares or maintaining or improving services provided to shareholders by Putnam Retail Management and investment dealers.
Putnam Retail Management compensates qualifying dealers (including, for this purpose, certain financial institutions) for sales of shares and the maintenance of shareholder accounts.
Putnam Retail Management 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 Retail Management and any applicable limits imposed by FINRA.
Financial institutions receiving payments from Putnam Retail Management 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 Retail Management 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 Retail Management makes quarterly (or in certain cases monthly) payments to dealers at up to 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 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, unless the dealer of record has waived the sales commission, or, in the case of dealers of record for a qualified benefit plan investing at least $1 million, where such dealer has agreed to a reduced sales commission.
<R>
II-12 |
Rate* | Fund |
| |
0.25% | All funds currently making payments under a class A |
distribution plan, except for those listed below | |
| |
0.20% for shares purchased before 3/21/05; | Putnam Tax-Free High Yield Fund |
0.25% for shares purchased on or after 3/21/05** | |
| |
0.20% for shares purchased before 4/1/05; | Putnam AMT-Free Municipal Fund |
0.25% for shares purchased on or after 4/1/05 | |
| |
0.20% for shares purchased on or before 12/31/89; | Putnam Convertible Income-Growth Trust |
0.25% for shares purchased after 12/31/89 | The George Putnam Fund of Boston |
Putnam Global Equity Fund | |
Putnam Global Natural Resources Fund | |
Putnam Global Health Care Fund | |
The Putnam Fund for Growth and Income | |
Putnam Investors Fund | |
Putnam Vista Fund | |
Putnam Voyager Fund | |
| |
0.20% for shares purchased on or before 3/31/90; | Putnam High Yield Trust |
0.25% for shares purchased after 3/31/90 | Putnam U.S. Government Income Trust |
| |
0.20% for shares purchased on or before 1/1/90; | Putnam Equity Income Fund |
0.25% for shares purchased after 1/1/90 | |
| |
0.20% for shares purchased on or before 3/31/91; | Putnam Income Fund |
0.25% for shares purchased after 3/31/91; | |
| |
0.15% for shares purchased on or before 3/6/92; | Putnam Michigan Tax Exempt Income Fund |
0.20% for shares purchased after 3/6/92 but before | Putnam Minnesota Tax Exempt Income Fund |
4/1/05; | Putnam Ohio Tax Exempt Income Fund |
0.25% for shares purchased on or after 4/1/05 | |
| |
0.15% for shares purchased on or before 5/11/92; | Putnam Massachusetts Tax Exempt Income Fund |
0.20% for shares purchased after 5/11/92 but before | |
4/1/05; | |
0.25% for shares purchased on or after 4/1/05 | |
| |
0.15% for shares purchased on or before 12/31/92; | Putnam California Tax Exempt Income Fund |
0.20% for shares purchased after 12/31/92 but | Putnam New Jersey Tax Exempt Income Fund |
before 4/1/05; | Putnam New York Tax Exempt Income Fund |
0.25% for shares purchased on or after 4/1/05 | Putnam Tax Exempt Income Fund |
| |
0.15% for shares purchased on or before 3/5/93; | Putnam Arizona Tax Exempt Income Fund |
0.20% for shares purchased after 3/5/93 but before | |
4/1/05; | |
0.25% for shares purchased on or after 4/1/05 | |
| |
0.15% for shares purchased on or before 7/8/93; | Putnam Pennsylvania Tax Exempt Income Fund |
0.20% for shares purchased after 7/8/93 but before | |
4/1/05; | |
0.25% for shares purchased on or after 4/1/05 | |
| |
0.00% | Putnam Money Market Fund |
Putnam Tax Exempt Money Market Fund | |
| |
</R> |
II-13 |
*For purposes of this table, shares are deemed to be purchased on date of settlement (i.e., once purchased and paid for). Shares issued in connection with dividend reinvestments are considered to be purchased on the date of their issuance, not the issuance of the original shares.
**Shares of Putnam Tax-Free High Yield Fund issued in connection with the merger of Putnam Municipal Income Fund into that fund pay a commission at the annual rate of 0.20% or 0.25%, based on the date of the original purchase of the shareholders corresponding shares of Putnam Municipal Income Fund, as set forth below: 0.20% for shares purchased on or before 5/7/92; 0.25% for shares purchased after 5/7/92.
Class B shares:
Putnam Retail Management makes quarterly (or in certain cases monthly) 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).
<R> | |
| |
Rate | Fund |
| |
0.25% | All funds currently making payments under a class B |
distribution plan, except for those listed below | |
| |
0.25%, except that the first years service fees of | Putnam AMT-Free Municipal Fund |
0.25% are prepaid at time of sale | Putnam Tax-Free High Yield Fund |
| |
0.20%, except that the first years service fees of | Putnam Arizona Tax Exempt Income Fund |
0.20% are prepaid at time of sale | Putnam California 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 Ohio Tax Exempt Income Fund | |
Putnam Pennsylvania Tax Exempt Income Fund | |
Putnam Tax Exempt Income Fund | |
| |
0.00% | Putnam Money Market Fund |
| |
</R> |
Class C shares:
Putnam Retail Management makes quarterly (or in certain cases monthly) 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). No payments are made during the first year after purchase unless the shareholder has made arrangements with Putnam Retail Management and the dealer of record has waived the sales commission.
<R>
II-14 |
Rate | Fund |
| |
1.00% | All funds currently making payments under a class C |
distribution plan, except the fund listed below | |
| |
0.50% | Putnam Money Market Fund |
| |
</R> |
Different rates may apply to shares sold outside the United States.
Class M shares:
Putnam Retail Management makes quarterly (or in certain cases monthly) 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), except as follows. No payments are made during the first year after purchase on shares purchased at net asset value for Putnam Rollover IRAs, unless the dealer of record has waived the sales commission.
<R> | |
| |
Rate | Fund |
| |
0.65% | All growth, blend, value, global sector and asset |
allocation funds currently making payments under a | |
class M distribution plan, and Putnam Absolute | |
Return 500 Fund and Putnam Absolute Return 700 | |
Fund. | |
| |
0.40% | All income funds currently making payments under a |
class M distribution plan (except for Putnam Floating | |
Rate Income Fund and Putnam Money Market Fund) | |
| |
0.30% | Putnam Absolute Return 100 Fund, Putnam Absolute |
Return 300 Fund and Putnam Floating Rate Income | |
Fund | |
| |
0.15% | Putnam Money Market Fund |
| |
</R> |
II-15 |
Putnam Retail Managements payments to dealers for plans investing in class M shares for which such dealers are designated the dealer of record may equal up to the annual rate of 0.75% of the average net asset value of such class M shares for Putnam Absolute Return 500 Fund and Putnam Absolute Return 700 Fund as well as all growth, blend, value, global sector and asset allocation funds currently making payments under a class M distribution plan and up to the annual rate of 0.50% of the average net asset value of such class M shares for all income funds currently making payments under a class M distribution plan (except for Putnam Floating Rate Income Fund, Putnam Absolute Return 100 Fund and Putnam Absolute Return 300 Fund and Putnam Money Market Fund).
Different rates may apply to shares sold outside the United States.
Class R shares:
Putnam Retail Management makes quarterly (or in certain cases monthly) payments to dealers at up to the annual rates set forth below (as a percentage of the average net asset value of class R shares for which such dealers are designated the dealer of record).
<R> | |
| |
Rate | Fund |
| |
0.50% | All funds currently making payments under a class R |
distribution plan | |
| |
</R> |
A portion of the class R distribution fee payable to dealers may be paid to third parties who provide services to plans investing in class R shares and participants in such plans.
Class T shares:
Putnam Retail Management makes quarterly (or in certain cases monthly) payments to dealers at the annual rates set forth below (as a percentage of the average net asset value of class T shares for which such dealers are designated the dealer of record).
<R> | |
| |
Rate | Fund |
| |
0.25% | Putnam Money Market Fund |
| |
</R> |
Additional Dealer Payments
As described earlier in this section, dealers may receive different commissions, sales charge reallowances and other payments with respect to sales of different classes of shares of the funds. These payments may include servicing payments to retirement plan administrators and other institutions up to the same levels as described above. For purposes of this section the term dealer includes any broker, dealer, bank, bank trust department, registered investment advisor, financial planner, retirement plan administrator and any other institution having a selling, services, or any similar agreement with Putnam Retail Management or one of its affiliates.
II-16 |
Putnam Retail Management and its affiliates pay additional compensation to selected dealers under the categories described below. These categories are not mutually exclusive, and a single dealer may receive payments under all categories. These payments may create an incentive for a dealer firm or its representatives to recommend or offer shares of the fund or other Putnam funds to its customers. These additional payments are made pursuant to agreements with dealers and do not change the price paid by investors for the purchase of a share or the amount a fund will receive as proceeds from such sales or the distribution (12b-1) fees and the expenses paid by the fund as shown under the heading Fees and Expenses in the prospectus.
Marketing Support Payments. Putnam Retail Management and its affiliates will make payments to certain dealers for marketing support services, including business planning assistance, educating dealer personnel about the Putnam funds and shareholder financial planning needs, placement on the dealers preferred or recommended fund company list, and access to sales meetings, sales representatives and management representatives of the dealer. These payments are generally based on one or more of the following factors: average net assets of Putnams retail mutual funds attributable to that dealer, gross or net sales of Putnams retail mutual funds attributable to that dealer, reimbursement of ticket charges (fees that a dealer firm charges its representatives for effecting transactions in fund shares) or a negotiated lump sum payment for services rendered.
Putnam Retail Management and its affiliates compensate dealers differently depending upon, among other factors, the level and/or type of marketing support provided by the dealer. In addition, payments typically apply to retail sales and assets, but may not, in certain situations, apply to other specific types of sales or assets, such as to retirement plans or fee-based advisory programs.
Marketing support payments to any one dealer are not expected, with certain limited exceptions, to exceed 0.085% of the average assets of Putnams retail mutual funds attributable to that dealer on an annual basis.
The following dealers (and such dealers respective affiliates) received marketing support payments from Putnam Retail Management and its affiliates during the calendar year ended December 31, 2009:
<R> | |
| |
Advantage Capital Corporation | Morgan Stanley & Co. Incorporated |
| |
American General Securities Incorporated | Multi-Financial Securities Corporation |
| |
American Portfolios Financial Services, Inc. | Mutual Service Corporation |
| |
Ameriprise Financial Services, Inc. | National Planning Corporation |
| |
Associated Securities Corporation | New England Securities Corporation |
| |
AXA Advisors, LLC | NEXT Financial Group, Inc. |
| |
Banc of America Investment Services, Inc. | NFP Securities, Inc. |
| |
BancWest Investment Services, Inc. | Northwestern Mutual Investment Services, LLC |
| |
Cadaret, Grant & Co. Inc. | NRP Financial, Inc. |
| |
Cambridge Investment Research, Inc. | Oppenheimer & Co. Inc. |
| |
CCO Investment Services Corp. | Peoples Securities |
| |
Chase Investment Services Corp. | PFS Investments, Inc. |
| |
Citigroup Global Markets, Inc | PNC Investments, LLC |
| |
Commonwealth Equity Services | Prime Vest Financial Services, Inc. |
| |
CUNA Brokerage Services, Inc. | Raymond James & Associates, Inc. |
| |
CUSO Financial Services, L.P. | Raymond James Financial Services, Inc. |
| |
Edward D. Jones & Co. | RBC Capital Markets Corporation |
| |
Financial Network Investment Corporation | Robert W. Baird & Co. Incorporated |
| |
FSC Securities Corporation | Royal Alliance Associates |
| |
Genworth Financial Securities Corp. | Sagepoint Financial, Inc. |
| |
HD Vest Investment Securities, Inc. | Securities America Financial Corporation, Inc. |
|
II-17 |
ING Financial Partners | Signator Investors, Inc. |
| |
INVEST Financial Corporation | SII Investments |
| |
Investment Centers of America, Inc. | SunTrust Investment Services, Inc. |
| |
J.P. Morgan Securities Inc. | Tower Square Securities, Inc. |
| |
Janney Montgomery Scott LLC | U.S. Bancorp Investments, Inc. |
| |
Key Investment Services | UBS Financial Services Inc. |
| |
Lincoln Financial Advisors Corp. | UVEST Financial Services, Inc. |
| |
Lincoln Financial Securities Corporation | Walnut Street Securities, Inc. |
| |
Lincoln Investment Planning, Inc. | WaMu Investments, Inc. |
| |
LPL Financial Corporation | Waterstone Financial Group Inc. |
| |
MMC Securities Corp. | Wells Fargo Advisors, LLC |
| |
M&T Securities, Inc. | Wells Fargo Investments, LLC |
| |
Merrill Lynch, Pierce, Fenner & Smith, Inc. | Woodbury Financial Services, Inc. |
| |
MetLife Securities, Inc. | |
| |
</R> |
Additional dealers may receive marketing support payments in 2010 and in future years. Any additions, modifications or deletions to the list of dealers identified above that have occurred since December 31, 2009 are not reflected. You can ask your dealer about any payments it receives from Putnam Retail Management and its affiliates.
Program Servicing Payments. Putnam Retail Management and its affiliates will also make payments to certain dealers that sell Putnam fund shares through retirement plans and other investment programs to compensate dealers for a variety of services they provide to such programs. A dealer may perform program services itself or may arrange with a third party to perform program services. In addition to participant recordkeeping, reporting, or transaction processing, program services may include services rendered in connection with fund/investment selection and monitoring, employee enrollment and education, plan balance rollover or separation, or other similar services. Payments by Putnam Retail Management and its affiliates for program servicing support to any one dealer are not expected, with certain limited exceptions, to exceed 0.20% of the total assets in the program on an annual basis. In addition, Putnam Reta il Management and its affiliates will make one-time or annual payments to selected dealers receiving program servicing payments in reimbursement of printing costs for literature for participants, account maintenance fees or fees for establishment of Putnam funds on the dealers system. The amounts of these payments may, but will not normally (except in cases where the aggregate assets in the program are small), cause the aggregate amount of the program servicing payments to such dealer on an annual basis to exceed the amounts set forth above.
The following dealers (and such dealers respective affiliates) received program servicing payments from Putnam Retail Management and its affiliates during the calendar year ended December 31, 2009:
<R> | |
| |
ADP Broker-Dealer, Inc. | MidAtlantic Capital Corporation |
| |
Ascensus, Inc. | Milliman, Inc. |
| |
Benefit Plans Administrators | MSCS Financial Services, LLC |
| |
Charles Schwab & Co., Inc. | National Financial Services LLC |
| |
Charles Schwab Trust Company | Nationwide Investment Services Corporation |
| |
CompuSys/Erisa Group | Nationwide Life Insurance Company |
| |
Correll Co. | Newport Retirement Services, Inc. |
| |
CPI Qualified Plan Consultants, Inc. | NYLIFE Distributors LLC |
| |
DailyAccess Corporation | Paychex Securities Corporation |
| |
Dyatech, LLC | Pershing LLC |
| |
ExpertPlan, Inc. | Plan Administrators, Inc. |
| |
FASCore, LLC | The Princeton Retirement Group, Inc. |
|
II-18 |
Fidelity Investments Institutional Operations Company, Inc. | Principal Life Insurance Co. |
| |
Genworth Life and Annuity Insurance Co. | Prudential Investment Management Services LLC |
| |
Great-West Life & Annuity Insurance Co. | Prudential Investments LLC |
| |
GWFS Equities, Inc. | Reliance Trust Company |
| |
Hartford Life Insurance Co. | Standard Retirement Services, Inc. |
| |
Hartford Securities Distribution Company, Inc. | SunTrust Bank |
| |
July Business Services | TD AMERITRADE Trust Company |
| |
Leggette & Company, Inc. | The Prudential Insurance Company of America |
| |
ML Life Insurance Company of New York | Union Bank of California, N.A. |
| |
Massachusetts Mutual Life Insurance Co. | VALIC Retirement Services Company |
| |
McLeod Administrative Services Inc. | Wachovia Bank, N.A. |
| |
Mercer HR Services LLC | Wells Fargo Bank, N.A. |
| |
Merrill Lynch Life Insurance Company | Wilmington Trust Company |
| |
Merrill Lynch, Pierce, Fenner & Smith, Inc. | Wilmington Trust Retirement & Institutional Services Co. |
| |
</R> |
Additional dealers may receive program servicing payments in 2010 and in future years. Any additions, modifications or deletions to the list of dealers identified above that have occurred since December 31, 2009 are not reflected. You can ask your dealer about any payments it receives from Putnam Retail Management and its affiliates.
Other Payments. From time to time, Putnam Retail Management, at its expense, may provide additional compensation to dealers which sell or arrange for the sale of shares of the fund to the extent not prohibited by laws or the rules of any self-regulatory agency, such as FINRA. Such compensation provided by Putnam Retail Management may include financial assistance to dealers that enable Putnam Retail Management to participate in and/or present at dealer-sponsored conferences or seminars, sales or training programs for invited registered representatives and other dealer employees, dealer entertainment, and other dealer-sponsored events, and travel expenses, including lodging incurred by registered representatives and other employees in connection with prospecting, retention and due diligence trips. Putnam Retail Management makes payments for entertainment events it deems appropriate, subject to Putnam Retail Mana gements internal guidelines and applicable law. These payments may vary upon the nature of the event.
Certain dealers also receive payments from the funds transfer agent in recognition of sub-accounting or other services they provide to shareholders or plan participants who invest in the fund or other Putnam funds through their retirement plan. These payments are not expected, with certain exceptions both for affiliated and unaffiliated entities noted in the discussion under the heading MANAGEMENT Investor Servicing Agent, to exceed 0.13% of the total assets of such shareholders or plan participants in the fund or other Putnam funds on an annual basis. See the discussion under the heading MANAGEMENT Investor Servicing Agent for more details.
You can ask your dealer for information about payments it receives from Putnam Retail Management or its affiliates and the services it provides for those payments.
In addition to payments to dealers described above, Putnam Investor Services or Putnam Retail Management may, at the direction of a retirement plans sponsor, reimburse or pay direct expenses of the plan that would otherwise be payable by the plan. Putnam Investor Services also, at its expense, may make payments to financial intermediaries for introducing to Putnam Investor Services, and/or assisting Putnam Investor Services in the provision of services to, certain retirement plans administered by Putnam Investor Services. Such payments to any one financial intermediary are not expected to exceed an annual rate of 0.05% of a plans average net assets.
II-19 |
MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS
As noted in the prospectus, in addition to the main 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 or limited by the investment restrictions discussed in the funds prospectus or in this SAI, or by applicable law, the fund may engage in each of the practices described below without limit. This section contains information on the investments and investment practices listed below. With respect to funds for which Putnam Investments Limited (PIL) and/or The Putnam Advisory Company, LLC (PAC) serves as sub-investment manager (as described in the funds prospect us), references to Putnam Management in this section include PIL and/or PAC, as appropriate.
<R> | |
| |
Alternative Investment Strategies | Money Market Instruments |
| |
Bank Loans | Mortgage-backed and Asset-backed Securities |
| |
Borrowing and Other Forms of Leverage | Options on Securities |
| |
Derivatives | Preferred Stocks and Convertible Securities |
| |
Exchange-Traded Notes | Private Placements and Restricted Securities |
| |
Floating Rate and Variable Rate Demand Notes | Real Estate Investment Trusts (REITs) |
| |
Foreign Currency Transactions | Redeemable Securities |
| |
Foreign Investments and Related Risks | Repurchase Agreements |
| |
Forward Commitments and Dollar Rolls | Securities Loans |
| |
Futures Contracts and Related Options | Securities of Other Investment Companies |
| |
Hybrid Instruments | Short-term Trading |
| |
Industry and Sector Groups | Special Purpose Acquisition Companies |
| |
Inflation-Protected Securities | Structured Investments |
| |
Initial Public Offerings (IPOs) | Swap Agreements |
| |
Interfund Borrowing and Lending | Tax-exempt Securities |
| |
Inverse Floaters | Warrants |
| |
Lower-rated Securities | Zero-coupon and Payment-in-kind Bonds |
| |
</R> |
Alternative Investment Strategies
Under normal market conditions, the fund seeks to remain fully invested and to minimize its cash holdings. However, at times, Putnam Management may judge that market conditions may make pursuing a funds investment strategies inconsistent with the best interests of its shareholders. Putnam Management then may temporarily use alternative strategies that are mainly designed to limit the funds losses. In implementing these strategies, the fund may invest primarily in, among other things, debt securities, preferred stocks, U.S. Government and agency obligations, cash or money market instruments (including, to the extent permitted by law or applicable exemptive relief, money market funds), or any other securities Putnam Management considers consistent with such defensive strategies.
Bank Loans
II-20 |
The fund may invest in bank loans. By purchasing a loan, the fund acquires some or all of the interest of a bank or other lending institution in a loan to a particular borrower. The fund may act as part of a lending syndicate, and in such cases would be purchasing a participation in the loan. The fund may also purchase loans by assignment from another lender. Many loans are secured by the assets of the borrower, and most impose restrictive covenants which must be met by the borrower. These loans 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 borr ower a portion of the total amount of the loan, and retains the corresponding interest in the loan.
The funds 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 (and, in some cases, the lending institution from which it purchases the loan). The value of collateral, if any, securing a loan can decline, or may be insufficient to meet the borrowers obligations or difficult to liquidate. In addition, the funds access to collateral may be limited by bankruptcy or other insolvency laws. The failure by the fund to receive scheduled interest or principal payments on a loan 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 funds 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 loans 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 Managements analysis may include consideration of the borrowers 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. Putnam Management will generally not have access to non-public information to which other investors in syndicated loans may have access. Because loans 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 will depend almost exclusively on Putnam Managements, and the original lending institutions, credit analysis of the borrower. Investments in loans may be of any quality, including distressed loans, and will be subje ct to the funds credit quality policy. The loans in which the fund may invest include those that pay fixed rates of interest and those that pay floating rates i.e., rates that adjust periodically based on a known lending rate, such as a banks prime rate.
Loans 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 lenders 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 banks 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, intere st and premium, if any, but will not generally be entitled to enforce its rights directly against the agent bank or the borrower, and must rely for that purpose on the lending institution. The fund may also acquire a loan interest 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 to collect and pass on to the fund such payments and to enforce the funds 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.
II-21 |
The borrower of a loan in which the fund holds an 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.
Corporate loans in which the fund may invest are generally made to finance internal growth, mergers, acquisitions, stock repurchases, leveraged buy-outs and other corporate activities. A significant portion of the corporate loans purchased by the fund may represent interests in loans made to finance highly leveraged corporate acquisitions, known as "leveraged buy-out" transactions, leveraged recapitalization loans and other types of acquisition financing. 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, loans 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 loans 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 f air market value. The fund may hold investments in loans for a very short period of time when opportunities to resell the investments that Putnam Management believes are attractive arise.
Certain of the loans 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 set aside on its books 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 (i.e., non-U.S.) currencies. The funds investment in such participations would involve the risks of currency fluctuations described above with respect to investments in the foreign securities.
With respect to its management of investments in bank loans, Putnam Management will normally seek to avoid receiving material, non-public information (Confidential Information) about the issuers of bank loans being considered for acquisition by the fund or held in the funds portfolio. In many instances, borrowers may offer to furnish Confidential Information to prospective investors, and to holders, of the issuers loans. Putnam Managements decision not to receive Confidential Information may place Putnam Management at a disadvantage relative to other investors in loans (which could have an adverse effect on the price the fund pays or receives when buying or selling loans). Also, in instances where holders of loans are asked to grant amendments, waivers or consent, Putnam Managements ability to assess their significance or desirability may be adversely affected. For these and other reasons, it is possible that Putnam Managements decision not to receive Confidential Information under normal circumstances could adversely affect the funds investment performance.
Notwithstanding its intention generally not to receive material, non-public information with respect to its management of investments in loans, Putnam Management may from time to time come into possession of material, non-public information about the issuers of loans that may be held in the funds portfolio. Possession of such information may in some instances occur despite Putnam Managements efforts to avoid such possession, but in other instances Putnam Management may choose to receive such information (for example, in connection with participation in a creditors committee with respect to a financially distressed issuer). As, and to the extent, required by applicable law, Putnam Managements ability to trade in these loans for the account of the fund could potentially be limited by its possession of such information. Such limitations on Putnam Managements ability to trade could have an adverse effect on the fund by, for ex ample, preventing the fund from selling a loan that is experiencing a material decline in value. In some instances, these trading restrictions could continue in effect for a substantial period of time.
II-22 |
In some instances, other accounts managed by Putnam Management or an affiliate may hold other securities issued by borrowers whose loans may be held in the funds portfolio. These other securities may include, for example, debt securities that are subordinate to the loans held in the funds portfolio, convertible debt or common or preferred equity securities. In certain circumstances, such as if the credit quality of the issuer deteriorates, the interests of holders of these other securities may conflict with the interests of the holders of the issuers loans. In such cases, Putnam Management may owe conflicting fiduciary duties to the fund and other client accounts. Putnam Management will endeavor to carry out its obligations to all of its clients to the fullest extent possible, recognizing that in some cases certain clients may achieve a lower economic return, as a result of these conflicting client interests, than if Putnam Management s client accounts collectively held only a single category of the issuers securities.
Borrowing and Other Forms of Leverage
The fund may borrow money to the extent permitted by its investment policies and restrictions and applicable law. When the fund borrows money or otherwise leverages its portfolio, the value of an investment in the fund will be more volatile and other investment risks will tend to be compounded. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of the funds holdings. In addition to borrowing money from banks, the fund may engage in certain other investment transactions that may be viewed as forms of financial leverage for example, using dollar rolls, investing collateral from loans of portfolio securities, entering into when-issued, delayed-delivery or forward commitment transactions or using derivatives such as swaps, futures, forwards, and options. Because the fund either (1) sets aside cash (or other assets determined to be liquid by Putnam Management in accordance with procedures establishe d by the Trustees) on its books in respect of such transactions during the period in which the transactions are open or (2) otherwise covers its obligations under the transactions, such as by holding offsetting investments, the fund does not consider these transactions to be borrowings for purposes of its investment restrictions or senior securities for purposes of the 1940 Act. In some cases (e.g., with respect to futures and forwards that are contractually required to cash-settle), the fund is permitted under relevant guidance from the SEC or SEC staff to set aside assets with respect to an investment transaction in the amount of its net (marked-to-market) obligations thereunder, rather than the full notional amount of the transaction. By setting aside assets equal only to its net obligations, the fund will have the ability to employ leverage to a greater extent than if it set aside assets equal to the notional amount of the transaction, which may increase the risk assoc iated with such investments.
Each Putnam fund (other than Putnam RetirementReady Funds, Putnam Global Sector Fund and Putnam Money Market Liquidity Fund) participates in committed and uncommitted lines of credit with State Street Bank and Trust Company. These lines of credit are intended to provide a temporary source of cash in extraordinary or emergency circumstances, such as unexpected shareholder redemption requests. The fund may pay a commitment or other fee to maintain a line of credit, in addition to the stated interest rate.
Derivatives
Certain of the instruments in which the fund may invest, such as futures contracts, options, hybrid instruments, forward contracts, swap agreements and structured investments, are considered to be "derivatives." Derivatives are financial instruments whose value depends upon, or is derived from, the value or other attributes 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 and in this SAI. The funds use of derivatives may cause the fund to recognize higher amounts of short-term capital gains, which are generally taxed to shareholders at ordinary income tax rates. Investments in derivatives may be applied toward meeting a requirement to invest in a particular kind of investment if the derivatives have economic characteristics similar to that investment. The funds use of certain derivatives may in some cases involve fo rms of financial leverage, which involves risk and may increase the volatility of the funds net asset value. See Borrowing. In its use of derivatives, the fund may take both long positions (the values of which move in the same direction as the prices of the underlying investments, pools of investments, indexes or currencies), and short positions
II-23 |
(the values of which move in the opposite direction from the prices of the underlying investments, pools of investments indexes or currencies).
Short positions may involve greater risks than long positions, as the risk of loss may be theoretically unlimited (unlike a long position, in which the risk of loss may be limited to the amount invested). The fund may use derivatives that combine long and short positions in order to capture the difference between underlying investments, pools of investments, indices or currencies.
Exchange Traded Notes
The fund may invest in exchange traded notes (ETNs). ETNs are typically senior, unsecured, unsubordinated debt securities whose returns are linked to the performance of a particular market index less applicable fees and expenses. ETNs are listed on an exchange and traded in the secondary market. The fund may hold the ETN until maturity, at which time the issuer is obligated to pay a return linked to the performance of the relevant market index. ETNs do not make periodic interest payments and principal is not protected.
The market value of an ETN may be influenced by, among other things, time to maturity, level of supply and demand of the ETN, volatility and lack of liquidity in the underlying assets, changes in the applicable interest rates, the current performance of the market index to which the ETN is linked, and the credit rating of the ETN issuer. The market value of an ETN may differ from the performance of the applicable market index and there may be times when an ETN trades at a premium or discount. This difference in price may be due to the fact that the supply and demand in the market for ETNs at any point in time is not always identical to the supply and demand in the market for the securities underlying the market index that the ETN seeks to track. A change in the issuers credit rating may also impact the value of an ETN despite the underlying market index remaining unchanged. ETNs are also subject to tax risk. No assurance can be given that the Int ernal Revenue Service (the IRS) will accept, or a court will uphold, how the fund characterizes and treats ETNs for tax purposes.
An ETN that is tied to a specific market index may not be able to replicate and maintain exactly the composition and relative weighting of securities, commodities or other components in the applicable market index. ETNs also incur certain expenses not incurred by their applicable market index, and the fund would bear a proportionate share of any fees and expenses borne by the ETN in which it invests.
The funds decision to sell its ETN holdings may be limited by the availability of a secondary market. In addition, although an ETN may be listed on an exchange, the issuer may not be required to maintain the listing and there can be no assurance that a secondary market will exist for an ETN. Some ETNs that use leverage in an effort to amplify the returns of an underlying market index can, at times, be relatively illiquid and may therefore be difficult to purchase or sell at a fair price. Leveraged ETNs may offer the potential for greater return, but the potential for loss and speed at which losses can be realized also are greater.
ETNs are generally similar to structured investments and hybrid instruments. For discussion of these investments and the risks generally associated with them, see Hybrid Instruments and Structured Investments in this SAI.
Floating Rate and Variable Rate Demand Notes
The fund may purchase taxable or tax-exempt floating rate and variable rate demand notes for short-term cash management or other investment purposes. Floating rate and variable rate demand notes and bonds may have a stated maturity in excess of one year, but may have features that 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
II-24 |
instrument may be based on a known lending rate, such as a banks 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.
Foreign Currency Transactions
To manage its exposure to foreign currencies, the fund may engage in foreign currency exchange transactions, including purchasing and selling foreign currency, foreign currency options, foreign currency forward contracts and foreign currency futures contracts and related options. In addition, the fund may engage in these transactions for the purpose of increasing its return. Foreign currency transactions involve costs, and, if unsuccessful, may reduce the funds 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 also 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 securities the fund intends to buy are denominated or quoted).
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 or for other hedging or non-hedging purposes. If conditions warrant, for hedging or non-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. 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.
A foreign currency futures contract is a standardized exchange-traded 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 Commodity Futures Trading Commission (the "CFTC"), such as the New York Mercantile Exchange, and have margin requirements.
A foreign currency forward contract is a negotiated agreement to exchange currency at a future time, 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. The contract price may be higher or lower than the current spot rate. 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. 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. In addition, forward contracts are traded in the interbank market conducted directly between currency trad ers (usually large commercial banks) and their customers, so that no intermediary is required. A forward contract generally has no deposit requirement, and no commissions are charged at any stage for trades.
II-25 |
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 may be effected only on a commodities exchange or board of trade which provides a secondary market in such contracts; a clearing corporation associated with the exchange assumes responsibility for closing out 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.
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.
As noted above, the fund may purchase or sell 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.
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 may be affected by all of those factors which influence foreign exchange rates and investments generally.
The funds 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.
Transaction and position hedging do not eliminate fluctuations in the underlying prices of the securities that 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 involve costs to the fund and tend to limit any potential gain which might result from the increase in value of such currency.
II-26 |
The fund may also engage in non-hedging currency transactions. For example, Putnam Management may believe that exposure to a currency is in the funds best interest but that securities denominated in that currency are unattractive. In this situation, 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 set aside liquid assets on its books to cover forward contracts used for non-hedging purposes.
In addition, 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 funds 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 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. 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. 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 co nnection 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 funds 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.
Foreign Investments and Related Risks
Foreign securities are normally denominated and traded in foreign currencies. As a result, the value of the funds 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. In addition, the fund is required to compute and distribute its income in U.S. dollars. Therefore, if the exchange rate for a foreign currency declines after a funds income has been earned and translated into U.S. dollars (but before payment), the fund could be required to liquidate
II-27 |
portfolio securities to make such distributions. Similarly, if an exchange rate declines between the time a fund incurs expenses in U.S. dollars and the time such expenses are paid, the amount of such currency required to be converted into U.S. dollars in order to pay such expenses in U.S. dollars will be greater than the equivalent amount in any such currency of such expenses at the time they were incurred.
There may be less information publicly available about a foreign issuer than about a U.S. issuer, and foreign issuers may not be subject to accounting, auditing and financial reporting standards and practices comparable to those in the United States. In addition, there may be less (or less effective) regulation of exchanges, brokers and listed companies in some foreign countries. The securities of some foreign issuers are less liquid and at times more volatile than securities of comparable U.S. issuers. Foreign brokerage commissions, custodial expenses and other fees are also generally higher than in the United States.
Foreign settlement procedures and trade regulations may be more complex and involve certain risks (such as delay in payment or delivery of securities or in the recovery of the funds assets held abroad) and expenses not present in the settlement of investments in U.S. markets. For example, settlement of transactions involving foreign securities or foreign currencies (see below) may occur within a foreign country, and the fund may accept or make delivery of the underlying securities or currency in conformity with any applicable U.S. or foreign restrictions or regulations, and may pay 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.
In addition, 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, social or financial instability and diplomatic developments which could affect the value of the funds 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.
Note on MSCI Indices. Morgan Stanley Capital International (MSCI) publishes two versions of its indices reflecting the reinvestment of dividends using two different methodologies: gross dividends and net dividends. While both versions reflect reinvested dividends, they differ with respect to the manner in which taxes associated with dividend payments are treated. In calculating the net dividends version, MSCI incorporates reinvested dividends applying the withholding tax rate applicable to foreign non-resident institutional investors that do not benefit from double taxation treaties. Putnam Management believes that the net dividends version of MSCI indices better reflects the returns U.S. investors might expect were they to invest directly in the component securities of an MSCI index.
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 funds 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, typically are increased in connection with investments in developing countries, also known as "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.
II-28 |
The currencies of certain emerging market countries have experienced devaluations relative to the U.S. dollar, and future devaluations may adversely affect the value of assets denominated in such currencies. Many emerging market countries have experienced substantial, and in some periods extremely high, rates of inflation or deflation for many years, and future inflation may adversely affect the economies and securities markets of such countries.
In addition, unanticipated political or social developments may affect the value of investments in emerging markets and the availability of additional investments in these markets. The small size, limited trading volume and relative inexperience of the securities markets in these countries may make 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 or prospects of an investment in such securities.
American Depository Receipts (ADRs) as well as other hybrid forms of ADRs, including European Depository Receipts (EDRs) and Global Depository Receipts (GDRs), are certificates evidencing ownership of shares of a foreign issuer. These certificates are issued by depository banks and generally trade on an established market in the United States or elsewhere. The underlying shares are held in trust by a custodian bank or similar financial institution in the issuers home country. The depository bank may not have physical custody of the underlying securities at all times and may charge fees for various services, including forwarding dividends and interest and corporate actions. ADRs are alternatives to directly purchasing the underlying foreign securities in their national markets and currencies. However, ADRs continue to be subject to many of the risks associated with investing in foreign 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.
Forward Commitments and Dollar Rolls
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 its books 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 funds other assets. Where such purchases are made through dealers, the fund relies on the dealer to consummate the sale. The dealers 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
II-29 |
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.
The fund may enter into dollar roll transactions (generally using TBAs) in which it sells a fixed income security for delivery in the current month and simultaneously contracts to purchase similar securities (for example, same type, coupon and maturity) at an agreed upon future time. By engaging in a dollar roll transaction, the fund foregoes principal and interest paid on the security that is sold, but receives the difference between the current sales price and the forward price for the future purchase. The fund would also be able to earn interest on the proceeds of the sale before they are reinvested. The fund accounts for dollar rolls as purchases and sales. Because cash (or other assets determined to be liquid by Putnam Management in accordance with procedures established by the Trustees) in the amount of the funds commitment under a dollar roll is set aside on the funds books, the fund does not consider these transactions to be borrowi ngs for purposes of its investment restrictions.
The obligation to purchase securities on a specified future date involves the risk that the market value of the securities that the fund is obligated to purchase may decline below the purchase price. In addition, in the event the other party to the transaction files for bankruptcy, becomes insolvent or defaults on its obligation, the fund may be adversely affected.
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 funds 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 commod ity exchanges or boards of trade -- known as "contract markets" -- approved for such trading by the CFTC, and must be executed through a futures commission merchant or brokerage firm which is a member of the relevant contract market. Examples of futures contracts that the fund may use (which may include single-security futures) include, without limitation, U.S. Treasury security futures, index futures, corporate or municipal bond futures, Government National Mortgage Association certificate futures, interest rate swap futures, and Eurodollar futures. In addition, as described elsewhere in this SAI, the fund may use foreign currency futures.
Although futures contracts (other than index futures and futures based on the volatility or variance experienced by an index) 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. Index futures and futures based on the volatility or variance experienced by an index do not call for actual delivery or acceptance of commodities or securities, but instead require cash settlement of the futures contract on the settlement date specified in the contract. Such contracts may also be closed out before the settlement date. 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 s eller 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 funds potential loss is unlimited. The closing out of a futures contract purchase is effected by the purchasers 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.
II-30 |
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. Instead, upon entering into a contract, the fund is required to deliver to 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 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 position then currently held by the fund. The fund may close its positions by taking opposite positions which will operate to terminate the funds 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 funds existing futures and related options positions and premiums paid for outstanding options on futures contracts would exceed 5% of the funds net assets.
The fund has claimed an exclusion from the definition of the term "commodity pool operator" under the Commodity Exchange Act (the "CEA"), and therefore, is not subject to registration or regulation as a pool operator under the CEA.
Index futures. 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 & Poors 500 Composite Stock Price Index ("S&P 500") is composed of 500 selected U.S. common stocks. 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 currently to buy or sell 250 units. Thus, if the value of the S&P 500 were $150, one contract would be worth $37,500 (250 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 250 units of the S&P 500 at a specified future date at a contra ct price of $150 and the S&P 500 is at $154 on that future date, the fund will gain $1,000 (250 units x gain of $4). If the fund enters into a futures contract to sell 250 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 $500 (250 units x loss of $2).
II-31 |
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. 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 writers futures margin account which represents the amount by which the market price of the 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 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 underlying asset 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.
The fund may use options on futures contracts in lieu of writing or buying options directly on the underlying securities or indices 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, and involve the same risks, as options purchased or written directly on the underlying investments. In addition, 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 b rokers requirements similar to those described above in connection with the discussion of futures contracts. The writing of an option on a futures contract involves risks similar to those relating to the sale of futures contracts.
Compared to the purchase or sale of futures contracts, the purchase of call or put options on futures contracts generally 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.
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.
Risks of transactions in futures contracts and related options. Successful use of futures contracts by the fund is subject to Putnam Managements ability to predict movements in various factors affecting securities markets, including interest rates and market movements, and, in the case of index futures and futures based on the volatility or variance experienced by an index, Putnam Managements ability to predict the future level of the index or the future volatility or variance experienced by an index. 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 funds 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.
II-32 |
The use of options and futures strategies also involves the risk of imperfect correlation among movements in the prices of the securities or other assets 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. In addition to the possibility that there may be an imperfect correlation, or no correlation at all, between movements in the futures used by the fund and the portion of the portfolio being hedged, the prices of futures may not correlate perfectly with movements in the underlying asset 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 underlying asset 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 underlying asset and movements in the prices of related futures, even a correct forecast of general market trends by Putnam Management may still not result in a profitable position.
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.
Hybrid Instruments
These instruments are generally considered derivatives and include indexed or structured securities, and combine the elements of futures contracts or options with those of debt, preferred equity or a depository instrument. A hybrid instrument may be a debt security, preferred stock, warrant, convertible security, certificate of deposit or other evidence of indebtedness on which a portion of or all interest payments, and/or the principal or stated amount payable at maturity, redemption or retirement, is determined by reference to prices, changes in prices, or differences between prices, of securities, currencies, intangibles, goods, articles or commodities (collectively, underlying assets), or by another objective index, economic factor or other measure, including interest rates, currency exchange rates, or commodities or securities indices (collectively, benchmarks). Hybrid instruments may take a number of forms, including, but not limited to, debt instruments with interest or principal payments or redemption terms determined by reference to the value of an index at a future time, preferred stock with dividend rates determined by reference to the value of a currency, or convertible securities with the conversion terms related to a particular commodity.
II-33 |
The risks of investing in hybrid instruments reflect a combination of the risks of investing in securities, options, futures and currencies. An investment in a hybrid instrument may entail significant risks that are not associated with a similar investment in a traditional debt instrument that has a fixed principal amount, is denominated in U.S. dollars or bears interest either at a fixed rate or a floating rate determined by reference to a common, nationally published benchmark. The risks of a particular hybrid instrument will depend upon the terms of the instrument, but may include the possibility of significant changes in the benchmark(s) or the prices of the underlying assets to which the instrument is linked. Such risks generally depend upon factors unrelated to the operations or credit quality of the issuer of the hybrid instrument, which may not be foreseen by the purchaser, such as economic and political events, the supply and demand of the und erlying assets and interest rate movements. Hybrid instruments may be highly volatile and their use by the fund may not be successful.
Hybrid instruments may bear interest or pay preferred dividends at below market (or even relatively nominal) rates. Alternatively, hybrid instruments may bear interest at above market rates but bear an increased risk of principal loss (or gain). The latter scenario may result if leverage is used to structure the hybrid instrument. Leverage risk occurs when the hybrid instrument is structured so that a given change in a benchmark or underlying asset is multiplied to produce a greater value change in the hybrid instrument, thereby magnifying the risk of loss as well as the potential for gain.
Hybrid instruments can be an efficient means of creating exposure to a particular market, or segment of a market, with the objective of enhancing total return. For example, a fund may wish to take advantage of expected declines in interest rates in several European countries, but avoid the transaction costs associated with buying and currency-hedging the foreign bond positions. One solution would be to purchase a U.S. dollar-denominated hybrid instrument whose redemption price is linked to the average three year interest rate in a designated group of countries. The redemption price formula would provide for payoffs of less than par if rates were above the specified level. Furthermore, a fund could limit the downside risk of the security by establishing a minimum redemption price so that the principal paid at maturity could not be below a predetermined minimum level if interest rates were to rise significantly. The purpose of this arrangement, known as a structured security with an embedded put option, would be to give the fund the desired European bond exposure while avoiding currency risk, limiting downside market risk, and lowering transaction costs. Of course, there is no guarantee that the strategy will be successful and the fund could lose money if, for example, interest rates do not move as anticipated or credit problems develop with the issuer of the hybrid instrument.
Hybrid instruments are potentially more volatile and carry greater market risks than traditional debt instruments. Depending on the structure of the particular hybrid instrument, changes in a benchmark may be magnified by the terms of the hybrid instrument and have an even more dramatic and substantial effect upon the value of the hybrid instrument. Also, the prices of the hybrid instrument and the benchmark or underlying asset may not move in the same direction or at the same time.
Hybrid instruments may also carry liquidity risk since the instruments are often customized to meet the portfolio needs of a particular investor, and therefore, the number of investors that are willing and able to buy such instruments in the secondary market may be smaller than that for more traditional debt securities. Under certain conditions, the redemption value of such an investment could be zero. In addition, because the purchase and sale of hybrid investments could take place in an over-the-counter market without the guarantee of a central clearing organization, or in a transaction between the fund and the issuer of the hybrid instrument, the creditworthiness of the counterparty of the issuer of the hybrid instrument would be an additional risk factor the fund would have to consider and monitor. In addition, uncertainty regarding the tax treatment of hybrid instruments may reduce demand for such instruments. Hybrid instruments also m ay not be subject to regulation by the CFTC, which generally regulates the trading of commodity futures by U.S. persons, the SEC, which regulates the offer and sale of securities by and to U.S. persons, or any other governmental regulatory authority.
Industry and Sector Groups
II-34 |
Putnam Management uses a customized set of industry and sector groups for classifying securities ("Putnam Industry Codes"). The Putnam Industry Codes are based on an expanded Standard & Poors industry classification model, modified to be more representative of global investing and more applicable to both large and small capitalization securities. For presentation purposes, the fund may apply the Putnam Industry Codes differently in reporting industry groups in the funds shareholder reports or other communications.
Inflation-Protected Securities
The fund may invest in U.S. Treasury Inflation Protected Securities (U.S. TIPS), which are fixed income securities issued by the U.S. Department of Treasury, the principal amounts of which are adjusted daily based upon changes in the rate of inflation. The fund may also invest in other inflation-protected securities issued by non-U.S. governments or by private issuers. U.S. TIPS pay interest on a semi-annual basis, equal to a fixed percentage of the inflation-adjusted principal amount. The interest rate on these bonds is fixed at issuance, but over the life of the bond this interest may be paid on an increasing or decreasing principal value that has been adjusted for inflation.
Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed for U.S. TIPS, even during a period of deflation. However, because the principal amount of U.S. TIPS would be adjusted downward during a period of deflation, the fund will be subject to deflation risk with respect to its investments in these securities. In addition, the current market value of the bonds is not guaranteed, and will fluctuate. If the fund purchases U.S. TIPS in the secondary market whose principal values have been adjusted upward due to inflation since issuance, the fund may experience a loss if there is a subsequent period of deflation. The fund may also invest in other inflation-related bonds which may or may not provide a guarantee of principal. If a guarantee of principal is not provided, the adjusted principal value of the bond repaid at maturity may be less than the original principal amount.
The periodic adjustment of U.S. TIPS is currently tied to the CPI-U, which is calculated by the U.S. Department of Treasury. The CPI-U is a measurement of changes in the cost of living, made up of components such as housing, food, transportation and energy. Inflation-protected bonds issued by a non-U.S. government are generally adjusted to reflect a comparable inflation index, calculated by that government. There can no assurance that the CPI-U or any non-U.S. inflation index will accurately measure the real rate of inflation in the prices of goods and services. If interest rates rise due to reasons other than inflation (for example, due to changes in currency exchange rates), investors in these securities may not be protected to the extent that the increase is not reflected in the bonds inflation measure. In addition, there can be no assurance that the rate of inflation in a non-U.S. country will be correlated to the rate of inflation in the Uni ted States.
In general, the value of inflation-protected bonds is expected to fluctuate in response to changes in real interest rates, which are in turn tied to the relationship between nominal interest rates and the rate of inflation. Therefore, if inflation were to rise at a faster rate than nominal interest rates, real interest rates might decline, leading to an increase in value of inflation-protected bonds. In contrast, if nominal interest rates increased at a faster rate than inflation, real interest rates might rise, leading to a decrease in value of inflation-protected bonds. If inflation is lower than expected during the period the fund holds the security, the fund may earn less on the security than on a conventional bond. Any increase in principal value is taxable in the year the increase occurs, even though holders do not receive cash representing the increase at that time. As a result, when the fund invests in inflation-protected securities, it could b e required at times to liquidate other investments, including when it is not advantageous to do so, in order to satisfy its distribution requirements as a regulated investment company and to eliminate any fund-level income tax liability under the Internal Revenue Code.
II-35 |
The U.S. Treasury began issuing inflation-protected bonds in 1997. Certain non-U.S. governments, such as the United Kingdom, Canada and Australia, have a longer history of issuing inflation-protected bonds, and there may be a more liquid market in certain of these countries for these securities.
Initial Public Offerings
The fund may purchase debt or equity securities in initial public offerings (IPOs). These securities, which are often issued by unseasoned companies, may be subject to many of the same risks of investing in companies with smaller market capitalizations. Securities issued in IPOs have no trading history, and information about the companies may be available for very limited periods. Securities issued in an IPO frequently are very volatile in price, and the fund may hold securities purchased in an IPO for a very short period of time. As a result, the funds investments in IPOs may increase portfolio turnover, which increases brokerage and administrative costs and may result in taxable distributions to shareholders.
At any particular time or from time to time the fund may not be able to invest in securities issued in IPOs, or invest to the extent desired because, for example, only a small portion (if any) of the securities being offered in an IPO may be made available to the fund. In addition, under certain market conditions a relatively small number of companies may issue securities in IPOs. Similarly, as the number of Putnam funds to which IPO securities are allocated increases, the number of securities issued to any one fund may decrease. The investment performance of the fund during periods when it is unable to invest significantly or at all in IPOs may be lower than during periods when the fund is able to do so. In addition, as the fund increases in size, the impact of IPOs on the funds performance will generally decrease.
Interfund Borrowing and Lending
To satisfy redemption requests or to cover unanticipated cash shortfalls, the fund has entered into a Master Interfund Lending Agreement by and among each Putnam fund and Putnam Management (the Interfund Lending Agreement) under which the fund would lend or borrow money for temporary purposes directly to or from another Putnam fund (an Interfund Loan), subject to meeting the conditions of an SEC exemptive order granted to the fund permitting such Interfund Loans. All Interfund Loans would consist only of uninvested cash reserves that the lending fund otherwise would invest in short-term repurchase agreements or other short-term instruments. At this time, Putnam Money Market Liquidity Fund is the only Putnam fund expected to make its uninvested cash reserves available for Interfund Loans.
If the fund has outstanding borrowings, any Interfund Loans to the fund (a) would be at an interest rate equal to or lower than that of any outstanding bank loan, (b) would be secured at least on an equal priority basis with at least an equivalent percentage of collateral to loan value as any outstanding bank loan that requires collateral, and (c) would have a maturity no longer than any outstanding bank loan (and in any event not over seven days). In addition, if an event of default were to occur under any agreement evidencing an outstanding bank loan to the fund, the event of default would automatically (without need for action or notice by the lending fund) constitute an immediate event of default under the Interfund Lending Agreement entitling the lending fund to call the Interfund Loan (and exercise all rights with respect to any collateral) and such a call would be deemed made if the lending bank exercises its right to call its loan under its agr eement with the borrowing fund.
The fund may make an unsecured borrowing under the Interfund Lending Agreement if its outstanding borrowings from all sources immediately after the interfund borrowing total 10% or less of its total assets; provided, that if the fund has a secured loan outstanding from any other lender, including but not limited to another Putnam fund, the funds Interfund Loan would be secured on at least an equal priority basis with at least an equivalent percentage of collateral to loan value as any outstanding loan secured by collateral. If the funds total outstanding borrowings immediately after an interfund borrowing would be greater than 10% of its total assets, the fund may borrow through the credit facility on a secured basis only. All secured Interfund Loans would be secured by the pledge of segregated collateral with a market value equal to at least 102% of
II-36 |
the outstanding principal value of the Interfund Loan. The fund may not borrow from any source if its total outstanding borrowings immediately after the borrowing would exceed the limits imposed by Section 18 of the 1940 Act or the funds fundamental investment restrictions.
The fund may not lend to another Putnam fund under the Interfund Lending Agreement if the Interfund Loan would cause its aggregate outstanding Interfund Loans to exceed 15% of the funds current net assets at the time of the Interfund Loan. The funds Interfund Loans to any one fund may not exceed 5% of the lending funds net assets. The duration of Interfund Loans would be limited to the time required to receive payment for securities sold, but in no event may the duration exceed seven days. Interfund Loans effected within seven days of each other would be treated as separate loan transactions for purposes of this condition. Each Interfund Loan may be called on one business days notice by a lending fund and may be repaid on any day by a borrowing fund.
The limitations detailed above and the other conditions of the SEC exemptive order permitting interfund lending are designed to minimize the risks associated with interfund lending for both the lending fund and the borrowing fund. However, no borrowing or lending activity is without risk. If the fund borrows money from another fund, there is a risk that the Interfund Loan could be called on one days notice or not renewed, in which case the fund may have to borrow from a bank at higher rates if an Interfund Loan were not available from another fund. A delay in repayment to a lending fund could result in a lost opportunity or additional lending costs, and interfund loans are subject to the risk that the borrowing fund could be unable to repay the loan when due.
Inverse Floaters
These securities have variable interest rates that typically move in the opposite direction from movements in prevailing short-term interest rate levels rising when prevailing short-term interest rate fall, and vice versa. The prices of inverse floaters can be considerably more volatile than the prices of bonds with comparable maturities. The fund currently does not intend to invest more than 15% of its assets in inverse floating obligations.
Lower-rated Securities
The fund may invest in lower-rated fixed-income securities (commonly known as "junk bonds"). The lower ratings 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 funds 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 issuers 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 issuers current financial condition, which may be better or worse than the rating would indicate. In addition, the rating assigned to a security by Moodys Investors Service, Inc. or Standard & Poors (or by any other nationally recognized securities rating agency) does not reflect an assessment of the volatility of the securitys 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 funds fixed-income assets. Conversely, during periods of rising interest rates, the value of the funds fixed-income 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
II-37 |
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 funds 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 funds 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 funds assets may be invested in an issue 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 funds net asset value. In order to enforce its rights in the event of a default, the fund may be required to participate in various legal proceedings or take possession of and manage assets securing the issuers obligations on such securities. This could increase the funds operating expenses and adversely affect the funds net asset value. In the case of tax-exempt funds, any income derived from the funds 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 funds 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.
To the extent the fund invests in securities in the lower rating categories, the achievement of the funds goals is more dependent on Putnam Managements investment analysis than would be the case if the fund were investing in securities in the higher rating categories.
Money Market Instruments
Money market instruments, or short-term debt instruments, consist of obligations such as commercial paper, bank obligations (i.e., certificates of deposit and bankers acceptances), repurchase agreements and various government obligations, such as Treasury bills. These instruments have a remaining maturity of one year or less and are generally of high credit quality. Money market instruments may be structured to be, or may employ a trust or other form so that they are, eligible investments for money market funds. For example, put features can be used to modify the maturity of a security or interest rate adjustment features can be used to enhance price stability. If a structure fails to function as intended, adverse tax or investment consequences may result. Neither the Internal Revenue Service (IRS) nor any other regulatory authority has ruled definitively on certain le gal issues presented by certain structured securities. Future tax or other regulatory determinations could adversely affect the value, liquidity, or tax treatment of the income received from these securities or the nature and timing of distributions made by the funds.
II-38 |
Commercial paper is a money market instrument issued by banks or companies to raise money for short-term purposes. Unlike some other debt obligations, commercial paper is typically unsecured. Commercial paper may be issued as an asset-backed security (that is, backed by a pool of assets representing the obligations of a number of different issuers), in which case certain of the risks discussed in Mortgage-backed and Asset-backed securities would apply. Commercial paper is traded primarily among institutions.
Putnam Money Market Fund and Putnam Tax Exempt Money Market Fund may invest in bankers acceptances issued by banks with deposits in excess of $2 billion (or the foreign currency equivalent) at the close of the last calendar year. If the Trustees change this minimum deposit requirement, shareholders would be notified. Other Putnam funds may invest in bankers acceptances without regard to this requirement.
In accordance with rules issued by the SEC, the fund may from time to time invest all or a portion of its cash balances in money market and/or short-term bond funds advised by Putnam Management. In connection with such investments, Putnam Management may waive a portion of the advisory fees otherwise payable by the fund. See Charges and expenses in Part I of this SAI for the amount, if any, waived by Putnam Management in connection with such investments.
Mortgage-backed and Asset-backed Securities
Mortgage-backed securities, including collateralized mortgage obligations ("CMOs") and certain stripped mortgage-backed securities, represent a participation in, or are secured by, mortgage loans. 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.
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-backed securities. In that event the fund may be unable to invest the proceeds from the early payment of the mortgage-backed securities in an investment that provides as high a yield as the mortgage-backed securities. Consequently, early payment associated with mortgage-backed securities may caus e 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-backed securities. During periods of rising interest rates, the rate of mortgage prepayments usually decreases, thereby tending to increase the life of mortgage-backed securities. If the life of a mortgage-backed security is inaccurately predicted, the fund may not be able to realize the rate of return it expected.
Adjustable rate mortgage securities (ARMs), like traditional mortgage-backed securities, are interests in pools of mortgage loans that provide investors with payments consisting of both principal and interest as mortgage loans in the underlying mortgage pool are paid off by the borrowers. Unlike fixed-rate mortgage-backed securities, ARMs are collateralized by or represent interests in mortgage loans with variable rates of interest. These interest rates are reset at periodic intervals, usually by reference to an interest rate index or market interest rate. Although the rate adjustment feature may act as a buffer to reduce sharp changes in the value of adjustable rate securities, these securities are still subject to changes in value based on, among other things, changes in market interest rates or changes in the issuers creditworthiness. Because the interest rates are reset only periodically, changes in the interest rate on ARMs may l ag changes in prevailing market interest rates. Also, some ARMs (or the underlying mortgages) are subject to caps or floors that limit the maximum
II-39 |
change in the interest rate during a specified period or over the life of the security. As a result, changes in the interest rate on an ARM may not fully reflect changes in prevailing market interest rates during certain periods. The fund may also invest in hybrid ARMs, whose underlying mortgages combine fixed-rate and adjustable rate features.
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. The automatic interest rate adjustment feature of mortgages underlying ARMs likewise reduces the ability to lock-in attractive rates. As a result, mortgage-backed and asset-backed 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 ra tes. 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.
At times, some mortgage-backed and asset-backed securities will have higher than market interest rates and therefore will be purchased at a premium above their par value. Prepayments may cause losses on securities purchased at a 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 would have the same effect as the prepayment of mortga ges 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 their volatility.
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 yield to maturity on an interest only or 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 funds 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, principal only or POs tend to increase in value if prepayments are greater than anticipated and dec line 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 funds ability to buy or sell those
II-40 |
securities at any particular time. The fund currently does not intend to invest more than 35% of its assets in IOs and POs under normal market conditions.
The risks associated with other asset-backed securities (including in particular the risks of issuer default and of early prepayment) are generally similar to those described above for CMOs. In addition, because asset-backed securities generally do not have the benefit of a security interest in the underlying assets that is comparable to a mortgage, asset-backed securities present certain additional risks that are not present with mortgage-backed securities. The ability of an issuer of asset-backed securities to enforce its security interest in the underlying assets may be limited. For example, revolving credit receivables are generally unsecured and the debtors on such receivables are entitled to the protection of a number of state and federal consumer credit laws, many of which give debtors the right to set-off certain amounts owed, thereby reducing the balance due. Automobile receivables generally are secured, but by automobiles, rather than by real property.
Asset-backed securities may be collateralized by the fees earned by service providers. The value of asset-backed securities may be substantially dependent on the servicing of the underlying asset and are therefore subject to risks associated with negligence by, or defalcation of, their servicers. In certain circumstances, the mishandling of related documentation may also affect the rights of the security holders in and to the underlying collateral. The insolvency of entities that generate receivables or that utilize the assets may result in added costs and delays in addition to losses associated with a decline in the value of the underlying assets.
Options on Securities
Writing covered options. The fund may write covered call options and covered put options on optionable securities held in its portfolio or that it has an absolute and immediate right to acquire without additional cash consideration (or, if additional cash consideration is required, cash or other assets determined to be liquid by Putnam Management in accordance with procedures established by the Trustees, in such amount as are set aside on the funds books), when in the opinion of Putnam Management such transactions are consistent with the funds 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) or have an absolute and immediate right to acquire without additional cash consideration (or, if additional cash consideration is required, cash or other assets determined to be liquid by Putnam Management in accordance with procedures established by the Trustees, in such amount as are set aside on the funds books). In the case of put options, the fund will set aside on its books assets determined to be liquid by Putnam Management in accordance with procedures established by the Trustees and equal in value 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 funds return 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, if the fund holds the security, 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. If the fund does not hold the underlying security, the fund bears the risk that, if the market price exceeds the option s trike price, the fund will suffer a loss equal to the difference at the time of exercise. By writing a put option, the fund assumes the risk that it
II-41 |
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 securitys 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. The fund may also purchase put options for other investment purposes, including to take a short position in the security underlying the put option.
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 securitys 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. The fund may also purchase call options for other investment purposes.
Risk factors in options transactions. The successful use of the funds 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 Managements 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 Managements 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 options 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 securitys price does not change.
The effective use of options also depends on the funds 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
II-42 |
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. For example, if a fund is unable to purchase a security underlying a put option it had purchased, the fund may be unable to exercise the put option. 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 restrictio ns 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 it is unable to exercise the put option prior to its 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 funds ability to invest in illiquid securities. The fund may use both European-style options, which are only exercisable immediately prior to their expiration, and American-style options, which are exercisable at any time prior to the expiration date.
In addition to options on securities and futures, the fund may also enter into options on futures, swaps, or other instruments as described elsewhere in this SAI.
Preferred Stocks and Convertible Securities
The fund may invest in preferred stocks or convertible securities. A preferred stock generally pays dividends at a specified rate and has preference over common stock in the payment of dividends and the liquidation of an issuers assets but is junior to the debt securities of the issuer in those same respects. The market prices of preferred stocks are subject to changes in interest rates and are more sensitive to changes in an issuers creditworthiness than are the prices of debt securities. Shareholders of preferred stock may suffer a loss of value if dividends are not paid. Under ordinary circumstances, preferred stock does not carry voting rights. In addition, many preferred stocks may be called or redeemed prior to their maturity by the issuer under certain conditions.
II-43 |
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 securitys "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 issuers capital structure. A securitys "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. Convertible securities generally have less potential for gain than common stocks.
The funds 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 funds investments in preferred stocks and 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 and Restricted Securities
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 funds net asset value.
While such private placements may 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 (the Securities Act) 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.
II-44 |
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. In addition, 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 publicly traded 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. The fund may be deemed to be an "underwriter" for purposes of the Securities Act 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. 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 th e funds) must be pursuant to written procedures established by the Trustees and the Trustees have delegated such authority to Putnam Management.
Real Estate Investment Trusts (REITs)
The fund may invest in REITs. REITs are pooled investment vehicles that invest primarily in either real estate or real estate related loans. Like regulated investment companies such as the fund, REITs are not taxed on income distributed to shareholders provided that they comply with certain requirements under the Internal Revenue Code. The fund will indirectly bear its proportionate share of any expenses paid by REITs in which it invests in addition to the funds own expenses.
REITs involve certain unique risks in addition to those risks associated with investing in the real estate industry in general (such as possible declines in the value of real estate, lack of availability of mortgage funds, or extended vacancies of property). REITs are generally classified as equity REITs, mortgage REITs or a combination of equity and mortgage REITs. Equity REITs invest the majority of their assets directly in real property and derive income primarily from the collection of rents. Equity REITs can also realize capital gains by selling properties that have appreciated in value. Mortgage REITs invest the majority of their assets in real estate mortgages and derive income from the collection of interest payments. Equity REITs may be affected by changes in the value of the underlying property owned by the REITs, while mortgage REITs may be affected by the risk of borrower default. REITs, and mortgage REITs in particular, are also subject to interest rate risk. REITs are dependent upon their operators management skills, are generally not diversified (except to the extent the Internal Revenue Code requires), and are subject to heavy cash flow dependency and the risk of default by borrowers. REITs are also subject to the possibility of failing to qualify for tax-free pass-through of income under the Code or failing to maintain their exemptions from registration under the 1940 Act. REITs may have limited financial resources, may trade less frequently and in a limited volume, and may be subject to more abrupt or erratic price movements than more widely held securities.
The funds investment in a REIT may require the fund to accrue and distribute income not yet received or may result in the fund making distributions that constitute a return of capital to fund shareholders for federal income tax purposes. In addition, distributions by a fund from REITs will not qualify for the corporate dividends-received deduction, or, generally, for treatment as qualified dividend income.
Redeemable Securities
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.
II-45 |
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, except that this 25% limitation does not apply to repurchase agreements entered into in connection with short sales. Money market funds may invest without limit in repurchase agreements. A repurchase agreement is a contract under which the fund, the buyer under the contract, acquires a security for a relatively short period (usually not more than one week) subject to the obligation of the seller (or repurchase agreement counterparty) to repurchase, and the fund to resell, such security at a fixed time and price (representing the funds cost plus interest (or, for repurchase agreements with respect to securities to be sold short, the cost of borrowing the security)). It is the funds present intention to enter into repurchase agreements only with banks and registered broker-dealers. The fund may enter into repurchase agreements, including with respect to securities it wishes to sell short. See Short Sales in this SAI. Certain of the repurchase agreements related to securities sold short may provide that, at the option of the fund, settlement may be made by delivery of cash equal to the difference between (a) the sum of (i) the market value of the securities sold short at the time the repurchase agreement is closed out and (ii) transaction costs associated with the acquisition in the market by the repurchase agreement counterparty of the securities sold short and (b) the repurchase price specified in the repurchase agreement.
The fund may be exposed to the credit risk of the repurchase agreement counterparty (or seller) in the event that the counterparty is unable to close out the repurchase agreement in accordance with its terms. 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 sellers estate.
Pursuant to an exemptive order issued by the SEC, 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.
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. If a borrower defaults, the value of the collateral may decline before the fund can dispose of it. 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 recei ved 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. The fund may pay fees in connection with arranging loans of its portfolio securities.
Securities of Other Investment Companies
II-46 |
Securities of other investment companies, including shares of open- and closed-end investment companies and unit investment trusts (which may include exchange-traded funds (ETFs)), represent interests in collective investment portfolios that, in turn, invest directly in underlying instruments. The fund may invest in other investment companies when it has more uninvested cash than Putnam Management believes is advisable, when it receives cash collateral from securities lending arrangements, when there is a shortage of direct investments available, or when Putnam Management believes that investment companies offer attractive values.
Investment companies may be structured to perform in a similar fashion to a broad-based securities index or may focus on a particular strategy or class of assets. ETFs typically seek to track the performance or dividend yield of specific indexes or companies in related industries. These indexes may be broad-based, sector-based or international. Investing in investment companies involves substantially the same risks as investing directly in the underlying instruments, but also involves expenses at the investment company-level, such as portfolio management fees and operating expenses. These expenses are in addition to the fees and expenses of the fund itself, which may lead to duplication of expenses while the fund owns another investment companys shares. In addition, investing in investment companies involves the risk that they will not perform in exactly the same fashion, or in response to the same factors, as the underlying instruments or index. To the extent the fund invests in other investment companies that are professionally managed, its performance will also depend on the investment and research abilities of investment managers other than Putnam Management.
Open-end investment companies typically offer their shares continuously at net asset value plus any applicable sales charge and stand ready to redeem shares upon shareholder request. The shares of certain other types of investment companies, such as ETFs and closed-end investment companies, typically trade on a stock exchange or over-the-counter at a premium or a discount to their net asset value. In the case of closed-end investment companies, the number of shares is typically fixed. The securities of closed-end investment companies and ETFs carry the risk that the price the fund pays or receives may be higher or lower than the investment companys net asset value. ETFs and closed-end investment companies are also subject to certain additional risks, including the risks of illiquidity and of possible trading halts due to market conditions or other reasons, based on the policies of the relevant exchange. The shares of investment companies, particu larly closed-end investment companies, may also be leveraged, which would increase the volatility of the funds net asset value.
The extent to which the fund can invest in securities of other investment companies, including ETFs, is generally limited by federal securities laws.
Short Sales
The fund may engage in short sales of securities either as a hedge against potential declines in value of a portfolio security or to realize appreciation when a security that the fund does not own declines in value. Short sales are transactions in which the fund sells a security it does not own to a third party by borrowing the security in anticipation of purchasing the same security at the market price on a later date to close out the short position. The fund may also engage in short sales by entering into a repurchase agreement with respect to the security it wishes to sell short. See Repurchase Agreements in this SAI. The fund will incur a gain if the price of the security declines between the date of the short sale and the date on which the fund replaces the borrowed security (or closes out the related repurchase agreement); and the fund will incur a loss if the price of the security increases between those dates. Such a loss is theoretically unlimited since the potential increase in the market price of the security sold short is not limited. Until the security is replaced, the fund must pay the lender (or repurchase agreement counterparty) any dividends or interest that accrues during the period of the loan (or repurchase agreement). To borrow (or enter into a repurchase agreement with respect to) the security, the fund also may be required to pay a premium, which would increase the cost of the security sold. The funds successful use of short sales is subject to Putnam Managements ability to accurately predict movements in the market price of the security sold short. Short selling may involve financial leverage because the fund is exposed both to changes in the market price of the security sold short and to changes in the value of securities purchased with the proceeds of the short sale, effectively leveraging its assets. Under adverse market
II-47 |
conditions, a fund may have difficulty purchasing securities to meet its short sale delivery obligations, and may be required to close out its short position at a time when the fund would not choose to do so, and may therefore have to sell portfolio securities to raise the capital necessary to meet its short sale obligations at a time when fundamental investment considerations may not favor such sales. While the fund has an open short position, it will segregate, by appropriate notation on its books or the books of its custodian, cash or liquid assets at least equal in value to the market value of the securities sold short. The segregated amount will be marked-to-market daily. Because of this segregation, the fund does not consider these transactions to be senior securities for purposes of the 1940 Act. In connection with short sale transactions, the fund may be required to pledge certain additional assets for the benefit of the securities lender (or repurchase agreement counterparty) and the fund may, while such assets remain pledged, be limited in its ability to invest those assets in accordance with the funds investment strategies.
Certain of the repurchase agreements related to securities sold short may provide that, at the option of the fund, in lieu of delivering the securities sold short, settlement may be made by delivery of cash equal to the difference between (a) the sum of (i) the market value of the securities sold short at the time the repurchase agreement is closed out and (ii) transaction costs associated with the acquisition in the market by the repurchase agreement counterparty of the securities sold short and (b) the repurchase price specified in the repurchase agreement. Because that cash amount represents the funds maximum loss in the event of the insolvency of the counterparty, the fund will, except where the local market practice for foreign securities to be sold short requires payment prior to delivery of such securities, treat such amount, rather than the full notional amount of the repurchase agreement, as its investment in securities of th e counterparty for purposes of all applicable investment restrictions, including its fundamental policy with respect to diversification.
Short-term Trading
In seeking the funds objective(s), Putnam Management will buy or sell portfolio securities whenever Putnam Management believes it appropriate to do so. 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 funds investment policies, under certain market conditions the funds 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 portfo lio securities to the monthly average of the value of portfolio securities -- excluding securities whose maturities at acquisition were one year or less. The funds portfolio turnover rate is not a limiting factor when Putnam Management considers a change in the funds portfolio.
Special Purpose Acquisition Companies
The fund may invest in stock, warrants, and other securities of special purpose acquisition companies (SPACs) or similar special purpose entities that pool funds to seek potential acquisition opportunities. Unless and until an acquisition is completed, a SPAC generally invests its assets (less a portion retained to cover expenses) in U.S. Government securities, money market securities and cash; if an acquisition that meets the requirements for the SPAC is not completed within a pre-established period of time, the invested funds are returned to the entitys shareholders. Because SPACs and similar entities are in essence blank check companies without an operating history or ongoing business other than seeking acquisitions, the value of their securities is particularly dependent on the ability of the entitys management to identify and complete a profitable acquisition. Some SPACs may pursue acquisitions only within certain industrie s or regions, which may increase the volatility of their prices. In addition, these securities, which are typically traded in the over-the-counter market, may be considered illiquid and/or be subject to restrictions on resale.
Structured investments
II-48 |
A structured investment is a security having a return tied to an underlying index or other security or asset class. Structured investments generally are individually negotiated agreements and may be traded over-the-counter. Structured investments are organized and operated to restructure the investment characteristics of the underlying security. This restructuring involves the deposit with or purchase by an entity, such as a corporation or trust, or specified instruments (such as commercial bank loans) and the issuance by that entity or one or more classes of securities (structured securities) backed by, or representing interests in, the underlying instruments. The cash flow on the underlying instruments may be apportioned among the newly issued structured securities to create securities with different investment characteristics, such as varying maturities, payment priorities and interest rate provisions, and the extent of such payments mad e with respect to structured securities is dependent on the extent of the cash flow on the underlying instruments. Because structured securities typically involve no credit enhancement, their credit risk generally will be equivalent to that of the underlying instruments. Investments in structured securities are generally of a class of structured securities that is either subordinated or unsubordinated to the right of payment of another class. Subordinated structured securities typically have higher yields and present greater risks than unsubordinated structured securities. Structured securities are typically sold in private placement transactions, and there currently is no active trading market for structured securities. Investments in government and government-related and restructured debt instruments are subject to special risks, including the inability or unwillingness to repay principal and interest, requests to reschedule or restructure outstanding debt and requests to extend additional loan amounts.
Swap Agreements
The fund may enter into swap agreements and other types of over-the-counter transactions such as caps, floors and collars with broker-dealers or other financial institutions for hedging or investment purposes. A swap involves the exchange by the fund with another party of their respective commitments to pay or receive cash flows, e.g., an exchange of floating rate payments for fixed-rate payments. The purchase of a cap entitles the purchaser, to the extent that a specified index or other underlying financial measure exceeds a predetermined value on a predetermined date or dates, to receive payments on a notional principal amount from the party selling the cap. The purchase of a floor entitles the purchaser, to the extent that a specified index or other underlying financial measure falls or other underlying measure below a predetermined value on a predetermined date or dates, to receive payments on a notional principal amount from the party selling the floor. A collar combines elements of a cap and a floor.
Swap agreements and similar transactions can be individually negotiated and structured to include exposure to a variety of different types of investments or market factors. Depending on their structures, swap agreements may increase or decrease the funds exposure to long-or short-term interest rates (in the United States or abroad), foreign currency values, mortgage securities, mortgage rates, corporate borrowing rates, or other factors such as security prices, inflation rates or the volatility of an index or one or more securities. For example, if the fund agrees to exchange payments in U.S. dollars for payments in a non-U.S. currency, the swap agreement would tend to decrease the funds exposure to U.S. interest rates and increase its exposure to that non-U.S. currency and interest rates. The fund may also engage in total return swaps, in which payments made by the fund or the counterparty are based on the total return of a particular refe rence asset or assets (such as an equity or fixed-income security, a combination of such securities, or an index). The value of the funds swap positions would increase or decrease depending on the changes in value of the underlying rates, currency values, volatility or other indices or measures. Caps and floors have an effect similar to buying or writing options. Depending on how they are used, swap agreements may increase or decrease the overall volatility of a funds investments and its share price. The funds ability to engage in certain swap transactions may be limited by tax considerations.
II-49 |
The funds 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. If a counterpartys creditworthiness declines, the value of the agreement would be likely to decline, potentially resulting in losses. If a default occurs by the other party to such transaction, the fund will have contractual remedies pursuant to the agreements related to the transaction, which may be limited by applicable law in the case of a counterpartys insolvency. 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.
The fund may also enter into options on swap agreements ("swaptions"). A swaption is a contract that gives a counterparty the right (but not the obligation) to enter into a new swap agreement or to shorten, extend, cancel or otherwise modify an existing swap agreement, at some designated future time on specified terms. The fund may write (sell) and purchase put and call swaptions to the same extent it may make use of standard options on securities or other instruments. Swaptions are generally subject to the same risks involved in the funds use of options. See Options on Securities.
A credit default swap is an agreement between the fund and a counterparty that enables the fund to buy or sell protection against a credit event related to a particular issuer. One party, acting as a protection buyer, makes periodic payments to the other party, a protection seller, in exchange for a promise by the protection seller to make a payment to the protection buyer if a negative credit event (such as a delinquent payment or default) occurs with respect to a referenced bond or group of bonds. Credit default swaps may also be structured based on the debt of a basket of issuers, rather than a single issuer, and may be customized with respect to the default event that triggers purchase or other factors (for example, the Nth default within a basket, or defaults by a particular combination of issuers within the basket, may trigger a payment obligation). The fund may enter into credit default swap contracts for investment purpo ses. As a credit protection seller in a credit default swap contract, the fund would be required to pay the par (or other agreed-upon) value of a referenced debt obligation to the counterparty in the event of a default by a third party, such as a U.S. or non-U.S. corporate issuer, on the debt obligation. In return for its obligation, the fund would receive from the counterparty a periodic stream of payments over the term of the contract provided that no event of default has occurred. If no default occurs, the fund would keep the stream of payments and would have no payment obligations. As the seller, the fund would be subject to investment exposure on the notional amount of the swap.
The fund may also purchase credit default swap contracts in order to hedge against the risk of default of the debt of a particular issuer or basket of issuers or profit from changes in the creditworthiness of the particular issuer(s) (also known as buying credit protection). In these cases, the fund would function as the counterparty referenced in the preceding paragraph. This would involve the risk that the investment may expire worthless and would only generate income in the event of an actual default by the issuer(s) of the underlying obligation(s) (or, as applicable, a credit downgrade or other indication of financial instability). It would also involve the risk that the seller may fail to satisfy its payment obligations to the fund in the event of a default. The purchase of credit default swaps involves costs, which will reduce the funds return.
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 (if applicable) the corresponding states 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.
II-50 |
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 (if applicable) 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 pla ce substantial limitations on the size of such issues.
Tax-exempt Securities share many of the structural features and risks of other bonds, as described elsewhere in this SAI. For example, the fund may purchase callable Tax-exempt Securities, zero-coupon Tax-exempt Securities, or stripped Tax-exempt Securities, which entail additional risks. The fund may also purchase structured or asset-backed Tax-exempt Securities, such as the securities (including preferred stock) of special purpose entities that hold interests in the Tax-exempt Securities of one or more issuers and issue tranched securities that are entitled to receive payments based on the cash flows from those underlying securities. See Redeemable securities, Zero-coupon and Payment-in-kind Bonds, Structured investments, and Mortgage-backed and Asset-backed Securities in this SAI. Structured Tax-exempt Securities may involve increased risk that the intere st received by the fund may not be exempt from federal or state income tax, or that such interest may result in liability for the alternative minimum tax for shareholders of the fund. For example, in certain cases, the issuers of certain securities held by a special purpose entity may not have received an unqualified opinion of bond counsel that the interest from the securities will be exempt from federal income tax and (if applicable) the corresponding states personal income tax.
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. As a result, the achievement of the funds goals is more dependent on Putnam Managements investment analysis than would be the case if the fund were investing in securities of better-known issuers.
Escrow-secured or pre-refunded bonds. These securities are created when an issuer uses the proceeds from a new bond issue to buy high grade, interest-bearing debt securities, generally direct obligations of the U.S. government, in order to redeem (or pre-refund), before maturity, an outstanding bond issue that is not immediately callable. These securities are then deposited in an irrevocable escrow account held by a trustee bank to secure all future payments of principal and interest on the pre-refunded bond until that bonds call date. Pre-refunded bonds often receive an AAA or equivalent rating. Because pre-refunded bonds still bear the same interest rate, and have a very high credit quality, their price may increase. However, as the original bond approaches its call date, the bonds price will fall to its call price.
Residual interest bonds. The fund may invest in residual interest bonds, which are created by depositing municipal securities in a trust and dividing the income stream of an underlying municipal bond in two parts, one, a variable rate security and the other, a residual interest bond. The interest rate for the variable rate security is determined by an index or a periodic auction process, while the residual interest bond holder receives the balance of the income from the underlying municipal bond less an auction fee. The market prices of residual interest bonds may be highly sensitive to changes in market rates and may decrease significantly when market rates increase.
II-51 |
Tobacco Settlement Revenue Bonds. The fund may invest in tobacco settlement revenue bonds, which are secured by an issuing states proportionate share of payments under the Master Settlement Agreement (MSA). The MSA is an agreement that was reached out of court in November 1998 between 46 states and six U.S. jurisdictions and tobacco manufacturers representing an overwhelming majority of U.S. market share. The MSA provides for annual payments by the manufacturers to the states and jurisdictions in perpetuity in exchange for releasing all claims against the manufacturers and a pledge of no further litigation. The MSA established a base payment schedule and a formula for adjusting payments each year. Tobacco manufacturers pay into a master escrow trust based on their market share, and each state receives a fixed percentage of the payment as set forth in the MSA. Within some states, certain local ities may in turn be allocated a specific portion of the states MSA payment pursuant to an arrangement with the state.
A number of state and local governments have securitized the future flow of payments under the MSA by selling bonds pursuant to indentures, some through distinct governmental entities created for such purpose. The bonds are backed by the future revenue flow that is used for principal and interest payments on the bonds. Annual payments on the bonds, and thus risk to the fund, are dependent on the receipt of future settlement payments by the state or its instrumentality. The actual amount of future settlement payments may vary based on, among other things, annual domestic cigarette shipments, inflation, the financial capability of participating tobacco companies, and certain offsets for disputed payments. Payments made by tobacco manufacturers could be reduced if cigarette shipments continue to decline below the base levels used in establishing manufacturers payment obligations under the MSA. Demand for cigarettes in the U.S. could continue to decl ine based on many factors, including, without limitation, anti-smoking campaigns, tax increases, price increases implemented to recoup the cost of payments by tobacco companies under the MSA, reduced ability to advertise, enforcement of laws prohibiting sales to minors, elimination of certain sales venues such as vending machines, and the spread of local ordinances restricting smoking in public places.
Because tobacco settlement bonds are backed by payments from the tobacco manufacturers, and generally not by the credit of the state or local government issuing the bonds, their creditworthiness depends on the ability of tobacco manufacturers to meet their obligations. The bankruptcy of an MSA-participating manufacturer could cause delays or reductions in bond payments, which would affect the funds net asset value. Under the MSA, a market share loss by MSA-participating tobacco manufacturers to non-MSA participating manufacturers would also cause a downward adjustment in the payment amounts under some circumstances.
The MSA and tobacco manufacturers have been and continue to be subject to various legal claims, including, among others, claims that the MSA violates federal antitrust law. In addition, the United States Department of Justice has alleged in a civil lawsuit that the major tobacco companies defrauded and misled the American public about the health risks associated with smoking cigarettes. An adverse outcome to this lawsuit or to any other litigation matters or regulatory actions relating to the MSA or affecting tobacco manufacturers could adversely affect the payment streams associated with the MSA or cause delays or reductions in bond payments by tobacco manufacturers.
In addition to the risks described above, tobacco settlement revenue bonds are subject to other risks described in this SAI, including the risks of asset-backed securities discussed under Mortgage-backed and Asset-backed Securities.
Participation interests (Money Market Funds only). The money market funds 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, 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 funds 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. Th e selling bank may receive a fee from the money market
II-52 |
funds in connection with the arrangement. The money market funds will not purchase such participation interests unless it receives an opinion of counsel or a ruling of the IRS that interest earned by it on Tax-exempt securities in which it holds such participation interests is exempt from federal income tax. No money market fund expects 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 a s 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 funds 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 may invest in so-called moral obligation bonds, where repayment of the bond is backed by a moral (but not legally binding) commitment of an entity other than the issuer, such as a state legislature, to pay. Such a commitment may be in addition to the legal commitment of the issuer to repay the bond or may represent the only payment obligation with respect to the bond (where, for example, no amount has yet been specifically appropriated to pay the bond. See Municipal leases below.)
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 municipalitys 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 the case of a non-appropriation lease, the funds 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.
II-53 |
From time to time, legislation may be introduced or litigation may arise that may restrict or eliminate 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 securities 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 funds 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. Shareholders should consult their tax advisers for the current law on tax-exempt bonds and securities.
Warrants
The fund may invest in warrants, which are instruments that give the fund the right to purchase certain securities from an issuer at a specific price (the strike price) for a limited period of time. The strike price of warrants typically is much lower than the current market price of the underlying securities, yet they are subject to similar price fluctuations. As a result, warrants may be more volatile investments than the underlying securities and may offer greater potential for capital appreciation as well as capital loss. Warrants do not entitle a holder to dividends or voting rights with respect to the underlying securities and do not represent any rights in the assets of the issuing company. Also, the value of the warrant does not necessarily change with the value of the underlying securities and a warrant ceases to have value if it is not exercised prior to the expiration date. These factors can make warrants more speculative than ot her types of investments.
In addition to warrants on securities, 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 differen ce 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 funds 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. 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 funds ability to exercise the warrants at such time, or in such quantities, as the fund would otherwise wish to do.
Zero-coupon and Payment-in-kind Bonds
II-54 |
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 d o not pay current interest in cash. Thus, it may be necessary at times for the fund to liquidate other investments in order to satisfy its distribution requirements under the Internal Revenue Code.
TAXES
The following discussion of U.S. federal income tax consequences is based on the Code, existing U.S. Treasury regulations, and other applicable authority, as of the date of this SAI. These authorities are subject to change by legislative or administrative action, possibly with retroactive effect. The following discussion is only a summary of some of the important U.S. federal tax considerations generally applicable to investments in the fund. There may be other tax considerations applicable to particular shareholders. Shareholders should consult their own tax advisors regarding their particular situation and the possible application of foreign, state and local tax laws.
Taxation of the fund. The fund intends to qualify each year as a regulated investment company under Subchapter M of 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 for each taxable year from (i) dividends, interest, payments with respect to certain securities loans, and gains from the sale of stock, securities or 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, and (ii) net income from interests in qualified publicly traded partnerships (as defined below);
(b) diversify its holdings so that, at the end of each quarter of the funds taxable year, (i) at least 50% of the market value of the funds total 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 funds total assets and not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of the funds total assets is invested (x) 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, or (y) in the securities of one or more qualified publicly traded partnerships (as defined below); and
(c) distribute with respect to each taxable year at least 90% of the sum of its investment company taxable income (as that term is defined in the Code without regard to the deduction for dividends paidgenerally, taxable ordinary income and the excess, if any, of net short-term capital gains over net long-term capital losses) and net tax-exempt interest income, for such year.
In general, for purposes of the 90% gross income requirement described in paragraph (a) above, income derived from a partnership will be treated as qualifying income only to the extent such income is attributable to items of income of the partnership which would be qualifying income if realized by the regulated investment company. However, 100% of the net income of a regulated investment company derived from an interest in a qualified publicly traded partnership (generally defined as a partnership (i) interests in which are traded on an established securities market or readily tradable on a secondary market or the substantial equivalent thereof,
II-55 |
(ii) that derives at least 90% of its income from the passive income sources described in Code section 7704(d), and (iii) that derives less than 90% of its income from the qualifying income described in paragraph (a) above) will be treated as qualifying income. In addition, although in general the passive loss rules of the Code do not apply to regulated investment companies, such rules do apply to a regulated investment company with respect to items attributable to an interest in a qualified publicly traded partnership.
For purposes of the diversification test in paragraph (b) above, identification of the issuer (or, in some cases, issuers) of a particular fund investment will depend on the terms and conditions of that investment. In some cases, identification of the issuer (or issuers) is uncertain under current law, and an adverse determination or future guidance by the Internal Revenue Service (IRS) with respect to issuer identification for a particular type of investment may adversely affect the funds ability to meet the diversification test in (b) above. Also, for the purposes of the diversification test in paragraph (b) above, the term outstanding voting securities of such issuer will include the equity securities of a qualified publicly traded partnership.
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 distributed in a timely manner to its shareholders in the form of dividends (including Capital Gain Dividends, as defined below).
If the fund were to fail 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. Some portions of such distributions may be eligible for the dividends received deduction in the case of corporate shareholders. 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.
The fund intends to distribute at least annually to its shareholders all or substantially all of its investment company taxable income (computed without regard to the dividends-paid deduction) and may distribute its net capital gain. Investment company taxable income (which is retained by the fund) will be subject to tax at regular corporate rates. The fund may also retain for investment its net capital gain. If the fund retains any net capital gain, it will be subject to tax at regular corporate rates on the amount retained, but may designate the retained amount as undistributed capital gains in a notice to its shareholders who (i) will be required to include in income for federal income tax purposes, as long-term capital gain, their shares of such undistributed amount, and (ii) will be entitled to credit their proportionate shares of the tax paid by the fund on such undistributed amount against their federal income tax liabilities, if any, and to cla im refunds on a properly-filed U.S. tax return to the extent the credit exceeds such liabilities. For federal income tax purposes, the tax basis of shares owned by a shareholder of the fund will be increased by an amount equal under current law to the difference between the amount of undistributed capital gains included in the shareholders gross income and the tax deemed paid by the shareholder under clause (ii) of the preceding sentence.
Properly designated distributions of net capital gains are the excess of net gains from the sale of capital assets held by the fund for more than one year over net losses from the sale of capital assets held for not more than one year (Capital Gain Dividends). In determining its net capital gain for Capital Gain Dividend purposes, a regulated investment company generally must treat any net capital loss or any net long-term capital loss incurred after October 31 as if it had been incurred in the succeeding year. Treasury regulations permit a regulated investment company, in determining its taxable income, to elect to treat all or part of any net capital loss, any net long-term capital loss or any foreign currency loss incurred after October 31 as if it had been incurred in the succeeding year.
II-56 |
If the fund fails to distribute in a calendar year at least an amount equal to the sum of 98% of its ordinary income for such year and 98% of its capital gain net income for the one-year period ending October 31 of such year, plus any retained amount from the prior year, the fund will be subject to a nondeductible 4% excise tax on the undistributed amounts. For these purposes, the fund will be treated as having distributed any amount on which it has been subject to corporate income tax in the taxable year ending within the calendar year. A dividend paid to shareholders 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, although there can be no assurance that it wi ll be able to do so.
The fund distributes its net investment income and capital gains to shareholders as dividends annually to the extent required to qualify as a regulated investment company under the Code and generally to avoid federal income or excise tax. Under current law, the fund may treat the portion of redemption proceeds paid to redeeming shareholders that represents the redeeming shareholders portion of the undistributed investment company taxable income and capital gain of the fund as a distribution of investment company taxable income and net capital gain on the funds tax return. This practice, which involves the use of equalization accounting, will have the effect of reducing the amount of income and gains that the fund is required to distribute as dividends to shareholders in order for the fund to avoid federal income tax and excise tax. This practice may also reduce the amount of distributions required to be made to non-redeeming shareholders an d the amount of any undistributed income will be reflected in the value of the shares of the fund; the total return on a shareholders investment will not be reduced as a result of the distribution policy. Investors who purchase shares shortly before the record date of a distribution will pay the full price for the shares and then receive some portion of the price back as a taxable distribution.
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 funds investment income and net short-term capital gains. Distributions are taxable to shareholders even if they are paid from income or gains earned by the fund before a shareholders investment (and thus were included in the price the shareholder paid). Distributions are taxable whether shareholders receive them in cash or reinvest them in additional shares of the fund or other Putnam funds. Capital Gain Dividends will be taxable to shareholders as such, regardless of how long a shareholder has held the shares in the fund.
If a fund invests all of its assets in shares of underlying funds, its distributable income and gains will normally consist entirely of distributions from underlying funds and gains and losses on the disposition of shares of underlying funds. To the extent that an underlying fund realizes net losses on its investments for a given taxable year, the fund will not be able to recognize its share of those losses (so as to offset distributions of net income or capital gains from other underlying funds) until it disposes of shares of the underlying fund or those losses reduce distributions required to be made by the underlying fund. Moreover, even when the fund does make such a disposition, a portion of its loss may be recognized as a long-term capital loss, which will not be treated as favorably for federal income tax purposes as a short-term capital loss or an ordinary deduction. In particular, the fund will not be able to offset any capital losses from its dispositions of underlying fund shares against its ordinary income (including distributions of any net short-term capital gains realized by an underlying fund). As a result of the foregoing rules, and certain other special rules, the amounts of net investment income and net capital gains that the fund will be required to distribute to shareholders may be greater than such amounts would have been had the fund invested directly in the securities held by the underlying funds, rather than investing in shares of the underlying funds. For similar reasons, the character of distributions from a fund (e.g., long-term capital gain, exempt interest, eligibility for dividends-received deduction, etc.) will not necessarily be the same as it would have been had the fund invested directly in the securities held by the underlying funds. In addition, in certain circumstances, the "wash sale" rules under Section 1091 of the Code may apply to a funds sales of underlying fund shares that have generated losses. A wash sal e occurs if shares of an underlying fund are sold by the fund at a loss and the fund acquires additional shares of that same underlying fund 30 days before or after the date of the sale. The wash-sale rules could
II-57 |
defer losses in the funds hands on sales of underlying fund shares (to the extent such sales are wash sales) for extended (and, in certain cases, potentially indefinite) periods of time. In addition to the wash-sale rules, certain related-party transaction rules may cause any losses generated by the fund on the sale of an underlying funds shares to be deferred (or, in some cases, permanently disallowed) if the fund and the underlying fund are part of the same "controlled group" (as defined in Section 267(f) of the Code) at the time the loss is recognized. For instance, for these purposes, the fund and an underlying fund will be part of the same controlled group if the fund owns more than 50% of the total outstanding voting securities of the underlying fund.
For taxable years beginning before January 1, 2011, qualified dividend income received by an individual will be taxed at the rates applicable to long-term capital gain. It is currently unclear whether Congress will extend this preferential treatment of qualified dividend income for tax years beginning on or after January 1, 2011. In order for some portion of the dividends received by a fund shareholder to be qualified dividend income, the fund must meet holding period and other requirements with respect to some portion of the dividend-paying stocks in its portfolio and the shareholder must meet holding period and other requirements with respect to the funds shares. A dividend will not be treated as qualified dividend income (at either the fund or shareholder level) (1) if the dividend is received with respect to any share of stock held for fewer than 61 days during the 121-day period beginning on the date which is 60 days before the d ate on which such share becomes ex-dividend with respect to such dividend (or, on the case of certain preferred stock, 91 days during the 181-day period beginning 90 days before such date), (2) to the extent that the recipient is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property, (3) if the recipient elects to have the dividend income treated as investment interest, or (4) if the dividend is received from a foreign corporation that is (a) not eligible for the benefits of a comprehensive income tax treaty with the United States (with the exception of dividends paid on stock of such a foreign corporation readily tradable on an established securities market in the United States) or (b) treated as a passive foreign investment company. The fund generally expects to designate eligible dividends as qualified dividend income.
In general, distributions of investment income designated by a fund as derived from qualified dividend income will be treated as qualified dividend income by a shareholder taxed as an individual provided the shareholder meets the holding period and other requirements described above with respect to such funds shares. In any event, if the aggregate qualified dividends received by a fund during any taxable year are 95% or more of its gross income, then 100% of the funds dividends (other than properly designated Capital Gain Dividends) will be eligible to be treated as qualified dividend income. For this purpose, the only gain included in the term gross income is the excess of net short-term capital gain over net long-term capital loss.
In general, fixed-income and money market funds receive interest, rather than dividends, from their portfolio securities. As a result, it is not currently expected that any significant portion of such funds distributions to shareholders will be derived from qualified dividend income.
If a fund receives dividends from an underlying fund that qualifies as a regulated investment company, and the underlying fund designates such dividends as qualified dividend income, then the fund may, in turn, designate a portion of its distributions as qualified dividend income as well, provided the fund meets the holding period and other requirements with respect to shares of the underlying fund.
Long-term capital gain rates applicable to individuals have been temporarily reducedin general, to 15% with lower rates applying to taxpayers in the 10% and 15% rate brackets for taxable years beginning before January 1, 2011. It is currently unclear whether Congress will extend these lower rates for tax years beginning on or after January 1, 2011.
II-58 |
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 funds taxable year, at least 50% of the total value of the funds 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 (AMT) purposes and for state and local purposes. If the fund intends to qualify 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 the 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 funds 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 IRS to determine 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 that is qualified to pay exempt-interest dividends will inform investors within 60 days of the funds 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 funds income that was tax-exempt during the period covered by the distribution.
Exempt-interest dividends may be taxable for purposes of the federal AMT. For individual shareholders, exempt-interest dividends that are derived from interest on private activity bonds that are issued after August 7, 1986 (other than a qualified 501(c)(3) bond, as such term is defined in the Code) generally must be included in an individuals tax base for purposes of calculating the shareholders liability for federal AMT. Corporate shareholders will be required to include all exempt-interest dividends in determining their federal AMT. The AMT calculation for corporations is based, in part, on a corporations earnings and profits for the year. A corporation must include all exempt-interest dividends in calculating its earnings and profits for the year.
Putnam AMT-Free Municipal Fund intends to distribute exempt-interest dividends that will not be taxable for federal AMT purposes for individuals. It intends to make such distributions by investing in tax exempt securities other than private activity bonds that are issued after August 7, 1986 (other than qualified 501(c)(3) bonds, as such term is defined in the Code). Because corporate shareholders are required to include all exempt-interest dividends in determining their federal AMT, exempt-interest dividends distributed by Putnam AMT-Free Municipal Fund will be taxable for purposes of the federal AMT.
Derivative transactions. If the fund engages in derivative transactions, including transactions in options, futures contracts, straddles, and other similar transactions, including for hedging purposes, 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 funds 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 may make any applicable elections pertaining to such transactions consistent with the interests of the fund.
II-59 |
Certain of the funds derivative 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 funds 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 funds 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 recipients basis in the shares, and (iii) thereafter as gain from the sale or exchange of a capital asset. If the funds book income is less than its taxable income (or, for tax-exempt funds, the sum of its net tax-exempt and 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 treatmen t and to eliminate fund-level income tax.
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.
Investments in REITs. If the fund invests in equity securities of real estate investment trusts ("REITs"), such investments in REIT equity securities may require the fund to accrue and distribute income not yet received. In order to generate sufficient cash to make the requisite distributions, the fund may be required to sell securities in its portfolio that it otherwise would have continued to hold. The funds investment in REIT equity securities may at other times result in the funds receipt of cash in excess of the REITs earnings. If the fund distributes such amounts, such distribution could constitute a return of capital to the fund shareholders for federal income tax purposes. Dividends received by a fund from a REIT generally will not constitute qualified dividend income.
The fund may invest in REITs, including REITs that hold residual interests in real estate mortgage investment conduits ("REMICs"), REITs that are themselves taxable mortgage pools ("TMPs") or REITs that invest in TMPs. Under a notice recently issued by the IRS and Treasury regulations that have not yet been issued, but may apply retroactively, a portion of a funds income from a REIT that is attributable to the REITs residual interest in a REMIC or TMP (referred to in the Code as an "excess inclusion") will be subject to federal income tax in all events. This notice also provides, and the regulations are expected to provide, that excess inclusion income of a regulated investment company, such as the fund, will be allocated to shareholders of the regulated investment company in proportion to the dividends received by such shareholders, with the same consequences as if the shareholders held the related REMIC or TMP residual interest directly.< /FONT>
In general, excess inclusion income allocated to shareholders (i) cannot be offset by net operating losses (subject to a limited exception for certain thrift institutions), (ii) will constitute unrelated business taxable income ("UBTI") to entities (including a qualified pension plan, an individual retirement account, a 401(k) plan, a Keogh plan or other tax-exempt entity) subject to tax on UBTI, thereby potentially requiring such an entity that is allocated excess inclusion income, and otherwise might not be required to file a tax return, to file a tax return and pay tax on such income, and (iii) in the case of a non-U.S. shareholder, will not qualify for any reduction in U.S. federal withholding tax. Any investment in residual interests of a Collateralized Mortgage Obligation (a CMO) that has elected to be treated as a REMIC can create complex tax problems, especially if the fund has state or local governments or other tax-exempt organiza tions as shareholders. Under current law, a fund serves to block UBTI from being realized by its tax-exempt shareholders. Notwithstanding the foregoing, a tax-exempt shareholder will recognize UBTI by virtue of its investment in the fund if shares in the fund constitute debt-financed property in the hands of the tax-exempt shareholder within the meaning of Code Section 514(b). Furthermore, a tax-exempt shareholder may recognize UBTI if the fund recognizes excess inclusion income derived from direct or indirect investments in REMIC residual interests or TMPs if the amount of such income recognized by the fund exceeds the funds investment company taxable income (after taking into account deductions for dividends paid by the fund).
II-60 |
Under legislation enacted in December 2006, a charitable remainder trust ("CRT"), as defined in Section 664 of the Code, that realizes UBTI for a taxable year must pay an excise tax annually of an amount equal to such UBTI. Under IRS guidance issued in October 2006, a CRT will not recognize UBTI solely as a result of investing in a fund that recognizes excess inclusion income. Rather, if at any time during any taxable year a CRT (or one of certain other tax-exempt shareholders, such as the United States, a state or political subdivision, or an agency or instrumentality thereof, and certain energy cooperatives) is a record holder of a share in a fund that recognizes excess inclusion income, then the fund will be subject to a tax on that portion of its excess inclusion income for the taxable year that is allocable to such shareholders at the highest federal corporate income tax rate. The extent to which this IRS guidan ce remains applicable in light of the December 2006 legislation is unclear. To the extent permitted under the 1940 Act, the fund may elect to specially allocate any such tax to the applicable CRT, or other shareholder, and thus reduce such shareholders distributions for the year by the amount of the tax that relates to such shareholders interest in the fund. CRTs are urged to consult their tax advisors concerning the consequences of investing in the fund.
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 the funds shares are generally subject to federal income tax as described herein to the extent they do not exceed the funds realized income and gains, even though such dividends and distributions may economically represent a return of a particular shareholders investment. Such distributions are likely to occur in respect of shares purchased at a time when the funds net asset value reflects gains that are either unrealized, or realized but not distributed. Such realized income and gains may be required to be distributed even when the funds net asset value also reflects unrealized losses. Distributions are taxable to a shareholder even if they are paid from income or gains earned by the fund prior to the shareholders investment (and thus included in the price paid by the shareholder).
Securities issued or purchased at a discount. The funds 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.
Some debt obligations with a fixed maturity date of more than one year from the date of issuance that are acquired by the fund in the secondary market may be treated as having market discount. Generally, any gain recognized on the disposition of, and any partial payment of principal on, a debt security having market discount is treated as ordinary income to the extent the gain, or principal payment, does not exceed the accrued market discount on such debt security. Market discount generally accrues in equal daily installments. The fund may make one or more of the elections applicable to debt obligations having market discount, which could affect the character and timing of recognition of income.
Some debt obligations with a fixed maturity date of one year or less from the date of issuance that are acquired by the fund may be treated as having acquisition discount or original issue discount ("OID"). Generally, the fund will be required to include the acquisition discount or OID in income over the term of the debt security, even though payment of that amount is not received until a later time, usually when the debt security matures. The fund may make one or more of the elections applicable to debt obligations having acquisition discount or OID, which could affect the character and timing of recognition of income.
II-61 |
If the fund holds the foregoing kinds of securities, it may be required to pay out as an income distribution each year an amount which is greater than the total amount of cash interest the fund actually received. Such distributions may be made from the cash assets of the fund or by liquidation of portfolio securities, if necessary. The fund may realize gains or losses from such liquidations. In the event the fund realizes net capital gains from such transactions, its shareholders may receive a larger capital gain distribution than they would in the absence of such transactions.
Higher-Risk Securities. The fund may invest to a significant extent in debt obligations that are in the lowest rating categories or are unrated, including debt obligations of issuers not currently paying interest or who are in default. Investments in debt obligations that are at risk of or in default present special tax issues for the fund. Tax rules are not entirely clear about issues such as whether the fund should recognize market discount on a debt obligation and, if so, the amount of market discount the fund should recognize, when the fund may cease to accrue interest, original issue discount or market discount, when and to what extent deductions may be taken for bad debts or worthless securities and how payments received on obligations in default should be allocated between principal and income. These and other related issues will be addressed by the fund when, as and if it invests in such securities, in order to seek to ensure that it distributes sufficient income to preserve its status as a regulated investment company and does not become subject to U.S. federal income or excise tax.
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 Taxes. If more than 50% of the funds 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 shareholders 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.
Under current law, a fund cannot pass through to shareholders foreign tax credits borne in respect of foreign securities income earned by underlying funds. In general, a fund may elect to pass through to its shareholders foreign income taxes it pays only in the case where it directly holds more than 50% of its assets in foreign stock and securities at the close of its taxable year. Foreign securities held indirectly through an underlying fund do not contribute to this 50% threshold.
Passive Foreign Investment Companies. Investment by the fund in passive foreign investment companies (PFICs) could subject the fund to a U.S. federal income tax (including interest charges) on distributions received from the company or on the proceeds from the sale of its investment in such a company. This tax cannot be eliminated by making distributions to fund shareholders; 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. The QEF and mark-to-market elections may have the effect of accelerating the recognition of income (without the receipt of cash) and increasing the amount required to be distributed by the fund to avoid taxation. Making either of these elections therefore may require the fund to liquidate other investments to meet its distribu tion requirement, which may also accelerate the recognition of gain and affect the funds total return. Dividends paid by PFICs will not be eligible to be treated as qualified dividend income.
II-62 |
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.
Foreign currency-denominated securities and related hedging transactions. The funds 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.
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 Capital Gain Dividends received by the shareholder with r espect 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.
Depending on a funds percentage ownership in an underlying fund both before and after a redemption of underlying fund shares, the funds redemption of shares of such underlying fund may cause the fund to be treated as receiving a dividend treated as qualified dividend income, if applicable, or otherwise taxable as ordinary income on the full amount of the distribution instead of receiving capital gain income on the shares of the underlying fund. This would be the case where the fund holds a significant interest in an underlying fund and redeems only a small portion of such interest.
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 advisors 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 a percentage 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 backup withholding rules may also apply to distributions that are properly designated as exempt-interest dividends. The back-up withholding tax rate is 28% for amounts paid through 2010. This rate will expire and the back-up withholding rate will be 31% for amounts paid after December 31, 2010, unless Congress enacts tax legislation providing otherwise. Backup withholding is not an additional tax. Any amounts withheld may be credited against the shareholders U.S. federal income tax liability, p rovided the appropriate information is furnished to the IRS.
In order for a foreign investor to qualify for exemption from the back-up withholding tax rates and for reduced withholding tax rates under income tax treaties, the foreign investor must comply with special certification and filing requirements. Foreign investors in a fund should consult their tax advisors in this regard.
II-63 |
Tax shelter reporting regulations. Under U.S. Treasury regulations, if a shareholder realizes a loss on disposition of fund shares of $2 million or more for an individual shareholder or $10 million or more for a corporate shareholder, the shareholder must file with the IRS a disclosure statement on Form 8886. Direct shareholders of portfolio securities are in many cases excepted from this reporting requirement, but under current guidance, shareholders of a regulated investment company are not excepted. Future guidance may extend the current exception from this reporting requirement to shareholders of most or all regulated investment companies. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayers treatment of the loss is proper. Shareholders should consult their tax advisers to determine the applicability of these regulations in light of their individual circumstances.
Non-U.S. Shareholders. In general, dividends (other than Capital Gain Dividends or exempt-interest dividends) paid by the fund to a shareholder that is not a U.S. person within the meaning of the Code (a foreign person) are subject to withholding of U.S. federal income tax at a rate of 30% (or lower applicable treaty rate) even if they are funded by income or gains (such as portfolio interest, short-term capital gains, or foreign-source dividend and interest income) that, if paid to a foreign person directly, would not be subject to withholding. However, effective for taxable years of the fund beginning before January 1, 2010, the fund will not be required to withhold any amounts (i) with respect to distributions (other than distributions to a foreign person (w) that did not provide a satisfactory statement that the beneficial owner was not a U.S. person, (x) to the extent that the divi dend was attributable to certain interest on an obligation if the foreign person was the issuer or was a 10% shareholder of the issuer, (y) that was within certain foreign countries that have inadequate information exchange with the United States, or (z) to the extent the dividend was attributable to interest paid by a person that was a related person of the foreign person and the foreign person was a controlled foreign corporation) from U.S.-source interest income that were not subject to U.S. federal income tax if earned directly by an individual foreign person, to the extent such distributions were properly designated by the fund (an interest-related dividend), and (ii) with respect to distributions (other than (a) distributions to an individual foreign person who is present in the United States for a period or periods aggregating 183 days or more during the year of the distribution and (b) distributions subject to special rules regarding the disposition of U.S. real property interests) of net short-term capital gains in excess of net long-term capital losses, to the extent such distributions were properly designated by the fund (a short-term capital gain dividend). The fund generally expects to make designations of interest-related and/or short-term capital gain dividends with respect to its eligible dividends and/or treat such dividends, in whole or in part, as ineligible for these exemptions from withholding. Pending legislation proposes to extend the exemption from withholding for interest-related dividends and short-term capital gain dividends for one additional year, i.e., for dividends with respect to taxable years beginning on or after January 1, 2010 but before January 1, 2011. As of the date of this Statement of Additional Information, it is unclear whether such legislation will be enacted and , if enacted, what the terms of the extension will be.
The fact that a fund achieves its investment objectives by investing in underlying funds will generally not adversely affect the funds ability to pass on to foreign shareholders the full benefit of the interest-related dividends and short-term capital gain dividends that it receives from its underlying investments in the funds, except possibly to the extent that (1) interest-related dividends received by the fund are offset by deductions allocable to the funds qualified interest income or (2) short-term capital gain dividends received by the fund are offset by the funds net short- or long-term capital losses, in which case the amount of a distribution from the fund to a foreign shareholder that is properly designated as either an interest-related dividend or a short-term capital gain dividend, respectively, may be less than the amount that such shareholder would have received had they invested directly in the underlying funds. If a be neficial holder who is a foreign person has a trade or business in the United States, and the dividends are effectively connected with the conduct by the beneficial holder of a trade or business in the United States, the dividend will be subject to U.S. federal net income taxation at regular income tax rates.
II-64 |
Under U.S. federal tax law, a beneficial holder of shares who is a foreign person is not, in general, subject to U.S. federal income tax on gains (and is not allowed a deduction for losses) realized on the sale of shares of the fund or on Capital Gain Dividends unless (i) such gain or Capital Gain Dividend is effectively connected with the conduct of a trade or business carried on by such holder within the United States or (ii) in the case of an individual holder, the holder is present in the United States for a period or periods aggregating 183 days or more during the year of the sale or Capital Gain Dividend and certain other conditions are met.
General Considerations. The federal income tax discussion set forth above is for general information only. Prospective investors should consult their tax advisers regarding the specific federal tax consequences of purchasing, holding, and disposing of shares of the fund, as well as the effects of state, local and foreign tax law and any proposed tax law changes.
MANAGEMENT
Trustees
<R> | ||
| ||
Name, Address1 , Year of | Principal | Other Directorships Held by Trustee |
Birth, Position(s) Held with | Occupation(s) During | |
Fund and Length of Service | Past 5 Years | |
as a Putnam Fund Trustee2 | ||
| ||
Ravi Akhoury (Born 1947), | Advisor to New York | Director of Jacob Ballas Capital India (a non- |
Trustee since 2009 | Life. Served as | banking finance company focused on private equity |
Chairman and CEO of | advisory services) and a member of its | |
MacKay Shields (a | Compensation Committee. Mr. Akhoury is also a | |
multi-product | Trustee of the Rubin Museum, serving on the | |
investment management | Investment Committee, and of American India | |
firm with AUM over $40 | Foundation. Mr. Akhoury is a former Vice President | |
billion) from 1992 to | and Investment Policy Committee member of | |
2007. | Fischer, Francis, Trees and Watts (a fixed-income | |
portfolio management firm). He previously served | ||
on the board of Bharti Telecom (an Indian telecom | ||
company) and was a member of its Audit and | ||
Compensation Committees. Mr. Akhoury served as | ||
Chairman and CEO of Mackay Shields (a multi- | ||
product investment firm) from 1992 to 2007. He also | ||
served on the Board of Thompson Press (a | ||
publishing company) and was a member of its Audit | ||
Committee. Mr. Akhoury graduated from the Indian | ||
Institute of Technology with a BS in Engineering | ||
and obtained an MS in Quantitative Methods from | ||
SUNY at Stony Brook. | ||
| ||
Barbara M. Baumann (Born | President of Cross Creek | Director of SM Energy Company (a publicly held |
1955), Trustee since 2010 | Energy Corporation, a | U.S. exploration and production company), |
strategic consultant to | UniSource Energy Corporation (a publicly held | |
domestic energy firms | electric utility in Arizona), and Cody Resources | |
and direct investor in | Management, LLP (a privately held energy, | |
energy assets. | ranching and commercial real estate company). She | |
is a Trustee of Mount Holyoke College and Co- | ||
Chair of the Boards Finance Committee. She is a | ||
|
II-65 |
Name, Address1 , Year of | Principal | Other Directorships Held by Trustee |
Birth, Position(s) Held with | Occupation(s) During | |
Fund and Length of Service | Past 5 Years | |
as a Putnam Fund Trustee2 | ||
| ||
former Chair of the Board, and a current Board | ||
member, of Girls Inc. of Metro Denver, and serves | ||
on the Finance Committee of The Childrens | ||
Hospital of Denver. Prior to 2003, Ms. Baumann | ||
was Executive Vice President of Associated Energy | ||
Managers, LLC, a domestic private equity firm. | ||
From 1981 until 2000 she held a variety of financial | ||
and operational management positions with the | ||
global energy company Amoco Corporation and its | ||
successor, BP, most recently serving as Commercial | ||
Operations Manager of its Western Business Unit. | ||
| ||
Jameson A. Baxter (Born | President of Baxter | Director of ASHTA Chemicals Inc. and Chairman of |
1943), Trustee since 1994 and | Associates, Inc., a | the Mutual Fund Directors Forum. Until 2007, Ms. |
Vice Chairman since 2005 | private investment firm. | Baxter was a Director of Banta Corporation (a |
printing and supply chain management company), | ||
Ryerson, Inc. (a metals service company) and | ||
Advocate Health Care. She has also served as a | ||
director on a number of other boards including | ||
BoardSource (formerly the National Center for | ||
Nonprofit Boards), Intermatic Corporation (a | ||
manufacturer of energy control products) and MB | ||
Financial. She is Chairman Emeritus of the Board | ||
of Trustees, Mount Holyoke College. | ||
| ||
Charles B. Curtis (Born | President Emeritus, | Member of the Council on Foreign Relations and the |
1940), Trustee since 2001 | Nuclear Threat Initiative | National Petroleum Council. Mr. Curtis also serves |
(a private foundation | as a Director of Edison International and Southern | |
dealing with national | California Edison. Until 2006, Mr. Curtis served as | |
security issues) and | a member of the Trustee Advisory Council of the | |
serves as Senior Advisor | Applied Physics Laboratory, Johns Hopkins | |
to the United Nations | University. Mr. Curtis is an attorney with over 15 | |
Foundation and as | years in private practice and 19 years in various | |
Senior Advisor to the | positions in public service, including service at the | |
Center for Strategic and | Department of Treasury, the U.S. House of | |
International Studies. | Representatives, the Securities and Exchange | |
Previously, President | Commission, the Federal Energy Regulatory | |
and Chief Operating | Commission and the Department of Energy. | |
Officer, Nuclear Threat | ||
Initiative. | ||
| ||
Robert J. Darretta (Born | Mr. Darretta serves as a | Currently a director of UnitedHealth Group. Until |
1946), Trustee since 2007 | director of the United | April, 2007, Mr. Darretta was Vice Chairman of the |
Health Group and as the | Board of Directors of Johnson & Johnson (a | |
Health Care Industry | diversified health care conglomerate). | |
Advisor to Permira, a | ||
global private equity | ||
firm. Prior to 2007, Mr. | ||
Darretta was the Chief | ||
Financial Officer of | ||
Johnson & Johnson. |
II-66 |
Name, Address1 , Year of | Principal | Other Directorships Held by Trustee |
Birth, Position(s) Held with | Occupation(s) During | |
Fund and Length of Service | Past 5 Years | |
as a Putnam Fund Trustee2 | ||
| ||
Myra R. Drucker (Born | Ms. Drucker is Vice | Ms. Drucker is an ex-officio member of the New |
1948), Trustee since 2004 | Chair of the Board of | York Stock Exchange Pension Managers Advisory |
Trustees of Sarah | Committee, having served as Chair for seven years. | |
Lawrence College, and a | She serves as an advisor to the Employee Benefits | |
member of the | Investment Committee of The Boeing Company (an | |
Investment Committee | aerospace firm). From November 2001 until August | |
of the Kresge | 2004, Ms. Drucker was Managing Director and a | |
Foundation (a charitable | member of the Board of Directors of General Motors | |
trust). She is also a | Asset Management and Chief Investment Officer of | |
member of the Board of | General Motors Trust Bank. From December 1992 | |
Directors of Grantham, | to November 2001, Ms. Drucker served as Chief | |
Mayo, Van Otterloo & | Investment Officer of Xerox Corporation (a | |
Co., LLC (an investment | document company). Prior to December 1992, Ms. | |
management firm). Ms. | Drucker was Staff Vice President and Director of | |
Drucker retired in 2009 | Trust Investments for International Paper (a paper | |
as Chair of the Board of | and packaging company). Ms. Drucker received a | |
Trustees of | B.A. degree from Sarah Lawrence College and | |
Commonfund (a not-for- | pursued graduate studies in economics, statistics and | |
profit firm managing | portfolio theory at Temple University. | |
assets for educational | ||
endowments and | ||
foundations). Before | ||
August 2010, Ms. | ||
Drucker was a member | ||
of the Board of Directors | ||
of Interactive Data | ||
Corporation (a provider | ||
of financial market data | ||
and analytics to financial | ||
institutions and | ||
investors). | ||
| ||
John A. Hill (Born 1942), | Vice Chairman, First | Director of Devon Energy Corporation and various |
Trustee since 1985 and | Reserve Corporation (a | private companies controlled by First Reserve |
Chairman since 2000 | private equity buyout | Corporation. He is also Chairman of The Board of |
firm that specializes in | Trustees of Sarah Lawrence College and a member | |
energy investments in | of the Advisory Board of the Millstein Center for | |
the diversified world- | Corporate Governance and Performance at the Yale | |
wide energy industry). | School of Management. | |
| ||
Paul L. Joskow (Born 1947), | President of the Alfred | Trustee of Yale University; a Director of |
Trustee since 1997 | P. Sloan Foundation (a | TransCanada Corporation (an energy company |
philanthropic institution | focused on natural gas transmission and power | |
focused primarily on | services) and of Exelon Corporation (an energy | |
research and education | company focused on power services); and a Member | |
on issues related to | of the Board of Overseers of the Boston Symphony | |
science, technology and | Orchestra. Prior to August 2007, he served as a | |
economic performance). | Director of National Grid (a U.K.-based holding | |
He is currently on leave | company with interests in electric and gas | |
from his position as the | transmission and distribution and | |
Elizabeth and James | telecommunications infrastructure). Prior to July, | |
|
II-67 |
Name, Address1 , Year of | Principal | Other Directorships Held by Trustee |
Birth, Position(s) Held with | Occupation(s) During | |
Fund and Length of Service | Past 5 Years | |
as a Putnam Fund Trustee2 | ||
| ||
Killian Professor of | 2006, he served as President of the Yale University | |
Economics and | Council. Prior to February 2005, he served on the | |
Management at the | board of the Whitehead Institute for Biomedical | |
Massachusetts Institute | Research (a non-profit research institution). Prior to | |
of Technology (MIT). | February 2002, he was a Director of State Farm | |
Prior to 2007, he was the | Indemnity Company (an automobile insurance | |
Director of the Center | company), and prior to March 2000, he was a | |
for Energy and | Director of New England Electric System (a public | |
Environmental Policy | utility holding company). | |
Research at MIT. | ||
| ||
Kenneth R. Leibler (Born | A founder and former | Prior to December 2006, Mr. Leibler served as a |
1949), Trustee since 2006 | Chairman of the Boston | Director of the Optimum Funds Group. Prior to |
Options Exchange, an | October 2006, he served as a Director of ISO New | |
electronic market place | England, the organization responsible for the | |
for the trading of listed | operation of the electric generation system in the | |
derivatives securities, | New England states. Prior to 2000, he was a Director | |
and director of Ruder | of the Investment Company Institute in Washington, | |
Finn Group, a global | D.C. Prior to January, 2005 Mr. Leibler served as | |
communications and | Chairman and Chief Executive Officer of the Boston | |
advertising firm. He | Stock Exchange. Prior to January 2000, he served as | |
currently serves as Vice | President and Chief Executive Officer of Liberty | |
Chairman of the Board | Financial Companies, a publicly traded diversified | |
of Trustees of Beth | asset management organization. Prior to June 1990, | |
Israel Deaconess | he served as President and Chief Operating Officer | |
Hospital in Boston and | of the American Stock Exchange (AMEX). Prior to | |
as a Director of | serving as AMEX President, he held the position of | |
Northeast Utilities, | Chief Financial Officer, and headed its management | |
which operates New | and marketing operations. | |
Englands largest energy | ||
delivery system. | ||
| ||
Robert E. Patterson (Born | Senior Partner of Cabot | Mr. Patterson is past Chair and served as a Trustee |
1945), Trustee since 1984 | Properties, L.P. and Co- | of the Joslin Diabetes Center. Prior to December |
Chairman of Cabot | 2001 and June 2003, Mr. Patterson served as a | |
Properties, Inc. (a | Trustee of Cabot Industrial Trust and the Sea | |
private equity firm | Education Association, respectively. | |
investing in commercial | ||
real estate). Prior to | ||
December 2001, he was | ||
President of Cabot | ||
Industrial Trust (a | ||
publicly traded real | ||
estate investment trust). | ||
| ||
George Putnam, III (Born | Chairman of New | Director of The Boston Family Office, LLC (a |
1951), Trustee since 1984 | Generation Research, | registered investment advisor), a Trustee of St. |
Inc. (a publisher of | Marks School, a Trustee of Epiphany School and a | |
financial advisory and | Trustee of the Marine Biological Laboratory. Until | |
other research services) | 2006, Mr. Putnam was a Trustee of Shore Country | |
and President of New | Day School. Until 2002, he was a Trustee of the Sea | |
Generation Advisors, | Education Association. | |
|
II-68 |
Name, Address1 , Year of | Principal | Other Directorships Held by Trustee |
Birth, Position(s) Held with | Occupation(s) During | |
Fund and Length of Service | Past 5 Years | |
as a Putnam Fund Trustee2 | ||
| ||
LLC (a registered | ||
investment adviser to | ||
private funds), which are | ||
firms he founded in | ||
1986. Prior to June 2007, | ||
Mr. Putnam was | ||
President of the Putnam | ||
Funds. | ||
| ||
W. Thomas Stephens (Born | Prior to 2009, Mr. | Director of TransCanadaPipelines Ltd (an energy |
1942), Trustee from 1997- | Stephens was Chairman | infrastructure company). From 1997 to 2008, Mr. |
2008, and since 2009 | and Chief Executive | Stephens served as a Trustee on the Board of the |
Officer of Boise | Putnam Funds, which he rejoined as a Trustee in | |
Cascade, LLC (a paper, | 2009. Until 2004, Mr. Stephens was a Director of | |
forest product and | Xcel Energy Incorporated (a public utility | |
timberland assets | company), Qwest Communications and Norske | |
company). | Canada, Inc. (a paper manufacturer). Until 2003, | |
Mr. Stephens was a Director of Mail-Well, Inc. (a | ||
diversified printing company). Prior to July 2001, | ||
Mr. Stephens was Chairman of Mail-Well. | ||
| ||
Richard B. Worley (Born | Managing Partner of | Serves as a Trustee of the University of |
1945), Trustee since 2004 | Permit Capital LLC (an | Pennsylvania Medical Center, the Robert Wood |
investment management | Johnson Foundation (a philanthropic organization | |
firm). Prior to 2002, he | devoted to healthcare issues) and the National | |
served as Chief Strategic | Constitution Center. Mr. Worley is also a Director | |
Officer of Morgan | of the Colonial Williamsburg Foundation (a | |
Stanley Investment | historical preservation organization) and serves as | |
Management. He | Chairman of the Philadelphia Orchestra Association. | |
previously served as | He serves on the investment committees of Mount | |
President, Chief | Holyoke College and World Wildlife Fund (a | |
Executive Officer and | wildlife conservation organization). Mr. Worley is | |
Chief Investment Officer | also an Independent Director of Neuberger Berman, | |
of Morgan Stanley Dean | an investment management firm. | |
Witter Investment | ||
Management and as a | ||
Managing Director of | ||
Morgan Stanley (a | ||
financial services firm). | ||
| ||
Interested Trustees | ||
| ||
*Robert L. Reynolds (Born | President and Chief | Director of several not-for-profit boards, including |
1952), Trustee since 2008 | Executive Officer of | West Virginia University Foundation, the Concord |
Putnam Investments. | Museum, Dana-Farber Cancer Institute, Lahey | |
Member of Putnam | Clinic, and the Initiative for a Competitive Inner | |
Investments Executive | City, in Boston. He is a member of the Chief | |
Board of Directors. | Executives Club of Boston, the National | |
Prior to joining Putnam | Innovation Initiative, and the Council on | |
Investments in 2008, Mr. | Competitiveness, and he is a former President of the | |
Reynolds was Vice | Commercial Club of Boston. Prior to 2008, he | |
Chairman and Chief | served as a Director of FMR Corporation, Fidelity | |
|
II-69 |
Name, Address1 , Year of | Principal | Other Directorships Held by Trustee |
Birth, Position(s) Held with | Occupation(s) During | |
Fund and Length of Service | Past 5 Years | |
as a Putnam Fund Trustee2 | ||
| ||
Operating Officer of | Investments Insurance Ltd., Fidelity Investments | |
Fidelity Investments | Canada Ltd., and Fidelity Management Trust | |
from 2000 to 2007. | Company and as a Trustee of the Fidelity Family of | |
Funds. | ||
| ||
</R> |
1 The address of each Trustee is One Post Office Square, Boston, MA 02109. As of December 31, 2009, there were 104 Putnam Funds.
2 Each Trustee serves for an indefinite term, until his or her resignation, retirement at age 72, death or removal.
*Trustee who is an interested person (as defined in the Investment Company Act of 1940, as amended) of the fund, Putnam Management and/or Putnam Retail Management. Mr. Reynolds is deemed an interested person by virtue of his positions as an officer of the fund, Putnam Management and/or Putnam Retail Management. Mr. Reynolds is the President and Chief Executive Officer of Putnam Investments, LLC and President of your fund and each of the other Putnam funds.
Trustee Qualifications
Each of the funds Trustees, with the exception of Ms. Baumann, was most recently elected by shareholders of the fund during 2009, although most of the Trustees have served on the board for many years. Ms. Baumann was elected to the Board of Trustees by the Independent Trustees effective July 1, 2010. The Board Policy and Nominating Committee is responsible for recommending proposed nominees for election to the full Board of Trustees for its approval. As part of its deliberative process, the Committee considers the experience, qualifications, attributes and skills that it determines would benefit the Putnam funds at the time.
In recommending the election of the current board members as Trustees, the Committee generally considered the educational, business and professional experience of each Trustee in determining his or her qualifications to serve as a Trustee of the fund, including the Trustees record of service as a director or trustee of public and private organizations. (This included, but was not limited to, consideration of the specific experience noted in the preceding table.) In the case of most members of the board, the Committee considered his or her previous service as a member of the Board of Trustees of the Putnam funds, which demonstrated a high level of diligence and commitment to the interests of fund shareholders and an ability to work effectively and collegially with other members of the board.
The Committee also considered, among other factors, the particular attributes described below with respect to the various individual Trustees and considered the attributes as indicative of the persons ability to deal effectively with the types of financial, regulatory, and/or investment matters that typically arise in the course of a Trustees work:
Ravi Akhoury -- Mr. Akhourys experience as chief investment officer and chief executive officer of a major investment management organization.
II-70 |
Barbara M. Baumann -- Ms. Baumanns experience in the energy industry as a consultant, an investor, and in both financial and operational management positions at a global energy company, and her service as a director of two NYSE companies.
Jameson A. Baxter -- Ms. Baxters experience in corporate finance acquired in the course of her career at a major investment bank, her experience as a director and audit committee chair of two NYSE companies and her role as a founding board member of the Mutual Fund Directors Forum.
Charles B. Curtis -- Mr. Curtis experience in public and regulatory policy matters relating to energy and finance acquired in the course of his service in various senior positions in government and on numerous boards of public and private organizations.
Robert J. Darretta -- Mr. Darrettas experience as the Chief Financial Officer and Vice Chairman of the Board of a major NYSE health products company.
Myra R. Drucker -- Ms. Druckers experience as investment officer for major retirement plans, which included selection and oversight of unaffiliated investment managers and oversight of accounting and custody operations, and her prior service as a member of the NYSE Corporate Accountability and Listing Standards Committee.
John A. Hill -- Mr. Hills experience as founder and chairman of a major open-end mutual fund and as a founder and lead managing partner of one of the largest private equity firms in the U.S.
Paul L. Joskow -- Dr. Joskows education and experience as a professional economist familiar with financial economics and related issues and his service on multiple for-profit boards.
Kenneth R. Leibler -- Mr. Leiblers extensive experience in the financial services industry, including as CEO of a major asset management organization, and his service as a director of various public and private companies.
Robert E. Patterson -- Mr. Pattersons training and experience as an attorney and his experience as president of a NYSE company.
George Putnam, III -- Mr. Putnams training and experience as an attorney, his experience as the founder and chief executive officer of an investment management firm and his experience as an author of various publications on the subject of investments.
W. Thomas Stephens -- Mr. Stephens extensive business experience, including his service as Chief Executive Officer of four public companies, as non-executive chairman of two public companies and as a director of numerous other public companies.
Richard B. Worley -- Mr. Worleys experience as a president, chief investment officer and chief executive officer of a major investment management firm.
Interested Trustee
Robert L. Reynolds -- Mr. Reynolds extensive experience as a senior executive of one of the largest mutual fund organizations in the U.S. and his current role as the Chief Executive Officer of Putnam Investments.
Officers
II-71 |
In addition to Robert L. Reynolds, the funds President, the other officers of the fund are shown below. All of the officers of your fund are employees of Putnam Management or its affiliates or are members of the Trustees independent administrative staff.
<R> | ||
| ||
Name, Address1 , Year of | Length of Service with | Principal Occupation(s) During Past 5 Years and |
Birth, Position(s) Held with | the Putnam Funds2 | Position(s) with Funds Investment Adviser and |
Fund | Distributor3 | |
| ||
Jonathan S. Horwitz4 | Since 2004 | Senior Vice President and Treasurer, The Putnam |
(Born 1955), Executive Vice | Funds. | |
President, Principal Executive | ||
Officer, Treasurer and | ||
Compliance Liaison | ||
| ||
Steven D. Krichmar | Since 2002 | Senior Managing Director, Putnam Investments and |
(Born 1958), Vice President | Putnam Management. | |
and Principal Financial Officer | ||
| ||
Janet C. Smith | Since 2007 | Managing Director, Putnam Investments and |
(Born 1965), Vice President, | Putnam Management. | |
Assistant Treasurer and | ||
Principal Accounting Officer | ||
| ||
Beth S. Mazor | Since 2002 | Managing Director, Putnam Investments and |
(Born 1958), Vice President | Putnam Management. | |
| ||
Robert R. Leveille | Since 2007 | Managing Director, Putnam Investments, Putnam |
(Born 1969), Vice President | Management and Putnam Retail Management | |
and Chief Compliance Officer | ||
| ||
Mark C. Trenchard | Since 2002 | Managing Director, Putnam Investments, Putnam |
(Born 1962), Vice President | Retail Management | |
and BSA Compliance Officer | ||
| ||
Francis J. McNamara, III | Since 2004 | Senior Managing Director, Putnam Investments and |
(Born 1955), Vice President | Putnam Management. | |
and Chief Legal Officer | ||
| ||
James P. Pappas | Since 2004 | Managing Director, Putnam Investments and |
(Born 1953), Vice President | Putnam Management. | |
| ||
Judith Cohen4 | Since 1993 | Vice President, Clerk and Assistant Treasurer, The |
(Born 1945), Vice President, | Putnam Funds. | |
Clerk and Assistant Treasurer | ||
| ||
Michael Higgins | Since 2010 | Manager of Finance, Dunkin Brands (2008-2010); |
(Born 1976), Vice President, | Senior Financial Analyst, Old Mutual Asset | |
Senior Associate Treasurer, | Management (2007-2008); Senior Financial Analyst, | |
Assistant Clerk | Putnam Investments (1999-2007). | |
| ||
Nancy E. Florek4 | Since 2000 | Vice President, Assistant Clerk, Assistant Treasurer |
(Born 1957), Vice President, | and Proxy Manager, The Putnam Funds. | |
Assistant Clerk, Assistant | ||
Treasurer and Proxy Manager | ||
| ||
Susan G. Malloy | Since 2007 | Managing Director, Putnam Management. |
(Born 1957),Vice President | ||
and Assistant Treasurer | ||
| ||
</R> |
1
II-72 |
3Prior positions and/or officer appointments with the fund or the funds investment adviser and distributor have been omitted.
4Officers of the fund who are members of the Trustees independent administrative staff. Compensation for these individuals is fixed by the Trustees and reimbursed to Putnam Management.
Except as stated above, 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.
Leadership Structure and Standing Committees of the Board of Trustees
For details regarding the number of times the standing committees of the Board of Trustees met during a funds last fiscal year, see "Trustee responsibilities and fees" in Part I of this SAI.
Board Leadership Structure. Currently, 13 of the 14 Trustees of your fund are Independent Trustees, meaning that they are not considered "interested persons" of your fund or its investment manager. These Independent Trustees must vote separately to approve all financial arrangements and other agreements with your funds investment manager and other affiliated parties. The role of the Independent Trustees has been characterized as that of a watchdog charged with oversight to protect shareholders interests against overreaching and abuse by those who are in a position to control or influence a fund. Your funds Independent Trustees meet regularly as a group in executive session. Independent Trustees currently serve as chair and vice-chair of the Board.
Taking into account the number, the diversity and the complexity of the funds overseen by the Board and the aggregate amount of assets under management, your funds Trustees have determined that the efficient conduct of the Boards affairs makes it desirable to delegate responsibility for certain specific matters to committees of the Board. Certain committees (the Executive Committee, Distributions Committee, and Audit and Compliance Committee) are authorized to act for the Trustees as specified in their charters. The other committees review and evaluate matters specified in their charters and make recommendations to the Trustees as they deem appropriate. Each committee may utilize the resources of your funds independent staff, counsel and auditors as well as other experts. The committees meet as often as necessary, either in conjunction with regular meetings of the Trustees or otherwise. The membership and chair of each committee are a ppointed by the Trustees upon recommendation of the Board Policy and Nominating Committee. Each Committee is chaired by an Independent Trustee and, except as noted below, the membership and chairs of each committee consist exclusively of Independent Trustees.
The Trustees have determined that this committee structure also allows the Board to focus more effectively on the oversight of risk as part of its broader oversight of the funds affairs. While risk management is the primary responsibility of the funds investment manager, the Trustees regularly receive reports regarding investment risks and compliance risks. The Boards committee structure allows separate committees to focus on different aspects of these risks and their potential impact on some or all of the funds and to discuss with the funds investment manager how it monitors and controls such risks.
II-73 |
Audit and Compliance Committee. The Audit and Compliance Committee provides oversight on matters relating to the preparation of the funds financial statements, compliance matters, internal audit functions, and Codes of Ethics issues. This oversight is discharged by regularly meeting with management and the funds independent auditors and keeping current on industry developments. Duties of this Committee also include the review and evaluation of all matters and relationships pertaining to the funds independent auditors, including their independence. The members of the Committee include only Trustees who are not interested persons of the funds or Putnam Management. Each member of the Committee also is independent, as that term is interpreted for purposes of Rule 10A-3(b)(1) of the Securities Exchange Act of 1934, as amended (the Exchange Act) and the listing s tandards of the New York Stock Exchange. The Board of Trustees has adopted a written charter for the Committee. The Committee currently consists of Messrs. Patterson (Chairperson), Darretta, Hill and Leibler, and Mses. Baumann and Drucker.
Board Policy and Nominating Committee. The Board Policy and Nominating Committee reviews matters pertaining to the operations of the Board of Trustees and its Committees, the compensation of the Trustees and their staff, and the conduct of legal affairs for the funds. The Committee evaluates and recommends all candidates for election as Trustees and recommends the appointment of members and chairs of each board committee. The Committee will consider nominees for Trustee recommended by shareholders of a fund provided that such recommendations are submitted by the date disclosed in the funds proxy statement and otherwise comply with applicable securities laws, including Rule 14a-8 under the Exchange Act. The Committee also reviews policy matters affecting the operation of the Board and its independent staff. In addition, the Committee oversees the voting of proxies associated with portfolio investments of the funds with the goal of ensuring that these proxies are voted in the best interest of the funds shareholders. The Committee reports to the Trustees and makes recommendations to the Trustees regarding these matters. The Committee generally believes that the Board benefits from diversity of background, experience and views among its members, and considers this as a factor in evaluating the composition of the Board, but has not adopted any specific policy in this regard. The Committee is composed entirely of Trustees who are not interested persons of the funds or Putnam Management and currently consists of Messrs. Hill (Chairperson), Patterson, Putnam and Worley, and Ms. Baxter.
Brokerage Committee. The Brokerage Committee reviews the funds policies regarding the execution of portfolio trades and Putnam Managements practices and procedures relating to the implementation of those policies. The Committee reviews periodic reports on the cost and quality of execution of portfolio transactions and the extent to which brokerage commissions have been used (i) by Putnam Management to obtain brokerage and research services generally useful to it in managing the portfolios of the funds and of its other clients, and (ii) by the funds to pay for certain fund expenses. The Committee reports to the Trustees and makes recommendations to the Trustees regarding these matters. The Committee currently consists of Dr. Joskow (Chairperson), Ms. Baxter, and Messrs. Akhoury, Curtis, Putnam, Stephens and Worley.
Contract Committee. The Contract Committee reviews and evaluates at least annually all arrangements pertaining to (i) the engagement of Putnam Management and its affiliates to provide services to the funds, (ii) the expenditure of the funds assets for distribution purposes pursuant to Distribution Plans of the funds, and (iii) the engagement of other persons to provide material services to the funds, including in particular those instances where the cost of services is shared between the funds and Putnam Management and its affiliates or where Putnam Management or its affiliates have a material interest. The Committee also reviews the proposed organization of new fund products, proposed structural changes to existing funds and matters relating to closed-end funds. The Committee reports and makes recommendations to the Trustees regarding these matters. The Committee currently consists of Ms. Baxter (Chairp erson), Dr. Joskow, and Messrs. Akhoury, Curtis, Putnam, Stephens and Worley.
Distributions Committee. The Distributions Committee oversees all dividends and distributions by the funds. The Committee makes recommendations to the Trustees of the funds regarding the amount and timing of distributions paid by the funds, and determines such matters when the Trustees are not in session. The Committee also oversees the policies and procedures pursuant to which Putnam Management prepares
II-74 |
recommendations for distributions, and meets regularly with representatives of Putnam Management to review the implementation of these policies and procedures. The Committee reports to the Trustees and makes recommendations to the Trustees regarding these matters. The Committee currently consists of Ms. Drucker (Chairperson), Ms. Baumann, and Messrs. Darretta, Hill, Leibler and Patterson.
Executive Committee. The functions of the Executive Committee are twofold. The first is to ensure that the funds business may be conducted at times when it is not feasible to convene a meeting of the Trustees or for the Trustees to act by written consent. The Committee may exercise any or all of the power and authority of the Trustees when the Trustees are not in session. The second is to establish annual and ongoing goals, objectives and priorities for the Board of Trustees and to ensure coordination of all efforts between the Trustees and Putnam Management on behalf of the shareholders of the funds. The Committee currently consists of Messrs. Hill (Chairperson), Patterson, Putnam and Worley, and Ms. Baxter.
Investment Oversight Committees. The Investment Oversight Committees regularly meet with investment personnel of Putnam Management to review the investment performance and strategies of the funds in light of their stated investment objectives and policies. The Committees seek to identify any compliance issues that are unique to the applicable categories of funds and work with the appropriate Board committees to ensure that any such issues are properly addressed. Investment Oversight Committee A currently consists of Messrs. Putnam (Chairperson), Akhoury, Darretta, Hill, Patterson and Reynolds, and Mses. Baxter and Drucker. Investment Oversight Committee B currently consists of Messrs. Worley (Chairperson), Curtis, Leibler and Stephens, Dr. Joskow, and Ms. Baumann.
Pricing Committee. The Pricing Committee oversees the valuation of assets of the Putnam funds and reviews the funds policies and procedures for achieving accurate and timely pricing of fund shares. The Committee also oversees implementation of these policies, including fair value determinations of individual securities made by Putnam Management or other designated agents of the funds. The Committee also oversees compliance by money market funds with Rule 2a-7 and the correction of occasional pricing errors. The Committee also reviews matters related to the liquidity of portfolio holdings. The Committee reports to the Trustees and makes recommendations to the Trustees regarding these matters. The Committee currently consists of Messrs. Leibler (Chairperson), Darretta, Hill and Patterson, and Mses. Baumann and Drucker.
Indemnification of Trustees
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.
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.
Putnam Management and its affiliates
Putnam Management is one of Americas oldest and largest money management firms. Putnam Managements staff of experienced portfolio managers and research analysts selects securities and constantly supervises the funds portfolio. By pooling an investors 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.
II-75 |
Putnam Management is a subsidiary of Putnam Investments, of which a majority is owned through a series of subsidiaries by Great-West Lifeco Inc., which is a financial services holding company with operations in Canada, the United States and Europe and is a member of the Power Financial Corporation group of companies. Power Financial Corporation, a global company with interests in the financial services industry, is a subsidiary of Power Corporation of Canada, a financial, industrial, and communications holding company, of which the Honorable Paul Desmarais, Sr., through a group of private holding companies which he controls, has voting control.
Trustees and officers of the fund who are also officers of Putnam Management or its affiliates or who are stockholders of Putnam Investments or its parent companies will benefit from the advisory fees, sales commissions, distribution 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 funds net asset value, but excluding shareholder accounting services) and places all orders for the purchase and sale of the funds portfolio securities. Putnam Management may place fund portfolio transactions with broker-dealers that 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 d oing, Putnam Management may cause the fund to pay greater brokerage commissions than it might otherwise pay.
For details of Putnam Managements compensation under the Management Contract, see Charges and expenses in Part I of this SAI. Putnam Managements compensation under the Management Contract may be reduced in any year if the funds 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.
Fund-specific expense limitation. Under the Management Contract, Putnam Management may reduce its compensation to the extent that the funds expenses exceed such lower expense limitation as Putnam Management may, by notice to the fund, declare to be effective. For the purpose of determining any such limitation on Putnam Managements 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 such expense limitation specific to a particular fund are described in the prospectus and/or Part I of this SAI.
General expense limitation. Through at least June 30, 2011, Putnam Management will reimburse expenses or waive fees of the fund to the extent necessary to limit the cumulative expenses of the fund, exclusive of brokerage, interest, taxes, investment-related expenses, extraordinary expenses and payments under the funds investor servicing contract, investment management contract and distribution plans, on a fiscal year-to-date basis (or from August 1, 2009 through the funds next fiscal year end, as applicable), to an annual rate of 0.20% of the funds average net assets over such fiscal year-to-date period.
Lipper category expense limitation. Prior to August 1, 2009, Putnam Management waived fees (and, to the extent necessary, bore other expenses of the fund) to ensure that the fund paid total fund operating expenses at an annual rate that did not exceed the simple average of the expenses of all front-end load funds viewed by Lipper Inc. as having the same investment classification or objective as the fund (expressed in each case as a percentage of average net assets).
II-76 |
Custom Lipper expense limitation. Prior to August 1, 2009, Putnam Management waived fees (and, to the extent necessary, bore other expenses) of certain funds to ensure that the fund paid total fund operating expenses at an annual rate that did not exceed the simple average of the expenses of a custom group of competitive funds selected by Lipper Inc. based on the size of the fund.
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 funds 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 Retail Management 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 1940 Act.
Effective January 1, 2007, Putnam Management has entered into a Master Sub-Accounting Services Agreement with State Street Bank and Trust Company ("State Street"), under which Putnam Management has delegated to State Street responsibility for providing certain administrative, pricing, and bookkeeping services for the fund. Putnam Management pays State Street a fee, monthly, based on a combination of fixed annual charges and charges based on the funds assets and the number and types of securities held by the fund, and reimburses State Street for certain out-of-pocket expenses.
The Sub-Manager
If so disclosed in the funds prospectus, PIL, an affiliate of Putnam Management, has been retained as the sub-manager for a portion of the assets of the fund, as determined by Putnam Management from time to time, pursuant to a sub-management agreement between Putnam Management and PIL. Under the terms of the sub-management contract, PIL, at its own expense, furnishes continuously an investment program for that portion of each such fund that is allocated to PIL from time to time by Putnam Management and makes investment decisions on behalf of such portion of the fund, subject to the supervision of Putnam Management. Putnam Management may also, at its discretion, request PIL to provide assistance with purchasing and selling securities for the fund, including placement of orders with certain broker-dealers. PIL, at its expense, furnishes all necessary investment and management facilities, including salaries of personnel, required for it to execute i ts duties.
II-77 |
The sub-management contract provides that PIL shall not be subject to any liability to Putnam Management, the fund or 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 obligations and duties on the part of PIL.
The sub-management contract may be terminated with respect to a fund without penalty by vote of the Trustees or the shareholders of the fund, or by PIL or Putnam Management, on 30 days written notice. The sub-management contract also terminates without payment of any penalty in the event of its assignment. Subject to applicable law, it may be amended by a majority of the Trustees who are not interested persons of Putnam Management or the fund. The sub-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 1940 Act.
The Sub-Adviser
If so disclosed in the funds prospectus, The Putnam Advisory Company, LLC (PAC), an affiliate of Putnam Management, has been retained as a sub-adviser for a portion of the assets of the fund, as determined from time to time by Putnam Management or, with respect to portions of a funds assets for which PIL acts as sub-manager as described above, PIL pursuant to a sub-advisory agreement among Putnam Management, PIL and PAC. Under certain terms of the sub-advisory contract, PAC, at its own expense, furnishes continuously an investment program for that portion of each such fund that is allocated to PAC from time to time by Putnam Management or PIL, as applicable and makes investment decisions on behalf of such portion of the fund, subject to the supervision of Putnam Management or PIL, as the case may be. Putnam Management or PIL, as the case may be, may also, at its discretion, request PAC to provide assistance with purchasing and s elling securities for the fund, including placement of orders with certain broker-dealers.
PAC, at its expense, furnishes all necessary investment and management facilities, including salaries of personnel, required for it to execute its duties. The sub-advisory contract provides that PAC shall not be subject to any liability to Putnam Management, PIL, the fund or 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 obligations and duties on the part of PAC.
The sub-advisory contract may be terminated with respect to a fund without penalty by vote of the Trustees or the shareholders of the fund, or by PAC, PIL or Putnam Management, on 30 days written notice. The sub-advisory contract also terminates without payment of any penalty in the event of its assignment. Subject to applicable law, it may be amended by a majority of the Trustees who are not interested persons of Putnam Management or the fund. The sub-advisory 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 1940 Act.
Portfolio Transactions
Potential conflicts of interest in managing multiple accounts. Like other investment professionals with multiple clients, the funds Portfolio Manager(s) may face certain potential conflicts of interest in connection with managing both the fund and the other accounts listed under PORTFOLIO MANAGERS Other accounts managed at the same time. The paragraphs below describe some of these potential conflicts, which Putnam Management believes are faced by investment professionals at most major financial firms. As described below, Putnam Management and the Trustees of the Putnam funds have adopted compliance policies and procedures that attempt to address certain of these potential conflicts.
II-78 |
The management of accounts with different advisory fee rates and/or fee structures, including accounts that pay advisory fees based on account performance (performance fee accounts), may raise potential conflicts of interest by creating an incentive to favor higher-fee accounts. These potential conflicts may include, among others:
The most attractive investments could be allocated to higher-fee accounts or performance fee accounts.
The trading of higher-fee accounts could be favored as to timing and/or execution price. For example, higher-fee accounts could be permitted to sell securities earlier than other accounts when a prompt sale is desirable or to buy securities at an earlier and more opportune time.
The trading of other accounts could be used to benefit higher-fee accounts (front- running).
The investment management team could focus their time and efforts primarily on higher-fee accounts due to a personal stake in compensation.
Putnam Management attempts to address these potential conflicts of interest relating to higher-fee accounts through various compliance policies that are generally intended to place all accounts, regardless of fee structure, on the same footing for investment management purposes. For example, under Putnam Managements policies:
Performance fee accounts must be included in all standard trading and allocation procedures with all other accounts.
All accounts must be allocated to a specific category of account and trade in parallel with allocations of similar accounts based on the procedures generally applicable to all accounts in those groups (e.g., based on relative risk budgets of accounts).
All trading must be effected through Putnams trading desks and normal queues and procedures must be followed (i.e., no special treatment is permitted for performance fee accounts or higher-fee accounts based on account fee structure).
Front running is strictly prohibited.
The funds Portfolio Manager(s) may not be guaranteed or specifically allocated any portion of a performance fee.
As part of these policies, Putnam Management has also implemented trade oversight and review procedures in order to monitor whether particular accounts (including higher-fee accounts or performance fee accounts) are being favored over time.
Potential conflicts of interest may also arise when the Portfolio Manager(s) have personal investments in other accounts that may create an incentive to favor those accounts. As a general matter and subject to limited exceptions, Putnam Managements investment professionals do not have the opportunity to invest in client accounts, other than the Putnam funds. However, in the ordinary course of business, Putnam Management or related persons may from time to time establish pilot or incubator funds for the purpose of testing proposed investment strategies and products prior to offering them to clients. These pilot accounts may be in the form of registered investment companies, private funds such as partnerships or separate accounts established by Putnam Management or an affiliate. Putnam Management or an affiliate supplies the funding for these accounts. Putnam employees, including the funds Portfolio Manager(s), may als o invest in certain pilot accounts. Putnam Management, and to the extent applicable, the Portfolio Manager(s) will benefit from the favorable investment performance of those funds and accounts. Pilot funds and accounts may, and frequently do, invest in the same securities as the client accounts. Putnam Managements policy is to treat pilot accounts in the same manner as client accounts for purposes of trading allocation neither favoring nor disfavoring them except as is legally required. For example, pilot accounts are normally included in Putnam Managements daily block trades to the same extent as client accounts (except that pilot accounts do not participate in initial public offerings).
II-79 |
A potential conflict of interest may arise when the fund and other accounts purchase or sell the same securities. On occasions when the Portfolio Manager(s) consider the purchase or sale of a security to be in the best interests of the fund as well as other accounts, Putnam Managements trading desk may, to the extent permitted by applicable laws and regulations, aggregate the securities to be sold or purchased in order to obtain the best execution and lower brokerage commissions, if any. Aggregation of trades may create the potential for unfairness to the fund or another account if one account is favored over another in allocating the securities purchased or sold for example, by allocating a disproportionate amount of a security that is likely to increase in value to a favored account. Putnam Managements trade allocation policies generally provide that each days transactions in securities that are purchased or sold by multiple accounts are, insofar as possible, averaged as to price and allocated between such accounts (including the fund) in a manner which in Putnam Managements opinion is equitable to each account and in accordance with the amount being purchased or sold by each account. Certain exceptions exist for specialty, regional or sector accounts. Trade allocations are reviewed on a periodic basis as part of Putnam Managements trade oversight procedures in an attempt to ensure fairness over time across accounts.
Cross trades, in which one Putnam account sells a particular security to another account (potentially saving transaction costs for both accounts), may also pose a potential conflict of interest. Cross trades may be seen to involve a potential conflict of interest if, for example, one account is permitted to sell a security to another account at a higher price than an independent third party would pay, or if such trades result in more attractive investments being allocated to higher-fee accounts. Putnam Management and the funds Trustees have adopted compliance procedures that provide that any transactions between the fund and another Putnam-advised account are to be made at an independent current market price, as required by law.
Another potential conflict of interest may arise based on the different investment objectives and strategies of the fund and other accounts. For example, another account may have a shorter-term investment horizon or different investment objectives, policies or restrictions than the fund. Depending on another accounts objectives or other factors, the Portfolio Manager(s) may give advice and make decisions that may differ from advice given, or the timing or nature of decisions made, with respect to the fund. In addition, investment decisions are the product of many factors in addition to basic suitability for the particular account involved. Thus, a particular security may be bought or sold for certain accounts even though it could have been bought or sold for other accounts at the same time. More rarely, a particular security may be bought for one or more accounts managed by the Portfolio Manager(s) when one or more other accounts are selling the security (including short sales). There may be circumstances when purchases or sales of portfolio securities for one or more accounts may have an adverse effect on other accounts. As noted above, Putnam Management has implemented trade oversight and review procedures to monitor whether any account is systematically favored over time.
The funds Portfolio Manager(s) may also face other potential conflicts of interest in managing the fund, and the description above is not a complete description of every conflict that could be deemed to exist in managing both the fund and other accounts. For information on restrictions imposed on personal securities transactions of the funds Portfolio Manager(s), please see - Personal Investments by Employees of Putnam Management and Putnam Retail Management and Officers and Trustees of the Fund.
For information about other funds and accounts managed by the funds Portfolio Manager(s), please refer to Who oversees and manages the fund(s)? in the prospectus and PORTFOLIO MANAGERS Other accounts managed in Part I of the SAI.
Brokerage and research services.
II-80 |
Transactions on stock exchanges, commodities markets and futures markets and other agency transactions involve the payment by the fund of negotiated brokerage commissions. Such commissions may vary among different brokers. A particular broker may charge different commissions according to such factors as execution venue and exchange. Although the fund does not typically pay commissions for principal transactions in the over-the-counter markets, such as the markets for most fixed income securities and certain derivatives, an undisclosed amount of profit or mark-up is included in the price the fund pays. In underwritten offerings, the price paid by the fund includes a disclosed, fixed commission or discount retained by the underwriter or dealer.
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 broker-dealers that execute portfolio transactions for the clients of advisers of investment companies and other institutional investors to provide those advisers with brokerage and research services, as defined in Section 28(e) of the Exchange Act. Consistent with this practice, Putnam Management receives brokerage and research services from broker-dealers with which Putnam Management places the funds portfolio transactions. The services that broker-dealers may provide to Putnam Managements managers and analysts include, among others, brokerage and trading systems, economic analysis, investment research, industry and company reviews, statistical information, market data, evaluations of investments, recommendations as to the purchase and sale of investments and performance measurement services. Some of these services are of value to Putnam Management and it s 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. Research services provided by broker-dealers are supplemental to Putnam Managements own research efforts and relieve Putnam Management of expenses it might otherwise have borne in generating such research. The management fee paid by the fund is not reduced because Putnam Management and its affiliates receive brokerage and research services even though Putnam Management might otherwise be required to purchase some of these services for cash. Putnam Management may also use portfolio transactions to generate soft dollar credits to pay for mixed-use services (i.e., products or services that may be used both for investment- and non-investment-related purposes), but in such instances Putnam Management uses its own resources to pay for that porti on of the mixed-use product or service that in its good-faith judgment does not relate to investment or brokerage purposes. Putnam Management may also allocate trades to generate soft dollar credits for third-party investment research reports and related fundamental research.
Putnam Management places all orders for the purchase and sale of portfolio investments for the funds, and buys and sells investments for the funds, through a substantial number of brokers and dealers. In selecting broker-dealers to execute the funds portfolio transactions, Putnam Management uses its best efforts to obtain for each fund the most favorable price and execution reasonably available under the circumstances, except to the extent it may be permitted to pay higher brokerage commissions as described below. In seeking the most favorable price and execution and in considering the overall reasonableness of the brokerage commissions paid, Putnam Management, having in mind the funds best interests, considers all factors it deems relevant, including, in no particular order of importance, and by way of illustration, price, the size and type 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.
Putnam Management may cause the fund to pay a broker-dealer that provides "brokerage and research services" (as defined in the Exchange Act and as described above) 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 another broker-dealer would have charged for effecting that transaction. Putnam Management may also instruct an executing broker to step out a portion of the trades placed with a broker to other brokers that provide brokerage and research services to Putnam Management. Putnam Managements authority to cause the fund to pay any such greater commissions or to instruct a broker to step out a portion of a trade is subject to the requirements of applicable law and such
II-81 |
policies as the Trustees may adopt from time to time. It is the position of the staff of the Securities and Exchange Commission that Section 28(e) of the Exchange Act 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 Trustees of the funds have directed Putnam, subject to seeking most favorable pricing and execution, to use its best efforts to allocate a portion of overall fund trades to trading programs which generate commission credits to pay fund expenses such as shareholder servicing and custody charges. The extent of any commission credits generated for this purpose may vary significantly from time to time and from fund to fund depending on, among other things, the nature of each funds trading activities and market conditions.
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 funds portfolio securities in tender or exchange offers. Any such fees which may be recaptured are likely to be minor in amount.
Principal Underwriter
Putnam Retail Management, located at One Post Office Square, Boston, MA. 02109, is the principal underwriter of shares of the fund and the other continuously offered Putnam funds. Putnam Retail Management 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 Retail Management.
Personal Investments by Employees of Putnam Management and Putnam Retail Management and Officers and Trustees of the Fund
Employees of Putnam Management, PIL, PAC and Putnam Retail Management 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, PIL, PAC and Putnam Retail Management (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 1940 Act, 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 of Ethics, consistent with standards recommended by the Investment Company Institutes Advisory Group on Personal Investing and requirements established by Rule 17j-1 and rules adopted under the Investment Advisers Act of 1940, 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 the Putnam Investments Code of Ethics to officers and Trustees of the fund who are affiliated with Putnam Investments. The Putnam Funds Code of Ethics does not prohibit unaffiliated officers and Trustees from investing in securities that may be held by the fund; however, the Putnam Funds Code of Ethics 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 reports of personal securities transactions under certain circumstances.
II-82 |
The funds Trustees, in compliance with Rule 17j-1, approved the 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
Putnam Investor Services, Inc., located at One Post Office Square, Boston, MA 02109, is the funds investor servicing agent (transfer, plan and dividend disbursing agent), for which it receives fees that are paid monthly by the fund as an expense of all its shareholders. The fee paid to Putnam Investor Services, subject to certain limitations, is based on a funds retail asset level, the number of shareholder accounts in the fund and the level of defined contribution plan assets in the fund. Through at least June 30, 2011, investor servicing fees for the fund will not exceed an annual rate of 0.375% of the funds average assets.
Certain dealers also receive payments from Putnam Investor Services in recognition of services they provide to shareholders who invest in the fund or other Putnam funds through an omnibus account or to retirement plan participants who invest in the fund or other Putnam funds through their retirement plans. These services include sub-accounting and similar recordkeeping services. For purposes of this section the term dealers includes any broker, dealer, bank, bank trust department, registered investment adviser, financial planner, retirement plan administrator and any other institution having a selling, services or any similar agreement with Putnam Retail Management or one of its affiliates. Payments by Putnam Investor Services to dealers for sub-accounting services provided to participants in retirement plans and to shareholders who invest in the funds through an omnibus account may be determined on the basis of (i) the number of retirement plan participants that invest in the fund through such plans or the number of shareholders in such omnibus account, as applicable, or (ii) the assets of such plan invested in the funds or the assets held in such account, as applicable. Such payments are not expected to exceed (i) $16 or $19 (generally depending on whether the shares in which the retirement plan participant or shareholder invests are subject to a contingent deferred sales charge) per plan participant or shareholder for those payments determined on the basis of the number of retirement plan participants or shareholders or (ii) 0.10% or 0.13% (generally depending on whether the shares in which the retirement plan participant or shareholder invests are subject to a contingent deferred sales charge) of the total assets of such plan or in such account invested in the funds on an annual basis for those payments determined on the basis of assets held. Putnam Investor Services also makes payments to dealers that charge networking fees for certain se rvices provided in connection with the maintenance of shareholder accounts. The payments described in this paragraph are not expected to exceed 0.13% of the total assets of such shareholders or plan participants in the funds on an annual basis, except for payments to dealers for sub-accounting services that are based on the number of plan participants or shareholders where the average account size for that dealer causes the payment to exceed 0.13% of the total assets of such plan participants or shareholders in the funds on an annual basis. In addition, as described in the following paragraph, the payments to FASCore, LLC for sub-accounting, recordkeeping, retirement plan administration and other services are expected to exceed 0.13% of the total assets of plan participants or shareholders in the funds on an annual basis.
Putnam Investor Services will pay its affiliate, FASCore, LLC up to 0.24% on the average value of the assets in Putnam-administered plans invested in the funds on an annual basis in consideration of sub-accounting, recordkeeping, retirement plan administration and other services being provided to participants in Putnam-administered retirement plans with respect to their investments in the funds. In addition to these payments, affiliates of Putnam Investor Services may make payments to FASCore, LLC and its affiliates of the types, and up to the amounts, described below under the headings Distribution Plans" Additional Dealer Payments.
Custodian
II-83 |
State Street Bank and Trust Company, located at 2 Avenue de Lafayette, Boston, Massachusetts 02111, is the funds custodian. State Street is responsible for safeguarding and controlling the funds cash and securities, handling the receipt and delivery of securities, collecting interest and dividends on the funds investments, serving as the funds foreign custody manager, providing reports on foreign securities depositaries, making payments covering the expenses of the fund and performing other administrative duties. State Street does not determine the investment policies of the fund or decide which securities the fund will buy or sell. State Street has a lien on the funds assets to secure charges and advances made by it. The fund may from time to time enter into brokerage arrangements that reduce or recapture fund expenses, including custody expenses. The fund also has an offset arrangement that may reduce the funds cus tody fee based on the amount of cash maintained by its custodian.
Counsel to the Fund and the Independent Trustees
<R>
Ropes & Gray LLP serves as counsel to the fund and the independent Trustees, and is located at Prudential Tower 800 Boylston Street, Boston, Massachusetts 02110.
</R>
DETERMINATION OF NET ASSET VALUE
The fund determines the net asset value per share of each class of shares once each day the Exchange is open. Currently, the Exchange is closed Saturdays, Sundays and the following holidays: New Years Day, Rev. Dr. Martin Luther King, Jr. Day, Presidents Day, Good Friday, Memorial Day, the Fourth of July, Labor Day, Thanksgiving Day and Christmas Day. The fund determines net asset value as of the close of regular trading on the Exchange, normally 4:00 p.m. Eastern time. The net asset value per share of each class equals the total value of its assets, less its liabilities, divided by the number of its outstanding shares.
Assets of money market funds are valued at amortized cost pursuant to Rule 2a-7 of the 1940 Act. For other funds, securities and other assets (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, prices for these Securities are determined using the last reported sale price (or official closing price for Securities listed on certain markets) 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 ask prices. All other Securities are valued by Putnam Management or other parties at their fair value following procedures approved by the Trustees.
Reliable market quotations are not considered to be readily available for, among other Securities, long-term corporate bonds and notes, certain preferred stocks, tax-exempt securities, and certain foreign securities. These investments are valued at fair value, generally on the basis of valuations furnished by approved 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 that are generally recognized by institutional traders. Other Securities, such as various types of options, are valued at fair value on the basis of valuations furnished by broker-dealers or other market intermediaries.
II-84 |
Putnam Management values all other Securities at fair value using its internal resources. 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. In the case of Securities that are restricted as to resale, Putnam Management determines fair value based on the inherent w orth of the Security without regard to the restrictive feature, adjusted for any diminution in value resulting from the restrictive feature.
Generally, trading in certain Securities (such as foreign securities) is substantially completed each day at various times before the close of the Exchange. The closing prices for these Securities in markets or on exchanges outside the U.S. that close before the close of the Exchange may not fully reflect events that occur after such close but before the close of the Exchange. As a result, the fund has adopted fair value pricing procedures, which, among other things, require the fund to fair value foreign equity securities if there has been a movement in the U.S. market that exceeds a specified threshold. Although the threshold may be revised from time to time and the number of days on which fair value prices will be used will vary, it is possible that fair value prices will be used by the fund to a significant extent. In addition, Securities held by some of the funds may be traded in foreign markets that are open for business on days that the fund is not, and the trading of such Securities on those days may have an impact on the value of a shareholders investment at a time when the shareholder cannot buy and sell shares of the fund.
Currency exchange rates used in valuing Securities are normally determined as of 3:00 p.m. Eastern time. Occasionally, events affecting such exchange rates may occur between the time of the determination of exchange rates and the close of the Exchange, which, in the absence of fair valuation, would not be reflected in the computation of the funds net asset value. If events materially affecting the currency exchange rates occur during such period, then the exchange rates used in valuing affected Securities will be valued by Putnam Management at their fair value following procedures approved by the Trustees.
In addition, 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 before the close of the Exchange. Occasionally, events affecting the value of such Securities may occur between the time of the determination of value and the close of the Exchange, which, in the absence of fair value prices, would not be reflected in the computation of the funds net asset value. If events materially affecting the value of such Securities occur during such period, then these Securities will be valued by Putnam Management at their fair value following procedures approved by the Trustees. It is expected that any such instance would be very rare.
The fair value of Securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such Securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a Security at a given point in time and does not reflect an actual market price.
The fund may also value its Securities at fair value under other circumstances pursuant to procedures approved by the Trustees.
Money Market Funds
Money market funds generally value their portfolio securities at amortized cost according to Rule 2a-7 under the 1940 Act.
II-85 |
Since the net income of a money market fund is declared as a dividend each time it is determined, the net asset value per share of a money market fund remains at $1.00 per share immediately after such determination and dividend declaration. Any increase in the value of a shareholders investment in a money market fund representing the reinvestment of dividend income is reflected by an increase in the number of shares of that fund in the shareholders account on the last business day of each month. It is expected that a money market funds net income will normally be positive each time it is determined. However, if because of realized losses on sales of portfolio investments, a sudden rise in interest rates, or for any other reason the net income of a fund determined at any time is a negative amount, a money market fund may offset such amount allocable to each then shareholders account from dividends accrued during the month with re spect to such account. If, at the time of payment of a dividend, such negative amount exceeds a shareholders accrued dividends, a money market fund may reduce the number of outstanding shares by treating the shareholder as having contributed to the capital of the fund that number of full and fractional shares which represent the amount of the excess. Each shareholder is deemed to have agreed to such contribution in these circumstances by his or her investment in a money market fund.
INVESTOR SERVICES
Shareholder Information
Each time shareholders buy or sell shares, a statement confirming the transaction and listing their current share balance will be made available for viewing electronically or delivered via mail. (Under certain investment plans, a statement may only be sent quarterly.) 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. To help shareholders take full advantage of their Putnam investment, publications covering many topics of interest to investors are available on our website or from Putnam Investor Services. Shareholders may call Putnam Investor Services toll-free weekdays at 1-800-225-1581 between 8:00 a.m. and 8:00 p.m., Eastern-time, for more information, including account balances. Shareholders can also visit the Putnam Web site at http://www.putnam.com.
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. 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, a shareholder may send checks to Putnam Investor Services, 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 shareholders agent whenever it receives instructions to carry out a transaction on the shareholders account. Upon receipt of instructions that shares are to be purchased for a shareholders 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 Retail Management.
II-86 |
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 or exchange fund shares?" in the prospectus. Putnam funds no longer issue share certificates. A shareholder may send to Putnam Investor Services any certificates which have been previously issued to enable more convenient maintenance of the account as a book-entry account.
Putnam Retail Management, 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 Retail Management, which may modify or terminate this service at any time.
The fund pays Putnam Investor Services fees for maintaining Investing Accounts.
Checkwriting Privilege. For those funds that allow shareholders, as disclosed in the prospectus, to redeem shares by check, Putnam is currently waiving the minimum per-check amount stated in the prospectus.
Reinstatement Privilege
An investor who has redeemed shares of the fund may reinvest within 90 days of such redemption the proceeds of such redemption in shares of the same class of the fund, or may reinvest within 90 days of such redemption 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 Retail Management 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. Reinstatements into class B, class C or class M shares may be permitted even if the resul ting purchase would otherwise be rejected for causing a shareholders investments in such class to exceed the applicable investment maximum. Shareholders will receive from Putnam Retail Management 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 in the aggregate up to $500,000 between accounts with identical registrations, provided that no certificates are outstanding for such shares. 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
II-87 |
available from Putnam Retail Management or investment dealers having sales contracts with Putnam Retail Management. 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 at 1-800-225-1581. 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. Exchanges from Putnam Money Market Fund or Putnam Tax Exempt Money Market Fund into another Putnam fund may be subject to an initial sales charge.
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 investors basis.
All exchanges are subject to applicable short-term trading fees and Putnams policies on excessive short-term trading, as set forth in the Funds Prospectus. In addition, trustees, sponsors and administrators of qualified plans that invest in the Fund may impose short-term trading fees whose terms may differ from those described in the Prospectus.
Same-Fund Exchange Privilege. Class A shareholders who are eligible to invest in Class Y shares are eligible to exchange their Class A shares for Class Y shares of the same fund, if offered in their state. No sales charges or other charges will apply to any such exchange. For federal income tax purposes, a same-fund exchange is not expected to result in the realization by the investor of a capital gain or loss.
Dividends PLUS
Shareholders may invest the funds 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 funds 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.
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 composed 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 Retail Management or Putnam Investor Services may modify or cease offering these plans at any time.
II-88 |
Systematic Withdrawal Plan ("SWP"). An investor who owns or buys shares of the fund valued at $5,000 or more at the current public offering price may open a SWP 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 fiducia ry, 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 cost of administering these plans for the benefit of those shareholders participating in th em is borne by the fund as an expense of all shareholders. The fund, Putnam Retail Management 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-favored 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), including simple IRAs, Roth IRAs, SEP IRAs; and Coverdell Education savings plans.
Forms and further information on these Plans are available from investment dealers or from Putnam Retail Management. In addition, specialized professional plan administration services are available on an optional basis; contact Putnam Investor Services at 1-866-207-7261.
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.
Automatic Rebalancing Arrangements. Putnam Retail Management or Putnam Investor Services may enter into arrangements with certain dealers which provide for automatic periodic rebalancing of shareholders accounts in Putnam funds. For more information about these arrangements, please contact Putnam Retail Management or Putnam Investor Services.
SIGNATURE GUARANTEES
Requests to redeem shares having a net asset value of $100,000 or more, or to transfer shares or make redemption 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 authorized and acceptable under and
II-89 |
conforms with Putnam Investor Services 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 Putnams 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 at 1-800-225-1581 for more information on Putnams signature guarantee and documentation requirements.
REDEMPTIONS
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 SEC 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.
In-kind redemptions. With the consent of a redeeming shareholder (or, with respect to certain funds as indicated in the prospectus, in Putnams discretion), the fund will consider satisfying all or a portion of a redemption request by distributing securities or other property in lieu of cash (in-kind redemptions). Any transaction costs or other expenses involved in liquidating securities received in an in-kind redemption will be borne by the redeeming investor. For information regarding procedures for in-kind redemptions, please contact Putnam Retail Management.
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 appears to be remote.
DISCLOSURE OF PORTFOLIO INFORMATION
The Trustees of the Putnam funds have adopted policies with respect to the disclosure of the funds portfolio holdings by the fund, Putnam Management, or their affiliates. These policies provide that information about the funds portfolio generally may not be released to any party prior to (i) the day after the posting of such information on the Putnam Investments website, (ii) the filing of the information with the SEC in a required filing, or (iii) the dissemination of such information to all shareholders simultaneously. Certain limited exceptions pursuant to the funds policies are described below. The Trustees will periodically receive reports from the funds Chief Compliance Officer regarding the operation of these policies and procedures, including any arrangements to make non-public disclosures of the funds portfolio information to third parties. Putnam Management and its affiliates are not permitted to receive compensa tion or other consideration in connection with disclosing information about the funds portfolio holdings to third parties.
Public Disclosures
II-90 |
The funds portfolio holdings are currently disclosed to the public through required filings with the SEC and voluntary postings on the Putnam Investments website. The fund files its portfolio holdings with the SEC for each fiscal quarter on Form N-CSR (with respect to each annual period and semi-annual period) and Form N-Q (with respect to the first and third quarters of the funds fiscal year). Shareholders may obtain the funds Form N-CSR and N-Q filings on the SECs website at http://www.sec.gov. In addition, the funds Form N-CSR and N-Q filings may be reviewed and copied at the SECs public reference room in Washington, D.C. You may call the SEC at 1-800-SEC-0330 for information about the SECs website or the operation of the public reference room.
Putnam Management also currently makes the funds portfolio information publicly available on the Putnam Investments website, www.putnam.com, as disclosed in the following table:
<R> | ||
| ||
Information(1) | Frequency of Disclosure | Date of Web Posting |
| ||
Full Portfolio Holdings | Quarterly | Last business day of the month |
following the end of each | ||
calendar quarter(2) | ||
| ||
Top 10 Portfolio Holdings and | Monthly | Approximately 15 days after the |
other portfolio statistics | end of each month | |
| ||
</R> |
(1) Putnam mutual funds that are not currently offered to the general public (incubated funds) do not post portfolio holdings on the Web. Full portfolio holdings for the Putnam RetirementReady® Funds, which invest solely in other Putnam funds, are posted on www.putnam.com approximately 15 days after the end of each month. Please see these funds prospectus for their target allocations.
(2) Money Market Funds make full quarterly holdings available on the Putnam website on or after the sixth business day after the end of each calendar quarter and may do so more frequently if determined by the Funds Chief Compliance Officer, but only to the extent it is in the best interest of the Money Market Funds shareholders.
The scope of the information relating to the funds portfolio that is made available on the website may change from time to time without notice. In addition, the posting of fund holdings may be delayed in some instances for technical reasons.
Putnam Management or its affiliates may include fund portfolio information that has already been made public through a Web posting or SEC filing in marketing literature and other communications to shareholders, advisors or other parties, provided that, in the case of information made public through the Web, the information is disclosed no earlier than the day after the date of posting to the website.
Other Disclosures
In order to address potential conflicts between the interest of fund shareholders, on the one hand, and those of Putnam Management, Putnam Retail Management or any affiliated person of those entities or of the fund, on the other hand, the funds policies require that non-public disclosures of information regarding the funds portfolio may be made only if there is a legitimate business purpose consistent with fiduciary duties to all shareholders of the fund. In addition, the party receiving the non-public information must sign a non-disclosure agreement unless otherwise approved by the Chief Compliance Officer of the fund. Arrangements to make non-public disclosures of the funds portfolio information must be approved by the Chief Compliance Officer of the fund. The Chief Compliance Officer will report on an ongoing basis to a committee of the funds Board of Trustees consisting only of Trustees who are not interested persons 148; of the fund or Putnam Management regarding any such arrangement that the fund may enter into with third parties other than service providers to the fund.
II-91 |
The fund periodically discloses its portfolio information on a confidential basis to various service providers that require such information in order to assist the fund with its day-to-day business affairs. In addition to Putnam Management and its affiliates, including PFTC and PRM, these service providers include the funds custodian (State Street Bank and Trust Company) and any sub-custodians, pricing services, independent registered public accounting firm, legal counsel (Ropes & Gray LLP), financial printer (McMunn Associates, Inc.), and proxy voting service (Glass, Lewis & Co). These service providers are required to keep such information confidential, and are prohibited from trading based on the information or otherwise using the information except as necessary in providing services to the fund.
The fund may also periodically provide non-public information about its portfolio holdings to rating and ranking organizations, such as Lipper Inc. and Morningstar Inc., in connection with those firms research on and classification of the fund and in order to gather information about how the funds attributes (such as volatility, turnover, and expenses) compare with those of peer funds. The fund may also periodically provide non-public information about its portfolio holdings to consultants that provide portfolio analysis services or other investment research. Any such rating, ranking, or consulting firm would be required to keep the funds portfolio information confidential and would be prohibited from trading based on the information or otherwise using the information except as necessary in providing services to the fund.
PROXY VOTING GUIDELINES AND PROCEDURES
The Trustees of the Putnam funds have established proxy voting guidelines and procedures that govern the voting of proxies for the securities held in the funds portfolios. The proxy voting guidelines summarize the funds positions on various issues of concern to investors, and provide direction to the proxy voting service used by the funds as to how fund portfolio securities should be voted on proposals dealing with particular issues. The proxy voting procedures explain the role of the Trustees, Putnam Management, the proxy voting service and the funds proxy manager in the proxy voting process, describe the procedures for referring matters involving investment considerations to the investment personnel of Putnam Management and describe the procedures for handling potential conflicts of interest. The Putnam funds proxy voting guidelines and procedures are included in this SAI as Appendix A. Information regarding how the funds vote d proxies relating to portfolio securities during the 12-month period ended June 30, 2008 is available on the Putnam Individual Investor website, www.putnam.com/individual, and on the SECs website at www.sec.gov. If you have questions about finding forms on the SECs website, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds proxy voting guidelines and procedures by calling Putnams Shareholder Services at 1-800-225-1581.
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 may 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:
Moodys 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.
II-92 |
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
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
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.
II-93 |
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 & Poors
Bonds
AAA - An obligation rated AAA has the highest rating assigned by Standard & Poors. The obligors 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 obligors 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 obligors 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 obligors 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 obligors 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 & Poors 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.
II-94 |
Notes
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
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.
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 obligors 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 obligors 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 obligors 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 obligors 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 obligors 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.
II-95 |
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.
CLAIMS-PAYING ABILITY RATINGS
The fund may invest in securities insured at the time of purchase as to the payment of principal and interest in the event of default. The fund may buy investments insured by (or insurance from) insurance companies whose claims-paying ability is rated by rating agencies.
An insurance claims-paying ability rating does not constitute an opinion on any specific contract. Furthermore, an insurance claims-paying ability rating does not take in account deductibles, surrender or cancellation penalties or the timeliness of payment; nor does it address the ability of a company to meet non-policy obligations (i.e., debt contracts).
The assignment of ratings to debt issues that are fully or partially supported by insurance policies, contracts, or guarantees is a separate process from the determination of claims-paying ability ratings. The likelihood of a timely flow of funds from the insurer to the trustee for the bondholders is a key element in the rating determination of such debt issues.
Listed below are rating agencies and their corresponding claims-paying ability ratings.
Standard & Poors Insurance Claims-Paying Ability Ratings
An S&P insurance claims-paying ability rating is an assessment of an operating insurance companys financial capacity to meet its obligations under an insurance policy in accordance with its terms. For example, an insurer with an insurance claims-paying ability rating of AAA by S&P has the highest rating assigned by S&P, which means its capacity to honor insurance contracts is deemed by S&P to be extremely strong and highly likely to remain so over a long period of time.
Secure claims-paying ability AAA to BBB
Vulnerable claims-paying ability BB to CCC
AAA - Superior financial security on an absolute and relative basis. Capacity to meet policyholder obligations is overwhelming under a variety of economic and underwriting conditions.
AA - Excellent financial security. Capacity to meet policyholder obligations is strong under a variety of economic and underwriting conditions.
A - Good financial security, but capacity to meet policyholder obligations is somewhat susceptible to adverse economic and underwriting conditions.
BBB - Adequate financial security, but capacity to meet policyholder obligations is susceptible to adverse economic and underwriting conditions.
BB - Financial security may be adequate, but capacity to meet policyholder obligations, particularly with respect to long-term or "long-tail" policies, is vulnerable to adverse economic and underwriting conditions.
B - Vulnerable financial security. Currently able to meet policyholder obligations, but capacity to meet policyholder obligations is particularly vulnerable to adverse economic and underwriting conditions.
II-96 |
CCC, CC, C - Extremely vulnerable financial security. Continued capacity to meet policyholder obligations is highly questionable unless favorable economic and underwriting conditions prevail.
R Regulatory action -- As of the date indicated, the insurer is under supervision of insurance regulators following rehabilitation, receivership, liquidation, or any other action that reflects regulatory concern about the insurers financial condition. Information on this status is provided by the National Association of Insurance Commissioners and other regulatory bodies. Although believed to be accurate, this information is not guaranteed. The R rating does not apply to insurers subject only to non-financial actions such as market conduct violations.
Notes:
NR = Not Rated. The insurer is not rated by Standard & Poors. The issue has not yet been evaluated by the respective credit rating agency. It is no indication as to the merits of the issue.
Plus (+) or minus (-): The ratings from AA to B may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.
Moodys Investors Service, Inc. Insurance Claims-Paying Ability Ratings
A Moodys insurance claims-paying ability rating is an opinion by Moodys about the ability of an insurance company to repay punctually senior policyholder obligations and claims. For example, an insurer with an insurance claims-paying ability rating of Aaa by Moodys is deemed by Moodys to be of the best quality. In the opinion of Moodys, the policy obligations of an insurance company with an insurance claims-paying ability rating of Aaa carries the smallest degree of credit risk and, while the financial strength of these companies is likely to change, such changes as can be visualized are most unlikely to impair the companys fundamentally strong position.
Moodys claims-paying ability ratings are as follows:
Long-Term Insurance Financial Strength Ratings
Moodys rating symbols for Insurance Financial Strength Ratings are identical to those used to indicate the credit quality of long-term obligations. These rating gradations provide investors with a system for measuring an insurance companys ability to meet its senior policyholder claims and obligations.
Aaa - Insurance companies rated Aaa offer exceptional financial security. While the credit profile of these companies is likely to change, such changes as can be visualized are most unlikely to impair their fundamentally strong position.
Aa - Insurance companies rated Aa offer excellent financial security. Together with the Aaa group, they constitute what are generally known as high-grade companies. They are rated lower than Aaa companies because long-term risks appear somewhat larger.
A - Insurance companies rated A offer good financial security. However, elements may be present which suggest a susceptibility to impairment sometime in the future.
Baa - Insurance companies rated Baa offer adequate financial security. However, certain protective elements may be lacking or may be characteristically unreliable over any great length of time.
Ba - Insurance companies rated Ba offer questionable financial security. Often the ability of these companies to meet policyholder obligations may be very moderate and thereby not well safeguarded in the future.
II-97 |
B - Insurance companies rated B offer poor financial security. Assurance of punctual payment of policyholder obligations over any long period of time is small.
Caa - Insurance companies rated Caa offer very poor financial security. They may be in default on their policyholder obligations or there may be present elements of danger with respect to punctual payment of policyholder obligations and claims.
Ca - Insurance companies rated Ca offer extremely poor financial security. Such companies are often in default on their policyholder obligations or have other marked shortcomings.
C - Insurance companies rated C are the lowest-rated class of insurance company and can be regarded as having extremely poor prospects of ever offering financial security.
Note: Moodys appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. Numeric modifiers are used to refer to the ranking within a group with 1 being the highest and 3 being the lowest. However, the financial strength of companies within a generic rating symbol (Aa, for example) is broadly the same.
Fitch IBCA / International Insurance Claims-Paying Ability Ratings
Fitch IBCA credit ratings are an opinion on the ability of an entity or of a securities issue to meet financial commitments, such as interest, preferred dividends, or repayment of principal, on a timely basis. Fitch IBCA credit ratings apply to a variety of entities and issues, including but not limited to sovereigns, governments, structured financings, and corporations; debt, preferred/preference stock, bank loans, and counterparties; as well as the claims-paying ability of insurance companies and financial guarantors.
AAA - Exceptionally strong claims-paying ability. Insurers assigned this highest rating have an exceptionally strong capacity to meet policyholder obligations and provide policyholder benefits. The impact of any adverse business and economic factors on the claims-paying ability of these insurers is expected to be minimal.
AA - Very strong claims-paying ability. Insurers rated AA have a very strong capacity to meet policyholder obligations and provide policyholder benefits. The impact of any adverse business and economic factors on the claims-paying ability of these insurers is expected to be very small.
A - Strong claims-paying ability. Insurers rated A have a strong capacity to meet policyholder obligations and provide policyholder benefits. Although adverse business and economic factors may have an impact on the claims-paying ability of these insurers, the effect of such factors is expected to be small.
BBB - Good claims-paying ability. Insurers rated BBB have a good capacity to meet policyholder obligations and provide policyholder benefits. However, their claims-paying ability may be more susceptible than that of higher rated insurers to the impact of adverse business and economic factors.
BB - Speculative claims-paying ability. Insurers rated BB have a capacity to meet policyholder obligations and provide policyholder benefits which is regarded as speculative. The impact of adverse business and economic factors on their claims-paying ability is considered likely to be more problematic than in the case of higher rated insurers.
B - Vulnerable claims-paying ability. Insurers rated B have a vulnerable capacity to meet policyholder obligations and provide policyholder benefits. The impact of adverse business and economic factors on their claims-paying ability is considered likely to be significant.
II-98 |
CCC, CC, C - Highly vulnerable claims-paying ability. Insurance companies assigned one of these ratings are considered very weak with respect to their capacity to meet policyholder obligations and provide policyholder benefits. The insurer may be under the supervision of an insurance regulator and already may not be making all payments in a timely fashion.
D - Insurers which have been placed in liquidation by insurance regulators and for which policy or claims payments are being controlled, delayed, or reduced.
Notes:
"+" or "-" may be appended to a rating to indicate the relative position of a credit within the rating category. Such suffixes are not added to the AAA and D categories.
IQ ratings - Fitch IBCA Qualified: Provided for issuers based solely on information in the public domain. These ratings include significant analytical input. Because of the reduced information presented in this process, compared with the full claims-paying ability rating approach, these ratings tend to be conservative and do not employ "+" or "-" qualifiers.
II-99 |
Appendix A
Proxy voting guidelines of the Putnam funds |
The proxy voting guidelines below summarize the funds positions on various issues of concern to investors, and give a general indication of how fund portfolio securities will be voted on proposals dealing with particular issues. The funds proxy voting service is instructed to vote all proxies relating to fund portfolio securities in accordance with these guidelines, except as otherwise instructed by the Proxy Manager, a member of the Office of the Trustees who is appointed to assist in the coordination and voting of the funds proxies.
The proxy voting guidelines are just that guidelines. The guidelines are not exhaustive and do not address all potential voting issues. Because the circumstances of individual companies are so varied, there may be instances when the funds do not vote in strict adherence to these guidelines. For example, the proxy voting service is expected to bring to the Proxy Managers attention proxy questions that are company-specific and of a non-routine nature and that, even if covered by the guidelines, may be more appropriately handled on a case-by-case basis.
Similarly, Putnam Managements investment professionals, as part of their ongoing review and analysis of all fund portfolio holdings, are responsible for monitoring significant corporate developments, including proxy proposals submitted to shareholders, and notifying the Proxy Manager of circumstances where the interests of fund shareholders may warrant a vote contrary to these guidelines. In such instances, the investment professionals submit a written recommendation to the Proxy Manager and the person or persons designated by Putnam Managements Legal and Compliance Department to assist in processing referral items under the funds Proxy Voting Procedures. The Proxy Manager, in consultation with the funds Senior Vice President, Executive Vice President, and/or the Chair of the Board Policy and Nominating Committee, as appropriate, will determine how the funds proxies will be voted. When indicated, the Chair of t he Board Policy and Nominating Committee may consult with other members of the Committee or the full Board of Trustees.
The following guidelines are grouped according to the types of proposals generally presented to shareholders. Part I deals with proposals submitted by management and approved and recommended by a companys board of directors. Part II deals with proposals submitted by shareholders. Part III addresses unique considerations pertaining to non-U.S. issuers.
The Trustees of the Putnam funds are committed to promoting strong corporate governance practices and encouraging corporate actions that enhance shareholder value through the judicious voting of the funds proxies. It is the funds policy to vote their proxies at all shareholder meetings where it is practicable to do so. In furtherance of this, the funds have requested that their securities lending agent recall each domestic issuers voting securities that are on loan, in advance of the record date for the issuers shareholder meetings, so that the funds may vote at the meetings.
The Putnam funds will disclose their proxy votes not later than August 31 of each year for the most recent 12-month period ended June 30, in accordance with the timetable established by SEC rules.
I. BOARD-APPROVED PROPOSALS
The vast majority of matters presented to shareholders for a vote involve proposals made by a company itself (sometimes referred to as management proposals), which have been approved and recommended by its board of directors. In view of the enhanced corporate governance practices currently being implemented in public companies and of the funds intent to hold corporate boards accountable for their actions in promoting shareholder interests, the funds proxies generally will be voted for the decisions reached by majority independent boards of directors, except as otherwise indicated in these guidelines. Accordingly, the funds proxies will be voted for board-approved proposals, except as follows:
II-100 |
Matters relating to the Board of Directors
Uncontested Election of Directors
The funds proxies will be voted for the election of a companys nominees for the board of directors, except as follows:
► The funds will withhold votes from the entire board of directors if
the board does not have a majority of independent directors,
the board has not established independent nominating, audit, and compensation committees,
the board has more than 19 members or fewer than five members, absent special circumstances,
the board has not acted to implement a policy requested in a shareholder proposal that received the support of a majority of the shares of the company cast at its previous two annual meetings, or
the board has adopted or renewed a shareholder rights plan (commonly referred to as a poison pill) without shareholder approval during the current or prior calendar year.
► The funds will on a case-by-case basis withhold votes from the entire board of directors, or from particular directors as may be appropriate, if the board has approved compensation arrangements for one or more company executives that the funds determine are unreasonably excessive relative to the companys performance or has otherwise failed to observe good corporate governance practices.
► The funds will withhold votes from any nominee for director:
who is considered an independent director by the company and who has received compensation within the last three years from the company other than for service as a director (e.g., investment banking, consulting, legal, or financial advisory fees),
who attends less than 75% of board and committee meetings without valid reasons for the absences (e.g., illness, personal emergency, etc.),
of a public company (Company A) who is employed as a senior executive of another company (Company B), if a director of Company B serves as a senior executive of Company A (commonly referred to as an interlocking directorate), or
who serves on more than five unaffiliated public company boards (for the purpose of this guideline, boards of affiliated registered investment companies will count as one board).
Commentary:
II-101 |
Board independence: Unless otherwise indicated, for the purposes of determining whether a board has a majority of independent directors and independent nominating, audit, and compensation committees, an independent director is a director who (1) meets all requirements to serve as an independent director of a company under the NYSE Corporate Governance Rules (e.g., no material business relationships with the company and no present or recent employment relationship with the company including employment of an immediate family member as an executive officer), and (2) has not within the last three years accepted directly or indirectly any consulting, advisory, or other compensatory fee from the company other than in his or her capacity as a member of the board of directors or any board committee. The funds Trustees believe that the recent (i.e., within the last three years) receipt of any a mount of compensation for services other than service as a director raises significant independence issues.
Board size: The funds Trustees believe that the size of the board of directors can have a direct impact on the ability of the board to govern effectively. Boards that have too many members can be unwieldy and ultimately inhibit their ability to oversee management performance. Boards that have too few members can stifle innovation and lead to excessive influence by management.
Time commitment: Being a director of a company requires a significant time commitment to adequately prepare for and attend the companys board and committee meetings. Directors must be able to commit the time and attention necessary to perform their fiduciary duties in proper fashion, particularly in times of crisis. The funds Trustees are concerned about over-committed directors. In some cases, directors may serve on too many boards to make a meaningful contribution. This may be particularly true for senior executives of public companies (or other directors with substantially full-time employment) who serve on more than a few outside boards. The funds may withhold votes from such directors on a case-by-case basis where it appears that they may be unable to discharge their duties properly because of excessive commitments.
Interlocking directorships: The funds Trustees believe that interlocking directorships are inconsistent with the degree of independence required for outside directors of public companies.
Corporate governance practices: Board independence depends not only on its members individual relationships, but also on the boards overall attitude toward management. Independent boards are committed to good corporate governance practices and, by providing objective independent judgment, enhancing shareholder value. The funds may withhold votes on a case-by-case basis from some or all directors who, through their lack of independence or otherwise, have failed to observe good corporate governance practices or, through specific corporate action, have demonstrated a disregard for the interests of shareholders. Such instances may include cases where a board of directors has approved compensation arrangements for one or more members of management that, in the judgment of the funds Trustees, are excessive by reasonable corporate standards relative to the companys record of performance.
Contested Elections of Directors
► The funds will vote on a case-by-case basis in contested elections of directors.
Classified Boards
► The funds will vote against proposals to classify a board, absent special circumstances indicating that shareholder interests would be better served by this structure.
Commentary: Under a typical classified board structure, the directors are divided into three classes, with each class serving a three-year term. The classified board structure results in directors serving staggered terms, with usually only a third of the directors up for re-election at any given annual meeting. The funds Trustees generally believe that it is appropriate for directors to stand for election each year, but recognize that, in special circumstances, shareholder interests may be better served under a classified board structure.
II-102 |
Other Board-Related Proposals
The funds will generally vote for proposals that have been approved by a majority independent board, and on a case-by-case basis on proposals that have been approved by a board that fails to meet the guidelines basic independence standards (i.e., majority of independent directors and independent nominating, audit, and compensation committees).
Executive Compensation
The funds generally favor compensation programs that relate executive compensation to a companys long-term performance. The funds will vote on a case-by-case basis on board-approved proposals relating to executive compensation, except as follows:
► Except where the funds are otherwise withholding votes for the entire board of directors, the funds will vote for stock option and restricted stock plans that will result in an average annual dilution of 1.67% or less (based on the disclosed term of the plan and including all equity-based plans).
► The funds will vote against stock option and restricted stock plans that will result in an average annual dilution of greater than 1.67% (based on the disclosed term of the plan and including all equity-based plans).
► The funds will vote against any stock option or restricted stock plan where the companys actual grants of stock options and restricted stock under all equity-based compensation plans during the prior three (3) fiscal years have resulted in an average annual dilution of greater than 1.67%.
► The funds will vote against stock option plans that permit the replacing or repricing of underwater options (and against any proposal to authorize a replacement or repricing of underwater options).
► The funds will vote against stock option plans that permit issuance of options with an exercise price below the stocks current market price.
► Except where the funds are otherwise withholding votes for the entire board of directors, the funds will vote for an employee stock purchase plan that has the following features: (1) the shares purchased under the plan are acquired for no less than 85% of their market value; (2) the offering period under the plan is 27 months or less; and (3) dilution is 10% or less.
► The funds will vote for proposals to approve a companys executive compensation program (i.e., say on pay proposals in which the companys board proposes that shareholders indicate their support for the companys compensation philosophy, policies, and practices), except that the funds will vote on a case-by-case basis if the company is assigned to the lowest category, through independent third party benchmarking performed by the funds proxy voting service, for the correlation of the companys executive compensation program with its performance.
► The funds will vote for bonus plans under which payments are treated as performance-based compensation that is deductible under Section 162(m) of the Internal Revenue Code of 1986, as amended, except that the funds will vote on a case-by-case basis if any of the following circumstances exist:
the award pool or amount per employee under the plan is unlimited, or
the plans performance criteria is undisclosed, or
II-103 |
the company is assigned to the lowest category, through independent third party benchmarking performed by the funds proxy voting service, for the correlation of the companys executive compensation program with its performance.
Commentary: Companies should have compensation programs that are reasonable and that align shareholder and management interests over the longer term. Further, disclosure of compensation programs should provide absolute transparency to shareholders regarding the sources and amounts of, and the factors influencing, executive compensation. Appropriately designed equity-based compensation plans can be an effective way to align the interests of long-term shareholders with the interests of management. However, the funds may vote against these or other executive compensation proposals on a case-by-case basis where compensation is excessive by reasonable corporate standards, where a company fails to provide transparent disclosure of executive compensation, or, in some instances, where independent third-party benchmarking indicates that compensation is inadequately correlated with pe rformance, relative to peer companies. (Examples of excessive executive compensation may include, but are not limited to, equity incentive plans that exceed the dilution criteria noted above, excessive perquisites, performance-based compensation programs that do not properly correlate reward and performance, golden parachutes or other severance arrangements that present conflicts between managements interests and the interests of shareholders, and golden coffins or unearned death benefits.) In voting on a proposal relating to executive compensation, the funds will consider whether the proposal has been approved by an independent compensation committee of the board.
Capitalization
Many proxy proposals involve changes in a companys capitalization, including the authorization of additional stock, the issuance of stock, the repurchase of outstanding stock, or the approval of a stock split. The management of a companys capital structure involves a number of important issues, including cash flow, financing needs, and market conditions that are unique to the circumstances of the company. As a result, the funds will vote on a case-by-case basis on board-approved proposals involving changes to a companys capitalization, except that where the funds are not otherwise withholding votes from the entire board of directors:
► The funds will vote for proposals relating to the authorization and issuance of additional common stock (except where such proposals relate to a specific transaction).
► The funds will vote for proposals to effect stock splits (excluding reverse stock splits).
► The funds will vote for proposals authorizing share repurchase programs.
Commentary: A company may decide to authorize additional shares of common stock for reasons relating to executive compensation or for routine business purposes. For the most part, these decisions are best left to the board of directors and senior management. The funds will vote on a case-by-case basis, however, on other proposals to change a companys capitalization, including the authorization of common stock with special voting rights, the authorization or issuance of common stock in connection with a specific transaction (e.g., an acquisition, merger or reorganization), or the authorization or issuance of preferred stock. Actions such as these involve a number of considerations that may affect a shareholders investment and that warrant a case-by-case determination.
Acquisitions, Mergers, Reincorporations, Reorganizations and Other Transactions
Shareholders may be confronted with a number of different types of transactions, including acquisitions, mergers, reorganizations involving business combinations, liquidations, and the sale of all or substantially all of a companys assets, which may require their consent. Voting on such proposals involves considerations unique to each transaction. As a result, the funds will vote on a case-by-case basis on board-approved proposals to effect these types of transactions, except as follows:
II-104 |
► The funds will vote for mergers and reorganizations involving business combinations designed solely to reincorporate a company in Delaware.
Commentary: A company may reincorporate into another state through a merger or reorganization by setting up a shell company in a different state and then merging the company into the new company. While reincorporation into states with extensive and established corporate laws notably Delaware provides companies and shareholders with a more well-defined legal framework, shareholders must carefully consider the reasons for a reincorporation into another jurisdiction, including especially an offshore jurisdiction.
Anti-Takeover Measures
Some proxy proposals involve efforts by management to make it more difficult for an outside party to take control of the company without the approval of the companys board of directors. These include the adoption of a shareholder rights plan, requiring supermajority voting on particular issues, the adoption of fair price provisions, the issuance of blank check preferred stock, and the creation of a separate class of stock with disparate voting rights. Such proposals may adversely affect shareholder rights, lead to management entrenchment, or create conflicts of interest. As a result, the funds will vote against board-approved proposals to adopt such anti-takeover measures, except as follows:
► The funds will vote on a case-by-case basis on proposals to ratify or approve shareholder rights plans; and
► The funds will vote on a case-by-case basis on proposals to adopt fair price provisions.
Commentary: The funds Trustees recognize that poison pills and fair price provisions may enhance or protect shareholder value under certain circumstances. For instance, where a company has incurred significant operating losses, a shareholder rights plan may be appropriately tailored to protect shareholder value by preserving a companys net operating losses. Thus, the funds will consider proposals to approve such matters on a case-by-case basis.
Other Business Matters
Many proxies involve approval of routine business matters, such as changing a companys name, ratifying the appointment of auditors, and procedural matters relating to the shareholder meeting. For the most part, these routine matters do not materially affect shareholder interests and are best left to the board of directors and senior management of the company. The funds will vote for board-approved proposals approving such matters, except as follows:
► The funds will vote on a case-by-case basis on proposals to amend a companys charter or bylaws (except for charter amendments necessary to effect stock splits, to change a companys name or to authorize additional shares of common stock).
► The funds will vote against authorization to transact other unidentified, substantive business at the meeting.
► The funds will vote on a case-by-case basis on proposals to ratify the selection of independent auditors if there is evidence that the audit firms independence or the integrity of an audit is compromised.
► The funds will vote on a case-by-case basis on other business matters where the funds are otherwise withholding votes for the entire board of directors.
II-105 |
Commentary: Charter and bylaw amendments and the transaction of other unidentified, substantive business at a shareholder meeting may directly affect shareholder rights and have a significant impact on shareholder value. As a result, the funds do not view these items as routine business matters. Putnam Managements investment professionals and the funds proxy voting service may also bring to the Proxy Managers attention company-specific items that they believe to be non-routine and warranting special consideration. Under these circumstances, the funds will vote on a case-by-case basis.
The funds proxy voting service may identify circumstances that call into question an audit firms independence or the integrity of an audit. These circumstances may include recent material restatements of financials, unusual audit fees, egregious contractual relationships, and aggressive accounting policies. The funds will consider proposals to ratify the selection of auditors in these circumstances on a case-by-case basis. In all other cases, given the existence of rules that enhance the independence of audit committees and auditors by, for example, prohibiting auditors from performing a range of non-audit services for audit clients, the funds will vote for the ratification of independent auditors.
II. SHAREHOLDER PROPOSALS
SEC regulations permit shareholders to submit proposals for inclusion in a companys proxy statement. These proposals generally seek to change some aspect of the companys corporate governance structure or to change some aspect of its business operations. The funds generally will vote in accordance with the recommendation of the companys board of directors on all shareholder proposals, except as follows:
► The funds will vote for shareholder proposals asking that director nominees receive support from holders of a majority of votes cast or a majority of shares outstanding in order to be (re)elected.
► The funds will vote for shareholder proposals to declassify a board, absent special circumstances which would indicate that shareholder interests are better served by a classified board structure.
► The funds will vote for shareholder proposals to require shareholder approval of shareholder rights plans.
► The funds will vote for shareholder proposals requiring companies to make cash payments under management severance agreements only if both of the following conditions are met:
the company undergoes a change in control, and
the change in control results in the termination of employment for the person receiving the severance payment.
► The funds will vote on a case-by-case basis on shareholder proposals requiring companies to accelerate vesting of equity awards under management severance agreements only if both of the following conditions are met:
the company undergoes a change in control, and
the change in control results in the termination of employment for the person receiving the severance payment.
► The funds will vote on a case-by-case basis on shareholder proposals to limit a companys ability to make excise tax gross-up payments under management severance agreements.
II-106 |
► The funds will vote on a case-by-case basis on shareholder proposals requesting that the board adopt a policy to recoup, in the event of a significant restatement of financial results or significant extraordinary write-off, to the fullest extent practicable, for the benefit of the company, all performance-based bonuses or awards that were paid to senior executives based on the company having met or exceeded specific performance targets to the extent that the specific performance targets were not, in fact, met.
► The funds will vote for shareholder proposals requiring a company to report on its executive retirement benefits (e.g., deferred compensation, split-dollar life insurance, SERPs and pension benefits).
► The funds will vote for shareholder proposals requiring a company to disclose its relationships with executive compensation consultants (e.g., whether the company, the board or the compensation committee retained the consultant, the types of services provided by the consultant over the past five years, and a list of the consultants clients on which any of the companys executives serve as a director).
► The funds will vote for shareholder proposals that are consistent with the funds proxy voting guidelines for board-approved proposals.
► The funds will vote on a case-by-case basis on other shareholder proposals where the funds are otherwise withholding votes for the entire board of directors.
Commentary: In light of the substantial reforms in corporate governance that are currently underway, the funds Trustees believe that effective corporate reforms should be promoted by holding boards of directors and in particular their independent directors accountable for their actions, rather than by imposing additional legal restrictions on board governance through piecemeal proposals. Generally speaking, shareholder proposals relating to business operations are often motivated primarily by political or social concerns, rather than the interests of shareholders as investors in an economic enterprise. As stated above, the funds Trustees believe that boards of directors and management are responsible for ensuring that their businesses are operating in accordance with high legal and ethical standards and should be held accountable for resulting corporate behavior. Accordingly, the funds will generally support the recommendations of boards that meet the basic independence and governance standards established in these guidelines. Where boards fail to meet these standards, the funds will generally evaluate shareholder proposals on a case-by-case basis.
However, the funds generally support shareholder proposals to implement majority voting for directors, observing that majority voting is an emerging standard intended to encourage directors to be attentive to shareholders interests. The funds also generally support shareholder proposals to declassify a board or to require shareholder approval of shareholder rights plans. The funds Trustees believe that these shareholder proposals further the goals of reducing management entrenchment and conflicts of interest, and aligning managements interests with shareholders interests in evaluating proposed acquisitions of the company. The Trustees also believe that shareholder proposals to limit severance payments may further these goals in some instances. In general, the funds favor arrangements in which severance payments are made to an executive only when there is a change in control and the executive loses his or her job as a result. Arr angements in which an executive receives a payment upon a change of control even if the executive retains employment introduce potential conflicts of interest and may distract management focus from the long term success of the company.
In evaluating shareholder proposals that address severance payments, the funds distinguish between cash and equity payments. The funds generally do not favor cash payments to executives upon a change in control transaction if the executive retains employment. However, the funds recognize that accelerated vesting of equity incentives, even without termination of employment, may help to align management and shareholder interests in some instances, and will evaluate shareholder proposals addressing accelerated vesting of equity incentive payments on a case-by-case basis.
II-107 |
When severance payments exceed a certain amount based on the executives previous compensation, the payments may be subject to an excise tax. Some compensation arrangements provide for full excise tax gross-ups, which means that the company pays the executive sufficient additional amounts to cover the cost of the excise tax. The funds are concerned that the benefits of providing full excise tax gross-ups to executives may be outweighed by the cost to the company of the gross-up payments. Accordingly, the funds will vote on a case-by-case basis on shareholder proposals to curtail excise tax gross-up payments. The funds generally favor arrangements in which severance payments do not trigger an excise tax or in which the companys obligations with respect to gross-up payments are limited in a reasonable manner.
The funds Trustees believe that performance-based compensation can be an effective tool for aligning management and shareholder interests. However, to fulfill its purpose, performance compensation should only be paid to executives if the performance targets are actually met. A significant restatement of financial results or a significant extraordinary write-off may reveal that executives who were previously paid performance compensation did not actually deliver the required business performance to earn that compensation. In these circumstances, it may be appropriate for the company to recoup this performance compensation. The funds will consider on a case-by-case basis shareholder proposals requesting that the board adopt a policy to recoup, in the event of a significant restatement of financial results or significant extraordinary write-off, performance-based bonuses or awards paid to senior executives based on the company having met or exceeded specific performance targets to the extent that the specific performance targets were not, in fact, met. The funds do not believe that such a policy should necessarily disadvantage a company in recruiting executives, as executives should understand that they are only entitled to performance compensation based on the actual performance they deliver.
The funds Trustees will also consider whether a companys severance payment and performance-based compensation arrangements, taking all of the pertinent circumstances into account, constitute excessive compensation or otherwise reflect poorly on the corporate governance practices of the company. In addition, as the Trustees evaluate these matters, they will be mindful of evolving practices and legislation relevant to executive compensation and corporate governance.
The funds Trustees also believe that shareholder proposals that are intended to increase transparency, particularly with respect to executive compensation, without establishing rigid restrictions upon a companys ability to attract and motivate talented executives, are generally beneficial to sound corporate governance without imposing undue burdens. The funds will generally support shareholder proposals calling for reasonable disclosure.
III. VOTING SHARES OF NON-U.S. ISSUERS
Many of the Putnam funds invest on a global basis, and, as a result, they may hold, and have an opportunity to vote, shares in non-U.S. issuers i.e., issuers that are incorporated under the laws of foreign jurisdictions and whose shares are not listed on a U.S. securities exchange or the NASDAQ stock market.
In many non-U.S. markets, shareholders who vote proxies of a non-U.S. issuer are not able to trade in that companys stock on or around the shareholder meeting date. This practice is known as share blocking. In countries where share blocking is practiced, the funds will vote proxies only with direction from Putnam Managements investment professionals.
In addition, some non-U.S. markets require that a companys shares be re-registered out of the name of the local custodian or nominee into the name of the shareholder for the shareholder to be able to vote at the meeting. This practice is known as share re-registration. As a result, shareholders, including the funds, are not able to trade in that companys stock until the shares are re-registered back in the name of the local custodian or nominee following the meeting. In countries where share re-registration is practiced, the funds will generally not vote proxies.
II-108 |
Protection for shareholders of non-U.S. issuers may vary significantly from jurisdiction to jurisdiction. Laws governing non-U.S. issuers may, in some cases, provide substantially less protection for shareholders than do U.S. laws. As a result, the guidelines applicable to U.S. issuers, which are premised on the existence of a sound corporate governance and disclosure framework, may not be appropriate under some circumstances for non-U.S. issuers. However, the funds will vote proxies of non-U.S. issuers in accordance with the guidelines applicable to U.S. issuers, except as follows:
Uncontested Election of Directors
Germany
► For companies subject to co-determination, the funds will vote on a case by- case basis for the election of nominees to the supervisory board.
► The funds will withhold votes for the election of a former member of the companys managerial board to chair of the supervisory board.
Commentary: German corporate governance is characterized by a two-tier board systema managerial board composed of the companys executive officers, and a supervisory board. The supervisory board appoints the members of the managerial board. Shareholders elect members of the supervisory board, except that in the case of companies with more than 2,000 employees, company employees are allowed to elect half of the supervisory board members. This co-determination practice may increase the chances that the supervisory board of a large German company does not contain a majority of independent members. In this situation, under the Funds proxy voting guidelines applicable to U.S. issuers, the funds would vote against all nominees. However, in the case of companies subject to co-determination, the Funds will vote for supervisory board members on a case-by-case basis, so that the funds can support independent nominees.
Consistent with the funds belief that the interests of shareholders are best protected by boards with strong, independent leadership, the funds will withhold votes for the election of former chairs of the managerial board to chair of the supervisory board.
Japan
► For companies that have established a U.S.-style corporate governance structure, the funds will withhold votes from the entire board of directors if
the board does not have a majority of outside directors,
the board has not established nominating and compensation committees composed of a majority of outside directors, or
the board has not established an audit committee composed of a majority of independent directors.
► The funds will withhold votes for the appointment of members of a companys board of statutory auditors if a majority of the members of the board of statutory auditors is not independent.
Commentary:
Board structure: Recent amendments to the Japanese Commercial Code give companies the option to adopt a U.S.-style corporate governance structure (i.e., a board of directors and audit, nominating, and compensation committees). The funds will vote for proposals to amend a companys articles of incorporation to adopt the U.S.-style corporate structure.
II-109 |
Definition of outside director and independent director: Corporate governance principles in Japan focus on the distinction between outside directors and independent directors. Under these principles, an outside director is a director who is not and has never been a director, executive, or employee of the company or its parent company, subsidiaries or affiliates. An outside director is independent if that person can make decisions completely independent from the managers of the company, its parent, subsidiaries, or affiliates and does not have a material relationship with the company (i.e., major client, trading partner, or other business relationship; familial relationship with current director or executive; etc.). The guidelines have incorporated these definitions in applying the board independence standards above.
Korea
► The funds will withhold votes from the entire board of directors if
the board does not have a majority of outside directors,
the board has not established a nominating committee composed of at least a majority of outside directors, or
the board has not established an audit committee composed of at least three members and in which at least two-thirds of its members are outside directors.
Commentary: For purposes of these guidelines, an outside director is a director that is independent from the management or controlling shareholders of the company, and holds no interests that might impair performing his or her duties impartially from the company, management or controlling shareholder. In determining whether a director is an outside director, the funds will also apply the standards included in Article 415-2(2) of the Korean Commercial Code (i.e., no employment relationship with the company for a period of two years before serving on the committee, no director or employment relationship with the companys largest shareholder, etc.) and may consider other business relationships that would affect the independence of an outside director.
Russia
► The funds will vote on a case-by-case basis for the election of nominees to the board of directors.
Commentary: In Russia, director elections are typically handled through a cumulative voting process. Cumulative voting allows shareholders to cast all of their votes for a single nominee for the board of directors, or to allocate their votes among nominees in any other way. In contrast, in regular voting, shareholders may not give more than one vote per share to any single nominee. Cumulative voting can help to strengthen the ability of minority shareholders to elect a director.
In Russia, as in some other emerging markets, standards of corporate governance are usually behind those in developed markets. Rather than vote against the entire board of directors, as the funds generally would in the case of a company whose board fails to meet the funds standards for independence, the funds may, on a case by case basis, cast all of their votes for one or more independent director nominees. The funds believe that it is important to increase the number of independent directors on the boards of Russian companies to mitigate the risks associated with dominant shareholders.
United Kingdom
► The funds will withhold votes from the entire board of directors if
the board does not have at least a majority of independent non-executive directors,
II-110 |
the board has not established a nomination committee composed of a majority of independent non-executive directors, or
the board has not established compensation and audit committees composed of (1) at least three directors (in the case of smaller companies, two directors) and (2) solely independent non-executive directors.
► The funds will withhold votes from any nominee for director who is considered an independent director by the company and who has received compensation within the last three years from the company other than for service as a director, such as investment banking, consulting, legal, or financial advisory fees.
► The funds will vote for proposals to amend a companys articles of association to authorize boards to approve situations that might be interpreted to present potential conflicts of interest affecting a director.
Commentary:
Application of guidelines: Although the United Kingdoms Combined Code on Corporate Governance (Combined Code) has adopted the comply and explain approach to corporate governance, the funds Trustees believe that the guidelines discussed above with respect to board independence standards are integral to the protection of investors in U.K. companies. As a result, these guidelines will generally be applied in a prescriptive manner.
Definition of independence: For the purposes of these guidelines, a non-executive director shall be considered independent if the director meets the independence standards in section A.3.1 of the Combined Code (i.e., no material business or employment relationships with the company, no remuneration from the company for non-board services, no close family ties with senior employees or directors of the company, etc.), except that the funds do not view service on the board for more than nine years as affecting a directors independence.
Smaller companies: A smaller company is one that is below the FTSE 350 throughout the year immediately prior to the reporting year.
Conflicts of interest: The Companies Act 2006 requires a director to avoid a situation in which he or she has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company. This broadly written requirement could be construed to prevent a director from becoming a trustee or director of another organization. Provided there are reasonable safeguards, such as the exclusion of the relevant director from deliberations, the funds believe that the board may approve this type of potential conflict of interest in its discretion.
Corporate Governance
► The funds will vote for shareholder proposals calling for a majority of a companys directors to be independent of management.
► The funds will vote for shareholder proposals seeking to increase the independence of board nominating, audit, and compensation committees.
► The funds will vote for shareholder proposals that implement corporate governance standards similar to those established under U.S. federal law and the listing requirements of U.S. stock exchanges, and that do not otherwise violate the laws of the jurisdiction under which the company is incorporated.
II-111 |
Compensation
► The funds will vote for proposals to approve annual directors fees, except that the funds will consider these proposals on a case-by-case basis in each case in which the funds proxy voting service has recommended a vote against such a proposal.
► The funds will vote for non-binding proposals to approve remuneration reports, except that the funds will vote against proposals to approve remuneration reports that indicate that awards under a long-term incentive plan are not linked to performance targets.
Commentary: Since proposals relating to directors fees for non-U.S. issuers generally address relatively modest fees paid to non-executive directors, the funds generally support these proposals, provided that the fees are consistent with directors fees paid by the companys peers and do not otherwise appear unwarranted. Consistent with the approach taken for U.S. issuers, the funds generally favor compensation programs that relate executive compensation to a companys long-term performance and will support non-binding remuneration reports unless such a correlation is not made.
Capitalization
► The funds will vote for proposals
to issue additional common stock representing up to 20% of the companys outstanding common stock, where shareholders do not have preemptive rights, or
to issue additional common stock representing up to 100% of the companys outstanding common stock, where shareholders do have preemptive rights.
► The funds will vote for proposals to authorize share repurchase programs that are recommended for approval by the funds proxy voting service; otherwise, the funds will vote against such proposals.
Other Business Matters
► The funds will vote for proposals permitting companies to deliver reports and other materials electronically (e.g., via website posting).
► The funds will vote for proposals permitting companies to issue regulatory reports in English.
► The funds will vote against proposals to shorten shareholder meeting notice periods to fourteen days.
Commentary: Under Directive 2007/36/EC of the European Parliament and the Council of the European Union, companies have the option to request shareholder approval to set the notice period for special meetings at 14 days provided that certain electronic voting and communication requirements are met. The funds believe that the 14 day notice period is too short to provide overseas shareholders with sufficient time to analyze proposals and to participate meaningfully at special meetings and, as a result, have determined to vote against such proposals.
Germany
► The funds will vote in accordance with the recommendation of the companys board of directors on shareholder countermotions added to a companys meeting agenda, unless the countermotion is directly addressed by one of the funds other guidelines.
II-112 |
Commentary: In Germany, shareholders are able to add both proposals and countermotions to a meeting agenda. Countermotions, which must correspond to a proposal on the agenda, generally call for shareholders to oppose the existing proposal, although they may also propose separate voting decisions. Countermotions may be proposed by any shareholder and they are typically added throughout the period between the publication of the meeting agenda and the meeting date. This guideline reflects the funds intention to focus on the original proposal, which is expected to be presented a reasonable period of time before the shareholder meeting so that the funds will have an appropriate opportunity to evaluate it.
As adopted February 12, 2010
II-113 |
Proxy voting procedures of the Putnam funds |
The proxy voting procedures below explain the role of the funds Trustees, the proxy voting service and the Proxy Manager, as well as how the process will work when a proxy question needs to be handled on a case-by-case basis, or when there may be a conflict of interest.
The role of the funds Trustees
The Trustees of the Putnam funds exercise control of the voting of proxies through their Board Policy and Nominating Committee, which is composed entirely of independent Trustees. The Board Policy and Nominating Committee oversees the proxy voting process and participates, as needed, in the resolution of issues that need to be handled on a case-by-case basis. The Committee annually reviews and recommends, for Trustee approval, guidelines governing the funds proxy votes, including how the funds vote on specific proposals and which matters are to be considered on a case-by-case basis. The Trustees are assisted in this process by their independent administrative staff (Office of the Trustees), independent legal counsel, and an independent proxy voting service. The Trustees also receive assistance from Putnam Investment Management, LLC (Putnam Management), the funds investment advisor, on matters involving investment jud gments. In all cases, the ultimate decision on voting proxies rests with the Trustees, acting as fiduciaries on behalf of the shareholders of the funds.
The role of the proxy voting service
The funds have engaged an independent proxy voting service to assist in the voting of proxies. The proxy voting service is responsible for coordinating with the funds custodians to ensure that all proxy materials received by the custodians relating to the funds portfolio securities are processed in a timely fashion. To the extent applicable, the proxy voting service votes all proxies in accordance with the proxy voting guidelines established by the Trustees. The proxy voting service will refer proxy questions to the Proxy Manager (described below) for instructions under circumstances where: (1) the application of the proxy voting guidelines is unclear; (2) a particular proxy question is not covered by the guidelines; or (3) the guidelines call for specific instructions on a case-by-case basis. The proxy voting service is also requested to call to the Proxy Managers attention specific proxy questions that, while governed by a guideline , appear to involve unusual or controversial issues. The funds also utilize research services relating to proxy questions provided by the proxy voting service and by other firms.
The role of the Proxy Manager
Each year, a member of the Office of the Trustees is appointed Proxy Manager to assist in the coordination and voting of the funds proxies. The Proxy Manager will deal directly with the proxy voting service and, in the case of proxy questions referred by the proxy voting service, will solicit voting recommendations and instructions from the Office of the Trustees, the Chair of the Board Policy and Nominating Committee, and Putnam Managements investment professionals, as appropriate. The Proxy Manager is responsible for ensuring that these questions and referrals are responded to in a timely fashion and for transmitting appropriate voting instructions to the proxy voting service.
Voting procedures for referral items
As discussed above, the proxy voting service will refer proxy questions to the Proxy Manager under certain circumstances. When the application of the proxy voting guidelines is unclear or a particular proxy question is not covered by the guidelines (and does not involve investment considerations), the Proxy Manager will assist in interpreting the guidelines and, as appropriate, consult with one or more senior staff members of the Office of the Trustees and the Chair of the Board Policy and Nominating Committee on how the funds shares will be voted.
II-114 |
For proxy questions that require a case-by-case analysis pursuant to the guidelines or that are not covered by the guidelines but involve investment considerations, the Proxy Manager will refer such questions, through an electronic request form, to Putnam Managements investment professionals for a voting recommendation. Such referrals will be made in cooperation with the person or persons designated by Putnam Managements Legal and Compliance Department to assist in processing such referral items. In connection with each such referral item, the Legal and Compliance Department will conduct a conflicts of interest review, as described below under Conflicts of interest, and provide electronically a conflicts of interest report (the Conflicts Report) to the Proxy Manager describing the results of such review. After receiving a referral item from the Proxy Manager, Putnam Managements investment professionals will pro vide a recommendation electronically to the Proxy Manager and the person or persons designated by the Legal and Compliance Department to assist in processing referral items. Such recommendation will set forth (1) how the proxies should be voted; (2) the basis and rationale for such recommendation; and (3) any contacts the investment professionals have had with respect to the referral item with non-investment personnel of Putnam Management or with outside parties (except for routine communications from proxy solicitors). The Proxy Manager will then review the investment professionals recommendation and the Conflicts Report with one or more senior staff members of the Office of the Trustees in determining how to vote the funds proxies. The Proxy Manager will maintain a record of all proxy questions that have been referred to Putnam Managements investment professionals, the voting recommendation, and the Conflicts Report.
In some situations, the Proxy Manager and/or one or more senior staff members of the Office of the Trustees may determine that a particular proxy question raises policy issues requiring consultation with the Chair of the Board Policy and Nominating Committee, who, in turn, may decide to bring the particular proxy question to the Committee or the full Board of Trustees for consideration.
Conflicts of interest
Occasions may arise where a person or organization involved in the proxy voting process may have a conflict of interest. A conflict of interest may exist, for example, if Putnam Management has a business relationship with (or is actively soliciting business from) either the company soliciting the proxy or a third party that has a material interest in the outcome of a proxy vote or that is actively lobbying for a particular outcome of a proxy vote. Any individual with knowledge of a personal conflict of interest (e.g., familial relationship with company management) relating to a particular referral item shall disclose that conflict to the Proxy Manager and the Legal and Compliance Department and otherwise remove himself or herself from the proxy voting process. The Legal and Compliance Department will review each item referred to Putnam Managements investment professionals to determine if a conflict of interest exists and will provide the Proxy Ma nager with a Conflicts Report for each referral item that (1) describes any conflict of interest; (2) discusses the procedures used to address such conflict of interest; and (3) discloses any contacts from parties outside Putnam Management (other than routine communications from proxy solicitors) with respect to the referral item not otherwise reported in an investment professionals recommendation. The Conflicts Report will also include written confirmation that any recommendation from an investment professional provided under circumstances where a conflict of interest exists was made solely on the investment merits and without regard to any other consideration.
As adopted March 11, 2005 and revised June 12, 2009.
II-115 |
Appendix B
Financial statements (excerpted from the most recent annual report)
II-116 |
Report of Independent Registered Public Accounting Firm
To the Trustees and Shareholders of
Putnam Voyager Fund:
In our opinion, the accompanying statement of assets and liabilities, including the portfolio, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Putnam Voyager Fund (the fund) at July 31, 2010, and the results of its operations, the changes in its net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as financial statements) are the responsibility of the funds management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those s tandards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of investments owned at July 31, 2010, by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 10, 2010
22
The funds portfolio 7/31/10
COMMON STOCKS (91.7%)* | Shares | Value |
| ||
Aerospace and defense (4.8%) | ||
Empresa Brasileira de Aeronautica SA (Embraer) ADR (Brazil) | 1,010,000 | $26,633,700 |
| ||
Goodrich Corp. | 79,500 | 5,793,165 |
| ||
Northrop Grumman Corp. | 520,700 | 30,533,848 |
| ||
Precision Castparts Corp. | 323,600 | 39,540,684 |
| ||
Raytheon Co. | 513,773 | 23,772,277 |
| ||
United Technologies Corp. | 737,700 | 52,450,470 |
| ||
178,724,144 | ||
Automotive (1.7%) | ||
Dongfeng Motor Group Co., Ltd. (China) | 15,594,000 | 21,717,231 |
| ||
Lear Corp. | 150,900 | 11,795,853 |
| ||
Renault SA (France) | 472,870 | 21,134,354 |
| ||
Volkswagen AG (Preference) (Germany) | 99,876 | 10,601,858 |
| ||
65,249,296 | ||
Banking (1.7%) | ||
Banco Santander Brasil SA ADS (Brazil) | 228,200 | 3,039,624 |
| ||
Barclays PLC (United Kingdom) | 1,936,856 | 10,117,417 |
| ||
Bond Street Holdings, LLC 144A Class A F | 167,181 | 3,427,211 |
| ||
Citigroup, Inc. | 913,100 | 3,743,710 |
| ||
Governor & Co. of the Bank of Ireland (Ireland) | 5,763,962 | 6,418,699 |
| ||
State Street Corp. | 371,400 | 14,454,888 |
| ||
Wells Fargo & Co. | 799,400 | 22,167,362 |
| ||
63,368,911 | ||
Biotechnology (5.1%) | ||
Amgen, Inc. | 503,300 | 27,444,949 |
| ||
Auxilium Pharmaceuticals, Inc. | 300,300 | 6,774,768 |
| ||
Celgene Corp. | 726,700 | 40,077,505 |
| ||
Dendreon Corp. | 701,775 | 23,095,415 |
| ||
Genzyme Corp. | 689,024 | 47,928,509 |
| ||
Gilead Sciences, Inc. | 301,700 | 10,052,644 |
| ||
Human Genome Sciences, Inc. | 1,163,300 | 30,176,002 |
| ||
Ironwood Pharmaceuticals, Inc. | 490,200 | 5,784,360 |
| ||
191,334,152 | ||
Broadcasting (0.9%) | ||
Liberty Media Corp. - Capital Ser. A | 686,385 | 32,012,996 |
| ||
Sirius XM Radio, Inc. | 744,435 | 766,768 |
| ||
TiVo, Inc. | 47,525 | 407,765 |
| ||
33,187,529 | ||
Cable television (3.0%) | ||
Comcast Corp. Class A | 2,514,638 | 48,960,002 |
| ||
DIRECTV Class A | 1,597,669 | 59,369,380 |
| ||
Hathway Cables and Datacom, Ltd. (India) | 801,583 | 3,018,460 |
| ||
111,347,842 | ||
Chemicals (1.2%) | ||
Agrium, Inc. (Canada) | 93,200 | 5,871,600 |
| ||
Celanese Corp. Ser. A | 401,400 | 11,275,326 |
| ||
Dow Chemical Co. (The) | 488,100 | 13,339,773 |
| ||
LyondellBasell Industries NV Class A (Netherlands) | 327,759 | 5,899,662 |
| ||
LyondellBasell Industries NV Class B (Netherlands) | 144,813 | 2,606,634 |
| ||
Potash Corp. of Saskatchewan, Inc. (Canada) | 57,500 | 6,030,025 |
| ||
45,023,020 |
23
COMMON STOCKS (91.7%)* cont. | Shares | Value |
| ||
Coal (0.2%) | ||
China Shenhua Energy Co., Ltd. (China) | 1,624,000 | $6,234,160 |
| ||
6,234,160 | ||
Commercial and consumer services (2.2%) | ||
Mastercard, Inc. Class A | 214,600 | 45,074,584 |
| ||
Priceline.com, Inc. | 59,700 | 13,396,680 |
| ||
Visa, Inc. Class A | 333,600 | 24,469,560 |
| ||
82,940,824 | ||
Communications equipment (6.9%) | ||
Cisco Systems, Inc. | 3,433,120 | 79,202,078 |
| ||
Corning, Inc. | 274,000 | 4,964,880 |
| ||
Harris Corp. | 465,000 | 20,706,450 |
| ||
Motorola, Inc. | 2,861,900 | 21,435,631 |
| ||
Qualcomm, Inc. | 3,455,009 | 131,566,743 |
| ||
257,875,782 | ||
Computers (6.9%) | ||
Apple, Inc. | 607,900 | 156,382,275 |
| ||
EMC Corp. | 839,900 | 16,621,621 |
| ||
Hewlett-Packard Co. | 825,200 | 37,992,208 |
| ||
Quest Software, Inc. | 553,000 | 11,148,480 |
| ||
Seagate Technology | 1,522,600 | 19,108,630 |
| ||
Western Digital Corp. | 638,200 | 16,842,098 |
| ||
258,095,312 | ||
Conglomerates (1.0%) | ||
Air Lease Corp. 144A | 197,533 | 3,950,660 |
| ||
Danaher Corp. | 247,000 | 9,487,270 |
| ||
Tyco International, Ltd. | 632,000 | 24,192,960 |
| ||
37,630,890 | ||
Construction (0.2%) | ||
China National Materials Co., Ltd. (China) | 10,104,000 | 7,898,953 |
| ||
7,898,953 | ||
Consumer goods (0.2%) | ||
Avon Products, Inc. | 253,800 | 7,900,794 |
| ||
7,900,794 | ||
Consumer services (0.6%) | ||
Avis Budget Group, Inc. | 1,880,754 | 23,208,504 |
| ||
23,208,504 | ||
Electric utilities (0.1%) | ||
EnerNOC, Inc. | 101,800 | 3,394,012 |
| ||
3,394,012 | ||
Electrical equipment (0.4%) | ||
Emerson Electric Co. | 276,500 | 13,697,810 |
| ||
13,697,810 | ||
Electronics (4.1%) | ||
MEMC Electronic Materials, Inc. | 740,404 | 7,078,262 |
| ||
Micron Technology, Inc. | 3,859,073 | 28,094,051 |
| ||
Sensata Technologies Holding NV (Netherlands) | 2,226,030 | 36,061,686 |
| ||
Texas Instruments, Inc. | 3,276,400 | 80,894,316 |
| ||
152,128,315 | ||
Energy (oil field) (1.4%) | ||
National Oilwell Varco, Inc. | 637,200 | 24,952,752 |
| ||
Schlumberger, Ltd. | 227,800 | 13,590,548 |
| ||
Smith International, Inc. | 262,400 | 10,884,352 |
| ||
Transocean, Ltd. (Switzerland) | 67,800 | 3,133,038 |
| ||
52,560,690 |
24
COMMON STOCKS (91.7%)* cont. | Shares | Value |
| ||
Energy (other) (1.3%) | ||
First Solar, Inc. | 384,261 | $48,205,542 |
| ||
48,205,542 | ||
Engineering and construction (0.4%) | ||
Fluor Corp. | 199,100 | 9,614,539 |
| ||
Foster Wheeler AG (Switzerland) | 238,251 | 5,484,538 |
| ||
15,099,077 | ||
Financial (0.9%) | ||
CME Group, Inc. | 13,800 | 3,847,440 |
| ||
KKR & Co. LP | 1,285,613 | 11,634,798 |
| ||
MGIC Investment Corp. | 1,703,948 | 14,636,913 |
| ||
Radian Group, Inc. | 267,933 | 2,304,224 |
| ||
32,423,375 | ||
Forest products and packaging (1.0%) | ||
International Paper Co. | 1,592,100 | 38,528,820 |
| ||
38,528,820 | ||
Gaming and lottery (0.1%) | ||
Las Vegas Sands Corp. | 181,500 | 4,875,090 |
| ||
4,875,090 | ||
Health-care services (3.2%) | ||
Aetna, Inc. | 1,308,900 | 36,452,865 |
| ||
Alapis Hldg. Industrial and Commercial SA of Pharmaceutical | ||
Chemical Products (Greece) | 3,406,504 | 10,006,180 |
| ||
Express Scripts, Inc. | 460,276 | 20,795,270 |
| ||
Lincare Holdings, Inc. | 384,900 | 9,145,224 |
| ||
Medco Health Solutions, Inc. | 60,100 | 2,884,800 |
| ||
WellPoint, Inc. | 754,800 | 38,283,456 |
| ||
117,567,795 | ||
Household furniture and appliances (0.3%) | ||
Tempur-Pedic International, Inc. | 382,600 | 11,734,342 |
| ||
11,734,342 | ||
Insurance (6.1%) | ||
Aflac, Inc. | 2,023,146 | 99,518,552 |
| ||
Assured Guaranty, Ltd. (Bermuda) | 5,338,314 | 83,811,530 |
| ||
Hartford Financial Services Group, Inc. (The) | 1,671,476 | 39,129,253 |
| ||
Ping An Insurance (Group) Co., of China, Ltd. (China) F | 503,000 | 4,413,484 |
| ||
226,872,819 | ||
Investment banking/Brokerage (1.7%) | ||
Charles Schwab Corp. (The) | 748,000 | 11,062,920 |
| ||
E*Trade Financial Corp. | 285,470 | 4,176,426 |
| ||
Goldman Sachs Group, Inc. (The) | 264,351 | 39,869,418 |
| ||
Morgan Stanley | 288,100 | 7,775,819 |
| ||
62,884,583 | ||
Leisure (0.2%) | ||
Brunswick Corp. | 498,158 | 8,428,833 |
| ||
8,428,833 | ||
Machinery (1.2%) | ||
Bucyrus International, Inc. Class A | 173,800 | 10,813,836 |
| ||
International Mining Machinery Holdings, Ltd. (China) | 7,686,500 | 4,165,112 |
| ||
Joy Global, Inc. | 209,800 | 12,455,826 |
| ||
Lonking Holdings, Ltd. (China) | 6,889,000 | 5,225,185 |
| ||
Parker Hannifin Corp. | 208,600 | 12,958,232 |
| ||
45,618,191 |
25
COMMON STOCKS (91.7%)* cont. | Shares | Value |
| ||
Manufacturing (1.6%) | ||
Illinois Tool Works, Inc. | 160,300 | $6,973,050 |
| ||
Ingersoll-Rand PLC | 1,365,000 | 51,132,900 |
| ||
58,105,950 | ||
Media (0.1%) | ||
Time Warner, Inc. | 96,700 | 3,042,182 |
| ||
3,042,182 | ||
Medical technology (2.0%) | ||
Baxter International, Inc. | 412,700 | 18,063,879 |
| ||
Boston Scientific Corp. | 1,271,000 | 7,117,600 |
| ||
China Medical Technologies, Inc. ADR (China) | 751,100 | 7,698,775 |
| ||
Covidien PLC (Ireland) | 974,145 | 36,355,091 |
| ||
Medtronic, Inc. | 90,100 | 3,330,997 |
| ||
Thermo Fisher Scientific, Inc. | 82,400 | 3,696,464 |
| ||
76,262,806 | ||
Metals (1.6%) | ||
Cia Siderurgica Nacional SA ADR (Brazil) | 665,700 | 11,177,103 |
| ||
Freeport-McMoRan Copper & Gold, Inc. Class B | 98,260 | 7,029,520 |
| ||
Molycorp, Inc. | 246,000 | 3,035,640 |
| ||
Rio Tinto PLC (United Kingdom) | 181,667 | 9,422,601 |
| ||
U.S. Steel Corp. | 333,300 | 14,775,189 |
| ||
United Co. RUSAL PLC (Russia) | 3,768,000 | 4,048,518 |
| ||
Vedanta Resources PLC (United Kingdom) | 274,541 | 10,518,746 |
| ||
60,007,317 | ||
Office equipment and supplies (0.4%) | ||
Avery Dennison Corp. | 416,053 | 14,915,500 |
| ||
14,915,500 | ||
Oil and gas (3.3%) | ||
Anadarko Petroleum Corp. | 111,600 | 5,486,256 |
| ||
Apache Corp. | 308,420 | 29,478,784 |
| ||
Chevron Corp. | 439,800 | 33,517,158 |
| ||
EOG Resources, Inc. | 28,800 | 2,808,000 |
| ||
Exxon Mobil Corp. | 120,400 | 7,185,472 |
| ||
Petrohawk Energy Corp. | 1,681,113 | 26,511,152 |
| ||
Petroleo Brasileiro SA ADR (Brazil) | 543,900 | 19,797,960 |
| ||
124,784,782 | ||
Pharmaceuticals (5.0%) | ||
Abbott Laboratories | 1,631,700 | 80,083,836 |
| ||
Merck & Co., Inc. | 400,600 | 13,804,676 |
| ||
Pfizer, Inc. | 5,265,732 | 78,985,980 |
| ||
Teva Pharmaceutical Industries, Ltd. ADR (Israel) | 241,386 | 11,791,706 |
| ||
184,666,198 | ||
Power producers (0.1%) | ||
AES Corp. (The) | 353,500 | 3,644,585 |
| ||
3,644,585 | ||
Publishing (1.2%) | ||
R. R. Donnelley & Sons Co. | 2,604,906 | 43,944,764 |
| ||
43,944,764 | ||
Regional Bells (0.1%) | ||
Qwest Communications International, Inc. | 811,096 | 4,590,803 |
| ||
4,590,803 |
26
COMMON STOCKS (91.7%)* cont. | Shares | Value |
| ||
Retail (3.6%) | ||
CVS Caremark Corp. | 774,171 | $23,759,308 |
| ||
Kohls Corp. | 308,000 | 14,688,520 |
| ||
Lowes Cos., Inc. | 1,066,200 | 22,112,988 |
| ||
Macys, Inc. | 632,877 | 11,803,156 |
| ||
Office Depot, Inc. | 721,934 | 3,118,755 |
| ||
Staples, Inc. | 435,600 | 8,855,748 |
| ||
Target Corp. | 642,900 | 32,993,628 |
| ||
Urban Outfitters, Inc. | 511,300 | 16,443,408 |
| ||
Wal-Mart Stores, Inc. | 4,300 | 220,117 |
| ||
133,995,628 | ||
Schools (0.8%) | ||
Apollo Group, Inc. Class A | 628,029 | 28,970,978 |
| ||
28,970,978 | ||
Semiconductor (1.9%) | ||
Atmel Corp. | 3,848,027 | 20,125,181 |
| ||
Himax Technologies, Inc. ADR (Taiwan) | 1,779,370 | 5,444,872 |
| ||
KLA-Tencor Corp. | 800,300 | 25,345,501 |
| ||
Lam Research Corp. | 507,860 | 21,426,613 |
| ||
72,342,167 | ||
Software (3.7%) | ||
Longtop Financial Technologies Ltd. ADR (Hong Kong) | 178,300 | 5,942,739 |
| ||
Microsoft Corp. | 3,656,900 | 94,384,589 |
| ||
Oracle Corp. | 1,223,300 | 28,918,812 |
| ||
VMware, Inc. Class A | 97,400 | 7,551,422 |
| ||
136,797,562 | ||
Technology services (4.0%) | ||
Baidu, Inc. ADR (China) | 141,523 | 11,521,387 |
| ||
Google, Inc. Class A | 126,013 | 61,097,163 |
| ||
Unisys Corp. § | 2,191,342 | 59,188,147 |
| ||
Western Union Co. (The) | 455,000 | 7,384,650 |
| ||
Yahoo!, Inc. | 626,400 | 8,694,432 |
| ||
147,885,779 | ||
Telecommunications (0.7%) | ||
Iridium Communications, Inc. | 320,500 | 3,304,355 |
| ||
Sprint Nextel Corp. | 4,662,525 | 21,307,739 |
| ||
24,612,094 | ||
Tobacco (2.6%) | ||
Philip Morris International, Inc. | 1,885,969 | 96,259,858 |
| ||
96,259,858 | ||
Toys (%) | ||
Hasbro, Inc. | 42,400 | 1,787,160 |
| ||
1,787,160 | ||
| ||
Total common stocks (cost $3,415,283,358) | $3,420,655,520 |
27
WARRANTS (2.6%)* | Expiration | Strike | ||
date | Price | Warrants | Value | |
| ||||
Bank of America Corp. W | 1/16/19 | $13.30 | 1,297,705 | $9,927,443 |
| ||||
Bank of America Corp. W | 10/28/18 | 30.79 | 1,971,235 | 5,440,609 |
| ||||
JPMorgan Chase & Co. W | 10/28/18 | 42.42 | 4,125,948 | 58,836,018 |
| ||||
Wells Fargo & Co. W | 10/28/18 | 34.01 | 2,711,400 | 23,290,926 |
| ||||
Total warrants (cost $93,044,473) | $97,494,996 | |||
PURCHASED OPTIONS | Expiration date/ | Contract | ||
OUTSTANDING (1.8%)* | strike price | amount | Value | |
| ||||
Abbott Laboratories (Call) | Jan-11/$50.00 | 5,807,348 | $13,240,753 | |
| ||||
Aflac, Inc. (Call) F | Jan-11/55.00 | 2,013,644 | 5,013,991 | |
| ||||
Apollo Group, Inc. Class A (Call) | Jan-11/60.00 | 2,269,877 | 4,003,382 | |
| ||||
Baxter International, Inc. (Call) | Jan-11/45.00 | 1,733,333 | 4,115,973 | |
| ||||
Genzyme Corp. (Put) | Oct-10/65.00 | 689,024 | 1,260,914 | |
| ||||
Goldman Sachs Group, Inc. (The) (Call) | Jan-11/180.00 | 447,720 | 1,589,406 | |
| ||||
JPMorgan Chase & Co. (Call) F | Jan-11/45.00 | 2,098,489 | 3,784,466 | |
| ||||
Petrohawk Energy Corp. (Call) F | Jan-11/21.00 | 3,446,770 | 2,072,529 | |
| ||||
Petrohawk Energy Corp. (Call) | Jan-11/25.00 | 936,000 | 123,568 | |
| ||||
Pfizer, Inc. (Call) | Dec-10/17.00 | 7,279,850 | 2,038,358 | |
| ||||
Pfizer, Inc. (Call) | Dec-10/18.00 | 6,597,792 | 989,669 | |
| ||||
Qualcomm, Inc. (Call) | Jan-11/45.00 | 6,076,601 | 4,253,621 | |
| ||||
Qualcomm, Inc. (Call) | Jan-11/45.00 | 1,245,929 | 940,445 | |
| ||||
State Street Corp. (Call) F | Jan-11/45.00 | 2,876,720 | 4,493,193 | |
| ||||
Technology Select Sector SPDR (Call) | Aug-10/22.00 | 2,907,535 | 1,221,165 | |
| ||||
WellPoint, Inc. (Call) F | Jan-11/55.00 | 2,135,133 | 6,001,421 | |
| ||||
Wells Fargo & Co. (Call) | Jan-11/31.00 | 4,386,432 | 6,053,276 | |
| ||||
Wells Fargo & Co. (Call) | Jan-11/32.50 | 4,628,429 | 4,443,292 | |
| ||||
Wells Fargo & Co. (Call) | Jan-11/30.00 | 1,485,681 | 2,585,085 | |
| ||||
Total purchased options outstanding (cost $121,108,724) | $68,224,507 | |||
U.S. TREASURY OBLIGATIONS (0.8%)* | Principal amount | Value |
| ||
U.S. Treasury Bonds 4 1/2s, May 15, 2038 i | $5,023,000 | $5,532,382 |
| ||
U.S. Treasury Inflation Protected Securities | ||
2 1/2s, July 15, 2016 i | 4,472,318 | 4,994,774 |
2s, July 15, 2014 i | 2,077,497 | 2,232,707 |
1 7/8s, July 15, 2013 i | 1,775,806 | 1,882,656 |
| ||
U.S. Treasury Notes | ||
2 3/4s, February 15, 2019 i | 2,250,000 | 2,292,367 |
1 3/8s, September 15, 2012 i | 161,000 | 164,510 |
7/8s, January 31, 2011 i | 13,505,000 | 13,548,581 |
| ||
Total U.S. treasury obligations (cost $30,647,977) | $30,647,977 | |
| ||
INVESTMENT COMPANIES (0.7%)* | Shares | Value |
| ||
iShares FTSE/Xinhua China 25 Index Fund | 378,300 | $15,623,790 |
| ||
SPDR KBW Regional Banking ETF | 157,600 | 3,744,576 |
| ||
SPDR S&P Homebuilders ETF | 382,500 | 5,764,275 |
| ||
Total investment companies (cost $25,285,183) | $25,132,641 |
28
SENIOR LOANS (0.4%)* c | Principal amount | Value |
| ||
Visteon Corp. bank term loan FRN Ser. B, 5 1/4s, 2013 | $1,155,064 | $1,238,806 |
| ||
Visteon Corp. bank term loan FRN Ser. B1, 5 1/4s, 2013 | 12,439,464 | 13,341,325 |
| ||
Total senior loans (cost $14,850,215) | $14,580,131 | |
CORPORATE BONDS AND NOTES (0.2%)* | Principal amount | Value |
| ||
Visteon Corp. sr. unsec. unsub. notes 8 1/4s, 2011 (In default) | $2,355,000 | $2,219,588 |
| ||
Visteon Corp. sr. unsec. unsub. notes 7s, 2014 (In default) | 3,925,000 | 3,699,313 |
| ||
Visteon Corp. 144A sr. unsec. notes 12 1/4s, 2016 (In default) | 1,780,000 | 2,207,200 |
| ||
Total corporate bonds and notes (cost $9,051,228) | $8,126,101 | |
SHORT-TERM INVESTMENTS (4.2%)* | Principal amount/shares | Value |
| ||
U.S. Treasury Bills for an effective yield of 0.23%, | ||
June 2, 2011 ## | $1,080,000 | $1,077,883 |
| ||
U.S. Treasury Bills zero%, January 20, 2011 i | 2,240,000 | 2,237,984 |
| ||
Putnam Money Market Liquidity Fund 0.12% e | 154,944,498 | 154,944,498 |
| ||
Total short-term investments (cost $158,260,361) | $158,260,365 | |
TOTAL INVESTMENTS | ||
| ||
Total investments (cost $3,867,531,519) | $3,823,122,238 |
Key to holdings abbreviations
ADR | American Depository Receipts |
ADS | American Depository Shares |
ETF | Exchange Traded Fund |
FRN | Floating Rate Notes |
Notes to the funds portfolio
Unless noted otherwise, the notes to the funds portfolio are for the close of the funds reporting period, which ran from August 1, 2009 through July 31, 2010 (the reporting period).
* Percentages indicated are based on net assets of $3,728,823,293.
Non-income-producing security.
§ Affiliated companies (Note 10).
## These securities, in part or in entirety, were pledged and segregated with the custodian for collateral on certain derivatives contracts at the close of the reporting period.
c Senior loans are exempt from registration under the Securities Act of 1933, as amended, but contain certain restrictions on resale and cannot be sold publicly. These loans pay interest at rates which adjust periodically. The interest rates shown for senior loans are the current interest rates at the close of the reporting period. Senior loans are also subject to mandatory and/or optional prepayment which cannot be predicted. As a result, the remaining maturity may be substantially less than the stated maturity shown (Notes 1 and 7).
e See Note 6 to the financial statements regarding investments in Putnam Money Market Liquidity Fund. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.
F Is valued at fair value following procedures approved by the Trustees. Securities may be classified as Level 2 or Level 3 for Accounting Standards Codification ASC 820 Fair Value Measurements and Disclosures (ASC 820) based on the securities valuation inputs. At the close of the reporting period, fair value pricing was also used for certain foreign securities in the portfolio (Note 1).
i Securities purchased with cash or securities received, that were pledged to the fund for collateral on certain derivatives contracts (Note 1).
W Warrants issued to the U.S. Treasury under the Troubled Asset Relief Program (TARP).
At the close of the reporting period, the fund maintained liquid assets totaling $53,047,783 to cover certain derivatives contracts.
29
144A after the name of an issuer represents securities exempt from registration under Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
ADR and ADS after the name of a foreign holding represents ownership of foreign securities on deposit with a custodian bank.
The rates shown on FRN are the current interest rates at the close of the reporting period.
The dates shown on debt obligations are the original maturity dates.
FORWARD CURRENCY CONTRACTS at 7/31/10 (aggregate face value $47,475,568) | ||||||
Contract | Delivery | Aggregate | Unrealized | |||
Counterparty Currency | type | date | Value | face value | depreciation | |
| ||||||
Credit Suisse AG | ||||||
| ||||||
Euro | Sell | 8/18/10 | $33,628,512 | $32,655,274 | $(973,238) | |
| ||||||
UBS AG | ||||||
| ||||||
British Pound | Sell | 8/18/10 | 15,321,783 | 14,820,294 | (501,489) | |
| ||||||
Total | $(1,474,727) | |||||
WRITTEN OPTIONS OUTSTANDING at 7/31/10 (premiums received $69,818,559) | ||||||
Contract | Expiration date/ | |||||
amount | strike price | Value | ||||
| ||||||
Abbott Laboratories (Call) | 5,807,348 | Jan-11/$52.50 | $7,375,331 | |||
| ||||||
Aflac, Inc. (Call) | 2,013,644 | Jan-11/60.00 | 2,286,084 | |||
| ||||||
Apollo Group, Inc. Class A (Call) | 2,269,877 | Jan-11/70.00 | 1,529,216 | |||
| ||||||
Baxter International, Inc. (Call) | 1,733,333 | Jan-11/50.00 | 1,369,333 | |||
| ||||||
Genzyme Corp. (Call) | 689,024 | Oct-10/75.00 | 689,024 | |||
| ||||||
Genzyme Corp. (Put) | 689,024 | Oct-10/57.50 | 461,646 | |||
| ||||||
Goldman Sachs Group, Inc. (The) (Call) | 447,720 | Jan-11/185.00 | 1,231,230 | |||
| ||||||
JPMorgan Chase & Co. (Call) F | 2,098,489 | Jan-11/50.00 | 1,341,491 | |||
| ||||||
Petrohawk Energy Corp. (Call) F | 3,446,770 | Jan-11/25.00 | 785,242 | |||
| ||||||
Petrohawk Energy Corp. (Call) | 936,000 | Jan-11/30.00 | 25,035 | |||
| ||||||
Pfizer, Inc. (Call) | 7,279,850 | Dec-10/18.00 | 1,091,978 | |||
| ||||||
Pfizer, Inc. (Call) | 6,597,792 | Dec-10/20.00 | 263,912 | |||
| ||||||
Qualcomm, Inc. (Call) | 6,076,601 | Jan-11/47.50 | 2,248,342 | |||
| ||||||
Qualcomm, Inc. (Call) | 1,245,929 | Jan-11/47.50 | 514,679 | |||
| ||||||
State Street Corp. (Call) F | 2,876,720 | Jan-11/50.00 | 1,694,155 | |||
| ||||||
WellPoint, Inc. (Call) F | 2,135,133 | Jan-11/57.50 | 4,263,541 | |||
| ||||||
Wells Fargo & Co. (Call) | 4,628,429 | Jan-11/35.00 | 2,267,930 | |||
| ||||||
Wells Fargo & Co. (Call) | 4,386,432 | Jan-11/34.00 | 2,851,181 | |||
| ||||||
Wells Fargo & Co. (Call) | 1,485,681 | Jan-11/32.50 | 1,426,254 | |||
| ||||||
Total | $33,715,604 |
TOTAL RETURN SWAP CONTRACTS OUTSTANDING at 7/31/10
Fixed payments | Total return | |||||
Swap counterparty / | Termination | received (paid) by | received by | Unrealized | ||
Notional amount | date | fund per annum | or paid by fund | appreciation | ||
| ||||||
Goldman Sachs International | ||||||
baskets | 159,334 | 7/28/11 | (1 month USD- | A basket (GSGLMIN2) | $312,025 | |
LIBOR-BBA) | of common stocks | |||||
| ||||||
JPMorgan Chase Bank, N.A. | ||||||
baskets | 629,891 | 7/27/11 | (1 month USD- | A basket (JPCBTRAN) | 3,165,374 | |
LIBOR-BBA) | of common stocks | |||||
| ||||||
Total | $3,477,399 |
30
ASC 820 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the funds investments. The three levels are defined as follows:
Level 1 Valuations based on quoted prices for identical securities in active markets.
Level 2 Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3 Valuations based on inputs that are unobservable and significant to the fair value measurement.
The following is a summary of the inputs used to value the funds net assets as of the close of the reporting period:
Valuation inputs | |||
| |||
Investments in securities: | Level 1 | Level 2 | Level 3 |
| |||
Common stocks: | |||
| |||
Basic materials | $139,510,639 | $11,947,471 | $ |
| |||
Capital goods | 316,770,375 | 9,390,297 | |
| |||
Communication services | 137,532,279 | 3,018,460 | |
| |||
Conglomerates | 33,680,230 | 3,950,660 | |
| |||
Consumer cyclicals | 343,709,109 | 21,717,231 | |
| |||
Consumer staples | 180,099,442 | | |
| |||
Energy | 225,551,014 | 6,234,160 | |
| |||
Financials | 377,708,993 | | 7,840,695 |
| |||
Health care | 569,830,951 | | |
| |||
Technology | 1,025,124,917 | | |
| |||
Utilities and power | 7,038,597 | | |
| |||
Total common stocks | 3,356,556,546 | 56,258,279 | 7,840,695 |
Corporate bonds and notes | | 8,126,101 | |
| |||
Investment Companies | 25,132,641 | | |
| |||
Purchased options outstanding | | 68,224,507 | |
| |||
Senior loans | | 14,580,131 | |
| |||
U.S. Treasury Obligations | | 30,647,977 | |
| |||
Warrants | 97,494,996 | | |
| |||
Short-term investments | 154,944,498 | 3,315,867 | |
| |||
Totals by level | $3,634,128,681 | $181,152,862 | $7,840,695 |
Valuation inputs | |||
| |||
Other financial instruments: | Level 1 | Level 2 | Level 3 |
| |||
Forward currency contracts to sell | $ | $(1,474,727) | $ |
| |||
Written options | | (33,715,604) | |
| |||
Total return swap contracts | | 3,477,399 | |
| |||
Totals by level | $ | $(31,712,932) | $ |
At the start and close of the reporting period, Level 3 investments in securities and other financial instruments were not considered a significant portion of the funds portfolio.
The accompanying notes are an integral part of these financial statements.
31
Statement of assets and liabilities 7/31/10
ASSETS | |
| |
Investment in securities, at value (Note 1): | |
Unaffiliated issuers (identified cost $3,658,300,655) | $3,608,989,593 |
Affiliated issuers (identified cost $209,230,864) (Notes 6 and 10) | 214,132,645 |
| |
Foreign currency (cost $196,073) (Note 1) | 205,679 |
| |
Dividends, interest and other receivables | 14,042,351 |
| |
Receivable for shares of the fund sold | 5,103,168 |
| |
Receivable for investments sold | 96,760,915 |
| |
Unrealized appreciation on swap contracts (Note 1) | 3,477,399 |
| |
Total assets | 3,942,711,750 |
LIABILITIES | |
| |
Payable to custodian (Note 2) | 1,531,990 |
| |
Payable for investments purchased | 132,566,981 |
| |
Payable for shares of the fund repurchased | 6,653,638 |
| |
Payable for compensation of Manager (Note 2) | 1,739,975 |
| |
Payable for investor servicing fees (Note 2) | 545,815 |
| |
Payable for custodian fees (Note 2) | 59,771 |
| |
Payable for Trustee compensation and expenses (Note 2) | 1,011,680 |
| |
Payable for administrative services (Note 2) | 24,115 |
| |
Payable for distribution fees (Note 2) | 885,127 |
| |
Unrealized depreciation on forward currency contracts (Note 1) | 1,474,727 |
| |
Written options outstanding, at value (premiums received $69,818,559) (Notes 1 and 3) | 33,715,604 |
| |
Collateral on certain derivative contracts, at value (Note 1) | 32,885,961 |
| |
Other accrued expenses | 793,073 |
| |
Total liabilities | 213,888,457 |
Net assets | $3,728,823,293 |
REPRESENTED BY | |
| |
Paid-in capital (Unlimited shares authorized) (Notes 1 and 4) | $6,024,521,209 |
| |
Undistributed net investment income (Note 1) | 12,852,238 |
| |
Accumulated net realized loss on investments and foreign currency transactions (Note 1) | (2,302,273,990) |
| |
Net unrealized depreciation of investments and assets and liabilities in foreign currencies | (6,276,164) |
| |
Total Representing net assets applicable to capital shares outstanding | $3,728,823,293 |
(Continued on next page)
32
Statement of assets and liabilities (Continued)
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE | |
| |
Net asset value and redemption price per class A share | |
($3,111,020,053 divided by 154,636,628 shares) | $20.12 |
| |
Offering price per class A share (100/94.25 of $20.12)* | $21.35 |
| |
Net asset value and offering price per class B share ($182,569,204 divided by 10,682,052 shares)** | $17.09 |
| |
Net asset value and offering price per class C share ($87,221,125 divided by 4,654,000 shares)** | $18.74 |
| |
Net asset value and redemption price per class M share ($28,856,811 divided by 1,552,529 shares) | $18.59 |
| |
Offering price per class M share (100/96.50 of $18.59)* | $19.26 |
| |
Net asset value, offering price and redemption price per class R share | |
($5,572,910 divided by 281,407 shares) | $19.80 |
| |
Net asset value, offering price and redemption price per class Y share | |
($313,583,190 divided by 14,956,988 shares) | $20.97 |
|
* On single retail sales of less than $50,000. On sales of $50,000 or more the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
33
Statement of operations Year ended 7/31/10
INVESTMENT INCOME | |
| |
Dividends (net of foreign tax of $354,223) | $41,328,997 |
| |
Interest (including interest income of $139,309 from investments in affiliated issuers) (Note 6) | 536,481 |
| |
Securities lending | 1,703,380 |
| |
Total investment income | 43,568,858 |
EXPENSES | |
| |
Compensation of Manager (Note 2) | 20,218,222 |
| |
Investor servicing fees (Note 2) | 13,515,569 |
| |
Custodian fees (Note 2) | 113,160 |
| |
Trustee compensation and expenses (Note 2) | 273,984 |
| |
Administrative services (Note 2) | 174,433 |
| |
Distribution fees Class A (Note 2) | 7,725,953 |
| |
Distribution fees Class B (Note 2) | 2,131,963 |
| |
Distribution fees Class C (Note 2) | 633,962 |
| |
Distribution fees Class M (Note 2) | 216,360 |
| |
Distribution fees Class R (Note 2) | 17,522 |
| |
Other | 2,244,232 |
| |
Total expenses | 47,265,360 |
Expense reduction (Note 2) | (1,081,642) |
| |
Net expenses | 46,183,718 |
Net investment loss | (2,614,860) |
| |
Net realized gain on investments (including realized gain of $130,611 on affiliated issuers) | |
(Notes 1, 3 and 10) | 941,510,712 |
| |
Net realized gain on swap contracts (Note 1) | 61,474,297 |
| |
Net realized loss on foreign currency transactions (Note 1) | (1,703,513) |
| |
Net realized loss on written options (Notes 1 and 3) | (32,696,478) |
| |
Net unrealized depreciation of assets and liabilities in foreign currencies during the year | (1,330,718) |
| |
Net unrealized depreciation of investments, swap contracts and written options during the year | (336,393,841) |
| |
Net gain on investments | 630,860,459 |
Net increase in net assets resulting from operations | $628,245,599 |
|
The accompanying notes are an integral part of these financial statements.
34
Statement of changes in net assets
INCREASE (DECREASE) IN NET ASSETS | Year ended 7/31/10 | Year ended 7/31/09 |
| ||
Operations: | ||
Net investment income (loss) | $(2,614,860) | $17,037,236 |
| ||
Net realized gain (loss) on investments | ||
and foreign currency transactions | 968,585,018 | (852,439,087) |
| ||
Net unrealized appreciation (depreciation) of | ||
investments and assets and liabilities in foreign currencies | (337,724,559) | 420,279,663 |
| ||
Net increase (decrease) in net assets resulting from operations | 628,245,599 | (415,122,188) |
| ||
Distributions to shareholders (Note 1): | ||
From ordinary income | ||
Net investment income | ||
| ||
Class A | (29,854,006) | |
| ||
Class B | (1,013,327) | |
| ||
Class C | (328,745) | |
| ||
Class M | (183,395) | |
| ||
Class R | (23,854) | |
| ||
Class Y | (2,000,365) | |
| ||
Increase in capital from settlement payments | 8,472 | 145,678 |
| ||
Redemption fees (Note 1) | 13,392 | 4,802 |
| ||
Increase (decrease) from capital share transactions (Note 4) | 12,864,933 | (1,061,431,880) |
| ||
Total increase (decrease) in net assets | 607,728,704 | (1,476,403,588) |
NET ASSETS | ||
| ||
Beginning of year | 3,121,094,589 | 4,597,498,177 |
| ||
End of year (including undistributed net investment | ||
income of $12,852,238 and $20,947,009, respectively) | $3,728,823,293 | $3,121,094,589 |
|
The accompanying notes are an integral part of these financial statements.
35
Financial highlights (For a common share outstanding throughout the period)
INVESTMENT OPERATIONS: | LESS DISTRIBUTIONS: | RATIOS AND SUPPLEMENTAL DATA: | ||||||||||||
| ||||||||||||||
Ratio | Ratio | |||||||||||||
Net realized | of expenses | of net investment | ||||||||||||
Net asset value, | and unrealized | Total from | From | Total return | Net assets, | to average | income (loss) | Portfolio | ||||||
beginning | Net investment | gain (loss) | investment | net investment | Total | Redemption | Non-recurring | Net asset value, | at net asset | end of period | net assets | to average | turnover | |
Period ended | of period | income (loss) a | on investments | operations | income | distributions | fees e | reimbursements | end of period | value (%) b | (in thousands) | (%) c | net assets (%) | (%) |
| ||||||||||||||
Class A | ||||||||||||||
July 31, 2010 | $16.85 | e | 3.46 | 3.46 | (.19) | (.19) | | e,f | $20.12 | 20.58 | $3,111,020 | 1.26 | (.03) | 177.37 |
July 31, 2009 | 16.93 | .08 | (.16) h | (.08) | | | | e, i | 16.85 | (.47) h | 2,715,001 | 1.26 d | .61 d | 186.67 |
July 31, 2008 | 18.54 | (.01) | (1.60) | (1.61) | | | | | 16.93 | (8.68) | 3,213,102 | 1.20 d | (.08) d | 67.79 |
July 31, 2007 | 16.20 | (.06) | 2.40 | 2.34 | | | | | 18.54 | 14.44 | 4,790,506 | 1.14 d | (.33) d | 65.48 |
July 31, 2006 | 17.16 | (.04) g | (.79) | (.83) | (.13) | (.13) | | | 16.20 | (4.93) g | 5,528,893 | 1.04 d,g | (.23) d,g | 75.88 |
| ||||||||||||||
Class B | ||||||||||||||
July 31, 2010 | $14.35 | (.13) | 2.94 | 2.81 | (.07) | (.07) | | e,f | $17.09 | 19.64 | $182,569 | 2.01 | (.77) | 177.37 |
July 31, 2009 | 14.52 | (.02) | (.15) h | (.17) | | | | e, i | 14.35 | (1.17) h | 217,981 | 2.01 d | (.13) d | 186.67 |
July 31, 2008 | 16.03 | (.13) | (1.38) | (1.51) | | | | | 14.52 | (9.42) | 368,079 | 1.95 d | (.84) d | 67.79 |
July 31, 2007 | 14.12 | (.17) | 2.08 | 1.91 | | | | | 16.03 | 13.53 | 726,751 | 1.89 d | (1.08) d | 65.48 |
July 31, 2006 | 14.95 | (.15) g | (.68) | (.83) | | | | | 14.12 | (5.55) g | 1,089,121 | 1.79 d,g | (.98) d,g | 75.88 |
| ||||||||||||||
Class C | ||||||||||||||
July 31, 2010 | $15.76 | (.15) | 3.24 | 3.09 | (.11) | (.11) | | e,f | $18.74 | 19.63 | $87,221 | 2.01 | (.79) | 177.37 |
July 31, 2009 | 15.95 | (.02) | (.17) h | (.19) | | | | e, i | 15.76 | (1.19) h | 37,356 | 2.01 d | (.14) d | 186.67 |
July 31, 2008 | 17.60 | (.14) | (1.51) | (1.65) | | | | | 15.95 | (9.38) | 45,990 | 1.95 d | (.82) d | 67.79 |
July 31, 2007 | 15.50 | (.19) | 2.29 | 2.10 | | | | | 17.60 | 13.55 | 59,248 | 1.89 d | (1.08) d | 65.48 |
July 31, 2006 | 16.42 | (.16) g | (.76) | (.92) | | | | | 15.50 | (5.60) g | 72,213 | 1.79 d,g | (.98) d,g | 75.88 |
| ||||||||||||||
Class M | ||||||||||||||
July 31, 2010 | $15.60 | (.10) | 3.21 | 3.11 | (.12) | (.12) | | e,f | $18.59 | 19.94 | $28,857 | 1.76 | (.53) | 177.37 |
July 31, 2009 | 15.74 | .01 | (.15) h | (.14) | | | | e,i | 15.60 | (.89) h | 25,635 | 1.76 d | .11 d | 186.67 |
July 31, 2008 | 17.34 | (.10) | (1.50) | (1.60) | | | | | 15.74 | (9.23) | 32,089 | 1.70 d | (.58) d | 67.79 |
July 31, 2007 | 15.22 | (.14) | 2.26 | 2.12 | | | | | 17.34 | 13.93 | 47,801 | 1.64 d | (.83) d | 65.48 |
July 31, 2006 | 16.12 | (.12) g | (.75) | (.87) | (.03) | (.03) | | | 15.22 | (5.42) g | 60,394 | 1.54 d,g | (.73) d,g | 75.88 |
| ||||||||||||||
Class R | ||||||||||||||
July 31, 2010 | $16.61 | (.06) | 3.41 | 3.35 | (.16) | (.16) | | e,f | $19.80 | 20.23 | $5,573 | 1.51 | (.29) | 177.37 |
July 31, 2009 | 16.72 | .05 | (.16) h | (.11) | | | | e, i | 16.61 | (.66) h | 2,156 | 1.51 d | .35 d | 186.67 |
July 31, 2008 | 18.37 | (.05) | (1.60) | (1.65) | | | | | 16.72 | (8.98) | 2,363 | 1.45 d | (.30) d | 67.79 |
July 31, 2007 | 16.09 | (.10) | 2.38 | 2.28 | | | | | 18.37 | 14.17 | 2,243 | 1.39 d | (.58) d | 65.48 |
July 31, 2006 | 17.06 | (.09) g | (.77) | (.86) | (.11) | (.11) | | | 16.09 | (5.12) g | 1,740 | 1.29 d,g | (.50) d,g | 75.88 |
| ||||||||||||||
Class Y | ||||||||||||||
July 31, 2010 | $17.54 | .04 | 3.62 | 3.66 | (.23) | (.23) | | e,f | $20.97 | 20.91 | $313,583 | 1.01 | .21 | 177.37 |
July 31, 2009 | 17.58 | .14 | (.18) h | (.04) | | | | e, i | 17.54 | (.23) h | 122,966 | 1.01 d | .96 d | 186.67 |
July 31, 2008 | 19.21 | .03 | (1.66) | (1.63) | | | | | 17.58 | (8.49) | 935,875 | .95 d | .18 d | 67.79 |
July 31, 2007 | 16.74 | (.02) | 2.49 | 2.47 | | | | | 19.21 | 14.76 | 1,297,987 | .89 d | (.08) d | 65.48 |
July 31, 2006 | 17.73 | e,g | (.82) | (.82) | (.17) | (.17) | | | 16.74 | (4.69) g | 1,579,957 | .79 d,g | .02 d,g | 75.88 |
|
See notes to financial highlights at the end of this section.
The accompanying notes are an integral part of these financial statements.
36 | 37 |
Financial highlights (Continued)
a Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding during the period.
b Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
c Includes amounts paid through expense offset and brokerage/service arrangements (Note 2).
d Reflects an involuntary contractual expense limitation and/or waivers of certain fund expenses in connection with investments in Putnam Prime Money Market Fund in effect during the period. As a result of such limitation and/or waivers, the expenses of each class reflect a reduction of the following amounts:
Percentage of | |
average net assets | |
| |
July 31, 2009 | 0.03% |
| |
July 31, 2008 | <0.01 |
| |
July 31, 2007 | <0.01 |
| |
July 31, 2006 | <0.01 |
|
e Amount represents less than $0.01 per share.
f Reflects a non-recurring reimbursement pursuant to a settlement between the Securities and Exchange Commission (SEC) and Prudential Securities, Inc., which amounted to less than $0.01 per share outstanding as of March 30, 2010.
g Reflects a non-recurring reimbursement from Putnam Investments relating to the calculation of certain amounts paid by the fund to Putnam in previous years for transfer agent services, which amounted to $0.01 per share and 0.06% of average net assets for the period ended July 31, 2006.
h Reflects a non-recurring litigation payment from Enron Corporation which amounted to the following amounts per share outstanding as of December 29, 2008.
Per share | |
| |
Class A | $0.11 |
| |
Class B | 0.10 |
| |
Class C | 0.11 |
| |
Class M | 0.10 |
| |
Class R | 0.11 |
| |
Class Y | 0.12 |
|
This payment resulted in an increase to total returns of 0.71% for the year ended July 31, 2009.
i Reflects a non-recurring reimbursement pursuant to a settlement between the SEC and Millennium Partners, L.P., Millennium Management, L.L.C., and Millennium International Management, L.L.C., which amounted to less than $0.01 per share outstanding as of June 23, 2009.
The accompanying notes are an integral part of these financial statements.
38
Notes to financial statements 7/31/10
Note 1: Significant accounting policies
Putnam Voyager Fund (the fund) is a Massachusetts business trust, which is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The fund invests mainly in common stocks of U.S. companies, with a focus on growth stocks.
The fund offers class A, class B, class C, class M, class R and class Y shares. Class A and class M shares are sold with a maximum front-end sales charge of 5.75% and 3.50%, respectively, and generally do not pay a contingent deferred sales charge. Class B shares, which convert to class A shares after approximately eight years, do not pay a front-end sales charge and are subject to a contingent deferred sales charge if those shares are redeemed within six years of purchase. Class C shares have a one-year 1.00% contingent deferred sales charge and do not convert to class A shares. Class R shares, which are offered to qualified employee-benefit plans, are sold at net asset value. The expenses for class A, class B, class C, class M and class R shares may differ based on the distribution fee of each class, which is identified in Note 2. Class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, class B, class C, class M and class R shares, but do not bear a distribution fee. Class Y shares are generally only available to corporate and institutional clients and clients in other approved programs.
A 1.00% redemption fee applied on certain shares that were redeemed (either by selling or exchanging into another fund) within 7 days of purchase. The redemption fee is accounted for as an addition to paid-in-capital. Effective August 2, 2010, a redemption fee will no longer apply to shares redeemed.
Investment income, realized and unrealized gains and losses and expenses of the fund are borne pro-rata based on the relative net assets of each class to the total net assets of the fund, except that each class bears expenses unique to that class (including the distribution fees applicable to such classes). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. If the fund were liquidated, shares of each class would receive their pro-rata share of the net assets of the fund. In addition, the Trustees declare separate dividends on each class of shares.
In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The funds maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the funds management team expects the risk of material loss to be remote.
The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the period from August 1, 2009 through July 31, 2010 (the reporting period). Actual results could differ from those estimates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements.
A) Security valuation Investments for which market quotations are readily available are valued at the last reported sales price on their principal exchange, or official closing price for certain markets and are classified as Level 1 securities. If no sales are reported as in the case of some securities traded over-the-counter a security is valued at its last reported bid price and is generally categorized as a Level 2 security.
Market quotations are not considered to be readily available for certain debt obligations; such investments are valued on the basis of valuations furnished by an independent pricing service approved by the Trustees or dealers selected by Putnam Investment Management, LLC (Putnam Management), the funds manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC. Such services or dealers determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships, generally recognized by institutional traders, between securities (which considers such factors as security prices, yields, maturities and ratings). These securities will generally be categorized as Level 2.
Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value foreign equity securities taking into account multiple factors including movements in the
39
U.S. securities markets, currency valuations and comparisons to the valuation of American Depository Receipts, exchange-traded funds and futures contracts. These securities, which will generally represent a transfer from a Level 1 to a Level 2 security, will be classified as Level 2. The number of days on which fair value prices will be used will depend on market activity and it is possible that fair value prices will be used by the fund to a significant extent. At the close of the reporting period, fair value pricing was used for certain foreign securities in the portfolio. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate.
To the extent a pricing service or dealer is unable to value a security or provides a valuation that Putnam Management does not believe accurately reflects the securitys fair value, the security will be valued at fair value by Putnam Management. Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures and recovery rates. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs.
Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.
B) Joint trading account Pursuant to an exemptive order from the Securities and Exchange Commission (the SEC), the fund may transfer uninvested cash balances, including cash collateral received under security lending arrangements, into a joint trading account along with the cash of other registered investment companies and certain other accounts managed by Putnam Management. These balances may be invested in issues of short-term investments having maturities of up to 397 days for collateral received under security lending arrangements and up to 90 days for other cash investments.
C) Security transactions and related investment income Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis.
Interest income is recorded on the accrual basis. Dividend income, net of applicable withholding taxes, is recognized on the ex-dividend date except that certain dividends from foreign securities, if any, are recognized as soon as the fund is informed of the ex-dividend date. Non-cash dividends, if any, are recorded at the fair market value of the securities received. Dividends representing a return of capital or capital gains, if any, are reflected as a reduction of cost and/or as a realized gain.
All premiums/discounts are amortized/accreted on a yield-to-maturity basis.
D) Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The market value of foreign securities, currency holdings, and other assets and liabilities is recorded in the books and records of the fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when earned or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net realized exchange gains or losse s on closed forward currency contracts, disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions and the difference between the amount of investment income and foreign withholding taxes recorded on the funds books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized appreciation and depreciation of assets and liabilities in foreign currencies arise from changes in the value of open forward currency contracts and assets and liabilities other than investments at the period end, resulting from changes in the exchange rate. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations, not present with domestic investments.
E) Futures and options contracts The fund used options contracts and may use futures contracts to hedge against changes in the values of securities the fund owns, owned or expects to purchase.
The potential risk to the fund is that the change in value of futures and options contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the
40
underlying instruments, if there is an illiquid secondary market for the contracts, if interest or exchange rates move unexpectedly or if the counterparty to the contract is unable to perform. With futures, there is minimal counterparty credit risk to the fund since futures are exchange traded and the exchanges clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. Risks may exceed amounts recognized on the Statement of assets and liabilities. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Realized gains and losses on purchased options are included in realized gains and losses on investment securities. If a written call option is exercised, the premium originally received is recorded as an addition to sales proceeds. If a written put option is exercised, the premium originally received is recorded as a reduction to the cost of investments.
Futures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. The fund and the broker agree to exchange an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments are known as variation margin. Exchange traded options are valued at the last sale price or, if no sales are reported, the last bid price for purchased options and the last ask price for written options. Options traded over-the-counter are valued using prices supplied by dealers. Futures and written option contracts outstanding at period end, if any, are listed after the funds portfolio. Outstanding contracts on purchased options contracts at the close of the reporting period are indicative of the volume of activity during the period. See Note 3 for the volume of written options contracts activity for the reporting period. The fund did not have any activity on futures contracts during the reporting period.
F) Forward currency contracts The fund may buy and sell forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date. These contracts are used to manage foreign exchange risk. The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The market value of the contract will fluctuate with changes in currency exchange rates. The contract is marked to market daily and the change in market value is recorded as an unrealized gain or loss. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The fund could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts are unable to m eet the terms of their contracts or if the fund is unable to enter into a closing position. Risks may exceed amounts recognized on the Statement of assets and liabilities. Forward currency contracts outstanding at period end, if any, are listed after the funds portfolio. The fund had an average contract amount of approximately $67,800,000 on forward currency contracts for the reporting period.
G) Total return swap contracts The fund may enter into total return swap contracts, which are arrangements to exchange a market linked return for a periodic payment, both based on a notional principal amount to manage the funds exposure to specific sectors or industries. To the extent that the total return of the security, index or other financial measure underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the fund will receive a payment from or make a payment to the counterparty. Total return swap contracts are marked to market daily based upon quotations from market makers and the change, if any, is recorded as an unrealized gain or loss. Payments received or made are recorded as realized gains or losses. Certain total return swap contracts may include extended effective dates. Payments related to these swap contracts are accrued based on the terms of the contr act. The fund could be exposed to credit or market risk due to unfavorable changes in the fluctuation of interest rates or in the price of the underlying security or index, the possibility that there is no liquid market for these agreements or that the counterparty may default on its obligation to perform. The funds maximum risk of loss from counterparty risk is the fair value of the contract. This risk may be mitigated by having a master netting arrangement between the fund and the counterparty. Risk of loss may exceed amounts recognized on the Statement of assets and liabilities. Total return swap contracts outstanding at period end, if any, are listed after the funds portfolio. The fund had an average notional amount of approximately $64,900,000 on total return swap contracts for the reporting period.
H) Master agreements The fund is a party to ISDA (International Swap and Derivatives Association, Inc.) Master Agreements (Master Agreements) with certain counterparties that govern over-the-counter derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to the fund is held in a segregated account by the funds custodian and with respect to those amounts which can be sold or repledged, are presented in the funds portfolio. Collateral posted to the
41
fund which cannot be sold or repledged totaled $10,534,279 at the close of the reporting period. Collateral pledged by the fund is segregated by the funds custodian and identified in the funds portfolio. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the funds net position with each counterparty. Termination events applicable to the fund may occur upon a decline in the funds net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterpartys long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contrac ts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the funds counterparties to elect early termination could impact the funds future derivative activity. At the close of the reporting period, the fund had a net liability position of $1,474,727 on derivative contracts subject to the Master Agreements. Collateral posted by the fund totaled $1,077,833.
I) Securities lending The fund may lend securities, through its agents, to qualified borrowers in order to earn additional income. The loans are collateralized by cash and/or securities in an amount at least equal to the market value of the securities loaned. The market value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The risk of borrower default will be borne by the funds agents; the fund will bear the risk of loss with respect to the investment of the cash collateral. Income from securities lending is included in investment income on the Statement of operations. At the close of the reporting period, the fund had no securities out on loan.
J) Interfund lending Effective July 2010, the fund, along with other Putnam funds, may participate in an interfund lending program pursuant to an exemptive order issued by the SEC. This program allows the fund to borrow from or lend to other Putnam funds that permit such transactions. Interfund lending transactions are subject to each funds investment policies and borrowing and lending limits. Interest earned or paid on the interfund lending transaction will be based on the average of certain current market rates. During the reporting period, the fund did not utilize the program.
K) Line of credit Effective July 2010, the fund participates, along with other Putnam funds, in a $285 million unsecured committed line of credit and a $165 million unsecured uncommitted line of credit, both provided by State Street Bank and Trust Company (State Street). Borrowings may be made for temporary or emergency purposes, including the funding of shareholder redemption requests and trade settlements. Interest is charged to the fund based on the funds borrowing at a rate equal to the Federal Funds rate plus 1.25% for the committed line of credit and the Federal Funds rate plus 1.30% for the uncommitted line of credit. A closing fee equal to 0.03% of the committed line of credit and $100,000 for the uncommitted line of credit has been paid by the participating funds. In addition, a commitment fee of 0.15% per annum on any unutilized portion of the committed line of credit is allocated to the partic ipating funds based on their relative net assets and paid quarterly. During the reporting period, the fund had no borrowings against these arrangements.
L) Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the Code), applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Code. The fund is subject to the provisions of Accounting Standards Codification ASC 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have any unrecognized tax benefits in the accompanying financial statements. No provision has been made for federal taxes on income, capital gains or unrea lized appreciation on securities held nor for excise tax on income and capital gains. Each of the funds federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
At July 31, 2010, the fund had a capital loss carryover of $2,286,630,820 available to the extent allowed by the Code to offset future net capital gain, if any. The amounts of the carryovers and the expiration dates are:
Loss Carryover | Expiration |
| |
$1,987,450,372 | July 31, 2011 |
| |
299,180,448 | July 31, 2017 |
|
M) Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Distributions from capital gains, if any, are recorded on the ex-dividend date and paid
42
at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. These differences include temporary and/or permanent differences of losses on wash sale transactions, foreign currency gains and losses, straddle loss deferrals, income on swap contracts and partnerships. Reclassifications are made to the funds capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. For the reporting period ended, the fund reclassified $27,923,781 to decrease distributions in excess of net investment income and $9,220 to decrease paid-in-capital, with an increase to accumulated net realized loss of $27,914,561.
The tax basis components of distributable earnings and the federal tax cost as of the close of the reporting period were as follows:
Unrealized appreciation | $259,413,147 |
Unrealized depreciation | (317,657,822) |
| |
Net unrealized depreciation | (58,244,675) |
Undistributed ordinary income | 14,854,653 |
Capital loss carryforward | (2,286,630,820) |
Cost for federal income tax purposes | $3,881,366,913 |
Note 2: Management fee, administrative services and other transactions
Effective January 1, 2010, the fund pays Putnam Management a management fee (base fee) (based on the funds average net assets and computed and paid monthly) at annual rates that may vary based on the average of the aggregate net assets of most open-end funds, as defined in the funds management contract, sponsored by Putnam Management. Such annual rates may vary as follows: 0.71% of the first $5 billion, 0.66% of the next $5 billion, 0.61% of the next $10 billion, 0.56% of the next $10 billion, 0.51% of the next $50 billion, 0.49% of the next $50 billion, 0.48% of the next $100 billion, and 0.475% of any excess thereafter.
In addition, beginning with the funds thirteenth complete calendar month of operation under the new management contract, the monthly management fee will consist of the monthly base fee plus or minus a performance adjustment for the month. The performance adjustment will be determined based on performance over the thirty-six month period then ended or, if the new management contract has not yet been effective for thirty-six complete calendar months, the period from the date the new management contract became effective to the end of the month for which the fee adjustment is being computed. Each month, the performance adjustment will be calculated by multiplying the performance adjustment rate and the funds average net assets over the performance period and the result will be divided by twelve. The resulting dollar amount will be added to, or subtracted from, the base fee for that month. The performance adjustment rate is equal to 0.03 multipl ied by the difference between the funds annualized performance (measured by the funds class A shares) and the annualized performance of the Russell 1000 Growth Index, each measured over the performance period. The maximum annualized performance adjustment rates are +/ 0.12%. The monthly base fee is determined based on the funds average net assets for the month, while the performance adjustment will be determined based on the funds average net assets over the performance period of up to thirty-six months. This means it is possible that, if the fund underperforms significantly over the performance period, and the funds assets have declined significantly over that period, the negative performance adjustment may exceed the base fee. In this event, Putnam Management would make a payment to the fund.
Prior to January 1, 2010, the fund paid Putnam Management for management and investment advisory services quarterly based on the average net assets of the fund. Such fee was based on the following annual rates: 0.70% of the first $500 million of average net assets, 0.60% of the next $500 million, 0.55% of the next $500 million, 0.50% of the next $5 billion, 0.475% of the next $5 billion, 0.455% of the next $5 billion, 0.44% of the next $5 billion, 0.43% of the next $5 billion, 0.42% of the next $5 billion, 0.41% of the next $5 billion, 0.40% of the next $5 billion, 0.39% of the next $5 billion, 0.38% of the next $8.5 billion and 0.37% thereafter.
Effective August 1, 2009 through June 30, 2011, Putnam Management has also contractually agreed to waive fees or reimburse the funds expenses to the extent necessary to limit the cumulative expenses of the fund, exclusive of brokerage, interest, taxes, investment-related expenses, extraordinary expenses and payments under the funds investor servicing contract, investment management contract and distribution plans, on a fiscal year-to-date basis (or from August 1, 2009 through the funds next fiscal year end, as applicable), to an annual rate of 0.20% of the
43
funds average net assets over such fiscal year-to-date period (or since August 1, 2009, as applicable). During the reporting period, the funds expenses were not reduced as a result of this limit.
Effective November 30, 2009, Putnam Investments Limited (PIL), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. Putnam Management pays a quarterly sub-management fee to PIL for its services at an annual rate of 0.35% of the average net assets of the portion of the fund managed by PIL.
The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees.
Custodial functions for the funds assets are provided by State Street. Custody fees are based on the funds asset level, the number of its security holdings and transaction volumes.
Putnam Investor Services, Inc., an affiliate of Putnam Management, provides investor servicing agent functions to the fund. Putnam Investor Services, Inc. received fees for investor servicing, subject to certain limitations, based on the funds retail asset level, the number of shareholder accounts in the fund and the level of defined contribution plan assets in the fund. The amounts incurred for investor servicing agent functions during the reporting period are included in Investor servicing fees in the Statement of operations.
Under the custodian contract between the fund and State Street, the custodian bank has a lien on the securities of the fund to the extent permitted by the funds investment restrictions to cover any advances made by the custodian bank for the settlement of securities purchased by the fund. At the close of the reporting period, the payable to the custodian bank represents the amount due for cash advanced for the settlement of securities purchased.
The fund has entered into expense offset arrangements with Putnam Investor Services, Inc. and State Street whereby Putnam Investor Services, Inc.s and State Streets fees are reduced by credits allowed on cash balances. The fund also reduced expenses through brokerage/service arrangements. For the reporting period, the funds expenses were reduced by $20,165 under the expense offset arrangements and by $1,061,477 under the brokerage/service arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of which $2,564, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.
The fund has adopted a Trustee Fee Deferral Plan (the Deferral Plan) which allows the Trustees to defer the receipt of all or a portion of Trustees fees payable on or after July 1, 1995. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension plan (the Pension Plan) covering all Trustees of the fund who have served as a Trustee for at least five years and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustees average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustees lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. Pension expense for the fund is included in Trustee compensation and expenses in the Statement of operations. Accrued pension liability is included in Payable for Trustee compensation and expenses in the Statement of assets and liabilities. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003.
The fund has adopted distribution plans (the Plans) with respect to its class A, class B, class C, class M and class R shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Retail Management Limited Partnership, a wholly-owned subsidiary of Putnam Investments, LLC and Putnam Retail Management GP, Inc., for services provided and expenses incurred in distributing shares of the fund. The Plans provide for payments by the fund to Putnam Retail Management Limited Partnership at an annual rate of up to 0.35%, 1.00%, 1.00%, 1.00% and 1.00% of the average net assets attributable to class A, class B, class C, class M and class R shares, respectively. The Trustees have approved payment by the fund at an annual rate of 0.25%, 1.00%, 1.00%, 0.75% and 0.50% of the average net assets attributable to class A, class B, class C, class M and class R shares, respectively.
For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received net commissions of $459,127 and $4,782 from the sale of class A and class M shares, respectively, and received $173,654 and $12,721 in contingent deferred sales charges from redemptions of class B and class C shares, respectively. A deferred sales charge of up to 1.00% and 0.65% is assessed on certain redemptions of class A and class M shares,
44
respectively. For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received $3,048 and no monies on class A and class M redemptions, respectively.
Note 3: Purchases and sales of securities
During the reporting period, cost of purchases and proceeds from sales of investment securities other than short-term investments aggregated $6,182,637,325 and $6,147,910,141, respectively. There were no purchases or proceeds from sales of long-term U.S. government securities.
Written option transactions during the reporting period are summarized as follows:
Contract Amounts | Premiums Received | |
| ||
Written options outstanding | ||
at beginning of the reporting period | 26,984,969 | $13,305,840 |
| ||
Options opened | 322,950,522 | 194,332,707 |
| ||
Options exercised | | |
| ||
Options expired | (137,850,625) | (35,598,307) |
| ||
Options closed | (155,241,070) | (102,221,681) |
| ||
Written options outstanding | ||
at end of the reporting period | 56,843,796 | $69,818,559 |
|
Note 4: Capital shares
At the close of the reporting period, there was an unlimited number of shares of beneficial interest authorized.
Transactions in capital shares were as follows:
Year ended 7/31/10 | Year ended 7/31/09 | |||
| ||||
Class A | Shares | Amount | Shares | Amount |
| ||||
Shares sold | 20,917,576 | $414,621,152 | 15,458,205 | $212,749,146 |
| ||||
Shares issued in connection with | ||||
reinvestment of distributions | 1,485,196 | 28,322,682 | | |
| ||||
22,402,772 | 442,943,834 | 15,458,205 | 212,749,146 | |
| ||||
Shares repurchased | (28,871,725) | (564,527,763) | (44,185,857) | (587,447,132) |
| ||||
Net decrease | (6,468,953) | $(121,583,929) | (28,727,652) | $(374,697,986) |
| ||||
Year ended 7/31/10 | Year ended 7/31/09 | |||
| ||||
Class B | Shares | Amount | Shares | Amount |
| ||||
Shares sold | 1,218,106 | $20,382,301 | 1,244,414 | $14,134,544 |
| ||||
Shares issued in connection with | ||||
reinvestment of distributions | 60,422 | 983,669 | | |
| ||||
1,278,528 | 21,365,970 | 1,244,414 | 14,134,544 | |
| ||||
Shares repurchased | (5,787,196) | (96,975,052) | (11,395,900) | (130,563,365) |
| ||||
Net decrease | (4,508,668) | $(75,609,082) | (10,151,486) | $(116,428,821) |
| ||||
Year ended 7/31/10 | Year ended 7/31/09 | |||
| ||||
Class C | Shares | Amount | Shares | Amount |
| ||||
Shares sold | 2,908,403 | $53,745,988 | 344,431 | $4,603,963 |
| ||||
Shares issued in connection with | ||||
reinvestment of distributions | 14,172 | 252,964 | | |
| ||||
2,922,575 | 53,998,952 | 344,431 | 4,603,963 | |
| ||||
Shares repurchased | (638,989) | (11,647,956) | (857,701) | (10,303,491) |
| ||||
Net increase (decrease) | 2,283,586 | $42,350,996 | (513,270) | $(5,699,528) |
|
45
Year ended 7/31/10 | Year ended 7/31/09 | |||
| ||||
Class M | Shares | Amount | Shares | Amount |
| ||||
Shares sold | 180,748 | $3,298,531 | 106,731 | $1,344,082 |
| ||||
Shares issued in connection with | ||||
reinvestment of distributions | 10,034 | 177,403 | | |
| ||||
190,782 | 3,475,934 | 106,731 | 1,344,082 | |
| ||||
Shares repurchased | (281,887) | (5,112,273) | (501,285) | (6,243,981) |
| ||||
Net decrease | (91,105) | $(1,636,339) | (394,554) | $(4,899,899) |
| ||||
Year ended 7/31/10 | Year ended 7/31/09 | |||
| ||||
Class R | Shares | Amount | Shares | Amount |
| ||||
Shares sold | 222,112 | $4,468,999 | 45,583 | $613,372 |
| ||||
Shares issued in connection with | ||||
reinvestment of distributions | 1,240 | 23,316 | | |
| ||||
223,352 | 4,492,315 | 45,583 | 613,372 | |
| ||||
Shares repurchased | (71,734) | (1,387,560) | (57,105) | (671,877) |
| ||||
Net increase (decrease) | 151,618 | $3,104,755 | (11,522) | $(58,505) |
| ||||
Year ended 7/31/10 | Year ended 7/31/09 | |||
| ||||
Class Y | Shares | Amount | Shares | Amount |
| ||||
Shares sold | 10,795,507 | $224,743,980 | 7,748,682 | $109,511,478 |
| ||||
Shares issued in connection with | ||||
reinvestment of distributions | 92,495 | 1,835,103 | | |
| ||||
10,888,002 | 226,579,083 | 7,748,682 | 109,511,478 | |
| ||||
Shares repurchased | (2,939,764) | (60,340,551) | (53,983,682) | (669,158,619) |
| ||||
Net increase (decrease) | 7,948,238 | $166,238,532 | (46,235,000) | $(559,647,141) |
|
Note 5: Summary of derivative activity
The following is a summary of the market values of derivative instruments as of the close of the reporting period:
Asset derivatives | Liability derivatives | |||
| ||||
Derivatives not | ||||
accounted for as | Statement of | Statement of | ||
hedging instruments | assets and | assets and | ||
under ASC 815 | liabilities location | Market value | liabilities location | Market value |
| ||||
Foreign exchange | ||||
contracts | Receivables | $ | Payables | $1,474,727 |
| ||||
Investments, | ||||
Equity contracts | Receivables | 169,196,902 | Payables | 33,715,604 |
| ||||
Total | $169,196,902 | $35,190,331 | ||
|
46
The following is a summary of realized and change in unrealized gains or losses of derivative instruments on the Statement of operations for the reporting period (see Note 1):
Amount of realized gain or (loss) on derivatives recognized in net gain or (loss) on investments
Derivatives not | |||||
accounted for as | Forward | ||||
hedging instruments | currency | ||||
under ASC 815 | Options | Warrants | contracts | Swaps | Total |
| |||||
Foreign exchange | |||||
contracts | $ | $ | $(1,517,851) | $ | $(1,517,851) |
| |||||
Equity contracts | 28,073,861 | 8,597,656 | | 61,474,297 | 98,145,814 |
| |||||
Total | $28,073,861 | $8,597,656 | $(1,517,851) | $61,474,297 | $96,627,963 |
|
Change in unrealized appreciation or (depreciation) on derivatives recognized in net gain or (loss) on investments
Derivatives not | |||||
accounted for as | Forward | ||||
hedging instruments | currency | ||||
under ASC 815 | Options | Warrants | contracts | Swaps | Total |
| |||||
Foreign exchange | |||||
contracts | $ | $ | $(1,347,287) | $ | $(1,347,287) |
| |||||
Equity contracts | (30,589,021) | 4,450,523 | | (8,587,034) | (34,725,532) |
| |||||
Total | $(30,589,021) | $4,450,523 | $(1,347,287) | $(8,587,034) | $(36,072,819) |
|
Note 6: Investment in Putnam Money Market Liquidity Fund
The fund invested in Putnam Money Market Liquidity Fund, an open-end management investment company managed by Putnam Management. Investments in Putnam Money Market Liquidity Fund are valued at its closing net asset value each business day. Income distributions earned by the fund are recorded as interest income in the Statement of operations and totaled $139,309 for the reporting period. During the reporting period, cost of purchases and proceeds of sales of investments in Putnam Money Market Liquidity Fund aggregated $1,870,739,103 and $1,839,400,046, respectively. Management fees charged to Putnam Money Market Liquidity Fund have been waived by Putnam Management.
Note 7: Senior loan commitments
Senior loans are purchased or sold on a when-issued or delayed delivery basis and may be settled a month or more after the trade date, which from time to time can delay the actual investment of available cash balances; interest income is accrued based on the terms of the securities. Senior loans can be acquired through an agent, by assignment from another holder of the loan, or as a participation interest in another holders portion of the loan. When the fund invests in a loan or participation, the fund is subject to the risk that an intermediate participant between the fund and the borrower will fail to meet its obligations to the fund, in addition to the risk that the borrower under the loan may default on its obligations.
Note 8: Regulatory matters and litigation
In late 2003 and 2004, Putnam Management settled charges brought by the SEC and the Massachusetts Securities Division in connection with excessive short-term trading in Putnam funds. Distribution of payments from Putnam Management to certain open-end Putnam funds and their shareholders is expected to be completed in the next several months. These allegations and related matters have served as the general basis for certain lawsuits, including purported class action lawsuits against Putnam Management and, in a limited number of cases, some Putnam funds. Putnam Management believes that these lawsuits will have no material adverse effect on the funds or on Putnam Managements ability to provide investment management services. In addition, Putnam Management has agreed to bear any costs incurred by the Putnam funds as a result of these matters.
47
Note 9: Market and credit risk
In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default.
Note 10: Transactions with affiliated issuers
Transactions during the reporting period with companies in which the fund owned at least 5% of the voting securities were as follows:
Purchase | Sales | Dividend | Market | |
Affiliates | cost | cost | income | value |
| ||||
Unisys Corp. | $47,494,087 | $266,844 | $ | $59,188,147 |
| ||||
Totals | $47,494,087 | $266,844 | $ | $59,188,147 |
|
Market values are shown for those securities affiliated at the close of the reporting period.
Federal tax information (Unaudited)
The fund designated 100% of ordinary income distributions as qualifying for the dividends received deduction for corporations.
For its tax year ended July 31, 2010, the fund hereby designates 100%, or the maximum amount allowable, of its taxable ordinary income distributions as qualified dividends taxed at the individual net capital gain rates.
For the tax year ended July 31, 2010, pursuant to §871(k) of the Internal Revenue Code, the fund hereby designates $1,032,174 of distributions paid as qualifying to be taxed as interest-related dividends, and no monies to be taxed as short-term capital gain dividends for nonresident alien shareholders.
The Form 1099 that will be mailed to you in January 2011 will show the tax status of all distributions paid to your account in calendar 2010.
48
PUTNAM VOYAGER FUND |
FORM N-1A |
PART C |
OTHER INFORMATION |
<R>
Item 28. Exhibits
</R>
(a) Agreement and Declaration of Trust, as amended dated January 10, 1992 -- Incorporated by reference to Post-Effective Amendment No. 62 to the Registrant's Registration Statement filed on November 25, 2008.
(b) By-Laws, as amended through July 21, 2000 -- Incorporated by reference to Post-Effective Amendment No. 54 to the Registrant's Registration Statement filed on November 29, 2000.
(c)(1) Portions of Agreement and Declaration of Trust Relating to Shareholders' Rights -- Incorporated by reference to Post-Effective Amendment No. 47 to the Registrant's Registration Statement filed on November 23, 1993.
(c)(2) Portions of By-Laws Relating to Shareholders' Rights -- Incorporated by reference to Post-Effective Amendment No. 48 to the Registrant's Registration Statement filed on September 30, 1994.
<R>
(d)(1) Management Contract with Putnam Investment Management, LLC dated January 1, 2010.
(d)(2) Sub-Management Contract between Putnam Investment Management, LLC and Putnam Investments Limited dated May 15, 2008; schedule dated November 30, 2010.
</R>
(e)(1) Distributors Contract with Putnam Retail Management Limited Partnership dated August 3, 2007 -- Incorporated by reference to Post-Effective Amendment No. 61 to the Registrant's Registration Statement filed on November 27, 2007.
<R>
(e)(2) Form of Dealer Sales Contract January 2010.
(e)(3) Form of Financial Institution Sales Contract dated January 2010.
</R>
(f) Trustee Retirement Plan dated October 4, 1996, as amended July 21, 2000 -- Incorporated by reference to Post-Effective Amendment No. 58 to the Registrant's Registration Statement filed on November 24, 2004.
<R>
Part C - 1 |
(g) Master Custodian Agreement with State Street Bank and Trust Company dated January 1, 2007; schedule dated November 30, 2010.
(h)(1) Amended and Restated Investor Servicing Agreement with Putnam Investments Management, LLC and Putnam Investor Services, Inc. dated January 1, 2009; November 30, 2010.
</R>
(h)(2) Letter of Indemnity with Putnam Investment Management, LLC dated December 18, 2003 -- Incorporated by reference to Post-Effective Amendment No. 58 to the Registrant's Registration Statement filed on November 24, 2004.
(h)(3) Liability Insurance Allocation Agreement dated December 18, 2003 -- Incorporated by reference to Post-Effective Amendment No. 58 to the Registrant's Registration Statement filed on November 24, 2004.
<R>
(h)(4) Master Sub-Accounting Services Agreement between Putnam Investment Management, LLC and State Street Bank and Trust Company dated January 1, 2007; schedule dated November 30, 2010.
(h)(5) Master Interfund Lending Agreement with the Trusts party thereto and Putnam Investment Management, LLC dated July 16, 2010.
(h)(6) Committed Line of Credit Agreement with State Street Bank and Trust Company dated July 6, 2010.
(h)(7) Uncommitted Line of Credit Agreement with State Street Bank and Trust Company dated July 6, 2010.
</R>
(i) Opinion of Ropes & Gray LLP, including consent -- Incorporated by reference to Post-Effective Amendment No. 41 to the Registrant's Registration Statement filed on October 3, 1989.
(j) Consent of Independent Registered Public Accounting Firm.
(k) Not applicable.
(l) Investment Letter from Putnam Investments, LLC to the Registrant -- Incorporated by reference to Pre-Effective Amendment No. 46 to the Registrant's Registration Statement.
(m)(1) Class A Distribution Plan and Agreement dated April 24, 1992 -- Incorporated by reference to Post-Effective Amendment No. 43 to the Registrant's Registration Statement filed on October 1, 1990.
(m)(2) Class B Distribution Plan and Agreement dated April 24, 1992 -- Incorporated by reference to Post-Effective Amendment No. 46 to the Registrant's Registration Statement.
(m)(3) Class C Distribution Plan and Agreement dated February 28, 1993 -- Incorporated by reference to Post-Effective Amendment No. 53 to the Registrant's Registration Statement filed on November 26, 1999.
Part C - 2 |
(m)(4) Class M Distribution Plan and Agreement dated November 28, 1994 -- Incorporated by reference to Post-Effective Amendment No. 49 to the Registrant's Registration Statement filed on November 29, 1995.
(m)(5) Class R Distribution Plan and Agreement dated November 15, 2002 -- Incorporated by reference to Post-Effective Amendment No. 57 to the Registrant's Registration Statement filed on November 25, 2003.
(m)(6) Form of Dealer Service Agreement -- Incorporated by reference to Post-Effective Amendment No. 51 to the Registrant's Registration Statement filed on November 28, 1997.
(m)(7) Form of Financial Institution Service Agreement -- Incorporated by reference to Post-Effective Amendment No. 51 to the Registrant's Registration Statement filed on November 28, 1997.
<R>
(n) Rule 18f-3 Plan dated April 2009 -- Incorporated by reference to Post-Effective Amendment No. 63 to the Registrant's Registration Statement filed on November 24, 2009.
(p)(1) The Putnam Funds Code of Ethics dated September 11, 2009 -- Incorporated by reference to Post-Effective Amendment No. 63 to the Registrant's Registration Statement filed on November 24, 2009.
(p)(2) Putnam Investments Code of Ethics dated June 2010.
Item 29. Persons Controlled by or under Common Control with the Fund
</R>
None
<R>
Item 30. Indemnification
</R>
The information required by this item is incorporated herein by reference to Post-Effective Amendment No. 54 to the Registrant's Registration Statement on Form N-1A under the Investment Company Act of 1940 (File No. 811-01682).
Part C - 3 |
Item 31. Business and Other Connections of the Investment Adviser
Except as set forth below, the directors and officers of each of Putnam Investment Management, LLC, the Registrants investment adviser (the Investment Adviser), Putnam Investments Limited, investment sub-manager to certain Putnam funds (the Sub-Manager), and The Putnam Advisory Company, LLC, investment sub-adviser to certain Putnam funds, have been engaged during the past two fiscal years in no business, profession, vocation or employment of a substantial nature other than as directors or officers of the Investment Adviser, Sub-Manager, or certain of the Investment Advisers 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 other than the Sub-Manager, and the Putnam funds is One Post Office Square, Boston, Massachusetts 02109. The address of the Sub-Manager is Cassini House, 57-59 St James 46;s Street, London, England, SW1A 1LD.
Name and Title | Non-Putnam business, profession, vocation or |
employment | |
<R> | |
Robert D. Ewing | Prior to November 2008, Co-Head |
Managing Director | River Source Investments, |
Putnam Investment Management, LLC | 125 High Street, Boston, MA 02110 |
Nick C. Thakore | Prior to November 2008, Co-Head |
Managing Director | River Source Investments, |
Putnam Investment Management, LLC | 125 High Street, Boston, MA 02110 |
Nicolas A. Brunetti | Prior to November 2008, Director |
Senior Vice President | Citigroup |
Putnam Investment Management, LLC | 301 Tresser Blvd., Stamford, CT 06901 |
Daniel C. Farrell | Prior to November 2008, VP Equity Trading |
Managing Director | River Source Investments, |
Putnam Investment Management, LLC | 125 High Street, Boston, MA 02110 |
Clare Richer | Prior to December 2008, Executive Vice President |
Senior Managing Director | Fidelity Investments, |
Putnam Investment Management, LLC | 82 Devonshire St., Boston, MA 02109 |
</R> | |
Steven W. Curbow | Prior to December 2008, Senior Vice President Director |
Senior Vice President | of Research, Independence Investments, |
Putnam Investment Management, LLC | 160 Federal Street, Boston, MA 02110 |
<R> | |
David Glancy | Prior to January 2009, Managing Partner, |
Managing Director | Andover Capital Advisors, |
Putnam Investment Management, LLC | 300 Brickstone Sq., Andover, MA 01810 |
Michael J. Maguire | Prior to January 2009, Senior Analyst, |
Senior Vice President | FTN Midwest Securities |
Putnam Investment Management, LLC | 99 Summer St., Boston, MA 02110 |
Lucas M. Klein | Prior to January 2009, VP Equity Analyst, |
Senior Vice President | River Source Investments, |
Putnam Investment Management, LLC | 125 High Street, Boston, MA 02110 |
George Gianarikas | Prior to January 2009, Global Industry Analyst, |
Senior Vice President | Wellington Management, |
Putnam Investment Management, LLC | 75 State Street, Boston, MA 02109 |
Shobha S. Frey | Prior to January 2009, Managing Director Hedge Fund, |
Senior Vice President | K Capital Partners, |
Putnam Investment Management, LLC | 75 Park Plaza, Boston, MA 02116 |
Richard E. Bodzy | Prior to February 2009, Industrials Analyst, |
Assistant Vice President | River Source Investments, |
Putnam Investment Management, LLC | 125 High Street, Boston, MA 02110 |
Ami Y. Joseph | Prior to February 2009, Equity Research Analyst, |
Vice President | Fidelity Investments, |
Putnam Investment Management, LLC | 245 Summer St., Boston, MA 02110 |
Vinay H. Shah | Prior to February 2009, VP Senior Tech Analyst |
Senior Managing Director | River Source Investments, |
Putnam Investment Management, LLC | 125 High Street, Boston, MA 02110 |
Walter C. Donovan | Prior to May 2009, President, Investment Processing, |
Senior Managing Director | Equiserve, |
Putnam Investment Management, LLC | 50 Royall St., Canton, MA 02021 |
Ferat Ongoren | Prior to June 2009, Director, Industrials Sector, |
Senior Vice President | CITI Equities Trading |
Putnam Investment Management, LLC | New York, NewYork |
Karan S. Sodhi | Prior to June 2010, Equity Analyst, |
Senior Vice President | Stark Investments, |
Putnam Investment Management, LLC | 2 International Place, Boston, MA 02110 |
</R> |
Item 32. Principal Underwriter
(a) Putnam Retail Management Limited Partnership is the principal underwriter for each of the following investment companies, including the Registrant:
<R>
George Putnam Balanced Fund, Putnam American Government Income Fund, Putnam Arizona Tax Exempt Income Fund, Putnam Asset Allocation Funds, Putnam California Tax Exempt Income Fund, Putnam Convertible Securities Fund, Putnam Diversified Income Trust, Putnam Equity Income Fund, Putnam Europe Equity Fund, Putnam Funds Trust, The Putnam Fund for Growth and Income, Putnam Global Equity Fund, Putnam Global Income Trust, Putnam Global Natural Resources Fund, Putnam Global Health Care Fund, Putnam Global Utilities Fund, Putnam High Yield Advantage Fund, Putnam High Yield Trust, Putnam Income Fund, Putnam International Equity 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 Multi-Cap Growth Fund, Putnam New Jersey Tax Exempt Income Fund, Putnam New York Tax Exempt Income Fund, Putnam Ohio Tax Exempt Incom e Fund, Putnam Pennsylvania Tax Exempt Income Fund, Putnam RetirementReady® Funds, Putnam Tax Exempt Income Fund, Putnam Tax Exempt
Money Market Fund, Putnam Tax-Free Income Trust, Putnam U.S. Government Income Trust, Putnam Variable Trust, and Putnam Voyager Fund.
</R>
(b) The directors and officers of the Registrant's principal underwriter are listed below. Except as noted below, no officer of the Registrants principal underwriter is an officer of the Registrant.
The principal business address of each person listed below is One Post Office Square, Boston, MA 02109.
Name | Position and Office with the Underwriter |
| |
Aaron III Jefferson F. | Senior Vice President |
| |
Ahearn Paul D. | Vice President |
| |
Amisano Paulette Cusick | Vice President |
| |
<R> | |
Asci Susan J. | Vice President |
| |
Ashibe Sumie | Assistant Vice President |
</R> | |
| |
Babcock III Warren W. | Senior Vice President |
| |
Balfour Renee | Assistant Vice President |
| |
Barnett William E. | Senior Vice President |
| |
Bartony Paul A. | Senior Vice President |
| |
Black Robert W. | Vice President |
| |
Boornazian Aram R. | Assistant Vice President |
| |
Borden Richard S. | Senior Vice President |
| |
<R> | |
Browne John C. | Assistant Vice President |
| |
Bruce Scott W. | Senior Vice President |
</R> | |
| |
Bumpus James F. | Managing Director |
| |
Bunker Christopher M. | Senior Vice President |
| |
Burke Brian M. | Vice President |
| |
Burns Robert T. | Managing Director |
| |
Cahill Daniel J. | Assistant Vice President |
| |
<R> | |
</R> | |
| |
Campbell Christopher F. | Vice President |
| |
Capece John P. | Vice President |
| |
Card Victoria R. | Vice President |
| |
Carney Jeffrey R. | Senior Managing Director |
| |
Casey David M. | Senior Vice President |
| |
Cass William D. | Senior Vice President |
| |
Chapman Frederick | Senior Vice President |
| |
Clark James F. | Senior Vice President |
| |
Colman Donald M. | Senior Vice President |
| |
Coneeny Mark L. | Managing Director |
| |
Connolly William T. | Senior Managing Director |
| |
Cooley Jonathan A. | Senior Vice President |
|
Corbett Dennis T. | Senior Vice President |
| |
Craig Casey R. | Vice President |
| |
Crilly Lindsay T. | Vice President |
| |
Cristo Chad H. | Managing Director |
| |
<R> | |
Curran Kevin M. | Assistant Vice President |
</R> | |
| |
Curtin Brian | Senior Vice President |
| |
Daley Eric Hugh | Senior Vice President |
| |
Daly Elizabeth Paul | Vice President |
| |
<R> | |
Davidian Raymond A. | Vice President |
</R> | |
| |
DeAngelis Adam | Senior Vice President |
| |
<R> | |
Deaver Marvin L. | Vice President |
</R> | |
| |
DeGregorio Jr. Richard A. | Vice President |
| |
Demery Thomas R. | Vice President |
| |
Dewey Jr. Paul S. | Managing Director |
| |
DiBuono Jeffrey P. | Vice President |
| |
DiPietro Daniel S. | Assistant Vice President |
| |
Donadio Joyce M. | Senior Vice President |
| |
<R> | |
Doucet Christopher C. | Senior Vice President |
</R> | |
| |
Druker Linda A. | Assistant Vice President |
| |
Duffy Anne Marie | Vice President |
| |
<R> | |
Dumas Alan J. | Vice President |
| |
Durkan Anthony | Assistant Vice President |
</R> | |
| |
Economou Stefan G. | Vice President |
| |
Eidelberg Kathleen E. | Vice President |
| |
<R> | |
Elderkin Justin | Vice President |
</R> | |
| |
Evans Adam Christopher | Senior Vice President |
| |
<R> | |
Fall Stephanie L. | Assistant Vice President |
</R> | |
| |
Favaloro Beth A. | Managing Director |
| |
<R> | |
Ferrelli F. Peter | Managing Director |
</R> | |
| |
Filmore Benjamin R. | Senior Vice President |
| |
Fleming Pamela B. | Vice President |
|
Fleming Robert A. | Vice President |
| |
Forcione Carlo N. | Vice President |
| |
Foster Laura G. | Senior Vice President |
| |
Gentile Donald A. | Vice President |
| |
Gentile Lauren K. | Assistant Vice President |
| |
Geraigery Mark F. | Assistant Vice President |
| |
<R> | |
Glickman David S. | Senior Vice President |
| |
Goyer Michael J. | Vice President |
</R> | |
| |
Greeley Jr. Robert E. | Vice President |
| |
Greenwood Julie M. | Senior Vice President |
| |
Halloran James E. | Senior Vice President |
| |
Hancock Nancy E. | Vice President |
| |
Harrington Terese A. | Assistant Vice President |
| |
<R> | |
</R> | |
| |
Hartigan Maureen A. | Senior Vice President |
| |
Hayes Alexander D. | Vice President |
| |
Homer Edward M. | Assistant Vice President |
| |
<R> | |
Horkan Lisa M. | Senior Vice President |
</R> | |
| |
Hoyt Paula J. | Senior Vice President |
| |
Hughes Rosemary A. | Vice President |
| |
<R> | |
Inoue Hitoshi | Senior Vice President |
</R> | |
| |
Iskandar Anthony Michael | Vice President |
| |
<R> | |
Jurkiewicz Gregg M. | Vice President |
| |
Kagami Masao | Senior Vice President |
</R> | |
| |
Kapinos Peter J. | Senior Vice President |
| |
Kay Karen R. | Managing Director |
| |
Kealty Joseph M. | Vice President |
| |
<R> | |
</R> | |
| |
Kelley Brian J. | Managing Director |
| |
Kelly A. Siobhan | Senior Vice President |
| |
Kennedy Daniel J. | Senior Vice President |
| |
Kersten Charles N. | Senior Vice President |
| |
Kinsman Anne M. | Senior Vice President |
| |
<R> | |
Kircher Richard T. | Vice President |
</R> | |
| |
Kotsiras Steven | Senior Vice President |
|
<R> | |
</R> | |
| |
Lacour Jayme J. | Vice President |
| |
<R> | |
Lange Christine L. | Senior Vice President |
</R> | |
| |
Leahy Jon F. | Vice President |
| |
Lecce Vincent L. | Vice President |
| |
<R> | |
Leeson John B. | Vice President |
</R> | |
| |
Leveille Robert R. * | Managing Director |
| |
Levy Norman S. | Senior Vice President |
| |
Lewis Benjamin Herbert | Managing Director |
| |
Lieberman Samuel L. | Senior Vice President |
| |
<R> | |
Link Christopher H. | Senior Vice President |
| |
Loehning III William F. | Vice President |
</R> | |
| |
Lohmeier Andrew | Senior Vice President |
| |
<R> | |
Lopez Christopher D. | Vice President |
</R> | |
| |
Maher James M. | Vice President |
| |
<R> | |
Maher Stephen B. | Vice President |
</R> | |
| |
Mahoney Julie M. | Senior Vice President |
| |
Martin David M. | Senior Vice President |
| |
<R> | |
</R> | |
| |
Marzelli Kristine | Assistant Vice President |
| |
Mattucci John T. | Senior Vice President |
| |
McCarthy Anne B. | Vice President |
| |
McCloy Andrew P. | Vice President |
| |
McCollough Martha J. | Assistant Vice President |
| |
McDaries Jane S. | Assistant Vice President |
| |
McDermott Robert J. | Senior Vice President |
| |
<R> | |
McKeehan John B. | Vice President |
</R> | |
| |
McKenna Mark J. | Managing Director |
| |
<R> | |
McNamara Daniel | Assistant Vice President |
</R> | |
| |
Mehta Ashok | Senior Vice President |
| |
Miller Daniel R. | Vice President |
|
<R> | |
Miller Geffrey | Vice President |
</R> | |
| |
Minsk Judith | Senior Vice President |
| |
Molesky Kevin P. | Senior Vice President |
| |
Morais Joseph | Vice President |
| |
Murphy III Edmund F. | Managing Director |
| |
Nakamura Denise-Marie | Senior Vice President |
| |
<R> | |
Nguyen David R. | Vice President |
</R> | |
| |
Nichols Leslie G. | Vice President |
| |
Nickodemus John P. | Managing Director |
| |
Norcross George H. | Senior Vice President |
| |
<R> | |
O'Connell Jr. Paul P. | Senior Vice President |
</R> | |
| |
O'Connor Brian P. | Senior Vice President |
| |
<R> | |
O'Neill Robert W. | Managing Director |
| |
Otsuka Haruo | Vice President |
| |
Papay Jennifer A. | Vice President |
</R> | |
| |
Perkins Erin M. | Senior Vice President |
| |
Petitti Joseph P. | Senior Vice President |
| |
Pheeney Bradford S. | Vice President |
| |
Pheeney Douglas K. | Vice President |
| |
Pike John R. | Managing Director |
| |
Powers Michele M. | Assistant Vice President |
| |
Pulkrabek Scott M. | Senior Vice President |
| |
<R> | |
Purtell Stephanie B. | Vice President |
</R> | |
| |
Puzzangara John C. | Senior Vice President |
| |
Quinn Kyle C. | Vice President |
| |
Reid Sandra L. | Senior Vice President |
| |
Riccardella Paul A. | Vice President |
| |
Ritter Jesse D. | Vice President |
| |
Rodammer Kris | Senior Vice President |
| |
Saunders Catherine A. | Managing Director |
| |
Scanlon Sharon Rose | Senior Vice President |
| |
<R> | |
Seward Mary E. | Assistant Vice President |
| |
Shimokawa Ryuichi | Senior Vice President |
</R> | |
| |
Short Jr. Harold P. | Managing Director |
| |
Signorello Stephen | Assistant Vice President |
| |
<R> | |
Sipple Scott C. | Managing Director |
</R> | |
|
Skomial Victoria S. | Assistant Vice President |
| |
Sloane Melissa A. | Vice President |
| |
Snyder Scott Joseph | Assistant Vice President |
| |
Spence David L. | Vice President |
| |
Spigelmeyer III Carl M. | Senior Vice President |
| |
Steingarten Brie A.E. | Vice President |
| |
<R> | |
Stern Derek A. | Vice President |
</R> | |
| |
Stuart James F. | Senior Vice President |
| |
Sullivan Brian L. | Senior Vice President |
| |
Sullivan Daniel John | Vice President |
| |
Sullivan Elaine M. | Managing Director |
| |
Taber Rene B. | Senior Vice President |
| |
<R> | |
Tamura Annika I. | Vice President |
</R> | |
| |
Tate Stephen J. | Senior Vice President |
| |
Tolmie Ryan J. | Assistant Vice President |
| |
<R> | |
Trenchard Mark C. | Managing Director |
| |
Tsuruoka Kei | Vice President |
</R> | |
| |
Tucker Jason A. | Managing Director |
| |
<R> | |
</R> | |
| |
Valentin-Hess Carmen | Vice President |
| |
Wallace Stephen | Senior Vice President |
| |
Watson Stefanie H. | Vice President |
| |
<R> | |
Weylman William K. | Vice President |
| |
Whitman Peter T. | Senior Vice President |
</R> | |
| |
Wilde Michael R. | Vice President |
| |
Williams Brie P. | Senior Vice President |
| |
Wolff Meredith M. | Senior Vice President |
| |
<R> | |
Wright Jr. Edmund F. | Senior Vice President |
| |
Yamamoto Kayo | Vice President |
</R> | |
| |
Zannino David J. | Vice President |
| |
<R> | |
Zechello Steven R. | Senior Vice President |
</R> | |
|
*Mr. Leveille is Vice President and Chief Compliance Officer of the Registrant.
<R>
Item 33. 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 the Registrant's Clerk, Judith Cohen; the Registrant's investment adviser, Putnam Investment Management, LLC (PIM); the Registrant's principal underwriter, Putnam Retail Management Limited Partnership (PRM); the Registrant's custodian, State Street Bank and Trust Company (which, in addition to its duties as custodian, also provides certain administrative, pricing and bookkeeping services); and the Registrant's transfer and dividend disbursing agent, Putnam Investor Services, Inc. The address of the Clerk, PIM, PRM and Putnam Investor Services, Inc. is One Post Office Square, Boston, Massachusett s 02109. State Street Bank and Trust Company is located at 225 Franklin Street, Boston, Massachusetts 02110 and 2 Avenue de Lafayette, Boston, Massachusetts 02111.
Item 34. Management Services
</R>
None.
<R>
Item 35. Undertakings
</R>
None.
Part C - 4 |
NOTICE |
A copy of the Agreement and Declaration of Trust of Putnam Voyager Fund is on file with the Secretary of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the 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.
Part C - 5 |
POWER OF ATTORNEY |
<R>
I, the undersigned Officer of each of the funds listed on Schedule A hereto, hereby severally constitute and appoint John Hill, George Putnam III, Jonathan S. Horwitz, John W. Gerstmayr and Bryan Chegwidden, and each of them singly, my true and lawful attorneys, with full power to them and each of them, to sign for me, and in my name and in the capacity indicated below, the Registration Statements on Form N-1A of each of the funds listed on Schedule A hereto and any and all amendments (including post-effective amendments) to said Registration Statements and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto my said attorneys, and each of them acting alone, full power and authority to do and perform each and every act and thing requisite or necessary to be done in the premises, as fully to all intents and purposes as he might or could do in person, and hereby rat ify and confirm all that said attorneys or any of them may lawfully do or cause to be done by virtue thereof.
</R>
WITNESS my hand and seal on the date set forth below.
Signature | Title | Date |
<R> | ||
/s/ Jonathan S. Horwitz | ||
-------------------------------------- | Executive Vice President, | January 8, 2010 |
Jonathan S. Horwitz | Treasurer, Principal | |
Executive Officer and | ||
Compliance Liaison | ||
</R> |
Part C - 6 |
<R>
Schedule A
</R>
Putnam American Government Income Fund
Putnam Arizona Tax Exempt Income Fund
Putnam Asset Allocation Funds
Putnam California Tax Exempt Income Fund
Putnam Convertible Income-Growth Trust
Putnam Diversified Income Trust
Putnam Equity Income Fund
Putnam Europe Equity Fund
Putnam Funds Trust
<R>
George Putnam Balanced Fund
</R>
Putnam Global Equity Fund
Putnam Global Health Care Fund
Putnam Global Income Trust
Putnam Global Natural Resources Fund
Putnam Global Utilities Fund
The Putnam Fund for Growth and Income
Putnam High Yield Advantage Fund
Putnam High Yield Trust
Putnam Income Fund
Putnam International Equity 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
<R>
Putnam Multi-Cap Growth Fund
</R>
Putnam New Jersey Tax Exempt Income Fund
<R>
</R>
Putnam New York Tax Exempt Income Fund
Putnam Ohio Tax Exempt Income Fund
Putnam Pennsylvania Tax Exempt Income Fund
Putnam RetirementReady® Funds
Putnam Tax Exempt Income Fund
Putnam Tax Exempt Money Market Fund
Putnam Tax-Free Income Trust
Part C - 7 |
Putnam U.S. Government Income Trust
Putnam Variable Trust
Putnam Vista Fund
Putnam Voyager Fund
POWER OF ATTORNEY |
I, the undersigned Trustee of each of the funds listed on Schedule A hereto, hereby severally constitute and appoint John Hill, George Putnam III, Jonathan S. Horwitz, John W. Gerstmayr and Bryan Chegwidden, and each of them singly, my true and lawful attorneys, with full power to them and each of them, to sign for me, and in my name and in the capacity indicated below, the Registration Statements on Form N-1A of each of the funds listed on Schedule A hereto and any and all amendments (including post-effective amendments) to said Registration Statements and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto my said attorneys, and each of them acting alone, full power and authority to do and perform each and every act and thing requisite or necessary to be done in the premises, as fully to all intents and purposes as he might or coul d do in person, and hereby ratify and confirm all that said attorneys or any of them may lawfully do or cause to be done by virtue thereof.
WITNESS my hand and seal on the date set forth below.
Signature | Title | Date |
<R> | ||
/s/ Barbara M. Baumann | ||
-------------------------------------- | Trustee | June 27, 2010 |
Barbara M. Baumann | ||
</R> |
Part C - 8 |
Schedule A
Putnam American Government Income Fund
Putnam Arizona Tax Exempt Income Fund
Putnam Asset Allocation Funds
Putnam California Tax Exempt Income Fund
Putnam Convertible Income-Growth Trust
Putnam Diversified Income Trust
Putnam Equity Income Fund
Putnam Europe Equity Fund
Putnam Funds Trust
<R>
George Putnam Balanced Fund
</R>
Putnam Global Equity Fund
Putnam Global Health Care Fund
Putnam Global Income Trust
Putnam Global Natural Resources Fund
Putnam Global Utilities Fund
The Putnam Fund for Growth and Income
Putnam High Yield Advantage Fund
Putnam High Yield Trust
Putnam Income Fund
Putnam International Equity 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
<R>
Putnam Multi-Cap Growth Fund
</R>
Putnam New Jersey Tax Exempt Income Fund
<R>
</R>
Putnam New York Tax Exempt Income Fund
Putnam Ohio Tax Exempt Income Fund
Putnam Pennsylvania Tax Exempt Income Fund
Putnam RetirementReady® Funds
Putnam Tax Exempt Income Fund
Putnam Tax Exempt Money Market Fund
Putnam Tax-Free Income Trust
Putnam U.S. Government Income Trust
Part C - 9 |
Putnam Variable Trust
Putnam Vista Fund
Putnam Voyager Fund
SIGNATURES |
</R>
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement under Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, duly authorized, in the City of Boston, and The Commonwealth of Massachusetts, on the 24th day of November, 2010.
</R>
Putnam Voyager Fund | ||
<R> | ||
By: /s/ Jonathan S. Horwitz, Executive Vice | ||
President, Treasurer, Principal Executive Officer | ||
and Compliance Liaison | ||
</R> |
Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:
Signature | Title |
<R> | |
John A. Hill** | Chairman of the Board and Trustee |
Jameson A. Baxter** | Vice Chairman of the Board and Trustee |
Robert L. Reynolds** | President and Trustee |
Jonathan S. Horwitz* | Executive Vice President, Treasurer, Principal Executive |
Officer and Compliance Liaison | |
Steven D. Krichmar** | Vice President and Principal Financial Officer |
Janet C. Smith** | Vice President, Assistant Treasurer and Principal |
Accounting Officer | |
Ravi Akhoury** | Trustee |
Part C - 10 |
Barbara M. Baumann* | Trustee |
Charles B. Curtis** | Trustee |
Robert J. Darretta** | Trustee |
Myra R. Drucker** | Trustee |
Paul L. Joskow** | Trustee |
Kenneth R. Leibler** | Trustee |
Robert E. Patterson** | Trustee |
George Putnam, III** | Trustee |
W. Thomas Stephens** | Trustee |
Richard B. Worley** | Trustee |
By: /s/ Jonathan S. Horwitz, as Attorney-in-Fact | |
November 24, 2010 | |
</R> | |
*Signed pursuant to power of attorney filed herewith. | |
<R> | |
**Signed pursuant to power of attorney filed Post- | |
Effective Amendment No. 63 to the Registrants | |
Registration Statement on November 24, 2009 | |
</R> |
Part C - 11 |
Exhibit Index |
<R>
Item 28 Exhibit
(d)(1) Management Contract with Putnam Investment Management, LLC dated January 1, 2010.
(d)(2) Sub-Management Contract between Putnam Investment Management, LLC and Putnam Investments Limited dated May 15, 2008; schedule dated November 30, 2010.
(e)(2) Form of Dealer Sales Contract January 2010.
(e)(3) Form of Financial Institution Sales Contract dated January 2010.
(g) Master Custodian Agreement with State Street Bank and Trust Company dated January 1, 2007; schedule dated November 30, 2010.
(h)(1) Amended and Restated Investor Servicing Agreement with Putnam Investments Management, LLC and Putnam Investor Services, Inc. dated January 1, 2009; schedule dated November 30, 2010.
(h)(4) Master Sub-Accounting Services Agreement between Putnam Investment Management, LLC and State Street Bank and Trust Company dated January 1, 2007; schedule dated November 30, 2010.
(h)(5) Master Interfund Lending Agreement with Trust party thereto and Putnam Investment Management, LLC dated July 16, 2010.
(h)(6) Committed Line of Credit Agreement with State Street Bank and Trust Company dated July 6, 2010.
(h)(7) Uncommitted Line of Credit Agreement with State Street Bank and Trust Company dated July 6, 2010.
</R>
(j) Consent of Independent Registered Public Accounting Firm.
<R>
(p)(2) Putnam Investments Code of Ethics dated June 2010.
</R>
Part C - 12 |
PUTNAM VOYAGER FUND |
MANAGEMENT CONTRACT |
This Management Contract is dated as of January 1, 2010 between PUTNAM VOYAGER FUND, a Massachusetts business trust (the Fund), and PUTNAM INVESTMENT MANAGEMENT, LLC, a Delaware limited liability company (the Manager).
In consideration of the mutual covenants herein contained, it is agreed as follows:
1. SERVICES TO BE RENDERED BY MANAGER TO FUND.
(a) The Manager, at its expense, will furnish continuously an investment program for the Fund or, in the case of a Fund that has divided its shares into two or more series under Section 18(f)(2) of the Investment Company Act of 1940, as amended (the 1940 Act), each series of the Fund identified from time to time on Schedule A to this Contract (each reference in this Contract to a Fund or to the Fund is also deemed to be a reference to any existing series of the Fund, as appropriate in the particular context), will determine what investments will be purchased, held, sold or exchanged by the Fund and what portion, if any, of the assets of the Fund will be held uninvested and will, on behalf of the Fund, make changes in such investments. Subject always to the control of the Trustees of the Fund and except for the functions car ried out by the officers and personnel referred to in Section 1(d), the Manager will also manage, supervise and conduct the other affairs and business of the Fund and matters incidental thereto. In the performance of its duties, the Manager will comply with the provisions of the Agreement and Declaration of Trust and By-Laws of the Fund and the stated investment objectives, policies and restrictions of the Fund, will use its best efforts to safeguard and promote the welfare of the Fund and to comply with other policies which the Trustees may from time to time determine and will exercise the same care and diligence expected of the Trustees.
(b) The Manager, at its expense, except as such expense is paid by the Fund as provided in Section 1(d), will furnish (1) all necessary investment and management facilities, including salaries of personnel, required for it to execute its duties faithfully; (2) suitable office space for the Fund; and (3) administrative facilities, including bookkeeping, clerical personnel and equipment necessary for the efficient conduct of the affairs of the Fund, including determination of the net asset value of the Fund, but excluding shareholder accounting services. Except as otherwise provided in Section 1(d), the Manager will pay the compensation, if any, of the officers of the Fund.
(c) The Manager, at its expense, will place all orders for the purchase and sale of portfolio investments for the Funds account with brokers or dealers selected by the Manager. In the selection of such brokers or dealers and the placing of such orders, the Manager will use 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 for brokerage and research services as described below. In using its best efforts to obtain for the Fund the most favorable price and execution available, the Manager, bearing in mind the Funds best interests at all times, will consider all factors it deems relevant, including by way of illustration, price, the size of the transaction, the nature of the market for the security, the amount of the commission, the timing of the transaction taking into account market prices and trends, the reputation, experience and< /FONT>
1 |
financial stability of the broker or dealer involved and the quality of service rendered by the broker or dealer in other transactions. Subject to such policies as the Trustees of the Fund may determine, the Manager will not be deemed to have acted unlawfully or to have breached any duty created by this Contract or otherwise solely by reason of its having caused the Fund to pay a broker or dealer that provides brokerage and research services to the Manager an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Manager determines in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Managers overall responsibilities with respect to the Fund and to other clients of the Manager as to which the Manager exercises investment discretion. The Manager agrees that in connection with purchases or sales of portfolio investments for the Funds account, neither the Manager nor any officer, director, employee or agent of the Manager shall act as a principal or receive any commission other than as provided in Section 3.
(d) The Fund will pay or reimburse the Manager for the compensation in whole or in part of such officers of the Fund and persons assisting them as may be determined from time to time by the Trustees of the Fund. The Fund will also pay or reimburse the Manager for all or part of the cost of suitable office space, utilities, support services and equipment attributable to such officers and persons as may be determined in each case by the Trustees of the Fund. The Fund will pay the fees, if any, of the Trustees of the Fund.
(e) The Manager will not be obligated to pay any expenses of or for the Fund not expressly assumed by the Manager pursuant to this Section 1 other than as provided in Section 3.
(f) Subject to the prior approval of a majority of the Trustees, including a majority of the Trustees who are not interested persons and, to the extent required by the 1940 Act and the rules and regulations under the 1940 Act, subject to any applicable guidance or interpretation of the Securities and Exchange Commission or its staff, by the shareholders of the Fund, the Manager may, from time to time, delegate to a sub-adviser or sub-administrator any of the Managers duties under this Contract, including the management of all or a portion of the assets being managed. In all instances, however, the Manager must oversee the provision of delegated services, the Manager must bear the separate costs of employing any sub-adviser or sub-administrator, and no delegation will relieve the Manager of any of its obligations under this Contract.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and employees of the Fund may be a shareholder, director, officer or employee of, or be otherwise interested in, the Manager, and in any person controlled by or under common control with the Manager, and that the Manager and any person controlled by or under common control with the Manager may have an interest in the Fund. It is also understood that the Manager and any person controlled by or under common control with the Manager may have advisory, management, service or other contracts with other organizations and persons and may have other interests and business.
2 |
3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.
The Fund will pay to the Manager as compensation for the Managers services rendered, for the facilities furnished and for the expenses borne by the Manager pursuant to paragraphs (a), (b), and (c) of Section 1, a Base Fee, computed and paid monthly on the Average Net Assets of the Fund at the annual rates set forth on Schedule B attached to this Contract, as from time to time amended, subject to adjustment as set forth on Schedule C attached to this Contract, as from time to time amended. The Funds Average Net Assets means the average of all of the determinations of the Funds net asset value at the close of business on each business day during each period for which such computation is made. The Base Fee, as adjusted, is payable for each month within 15 days after the close of the month.
The fees payable by the Fund to the Manager pursuant to this Section 3 will be reduced by any commissions, fees, brokerage or similar payments received by the Manager or any affiliated person of the Manager in connection with the purchase and sale of portfolio investments of the Fund, less any direct expenses approved by the Trustees incurred by the Manager or any affiliated person of the Manager in connection with obtaining such payments.
In the event that expenses of the Fund for any fiscal year exceed the expense limitation 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 compensation due the Manager for such fiscal year will be reduced by the amount of excess by a reduction or refund thereof. In the event that the expenses of the Fund exceed any expense limitation which the Manager may, by written notice to the Fund, voluntarily declare to be effective subject to such terms and conditions as the Manager may prescribe in such notice, the compensation due the Manager will be reduced, and if necessary, the Manager will assume expenses of the Fund, to the extent required by the terms and conditions of such expense limitation.
If the Manager serves for less than the whole of a month, the foregoing compensation will be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT.
This Contract will automatically terminate, without the payment of any penalty, in the event of its assignment, provided that no delegation of responsibilities by the Manager pursuant to Section 1(f) will be deemed to constitute an assignment. No provision of this Contract may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. No amendment of this Contract is effective until approved in a manner consistent with the 1940 Act, the rules and regulations under the 1940 Act and any applicable guidance or interpretation of the Securities and Exchange Commission or its staff.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract is effective upon its execution and will remain in full force and effect as to a Fund continuously thereafter (unless terminated automatically as set forth in Section 4 or
3 |
terminated in accordance with the following paragraph) through June 30, 2010, and will continue in effect from year to year thereafter so long as its continuance is approved at least annually by (i) the Trustees, or the shareholders by the affirmative vote of a majority of the outstanding shares of the respective Fund, and (ii) a majority of the Trustees who are not interested persons of the Fund or of the Manager, by vote cast in person at a meeting called for the purpose of voting on such approval.
Either party hereto may at any time terminate this Contract as to a Fund by not less than 60 days written notice delivered or mailed by registered mail, postage prepaid, to the other party. Action with respect to a Fund may be taken either (i) by vote of a majority of the Trustees or (ii) by the affirmative vote of a majority of the outstanding shares of the respective Fund.
Termination of this Contract pursuant to this Section 5 will be without the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the affirmative vote of a majority of the outstanding shares of a Fund means the affirmative vote, at a duly called and held meeting of shareholders of the respective Fund, (a) of the holders of 67% or more of the shares of the Fund present (in person or by proxy) and entitled to vote at the meeting, if the holders of more than 50% of the outstanding shares of the Fund entitled to vote at the meeting are present in person or by proxy or (b) of the holders of more than 50% of the outstanding shares of the Fund entitled to vote at the meeting, whichever is less.
For the purposes of this Contract, the terms affiliated person, control, interested person and assignment have their respective meanings defined in the 1940 Act, subject, however, to the rules and regulations under the 1940 Act and any applicable guidance or interpretation of the Securities and Exchange Commission or its staff; the term approve at least annually will be construed in a manner consistent with the 1940 Act and the rules and regulations under the 1940 Act and any applicable guidance or interpretation of the Securities and Exchange Commission or its staff; and the term brokerage and research services has the meaning given in the Securities Exchange Act of 1934 and the rules and regulations under the Securities Exchange Act of 1934 and under any applicable guidance or interpretation of the Securities and Exchange Commission or its staff.
7. NON-LIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross negligence on the part of the Manager, or reckless disregard of its obligations and duties hereunder, the Manager 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 hereunder.
8. LIMITATION OF LIABILITY OF THE TRUSTEES, OFFICERS, AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Fund is on file with the Secretary of The Commonwealth of Massachusetts, and notice is hereby given that this
4 |
instrument is executed on behalf of the Trustees of the Fund as Trustees and not individually and that the obligations of or arising out of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the respective Fund.
[The remainder of this page intentionally left blank.] |
5 |
IN WITNESS WHEREOF, PUTNAM VOYAGER FUND and PUTNAM INVESTMENT MANAGEMENT, LLC have each caused this instrument to be signed on its behalf by its President or a Vice President thereunto duly authorized, all as of the day and year first above written.
PUTNAM VOYAGER FUND | |
By: /s/ Jonathan S. Horwitz | |
Jonathan S. Horwitz | |
Senior Vice President and Treasurer | |
PUTNAM INVESTMENT MANAGEMENT, LLC | |
By: /s/ James P. Pappas | |
James P. Pappas | |
Managing Director |
6 |
Schedule A | |
Not applicable. |
7 |
Schedule B |
Base Fee:
0.710% of the first $5 billion of Total Open-End Mutual Fund Average Net Assets;
0.660% of the next $5 billion of Total Open-End Mutual Fund Average Net Assets;
0.610% of the next $10 billion of Total Open-End Mutual Fund Average Net Assets;
0.560% of the next $10 billion of Total Open-End Mutual Fund Average Net Assets;
0.510% of the next $50 billion of Total Open-End Mutual Fund Average Net Assets;
0.490% of the next $50 billion of Total Open-End Mutual Fund Average Net Assets;
0.480% of the next $100 billion of Total Open-End Mutual Fund Average Net Assets;
0.475% of any excess thereafter.
Benchmark: Russell 1000 Growth Index
Maximum Annualized Performance Adjustment Rate: 0.12%
Minimum Annualized Performance Adjustment Rate: -0.12%
Total Open-End Mutual Fund Average Net Assets means the average of all of the determinations of the aggregate net assets of all open-end funds sponsored by Putnam Management (excluding the net assets of such funds investing in, or invested in by, other such funds, such as Putnam RetirementReady® Funds and Putnam Money Market Liquidity Fund, to the extent necessary to avoid "double-counting" of such net assets) at the close of business on each business day during each month while the Management Contract is in effect.
8 |
Schedule C |
Commencing with the thirteenth whole calendar month after the later of January 1, 2010 and the date of execution of this Contract, the Funds Base Fee computed in accordance with Schedule B will be adjusted, on a monthly basis, upward or downward, as the case may be, by an amount computed by applying the Performance Adjustment Rate to the Average Net Assets of the Fund for the Performance Period and dividing the result by twelve.
Performance Period. The Performance Period is equal to the shorter of (i) the period from the later of January 1, 2010 and the date of the execution of this Contract to the end of the month for which the fee adjustment is being computed or (ii) the thirty-six month period then ended.
Performance Adjustment Rate. The Performance Adjustment Rate is equal to the product of 0.03 multiplied by the difference, positive or negative, obtained by subtracting (i) the Investment Record of the Benchmark for the Performance Period from (ii) the Investment Performance of the Measuring Class for the Performance Period; provided that the Performance Adjustment Rate for the Fund may not exceed the Maximum Performance Adjustment Rate set forth on Schedule B or be less than the Minimum Performance Adjustment Rate set forth on Schedule B.
Investment Performance and Investment Record. These terms are used as defined in Rule 205-1 under the Investment Advisers Act of 1940, as amended, and shall each be computed on an annualized basis for any Performance Period greater than one year.
Benchmark. The Funds initial Benchmark is set forth in Schedule B. If the Trustees determine that another appropriate index of securities prices should be substituted as the Benchmark, the Trustees may determine, with the consent of the Manager, to use such other appropriate index of securities prices for purposes of this Schedule C (the Replacement Benchmark) without shareholder approval, unless shareholder approval of the change is otherwise required by applicable law. Any Replacement Benchmark will be applied prospectively to determine the amount of the Performance Adjustment. The Benchmark will continue to be used to determine the amount of the Performance Adjustment for that part of the Performance Period prior to the effective date of the Replacement Benchmark.
Measuring Class. The Measuring Class of shares of the Fund initially is Class A shares of the Fund. If the Trustees determine that a different class of shares of the Fund is the most appropriate for use in calculating the Performance Adjustment, the Trustees may change, with the consent of the Manager, the class of shares used as the Measuring Class without shareholder approval, unless shareholder approval of such change is otherwise required by applicable law. If a different class of shares (Replacement Measuring Class) is substituted in calculating the Performance Adjustment, the use of that Replacement Measuring Class of shares for purposes of calculating the Performance Adjustment may apply to the entire Performance Period so long as the Replacement Measuring Class was outstanding at the beginning of such period. If the Replacement Measuring Class of shares was not outstanding for all or a po rtion of the Performance Period, it may only be used in calculating that portion of the Performance Adjustment attributable to the period during which the Replacement Measuring Class was
9 |
outstanding and any previous portion of the Performance Period will be calculated using the Measuring Class.
Notwithstanding any other provisions in this Schedule C, the computation of the Performance Adjustment Rate, the Investment Performance of the Measuring Class and the Investment Record of the Benchmark will be made in accordance with the Investment Advisers Act of 1940, as amended, and any applicable rules thereunder.
10 |
CONSENT OF INDEPENDENT Registered PUBLIC Accounting Firm |
We hereby consent to the use in this Post-Effective Amendment No. 64 to the registration statement on Form N-1A (File No. 2-29546) (Registration Statement) of our report dated September 10, 2010, relating to the financial statements and financial highlights of Putnam Voyager Fund, which appear in such Registration Statement. We also consent to the references to us under the headings "Financial highlights" and "Independent Registered Public Accounting Firm and Financial Statements" in such Registration Statement.
Boston, Massachusetts
November 22, 2010
PUTNAM FUNDS |
SUB-MANAGEMENT CONTRACT |
This Sub-Management Contract is dated as of May 15, 2008 between PUTNAM INVESTMENT MANAGEMENT, LLC, a Delaware limited liability company (the Manager) and PUTNAM INVESTMENTS LIMITED, a company organized under the laws of England and Wales (the Sub-Manager).
WHEREAS, the Manager is the investment manager of each of the investment companies registered under the United States Investment Company Act of 1940, as amended, that are identified on Schedule A hereto, as it may from time to time be amended by the Manager (the Funds), and a registered investment adviser under the United States Investment Advisers Act of 1940, as amended;
WHEREAS, the Sub-Manager is licensed as an investment manager by the Financial Services Authority of the United Kingdom (the FSA); and
WHEREAS, the Manager desires to engage the Sub-Manager from time to time to manage a portion of certain of the Funds:
NOW THEREFORE, in consideration of the mutual covenants herein contained, it is agreed as follows:
1. SERVICES TO BE RENDERED BY SUB-MANAGER
(a) The Sub-Manager, at its expense, will furnish continuously an investment program for that portion of any Fund the management of which is allocated from time to time by the Manager to the Sub-Manager (an Allocated Sleeve). The Manager shall, in its sole discretion, determine which Funds will have an Allocated Sleeve and the amount of assets allocated from time to time to each such Allocated Sleeve; provided that, with respect to any Fund, the Trustees of such Fund must have approved the use of the Sub-Manager prior to the creation of an Allocated Sleeve for such Fund. The Sub-Manager will determine what investments shall be purchased, held, sold or exchanged by any Allocated Sleeve and what portion, if any, of the assets of the Allocated Sleeve shall be held uninvested and shall, on behalf of the Fund, make changes in the Funds investments held in such Allocated Sleeve.
(b) The Manager may also, at its discretion, request the Sub-Manager to provide assistance with purchasing and selling securities for any Fund, including the placement of orders with broker-dealers selected in accordance with Section 1(d), even if the Manager has not established an Allocated Sleeve for such Fund.
(c) The Sub-Manager at its expense will furnish all necessary investment and management facilities, including salaries of personnel, required for it to execute its duties faithfully.
(d) The Sub-Manager shall place all orders for the purchase and sale of portfolio investments for any Allocated Sleeve with brokers or dealers selected by the Sub-Manager. In the selection of such brokers or dealers and the placing of such orders, the Sub-Manager shall use its best efforts to obtain for the related Fund the most favorable price and execution available, except to
the extent it may be permitted to pay higher brokerage commissions for brokerage and research services as described below. In using its best efforts to obtain for the Fund the most favorable price and execution available, the Sub-Manager, bearing in mind the Funds best interests at all times, shall consider all factors it deems relevant, including by way of illustration, price, the size of the transaction, the nature of the market for the security, 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 or dealer involved and the quality of service rendered by the broker or dealer in other transactions. Subject to such policies as the Trustees of the Funds may determine, the Sub-Manager shall not be deemed to have acted unlawfully or to have breached any duty created by this Contract or otherwise solely by reason of its having caused a Fu nd to pay a broker or dealer that provides brokerage and research services to the Manager or the Sub-Manager an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Sub-Manager determines in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or its overall responsibilities with respect to the Fund and to other clients of the Manager or the Sub-Manager as to which the Manager or the Sub-Manager exercises investment discretion. The Sub-Manager agrees that in connection with purchases or sales of portfolio investments for any Fund, neither the Sub-Manager nor any officer, director, employee or agent of the Sub-Manager shall act as a principal or receive any commission other than as provided in Section 3.
(e) The Sub-Manager shall not be obligated to pay any expenses of or for the Manager or any Fund not expressly assumed by the Sub-Manager pursuant to this Section 1.
(f) In the performance of its duties, the Sub-Manager will comply with the provisions of the Agreement and Declaration of Trust and By-Laws of each applicable Fund and such Funds stated investment objectives, policies and restrictions, and will use its best efforts to safeguard and promote the welfare of such Fund and to comply with other policies which the Manager or the Trustees may from time to time determine and shall exercise the same care and diligence expected of the Manager.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and employees of a Fund may be a shareholder, director, officer or employee of, or be otherwise interested in, the Sub-Manager, and in any person controlled by or under common control with the Sub-Manager, and that the Sub-Manager and any person controlled by or under common control with the Sub-Manager may have an interest in such Fund. It is also understood that the Sub-Manager and any person controlled by or under common control with the Sub-Manager have and may have advisory, management, service or other contracts with other organizations and persons, and may have other interests and business.
3. COMPENSATION
Except as provided below, the Manager will pay to the Sub-Manager as compensation for the Sub-Managers services rendered, a fee, computed and paid quarterly at the annual rate of 0.35% per annum of average aggregate net asset value of the assets in equity and asset allocation
-2- |
Allocated Sleeves and 0.40% per annum of average aggregate net asset value of the assets in fixed-income Allocated Sleeves. Such average net asset value shall be determined by taking an average of all of the determinations of such net asset value during a quarter at the close of business on each business day during such quarter while this Contract is in effect. Such fee shall be payable for each quarter within 30 days after the close of such quarter. The Sub-Manager shall look only to the Manager for payment of its fees. No Fund shall have any responsibility for paying any fees due the Sub-Manager.
With respect to each of Putnam High Income Securities Fund, Putnam Master Intermediate Income Trust and Putnam Premier Income Trust, the Manager will pay to the Sub-Manager as compensation for the Sub-Managers services rendered, a fee, computed and paid quarterly at the annual rate of 0.40% of Average Weekly Assets in Allocated Sleeves. Average Weekly Assets means the average of the weekly determinations of the difference between the total assets of the Fund (including any assets attributable to leverage for investment purposes) attributable to an Allocated Sleeve and the total liabilities of the Fund (excluding liabilities incurred in connection with leverage for investment purposes) attributable to such Allocated Sleeve, determined at the close of the last business day of each week, for each week which ends during the quarter. Such fee shall be payable for each quarter within 30 days after the close of such quarter. As used in this Secti on 3, leverage for investment purposes means any incurrence of indebtedness the proceeds of which are to be invested in accordance with the Funds investment objective. For purposes of calculating Average Weekly Assets, liabilities associated with any instruments or transactions used to leverage the Funds portfolio for investment purposes (whether or not such instruments or transactions are covered within the meaning of the Investment Company Act of 1940 and the rules and regulations thereunder, giving effect to any interpretations of the Securities and Exchange Commission and its staff) are not considered liabilities. For purposes of calculating Average Weekly Assets, the total assets of the Fund will be deemed to include (a) any proceeds from the sale or transfer of an asset (the Underlying Asset) of the Fund to a counterparty in a reverse repurchase or dollar roll transaction and (b) the value of such Underlying Asset as of the relevant measuring date.
In the event that the Managers management fee from any of Putnam High Income Securities Fund, Putnam Master Intermediate Income Trust or Putnam Premier Income Trust is reduced pursuant to the investment management contract between such Fund and the Manager because during any Measurement Period (as defined below) the amount of interest payments and fees with respect to indebtedness or other obligation of the Fund incurred for investment leverage purposes, plus additional expenses attributable to any such leverage for investment purposes, exceeds the portion of the Funds net income and net short-term capital gains (but not long-term capital gains) accruing during such Measurement Period as a result of the fact that such indebtedness or other obligation was outstanding during the Measurement Period, the fee payable to the Sub-Manager with respect to such Fund shall be reduced in the same proportion as the fee paid to the Manager with respect to suc h Fund is so reduced. Measurement Period shall be any period for which payments of interest or fees (whether designated as such or implied) are payable in connection with any indebtedness or other obligation of the Fund incurred for investment purposes.
If the Sub-Manager shall serve for less than the whole of a quarter, the foregoing compensation shall be prorated.
-3- |
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT.
This Contract shall automatically terminate without the payment of any penalty, in the event of its assignment; and this Contract shall not be amended with respect to any Allocated Sleeve unless such amendment be approved at a meeting by the vote, cast in person at a meeting called for the purpose of voting on such approval, of a majority of the Trustees of the related Fund who are not interested persons of such Fund or of the Manager.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and shall remain in full force and effect continuously thereafter (unless terminated automatically as set forth in Section 4) until terminated as follows:
(a) Either party hereto or, with respect to any Allocated Sleeve, the related Fund may at any time terminate this Contract by not more than sixty days nor less than thirty days written notice delivered or mailed by registered mail, postage prepaid, to the other party, or
(b) With respect to any Allocated Sleeve, if (i) the Trustees of the related Fund or the shareholders by the affirmative vote of a majority of the outstanding shares of such Fund, and (ii) a majority of the Trustees of such Fund who are not interested persons of such Fund or of the Manager, by vote cast in person at a meeting called for the purpose of voting on such approval, do not specifically approve at least annually the continuance of this Contract, then this Contract shall automatically terminate at the close of business on the anniversary of its execution, or upon the expiration of one year from the effective date of the last such continuance, whichever is later, or
(c) With respect to any Allocated Sleeve, automatically upon termination of the Managers investment management contract with the related Fund.
Action by a Fund under (a) above may be taken either (i) by vote of a majority of its Trustees, or (ii) by the affirmative vote of a majority of the outstanding shares of such Fund.
Termination of this Contract pursuant to this Section 5 will be without the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the affirmative vote of a majority of the outstanding shares of a Fund means the affirmative vote, at a duly called and held meeting of shareholders of such Fund, (a) of the holders of 67% or more of the shares of such Fund present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding shares of such Fund entitled to vote at such meeting are present in person or by proxy, or (b) of the holders of more than 50% of the outstanding shares of such Fund entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms affiliated person, control, interested person and assignment shall have their respective meanings defined in the United States Investment Company Act of 1940 and the Rules and Regulations thereunder (the 1940 Act),
-4- |
subject, however, to such exemptions as may be granted by the Securities and Exchange Commission under said Act; the term specifically approve at least annually shall be construed in a manner consistent with the 1940 Act, and the Rules and Regulations thereunder; and the term brokerage and research services shall have the meaning given in the United States Securities Exchange Act of 1934 and the Rules and Regulations thereunder.
7. NON-LIABILITY OF SUB-MANAGER.
In the absence of willful misfeasance, bad faith or gross negligence on the part of the Sub-Manager, or reckless disregard of its obligations and duties hereunder, the Sub-Manager shall not be subject to any liability to the Manager, any Fund or to any shareholder of any Fund, for any act or omission in the course of, or connected with, rendering services hereunder.
8. ADDITIONAL PROVISIONS
(a) The Sub-Manager represents that it is regulated by the FSA in the conduct of its investment business. The Sub-Manager has in operation a written procedure in accordance with FSA rules for the effective consideration and proper handling of complaints from customers. Any complaint by the Manager or any Fund should be sent to the Compliance Officer of the Sub-Manager. The Manager and any Fund is also entitled to make any complaints about the Sub-Manager to the Financial Ombudsman Service established by the FSA. The Manager and any Fund may also request a statement describing its rights to compensation in the event of the Sub-Managers inability to meet its liabilities.
(b) The Manager represents that it and each Fund are Professional Customers in the meaning of FSA rules.
(c) Although each Fund is not a party hereto and shall have no responsibility for the Managers or the Sub-Managers obligations hereunder, each Fund is named as explicit third party beneficiary of the parties agreements hereunder.
-5- |
IN WITNESS WHEREOF, PUTNAM INVESTMENTS LIMITED and PUTNAM INVESTMENT MANAGEMENT, LLC have each caused this instrument to be signed in duplicate on its behalf by an officer duly authorized, all as of the day and year first above written.
PUTNAM INVESTMENTS LIMITED | ||
By: | /s/ William T. Connolly | |
William T. Connolly | ||
Senior Managing Director | ||
PUTNAM INVESTMENT MANAGEMENT, LLC | ||
By: | /s/ James P. Pappas | |
James P. Pappas | ||
Managing Director |
-6- |
Schedule A |
As amended as of November 30, 2010 |
Putnam American Government Income Fund (effective 1/30/10) |
Putnam AMT-Free Municipal Fund (effective 11/30/09) |
Putnam Arizona Tax Exempt Income Fund (effective 9/30/10) |
Putnam Absolute Return 100 Fund |
Putnam Absolute Return 300 Fund |
Putnam Absolute Return 500 Fund |
Putnam Absolute Return 700 Fund |
Putnam Absolute Return 1000 Fund |
Putnam Asset Allocation Balanced Portfolio |
Putnam Asset Allocation Conservative Portfolio |
Putnam Asset Allocation Equity Portfolio |
Putnam Asset Allocation Growth Portfolio |
Putnam Asia Pacific Equity Fund |
Putnam California Tax Exempt Income Fund (effective 1/30/10) |
Putnam Capital Spectrum Fund |
Putnam Capital Opportunities Fund (effective 8/30/10) |
Putnam Convertible Securities Fund (effective 9/30/10) |
Putnam Diversified Income Trust |
Putnam Equity Income Fund (effective 3/30/10) |
Putnam Emerging Markets Equity Fund |
Putnam Europe Equity Fund |
Putnam Equity Spectrum Fund |
Putnam Floating Rate Income Fund (effective 6/30/10) |
The George Putnam Fund of Boston d/b/a George Putnam Balanced Fund (effective 9/30/10) |
Putnam Global Sector Fund (effective 12/14/09) |
Putnam Global Consumer Fund |
Putnam Global Energy Fund |
Putnam Global Equity Fund |
Putnam Global Financials Fund |
Putnam Global Health Care Fund |
Putnam Global Income Trust |
Putnam Global Industrials Fund |
Putnam Global Natural Resources Fund |
Putnam Global Technology Fund |
Putnam Global Telecommunications Fund |
Putnam Global Utilities Fund |
The Putnam Fund for Growth and Income (effective 2/28/10) |
Putnam Growth Opportunities Fund (effective 11/30/09) |
Putnam High Income Securities Fund |
Putnam High Yield Advantage Fund |
Putnam High Yield Trust |
Putnam Income Fund (effective 2/28/10) |
Putnam Income Strategies Fund |
-7- |
Putnam International Capital Opportunities Fund |
Putnam International Equity Fund |
Putnam International Value Fund |
Putnam International Growth Fund |
Putnam Investors Fund (effective 11/30/09) |
Putnam Managed Municipal Income Trust (9/14/09) |
Putnam Massachusetts Tax Exempt Income Fund (effective 9/30/10) |
Putnam Master Intermediate Income Trust |
Putnam Michigan Tax Exempt Income Fund (effective 9/30/10) |
Putnam Mid Cap Value Fund (effective 8/30/10) |
Putnam Minnesota Tax Exempt Income Fund (effective 9/30/10) |
Putnam Money Market Fund (effective 1/30/10) |
Putnam Money Market Liquidity Fund (effective 1/30/10) |
Putnam Multi-Cap Core Fund (effective 5/14/10) |
Putnam Municipal Opportunities Trust (effective 9/14/09) |
Putnam New Jersey Tax Exempt Income Fund (effective 9/30/10) |
Putnam New Opportunities Fund (effective 10/30/09) |
Putnam New York Tax Exempt Income Fund (effective 3/30/10) |
Putnam Ohio Tax Exempt Income Fund (effective 9/30/10) |
Putnam Pennsylvania Tax Exempt Income Fund (effective 9/30/10) |
Putnam Premier Income Trust |
Putnam Research Fund |
Putnam RetirementReady 2055 Fund (effective 11/30/10) |
Putnam RetirementReady 2050 Fund (effective 11/30/09) |
Putnam RetirementReady 2045 Fund (effective 11/30/09) |
Putnam RetirementReady 2040 Fund (effective 11/30/09) |
Putnam RetirementReady 2035 Fund (effective 11/30/09) |
Putnam RetirementReady 2030 Fund (effective 11/30/09) |
Putnam RetirementReady 2025 Fund (effective 11/30/09) |
Putnam RetirementReady 2020 Fund (effective 11/30/09) |
Putnam RetirementReady 2015 Fund (effective 11/30/09) |
Putnam RetirementReady Maturity Fund (effective 11/30/09) |
Putnam Small Cap Growth Fund (effective 10/30/09) |
Putnam Small Cap Value Fund (effective 6/30/10) |
Putnam Tax Exempt Income Fund (effective 1/30/10) |
Putnam Tax Exempt Money Market Fund (effective 1/30/10) |
Putnam Tax-Free High Yield Fund (effective 11/30/09) |
Putnam U.S. Government Income Trust (effective 1/30/10) |
Putnam Vista Fund (effective 11/30/09) |
Putnam Voyager Fund (effective 11/30/09) |
-8- |
Schedule A (continued) |
Putnam VT American Government Income Fund (effective 4/30/10) |
Putnam VT Capital Opportunities Fund (effective 4/30/10) |
Putnam VT Diversified Income Fund |
Putnam VT Equity Income Fund (effective 4/30/10) |
Putnam VT The George Putnam Fund of Boston |
Putnam VT Global Asset Allocation Fund |
Putnam VT Global Equity Fund |
Putnam VT Global Health Care Fund |
Putnam VT Global Utilities Fund |
Putnam VT Growth and Income Fund (effective 4/30/10) |
Putnam VT Growth Opportunities Fund (effective 4/30/10) |
Putnam VT High Yield Fund |
Putnam VT Income Fund (effective 4/30/10) |
Putnam VT International Equity Fund |
Putnam VT International Value Fund |
Putnam VT International Growth Fund |
Putnam VT Investors Fund (effective 4/30/10) |
Putnam VT Mid Cap Value Fund (effective 4/30/10) |
Putnam VT Money Market Fund (effective 4/30/10) |
Putnam VT New Opportunities Fund (effective 4/30/10) |
Putnam VT Research Fund |
Putnam VT Small Cap Value Fund (effective 4/30/10) |
Putnam VT Vista Fund (effective 4/30/10) |
Putnam VT Voyager Fund (effective 4/30/10) |
PUTNAM INVESTMENTS | PUTNAM INVESTMENT MANAGEMENT, LLC | ||
LIMITED | |||
By: | /s/ William T. Connolly | By: | /s/ James P. Pappas |
William T. Connolly | James P. Pappas | ||
Senior Managing Director | Managing Director |
-9- |
[PUTNAM INVESTMENTS LOGO]
Putnam Investor Services |
7 Shattuck Rd |
Andover, MA 01810 |
www.putnam.com |
DEALER SALES CONTRACT | ||
Between: | ||
Distributor: | Dealer: | |
PUTNAM RETAIL MANAGEMENT | and | |
LIMITED PARTNERSHIP | ||
General Distributor of | ||
The Putnam Family of Mutual Funds | ||
One Post Office Square | ||
Boston, MA 02109 |
As general distributor of The Putnam Family of Mutual Funds (the Funds), we agree to sell you shares of beneficial interest issued by the Funds (the Shares), subject to any limitations imposed by any of the Funds and to confirmation by us in each instance of such sales. By your acceptance hereof, you agree to all of the following terms and conditions:
1. Offering Prices and Fees |
The public offering price at which you may offer the Shares is the net asset value thereof, as computed from time to time, plus any applicable sales charge described in the then-current Prospectus of the applicable Fund. As compensation for each sale of Shares made by you, you will be allowed the dealer discount, if any, on such Shares described in the then-current Prospectus of the Fund whose Shares are sold. We reserve the right to revise the dealer discount referred to herein upon ten days written notice to you. We will furnish you upon request with the public offering prices for the Shares, and you agree to quote such prices in connection with any Shares offered by you for sale. Your attention is specifically called to the fact that each sale is always made subject to confirmation by us at the public offering price next computed after receipt of the order. There is no sales charge or dealer discount to dealers on the reinvestment of dividends and distributions.
In addition to the dealer discount, if any, allowed pursuant to the foregoing provisions of this Section 1, we may, at our expense, provide additional promotional incentives or payments to dealers. All dealer discounts, promotional incentives, payments and concessions will be made by us in accordance with the Financial Industry Regulatory Authority (FINRA) guidelines and rules.
2. Manner of Offering, Selling, Purchasing and Redeeming Shares |
We will, upon request deliver to you a copy of each Funds current Prospectus and will provide you with such number of copies of each Funds Prospectus, Statement of Additional Information and shareholder reports and of supplementary sales materials prepared by us, as you may reasonably request. At our request, you agree to deliver or cause to be delivered to your customers which are shareholders of the Funds copies of each Funds amended Prospectus, including supplements to the Prospectus, shareholder proxy materials and shareholder reports. You will offer and sell the Shares only in accordance with the terms and conditions of the current Prospectus and Statement of Additional Information of the applicable Fund. Neither you nor any other person is authorized to give any information or to make any representations other than those contained in such Prospectuses, Statements of Additional Information and shareholder reports or in such supplement ary sales materials provided to you by us. You shall not furnish or cause to be furnished to any person, display or publish any information or materials relating to any Fund (including, without limitation promotional materials and sales literature, advertisements and press-releases, announcements, statements, posters, signs, or other similar materials) except such information and materials as may be furnished to you by us or the Fund and such other information and materials as may be approved in writing by us.
You agree to furnish to each person to whom any sale is made prior to or at the time of any purchase of Shares a copy of the then-current Prospectus of the applicable Fund. You also agree to furnish a Funds Statement of Additional Information to such person upon request. You agree to transmit to us promptly upon receipt any and all orders received by you.
All purchase orders will be executed at then-current NAV per share, which is next computed after receipt of a purchase offer, plus any applicable sales charges as described in the applicable Funds Prospectus. All redemption orders will be executed at NAV as described in the applicable Funds Prospectus. Any deferred sales charges (contingent or otherwise) and/or redemption fees will be deducted prior to transmission of proceeds to you or to you on behalf of your customer. We reserve the right, at our discretion and without notice, to suspend the sale of Shares or withdraw entirely the sale of Shares of any or all of the Funds. All orders are subject to acceptance or rejection by us in our sole discretion, and by the Funds in their sole discretion. All purchase and redemptions orders shall be transmitted to each Fund in accordance with its Prospectus and subject to the terms of any written instruction to you from us.
You or your affiliate/designees will maintain records of sales, redemptions and repurchases of Shares and will furnish us or the Funds with such records upon request.
3. Payment for Shares |
You agree to pay for Shares in accordance with the applicable Funds Prospectus. You agree to pay us the offering price, less any dealer discount to which you may be entitled, within three (3) business days of our confirmation of your order, or such shorter time as may be required by law. You may elect to waive the dealer discount, to the extent permitted by the applicable Funds Prospectus. Neither us nor the Funds are responsible for correcting the payment to or assessment of an incorrect dealer discount due to your failure to fulfill your obligations under this contract. We may change the dealer discounts at any time in our sole discretion.
If the payment for Shares is not received within said time period or in accordance with the applicable Funds Prospectus, we reserve the right, without prior notice, to cancel the sale, or at our option to return the Shares to the issuer for redemption or repurchase. In the latter case, we shall have the right to hold you responsible for any loss, including lost profit, resulting to us. Should payment be made by check, liquidation of Shares may be made pending clearance of the check. In the event your check is dishonored for any reason, you shall remain liable for the purchase price and any loss incurred by us. In addition, should payment be made by means of a second or third party check, you shall be deemed to have made all presentment, transfer and other applicable warranties set forth in the Uniform Commercial Code, and in the event such check is either dishonored or subsequently determined to be invalid for any reason (including without limitation as a result of such check having been lost, stolen, or unauthorized) you shall remain liable for the purchase price and any loss incurred by us.
4. Relationship With Dealers |
Neither this contract nor the performance of the services of the respective parties hereunder shall be considered to constitute an exclusive arrangement, or to create a partnership, association or joint venture by you and us. In offering and selling Shares under this contract, you shall be acting as principal and nothing herein shall be construed to constitute you or any of your agents, employees or representatives as our agent or employee, or as an agent or employee of the Funds. As general distributor of the Funds, we shall have full authority to take such action as we may deem advisable in respect of all matters pertaining to the distribution of the Shares. We shall not be under any obligation to you, except for obligations expressly assumed by us in this contract.
5. Dealer Representations and Warranties |
2 |
You hereby represent and warrant that you are:
(i) registered as a broker-dealer under the Securities Exchange Act of 1934, as amended, and are licensed and qualified as a broker-dealer or otherwise authorized to offer and sell the Shares under the laws of each jurisdiction in which the Shares will be offered and sold by you;
(ii) a member in good standing of FINRA and agree to maintain such membership in good standing or, in the alternative, you are a foreign dealer not eligible for membership in FINRA, but agree to abide by rules promulgated by the U.S. Securities and Exchange Commission and FINRA; and
(iii) registered, licensed or qualified with appropriate securities authorities in all states, territories and jurisdictions in which your activities make such registration, licensing or qualification necessary.
You further agree, represent and warrant that you shall:
(i) comply with applicable laws, rules, and regulations and the applicable rules and regulations of any jurisdiction in which you sell, directly or indirectly, any Shares;
(ii) not offer for sale or sell the Shares in any jurisdiction in which the Shares are not qualified for sale or in which you are not qualified as a broker-dealer;
(iii) not engage in, authorize or facilitate market timing or late trading in the Funds (for your own account or the account of your customers);
(iv) maintain policies and procedures, including supervisory procedures, reasonably designed to ensure that your customers are apprised of and receive, if entitled, any Fund benefits including, but not limited to, breakpoint discounts;
(v) not withhold placing with us orders received from your customers so as to profit from such withholding; and
(vi) comply with the provisions of Rule 22c-2 under the Investment Company Act of 1940, as amended, as applicable, set forth on Exhibit A hereto.
6. Notice to Distributor |
You agree to notify us in writing immediately in the event of the following:
(i) termination of Securities Investor Protection Corporation coverage;
(ii) expulsion or suspension from FINRA;
(iii) finding of violation of state or federal law, rule or regulation that would be required to be reported on Form BD; and/or
(iv) finding of violation of state or federal law, rule or regulation affecting your ability to act under the terms of this contract in any material way.
3 |
7. Privacy |
Each party to this contract agrees to protect Customer Information (defined below) and to comply as may be necessary with the requirements of the Gramm-Leach-Bliley Act, the relevant state and federal regulations pursuant thereto, including Regulation S-P, and state privacy laws.
Customer Information means any information contained on an application of a customer (Customer) of the Funds or other form and all nonpublic personal information about a Customer that a party receives from the other party. Customer Information including, by way of example and not limitation, name, address, telephone number, social security number, date of birth and personal financial information.
The parties shall establish and maintain safeguards against the unauthorized access, destruction, loss, or alteration of Customer Information in their control, which are no less rigorous than those maintained by a party of its own information of a similar nature. In the event of any improper disclosure of any Customer Information, the party responsible for the disclosure will immediately notify the other party.
You shall not use our name or the name of any affiliate for marketing or advertising purposes without our prior consent.
The provisions of this Privacy section shall survive the termination of this contract.
8. Anti-Money Laundering Program |
You shall comply with all applicable anti-money laundering laws and regulations, including the applicable provisions of the Bank Secrecy Act and the USA PATRIOT Act of 2001, as well as with all applicable anti-money laundering/anti-terrorism sanctions and regulations promulgated by U.S. government agencies, including but not limited to, the Securities and Exchange Commission and the U.S. Department of Treasurys Office of Foreign Assets Control. You shall take necessary and appropriate steps consistent with such laws and regulations to: obtain, verify and retain information with regard to customer identification and source of customer funds. You shall maintain records of all customer transactions. You shall, to the extent consistent with applicable law, take all steps necessary and appropriate to provide the Funds and/or us with any requested information about investors and accounts in the event that the Funds or us shall request such information in re sponse to an inquiry or investigation by an appropriate authority. You shall, to the extent permitted by applicable law and regulations, notify the Funds and/or us of any concerns in connection with any investor in the context of anti-money laundering/anti-terrorism laws or regulations.
9. Termination |
Either party hereto may terminate this contract, without cause, upon ten days written notice to the other party. We may terminate this contract for cause upon the violation by you of any of the provisions hereof or suspension from FINRA for violation of state or federal law, rule or regulation, such termination to become effective on the date such notice of termination is mailed to you. This contract shall terminate automatically if either Party ceases to be a member of FINRA. This contract will also automatically terminate if the distribution agreement between a Fund and Putnam Retail Management Limited Partnership is terminated. Termination with respect to one Fund will not cause termination with respect to any other Fund.
10. Assignability |
This contract is not assignable or transferable, except that we may assign or transfer this contract to any successor which becomes general distributor of the Funds.
4 |
11. Indemnification |
You shall indemnify and hold harmless us, our affiliates and the Funds against any losses, claims, damages, liabilities or expenses (including reasonable attorneys fee and expenses) (collectively, Losses) resulting from (a) any negligence or misfeasance by you or any of your officers, directors, employees, agents or registered representatives; or (b) any violation of any law, rule or regulation or any failure to perform or observe any of your obligations set forth in this contract by your or any of your officers, directors, employees, agents or registered representatives.
We shall indemnify and hold harmless you and your affiliates against any Losses resulting from (a) any negligence or misfeasance by us or any of our officers, directors, employees, agents or registered representatives; or (b) any violation of any law, rule or regulation or any failure to perform or observe any of our obligations set forth in this contract by us or any of our officers, directors, employees, agents or registered representatives.
In the event that this contract is terminated under the terms and conditions described herein, the indemnification provision shall continue until the possibilities for damages or loss have expired.
12. Amendment |
This contract supersedes any prior sales agreements between the parties. This contract and any exhibits thereto may be amended from time to time by us by mailing the amendment to the notice address for you stated below. Acceptance of such amendment by you shall be deemed given either by executing and returning a signed copy of the amendment to us or by your subsequent action under this contract, as amended.
13. Notices |
Notices must be in writing and delivered by: personal delivery, prepaid registered or certified United States first class mail, return receipt requested; overnight courier; or fax or similar electronic delivery (with confirming copy by mail). All notices to us should be sent to the following address: Putnam Investments, Attn: General Counsel, One Post Office Square, Boston, MA 02109. All notices to you shall be sent to the address set forth below.
14. Governing Law |
This contract and the rights and obligations of the parties hereunder shall be governed by and construed under the laws of the Commonwealth of Massachusetts.
* | * | * |
Remainder of page intentionally left blank, signature page to follow. |
5 |
PUTNAM RETAIL MANAGEMENT | |
LIMITED PARTNERSHIP |
/s/ William T. Connolly | ||
By: | ||
William T. Connolly, President | ||
Putnam Retail Management Limited Partnership |
We accept and agree to the foregoing contract as of the date set forth below.
Please indicate below which best | |||||
describes your firms entity: | Dealer: | ||||
[] | Partnership | ||||
[] | Corporation | By: | |||
[] | Other please specify | Authorized Signature, Title | |||
Please provide your organizations Tax | |||||
Identification Number on the following line: | |||||
Address | |||||
Dated: | |||||
Please return the signed Putnam Copy of this Sales contract to:
Putnam Retail Management Limited Partnership, Attn: DMSS C6E, 7 Shattuck Rd, Andover, MA 01810
6 |
EXHIBIT A |
Shareholder Information Agreement |
pursuant to |
Rule 22c-2 under the Investment Company Act of 1940, as amended |
I. Agreement to Provide Information. You agree to provide the Fund and/or us, upon written request, the taxpayer identification number (TIN), the Individual/International Taxpayer Identification Number (ITIN), or other government-issued identifier (GII), if known, of any or all shareholder(s) holding or owning Shares through an account(s) and the amount, date and transaction type (purchase, redemption, transfer, or exchange), for each such shareholder, of every purchase, redemption, transfer, or exchange of Shares held or owned through such account maintained by you during the period covered by the request, as well as the name or other identifier of any investment professional(s) associated with the shareholder(s) or account(s) (if known). The foregoing information shall be collectively referred to herein as the Shareholder Information.
a. Period Covered by Request. Requests must set forth a specific period, not to exceed 90 days from the date of the request, for which Shareholder Information is sought. Notwithstanding the foregoing, the Fund and/or us may request Shareholder Information older than 90 days from the date of the request as deemed necessary or desirable to investigate compliance with policies established from time to time by the Fund for the purpose of eliminating or reducing any dilution of the value of the outstanding shares issued by the Fund.
b. Form and Timing of Response. You agree to provide promptly, upon request of the Fund and/or us, the Shareholder Information. If requested by the Fund and/or us, you agree to use best efforts to determine promptly whether any specific person about whom the Fund and/or us has received Shareholder Information is itself a financial intermediary (indirect intermediary, within the meaning of Rule 22c-2 of the Investment Company Act). If such person is determined to be an indirect intermediary, then, upon further request of the Fund and/or us, you shall promptly do either of the following: (i) provide (or arrange to have provided), to the Fund and/or us, the Shareholder Information for those shareholders who hold an account with an indirect intermediary; or (ii) restrict or prohibit the indirect intermediary from purchasing, in nominee name on behalf of other persons, securities is sued by the Fund. You additionally agree to inform the Fund and/or us whether you plan to perform (i) or (ii). Responses required by this paragraph must be communicated in writing and in a format mutually agreed upon by the parties. To the extent practicable, the format for any transaction information provided to the Fund and/or us should be consistent with the National Securities Clearing Corporation (NSCC) Standardized Data Reporting Format.
c. Limitations on Use of Information. We agree not to use the information received for marketing or any other similar purpose without your prior written consent.
II. Agreement to Restrict Trading. You agree to execute written instructions from the Fund and/or us to restrict or prohibit further purchases or exchanges of Shares by a shareholder that has been identified by the Fund and/or us as having engaged in transactions in Shares (directly or indirectly through your account) that violate policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of the outstanding shares issued by the Fund.
a. Form of Instructions. Instructions must include the TIN, ITIN, or GII, if known, and the specific restriction(s) to be executed. If the TIN, ITIN, or GII is not known, the instructions must include an equivalent identifying number of the shareholder(s) or account(s) or other agreed upon information to which the instruction relates.
b. Timing of Response. You agree to promptly execute instructions from the Fund and/or us to restrict or prohibit trading.
7 |
c. Confirmation. You must provide written confirmation to the Fund and/or us that instructions have been executed. You agree to provide confirmation as soon as reasonably practicable, but not later than ten business days after the instructions have been executed.
III. Instructions. We are entering into this 22c-2 Agreement on our own behalf, as well as on behalf of the Fund, and any instructions or directions given by us shall be deemed to be given by the Fund as well.
VII. Definitions. For purposes of this Exhibit A, the term promptly means as soon as reasonably practicable, but not later than five business days after you receive instructions or a request from the Fund and/or us.
8 |
[PUTNAM INVESTMENTS LOGO]
Putnam Investor Services |
7 Shattuck Road |
Andover, MA 01810 |
www.putnam.com |
FINANCIAL INSTITUTION SALES CONTRACT
Between: | ||
Distributor: | Financial Institution: | |
PUTNAM RETAIL MANAGEMENT | and | |
LIMITED PARTNERSHIP | ||
General Distributor of | ||
The Putnam Family of Mutual Funds | ||
One Post Office Square | ||
Boston MA 02109 |
As general distributor of The Putnam Family of Mutual Funds (the Funds), we agree that you will make available to your customers, under an agency relationship with your customers, shares of beneficial interest issued by the Funds (the Shares), subject to any limitations imposed by any of the Funds and to confirmation by us in each transaction. By your acceptance hereof, you agree to all of the following terms and conditions:
1. Offering Prices and Fees |
The public offering price at which you may make the Shares available to your customers is the net asset value thereof, as computed from time to time, plus any applicable sales charge described in the then-current Prospectus of the applicable Fund. In the case of purchases by you, as agent for your customers, of Shares sold with a sales charge, you shall receive an agency commission consisting of a portion of the public offering price, determined on same basis as the dealer discount described in the then-current Prospectus of the Fund, and such other compensation to dealers as may be described therein, which shall be payable to you at the same time and on the same basis as the same is paid to such dealers, consistent with applicable law, rules and regulations. In determining the amount of any agency commission payable to you hereunder, we reserve the right to exclude any purchases for any account which we reasonably determine are not made in acco rdance with terms of the applicable Fund Prospectus and the provisions of this contract. We reserve the right to revise the agency commission referred to herein upon ten days written notice to you. We will furnish you upon request with the public offering prices for the Shares, and you agree to quote such prices in connection with any Shares made available by you as agent for your customers. Your attention is specifically called to the fact that each purchase of Shares by your customers is always made subject to confirmation by us at the public offering price next computed after receipt of the order. There is no sales charge or agency commission to you on the reinvestment of dividends and distributions.
2. Manner of Making Shares Available for Purchase and Redeeming Shares |
We will, upon request, deliver to you a copy of each Funds then-current Prospectus and will provide you with such number of copies of each Funds then-current Prospectus, Statement of Additional Information and shareholder reports and of supplementary sales materials prepared by us, as you may reasonably request. It shall be your obligation to ensure that all such information and materials are distributed to your customers who own Shares, in accordance with securities and/or banking law and regulations and any other applicable regulations. Neither you nor any other person is authorized to give any information or to make any representations other than those contained in such Prospectuses, Statements of Additional Information and shareholder reports or in such supplementary sales material provided to you by us. You shall not furnish or cause to be furnished to any person, display or publish any information or materials relating to any Fund (includi ng, without limitation promotional materials and sales literature, advertisements and press-releases, announcements, statements, posters, signs, or other similar materials) except such information and materials as may be furnished to you by us or the Fund and such other information and materials as may be approved in writing by us.
You hereby agree:
(i) to not purchase any Shares as agent for any customer, unless you deliver or cause to be delivered to such customer, at or prior to the time of such purchase, a copy of the then-current Prospectus of the applicable Fund unless such customer has acknowledged receipt of the Prospectus of such Fund. You hereby represent that you understand your obligation to deliver a prospectus to customers who purchase Shares pursuant to federal securities laws and you have taken all necessary steps to comply with such prospectus delivery requirements;
(ii) to transmit to us promptly upon receipt any and all orders received by you, it being understood that no conditional orders will be accepted; and
(iii) to obtain from each customer for whom you act as agent for the purchase of Shares any tax-payer identification number certification and backup withholding information required under the Internal Revenue Code of 1986, as amended from time to time (the Code), and the regulations promulgated thereunder, or other sections of the Code which may become applicable, and to provide us or our designee with timely written notice of any failure to obtain such taxpayer identification number certification or information in order to enable the implementation of any required backup withholding in accordance with the Code and the regulations thereunder.
Unless otherwise mutually agreed in writing or except as provided below, each transaction placed by you shall be promptly confirmed by us in writing to you, and shall be confirmed to the customer promptly upon receipt by us of instructions from you as to such customer. In the case of a purchase order by customers application, each transaction shall be promptly confirmed in writing directly to the customer and a copy of each confirmation shall be sent simultaneously to you.
All purchase orders will be executed at then-current NAV per share, which is next computed after receipt of a purchase offer, plus any applicable sales charges as described in the applicable Funds Prospectus. All redemption orders will be executed at NAV as described in the applicable Funds Prospectus. Any deferred sales charges (contingent or otherwise) and/or redemption fees will be deducted prior to transmission of proceeds to you or to you on behalf of your customer.
We reserve the right, at our discretion and without notice, to suspend the sale of Shares or withdraw entirely the sale of Shares of any or all of the Funds. All orders are subject to acceptance or rejection by us in our sole discretion, and by the Funds in their sole discretion. The procedure stated herein relating to the pricing and handling of orders shall be subject to instructions, which we may forward to you from time to time.
3. Payment for Shares |
You agree to pay us, in accordance with the applicable Funds Prospectus, the offering price, less any agency commission to which you are entitled, within three (3) business days of our confirmation of your customers order, or such shorter time as may be required by law. You may elect to waive the agency discount, to the extent permitted by the applicable Funds Prospectus. Neither us nor the Funds are responsible for correcting the payment to or assessment of an incorrect agency discount due to your failure to fulfill your obligations under this contract. We may change the agency discounts at any time in our sole discretion.
You may, subject to our approval, remit the total public offering price to us, and we will return you your agency commission. If such payment is not received within said time period, we reserve the right, without prior notice, to cancel the sale, or at our option to return the Shares to the issuer for redemption or repurchase. In the latter case, we shall have the right to hold you responsible for any loss resulting to us. Should payment be made by local bank check, liquidation of Shares may be delayed pending clearance of your check. In the event your check is dishonored for any reason, you shall remain liable for the purchase price and any loss incurred by us. In addition, should
2 |
payment be made by means of a second or third party check, you shall be deemed to have made all presentment, transfer and other applicable warranties set forth in the Uniform Commercial Code, and in the event such check is either dishonored or subsequently determined to be invalid for any reason (including without limitation as a result of such check having been lost, stolen or unauthorized) you shall remain liable for the purchase price and any loss incurred by us.
4. Relationship with Customer |
With respect to any and all transactions in the Shares of any Fund pursuant to the contract, it is understood and agreed in each case that: (a) you shall be acting solely as agent for the account of your customer; (b) each transaction shall be initiated solely upon the order of your customer; (c) we shall execute transactions only upon receiving instructions from you acting as agent for your customer or upon receiving instructions directly from your customer; (d) as between you and your customer, your customer will have full beneficial ownership of all Shares; and (e) each transaction shall be for the account of your customer and not for your account. Subject to the foregoing, however, and except for Shares sold subject to a contingent deferred sales charge, you may maintain record ownership of such customers Shares in an account registered in your name or the name of your nominee, for the benefit of such customers. With respect to Shares sold subject to a contingent deferred sales charge, you agree not to hold shares of such Funds in an account registered in your name or in the name of your nominee for the benefit of certain of your customers. You understand that such Shares must be held in a separate account for each shareholder of such Funds. Each transaction shall be without recourse to you provided that you act in accordance with the terms of this contract.
5. Relationship with Financial Institution |
Neither this contract nor the performance of the services of the respective parties hereunder shall be considered to constitute an exclusive arrangement, or to create a partnership, association or joint venture between you and us. In making available Shares of the Funds under this contract, nothing herein shall be construed to constitute you or any of your agents, employees or representatives as our agent or employee, or as an agent or employee of the Funds, and you shall not make any representations to the contrary. As general distributors of the Funds, we shall have full authority to take such action, as we may deem advisable in respect of all matters pertaining to the distribution of the Shares. We shall not be under any obligation to you, except for obligation expressly assumed by us in this contract.
6. Financial Institution Representations and Warranties |
You hereby represent and warrant that you are:
(i) either (1) a bank as defined in Section 3 (a)(6) of the Securities Exchange Act of 1934, as amended (the Exchange Act), and at the time of each transaction in shares of the Funds, are not required to register as a broker-dealer under the Exchange Act or regulations there-under; or (2) registered as a broker-dealer under the Exchange Act, a member in good standing of the Financial Industry Regulatory Authority (FINRA) and affiliated with a bank; and in either case have the full right, power and authority to effect transactions (including, without limitation, any purchases and redemptions) in Shares on behalf of all customer accounts provided by you;
(ii) if you are a bank not required to register as a broker-dealer under the Exchange Act, that with respect to any sales in the United States, you will use your best efforts to ensure that any purchases of Shares by your customers constitutes a suitable investment for such customers;
(iii) if you are a FINRA member broker-dealer affiliated with a bank and registered under the Exchange Act, that with respect to any sales in the United States, you agree to abide by all of the applicable laws, rules and regulations including applicable provisions of the Securities Act of 1933, as amended, and the applicable rules and regulations of the FINRA, including, without limitation, its Rules of Conduct, and the applicable rules and regulations of any jurisdiction in which you make Shares available for sale to your customers; and
3 |
(iv) not in violation of any banking law or regulations as to which you are subject.
You further agree, represent and warrant that you shall:
(i) not make available for sale to your customers the Shares in any jurisdiction in which the Shares are not qualified for sale or in which you are not qualified as a broker-dealer. We shall have no obligation or responsibility as to your right to make Shares of any Funds available to your customers in any jurisdiction;
(ii) not make Shares of any Fund available to your customers, including your fiduciary customers, except in compliance with all federal and state laws and rules and regulations of regulatory agencies or authorities applicable to you, or any of your affiliates engaging in such activity, which may affect your business practices;
(iii) not engage in, authorize or facilitate market timing or late trading in the Funds (for your own account or for the account of your customers);
(iv) not withhold placing with us orders received from your customers so as to profit form such withholding;
(v) not effect any transaction in, or induce any purchase or sale of, any Shares by means of any manipulative, deceptive or other fraudulent device or contrivance, and shall otherwise deal equitably and fairly with your customers with respect to transactions in Shares of a Fund; and
(vi) comply with the provisions of Rule 22c-2 under the Investment Company Act of 1940, as amended, as applicable, set forth on Exhibit A hereto.
7. Notice to Distributor |
You agree to notify us in writing immediately in the event of the following:
(i) your expulsion or suspension from the FINRA;
(ii) your becoming subject to any enforcement action by the Securities and Exchange Commission, FINRA or any other self-regulatory organization;
(iii) your violation of any applicable federal or state law, rule or regulation or self-regulatory organization rule affecting your ability to act in accordance with the terms of this contract; and/or
(iv) any action by or communication from any authority that may affect your status as a bank or which may otherwise affect your ability to act under the terms of this contract in any material way.
8. Privacy |
Each party to this contract agrees to protect Customer Information (defined below) and to comply as may be necessary with the requirements of relevant state and federal regulations pursuant thereto.
Customer Information means any information contained on an application of a customer (Customer) of the Funds or other form and all nonpublic personal information about a Customer that a party receives from the other party. Customer Information including, by way of example and not limitation, name, address, telephone number, social security number, date of birth and personal financial information.
The parties shall establish and maintain safeguards against the unauthorized access, destruction, loss, or alteration of Customer Information in their control, which are no less rigorous than those maintained by a party of its own
4 |
information of a similar nature. In the event of any improper disclosure of any Customer Information, the party responsible for the disclosure will immediately notify the other party.
You shall not use our name or the name of any affiliate for marketing or advertising purposes without our prior consent.
The provisions of this Privacy section shall survive the termination of this contract.
9. Anti-Money Laundering Program |
You shall comply with all applicable anti-money laundering laws and regulations, including the applicable provisions of the Bank Secrecy Act and the USA PATRIOT Act of 2001, as well as with all applicable anti-money laundering/anti-terrorism sanctions and regulations promulgated by U.S. government agencies, including but not limited to, the Securities and Exchange Commission and the U.S. Department of Treasurys Office of Foreign Assets Control. You shall take necessary and appropriate steps consistent with such laws and regulations to: obtain, verify and retain information with regard to customer identification and source of customer funds. You shall maintain records of all customer transactions. You shall, to the extent consistent with applicable law, take all steps necessary and appropriate to provide the Funds and/or us with any requested information about investors and accounts in the event that the Funds or us shall request such information in re sponse to an inquiry or investigation by an appropriate authority. You shall, to the extent permitted by applicable law and regulations, notify the Funds and/or us of any concerns in connection with any investor in the context of anti-money laundering/anti-terrorism laws or regulations.
10. Termination |
Either party hereto may terminate this contract, without cause, upon ten days written notice to the other party. We may terminate this contract for cause upon the violation by you of any of the provisions hereof or suspension from FINRA for violation of state or federal law, rule or regulation, such termination to become effective on the date such notice of termination is mailed to you. If you are registered as a broker-dealer and affiliated with a bank, this contract shall terminate automatically if either party ceases to be a member of the FINRA.
11. Assignability |
This contract is not assignable or transferable, except that we may assign or transfer this contract to any successor that becomes general distributor of the Funds.
12. Indemnification |
You shall indemnify and hold harmless us, our affiliates and the Funds against any losses, claims, damages, liabilities or expenses (including reasonable attorneys fee and expenses) resulting from (a) any negligence or misfeasance by you or any of your officers, directors, employees, agents or registered representatives; or (b) any violation of any law, rule or regulation or any failure to perform or observe any of your obligations set forth in this contract by your or any of your officers, directors, employees, agents or registered representatives.
We shall indemnify and hold harmless you and your affiliates against any Losses resulting from (a) any negligence or misfeasance by us or any of our officers, directors, employees, agents or registered representatives; or (b) any violation of any law, rule or regulation or any failure to perform or observe any of our obligations set forth in this contract by us or any of our officers, directors, employees, agents or registered representatives.
In the event that this contract is terminated under the terms and conditions described herein, the indemnification provision shall continue until the possibilities for damages or loss have expired.
5 |
13. Amendment |
This contract supersedes any prior sales agreements between the parties. This contract and any exhibits thereto may be amended from time to time by us by mailing the amendment to the notice address for you stated below. Acceptance of such amendment by you shall be deemed given either by executing and returning a signed copy of the amendment to us or by your subsequent action under this contract, as amended.
14. Notices |
Notices must be in writing and delivered by: personal delivery, prepaid registered or certified United States first class mail, return receipt requested; overnight courier; or fax or similar electronic delivery (with confirming copy by mail). All notices to us should be sent to the following address: Putnam Investments, Attn: General Counsel, One Post Office Square, Boston, MA 02109. All notices to you shall be sent to the address set forth below.
15. Governing Law |
This contract and the rights and obligations of the parties hereunder shall be governed by and construed under the laws of the Commonwealth of Massachusetts.
* | * | * |
Remainder of page intentionally left blank, signature page to follow. |
6 |
PUTNAM RETAIL MANAGEMENT LIMITED | |
PARTNERSHIP |
/s/ William T. Connolly | ||
By: | ||
William T. Connolly, President | ||
Putnam Retail Management Limited Partnership |
We accept and agree to the foregoing contract as of the date set forth below.
Please indicate below which best | |||||
describes your firms entity: | Financial Institution: | ||||
[] | Partnership | ||||
[] | Corporation | By: | |||
[] | Other please specify | Authorized Signature, Title | |||
Please provide your organizations Tax | |||||
Identification Number on the following line: | Address | ||||
Dated: |
Please return the signed Putnam Copy of this Sales contract to:
Putnam Retail Management Limited Partnership, Attn: DMSS C6E, 7 Shattuck Rd, Andover, MA 01810
7 |
EXHIBIT A |
Shareholder Information Agreement |
pursuant to |
Rule 22c-2 under the Investment Company Act of 1940, as amended |
I. Agreement to Provide Information. You agree to provide the Fund and/or us, upon written request, the taxpayer identification number (TIN), the Individual/International Taxpayer Identification Number (ITIN), or other government-issued identifier (GII), if known, of any or all shareholder(s) holding or owning Shares through an account(s) and the amount, date and transaction type (purchase, redemption, transfer, or exchange), for each such shareholder, of every purchase, redemption, transfer, or exchange of Shares held or owned through such account maintained by you during the period covered by the request, as well as the name or other identifier of any investment professional(s) associated with the shareholder(s) or account(s) (if known). The foregoing information shall be collectively referred to herein as the Shareholder Information.
a. Period Covered by Request. Requests must set forth a specific period, not to exceed 90 days from the date of the request, for which Shareholder Information is sought. Notwithstanding the foregoing, the Fund and/or us may request Shareholder Information older than 90 days from the date of the request as deemed necessary or desirable to investigate compliance with policies established from time to time by the Fund for the purpose of eliminating or reducing any dilution of the value of the outstanding shares issued by the Fund.
b. Form and Timing of Response. You agree to provide promptly, upon request of the Fund and/or us, the Shareholder Information. If requested by the Fund and/or us, you agree to use best efforts to determine promptly whether any specific person about whom the Fund and/or us has received Shareholder Information is itself a financial intermediary (indirect intermediary, within the meaning of Rule 22c-2 of the Investment Company Act). If such person is determined to be an indirect intermediary, then, upon further request of the Fund and/or us, you shall promptly do either of the following: (i) provide (or arrange to have provided), to the Fund and/or us, the Shareholder Information for those shareholders who hold an account with an indirect intermediary; or (ii) restrict or prohibit the indirect intermediary from purchasing, in nominee name on behalf of other persons, securities is sued by the Fund. You additionally agree to inform the Fund and/or us whether you plan to perform (i) or (ii). Responses required by this paragraph must be communicated in writing and in a format mutually agreed upon by the parties. To the extent practicable, the format for any transaction information provided to the Fund and/or us should be consistent with the National Securities Clearing Corporation (NSCC) Standardized Data Reporting Format.
c. Limitations on Use of Information. We agree not to use the information received for marketing or any other similar purpose without your prior written consent.
II. Agreement to Restrict Trading. You agree to execute written instructions from the Fund and/or us to restrict or prohibit further purchases or exchanges of Shares by a shareholder that has been identified by the Fund and/or us as having engaged in transactions in Shares (directly or indirectly through your account) that violate policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of the outstanding shares issued by the Fund.
a. Form of Instructions. Instructions must include the TIN, ITIN, or GII, if known, and the specific restriction(s) to be executed. If the TIN, ITIN, or GII is not known, the instructions must include an equivalent identifying number of the shareholder(s) or account(s) or other agreed upon information to which the instruction relates.
b. Timing of Response. You agree to promptly execute instructions from the Fund and/or us to restrict or prohibit trading.
8 |
c. Confirmation. You must provide written confirmation to the Fund and/or us that instructions have been executed. You agree to provide confirmation as soon as reasonably practicable, but not later than ten business days after the instructions have been executed.
III. Instructions. We are entering into this 22c-2 Agreement on our own behalf, as well as on behalf of the Fund, and any instructions or directions given by us shall be deemed to be given by the Fund as well.
VII. Definitions. For purposes of this Exhibit A, the term promptly means as soon as reasonably practicable, but not later than five business days after you receive instructions or a request from the Fund and/or us.
9 |
EXECUTION COPY | |
MASTER CUSTODIAN AGREEMENT | |
This Agreement is made as of January 1, 2007 by and among each management investment company identified on Appendix A hereto, each such investment company acting on its own behalf separately from all of the other investment companies and not jointly or jointly and severally with any of the other investment companies (each such investment company and each management investment company made subject to this Agreement in accordance with Section 21.5 below shall hereinafter be referred to as a Fund), and STATE STREET BANK and TRUST COMPANY, a Massachusetts trust company ( the Custodian).
WITNESSETH: |
WHEREAS, each Fund is authorized to issue common stock or shares of beneficial interest (Shares), and some Funds are authorized to issue Shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets, as more particularly identified on Appendix A hereto (each such series and each series made subject to this Agreement in accordance with Section 21.6 below shall hereinafter be referred to as a Portfolio with respect to that Fund, but for any Fund that does not have any separate series, then any reference to Portfolio is a reference to that Fund);
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
Each Fund hereby employs the Custodian as a custodian of assets of the Portfolios, including securities which the Fund, on behalf of the applicable Portfolio, desires to be held in places within the United States (domestic securities) and securities it desires to be held outside the United States (foreign securities). Each Fund, on behalf of its Portfolio(s), agrees to deliver to the Custodian all securities and cash of the Portfolios (other than any securities or cash of the Portfolios held by a futures commission merchant or commodity clearing organization pursuant to Rule 17f-6 under the Investment Company Act of 1940, as amended (the 1940 Act)), and all payments of income, payments of principal or capital distributions received by it with respect to all securities owned by the Portfolio(s) from time to time, and the cash consideration received by it for such Shares as may be issued or sold from time to time. The Custodian shall not be responsible for any property of a Portfolio held or received by the Portfolio but not delivered to the Custodian or which is delivered out in accordance with Proper Instructions or Special Instructions (as such terms are defined in Section 7 hereof). With respect to uncertificated shares (the Underlying Shares) of registered investment companies (as defined in Section 3(a)(1) of the 1940 Act) (hereinafter sometimes referred to as the Underlying Portfolios), whether in the same group of investment companies (as defined in Section 12(d)(1)(G)(ii) of the 1940 Act) or otherw ise, the holding of confirmation statements that identify the shares as being recorded in the Custodians name on behalf of the Portfolios will be deemed custody for purposes hereof.
Upon receipt of Proper Instructions, the Custodian shall on behalf of the applicable Portfolio(s) from time to time employ as its agent one or more sub-custodians located in the United States, but only in accordance with an applicable vote by the Board of Trustees or the Board of Directors of the Fund (as appropriate, and in each case, the Board) on behalf of the applicable Portfolio(s). The Custodian may place and maintain each Funds foreign securities with Eligible Foreign Custodians employed by the Custodian and/or Foreign Securities Systems, all as designated in Schedules A and B hereto, but only in accordance with the applicable provisions of Sections 3 and 4 hereof.
SECTION 2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE PORTFOLIOS TO BE HELD IN THE UNITED STATES
SECTION 2.1 HOLDING SECURITIES. The Custodian shall hold and physically segregate for the account of each Portfolio all non-cash property to be held by it in the United States, including all domestic securities owned by such Portfolio other than (a) securities which are maintained pursuant to Section 2.8 in a clearing agency which acts as a securities depository or in a book-entry system authorized by the U.S. Department of the Treasury (each, a U.S. Securities System) and (b) Underlying Shares owned by each Fund on behalf of a Portfolio which are maintained pursuant to Section 2.10 hereof in an account with State Street Bank and Trust Company or such other entity which may from time to time act as a transfer agent for the Underlying Portfolios and with respect to which the Custodian is provided with Proper Instructions (the Underlying Transfer Agent).
SECTION 2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver domestic securities owned by a Portfolio held by the Custodian, whether held by the Custodian, in a U.S. Securities System account of the Custodian or in an account at the Underlying Transfer Agent, only upon receipt of Proper Instructions on behalf of the applicable Portfolio, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System, in accordance with the provisions of Section 2.8 hereof;
4) To the depository agent in connection with tender or other similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called, redeemed, retired or otherwise become payable; provided that, in any such case, the cash or other consideration is to be delivered to the Custodian;
2. |
6) To the issuer thereof, or its agent, for transfer into the name of the Portfolio or into the name of any nominee or nominees of the Custodian or into the name or nominee name of any agent appointed pursuant to Section 2.7 or into the name or nominee name of any sub-custodian appointed pursuant to Section 1; or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Portfolio, to the broker or its clearing agent, against a receipt, for examination in accordance with street delivery custom; provided that in any such case, the Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Custodians own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the Portfolio (a) against receipt of collateral as agreed from time to time by the Fund on behalf of the Portfolio, except that in connection with any loans for which collateral is to be credited to the Custodians account in the book-entry system authorized by the U.S. Department of the Treasury, the Custodian will not be held liable or responsible for the delivery of securities owned by the Portfolio prior to the receipt of such collateral or (b) to the lending agent, or the lending agents custodian, in accordance with written Proper Instructions (which may but need not provide for the receipt by the Custodian of collateral therefor) agreed upon from time to time by the Custodian and the Fund;
11) For delivery as security in connection with any borrowing by a Fund on behalf of a Portfolio requiring a pledge of assets by the Fund on behalf of such Portfolio but only against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, the Custodian and a broker-dealer that is both registered under the Securities Exchange Act of 1934, as amended (the Exchange Act), and a
3. |
member of The National Association of Securities Dealers, Inc. (the NASD), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange, or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Fund on behalf of a Portfolio;
13) For delivery in accordance with the provisions of any agreement among a Fund on behalf of the Portfolio, the Custodian, and a futures commission merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures Trading Commission (the CFTC) and/or any contract market, or any similar organization or organizations, regarding account deposits in connection with transactions by the Fund on behalf of a Portfolio;
14) Upon the sale or other delivery of such investments, including, without limitation, to one or more (a) additional custodians appointed by the Fund, and communicated to the Custodian from time to time via a writing duly executed by an authorized officer of the Fund, for the purpose of engaging in repurchase agreement transactions(s), (each a Repo Custodian), or (b) Special Sub-Custodians, and prior to receipt of payment therefor, as set forth in written Proper Instructions (such delivery in advance of payment, along with payment in advance of delivery made in accordance with Section 2.6(7), as applicable, shall each be referred to herein as a Free Trade), provided that such Proper Instructions shall set forth (a) the securities of the Portfolio to be delivered and (b) the person(s) to whom delivery of such securities shall be made;
15) Upon receipt of Proper Instructions from the Fund or the Funds transfer agent (the Transfer Agent) for delivery to such Transfer Agent or to the holders of Shares in connection with payments in kind, as may be described from time to time in the currently effective prospectus and statement of additional information of the Fund related to the Portfolio (the Prospectus), in satisfaction of requests by holders of Shares for repurchase or redemption;
16) In the case of a sale processed through the Underlying Transfer Agent of Underlying Shares, in accordance with Section 2.10 hereof;
17) For delivery as initial or variation margin in connection with futures or options on futures contracts entered into by the Fund on behalf of the Portfolio; and
18) For any other purpose, but only upon receipt of Proper Instructions from the Fund on behalf of the applicable Portfolio specifying (a) the securities of the Portfolio to be delivered and (b) the person or persons to whom delivery of such securities shall be made.
4. |
SECTION 2.3 REGISTRATION OF SECURITIES. Domestic securities held by the Custodian (other than bearer securities) shall be registered by the Custodian in the name of the Portfolio or in the name of any nominee of a Fund on behalf of the Portfolio or in the name of any nominee of the Custodian which nominee shall be assigned exclusively to the Portfolio, unless the Fund has authorized in writing the appointment of a nominee to be used in common with other registered management investment companies having the same investment adviser as the Portfolio, or in the name or nominee name of any agent appointed pursuant to Section 2.7 or in the name or nominee name of any sub-custodian appointed pursuant to Section 1. All secur ities accepted by the Custodian on behalf of the Portfolio under the terms of this Agreement shall be in street name or other good delivery form. If, however, a Fund directs the Custodian to maintain securities in street name, the Custodian shall utilize its best efforts only to timely collect income due the Fund on such securities and to notify the Fund on a best efforts basis only of relevant corporate actions including, without limitation, pendency of calls, maturities, tender or exchange offers.
SECTION 2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate bank account or accounts in the United States in the name of each Portfolio of each Fund, subject only to draft or order by the Custodian acting pursuant to the terms of this Agreement, and shall hold in such account or accounts, subject to the provisions hereof, all cash received by it from or for the account of the Portfolio, other than cash maintained by the Portfolio in a bank account established and used in accordance with Rule 17f-3 under the 1940 Act. Cash held by the Custodian for a Portfolio may be deposited by it to its credit as Custodian in the banking department of the Custodian or in such other banks or trust companies as it may in its reasonable discretion deem necessary or desirable; provided, however, that every such bank or trust company shall be qualified to act as a custodian under the 1940 Act and that each such bank or trust company and the funds to be deposited therewith shall on behalf of each applicable Portfolio be approved by vote of a majority of the Board. Such cash shall be deposited by the Custodian only in its capacity as Custodian and shall be withdrawable by the Custodian only in that capacity.
SECTION 2.5 COLLECTION OF INCOME. Except with respect to Portfolio property released and delivered pursuant to Section 2.2(14) or purchased and not held pursuant to Section 2.6(7), and subject to the provisions of Section 2.3, the Custodian shall collect on a timely basis all income and other payments with respect to (a) registered domestic securities held hereunder to which each Portfolio shall be entitled either by law or pursuant to custom in the securities business if, on the record date for payment by the issuer, such securities are held hereunder, and (b) bearer domestic securities if, on the date of payment by the issuer, such securities are held by the Custodian or its agent, and, with respect to (a) and (b) above, shall credit such income, on the designated settlement date, as predetermined income, to such Portfolios custodian account. Without limiting the generality of the foregoing, the Custodian shall detach and present for payment all coupons and other income items requiring presentation as and when they become due and shall collect interest when due on securities held hereunder. Income due each Portfolio on securities loaned pursuant to the provisions of Section 2.2 (10) shall be the responsibility of the applicable Fund. The Custodian will have no duty or responsibility in connection therewith, other than to provide the Fund with such information or data as may be necessary to assist the Fund in arranging for the timely delivery to the Custodian of the income to which the Portfolio is properly entitled. The Fund, or its duly authorized
5. |
investment manager, shall instruct the Custodian regarding all Fund or investment manager determinations that a portfolio security has been deemed worthless by such Fund.
SECTION 2.6 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions on behalf of the applicable Portfolio, which may be continuing instructions when deemed appropriate by the parties, the Custodian shall pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures contracts or options on futures contracts for the account of the Portfolio but only (a) against the delivery of such securities or evidence of title to such options, futures contracts or options on futures contracts to the Custodian (or any bank, banking firm or trust company doing business in the United States or abroad which is qualified under the 1940 Act to act as a custodian and has been designated by the Custodian as its agent for this purpose) registered in the name of the Portfolio or in the name of a nominee of the Custodian pursuant to Section 2.3 hereof or in proper form for transfer; (b) in the case of a purchase effected through a U.S. Securities System, in accordance with the conditions set forth in Section 2.8 hereof; (c) in the case of a purchase of Underlying Shares, in accordance with the conditions set forth in Section 2.10 hereof; (d) in the case of repurchase agreements enter ed into between the applicable Fund on behalf of a Portfolio and the Custodian, or another bank, or a broker-dealer which is a member of NASD, (i) against delivery of the securities either in certificate form or through an entry crediting the Custodians account at the Federal Reserve Bank with such securities or (ii) against delivery of the receipt evidencing purchase by the Portfolio of securities owned by the Custodian, or another bank, or a broker-dealer which is a member of NASD along with written evidence of the agreement by the Custodian, or another bank, or a broker-dealer which is a member of NASD to repurchase such securities from the Portfolio; or (e) for transfer to a time deposit account of the Fund in any bank, whether domestic or foreign; such transfer may be effected prior to receipt of a confirmation from a broker and/or the applicable bank pursuant to Proper Instructions from the Fund;
2) In connection with conversion, exchange or surrender of securities owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued as set forth in Section 6 hereof;
4) For the payment of any expense or liability incurred by the Portfolio, including but not limited to the following payments for the account of the Portfolio: interest, taxes, management, accounting, audit, transfer agent and legal fees, and operating expenses of the Fund whether or not such expenses are to be in whole or part capitalized or treated as deferred expenses;
6. |
5) For the payment of any dividends on Shares declared pursuant to the Funds articles of incorporation or organization and by-laws or agreement or declaration of trust, as applicable, and Prospectus (collectively, Governing Documents);
6) For payment of the amount of dividends received in respect of securities sold short;
7) Upon the purchase of domestic investments including, without limitation, repurchase agreement transactions involving delivery of Portfolio monies to Repo Custodian(s), and prior to receipt of such investments, as set forth in written Proper Instructions (such payment in advance of delivery, along with delivery in advance of payment made in accordance with Section 2.2(14), as applicable, shall each be referred to herein as a Free Trade), provided that such Proper Instructions shall also set forth (a) the amount of such payment and (b) the person(s) to whom such payment is made;
8) For payment as initial or variation margin in connection with futures or options on futures contracts entered into by the Fund on behalf of the Portfolio; and
9) For any other purpose, but only upon receipt of Proper Instructions from the Fund on behalf of the Portfolio specifying (a) the amount of such payment and (b) the person or persons to whom such payment is to be made.
SECTION 2.7 APPOINTMENT OF AGENTS. The Custodian may at any time or times in its discretion appoint (and may at any time remove) one or more of its wholly-owned subsidiaries which is a bank or trust company and which is itself qualified under the 1940 Act to act as a custodian, as its agent to carry out such of the provisions of this Section 2 as the Custodian may from time to time direct; provided, however, that the appointment of any agent shall not relieve the Custodian of its responsibilities or liabilities hereunder. No Underlying Transfer Agent acting as such shall be deemed an agent or sub-custodian of the Custodian for purposes of this Secti on 2.7 or any other provision of this Agreement.
SECTION 2.8 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. The Custodian may deposit and/or maintain securities owned by a Portfolio in a U.S. Securities System in compliance with the conditions of Rule 17f-4 under the 1940 Act, as amended from time to time.
SECTION 2.9 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper Instructions on behalf of each applicable Portfolio, establish and maintain a segregated account or accounts for and on behalf of each such Portfolio, into which account or accounts may be transferred cash and/or securities, including securities maintained in an account by the Custodian pursuant to Section 2.8 hereof, (a) in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, the Custodian and a broker-dealer registered under the Exchange Act and a member of the NASD (or any futures commission merchant registered under the Commodity Exchange Act), relating to compliance with the rules of The Options Clear ing Corporation and of any registered national securities exchange (or the CFTC or any registered contract market), or of
7. |
any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Portfolio, (b) for purposes of segregating cash or government securities in connection with swap arrangements of the Portfolio, options purchased, sold or written by the Portfolio or commodity futures contracts or options thereon purchased or sold by the Portfolio, (c) for the purposes of compliance by the Portfolio with the procedures required by Investment Company Act Release No. 10666, or any subsequent release of the U.S. Securities and Exchange Commission (the SEC), or interpretative opinion of the staff of the SEC, relating to the maintenance of segregated accounts by registered investment companies, and (d) for any other purpose in accordance with Proper Instructions.
SECTION 2.10 DEPOSIT OF FUND ASSETS WITH THE UNDERLYING TRANSFER AGENT. Underlying Shares beneficially owned by the Fund, on behalf of a Portfolio, shall be deposited and/or maintained in an account or accounts maintained with an Underlying Transfer Agent and the Custodians only responsibilities with respect thereto shall be limited to the following:
1) Upon receipt of a confirmation or statement from an Underlying Transfer Agent (copies of which the Custodian will maintain as may be required by Section 11 of this Agreement) that such Underlying Transfer Agent is holding or maintaining Underlying Shares in the name of the Custodian (or a nominee of the Custodian) for the benefit of a Portfolio, the Custodian shall identify by book-entry that such Underlying Shares are being held by it as custodian for the benefit of the Portfolio.
2) In respect of the purchase of Underlying Shares for the account of a Portfolio, upon receipt of Proper Instructions, the Custodian shall pay out monies of such Portfolio as so directed, and record such payment from the account of such Portfolio on the Custodians books and records.
3) In respect of the sale or redemption of Underlying Shares for the account of a Portfolio, upon receipt of Proper Instructions, the Custodian shall transfer such Underlying Shares as so directed, record such transfer from the account of such Portfolio on the Custodians books and records and, upon the Custodians receipt of the proceeds therefor, record such payment for the account of such Portfolio on the Custodians books and records.
The Custodian shall not be liable to the Fund for any loss or damage to the Fund or any Portfolio resulting from the maintenance of Underlying Shares with an Underlying Transfer Agent except for losses to the extent resulting from (i) the fraud, negligence, or willful misconduct of the Custodian or any of its agents or of any of its or their employees, (ii) violation of law applicable to the Custodian in its capacity as a custodian and that affects the Custodians performance of the Services hereunder, or (iii) material breach of this Agreement by the Custodian (provided, however, that the Custodian shall have the opportunity to cure, within thirty (30) days of its receipt of written notice from the Fund, solely those breaches capable of cure without material adverse impact to the Fund, provided, in each such instance where the Custodian is aware of an event related to such notice, th e Custodian had previously informed the Fund promptly of such
8. |
event; any such communication from the Custodian to the Fund shall not be used as or considered as an admission of fault and will be provided solely as an accommodation to the Fund).
SECTION 2.11 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall execute ownership and other certificates and affidavits for all federal and state tax purposes in connection with receipt of income or other payments with respect to domestic securities of each Portfolio held by it and in connection with transfers of securities.
SECTION 2.12 PROXIES. Except with respect to Portfolio property released and delivered pursuant to Section 2.2(14), or purchased and not held pursuant to Section 2.6(7), the Custodian shall, with respect to the domestic securities held hereunder, cause to be promptly executed by the registered holder of such securities, if the securities are registered otherwise than in the name of the Portfolio or a nominee of the Portfolio, all proxies, without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Fund or its duly authorized agent all proxies, all proxy soliciting materials and all notices relating to such securities.
SECTION 2.13 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Except with respect to Portfolio property released and delivered pursuant to Section 2.2(14), or purchased and not held pursuant to Section 2.6(7), and subject to the provisions of Section 2.3, the Custodian shall transmit promptly to the applicable Fund for each Portfolio all written information (including, without limitation, pendency of calls and maturities of domestic securities and expirations of rights in connection therewith and notices of exercise of call and put options written by the Fund on behal f of the Portfolio and the maturity of futures contracts purchased or sold by the Fund on behalf of the Portfolio) received by the Custodian from issuers of the securities being held for the Portfolio. With respect to voluntary corporate actions such as tender or exchange offers, the Custodian shall transmit promptly to the applicable Fund all written information received by the Custodian from issuers of the securities whose tender or exchange or other action is sought and from the party (or its agents) making the tender or exchange offer or other action. The Custodian shall also transmit promptly to the applicable Fund for each Portfolio all written information received by the Custodian regarding any class action or other litigation in connection with Portfolio securities or other assets issued in the United States and then held, or previously held, during the term of this Agreement by the Custodian for the account of the Fund for such Portfolio, including, but not limited to, opt-out notices and proof-of-c laim forms. The Custodian shall not be liable for any untimely exercise of any tender, exchange or other right or power in connection with domestic securities or other property of the Portfolios at any time held by it unless (i) the Custodian is in actual possession of such domestic securities or property and (ii) the Custodian receives Proper Instructions with regard to the exercise of any such right or power, and both (i) and (ii) occur prior to such deadline established by the Custodian in its reasonable discretion as will give the Custodian sufficient time to take such action, which deadline shall in no event be longer than three (3) business days. The Custodian shall inform the Fund of pertinent deadlines in each case. For avoidance of doubt, upon and after the effective date of any termination of this Agreement, with respect to a Fund or its Portfolio(s), as may be applicable, the Custodian shall have no responsibility to so transmit any information under this Section 2.13.
9. |
SECTION 3. PROVISIONS RELATING TO RULES 17F-5 AND 17F-7
SECTION 3.1. DEFINITIONS. As used throughout this Agreement, the capitalized terms set forth below shall have the indicated meanings:
Country Risk means all factors reasonably related to the systemic risk of holding Foreign Assets in a particular country including, but not limited to, such countrys political environment, economic and financial infrastructure (including any Eligible Securities Depository operating in the country), prevailing or developing custody and settlement practices, and laws and regulations applicable to the safekeeping and recovery of Foreign Assets held in custody in that country.
Eligible Foreign Custodian has the meaning set forth in section (a)(1) of Rule 17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as defined in Rule 17f-5), a bank holding company meeting the requirements of an Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate action of the SEC), or a foreign branch of a Bank (as defined in Section 2(a)(5) of the 1940 Act) meeting the requirements of a custodian under Section 17(f) of the 1940 Act; the term does not include any Eligible Securities Depository.
Eligible Securities Depository has the meaning set forth in section (b)(1) of Rule 17f-7.
Foreign Assets means any of the Portfolios investments (including foreign currencies) for which the primary market is outside the United States and such cash and cash equivalents as are reasonably necessary to effect the Portfolios transactions in such investments.
Foreign Custody Manager has the meaning set forth in section (a)(3) of Rule 17f-5.
Rule 17f-5 means Rule 17f-5 promulgated under the 1940 Act.
Rule 17f-7 means Rule 17f-7 promulgated under the 1940 Act.
SECTION 3.2. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
3.2.1 DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY MANAGER. Each Fund, by resolution adopted by its Board, hereby delegates to the Custodian, subject to Section (b) of Rule 17f-5, the responsibilities set forth in this Section 3.2 with respect to Foreign Assets of the Portfolios held outside the United States, and the Custodian hereby accepts such delegation as Foreign Custody Manager with respect to the Portfolios.
3.2.2 COUNTRIES COVERED. The Foreign Custody Manager shall be responsible for performing the delegated responsibilities defined below only with respect to the countries and custody arrangements for each such country listed on Schedule A to this Agreement, which list of countries may be amended from time to time by any Fund with the agreement of the Foreign Custody Manager. The Foreign Custody Manager shall list on Schedule A the Eligible Foreign
10. |
Custodians selected by the Foreign Custody Manager to maintain the assets of the Portfolios, which list of Eligible Foreign Custodians may be amended from time to time in the sole discretion of the Foreign Custody Manager. The Foreign Custody Manager will provide amended versions of Schedule A in accordance with Section 3.2.5 hereof.
Upon the receipt by the Foreign Custody Manager of Proper Instructions to open an account or to place or maintain Foreign Assets in a country listed on Schedule A, and the fulfillment by each Fund, on behalf of the applicable Portfolio(s), of the applicable account opening requirements for such country, the Foreign Custody Manager shall be deemed to have been delegated by such Funds Board on behalf of such Portfolio(s) responsibility as Foreign Custody Manager with respect to that country and to have accepted such delegation. Execution of this Agreement by each Fund shall be deemed to be a Proper Instruction authorizing the Foreign Custody Manager to open an account, or to place or maintain Foreign Assets, with the Eligible Foreign Custodians identified in each country as listed on Schedule A, as required by each Portfolio from time to time. Following the receipt of Proper Instructions directing the Foreign Custody Manager to close the account of a Po rtfolio with the Eligible Foreign Custodian selected by the Foreign Custody Manager in a designated country, the delegation by the Board on behalf of such Portfolio to the Custodian as Foreign Custody Manager for that country shall be deemed to have been withdrawn and the Custodian shall immediately cease to be the Foreign Custody Manager with respect to such Portfolio with respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated responsibilities with respect to a designated country upon written notice to the Fund. Thirty days (or such longer period to which the parties agree in writing) after receipt of any such notice by the Fund, the Custodian shall have no further responsibility in its capacity as Foreign Custody Manager to the Fund with respect to the country as to which the Custodians acceptance of delegation is withdrawn.
3.2.3 SCOPE OF DELEGATED RESPONSIBILITIES:
(a) SELECTION OF ELIGIBLE FOREIGN CUSTODIANS. Subject to the provisions of this Section 3.2, the Foreign Custody Manager may place and maintain the Foreign Assets in the care of the Eligible Foreign Custodian selected by the Foreign Custody Manager for each appropriate country as is listed on Schedule A, as amended from time to time. In performing its delegated responsibilities as Foreign Custody Manager to place or maintain Foreign Assets with an Eligible Foreign Custodian, the Foreign Custody Manager shall determine that the Foreign Assets will be subject to reasonable care, based on the standards applicable to custodians in t he relevant market in which the Foreign Assets will be held by that Eligible Foreign Custodian, after considering all factors relevant to the safekeeping of such assets, including, without limitation the factors specified in Rule 17f-5(c)(1).
(b) CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS. The Foreign Custody Manager shall determine that the contract governing the foreign custody arrangements with each Eligible Foreign Custodian selected by the Foreign Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).
11. |
(c) MONITORING. In each case in which the Foreign Custody Manager maintains Foreign Assets with an Eligible Foreign Custodian selected by the Foreign Custody Manager, the Foreign Custody Manager shall establish a system to monitor (i) the appropriateness of maintaining the Foreign Assets with such Eligible Foreign Custodian and (ii) performance of the contract governing the custody arrangements established by the Foreign Custody Manager with the Eligible Foreign Custodian. In the event the Foreign Custody Manager determines that the custody arrangements with an Eligible Foreign Custodian it has selected are no longer appropriate, the Foreign Custody Manager shall reasonably promptly notify the Board in accordance with Section 3.2.5 hereunder.
3.2.4 GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For purposes of this Section 3.2, the Board, or at the Boards delegation, a Funds investment adviser, shall be deemed to have considered and determined to accept, on behalf of the Fund, such Country Risk as is incurred by placing and maintaining the Foreign Assets in each country for which the Custodian is serving as Foreign Custody Manager of the Portfolios.
3.2.5 REPORTING REQUIREMENTS. The Foreign Custody Manager shall report the withdrawal of the Foreign Assets from an Eligible Foreign Custodian and the placement of such Foreign Assets with another Eligible Foreign Custodian by providing to the Board an amended Schedule A at the end of each calendar quarter in which an amendment to such Schedule has occurred. The Foreign Custody Manager shall make written reports notifying the Board of any other material change in the foreign custody arrangements of the Portfolios described in this Section 3.2 reasonably promptly after the occurrence of the material change.
3.2.6 STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF A PORTFOLIO. In performing the responsibilities delegated to it, the Foreign Custody Manager agrees to exercise reasonable care, prudence and diligence such as a person having responsibility for the safekeeping of assets of management investment companies registered under the 1940 Act would exercise.
3.2.7 REPRESENTATIONS WITH RESPECT TO RULE 17F-5. The Foreign Custody Manager represents to each Fund that it is a U.S. Bank as defined in section (a)(7) of Rule 17f-5. Each Fund represents to the Custodian that its Board has determined that it is reasonable for such Board to rely on the Custodian to perform the responsibilities delegated pursuant to this Agreement to the Custodian as the Foreign Custody Manager of the Portfolios.
3.2.8 EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS FOREIGN CUSTODY MANAGER. Each Boards delegation to the Custodian as Foreign Custody Manager of the Portfolios shall be effective as of the date hereof and shall remain in effect until terminated at any time, without penalty, by written notice from the terminating party to the non-terminating party. Termination will become effective thirty (30) days after receipt by the non-terminating party of such notice. The provisions of Section 3.2.2 hereof shall govern the delegation to and termination of the Custodian as Foreign Custody Manager of the Portfolios with respect to designated countries.
12. |
SECTION 3.3 ELIGIBLE SECURITIES DEPOSITORIES.
3.3.1 ANALYSIS AND MONITORING. The Custodian shall (a) provide the Fund (or its duly-authorized investment manager or investment adviser) with an analysis of the custody risks associated with maintaining assets with the Eligible Securities Depositories set forth on Schedule B hereto in accordance with section (a)(1)(i)(A) of Rule 17f-7, and (b) monitor such risks on a continuing basis, and promptly notify the Fund (or its duly-authorized investment manager or investment adviser) of any material change in such risks, in accordance with section (a)(1)(i)(B) of Rule 17f-7.
3.3.2 STANDARD OF CARE. The Custodian agrees to exercise reasonable care, prudence and diligence in performing the duties set forth in Section 3.3.1.
SECTION 4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE PORTFOLIOS TO BE HELD OUTSIDE THE UNITED STATES
SECTION 4.1 DEFINITIONS. As used throughout this Agreement, the capitalized terms set forth below shall have the indicated meanings:
Foreign Securities System means an Eligible Securities Depository listed on Schedule B hereto.
Foreign Sub-Custodian means a foreign banking institution serving as an Eligible Foreign Custodian.
SECTION 4.2. HOLDING SECURITIES. The Custodian shall identify on its books as belonging to the Portfolios the foreign securities held by each Foreign Sub-Custodian or Foreign Securities System. The Custodian may hold foreign securities for all of its customers, including the Portfolios, with any Foreign Sub-Custodian in an account that is identified as belonging to the Custodian for the benefit of its customers, provided however, that (i) the records of the Custodian with respect to foreign securities of the Portfolios which are maintained in such account shall identify those securities as belonging to the Portfolios and (ii), to the extent permitted and customary in the market in which the account is maintained, the Custodian shall require that securities so held by the Foreign Sub-Custodian be held separately from any assets of such Foreign Sub-Custodian or of other customers of such Foreign Sub-Custodian.
SECTION 4.3. FOREIGN SECURITIES SYSTEMS. Foreign securities shall be maintained in a Foreign Securities System in a designated country through arrangements implemented by the Custodian or a Foreign Sub-Custodian, as applicable, in such country.
SECTION 4.4. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
4.4.1. DELIVERY OF FOREIGN ASSETS. The Custodian or a Foreign Sub-Custodian shall release and deliver foreign securities of the Portfolios held by the Custodian or such Foreign Sub-Custodian, or in a Foreign Securities System account, only upon receipt of Proper Instructions,
13. |
which may be continuing instructions when deemed appropriate by the parties, and only in the following cases:
(i) Upon the sale of such foreign securities for the Portfolio in accordance with commercially reasonable market practice in the country where such foreign securities are held or traded, including, without limitation: (A) delivery against expectation of receiving later payment; or (B) in the case of a sale effected through a Foreign Securities System, in accordance with the rules governing the operation of the Foreign Securities System;
(ii) In connection with any repurchase agreement related to foreign securities;
(iii) To the depository agent in connection with tender or other similar offers for foreign securities of the Portfolios;
(iv) To the issuer thereof or its agent when such foreign securities are called, redeemed, retired or otherwise become payable;
(v) To the issuer thereof, or its agent, for transfer into the name of the Custodian (or the name of the respective Foreign Sub-Custodian or of any nominee of the Custodian or such Foreign Sub-Custodian) or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units;
(vi) To brokers, clearing banks or other clearing agents for examination or trade execution in accordance with market custom; provided that in any such case, the Foreign Sub-Custodian shall have no responsibility or liability for any loss arising from the delivery of such foreign securities prior to receiving payment for such foreign securities except as may arise from the Foreign Sub-Custodians own negligence or willful misconduct;
(vii) For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement;
(viii) In the case of warrants, rights or similar foreign securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities;
(ix) For delivery as security in connection with any borrowing by a Fund on behalf of a Portfolio requiring a pledge of assets by the Fund on behalf of such Portfolio;
14. |
(x) In connection with trading in options and futures contracts, including delivery as original margin and variation margin;
(xi) Upon the sale or other delivery of such foreign securities (including, without limitation, to one or more Special Sub-Custodians or Repo Custodians) as a Free Trade, provided that applicable Proper Instructions shall set forth (A) the foreign securities to be delivered and (B) the person or persons to whom delivery shall be made;
(xii) In connection with the lending of foreign securities; and
(xiii) For any other purpose, but only upon receipt of Proper Instructions specifying (A) the foreign securities to be delivered and (B) the person or persons to whom delivery of such securities shall be made.
4.4.2. PAYMENT OF PORTFOLIO MONIES. Upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, the Custodian shall pay out, or direct the respective Foreign Sub-Custodian or the respective Foreign Securities System to pay out, monies of a Portfolio in the following cases only:
(i) Upon the purchase of foreign securities for the Portfolio in accordance with commercially reasonable market practice in the country where such foreign securities are held or traded, unless otherwise directed by Proper Instructions, by (A) delivering money to the seller thereof or to a dealer therefor (or an agent for such seller or dealer) against expectation of receiving later delivery of such foreign securities; or (B) in the case of a purchase effected through a Foreign Securities System, in accordance with the rules governing the operation of such Foreign Securities System;
(ii) In connection with the conversion, exchange or surrender of foreign securities of the Portfolio;
(iii) For the payment of any expense or liability of the Portfolio, including but not limited to the following payments: interest, taxes, investment advisory fees, transfer agency fees, fees under this Agreement, legal fees, audit or accounting fees, and other operating expenses;
(iv) For the purchase or sale of foreign exchange or foreign exchange contracts for the Portfolio, including transactions executed with or through the Custodian or its Foreign Sub-Custodians;
(v) In connection with trading in options and futures contracts, including delivery as original margin and variation margin;
15. |
(vi) Upon the purchase of foreign investments including, without limitation, repurchase agreement transactions involving delivery of Portfolio monies to Repo Custodian(s), as a Free Trade, provided that applicable Proper Instructions shall set forth (A) the amount of such payment and (B) the person or persons to whom payment shall be made;
(vii) For payment of part or all of the dividends received in respect of securities sold short;
(viii) In connection with the borrowing or lending of foreign securities; and
(ix) For any other purpose, but only upon receipt of Proper Instructions specifying (A) the amount of such payment and (B) the person or persons to whom such payment is to be made.
4.4.3. MARKET CUSTOMS. Notwithstanding any provision of this Agreement to the contrary, settlement and payment for Foreign Assets received for the account of the Portfolios and delivery of Foreign Assets maintained for the account of the Portfolios may be effected in accordance with the customary established securities trading or processing practices and procedures in the country or market in which the transaction occurs, including, without limitation, delivering Foreign Assets to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) with the expectation of receiving later payment for such Foreign Assets from such purchaser or dealer.
The Custodian shall provide to each Board the information with respect to custody and settlement practices in countries in which the Custodian employs a Foreign Sub-Custodian described on Schedule C hereto at the time or times set forth on such Schedule. The Custodian may revise Schedule C from time to time, provided that no such revision shall result in a Board being provided with substantively less information than had been previously provided hereunder.
SECTION 4.5. REGISTRATION OF FOREIGN SECURITIES. The foreign securities maintained in the custody of a Foreign Sub-Custodian (other than bearer securities) shall be registered by the Custodian or the Foreign Sub-Custodian in the name of the applicable Portfolio or in the name of the Custodian or in the name of any Foreign Sub-Custodian or in the name of any nominee of the foregoing. The Custodian or a Foreign Sub-Custodian shall not be obligated to accept securities on behalf of a Portfolio under the terms of this Agreement unless the form of such securities and the manner in which they are delivered are in accordance with reasonable market p ractice.
SECTION 4.6 BANK ACCOUNTS. The Custodian shall identify on its books as belonging to the applicable Fund on behalf of a Portfolio cash (including cash denominated in foreign currencies) deposited with the Custodian. Cash maintained on the books of the Custodian (including its branches, subsidiaries and affiliates), regardless of currency denomination, is maintained in bank accounts established under, and subject to the laws of, The Commonwealth of Massachusetts. Where the Custodian is unable to maintain, or market practice does not readily allow the
16. |
maintenance of, cash on the books of the Custodian, a bank account or bank accounts shall be opened and maintained outside the United States on behalf of the Portfolio with a Foreign Sub-Custodian. All accounts referred to in this section shall be subject only to draft or order by the Custodian (or, if applicable, such Foreign Sub-Custodian) acting pursuant to the terms of this Agreement to hold cash received by or from or for the account of the Portfolio.
SECTION 4.7. COLLECTION OF INCOME. The Custodian shall use reasonable commercial efforts to collect all income and other payments with respect to the Foreign Assets held hereunder to which the Portfolios shall be entitled and shall credit such income, as collected, to the applicable Portfolio. In the event that extraordinary measures are required to collect such income, the Fund and the Custodian shall consult as to such measures and as to the compensation and expenses of the Custodian relating to such measures.
SECTION 4.8 SHAREHOLDER RIGHTS. With respect to the foreign securities held pursuant to this Section 4, the Custodian shall use reasonable commercial efforts to facilitate the exercise of voting and other shareholder rights, subject always to the laws, regulations and practical constraints that may exist in the country where such securities are issued, which facilitation efforts may include endeavoring to (a) cause to be executed by the registered holder of such foreign securities (if such securities are registered otherwise than in the name of the Portfolio or a nominee of the Portfolio), all proxies, without indication of the manner in which such proxies are to be voted, and (b) deliver to the Fund or its agents al l proxy soliciting materials and all notices relating to such securities. Each Fund acknowledges that local conditions, including lack of regulation, onerous procedural obligations, lack of notice and other factors may have the effect of severely limiting the ability of such Fund to exercise shareholder rights.
SECTION 4.9. COMMUNICATIONS RELATING TO FOREIGN SECURITIES. The Custodian shall transmit promptly to the applicable Fund written information with respect to materials received by the Custodian via the Foreign Sub-Custodians from issuers of the foreign securities being held for the account of the Portfolios (including, without limitation, pendency of calls and maturities of foreign securities and expirations of rights in connection therewith). With respect to voluntary corporate actions such as tender or exchange offers, the Custodian shall transmit promptly to the app licable Fund written information with respect to materials so received by the Custodian from issuers of the foreign securities whose tender or exchange or other action is sought or from the party (or its agents) making the tender or exchange offer or other action. The Custodian shall also transmit promptly to the applicable Fund all written information received by the Custodian via the Foreign Sub-Custodians from issuers of the foreign securities being held for the account of the Portfolios regarding any class action or other litigation in connection with Portfolio foreign securities or other assets issued outside the United States and then held, or previously held, during the term of this Agreement by the Custodian via a Foreign Sub-Custodian for the account of the Fund for such Portfolio, including, but not limited to, opt-out notices and proof-of-claim forms. The Custodian shall not be liable for any untimely exercise of any tender, exchange or other right or power in connection with foreign securities or other property of the Portfolios at any time held by it unless (i) the Custodian or the respective Foreign Sub-Custodian is in actual possession of such foreign securities or property and (ii) the Custodian receives Proper Instructions with regard to the exercise
17. |
of any such right or power, and both (i) and (ii) occur prior to such deadline established by the Custodian in its reasonable discretion as will give the Custodian (including any Foreign Sub-Custodian) sufficient time to take such action, which deadline shall in no event be longer than three (3) business days. The Custodian shall inform the Fund of pertinent deadlines in each case. For avoidance of doubt, upon and after the effective date of any termination of this Agreement, with respect to a Fund or its Portfolio(s), as may be applicable, the Custodian shall have no responsibility to so transmit any information under this Section 4.9.
SECTION 4.10. LIABILITY OF FOREIGN SUB -CUSTODIANS. Each agreement pursuant to which the Custodian employs a Foreign Sub-Custodian shall, to the extent possible, require the Foreign Sub-Custodian to exercise reasonable care in the performance of its duties, and to indemnify, and hold harmless, the Custodian from and against any loss, damage, cost, expense, liability or claim arising out of or in connection with the Foreign Sub-Custodians performance of such obligations. At a Funds election, its Portfolios shall be entitled to be subrogated to the rights of the Custodian with respect to any claims against a Foreign Sub-Custodian as a consequence of any such loss, damage, cost, expense, liability or claim if and to the extent that the Portfolios have not been made whole for any such loss, damage, cost, expense, liability or claim.
SECTION 4.11 TAX LAW. The Custodian shall have no responsibility or liability for any obligations now or hereafter imposed on any Fund, the Portfolios or the Custodian as custodian of the Portfolios by the tax law of the United States or of any state or political subdivision thereof. It shall be the responsibility of each Fund to notify the Custodian of the obligations imposed on such Fund with respect to the Portfolios or the Custodian as custodian of the Portfolios by the tax law of countries other than those mentioned in the above sentence, including responsibility for withholding and other taxes, assessments or other governmental charges, certifications and governmental reporting. The sole responsibilities of the Custodian with regard to such tax law shall be to use reasonable efforts to effect the withholding of local taxes and related charges with regard to market entitlement/payment in accordance with local law and subject to local market practice or custom and to assist the Fund with respect to any claim for exemption or refund under the tax law of countries for which such Fund has provided such information. Except as specifically provided in this Agreement or otherwise agreed to in writing by the Custodian, the Custodian shall have no independent obligation to determine the tax obligations now or hereafter imposed on any of the Funds by any taxing authority or to obtain or provide information relating thereto, and shall have no obligation or liability with respect to such tax obligations, it being specifically understood and agreed that the Custodian shall not thereby or otherwise be considered any Funds tax advisor or tax counsel.
SECTION 5. SPECIAL SUB-CUSTODIANS
Upon receipt of Special Instructions (as such term is defined in Section 7 hereof), the Custodian shall, on behalf of one or more Portfolios, appoint one or more banks, trust companies or other entities designated in such Special Instructions to act as a sub-custodian for the purposes of effecting such transaction(s) as may be designated by a Fund in Special Instructions. Each such designated sub-custodian is referred to herein as a Special Sub-Custodian. Each such duly appointed Special
18. |
Sub-Custodian shall be listed on Schedule D hereto, as it may be amended from time to time by a Fund, with the acknowledgment of the Custodian. In connection with the appointment of any Special Sub-Custodian, and in accordance with Special Instructions, the Custodian shall enter into a sub-custodian agreement with the Fund and the Special Sub-Custodian in form and substance approved by such Fund, provided that such agreement shall in all events comply with the provisions of the 1940 Act and the rules and regulations thereunder and the terms and provisions of this Agreement.
SECTION 6. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES
The Custodian shall receive from the distributor of the Shares or from the Transfer Agent and deposit into the account of the appropriate Portfolio such payments as are received for Shares thereof issued or sold from time to time by the applicable Fund. The Custodian will provide timely notification to such Fund on behalf of each such Portfolio and the Transfer Agent of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose, the Custodian shall, upon receipt of instructions from the Transfer Agent, make funds available for payment to holders of Shares who have delivered to the Transfer Agent a request for redemption or repurchase of their Shares. In connection with the redemption or repurchase of Shares, the Custodian is authorized upon receipt of instructions from the Transfer Agent to wire funds to or through a commercial bank designated by the redeeming shareholders. In connection with the redemption or repurchase of Shares, the Custodian shall honor checks drawn on the Custodian by a holder of Shares, which checks have been furnished by a Fund to the holder of Shares, when presented to the Custodian in accordance with such procedures and controls as are mutually agreed upon from time to time between such Fund and the Custodian.
SECTION 6A. INVESTMENT ADMINISTRATION SERVICES
Custodian shall provide Investment Administration Services to the Funds pursuant to the terms and conditions of the attached Investment Administration Services Addendum.
SECTION 7. PROPER INSTRUCTIONS AND SPECIAL INSTRUCTIONS
Proper Instructions, which may be standing instructions, shall mean instructions received by the Custodian from a Fund or a person or entity duly authorized by the Fund. Such instructions may be in writing signed by the authorized person or persons or may be in a tested communication or in a communication utilizing access codes effected between electro-mechanical or electronic devices or may be by such other means and utilizing such intermediary systems and utilities as may be agreed from time to time by the Custodian and the person(s) or entity giving such instruction, provided that such person(s) or entity has followed any security procedures agreed to from time to time by the applicable Fund and the Custodian including, but not limited to, the security procedures selected by the Fund via the f orm of Funds Transfer Addendum hereto. Oral instructions will be considered Proper Instructions if the Custodian reasonably believes them to have been given by a person
19. |
authorized to provide such instructions with respect to the transaction involved; the Fund shall cause all oral instructions to be confirmed in writing. For purposes of this section, Proper Instructions shall include instructions received by the Custodian pursuant to any multi-party agreement which requires a segregated asset account in accordance with Section 2.9 hereof.
Special Instructions, as such term is used throughout this Agreement, means Proper Instructions countersigned or confirmed in writing by the Treasurer or any Assistant Treasurer of the applicable Fund or any other person designated in writing by the Treasurer of such Fund, which countersignature or confirmation shall be (a) included on the same instrument containing the Proper Instructions or on a separate instrument clearly relating thereto and (b) delivered by hand, by facsimile transmission, or in such other manner as the Fund and the Custodian agree in writing.
Concurrently with the execution of this Agreement, and from time to time thereafter, as appropriate, each Fund shall deliver to the Custodian, duly certified by such Funds Treasurer or Assistant Treasurer, a certificate setting forth: (i) the names, titles, signatures and scope of authority of all persons authorized to give Proper Instructions or any other notice, request, direction, instruction, certificate or instrument on behalf of the Fund and (ii) the names, titles and signatures of those persons authorized to give Special Instructions. Such certificate may be accepted and relied upon by the Custodian as conclusive evidence of the facts set forth therein and shall be considered to be in full force and effect until receipt by the Custodian of notice to the contrary.
SECTION 8. EVIDENCE OF AUTHORITY
Subject to Section 15, the Custodian shall be protected in acting upon any instructions, notice, request, consent, certificate or other instrument or paper reasonably believed by it to be genuine and to have been properly executed by or on behalf of the applicable Fund. The Custodian may receive and accept a copy of a resolution certified by the Secretary or an Assistant Secretary of any Fund as conclusive evidence (a) of the authority of any person to act in accordance with such resolution or (b) of any determination or of any action by the applicable Board as described in such resolution, and such resolution may be considered as in full force and effect until receipt by the Custodian of written notice to the contrary.
SECTION 9. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from the applicable Fund on behalf of each applicable Portfolio:
1) Make payments to itself or others for minor expenses of handling securities or other similar items relating to its duties under this Agreement; provided that all such payments shall be accounted for to the Fund on behalf of the Portfolio;
2) Surrender securities in temporary form for securities in definitive form;
20. |
3) Endorse for collection, in the name of the Portfolio, checks, drafts and other negotiable instruments; and
4) In general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and property of the Portfolio except as otherwise directed by the applicable Board.
SECTION 10. REPRESENTATIONS AND WARRANTIES
(1) The Custodian represents and warrants to each Fund that:
a. It is a Massachusetts trust company, duly organized and existing under the laws of The Commonwealth of Massachusetts and is qualified to conduct its business in every jurisdiction where its business is conducted except where the failure to be so qualified would not have a material adverse affect on the Custodian.
b. It has the power and authority to carry on its business in The Commonwealth of Massachusetts and to enter into and perform this Agreement;
c. All requisite proceedings have been taken to authorize it to enter into and perform this Agreement;
d. No legal or administrative proceedings have been instituted or threatened which would materially impair the Custodians ability to perform its duties and obligations under this Agreement;
e. This Agreement constitutes its legal, valid, binding and enforceable agreement; and
f. Its entrance into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of the Custodian or any law or regulation applicable to it.
(2) Each Fund represents and warrants to the Custodian that:
a. It is duly organized, validly existing and in good standing in its state of organization as specified on Appendix A, and is qualified to conduct its business in every jurisdiction where its business is conducted except where the failure to be so qualified would not have a material adverse affect on the Fund;
b. It has the power and authority under applicable laws and its Governing Documents to enter into and perform this Agreement;
21. |
c. All requisite proceedings have been taken to authorize it to enter into and perform this Agreement;
d. No legal or administrative proceedings have been instituted or threatened which would materially impair the Funds ability to perform its duties and obligations under this Agreement;
e. This Agreement constitutes its legal, valid, binding and enforceable agreement; and
f. Its entrance into this Agreement will not cause a material breach or be in material conflict with any other agreement or obligation of the Fund or any law or regulation applicable to it.
SECTION 11. RECORDS
The Custodian shall with respect to each Portfolio create and maintain all records relating to its activities and obligations under this Agreement in such manner as will meet the obligations of each Fund under the 1940 Act, with particular attention to section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the property of the Fund and shall at all times during the regular business hours of the Custodian be open for inspection by duly authorized officers, employees or agents of such Fund and employees and agents of the SEC. The Custodian shall, at a Funds request, supply the Fund with a tabulation of securities owned by each Portfolio and held by the Custodian and shall, when requested to do so by the Fund and for such compensation as shall be agreed upon between the Fund and the Custodian, include certificate numbers in such tabulations. Each Fund acknowledges that, in creating and maintaining the records as set forth herei n with respect to Portfolio property released and delivered pursuant to Section 2.2(14), or purchased pursuant to Section 2.6(7) hereof, the Custodian is authorized and instructed to rely upon information provided to it by the Fund, the Funds counterparty(ies), or the agents of either of them. In addition to the foregoing, the Custodian shall provide storage for, during the term of this Agreement, historical records delivered to it by any prior custodian of the Funds and consult with the Funds in any event of the Custodians inability to do so; provided, that the parties hereby agree that the Custodian shall have no responsibility for the condition, accuracy, integrity, searchability, reconciliation or contents of such historical records.
SECTION 12. OPINION OF FUNDS INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as a Fund with respect to a Portfolio may from time to time request, to obtain from year to year favorable opinions from the Funds independent accountants with respect to its activities hereunder in connection with the preparation of the Funds Form N-1A or Form N-2, as applicable, and Form N-SAR or other annual reports to the SEC and with respect to any other requirements thereof.
22. |
SECTION 13. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide each Fund, on behalf of each of its Portfolios, at such times as such Fund may reasonably require, with reports by independent public accountants on the accounting system, internal accounting control and procedures for safeguarding securities, futures contracts and options on futures contracts, including securities deposited and/or maintained in a U.S. Securities System or a Foreign Securities System (either, a Securities System), relating to the services provided by the Custodian under this Agreement; such reports shall be of sufficient scope and in sufficient detail as may reasonably be required by the Fund to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and, if there are no such inadequacies, the reports shall so state.
SECTION 14. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its services and expenses as Custodian, as agreed upon from time to time in writing between each Fund on behalf of each applicable Portfolio and the Custodian.
SECTION 15. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable care, the Custodian shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Agreement and shall be held harmless in acting upon any notice, request, consent, certificate or other instrument reasonably believed by it to be genuine and to be signed by the proper party or parties, including any futures commission merchant acting pursuant to the terms of a three-party futures or options agreement. The Custodian shall be held to the exercise of reasonable care in carrying out the provisions of this Agreement, but shall be kept indemnified by and shall be without liability to any Fund for any action taken or omitted by it in good faith without negligence, bad faith, willful misconduct, violation of law applicable to the Custodian in its capacity as a custodian and that affects the Custodian 146;s performance of the Services hereunder, or material breach of this Agreement (provided, however, that the Custodian shall have the opportunity to cure, within thirty (30) days of its receipt of written notice from the Fund, solely those breaches capable of cure without material adverse impact to the Fund, provided, in each such instance where the Custodian is aware of an event related to such notice, the Custodian had previously informed the Fund promptly of such event; any such communication from the Custodian to the Fund shall not be used as or considered as an admission of fault and will be provided solely as an accommodation to the Fund), including, without limitation, acting in accordance with any Proper Instruction. It shall be entitled to rely on and may act upon advice of counsel (who may be counsel for the Fund) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice. T he Custodian shall be without liability to any Fund or Portfolio for any loss, liability, claim or expense to the extent resulting from or caused by anything which is part of Country Risk (as defined in Section 3 hereof), including without limitation nationalization, expropriation, currency restrictions, or acts of war, revolution, riots or terrorism.
23. |
Except as may arise from the Custodians own negligence, bad faith, willful misconduct, violation of law applicable to the Custodian in its capacity as a custodian that affects the Custodians performance of the Services hereunder, or material breach of this Agreement (provided, however, that the Custodian shall have the opportunity to cure, within thirty (30) days of its receipt of written notice from the Fund, solely those breaches capable of cure without material adverse impact to the Fund, provided, in each such instance where the Custodian is aware of an event related to such notice, the Custodian had previously informed the Fund promptly of such event; any such communication from the Custodian to the Fund shall not be used as or considered as an admission of fault and will be provided solely as an accommodation to the Fund), or the negligence, bad faith or willful misconduc t of a sub-custodian or agent, the Custodian shall be without liability to any Fund for any loss, liability, claim or expense to the extent resulting from or caused by: (i) events or circumstances beyond the reasonable control of the Custodian or any sub-custodian or Securities System or any agent or nominee of any of the foregoing, including, without limitation, the interruption, suspension or restriction of trading on or the closure of any securities market, power or other mechanical or technological failures or interruptions, computer viruses or communications disruptions, work stoppages, natural disasters, or other similar events or acts; (ii) errors by any Fund or its duly authorized investment manager or investment adviser in its instructions to the Custodian provided such instructions have been in accordance with this Agreement; (iii) the insolvency of or acts or omissions by a Securities System; (iv) any act or omission of a Special Sub-Custodian including, without limitation, reliance on reports pre pared by a Special Sub-Custodian ; (v) any delay or failure of any broker, agent or intermediary, central bank or other commercially prevalent payment or clearing system to deliver to the Custodians sub-custodian or agent securities purchased or in the remittance or payment made in connection with securities sold; (vi) any delay or failure of any company, corporation, or other body in charge of registering or transferring securities in the name of the Custodian, any Fund, the Custodians sub-custodians, nominees or agents or any consequential losses arising out of such delay or failure to transfer such securities including non-receipt of bonus, dividends and rights and other accretions or benefits; (vii) delays or inability to perform its duties due to any disorder in market infrastructure with respect to any particular security or Securities System; (viii) any provision of any present or future law or regulation or order of the United States of America, or any state thereof, or any other country, or political subdivision thereof or of any court of competent jurisdiction; and (ix) the Custodian acting in accordance with any Proper Instruction with respect to Free Trade.
In the event of equipment failure, work stoppage, governmental action, communication disruption or other impossibility of performance beyond the Custodians control, the Custodian shall take reasonable steps to minimize service interruptions. The Custodian shall enter into and shall maintain in effect, at all times during the term of this Agreement, with appropriate parties one or more agreements making reasonable provision for (i) periodic back-up of the computer files and data with respect to the Funds; and (ii) emergency use of electronic data processing equipment to provide services under this Agreement.
The Custodian shall have no more or less responsibility or liability to any Fund on account of any actions or omissions of any sub-custodian so employed than any such sub-custodian has to the Custodian. The Custodian shall be liable for the acts or omissions of a Foreign Sub-Custodian (as
24. |
such term is defined in Section 4 hereof) to the same extent as set forth with respect to sub-custodians generally in this Agreement and, regardless of whether assets are maintained in the custody of a Foreign Sub-Custodian or a Foreign Securities System, the Custodian shall not be liable for any loss, damage, cost, expense, liability or claim to the extent resulting from nationalization, expropriation, currency restrictions, or acts of war or terrorism, or any other loss where the Sub-Custodian has otherwise acted with reasonable care. With respect to foreign securities maintained in the custody of a Foreign Sub-Custodian (other than bearer securities) which are registered in the name of the applicable Portfolio or in the name of the Custodian or in the name of any Foreign Sub-Custodian or in the name of any nominee of the foregoing in accordance with Section 4.5 of this Agreement, the applicable Fund on behalf of such Portfolio agrees to hold any such nom inee harmless from any liability as a holder of record of such foreign securities.
If a Fund on behalf of a Portfolio requires the Custodian to take any action not otherwise addressed in this Agreement with respect to securities, which action involves the payment of money or which action may, in the reasonable opinion of the Custodian, result in the Custodian or its nominee assigned to the Fund or the Portfolio being liable for the payment of money or incurring liability of some other form, such Fund on behalf of the Portfolio, as a prerequisite to requiring the Custodian to take such action, shall provide indemnity to the Custodian in an amount and form satisfactory to it.
In the event a Fund requires the Custodian, its affiliates, subsidiaries or agents, to advance cash or securities for any purpose (including but not limited to securities settlements, predetermined income, foreign exchange contracts and assumed settlement) or in the event that the Custodian or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Agreement, except such as may arise from its or its nominees own negligent action, negligent failure to act or willful misconduct, any property at any time held for the account of the applicable Portfolio shall be security therefor and should the Fund fail to repay the Custodian promptly, the Custodian shall be entitled to utilize available cash and to dispose of such Portfolios assets to the extent necessary to obtain reimbursement. To the extent not inconsistent with market rules or practice, the Custodian sha ll first utilize available cash and thereafter such Portfolios other assets, it being specifically understood that any failure of the Custodian to so utilize or dispose shall in no way affect either the validity or priority of the Custodians security interest in such cash or assets. Further, and only to the extent practicable, the Custodian shall provide notice to the Fund prior to commencing such utilization or disposal, and, if such prior notice is not practicable, the Custodian shall provide notice to the Fund as soon as practicable thereafter, it being specifically understood that any failure of the Custodian to provide any such notice shall in no way affect the Custodians rights or remedies under this paragraph or applicable law.
In no event shall any party hereto be liable for indirect, special or consequential damages.
SECTION 16. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
(a) This Agreement shall become effective as of its execution and shall continue in full force and effect for an initial term of four (4) years from the date hereof, and shall automatically
25. |
renew for additional consecutive three (3) year terms, unless either party gives one hundred eighty (180) days prior written notice to the other of its intent not to renew. If this Agreement is terminated (the effective date of such termination being referred to as the Termination Date), the Custodian shall, at the reasonable request of the Funds, and subject to the consent of the Custodian (which consent shall not be unreasonably withheld or delayed), continue to provide services hereunder for a period (the Extension Period) not to exceed ninety (90) days from the Termination Date, and the compensation payable to the Custodian for its services and expenses during such Extension Period shall not exceed one hundred and five percent (105%) (per annum) of the compensation last agre ed upon by each Fund and the Custodian and in effect immediately prior to the Termination Date.
(b) In the event that the Agreement is terminated by any Fund with respect to a Portfolio (the Terminating Fund), other than for cause, with respect to such Terminating Fund prior to the four (4) year anniversary of the date hereof (the Anniversary Date), and the Custodian has not terminated either this Agreement with respect to such Terminating Fund or any agreement pursuant to which the Custodian provides fund accounting services relative to such Terminating Fund, the Terminating Fund shall pay to the Custodian, in lieu of any other fees, expenses, termination penalties, damages or other amounts (except as identified in paragraph (c) below), an early termination fee equal to the present value, using a discount rate of seven percent (7%), compounded annually, of the remaining fees wh ich would have been due by the Terminating Fund to the Custodian for the period from the Termination Date until the Anniversary Date if the Agreement had not been terminated (the Remaining Fees) which Remaining Fees shall be determined using the average monthly compensation for its services (prior to the application of any earnings credits) earned by the Custodian hereunder with respect to such Terminating Fund during the 12-month period (or if shorter, such lesser period of time) preceding such Termination Date (the Early Termination Fee).
For the avoidance of doubt, no Terminating Fund will be required to make any such Early Termination Fee payment (other than as set forth in paragraph (e) below) if this Agreement is terminated on or after the Anniversary Date or by the Terminating Funds for cause at any time.
(c) Notwithstanding the provisions of paragraph (b) above, no Early Termination Fee shall be payable in the event (each, a Liquidation, Merger or Consolidation Event) that a Fund or Portfolio is
(i) liquidated; or
(ii) merged into or consolidated with another Fund or Portfolio with respect to which the Custodian provides Services pursuant to this Agreement; or
(iii) merged into or consolidated with another investment company or series of an investment company (each series representing interests in a separate portfolio of securities and other assets) with respect to which the Custodian provides custody services,
26. |
provided, that in each case of (i) and (ii) above, the aggregate amount of fees for custody services provided by the Custodian with respect to all Funds and Portfolios covered by this Agreement immediately after, and taking into consideration the effect of, such Liquidation, Merger or Consolidation Event (the Projected Fees) shall be equal to or greater than the aggregate amount of fees for custody services provided by the Custodian pursuant to this Agreement, measured as of the date of this Agreement (the Existing Fees);
and further provided, that in each case of (iii) above, (A) the Projected Fees plus (B) the Incremental Fees (as defined below) shall be equal to or greater than the Existing Fees.
For purposes of this Section 16(c), the Projected Fees shall equal the custody fees, with respect to such Funds and Portfolios subject to this Agreement immediately after such Liquidation, Merger or Consolidation Event, projected to be earned by the Custodian on an annualized basis for the ensuing twelve-month period, with no adjustments for market fluctuations or subscription and redemption activity.
For purposes of this Section 16(c), the Existing Fees shall equal the custody fees, with respect to such Funds and Portfolios on the date of this Agreement, projected to be earned by the Custodian on an annualized basis for the ensuing twelve-month period, with no adjustments for market fluctuations or subscription and redemption activity.
For purposes of this Section 16(c), the Other Contract shall mean a contractual arrangement pursuant to which the Custodian provides custody services that may not be terminated earlier than the Anniversary Date and whose fee schedule is fixed until the Anniversary Date.
For purposes of this Section 16(c), the Incremental Fees shall mean (A) the custody fees with respect to custody services under the Other Contract that are projected to be earned by the Custodian on an annualized basis for the ensuing twelve-month period, with no adjustments for market fluctuations or subscription and redemption activity, immediately after such Liquidation, Merger or Consolidation Event, less (B) the custody fees with respect to custody services under the Other Contract that were projected to have been earned by the Custodian on an annualized basis for the ensuing twelve-month period, with no adjustments for market fluctuations or subscription and redemption activity, immediately prior to such Liquidation, Merger or Consolidation Event.
(d) Upon any termination of this Agreement pursuant to paragraph (b) above and receipt of a final bill from the Custodian, the Terminating Fund shall pay to the Custodian all accrued and unpaid fees and expenses, whether the same have been billed or remain unbilled prior to delivery of such final bill, and shall reimburse the Custodian for any reasonable de-conversion costs associated with such termination.
(e) Notwithstanding any term herein to the contrary, termination of this Agreement with respect to a Terminating Fund shall in no way affect the rights and duties under this Agreement with respect to any other Fund or Portfolio.
27. |
(f) In the event of the appointment of a conservator or receiver for the Custodian by the Comptroller of the Currency or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction, any Fund on behalf of one or more of the Portfolios may at any time by action of its Board (i) substitute another bank or trust company for the Custodian by giving notice as described above to the Custodian, or (ii) immediately terminate this Agreement without penalty.
(g) This Agreement may be modified or amended from time to time by mutual written agreement of the parties hereto.
SECTION 17. SUCCESSOR CUSTODIAN
If a successor custodian for one or more Portfolios shall be appointed by the applicable Board, the Custodian shall, upon notice of such appointment and receipt of Proper Instructions, deliver to such successor custodian at the office of the Custodian, duly endorsed and in the form for transfer, as may be applicable, all securities, funds and other properties of each applicable Portfolio then held by it hereunder and shall transfer to an account of the successor custodian all of the securities of each such Portfolio held in a Securities System or at the Underlying Transfer Agent.
If no such successor custodian shall be appointed, the Custodian shall, in like manner, upon receipt of Proper Instructions, deliver at the office of the Custodian and transfer such securities, funds and other properties in accordance therewith.
In the event that no Proper Instructions designating a successor custodian or alternative arrangements shall have been delivered to the Custodian on or before the date when such termination shall become effective, then the Custodian shall have the right to deliver to a bank or trust company, which is a bank as defined in the 1940 Act, doing business in Boston, Massachusetts or New York, New York, of its own selection, having an aggregate capital, surplus, and undivided profits, as shown by its last published report, of not less than $25,000,000, all securities, funds and other properties held by the Custodian on behalf of each applicable Portfolio and all instruments held by the Custodian relative thereto and all other property held by it under this Agreement on behalf of each applicable Portfolio, and to transfer to an account of such successor custodian all of the securities of each such Portfolio held in any Securities System or at the Underl ying Transfer Agent. Thereafter, such bank or trust company shall be the successor of the Custodian under this Agreement.
In the event that securities, funds and other properties remain in the possession of the Custodian after the date of termination hereof owing to failure of any Fund to provide Proper Instructions as aforesaid, the Custodian shall be entitled to fair compensation for its services during such period as the Custodian retains possession of such securities, funds and other properties and the provisions of this Agreement relating to the duties and obligations of the Custodian shall remain in full force and effect.
28. |
SECTION 18. OVERSIGHT; AUDIT RIGHTS; ADDITIONAL SUB-CERTIFICATIONS AND REPORTS
SECTION 18.1 OVERSIGHT. The Custodian acknowledges that the Funds have informed the Custodian of their intent to engage Putnam Fiduciary Trust Company, a Massachusetts trust company (PFTC), or one of PFTCs affiliates to perform custody oversight services on behalf of the Funds. Upon notice and instruction from the Funds that they have engaged PFTC or its affiliate regarding such custody oversight services, the Custodian shall, at the expense of the Funds, reasonably cooperate with such entity to provide such information regarding the Funds and such information regarding the Custodians performance of the services contemplated by this Agreement (the Ser vices) to such entity as it may reasonably request from time to time.
SECTION 18.2 AUDIT RIGHTS.
(a) To the extent required by applicable law, rule or regulation and upon request of a Fund (which shall include reasonable advance notice), the Custodian shall allow such Funds regulators or supervisory authorities to perform periodic on-site audits as may be reasonably required to examine the Custodians performance of the Services. Notwithstanding the foregoing, prior to the performance of any audits of the Custodians performance of the Services, the Fund will request that such regulator or supervisory authority to the extent possible shall coordinate such audit through the Custodians primary regulator, the United States Federal Reserve Bank of Boston.
(b) Upon request of a Fund (which shall include reasonable advance notice), the Custodian shall allow such Fund and its duly-authorized agents, auditors (including internal audit staff and external auditors), and compliance personnel to perform periodic on-site audits as may be reasonably required to examine the Custodians performance of the Services.
(c) Notwithstanding the audit and inspection rights conferred by the foregoing subsection, the Custodian reserves the right to impose reasonable limitations on the number, frequency, timing and scope of audits and inspections requested by the Funds so as to prevent or minimize any potential impairment or disruption of its operations, distraction of its personnel or breaches of security or confidentiality; provided, however, that the Custodian may not limit the number, frequency or timing of audits and inspections by regulatory bodies with supervisory authority over a Fund or by a Fund resulting from a regulatory problem at the Custodian and affecting the Custodians ability to provide the Services hereunder or any material weakness or significant deficiency in the Custodians internal controls. In addition, the Custodian shall be entitled to impose a commercially reasonable per p erson hourly charge for the cooperation and assistance of its personnel in connection with any audit in excess of one (1) in any twelve (12) month period; provided, however, that no such charge may be imposed in connection with any audit or inspection by any regulatory body with supervisory authority over a Fund or by a Fund resulting from a regulatory problem at the Custodian and affecting the Custodians ability to provide the Services hereunder or any material weakness or significant deficiency in the Custodians internal controls. Nothing contained in this section shall obligate the Custodian to provide access to or otherwise disclose: (i) any information that is unrelated to the relevant Fund and the provision of the Services to such Fund; (ii) any information which is treated as confidential under the Custodians corporate
29. |
policies, including, without limitation, internal audit reports, compliance or risk management plans or reports, work papers and other reports and information relating to management functions; or (iii) any other documents, reports or other information that the Custodian is obligated to maintain in confidence as a matter of law or regulation. In addition, any access provided hereunder to technology shall be limited to a demonstration by the Custodian of the functionality thereof and a reasonable opportunity to communicate with the Custodian personnel regarding such technology.
SECTION18.3 ADDITIONAL SUB-CERTIFICATIONS AND REPORTS
The Custodian shall provide to the Funds: (a) sub-certifications in connection with Sarbanes-Oxley Act of 2002 certification requirements; and (b) periodic reports and reasonable documentation for delivery to the Funds Chief Compliance Officer in connection with Rule 38a-1 under the 1940 Act with respect to the Services and the Custodians compliance with its operating policies and procedures related thereto.
SECTION 19. INCLUDED SERVICE ENHANCEMENTS.
If, in the ordinary course of its business, the Custodian enhances core system processing functionality that it uses in connection with the Services, the Custodian shall use such enhanced core system processing enhancements in performing the Services hereunder, at no additional charge to the Funds, as soon as the Custodian reasonably determines that such use is appropriate. To the extent the Custodian reasonably determines that such enhanced core system processing enhancements are relevant to the Funds receipt of the Services, the Custodian shall inform the Funds of such core system processing enhancements.
SECTION 20. CONFIDENTIALITY.
The parties hereto agree that each shall treat as confidential all information provided by a party (the Disclosing Party) to the other party (the Recipient) or to which the Recipient obtains access and that relates to the Disclosing Party, including information regarding its business, financial affairs, operations or otherwise, including without limitation, securities holdings and trading information of a Portfolio or Fund (Confidential Information). In maintaining the confidentiality of the Confidential Information of a Disclosing Party, each Recipient shall exercise the same degree of care that such person exercises with respect to its own Confidential Information of a similar nature, including t he use of customary data protection procedures, and in no event less than a reasonable degree of care. All Confidential Information of a Disclosing Party shall be used by a Recipient solely for the purpose of rendering or receiving services pursuant to this Agreement and shall not be disclosed to any party other than such Recipients (i) employees and contractors who have a need-to-know for purposes of performing such Recipients obligations under this Agreement, provided, that, such persons and entities are bound by confidentiality provisions at least as stringent as those contained herein, (ii) regulators or examiners, and (iii) auditors and legal counsel, to the extent required in connection with services provided by such parties to Recipient.
30. |
The Recipient shall notify the Disclosing Party of any unauthorized use or disclosure of Confidential Information of the Disclosing Party of which the Recipient becomes aware. The parties agree that disclosure of Confidential Information of a Disclosing Party may give rise to an irreparable injury to such Disclosing Party inadequately compensable in damages. Accordingly, the Disclosing Party may seek (without the posting of any bond or other security) injunctive relief against the breach of the foregoing undertaking of confidentiality and nondisclosure, in addition to any other legal remedies which may be available.
The foregoing obligations of confidentiality and non-disclosure shall not be applicable to any information that the Recipient demonstrates (i) is publicly available when provided or thereafter becomes publicly available, other than through disclosure by the Recipient or any of its affiliates, or that is independently derived by the Recipient without the use of any information provided by the Disclosing Party, (ii) that is required in any legal or regulatory proceeding, investigation, audit, examination, subpoena, civil investigative demand or other similar process, or by operation of law or regulation (collectively, Legal Process), or (iii) where the Recipient has received the prior written consent of the Disclosing Party. In the event that a Recipient is requested by or pursuant to, or required by, Legal Process to disclose any Confidential Information of any other part y to this Agreement, such Recipient will, to the extent not legally prohibited, provide the applicable Disclosing Party with prompt notice of such Legal Process in order to enable the Disclosing Party, at its own expense, to seek an appropriate protective order or other remedy (and, if the Disclosing Party seeks such order, the Recipient will provide such cooperation as the Disclosing Party shall reasonably request at the Disclosing Partys expense) to resist or narrow the scope of such request or legal process, or waive compliance, in whole or in part, with the terms of this Section 20. In the event that such protective order or other remedy is not obtained or the Disclosing Party waives such compliance, only that portion of the Confidential Information may be disclosed as the Recipient, as advised by counsel, is legally required to disclose and the Recipient will request that all such Confidential Information so disclosed will be accorded confidential treatment. Confidential Information disclosed in c ombination with other information that is not Confidential Information is not deemed to fall within one of the foregoing exceptions by reason of such combination.
Furthermore, and notwithstanding anything in this section to the contrary, the Custodian may aggregate Fund or Portfolio data with similar data of other customers of the Custodian (Aggregated Data) and may use Aggregated Data for purposes of constructing statistical models so long as such Aggregated Data represents a sufficiently large sample that no Fund or Portfolio data can be identified either directly or by inference or implication.
All of the undertakings and obligations relating to confidentiality and nondisclosure, whether contained in this Section or elsewhere in this Agreement or any schedule or exhibit hereto shall survive the termination or expiration of this Agreement for a period of three (3) years.
31. |
SECTION 21. GENERAL
SECTION 21.1 MASSACHUSETTS LAW TO APPLY. This Agreement shall be construed and the provisions thereof interpreted under and in accordance with laws of The Commonwealth of Massachusetts.
SECTION 21.2 PRIOR AGREEMENTS. This Agreement supersedes and terminates, as of the date hereof, any prior Agreements between each Fund on behalf of each of the Portfolios and the Custodian relating to the custody of such Funds assets.
SECTION 21.3 ASSIGNMENT. This Agreement may not be assigned by (a) any Fund without the written consent of the Custodian or (b) by the Custodian without the written consent of each applicable Fund.
SECTION 21.4 INTERPRETIVE AND ADDITIONAL PROVISIONS. In connection with the operation of this Agreement, the Custodian and each Fund on behalf of each of the Portfolios, may from time to time agree on such provisions interpretive of or in addition to the provisions of this Agreement as may in their joint opinion be consistent with the general tenor of this Agreement. Any such interpretive or additional provisions shall be in a writing signed by all parties and shall be annexed hereto, provided that no such interpretive or additional provisions shall contravene any applicable federal or state regulations or any p rovision of a Funds Governing Documents. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Agreement.
SECTION 21.5 ADDITIONAL FUNDS. In the event that any management investment company advised by Putnam Investment Management, LLC or an affiliate thereof, in addition to those listed on Appendix A hereto desires to have the Custodian render services as custodian under the terms hereof, it shall so notify the Custodian in writing, and if the Custodian agrees in writing to provide such services, such management investment company shall become a Fund hereunder and the Custodian and the Fund shall be bound by all terms and conditions and provisions hereof.
SECTION 21.6 ADDITIONAL PORTFOLIOS. In the event that any Fund establishes one or more series of Shares in addition to those set forth on Appendix A hereto with respect to which it desires to have the Custodian render services as custodian under the terms hereof, it shall so notify the Custodian in writing, and if the Custodian agrees in writing to provide such services, such series of Shares shall become a Portfolio hereunder and the Custodian and the Fund shall be bound by all terms and conditions and provisions hereof with respect to such Portfolio.
SECTION 21.7 THE PARTIES. All references herein to the Fund are to each of the management investment companies listed on Appendix A hereto, and each management investment company made subject to this Agreement in accordance with Section 21.5 above, individually, as if this Agreement were between such individual Fund and the Custodian. In the case of a series corporation, trust or other entity, all references herein to the Portfolio are to the individual series or portfolio of such corporation, trust or other entity, or to such corporation, trust or other entity on
32. |
behalf of the individual series or portfolio, as appropriate. Any reference in this Agreement to the parties shall mean the Custodian and such other individual Fund as to which the matter pertains.
A copy of the Declaration of Trust of each Fund is on file with the Secretary of The Commonwealth of The Commonwealth of Massachusetts. Notice is hereby given, and it is expressly agreed that the obligations under this Agreement of any such Fund shall not be binding upon any of the trustees, shareholders, nominees, officers, agents or employees of such Fund personally, but bind only the trust property of such Fund. In the case of each Fund, the execution and delivery of this Agreement on its behalf has been authorized by its trustees, and signed by an authorized officer, in each case acting in such capacity and not individually, and neither such authorization by the trustees nor such execution and delivery shall be deemed to have been made by any of them individually, but shall only bind the trust property of each Fund.
SECTION 21.8 REMOTE ACCESS SERVICES ADDENDUM. The Custodian and each Fund agree to be bound by the terms of the Remote Access Services Addendum hereto.
SECTION 21.9 NOTICES. Any notice, instruction or other instrument required to be given hereunder may be delivered in person to the offices of the parties as set forth herein during normal business hours or delivered prepaid registered mail, overnight courier or by telex, cable or telecopy to the parties at the following addresses or such other addresses as may be notified by any party from time to time.
To any Fund: | c/o PUTNAM FIDUCIARY TRUST COMPANY |
1 Post Office Square | |
Boston, Massachusetts 02109 | |
Attention: Judd Symon, Senior Vice President | |
Telephone: 617-760-5181 | |
Telecopy: 617-760-5140 | |
with a copy to: | ROPES & GRAY |
One International Place | |
Boston, MA 02110-2624 | |
Attention: John W. Gertsmayr | |
Telephone: 617-951-7393 | |
Telecopy: 617-235-0040 |
33. |
To the Custodian: | STATE STREET BANK AND TRUST COMPANY | |
Lafayette Corporate Center | ||
2 Avenue de Lafayette | ||
Boston, Massachusetts 02111 | ||
Attention: Robert F. Dame, Senior Vice President, LCC/2S | ||
Telephone: 617-662-4036 | ||
Telecopy: 617-662-4040 |
Such notice, instruction or other instrument shall be deemed to have been served in the case of a registered letter at the expiration of five business days after posting, in the case of overnight courier, upon receipt, in the case of cable twenty-four hours after dispatch and, in the case of telex or telecopy, immediately on dispatch and if delivered by cable, telex or telecopy outside normal business hours it shall be deemed to have been received at the next time after delivery when normal business hours commence. Evidence that the notice was properly addressed, stamped and put into the post shall be conclusive evidence of posting.
SECTION 21.10 COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all such counterparts taken together shall constitute one and the same Agreement.
SECTION 21.11 SEVERABILITY; WAIVER. If any provision or provisions of this Agreement shall be held to be invalid, unlawful or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired. The failure of a party hereto to insist upon strict adherence to any term of this Agreement on any occasion or the failure of a party hereto to exercise or any delay in exercising any right or remedy under this Agreement shall not constitute a waiver of any such term, right or remedy or a waiver of any other rights or remedies and no single or partial exercise of any right or remedy under this Agreement shall prevent any further exercise of the right or remedy or t he exercise of any other right or remedy.
SECTION 21.12 REPRODUCTION OF DOCUMENTS. This Agreement and all schedules, addenda, exhibits, appendices, attachments and amendments hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto all/each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.
SECTION 21.13 SHAREHOLDER COMMUNICATIONS ELECTION. SEC Rule 14b-2 requires banks which hold securities for the account of customers to respond to requests by issuers of securities for the names, addresses and holdings of beneficial owners of securities of that issuer held by the bank unless the beneficial owner has expressly objected to disclosure of this information. In order to comply with the rule, the Custodian needs each Fund to indicate whether it authorizes the Custodian
34. |
to provide such Funds name, address, and share position to requesting companies whose securities the Fund owns. If a Fund tells the Custodian no, the Custodian will not provide this information to requesting companies. If a Fund tells the Custodian yes or does not check either yes or no below, the Custodian is required by the rule to treat the Fund as consenting to disclosure of this information for all securities owned by the Fund or any funds or accounts established by the Fund. For a Funds protection, the Rule prohibits the requesting company from using the Funds name and address for any purpose other than corporate communications. Please indicate below whether the Fund consents or objects by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Funds name, address, and share positions.
NO [X] The Custodian is not authorized to release the Funds name, address, and share positions.
35. |
SIGNATURE PAGE |
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and behalf by its duly authorized representative and its seal to be hereunder affixed as of the date first above-written.
FUND SIGNATURE ATTESTED TO BY: | EACH OF THE ENTITIES SET |
FORTH ON APPENDIX A HERETO | |
By: /s/ Robert T. Burns | By: /s/ Jonathan S. Horwitz |
Robert T. Burns | Jonathan S. Horwitz |
Managing Director, | Executive Vice President and |
Putnam Investments | Principal Executive Officer, |
Treasurer and Compliance Liason | |
SIGNATURE ATTESTED TO BY: | STATE STREET BANK AND TRUST |
COMPANY | |
By: /s/ Stephanie L. Poster | By: /s/ Joseph L. Hooley |
Stephanie L. Poster | Joseph L. Hooley |
Vice President and Senior Managing Counsel | Executive Vice President |
APPENDIX A |
TO |
MASTER CUSTODIAN AGREEMENT |
As amended as of November 30, 2010 |
Putnam American Government Income Fund |
Putnam Arizona Tax Exempt Income Fund |
Putnam Asset Allocation Funds |
-Balanced Portfolio |
-Conservative Portfolio |
-Growth Portfolio |
Putnam California Tax Exempt Income Fund |
Putnam Convertible Securities Fund |
Putnam Diversified Income Trust |
Putnam Equity Income Fund |
Putnam Europe Equity Fund |
Putnam Funds Trust |
- Putnam Absolute Return 100 Fund |
- Putnam Absolute Return 300 Fund |
- Putnam Absolute Return 500 Fund |
- Putnam Absolute Return 700 Fund |
- Putnam Asia Pacific Equity Fund |
- Putnam Asset Allocation: Equity Portfolio |
- Putnam Capital Spectrum Fund |
- Putnam Emerging Markets Equity Fund |
- Putnam Equity Spectrum Fund |
- Putnam Floating Rate Income Fund |
- Putnam Global Consumer Fund |
- Putnam Global Energy Fund |
- Putnam Global Financials Fund |
- Putnam Global Industrials Fund |
- Putnam Global Sector Fund |
- Putnam Global Technology Fund |
- Putnam Global Telecommunications Fund |
- Putnam Income Strategies Fund |
- Putnam International Value Fund |
- Putnam Money Market Liquidity Fund |
- Putnam Multi-Cap Core Fund |
- Putnam Small Cap Growth Fund |
The George Putnam Fund of Boston d/b/a George Putnam Balanced Fund |
Putnam Global Equity Fund |
Putnam Global Health Care Fund |
Putnam Global Income Trust |
Putnam Global Natural Resources Fund |
Putnam Global Utilities Fund |
The Putnam Fund for Growth and Income |
Putnam High Income Securities Fund |
Putnam High Yield Advantage Fund |
Putnam High Yield Trust |
Putnam Income Fund |
Putnam International Equity Fund |
Putnam Investment Funds |
-Putnam Capital Opportunities Fund |
-Putnam Growth Opportunities Fund |
-Putnam International Capital Opportunities Fund |
-Putnam International Growth Fund |
-Putnam Mid Cap Value Fund |
-Putnam Research Fund |
-Putnam Small Cap Value Fund |
Putnam Investors Fund |
Putnam Managed Municipal Income Trust |
Putnam Massachusetts Tax Exempt Income Fund |
Putnam Master Intermediate Income Trust |
Putnam Michigan Tax Exempt Income Fund |
Putnam Minnesota Tax Exempt Income Fund |
Putnam Money Market Fund |
Putnam Municipal Opportunities Trust |
Putnam New Jersey Tax Exempt Income Fund |
Putnam New Opportunities Fund |
Putnam New York Tax Exempt Income Fund |
Putnam Ohio Tax Exempt Income Fund |
Putnam Pennsylvania Tax Exempt Income Fund |
Putnam Premier Income Trust |
Putnam RetirementReady®Funds |
-Putnam RetirementReady 2055 Fund |
-Putnam RetirementReady 2050 Fund |
-Putnam RetirementReady 2045 Fund |
-Putnam RetirementReady 2040 Fund |
-Putnam RetirementReady 2035 Fund |
-Putnam RetirementReady 2030 Fund |
-Putnam RetirementReady 2025 Fund |
-Putnam RetirementReady 2020 Fund |
-Putnam RetirementReady 2015 Fund |
-Putnam RetirementReady Maturity Fund |
Putnam Tax Exempt Income Fund |
Putnam Tax Exempt Money Market Fund |
Putnam Tax-Free Income Trust |
-Putnam AMT-Free Municipal Fund |
-Putnam Tax-Free High Yield Fund |
Putnam U.S. Government Income Trust |
Putnam Variable Trust |
-Putnam VT American Government Income Fund |
-Putnam VT Capital Opportunities Fund |
-Putnam VT Diversified Income Fund |
-Putnam VT Equity Income Fund |
-Putnam VT The George Putnam Fund of Boston |
-Putnam VT Global Asset Allocation Fund |
-Putnam VT Global Equity Fund |
-Putnam VT Global Health Care Fund |
-Putnam VT Global Utilities Fund |
-Putnam VT Growth and Income Fund |
-Putnam VT Growth Opportunities Fund |
-Putnam VT High Yield Fund |
-Putnam VT Income Fund |
-Putnam VT International Equity Fund |
-Putnam VT International Value Fund |
-Putnam VT International Growth Fund |
-Putnam VT Investors Fund |
-Putnam VT Mid Cap Value Fund |
-Putnam VT Money Market Fund |
-Putnam VT New Opportunities Fund |
-Putnam VT Research Fund |
-Putnam VT Small Cap Value Fund |
-Putnam VT Vista Fund |
-Putnam VT Voyager Fund |
Putnam Vista Fund |
Putnam Voyager Fund |
11/30/10 |
AMENDED AND RESTATED INVESTOR SERVICING AGREEMENT |
This AGREEMENT is made as of the 1st day of January, 2009, between each of the Putnam Funds listed in Appendix A hereto (as the same may from time to time be amended to add one or more additional Putnam Funds or to delete one or more of such Funds), each of such Funds acting severally on its own behalf and not jointly with any of such other Funds (each of such Funds being hereinafter referred to as the Fund), and Putnam Investment Management, LLC (the Manager), a Delaware limited liability company, and Putnam Investor Services, Inc. (the Agent), a Massachusetts corporation, and amends and restates the Investor Servicing Agreement dated as of January 1, 2005 between each of the Funds, the Manager, and Putnam Fiduciary Trust Company (PFTC).
W I T N E S S E T H: |
WHEREAS, the Fund is an investment company registered under the Investment Company Act of 1940;
WHEREAS, PFTC has transferred, with the consent of the trustees of the Fund (the Trustees), its investor servicing business for the Fund to the Agent effective as of the date hereof;
WHEREAS, the Fund desires to engage the Manager and the Agent to provide all services required by the Fund in connection with the establishment, maintenance and recording of shareholder accounts, including without limitation all related tax and other reporting requirements, and the implementation of investment and redemption arrangements offered in connection with the sale of the Fund's shares;
WHEREAS, in July 2002, PFTC proposed and the Fund adopted (i) an Anti-Money Laundering Program, including a Customer Identification Program (CIP) (the AML Program) in compliance with the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the USA PATRIOT Act), and (ii) policies and procedures to comply with the sanctions programs administered by the U.S. Department of Treasurys Office of Foreign Asset Control (OFAC), Rule 22c-2 promulgated under the Investment Company Act of 1940, as amended (Rule 22c-2), Regulation S-P adopted by the Securities and Exchange Commission (SEC) and various state privacy requirements (collectively, Reg S-P), and the Federal Trade Commissions Identity Theft Red Flags Rule (Identity Theft Red Flags), which AML program and policies and procedures have bee n performed by PFTC until the date hereof;
WHEREAS, the Fund desires to delegate to the Agent the implementation and administration of the regulatory obligations enumerated above and believe such delegation is reasonable under the circumstances; and
WHEREAS, the Agent, an affiliate of the Manager, is willing to provide such services and implement and administer such regulatory obligations on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth herein, the parties hereto agree as follows:
1. APPOINTMENT.
The Fund hereby appoints the Agent as its Investor Servicing Agent on the terms and conditions set forth herein. In such capacity, the Agent shall act as transfer, distribution disbursing and redemption agent for the Fund and shall act as agent for the shareholders of the Fund in connection with the various shareholder investment and/or redemption plans from time to time made available to shareholders. The Agent hereby accepts such appointment and agrees to perform the respective duties and functions of such offices in accordance with the terms of this agreement and in a manner generally consistent with the practices and standards customarily followed by other high quality investor servicing agents for registered investment companies.
Notwithstanding such appointment, however, the parties agree that the Manager may, upon thirty (30) days prior written notice to the Fund, assume such appointment and perform such duties and functions itself. Pending any such assumption, however, the Manager hereby guarantees the performance of the Agent hereunder and shall be fully responsible to the Fund, financially and otherwise, for the performance by the Agent of its agreements contained herein.
2. GENERAL AUTHORITY AND DUTIES.
By its acceptance of the foregoing appointment, the Agent shall be responsible for performing all functions and duties which, in the reasonable judgment of the Fund, are necessary or desirable in connection with the establishment, maintenance and recording of the Fund's shareholder accounts and the conduct of its relations with shareholders with respect to their accounts. Without limiting the generality of the foregoing, the Agent shall be responsible:
(a) as transfer agent, for performing all functions customarily performed by transfer agents for registered investment companies, including without limitation all functions necessary or desirable to establish and maintain accounts evidencing the ownership of securities issued by the Fund and, to the extent applicable, the issuance of certificates representing such securities, the recording of all transactions pertaining to such accounts, and effecting the issuance and redemption of securities issued by the Fund;
(b) as distribution disbursing agent, for performing all functions customarily performed by distribution disbursing agents for registered investment companies, including without limitation all functions necessary or desirable to effect the payment to shareholders of distributions declared from time to time by the Trustees;
(c) as redemption agent for the Fund, for performing all functions necessary or desirable to effect the redemption of securities issued by the Fund and payment of the proceeds thereof; and
(d) as agent for shareholders of the Fund, performing all functions necessary or
2 |
desirable to maintain all plans or arrangements from time to time made available to shareholders to facilitate the purchase or redemption of securities issued by the Fund.
The Agent shall also be responsible for performing the foregoing functions and duties, to the extent applicable, with respect to participants in retirement plans administered by Mercer HR Outsourcing, LLC (MHRO) that have invested, through such plans, in the Fund. At its own cost and expense, the Agent may hire MHRO to provide some or all of such services with respect to such participants; provided that (a) the Trustees have approved the appointment of MHRO; (b) MHRO agrees to be bound by the terms of an agreement with the Agent (i) whereby MHRO extends to the Fund all of the rights it would have had against the Agent if the Agent were providing the services directly to the Fund pursuant to this Agreement and (ii) which requires MHRO to provide such services in a manner generally consistent with the practices and standards customarily followed by other high quality retir ement plan servicing agents; (c) the Agent shall be fully responsible to the Fund, financially and otherwise, for the performance by MHRO of such services, it being understood by the parties that the duties and obligations of the Agent are in no way relieved by the appointment of MHRO and that the Agent remains fully liable to the Fund for any and all losses arising out of the provision of, or the failure to provide, such services by MHRO (pursuant to Section 6 hereof or otherwise), to the same extent that the Agent would have been liable if MHRO had not been appointed; (d) without in any way limiting the applicability to the Agent of the other provisions of this Agreement, the Agent shall enter into an agreement with MHRO that requires MHRO to comply with the provisions of the last paragraph of this Section 2 and the provisions of Sections 5, 8, 10 and 11 of this Agreement in substantially the same manner as if MHRO were a party to this Agreement; and (e) the Agent shall continually monitor the nature and q uality of the services performed by MHRO, reporting to the Trustees at such times and in such manner as requested by the Trustees. For avoidance of doubt, MHRO shall have no rights under this Agreement, including any rights to indemnification. The Agent shall provide to the Fund a copy of the agreement referred to herein and a copy of any amendments to such agreement promptly upon execution. The Agent shall be permitted at any time to terminate the agreement referred to herein pursuant to the terms of such agreement; provided that the Agent shall provide notice to the Fund at least 90 days prior to any proposed termination of such agreement.
In performing its duties hereunder, in addition to the provisions set forth herein, the Agent shall comply with the terms of the Declaration of Trust, the Bylaws and the current Prospectus and Statement of Additional Information of the Fund, and with the terms of votes adopted from time to time by the Trustees and shareholders of the Fund, relating to the subject matters of this Agreement, all as the same may be amended from time to time.
3. DELEGATION OF CERTAIN REGULATORY OBLIGATIONS
3.1 As of the date hereof and through the term of this Agreement, the Agent shall (i) perform the Funds obligations under the Funds AML Program as such program has been provided to the Agent as Exhibit A hereto and as such Exhibit A may be amended by the Fund from time to time, and (ii) perform the Funds obligations under the Funds OFAC, Rule 22c-2, Reg S-P, and Identity Theft Red Flags compliance programs.
3 |
3.2. The Agent shall provide the Fund and its agents with reasonable access to all records related to the establishment and maintenance of accounts that have been retained in compliance with the Funds CIP and shall take such further action as may be reasonably requested by the Fund in order to facilitate compliance with the Funds CIP. The Agent shall provide adequate notice to customers of the Fund that the Fund is requesting information to verify their identities.
3.3 In connection with applicable anti-money laundering laws (including the reporting, recordkeeping and compliance requirements of the Bank Secrecy Act, as amended by the USA PATRIOT Act, their implementing regulations, and related SEC rules and regulations) and in connection with the Funds AML Program and CIP, the Fund and the Agent hereby agree and covenant that the Agent will permit federal examiners, regulators and personnel of the Fund to (i) obtain all information such federal examiners, regulators or personnel of the Fund consider necessary or appropriate relating to the Funds AML Program and CIP and (ii) inspect the Agent, including its facilities and records, with respect to the Fund AML Program and CIP.
3.4. The Agent shall provide the Fund and its agents with reasonable access to all records relating to its performance of the Funds OFAC, Rule 22c-2, Reg S-P, and Identity Theft Red Flags compliance programs, and will permit federal examiners, regulators, and personnel of the Fund to (i) obtain all information such federal examiners, regulators, or personnel of the Fund consider necessary or appropriate relating to such compliance programs and (ii) inspect the Agent, including its facilities and records, with respect to such compliance programs.
4. OTHER THIRD PARTY SERVICING ARRANGEMENTS
Servicing arrangements may currently exist or may in the future be established with various third parties who have agreed to provide services to shareholders or to retirement plans and their participants who invest in the Fund. The Agent, and not the Fund, shall be fully responsible for the payment of all amounts owing to such service providers and shall monitor the provision of such services to such shareholders or plans and participants, reporting to the Trustees at such times and in such manner as the Trustees may request from time to time.
5. STANDARD OF SERVICE; COMPLIANCE WITH LAWS.
The Agent will use its best efforts to provide high quality services to the Fund's shareholders and in so doing will seek to take advantage of such innovations and technological improvements as may be appropriate or desirable with a view to improving the quality and, where possible, reducing the cost of its services to the Fund. In performing its duties hereunder, the Agent shall comply with the provisions of all applicable laws and regulations and shall comply with the requirements of any governmental authority having jurisdiction over the Agent or the Fund with respect to the duties of the Agent hereunder.
6. COMPENSATION.
The Fund shall pay to the Agent, for its services rendered and its costs incurred in connection with the performance of its duties hereunder, such compensation and reimbursements
4 |
as may from time to time be approved by vote of the Trustees.
7. DUTY OF CARE; INDEMNIFICATION.
The Agent will at all times act in good faith and exercise reasonable care in performing its duties hereunder. The Agent will not be liable or responsible for delays or errors resulting from circumstances beyond its control, including acts of civil or military authorities, national emergencies, labor difficulties, fire, mechanical breakdown beyond its control, flood or catastrophe, acts of God, insurrection, war, riots or failure beyond its control of transportation, communication or power supply.
The Agent may rely on certifications of the Clerk, the President, the Vice Chairman, the Executive Vice President, the Senior Vice President or the Treasurer of the Fund as to any action taken by the shareholders or Trustees, and upon instructions not inconsistent with this Agreement received from the President, Vice Chairman, the Executive Vice President, the Senior Vice President or the Treasurer of the Fund. If any officer of the Fund shall no longer be vested with authority to sign for the Fund, written notice thereof shall forthwith be given to the Agent by the Fund and, until receipt of such notice by it, the Agent shall be entitled to recognize and act in good faith upon certificates or other instruments bearing the signatures or facsimile signatures of such officers. The Agent may request advice of counsel for the Fund, at the expense of the Fund, with respect to the performance of its duties hereunder.
The Fund will indemnify and hold the Agent harmless from any and all losses, claims, damages, liabilities and expenses (including reasonable fees and expenses of counsel) arising out of (i) any action taken by the Agent in good faith consistent with the exercise of reasonable care in accordance with such certifications, instructions or advice, (ii) any action taken by the Agent in good faith consistent with the exercise of reasonable care in reliance upon any instrument or certificate for securities believed by it (a) to be genuine, and (b) to be executed by any person or persons authorized to execute the same; provided, however, that the Agent shall not be so indemnified in the event of its failure to obtain a proper signature guarantee to the extent the same is required by the Declaration of Trust, Bylaws, current Prospectus or Statement of Additional Information of the Fund or a vote of the Trustees, and such requirement has not been waived by vote of th e Trustees, or (iii) any other action taken by the Agent in good faith consistent with the exercise of reasonable care in connection with the performance of its duties hereunder.
In the event that the Agent proposes to assert the right to be indemnified under this Section 7 in connection with any action, suit or proceeding against it, the Agent shall promptly after receipt of notice of commencement of such action, suit or proceeding notify the Fund of the same, enclosing a copy of all papers served. In such event, the Fund shall be entitled to participate in such action, suit or proceeding, and, to the extent that it shall wish, to assume the defense thereof, and after notice from the Fund to the Agent of its election so to assume the defense thereof the Fund shall not be liable to the Agent for any legal or other expenses. The parties shall cooperate with each other in the defense of any such action, suit or proceeding. In no event shall the Fund be liable for any settlement of any action or claim effected without its consent.
5 |
8. MAINTENANCE OF RECORDS.
The Agent will maintain and preserve all records relating to its duties under this Agreement in compliance with the requirements of applicable statutes, rules and regulations, including, without limitation, Rule 31a-1 under the Investment Company Act of 1940. Such records shall be the property of the Fund and shall at all times be available for inspection and use by the officers and agents of the Fund. The Agent shall furnish to the Fund such information pertaining to the shareholder accounts of the Fund and the performance of its duties hereunder as the Fund may from time to time request. The Agent shall notify the Fund promptly of any request or demand by any third party to inspect the records of the Fund maintained by it and will act upon the instructions of the Fund in permitting or refusing such inspection.
9. FUND ACCOUNTS.
All moneys of the Fund from time to time made available for the payment of distributions to shareholders or redemptions of shares, or otherwise coming into the possession or control of the Agent or its officers, shall be deposited and held in one or more accounts maintained by the Agent solely for the benefit of the Funds.
10. INSURANCE.
The Agent will at all times maintain in effect insurance coverage, including, without limitation, Errors and Omissions, Fidelity Bond and Electronic Data Processing coverages, at levels of coverage consistent with those customarily maintained by other high quality investor servicing agents for registered investment companies and with such policies as the Trustees may from time to time adopt.
11. EMPLOYEES.
The Agent shall be responsible for the employment, control and conduct of its agents and employees and for injury to such agents or employees or to others caused by such agents or employees. The Agent shall assume full responsibility for its agents and employees under applicable statutes and agrees to pay all applicable employer taxes thereunder with respect to such agents and employees, and such agents and employees shall in no event be considered to be agents or employees of the Fund.
12. TERMINATION.
This Agreement shall continue indefinitely until terminated by not less than ninety (90) days prior written notice given by the Fund to the Agent, or by not less than six months prior written notice given by the Agent to the Fund.
In the event that in connection with any such termination a successor to any of the Agent's duties or responsibilities hereunder is designated by the Fund by written notice to the Agent, the Agent will cooperate fully in the transfer of such duties and responsibilities, including provision
6 |
for assistance by the Agent's personnel in the establishment of books, records and other data by such successor. The Fund will reimburse the Agent for all expenses incurred by the Agent in connection with such transfer.
13. MISCELLANEOUS.
This Agreement shall be construed and enforced in accordance with and governed by the laws of The Commonwealth of Massachusetts.
The captions in this Agreement are included for convenience of reference only and in no way define or limit any of the provisions of this Agreement or otherwise affect their construction or effect. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.
A copy of the Declaration of Trust (including any amendments thereto) of the Fund is on file with the Secretary of The Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Trustees as trustees and not individually and that the obligations of or arising out of this instrument are not binding upon any of the Trustees or officers or shareholders individually, but binding only upon the assets and property of the Fund.
7 |
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized officers as of the date and year first above written.
THE PUTNAM FUNDS, listed on Appendix A | |||
By | /s/ Jonathan S. Horwitz | ||
Name: Jonathan S. Horwitz | |||
Title: | Executive Vice President, Principal | ||
Executive Officer, Treasurer and | |||
Compliance Liaison | |||
PUTNAM INVESTOR SERVICES, INC. | |||
By | /s/ Steven D. Krichmar | ||
Name: Steven D. Krichmar | |||
Title: | Senior Managing Director | ||
PUTNAM INVESTMENT MANAGEMENT, LLC | |||
By | /s/ James P. Pappas | ||
Name: James P. Pappas | |||
Title: | Managing Director |
8 |
APPENDIX A | |||
PUTNAM FUNDS | |||
As amended as of November 30, 2010 | |||
Putnam American Government Income Fund | |||
Putnam Arizona Tax Exempt Income Fund | |||
Putnam Asset Allocation Funds | |||
-Balanced Portfolio | |||
-Conservative Portfolio | |||
-Growth Portfolio | |||
Putnam California Tax Exempt Income Fund | |||
Putnam Convertible Securities Fund | |||
Putnam Diversified Income Trust | |||
Putnam Equity Income Fund | |||
Putnam Europe Equity Fund | |||
Putnam Funds Trust | |||
- Putnam Absolute Return 100 Fund | |||
- Putnam Absolute Return 300 Fund | |||
- Putnam Absolute Return 500 Fund | |||
- Putnam Absolute Return 700 Fund | |||
- Putnam Asia Pacific Equity Fund | |||
- Putnam Asset Allocation: Equity Portfolio | |||
- Putnam Capital Spectrum Fund | |||
- Putnam Emerging Markets Equity Fund | |||
- Putnam Equity Spectrum Fund | |||
- Putnam Floating Rate Income Fund | |||
- Putnam Global Consumer Fund | |||
- Putnam Global Energy Fund | |||
- Putnam Global Financials Fund | |||
- Putnam Global Industrials Fund | |||
- Putnam Global Sector Fund | |||
- Putnam Global Technology Fund | |||
- Putnam Global Telecommunications Fund | |||
- Putnam Income Strategies Fund | |||
- Putnam International Value Fund | |||
- Putnam Money Market Liquidity Fund | |||
- Putnam Multi-Cap Core Fund | |||
- Putnam Small Cap Growth Fund | |||
The George Putnam Fund of Boston d/b/a George Putnam Balanced Fund | |||
Putnam Global Equity Fund | |||
Putnam Global Health Care Fund | |||
Putnam Global Income Trust | |||
Putnam Global Natural Resources Fund | |||
Putnam Global Utilities Fund |
9 |
The Putnam Fund for Growth and Income | |
Putnam High Income Securities Fund | |
Putnam High Yield Advantage Fund | |
Putnam High Yield Trust | |
Putnam Income Fund | |
Putnam International Equity Fund | |
Putnam Investment Funds | |
-Putnam Capital Opportunities Fund | |
-Putnam Growth Opportunities Fund | |
-Putnam International Capital Opportunities Fund | |
-Putnam International Growth Fund | |
-Putnam Mid Cap Value Fund | |
-Putnam Research Fund | |
-Putnam Small Cap Value Fund | |
Putnam Investors Fund | |
Putnam Managed Municipal Income Trust | |
Putnam Massachusetts Tax Exempt Income Fund | |
Putnam Master Intermediate Income Trust | |
Putnam Michigan Tax Exempt Income Fund | |
Putnam Minnesota Tax Exempt Income Fund | |
Putnam Money Market Fund | |
Putnam Municipal Opportunities Trust | |
Putnam New Jersey Tax Exempt Income Fund | |
Putnam New Opportunities Fund | |
Putnam New York Tax Exempt Income Fund | |
Putnam Ohio Tax Exempt Income Fund | |
Putnam Pennsylvania Tax Exempt Income Fund | |
Putnam Premier Income Trust | |
Putnam RetirementReady® Funds | |
-Putnam RetirementReady 2055 Fund | |
-Putnam RetirementReady 2050 Fund | |
-Putnam RetirementReady 2045 Fund | |
-Putnam RetirementReady 2040 Fund | |
-Putnam RetirementReady 2035 Fund | |
-Putnam RetirementReady 2030 Fund | |
-Putnam RetirementReady 2025 Fund | |
-Putnam RetirementReady 2020 Fund | |
-Putnam RetirementReady 2015 Fund | |
-Putnam RetirementReady Maturity Fund | |
Putnam Tax Exempt Income Fund | |
Putnam Tax Exempt Money Market Fund | |
Putnam Tax-Free Income Trust | |
-Putnam AMT-Free Municipal Fund | |
-Putnam Tax-Free High Yield Fund | |
Putnam U.S. Government Income Trust |
10 |
Putnam Variable Trust | |
-Putnam VT American Government Income Fund | |
-Putnam VT Capital Opportunities Fund | |
-Putnam VT Diversified Income Fund | |
-Putnam VT Equity Income Fund | |
-Putnam VT The George Putnam Fund of Boston | |
-Putnam VT Global Asset Allocation Fund | |
-Putnam VT Global Equity Fund | |
-Putnam VT Global Health Care Fund | |
-Putnam VT Global Utilities Fund | |
-Putnam VT Growth and Income Fund | |
-Putnam VT Growth Opportunities Fund | |
-Putnam VT High Yield Fund | |
-Putnam VT Income Fund | |
-Putnam VT International Equity Fund | |
-Putnam VT International Value Fund | |
-Putnam VT International Growth Fund | |
-Putnam VT Investors Fund | |
-Putnam VT Mid Cap Value Fund | |
-Putnam VT Money Market Fund | |
-Putnam VT New Opportunities Fund | |
-Putnam VT Research Fund | |
-Putnam VT Small Cap Value Fund | |
-Putnam VT Vista Fund | |
-Putnam VT Voyager Fund | |
Putnam Vista Fund | |
Putnam Voyager Fund | |
11/30/10 |
11 |
EXECUTION COPY | |
MASTER SUB-ACCOUNTING SERVICES AGREEMENT | |
This AGREEMENT is made as of January 1, 2007 by and between PUTNAM INVESTMENT MANAGEMENT, LLC, a Delaware limited liability company, having its principal place of business at 1 Post Office Square, Boston, Massachusetts 02109 (the Administrator), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, having its principal place of business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Sub-Accounting Agent").
WITNESSETH: |
WHEREAS, pursuant to various management or administration agreements (collectively, the Administration Agreement) by and between the Administrator and each management investment company party thereto (and each management investment company that becomes a party thereto), the Administrator has been retained to provide, and provides, certain fund accounting and recordkeeping services;
WHEREAS, the Administrator may contract, subcontract or otherwise arrange for the Sub-Accounting Agents provision of certain of the aforementioned services, including the fund accounting and recordkeeping services set forth below;
WHEREAS, the Administrator desires to retain the Sub-Accounting Agent to perform certain fund accounting and recordkeeping services with regard to each management investment company for which it provides fund accounting and recordkeeping services under the Administration Agreement, as more particularly identified on Appendix A hereto (each such management investment company and each management investment company made subject to this Agreement in accordance with Section 11.5 below shall hereinafter be referred to as a Fund and collectively as the Funds);
WHEREAS, each Fund is authorized to issue common stock or shares of beneficial interest (Shares), and some Funds are authorized to issue Shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets, as more particularly identified on Appendix A hereto (each such series and each series made subject to this Agreement in accordance with Section 11.6 below shall hereinafter be referred to as Portfolio with respect to that Fund, but for any Fund that does not have any separate series, then any reference to the Portfolio is a reference to that Fund; and
WHEREAS, the Sub-Accounting Agent is willing to perform such services upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows:
SECTION 1. DUTIES OF THE SUB-ACCOUNTING AGENT.
SECTION 1.1 BOOKS OF ACCOUNT.
The Sub-Accounting Agent shall maintain the books of account of each Portfolio and shall perform the duties described in Appendix B in the manner prescribed by such Portfolios currently effective prospectus, statement of additional information or other governing document, certified copies of which have been supplied to the Sub-Accounting Agent (a "governing document").
The Administrator shall provide timely prior notice to the Sub-Accounting Agent of any modification in the manner in which calculations are to be performed as prescribed in any revision to such Portfolios governing document and shall supply the Sub-Accounting Agent with certified copies of all amendments and/or supplements to the governing documents in a timely manner. For purposes of calculating the net asset value of a Portfolio, the Sub-Accounting Agent shall value each Portfolios portfolio securities utilizing prices obtained from sources designated by the Administrator (collectively, the Authorized Price Sources) on a price source authorization substantially in the form attached hereto as Exhibit A, as the same may be amended from time to time, or otherwise designated by means of Proper Instructions (as such term is defined in Section 2.2 below) (the 47;Price Source Authorization). The Sub-Accounting Agent shall not be responsible for any revisions to calculation methods unless such revisions are communicated in writing by the Administrator to the Sub-Accounting Agent.
SECTION 1.2 RECORDS.
The Sub-Accounting Agent shall create and maintain all records relating to its activities and obligations under this Agreement in such a manner as will meet the obligations of the Administrator with respect to each Fund under the Investment Company Act of 1940, as amended (the 1940 Act), specifically Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the property of the applicable Fund and shall at all times during the regular business hours of the Sub-Accounting Agent be open for inspection by duly authorized officers, employees or agents of the applicable Fund and employees and agents of the Securities and Exchange Commission. Subject to Section 3 below, the Sub-Accounting Agent shall preserve for the period required by law the records required to be maintained thereunder.
The Administrator acknowledges that, in keeping the books of account of each Fund and/or making the calculations described herein with respect to Fund property released and delivered pursuant to Section 2.2(14), or purchased pursuant to Section 2.6(7) of such Funds custodial services agreement with State Street Bank and Trust Company (the Custody Contract), if any, or pursuant to comparable provisions of other custodial services agreements applicable to the Fund, the Sub-Accounting Agent is authorized and instructed to rely upon information provided to it by such Fund, such Funds counterparty(ies), or the agents of either of them.
2. |
SECTION 1.3 APPOINTMENT OF AGENTS.
The Sub-Accounting Agent may at its own expense employ one or more of its affiliates as agents in the performance of its duties and the exercise of its rights under this Agreement, provided that the employment of such agents shall not reduce the Sub-Accounting Agents obligations or liabilities hereunder.
SECTION 2. DUTIES OF THE ADMINISTRATOR.
SECTION 2.1 DELIVERY OF INFORMATION.
The Administrator shall provide, or shall cause a third party to provide, timely notice to the Sub-Accounting Agent of certain data as a condition to the Sub-Accounting Agent's performance described in Section 1 above. The data required to be provided pursuant to this section is set forth on Schedule A hereto, which schedule may be separately amended or supplemented by the parties from time to time.
The Sub-Accounting Agent is authorized and instructed to rely upon the information it receives from the Administrator or any third party designated by the Administrator to provide such information, including without limitation as set forth on Schedule A.
SECTION 2.2 PROPER INSTRUCTIONS.
The Administrator and any other person duly authorized by it shall communicate to the Sub-Accounting Agent by means of Proper Instructions. Proper Instructions shall mean (i) a writing signed or initialed by one or more persons as the Administrator shall have from time to time authorized in writing or (ii) communication effected directly between the Administrator or its third-party agents (each, a Third Party Agent) and the Sub-Accounting Agent by electro-mechanical or electronic devices, provided that the Administrator and the Sub-Accounting Agent agree to security procedures. The Sub-Accounting Agent may rely upon any Proper Instruction reasonably believed by it to be genuine and to have been properly issued by or on behalf of the Administrator. Oral instructions shall be considered Proper Instructions if the Sub-Accounting Agent reasonably believes them to have been g iven by a person authorized to give such instructions. The Administrator shall cause all oral instructions to be confirmed in accordance with clauses (i) or (ii) above, as appropriate. The Administrator shall give timely Proper Instructions to the Sub-Accounting Agent in regard to matters affecting accounting practices and the Sub-Accounting Agent's performance pursuant to this Agreement.
SECTION 3. STANDARD OF CARE; LIMITATION OF LIABILITY.
The Sub-Accounting Agent shall be held to the exercise of reasonable care in carrying out the provisions of this Agreement, but shall be kept indemnified by and shall be without liability to the Administrator for any action taken or omitted by it in good faith without negligence, bad faith, willful misconduct, violation of law applicable to the Sub-Accounting Agent in its capacity as a fund accounting agent and that affects the Sub-Accounting Agents performance of the Services hereunder, or material breach of this Agreement (provided, however, that the Sub-
3. |
Accounting Agent shall have the opportunity to cure, within thirty (30) days of its receipt of written notice from the Administrator, solely those breaches capable of cure without material adverse impact to the Administrator, provided, in each such instance where the Sub-Accounting Agent is aware of an event related to such notice, the Sub-Accounting Agent had previously informed the Administrator promptly of such event; any such communication from the Sub-Accounting Agent to the Administrator shall not be used as or considered as an admission of fault and will be provided solely as an accommodation to the Administrator), including, without limitation, acting in accordance with any Proper Instruction. The Sub-Accounting Agent shall be entitled to rely on and may act upon the advice of counsel (who may be counsel for the Administrator or the Fund) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advic e. Without in any way limiting the generality of the foregoing, the Sub-Accounting Agent shall in no event be liable for any loss or damage to the extent arising from causes beyond its control including, without limitation, delay or cessation of services hereunder or any damages resulting therefrom as a result of work stoppage, power or other mechanical failure, natural disaster, governmental action, communication disruption or other impossibility of performance, or causes commonly referred to as Acts of God.
In the event of equipment failure, work stoppage, governmental action, communication disruption or other impossibility of performance beyond the Sub-Accounting Agents control, the Sub-Accounting Agent shall take reasonable steps to minimize service interruptions. The Sub-Accounting Agent shall enter into and shall maintain in effect with appropriate parties one or more agreements making reasonable provision for (i) periodic back-up of the computer files and data with respect to the Funds; and (ii) emergency use of electronic data processing equipment to provide services under this Agreement.
The Sub-Accounting Agent shall not be liable for any special, indirect, incidental, or consequential damages of any kind whatsoever (including, without limitation, attorneys fees) in any way due to the Administrators use of the accounting services or the performance of or failure to perform the Sub-Accounting Agents obligations under this Agreement. The Administrator shall not be liable for any special, indirect, incidental, or consequential damages of any kind whatsoever (including, without limitation, attorneys fees) in any way due to the performance of or failure to perform the Administrators obligations under this Agreement. The aforementioned disclaimer applies without limitation to claims regardless of the form of action, whether in contract, tort (including negligence), strict liability or otherwise, and regardless of whether such damages are foreseeable.
The Administrator, any Third Party Agent or any Authorized Price Source from which the Sub-Accounting Agent shall receive or obtain certain records, reports and other data utilized or included in the sub-accounting services provided hereunder is solely responsible for the contents of such information including, without limitation, the accuracy thereof and the Administrator agrees to make no claim against the Sub-Accounting Agent arising out of the contents of such third-party data including, but not limited to, the accuracy thereof. Except as otherwise required by the Price Source Authorization with respect to the use of data obtained from Authorized Price Sources, the Sub-Accounting Agent shall have no responsibility to review, confirm or otherwise assume any duty with respect to the accuracy or completeness of any such information and, it shall be without liability for any loss or damage suffered as a result of the Sub-Accounting
4. |
Agents reliance on and utilization of such information. The Sub-Accounting Agent shall have no responsibility and shall be without liability for any loss or damage caused by the failure of the Administrator or any Third Party Agent to provide it with the information required by Section 2.1 above. Further, and without in any way limiting the generality of the foregoing, the Sub-Accounting Agent shall have no liability in respect of any loss, damage or expense suffered by the Administrator, any Fund or any third party, insofar as such loss, damage or expense arises from the performance of the Sub-Accounting Agents duties hereunder by reason of the Sub-Accounting Agents reliance upon records that were maintained for the Administrator or any Fund by any entity other than the Sub-Accounting Agent prior to the Administrators appointment of the Sub-Accounting Agent pursuant to this Agreement.
The Administrator agrees to indemnify and hold the Sub-Accounting Agent free and harmless from any expense, loss, damage or claim, including reasonable attorney's fees, suffered by the Sub-Accounting Agent and caused by or resulting from the acts or omissions of the Administrator or any third party whose services the Sub-Accounting Agent must rely upon in performing the services hereunder, except to the extent that any such expense, loss, damage or claim is caused by or results from the Sub-Accounting Agents own negligence, bad faith, willful misconduct, violation of law applicable to the Sub-Accounting Agent in its capacity as a fund accounting agent and that affects the Sub-Accounting Agents performance of the Services hereunder, or material breach of this Agreement (provided, however, that the Sub-Accounting Agent shall have the opportunity to cure, within thirty (30) days o f its receipt of written notice from the Administrator, solely those breaches capable of cure without material adverse impact to the Administrator, provided, in each such instance where the Sub-Accounting Agent is aware of an event related to such notice, the Sub-Accounting Agent had previously informed the Administrator promptly of such event; any such communication from the Sub-Accounting Agent to the Administrator shall not be used as or considered as an admission of fault and will be provided solely as an accommodation to the Administrator).
The Administrator acknowledges and agrees that, with respect to investments any Portfolio maintains with an entity which may from time to time act as a transfer agent for uncertificated shares of registered investment companies (the Underlying Transfer Agent), such Underlying Transfer Agent is the sole source of information on the number of shares held by it on behalf of a Portfolio and that the Sub-Accounting Agent has the right to rely on holdings information furnished by the Underlying Transfer Agent to the Sub-Accounting Agent in performing its duties under this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
The Administrator represents and warrants to the Sub-Accounting Agent that:
(a) It is duly incorporated or organized, validly existing and in good standing in its jurisdiction of incorporation or organization and is qualified to conduct its business in every jurisdiction where its business is conducted except where the failure to be so qualified would not have a material adverse affect on the Administrator;
5. |
(b) The execution, delivery and performance of this Agreement, all documents and instruments to be delivered hereunder or thereunder and all transactions contemplated hereunder or thereunder have been duly authorized by all necessary action;
(c) The person executing this Agreement on its behalf has been duly authorized to act on its behalf;
(d) This Agreement constitutes its legal, valid, binding and enforceable agreement;
(e) It has obtained all authorizations, approvals and consents of any governmental body required in connection with this Agreement and all transactions contemplated hereunder and such authorizations are in full force and effect; and
(f) The execution, delivery and performance of this Agreement and the transactions hereunder will not violate any agreement, law, ordinance, charter, by-law, rule or regulation applicable to it or to any Fund, or by which it or any Fund is bound or by which any of its or any Funds assets are affected. Further, the Administrator hereby acknowledges and agrees that it shall promptly notify the Sub-Accounting Agent of any statute, regulation, rule, or other regulatory requirement or policy governing the Administrator or the Funds, and any change thereto, which may affect the Sub-Accounting Agents responsibilities under this Agreement.
The Sub-Accounting Agent represents and warrants to the Administrator that:
(a) It is a Massachusetts trust company, duly organized and existing under the laws of The Commonwealth of Massachusetts and is qualified to conduct its business in every jurisdiction where its business is conducted except where the failure to be so qualified would not have a material adverse affect on the Sub-Accounting Agent;
(b) The execution, delivery and performance of this Agreement, all documents and instruments to be delivered hereunder or thereunder and all transactions contemplated hereunder or thereunder have been duly authorized by all necessary action;
(c) The person executing this Agreement on its behalf has been duly authorized to act on its behalf;
(d) This Agreement constitutes its legal, valid, binding and enforceable agreement;
(e) It has obtained all authorizations, approvals and consents of any governmental body required in connection with this Agreement and all transactions contemplated hereunder and such authorizations are in full force and effect; and
(f) The execution, delivery and performance of this Agreement and the transactions hereunder will not violate any agreement, law, ordinance, charter, by-law, rule or regulation applicable to it, or by which it is bound or by which any of its assets are affected. Further, the Sub-Accounting Agent hereby acknowledges and agrees that it shall promptly notify the Administrator of any statute, regulation, rule, or other regulatory requirement or policy governing the Sub-Accounting Agent,
6. |
and any change thereto, which may affect the Administrators responsibilities under this Agreement.
SECTION 5. COMPENSATION OF SUB-ACCOUNTING AGENT.
The Sub-Accounting Agent shall be entitled to reasonable compensation for its services and expenses as Sub-Accounting Agent, as agreed upon from time to time in writing between the Administrator and the Sub-Accounting Agent.
SECTION 6. TERM OF AGREEMENT.
(a) This Agreement shall become effective as of its execution and shall continue in full force and effect for an initial term of seven (7) years from the date hereof, and shall automatically renew for additional consecutive three (3) year terms, unless either party gives one hundred eighty (180) days prior written notice to the other of its intent not to renew. If this Agreement is terminated (the effective date of such termination being referred to as the Termination Date), the Sub-Accounting Agent shall, at the reasonable request of the Administrator, and subject to the consent of the Sub-Accounting Agent (which consent shall not be unreasonably withheld or delayed), continue to provide services hereunder for a period (the Extension Period) not to exceed ninety (90) days from the Termination Date, and the compensation payable to the Sub-Accounting Agent for its services and expenses during such Extension Period shall not exceed one hundred and five percent (105%) (per annum) of the compensation last agreed upon by the Administrator and the Sub-Accounting Agent and in effect immediately prior to the Termination Date.
(b) In the event that the Agreement is terminated by the Administrator, other than for cause, either in its entirety, with respect to any particular Fund, or with respect to its applicability to any particular Portfolio, as may be applicable, prior to the five (5) year anniversary of the date hereof (the Anniversary Date), and the Sub-Accounting Agent has not terminated either this Agreement or any agreement pursuant to which the Sub-Accounting Agent provides custody services to the Funds, either in its entirety, with respect to such particular Fund, or with respect to its applicability to such particular Portfolio, as applicable, the Administrator shall pay to the Sub-Accounting Agent, in lieu of any other fees, expenses, termination penalties, damages or other amounts (except as identified in paragraph (c) below), an early termination fee equal to the present value, us ing a discount rate of seven percent (7%), compounded annually, of the remaining fees which would have been due by the Administrator to the Sub-Accounting Agent for Services provided to the Funds, to such particular Fund, or to such particular Portfolio, as applicable, for the period from the Termination Date until the Anniversary Date if the Agreement had not been terminated either in its entirety, with respect to such particular Fund, or with respect to its applicability to such particular Portfolio, as applicable (the Remaining Fees) which Remaining Fees shall be determined using the average monthly compensation for its services (prior to the application of any earnings credits) earned by the Sub-Accounting Agent hereunder with respect to all Funds, such particular Fund, or such particular Portfolio, as applicable, during the 12-month period (or if shorter, such lesser period of time) preceding such Termination Date (t he Early Termination Fee).
7. |
For the avoidance of doubt, the Administrator will not be required to make any such Early Termination Fee payment (other than as set forth in paragraph (e) below) if this Agreement is terminated on or after the Anniversary Date or by the Administrator for cause at any time.
(c) Notwithstanding the provisions of paragraph (b) above, no Early Termination Fee shall be payable in the event (each, a Liquidation, Merger or Consolidation Event) that a Fund or Portfolio is
(i) liquidated; or
(ii) merged into or consolidated with another Fund or Portfolio with respect to which the Sub-Accounting Agent provides Services pursuant to this Agreement; or
(iii) merged into or consolidated with another investment company or series of an investment company (each series representing interests in a separate portfolio of securities and other assets) with respect to which the Sub-Accounting Agent provides fund accounting services (either as an accounting agent or sub-accounting agent),
provided, that in each case of (i) and (ii) above, the aggregate amount of fees for fund accounting services provided by the Sub-Accounting Agent with respect to all Funds and Portfolios covered by this Agreement immediately after, and taking into consideration the effect of, such Liquidation, Merger or Consolidation Event (the Projected Fees) shall be equal to or greater than the aggregate amount of fees for fund accounting services provided by the Sub-Accounting Agent pursuant to this Agreement, measured as of the date of this Agreement (the Existing Fees);
and further provided, that in each case of (iii) above, (A) the Projected Fees plus (B) the Incremental Fees (as defined below), shall be equal to or greater than the Existing Fees.
For purposes of this Section 6(c), the Projected Fees shall equal the fund accounting fees, with respect to such Funds and Portfolios subject to this Agreement immediately after such Liquidation, Merger or Consolidation Event, projected to be earned by the Sub-Accounting Agent on an annualized basis for the ensuing twelve-month period, with no adjustments for market fluctuations or subscription and redemption activity.
For purposes of this Section 6(c), the Existing Fees shall equal the fund accounting fees, with respect to such Funds and Portfolios on the date of this Agreement, projected to be earned by the Sub-Accounting Agent on an annualized basis for the ensuing twelve-month period, with no adjustments for market fluctuations or subscription and redemption activity.
For purposes of this Section 6(c), the Other Contract shall mean a contractual arrangement pursuant to which the Sub-Accounting Agent provides fund accounting services that may not be terminated earlier than the Anniversary Date and whose fee schedule is fixed until the Anniversary Date.
For purposes of this Section 6(c), the Incremental Fees shall mean (A) the fund accounting fees with respect to fund accounting services under the Other Contract that are projected to be
8. |
earned by the Sub-Accounting Agent on an annualized basis for the ensuing twelve-month period, with no adjustments for market fluctuations or subscription and redemption activity, immediately after such Liquidation, Merger or Consolidation Event, less (B) the fund accounting fees with respect to fund accounting services under the Other Contract that were projected to have been earned by the Sub-Accounting Agent on an annualized basis for the ensuing twelve-month period, with no adjustments for market fluctuations or subscription and redemption activity, immediately prior to such Liquidation, Merger or Consolidation Event.
(d) Upon any termination of this Agreement pursuant to paragraph (b) above, the Administrator shall pay to the Sub-Accounting Agent all accrued and unpaid fees and expenses, whether the same have been billed or remain unbilled, and shall reimburse Sub-Accounting Agent for any reasonable de-conversion costs associated with such termination.
(e) Notwithstanding any term herein to the contrary, termination of this Agreement with respect to the coverage of any one particular Fund or Portfolio shall in no way affect the rights and duties under this Agreement with respect to any other Fund or Portfolio.
(f) Notwithstanding any term herein to the contrary, this Agreement may, at the sole option of the Sub-Accounting Agent, be terminated (in its entirety, with respect to any particular Fund, or with respect to its applicability to any particular Portfolio, as may be applicable) without prior notice by the Sub-Accounting Agent in the event of (i) any termination by a Fund of its custodial services agreement with State Street Bank and Trust Company (in each such case, in such agreements entirety, with respect to any particular Fund, or with respect to its applicability to any particular Portfolio, as may be applicable) or (ii) any termination of the Administration Agreement or the termination or resignation of the Administrator under the Administration Agreement (in each such case, in such agreements entirety, with respect to any particular Fund, or with respect to its applicability to any particular Portfolio, as may be applicable).
SECTION 7. SUCCESSOR AGENT.
If a successor fund accounting agent with respect to any Fund, or Portfolio thereof, shall be appointed by the Administrator, the Sub-Accounting Agent shall upon termination deliver to such successor agent at the office of the Sub-Accounting Agent all records of such Fund or Portfolio thereof, as applicable, held by it hereunder. If no such successor agent shall be appointed, the Sub-Accounting Agent shall have the right at its office to deliver such records to the Administrator.
SECTION 8. AUDIT RIGHTS; REPORTS TO ADMINISTRATOR BY INDEPENDENT PUBLIC ACCOUNTANTS
SECTION 8.1 AUDIT RIGHTS.
(a) To the extent required by applicable law, rule or regulation and upon request of the Administrator (which shall include reasonable advance notice), the Sub-Accounting Agent shall allow the Administrators regulators or supervisory authorities to perform periodic on-site audits as may be reasonably required to examine the Sub-Accounting Agents performance of the services contemplated by this Agreement (the Services). Notwithstanding the foregoing, prior
9. |
to the performance of any audits of the Sub-Accounting Agents performance of the Services, the Administrator will request that such regulator or supervisory authority to the extent possible shall coordinate such audit through the Sub-Accounting Agents primary regulator, the United States Federal Reserve Bank of Boston.
(b) Upon request of the Administrator (which shall include reasonable advance notice), the Sub-Accounting Agent shall allow the Administrator and its auditors (including internal audit staff and external auditors) and compliance personnel to perform periodic on-site audits as may be reasonably required to examine the Sub-Accounting Agents performance of the Services.
(c) Notwithstanding the audit and inspection rights conferred by the foregoing subsection, the Sub-Accounting Agent reserves the right to impose reasonable limitations on the number, frequency, timing and scope of audits and inspections requested by the Administrator so as to prevent or minimize any potential impairment or disruption of its operations, distraction of its personnel or breaches of security or confidentiality; provided, however, that the Sub-Accounting Agent may not limit the number, frequency or timing of audits and inspections by regulatory bodies with supervisory authority over the Administrator or by the Administrator resulting from a regulatory problem at the Sub-Accounting Agent and affecting the Sub-Accounting Agents ability to provide the Services hereunder or any material weakness or significant deficiency in the Sub-Accounting Agents internal controls. I n addition, the Sub-Accounting Agent shall be entitled to impose a commercially reasonable per person hourly charge for the cooperation and assistance of its personnel in connection with any audit in excess of one (1) in any twelve (12) month period; provided, however, that no such charge may be imposed in connection with any audit or inspection by any regulatory body with supervisory authority over the Administrator or by the Administrator resulting from a regulatory problem at the Sub-Accounting Agent and affecting the Sub-Accounting Agents ability to provide the Services hereunder or any material weakness or significant deficiency in the Sub-Accounting Agents internal controls. Nothing contained in this section shall obligate the Sub-Accounting Agent to provide access to or otherwise disclose: (i) any information that is unrelated to the Administrator or the Funds and the provision of the Services to the Administrator; (ii) a ny information which is treated as confidential under the Sub-Accounting Agents corporate policies, including, without limitation, internal audit reports, compliance or risk management plans or reports, work papers and other reports and information relating to management functions; or (iii) any other documents, reports or other information that the Sub-Accounting Agent is obligated to maintain in confidence as a matter of law or regulation. In addition, any access provided hereunder to technology shall be limited to a demonstration by the Sub-Accounting Agent of the functionality thereof and a reasonable opportunity to communicate with the Sub-Accounting Agent personnel regarding such technology.
10. |
SECTION 8.2 REPORTS TO ADMINISTRATOR BY INDEPENDENT PUBLIC ACCOUNTANTS
The Sub-Accounting Agent shall provide the Administrator, at such times as the Administrator may reasonably require, with reports by independent public accountants on the accounting system, internal accounting control and procedures relating to the services provided by the Sub-Accounting Agent under this Agreement; such reports shall be of sufficient scope and in sufficient detail as may reasonably be required by the Administrator to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and, if there are no such inadequacies, the reports shall so state.
SECTION 8.3 ADDITIONAL SUB-CERTIFICATIONS AND REPORTS
The Sub-Accounting Agent shall provide to the Administrator: (a) sub-certifications in connection with Sarbanes-Oxley Act of 2002 certification requirements; and (b) periodic reports and reasonable documentation for delivery to the Funds Chief Compliance Officer in connection with Rule 38a-1 under the 1940 Act with respect to the Services and the Sub-Accounting Agents compliance with its operating policies and procedures related thereto.
SECTION 9. INCLUDED SERVICE ENHANCEMENTS.
If, in the ordinary course of its business, the Sub-Accounting Agent enhances core system processing functionality that it uses in connection with the Services, the Sub-Accounting Agent shall use such enhanced core system processing enhancements in performing the Services hereunder, at no additional charge to the Administrator, as soon as the Sub-Accounting Agent reasonably determines that such use is appropriate. To the extent the Sub-Accounting Agent reasonably determines that such enhanced core system processing enhancements are relevant to the Administrators receipt of the Services, the Sub-Accounting Agent shall inform the Administrator of such core system processing enhancements.
SECTION 10. CONFIDENTIALITY.
Each party hereto agrees that it shall treat as confidential all information provided by the other party (the Disclosing Party) to such party (the Recipient) or to which the Recipient obtains access and that relates to the Disclosing Party, including information regarding its business, financial affairs, operations or otherwise, including without limitation, securities holdings and trading information of a Portfolio or Fund (Confidential Information). In maintaining the confidentiality of the Confidential Information of a Disclosing Party, each Recipient shall exercise the same degree of care that such person exercises with respect to its own Confidential Information of a similar nature, including the use of customary data protection procedures, and in no event less than a reasonable degree of care. All Confidential Information of a Disclosing Party shall be used by the Recipient solely for the purpose of rendering or receiving services pursuant to this Agreement and shall not be disclosed to any party other than such Recipients (i) employees and contractors who have a need-to-know for purposes of performing such Recipients obligations under this Agreement, provided, that, such persons and entities are bound by confidentiality provisions at least as stringent as those contained herein, (ii) regulators or examiners, and (iii) auditors and legal counsel, to the extent required in connection with services provided by such parties to Recipient.
11. |
The Recipient shall notify the Disclosing Party of any unauthorized use or disclosure of Confidential Information of the Disclosing Party of which the Recipient becomes aware. The parties agree that disclosure of Confidential Information of a Disclosing Party may give rise to an irreparable injury to such Disclosing Party inadequately compensable in damages. Accordingly, the Disclosing Party may seek (without the posting of any bond or other security) injunctive relief against the breach of the foregoing undertaking of confidentiality and nondisclosure, in addition to any other legal remedies which may be available.
The foregoing obligations of confidentiality and non-disclosure shall not be applicable to any information that the Recipient demonstrates (i) is publicly available when provided or thereafter becomes publicly available, other than through disclosure by the Recipient or any of its affiliates, or that is independently derived by the Recipient without the use of any information provided by the Disclosing Party, (ii) that is required in any legal or regulatory proceeding, investigation, audit, examination, subpoena, civil investigative demand or other similar process, or by operation of law or regulation (collectively, Legal Process), or (iii) where the Recipient has received the prior written consent of the Disclosing Party. In the event that a Recipient is requested by or pursuant to, or required by, Legal Process to disclose any Confidential Information of any other part y to this Agreement, such Recipient will, to the extent not legally prohibited, provide the Disclosing Party with prompt notice of such Legal Process in order to enable the Disclosing Party, at its own expense, to seek an appropriate protective order or other remedy (and, if the Disclosing Party seeks such order, the Recipient will provide such cooperation as the Disclosing Party shall reasonably request at the Disclosing Partys expense) to resist or narrow the scope of such request or legal process, or waive compliance, in whole or in part, with the terms of this Section 10. In the event that such protective order or other remedy is not obtained or the Disclosing Party waives such compliance, only that portion of the Confidential Information may be disclosed as the Recipient, as advised by counsel, is legally required to disclose and the Recipient will request that all such Confidential Information so disclosed will be accorded confidential treatment. Confidential Information disclosed in combination with other information that is not Confidential Information is not deemed to fall within one of the foregoing exceptions by reason of such combination.
Furthermore, and notwithstanding anything in this section to the contrary, the Sub-Accounting Agent may aggregate Fund or Portfolio data with similar data of other customers of the Sub-Accounting Agent (Aggregated Data) and may use Aggregated Data for purposes of constructing statistical models so long as such Aggregated Data represents a sufficiently large sample that no Fund or Portfolio data can be identified either directly or by inference or implication.
All of the undertakings and obligations relating to confidentiality and nondisclosure, whether contained in this Section or elsewhere in this Agreement or any schedule or exhibit hereto shall survive the termination or expiration of this Agreement for a period of three (3) years.
SECTION 11. GENERAL.
SECTION 11.1 MASSACHUSETTS LAW TO APPLY. This Agreement shall be governed by, construed and the provisions thereof interpreted under and in accordance with laws of The Commonwealth of Massachusetts excluding that body of law applicable to conflicts of law.
12. |
SECTION 11.2 PRIOR AGREEMENTS. This Agreement supersedes and terminates, as of the date hereof, any prior agreements between the Administrator and the Sub-Accounting Agent relating to fund accounting and recordkeeping services regarding each Fund.
SECTION 11.3 ASSIGNMENT. This Agreement may not be assigned by (a) the Administrator without the prior written consent of the Sub-Accounting Agent or (b) by the Sub-Accounting Agent without the prior written consent of the Administrator, except that either party may, without such prior consent, assign to an entity controlling, controlled by or under common control with such party or to a successor of all of or a substantial portion of its business; however, such assignment shall not relieve the assigning party of its responsibilities hereunder.
SECTION 11.4 INTERPRETIVE AND ADDITIONAL PROVISIONS. In connection with the operation of this Agreement, the Sub-Accounting Agent and the Administrator may from time to time agree on such provisions interpretive of or in addition to the provisions of this Agreement as may in their joint opinion be consistent with the general tenor of this Agreement. Any such interpretive or additional provisions shall be in a writing signed by all parties and shall be annexed hereto, provided that no such interpretive or additional provisions shall contravene any applicable federal or state regulations or any provision of a Funds governing documents. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Agreement.
SECTION 11.5 ADDITIONAL FUNDS. In the event that the Administrator desires to have the Sub-Accounting Agent render services hereunder with respect to any management investment company in addition to those listed on Appendix A hereto, it shall so notify the Sub-Accounting Agent in writing, and if the Sub-Accounting Agent agrees in writing to provide such services, such management investment company shall become a Fund hereunder and the Sub-Accounting Agent and the Administrator shall be bound by all terms and conditions and provisions hereof with respect to such Fund.
SECTION 11.6 ADDITIONAL PORTFOLIOS. In the event that any Fund establishes one or more series of Shares in addition to those set forth on Appendix A hereto with respect to which the Administrator desires to have the Sub-Accounting Agent render services as sub-accounting agent under the terms hereof, the Administrator shall so notify the Sub-Accounting Agent in writing, and if the Sub-Accounting Agent agrees in writing to provide such services, such series of Shares shall become a Portfolio hereunder and the Sub-Accounting Agent and the Administrator shall be bound by all terms and conditions and provisions hereof with respect to such Portfolio.
SECTION 11.7 REMOTE ACCESS SERVICES ADDENDUM. The Administrator and the Sub-Accounting Agent hereby agree to the terms of the Remote Access Services Addendum hereto.
SECTION 11.8 AMENDMENTS. This Agreement may be modified or amended from time to time only by mutual written agreement of the parties hereto.
13. |
SECTION 11.9 NOTICES. Any notice, instruction or other instrument required to be given hereunder may be delivered in person to the offices of the parties as set forth herein during normal business hours or delivered prepaid registered mail, overnight courier or by telex, cable or telecopy to the parties at the following addresses or such other addresses as may be notified by any party from time to time.
To the Administrator: | PUTNAM INVESTMENT MANAGEMENT, LLC | |
1 Post Office Square | ||
Boston, Massachusetts 02109 | ||
Attention: Susan G. Malloy, Managing Director | ||
Telephone: 617-760-5050 | ||
with a copy to: | PUTNAM INVESTMENT MANAGEMENT, LLC | |
1 Post Office Square | ||
Boston, Massachusetts 02109 | ||
Francis J. McNamara, III, Senior Managing Director and | ||
General Counsel | ||
Telephone: 617-760-1722 | ||
To the Sub-Accounting Agent: | STATE STREET BANK AND TRUST COMPANY | |
Lafayette Corporate Center | ||
2 Avenue de Lafayette | ||
Boston, Massachusetts 02111 | ||
Attention: Robert F. Dame, Senior Vice President | ||
Telephone: 617-662-4036 | ||
Telecopy: 617-662-4040 |
Such notice, instruction or other instrument shall be deemed to have been served in the case of a registered letter at the expiration of five business days after posting, in the case of overnight courier, upon receipt, in the case of cable twenty-four hours after dispatch and, in the case of telex or telecopy, immediately on dispatch and if delivered by cable, telex or telecopy outside normal business hours it shall be deemed to have been received at the next time after delivery when normal business hours commence. Evidence that the notice was properly addressed, stamped and put into the post shall be conclusive evidence of posting.
SECTION 11.10 COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all such counterparts taken together shall constitute one and the same agreement.
SECTION 11.11 SEVERABILITY; WAIVER. If any provision or provisions of this Agreement shall be held to be invalid, unlawful or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired. The failure of a party hereto to insist upon strict adherence to any term of this Agreement on any occasion or the failure of a party hereto to exercise or any delay in exercising any right or remedy under this Agreement shall not constitute a waiver of any such term, right or remedy or a waiver of any other rights or
14. |
remedies and no single or partial exercise of any right or remedy under this Agreement shall prevent any further exercise of the right or remedy or the exercise of any other right or remedy.
SECTION 11.12 REPRODUCTION OF DOCUMENTS. This Agreement and all schedules, addenda, exhibits, appendices, attachments and amendments hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto all/each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK |
15. |
SIGNATURE PAGE |
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and behalf by its duly authorized representative under seal as of the date first above written.
SIGNATURE ATTESTED TO BY: | PUTNAM INVESTMENT |
MANAGEMENT, LLC | |
By: /s/ Robert T. Burns | By: /s/ Steven D. Krichmar |
Robert T. Burns | Steven D. Krichmar |
Managing Director | Chief of Operations, Senior |
Managing Director | |
SIGNATURE ATTESTED TO BY: | STATE STREET BANK AND |
TRUST COMPANY | |
By: /s/ Stephanie L. Poster | By: /s/ Joseph L. Hooley |
Stephanie L. Poster | Joseph L. Hooley |
Vice President and Senior Managing Counsel | Executive Vice President |
APPENDIX A |
TO |
MASTER ACCOUNTING SERVICES AGREEMENT |
As amended as of November 30, 2010 |
Putnam American Government Income Fund |
Putnam Arizona Tax Exempt Income Fund |
Putnam Asset Allocation Funds |
-Balanced Portfolio |
-Conservative Portfolio |
-Growth Portfolio |
Putnam California Tax Exempt Income Fund |
Putnam Convertible Securities Fund |
Putnam Diversified Income Trust |
Putnam Equity Income Fund |
Putnam Europe Equity Fund |
Putnam Funds Trust |
- Putnam Absolute Return 100 Fund |
- Putnam Absolute Return 300 Fund |
- Putnam Absolute Return 500 Fund |
- Putnam Absolute Return 700 Fund |
- Putnam Asia Pacific Equity Fund |
- Putnam Asset Allocation: Equity Portfolio |
- Putnam Capital Spectrum Fund |
- Putnam Emerging Markets Equity Fund |
- Putnam Equity Spectrum Fund |
- Putnam Floating Rate Income Fund |
- Putnam Global Consumer Fund |
- Putnam Global Energy Fund |
- Putnam Global Financials Fund |
- Putnam Global Industrials Fund |
- Putnam Global Sector Fund |
- Putnam Global Technology Fund |
- Putnam Global Telecommunications Fund |
- Putnam Income Strategies Fund |
- Putnam International Value Fund |
- Putnam Money Market Liquidity Fund |
- Putnam Multi-Cap Core Fund |
- Putnam Small Cap Growth Fund |
The George Putnam Fund of Boston d/b/a George Putnam Balanced Fund |
Putnam Global Equity Fund |
Putnam Global Health Care Fund |
Putnam Global Income Trust |
Putnam Global Natural Resources Fund |
Putnam Global Utilities Fund |
The Putnam Fund for Growth and Income |
Putnam High Income Securities Fund |
Putnam High Yield Advantage Fund |
Putnam High Yield Trust |
Putnam Income Fund |
Putnam International Equity Fund |
Putnam Investment Funds |
-Putnam Capital Opportunities Fund |
-Putnam Growth Opportunities Fund |
-Putnam International Capital Opportunities Fund |
-Putnam International Growth Fund |
-Putnam Mid Cap Value Fund |
-Putnam Research Fund |
-Putnam Small Cap Value Fund |
Putnam Investors Fund |
Putnam Managed Municipal Income Trust |
Putnam Massachusetts Tax Exempt Income Fund |
Putnam Master Intermediate Income Trust |
Putnam Michigan Tax Exempt Income Fund |
Putnam Minnesota Tax Exempt Income Fund |
Putnam Money Market Fund |
Putnam Municipal Opportunities Trust |
Putnam New Jersey Tax Exempt Income Fund |
Putnam New Opportunities Fund |
Putnam New York Tax Exempt Income Fund |
Putnam Ohio Tax Exempt Income Fund |
Putnam Pennsylvania Tax Exempt Income Fund |
Putnam Premier Income Trust |
Putnam RetirementReady®Funds |
-Putnam RetirementReady 2055 Fund |
-Putnam RetirementReady 2050 Fund |
-Putnam RetirementReady 2045 Fund |
-Putnam RetirementReady 2040 Fund |
-Putnam RetirementReady 2035 Fund |
-Putnam RetirementReady 2030 Fund |
-Putnam RetirementReady 2025 Fund |
-Putnam RetirementReady 2020 Fund |
-Putnam RetirementReady 2015 Fund |
-Putnam RetirementReady Maturity Fund |
Putnam Tax Exempt Income Fund |
Putnam Tax Exempt Money Market Fund |
Putnam Tax-Free Income Trust |
-Putnam AMT-Free Municipal Fund |
-Putnam Tax-Free High Yield Fund |
Putnam U.S. Government Income Trust |
Putnam Variable Trust |
-Putnam VT American Government Income Fund |
-Putnam VT Capital Opportunities Fund |
-Putnam VT Diversified Income Fund |
-Putnam VT Equity Income Fund |
-Putnam VT The George Putnam Fund of Boston |
-Putnam VT Global Asset Allocation Fund |
-Putnam VT Global Equity Fund |
-Putnam VT Global Health Care Fund |
-Putnam VT Global Utilities Fund |
-Putnam VT Growth and Income Fund |
-Putnam VT Growth Opportunities Fund |
-Putnam VT High Yield Fund |
-Putnam VT Income Fund |
-Putnam VT International Equity Fund |
-Putnam VT International Value Fund |
-Putnam VT International Growth Fund |
-Putnam VT Investors Fund |
-Putnam VT Mid Cap Value Fund |
-Putnam VT Money Market Fund |
-Putnam VT New Opportunities Fund |
-Putnam VT Research Fund |
-Putnam VT Small Cap Value Fund |
-Putnam VT Vista Fund |
-Putnam VT Voyager Fund |
Putnam Vista Fund |
Putnam Voyager Fund |
11/30/10 |
APPENDIX B |
TO |
MASTER ACCOUNTING SERVICES AGREEMENT |
DUTIES OF SUB-ACCOUNTING AGENT* |
(i) Record each Portfolios investment, capital share and income and expense activities;
(ii) Establish amortization calculations in accordance with Administrators amortization authorizations;
(iii) Maintain ledgers for investment securities;
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances to the custodians records;
(vi) Post entries to and prepare each Portfolios daily trial balance;
(vii) Calculate fee-based expenses and set-up expense accruals;
(viii) Calculate capital gains and losses;
(ix) Calculate net income of each Portfolio;
(x) Pursuant to Price Source Authorization duly executed by Administrator, receive quotes regarding portfolio investments;
(xi) Compute the net asset value (NAV) of each Portfolio daily;
(xii) Disseminate NAV, distribution and other Portfolio data as authorized by Administrator;
(xiii) Compute each Portfolios yield and, if required by Administrator, portfolio average dollar-weighted maturity;
(xiv) For multi-managed Portfolios, calculate NAV and maintain books, ledgers, and capital at manager level (none of which in the capacity of an official book or recordkeeper);
(xv) Maintain a separate portfolio to calculate a tax basis for each Portfolios investments, as directed by Administrator (not in the capacity of an official book or recordkeeper);
(xvi) Prepare a monthly proof package of accounting reports mutually agreed upon, including, as applicable, the following:
Account Position Appraisal (details holdings, shares, value)
Trial balance reflecting all as of activity
Capital Stock Roll-forward
Base Equivalent Cash Statement
Detail Gains and Loss report
Cost of securities held
Accretion and amortization of cost
Open Trades
Forward contracts and swap receivables and payables
Income
Distributions
Paid In Capital
Unrealized Gains and Losses
Cost Roll Forward
Interest-only yield and impairment spreadsheets
Cash to Custodian reconciliations, as may be applicable;
(xvii) Prepare and transmit to Administrator, or such other entities or persons as the Administrator may instruct from time to time, such quarterly reports of Portfolio data as may be mutually agreed upon by the parties hereto; and
(xviii) Daily portfolio reconciliation for attribution and performance.
* Details with respect to such duties may be set forth in mutually acceptable service level documents.
EXHIBIT A |
TO |
MASTER ACCOUNTING SERVICES AGREEMENT |
Form of Price Source Authorization |
SCHEDULE A | |
TO | |
MASTER ACCOUNTING SERVICES AGREEMENT | |
INFORMATION REQUIRED TO BE SUPPLIED | RESPONSIBLE PARTY |
Portfolio Trade Authorizations | Investment Adviser |
Currency Transactions | Investment Adviser |
Cash Transaction Report | Custodian |
Portfolio Prices | Third Party Vendors/Investment Adviser |
Exchange Rates | Third Party Vendors/Investment Adviser |
Capital Stock Activity Report | Transfer Agent |
Dividend/Distribution Schedule | Investment Adviser |
Dividend/Distribution Declaration | Investment Adviser |
Dividend Reconciliation/Confirmation | Transfer Agent |
Corporate Actions | Third Party Vendors/Custodian |
Service Provider Fee Schedules | Investment Adviser |
Expense Budget | Investment Adviser/Administrator |
Amortization Policy | Investment Adviser |
Accounting Policy/Complex Investments | Investment Adviser |
Audit Management Letter | Auditor |
Annual Shareholder Letter | Investment Adviser |
Annual/Semi-Annual Reports | Investment Adviser/Administrator |
MASTER INTERFUND LENDING AGREEMENT |
This Master Interfund Lending Agreement (as amended, restated, supplemented or otherwise modified from time to time, the Master Agreement), dated as of July 16, 2010 (the Effective Date), is by and among each investment company listed on Schedule A or Schedule B hereto (collectively, the Trusts, and each portfolio series of a Trust (or if the relevant Trust has no portfolio series, then the relevant Trust) shall be referred to herein as a Fund and collectively as the Funds) and Putnam Investment Management, LLC (the Advi ser).
WHEREAS, the Trusts and the Adviser have received an exemptive order (the Order) dated April 10, 2002 from the U.S. Securities and Exchange Commission permitting the Funds to participate in a joint lending and borrowing facility (the Lending Facility);
WHEREAS, the Funds listed on Schedule A hereto (as amended from time to time) are permitted to borrow cash in accordance with the terms and conditions of the Order to satisfy redemption requests, to cover unanticipated cash shortfalls such as a Sales Fail (defined below), or for other temporary purposes (each such borrowing Fund is hereinafter referred to as a Borrower);
WHEREAS, the Funds listed on Schedule B hereto (as amended from time to time) are permitted to lend cash to one or more Borrowers from time to time on the terms set forth below and in accordance with the terms and conditions of the Order (each such lending Fund is hereinafter referred to as a Lender);
NOW THEREFORE, the parties hereto agree as follows:
1. Definitions. As used herein, the following terms shall have meanings assigned to them below:
1940 Act means the Investment Company Act of 1940, as amended.
Bank Loan Rate for any day means the rate calculated by the Credit Facility Team according to a formula established by the Board of Trustees of each Trust intended to approximate the lowest interest rate at which bank short-term loans would be available to a Borrower.
Borrowing Instructions has the meaning specified in Section 3.1.1 hereof.
Business Day means a day on which the New York Stock Exchange is open for the purpose of transacting business.
Credit Arrangements means the credit arrangements that a Fund may have for borrowing for temporary or emergency purposes, including borrowings from banks and other institutional lenders.
1 |
Credit Facility Team means the officers and employees of the fund administration, middle office, trading and investment departments of the Adviser who are responsible for administering the Interfund Lending Facility.
Interest Rate means, for each date on which interest accrues hereunder, the average of (i) the higher of the OTD Rate and the Repo Rate and (ii) the Bank Loan Rate.
Lending Instructions has the meaning specified in Section 3.1.1 hereof.
Loan has the meaning specified in Section 2 hereof.
Loan Account has the meaning specified in Section 3.5 hereof.
Maximum Amount has the meaning specified in Section 2 hereof.
Obligations means all of the obligations (whether direct or indirect, absolute or contingent, primary or secondary, due or to become due, now existing or hereafter arising) of a Borrower to a Lender hereunder.
OTD Rate on any day means the highest interest rate available to a Lender from investment in overnight time deposits.
Outstanding Secured Borrowing means any loan made to a Fund either under this Master Agreement or under any other agreement that is secured by assets of the Fund.
Prospectus means with respect to each Borrower the prospectus required to be delivered by the Borrower to offerees of its securities pursuant to the Securities Act of 1933, as amended.
Repo Rate on any day means the highest interest rate available to a Lender from investment in overnight repurchase agreements.
Sales Fail in connection with the attempted sale of a security means the cash shortfall resulting from circumstances beyond the sellers control, such as the delay in the delivery of cash to the sellers custodian or improper delivery instructions by the broker effecting the transaction.
SEC means the United States Securities and Exchange Commission.
Secured Loan has the meaning specified in Section 2(e) hereof.
Security Agreement has the meaning specified in Section 3.11(d) hereof.
Statement of Additional Information means with respect to each Borrower the Statement of Additional Information which must be provided by the Borrower to recipients of its Prospectus upon request pursuant to rules and regulations adopted by the SEC.
Unsecured Loan means any Loan other than a Secured Loan.
2 |
2. Lending Facility. Subject to the terms and conditions of this Master Agreement, each Lender may from time to time in its discretion loan its available cash to any Borrower (a Loan). Each Loan shall be made for a term no longer than the least of (a) the maximum term on any outstanding loan or advance to the Borrower under its Credit Arrangements; (b) seven (7) days; or (c) the number of days required for the Borrower to receive payment for securities sold at or prior to the time the Loan is made in an amount sufficient to repay the Loan. The maximum principal amount of all Loans outstanding with respect to any Borrower at any time shall not exceed the Maximum Amount the Borrower is permitted to borrow at such time under:
(a) applicable laws and regulations;
(b) the provisions of Section 5.2 hereof;
(c) agreements with federal, state, local or foreign governmental authorities or regulators applicable to the Borrower or limitations specified in the Order applicable to the Borrowers borrowing and pledging activities, all as amended and in effect from time to time;
(d) limitations on borrowing adopted by the Borrower in its Prospectus, Statement of Additional Information or elsewhere, as amended and in effect from time to time; and
(e) in the case of Loans for which the Borrower is required to provide collateral pursuant to Section 3.11 hereof (Secured Loans), any limitations specified in the Security Agreement (as defined below) and any limitations on the pledging of assets adopted by the Borrower in its Prospectus, Statement of Additional Information or elsewhere.
As used herein, the term Maximum Amount means the maximum amount that the Borrower is permitted to borrow in accordance with the provisions of the preceding sentence.
3. Loan Requirements.
3.1 Procedural Requirements. All loans shall be requested and funded in accordance with the procedures set forth herein and such other procedures as may be approved and adopted from time to time by the Board of Trustees of the applicable Trust (the Interfund Lending Procedures), including a majority of the trustees who are not interested persons as that term is used in Section 2(a)(19) of the 1940 Act.
3.1.1 Borrowing and Lending Instructions. The Advisers investment personnel for each participating Fund shall provide the Credit Facility Team with standing instructions as to their desire to have the Fund act as a Lender when such Fund has uninvested cash balances (Lending Instructions). If the Chief Investment Officer of the Adviser or an alternative person as specified in the Interfund Lending Procedures (the CIO) determines that a Fund has borrowing needs that are not first met by borrowings under any custody agreement between the Borrower and the Borrowers custodian that are secured by such custodians lien on assets of the Borrower, then the CIO shall instruct the Credit Facility Team as to such Funds desire to have the Fund act as a Borrower (Borrowing Instructions). The Advisers investment personnel may revoke or change
3 |
Lending Instructions, and the CIO may revoke or change Borrowing Instructions, with respect to a Fund by notifying the Credit Facility Team.
3.1.2 Allocation Procedures. On each Business Day, the Credit Facility Team shall seek to collect data on the uninvested cash of Funds listed on Schedule B hereto from such Funds custodian. On each occasion that a Fund delivers Borrowing Instructions to the Credit Facility Team, the Credit Facility Team will seek to match the amount and term of the Funds borrowing needs with the cash available from the Funds that have provided Lending Instructions in accordance with allocation and administrative procedures established by the Board of Trustees. The Credit Facility Team shall allocate the borrowing demand and lending needs among the Funds on what the Credit Facility Team deems to be an equitable basis and in accordance with the Interfund Lending Procedures. The Credit Facility Team shall not solicit cash for Loa ns from any Funds or publish or disseminate the amount of any current borrowing demand to the Advisers investment personnel.
No Loan may be made unless the Interest Rate is more favorable for the Lender than both the OTD Rate and the Repo Rate and more favorable for the Borrower than the Bank Loan Rate.
3.1.3 Funding the Loans. If a Loan has been allocated to a Lender and Borrower pursuant to Section 3.1.2 hereof, and the Loan is otherwise in compliance with the requirements set forth in the Order, the Lender shall make such Loan to the Borrower. The proceeds of each Loan made by the Lender to the Borrower shall be wired (or transferred if Borrower and Lender have the same custodian) at the Borrowers expense in accordance with the wiring instructions for each Fund, as in effect from time to time, to an account maintained on the Borrowers behalf by its custodian.
3.1.4 Obligations Arising from Loan. Each Loan made by the Lender to Borrower shall:
(a) obligate the Borrower to borrow the principal amount of the Loan at the Interest Rate applicable thereto for the term thereof solely for use by the Borrower;
(b) constitute a representation and warranty by the Borrower to the Lender that (i) the Loan requested thereby (A) is permitted under the Borrowers most recent Prospectus and Statement of Additional Information,
(B) is in accordance with the requirements of the Order applicable to the Borrower,
(C) will not, when made, cause the aggregate indebtedness of the Borrower to exceed the Maximum Amount then in effect, and
4 |
(D) will be used by the Borrower only in accordance with Section 3.7 hereof; and
(ii) all of the representations and warranties of the Borrower contained in Section 4 hereof are true and correct as of the date of such Loan as though made on and as of such date; and
(iii) all materials facts about the Borrowers intended participation in the Lending Facility are fully disclosed in the Borrowers Statement of Additional Information; and
(c) constitute a representation and warranty by the Lender to the Borrower that the Loan thereby
(i) is permitted under the Lenders most recent Prospectus and Statement of Additional Information;
(ii) is in accordance with the requirements of the Order applicable to the Lender; and
(iii) all materials facts about the Lenders intended participation in the Lending Facility are fully disclosed in the Lenders Statement of Additional Information.
3.2 Repayment of Loans. The principal amount of each Loan shall be repaid by the Borrower from the assets of the Borrower on the earlier of one (1) Business Day after demand by the Lender or the expiration of the term of the Loan.
3.3 Interest. The outstanding principal amount of each Loan shall bear interest until maturity at the Interest Rate. Interest accrued on each Loan shall be paid by the Borrower upon the earlier of (a) mutually agreed times, or (b) the maturity of such Loan. Amounts overdue hereunder (including, without limitation, overdue principal, and, to the extent permitted by law, overdue interest, fees, charges and expenses) shall bear interest until paid at an annual rate equal to the sum of (i) the Interest Rate applicable to such Loan prior to its maturity and (ii) two percent (2%).
3.4 Prepayments. Loans may be prepaid in whole or in part prior to the date on which such Loan is due and payable without premium or penalty.
3.5 Loan Records Accounts. Promptly after a Loan has been made, the Credit Facility Team shall note on its records for the Borrower and Lender, confirming (a) the principal amount of such Loan, (b) the Interest Rate applicable thereto and (c) the maturity thereof. The Credit Facility Team will maintain a separate account on its books for each Lender and Borrower (a Loan Account) on which will be recorded, in accordance with the Advisers customary accounting practice, (a) all Loans made by a Lender to a Borrower, (b) all payments of such Loans made to a Lender, and (c) all other charges and expenses properly chargeable to the Borrower. The debit balance of each Funds Loan Account shall reflect the amount of the Borrowers indebtedness from time to time to the Lenders hereunder. Any written stat ement
5 |
maintained by the Credit Facility Team regarding the Loan shall, in the absence of manifest error, constitute conclusive evidence of the indebtedness of the Borrower to the Lender as of the date of such statement, provided, however, that the failure of the Credit Facility Team to make such statement shall not impair the validity or binding nature of the Borrowers Obligations with respect to such Loan.
3.6 Computations. All computations hereunder shall be computed on the basis of the actual number of days elapsed and a 360-day year.
3.7 Use of Proceeds. The proceeds of each Loan made hereunder with respect to any Fund shall be used only by such Fund in accordance with its Prospectus and Statement of Additional Information for temporary purposes to satisfy redemption requests, to cover unanticipated cash shortfalls such as a Sales Fail, or for other temporary purposes as permitted by the Interfund Lending Procedures.
3.8 Discretionary Facility. It is acknowledged and agreed by each Borrower that each Lender has no obligation to make any Loan hereunder unless it has issued Lending Instructions, and that the decision whether or not to issue Lending Instructions under this Master Agreement is within the sole and exclusive discretion of each Lender. It is acknowledged and agreed by each Lender that no Borrower is obligated to borrow money hereunder unless it has issued Borrowing Instructions.
3.9 Termination of Participation in the Lending Facility. Each Lender and each Borrower may terminate its participation in this Master Agreement at any time by written notice to the Credit Facility Team; provided that on or before the date of any termination the relevant Lender or Borrower has no Loans outstanding. The Adviser may at any time by delivery of a revised Schedule A or Schedule B, as applicable, to the Credit Facility Team add additional Funds that are eligible to rely on the Order as parties to this Master Agreement, whereupon those additional Funds shall be treated for all purposes as a Borrower and as a Lender, as applicable.
3.10 Recourse to Assets. Loans made to any Borrower shall be repaid solely from the assets of such Borrower, and a Lender shall have no right of recourse or offset against the assets of any other Fund with respect to such Loans or any default in respect thereto. Each Lenders liability under this Master Agreement with respect to a Loan shall be solely limited to the Lenders assets and each Borrower hereby waives any and all rights it may have against any other Funds with respect to such Loan or any default by Lender with respect thereto.
3.11 Collateral Security for Loans.
(a) As a condition precedent to making any Loan to any Borrower or continuing any Loan made to any Borrower, the Borrower covenants and agrees that in the event that (i) the Borrowers outstanding borrowings from all sources immediately after the Loan would exceed 10% of its total assets, (ii) the Borrowers outstanding borrowings from all sources exceed 10% of the Borrowers total assets for any reason (such as a decline in net asset value or because of shareholder redemptions), or (iii) the Borrower has Outstanding Secured Borrowings, within one (1) Business Day (except as required by Section 3.11(b) below), the Borrower will
6 |
(i) repay all its outstanding Loans;
(ii) reduce its outstanding indebtedness to 10% or less of its total assets; or
(iii) secure each outstanding Loan by the pledge of segregated collateral for such Loan and by transfer of such collateral into a segregated account in the name of the Lender or the entering into, by the Borrower, the Lender and the Borrowers custodian, of a control agreement satisfactory to the Lender. The minimum market value of the stock and other portfolio securities of the Borrower required to be pledged as collateral to the Lender hereunder with respect to any Secured Loan shall be determined by the Lender in its discretion but, in all cases, will have a market value at least equal to 102% of the outstanding principal value of the loan.
Until each Loan that is outstanding at any time that a Borrowers outstanding borrowings exceed 10% of its assets is repaid or the Borrowers outstanding borrowings cease to exceed 10% of its total assets, the Borrower shall mark the value of the collateral to market each day and will pledge and transfer to a segregated account in the name of the Lender such additional collateral as is necessary to maintain the market value of the collateral that secures each outstanding Loan at least equal to 102% of the outstanding principal value of the Loan. Subject to Sections 3.11(b) and (c) hereof, once a Borrowers outstanding borrowings cease to exceed 10% of its total assets, segregated collateral will no longer be required.
(b) Any Loan to a Borrower with Outstanding Secured Borrowings (i) will be at an interest rate equal to or lower than that of any outstanding bank loan, (ii) will be secured at least on an equal priority basis with at least an equivalent percentage of collateral to loan value as any outstanding bank loan that requires collateral, and (iii) will have a maturity no longer than any outstanding bank loan (and in any event not more than seven (7) days).
(c) Notwithstanding Sections 3.11(a) and (b), if any other lender to a Borrower imposes conditions with respect to the quality of or access to collateral securing a borrowing, the Borrowers collateral for any Loan will be subject to the same conditions (if the other lender is another Fund) or the same or better conditions (in any other circumstance).
(d) Each pledge of collateral required pursuant to this Section 3.11 shall be made in accordance with and subject to the terms and conditions set forth in the collateral security agreement dated as of the Effective Date and signed by each Trust, substantially in the form set forth in Schedule C hereto (the Security Agreement).
(e) If requested by the Lender, the Borrower agrees to enter into, and use reasonable efforts to cause its custodian to enter into, a control agreement with the Lender on terms satisfactory to the Lender.
3.12 Records and Reports. Each Fund will maintain and preserve for a period of not less than six years from the end of the fiscal year in which any transaction under this Master Agreement has occurred, the first two years in an easily accessible place, written records of all
7 |
Loans to which it was a party setting forth: (i) a description of the terms of the transaction, including the amount, the maturity, and the rate of interest on the Loan, (ii) the rate of interest available at the time on short-term repurchase agreements and commercial bank borrowings, and (iii) a quarterly report of the Credit Facility Team to the applicable Board of Trustees and the other information presented to the applicable Board of Trustees related to their review of the Lending Facility. On a quarterly basis, the Credit Facility Team will prepare a report for the applicable Board of Trustees (i) concerning the participation of the Funds in the Lending Facility and the terms and other conditions of any extensions of credit under the Lending Facility and (ii) reporting on the operations of the Lending Facility.
4. Representations and Warranties
Each Borrower represents and warrants to each Lender and each Lender represents and warrants to each Borrower that:
(a) it is a series of the applicable Trust that is duly organized and validly existing under the laws of its jurisdiction of organization and is qualified to do business in every other jurisdiction where lack of such qualification would have a material adverse effect on its business, assets or condition (financial or otherwise);
(b) the applicable Trust is registered as an open-end management investment company under the 1940 Act;
(c) the execution, delivery and performance by the applicable Trust of this Master Agreement
(i) are within its power,
(ii) have been duly authorized by all necessary action, and
(iii) will not
(A) contribute to or result in a breach of or default under or conflict with any existing law, order, regulation or ruling of any governmental or regulatory agency or authority, any order, writ, injunction or ruling of any court or other tribunal, or any indenture, lease agreement, instrument or other undertaking to which the Trust is a party or by which it is or its property or assets may be bound or affected, or
(B) result in the imposition of any liens or encumbrances on any property or assets of the Trust (except as contemplated hereby), or
(C) require any additional approval or consent of, or filing with, shareholders of such Trust or any governmental or regulatory agency or authority bearing on the validity of any borrowing pursuant to this Master Agreement, or
8 |
(D) violate any provision of the Trusts Agreement and Declaration of Trust or any amendment thereof, any of its investment policies and limitations, or any provision of its most recent Prospectus or Statement of Additional Information;
(d) this Master Agreement is a legally valid and binding obligation of the applicable Trust, enforceable against the Fund in accordance with its terms except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws or equitable principles relating to or limiting the rights of creditors generally; and
(e) it is not in material violation of any material term of its most recent Prospectus or Statement of Additional Information, or of its organizational documents, or of any investment, borrowing or other similar type of policy or restriction to which it is subject, or of any material term of any material agreement or instrument to which it is a party, or, to the best of its knowledge, of any judgment, decree, order, statute, rule or governmental regulation applicable to it.
5. Covenants
5.1 Covenants in Effect Until Termination of Master Agreement. Until all of the obligations have been performed in full and its participation in the Lending Facility has been terminated as provided herein, each Borrower covenants that it will:
(a) maintain its legal existence and business; provided, however, that nothing contained in this Section 5.1(a) shall prohibit the merger or consolidation of any Borrower with or into another person upon written notice thereof to the Lenders under any Loans then outstanding, subject to the requirement that the surviving entity (if not previously a Borrower) be admitted as such in accordance with this Master Agreement, and subject to the further requirement that the surviving entity assumes all of the obligations of such Borrower under this Master Agreement, including, without limitation, the obligations of such Borrower with respect to any Loans outstanding to such Borrower at the time of such merger or consolidation;
(b) at any time and from time to time, at its own expense, promptly execute and deliver or file all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Lender may request, in order to perfect, protect, validate or preserve any security interest granted or pledged to the Lender pursuant to Section 3.11 hereof or to enable the Lender to exercise and enforce its rights and remedies thereunder with respect thereto;
(c) file all federal and other tax returns, reports and declarations required by all relevant jurisdictions on or before the due dates for such returns, reports and declarations and will pay all taxes and other governmental assessments and charges as and when they become due;
(d) comply in all material respects with all of its investment policies and restrictions and all applicable statutes, rules, regulations and orders of, and all applicable restrictions
9 |
imposed by, all governmental authorities in respect of the conduct of its business and the ownership of its properties; provided that such Borrower shall not be required by reason of this section to comply therewith at any time while such Borrower shall be contesting its obligations to do so in good faith by appropriate proceedings promptly initiated and diligently conducted;
(e) promptly notify the Lender of any material change in its agreements with governmental authorities or regulators or its investment policies or restrictions or of any Credit Arrangements or modifications thereof; and
(f) upon request from the Lender from time to time, furnish to the Lender at reasonable times and intervals any information with respect to its financial standing and history or its property or business or prospects.
5.2 Covenants in Effect While Loans Are Outstanding.
The Borrower covenants that, so long as any principal of or interest on any Loan made to it is outstanding, it will:
(a) not, as long as any Unsecured Loan is outstanding hereunder, create or permit to exist any encumbrance in favor of any person or entity other than the Lender upon any of the assets of the Borrower other than (a) encumbrances created in connection with portfolio investments of the Borrower and (b) to secure the Borrowers obligations under any Credit Arrangement by any assets not then pledged as collateral hereunder, in each case to the extent permitted by the provisions of its Prospectus and Statement of Additional Information;
(b) not take out any Loan that
(i) immediately after such Loan would cause the total of such loans to exceed 33 1/3% of the Borrowers total assets, or
(ii) would cause such Borrowers total loans to exceed 10% of such Borrowers total assets unless any Loan hereunder is secured in accordance with Section 3.11 hereof;
(c) not, as long as any Loan made with respect to the Borrower is outstanding, allow the total amount of such Borrowers Loans, as measured on the day when the most recent Loan was made, to exceed the greater of 125% of such Borrowers total net cash redemptions for the preceding seven (7) calendar days and 102% of Sales Fails for the preceding seven (7) calendar days;
(d) notify the Lender if it draws on its Credit Arrangements, borrows from other Lenders under the Master Agreement, or borrows from other parties; and
(e) notify the Lender promptly of
10 |
(i) any material changes in its method of business, Prospectus, Statement of Additional Information, and
(ii) the occurrence of any event which would make any of the representations and warranties contained herein, or in any document, instrument or certificate delivered in connection herewith, untrue or inaccurate in any material respect.
The Lender covenants that
(a) its Loans to a single Borrower will not exceed 5% of the Lenders net assets; and
(b) its aggregate Loans to all Borrowers constitute 15% or less of the Lenders net assets at the time of any Loan.
6. Documents to be Delivered Prior to Initial Loan. The Borrower shall deliver to the Lender prior to the first Loan between the parties any documents as the Lender shall have requested in order to comply with applicable rules and regulations promulgated by governmental and regulatory authorities.
7. Default
7.1 Events of Default. The occurrence of any one or more of the following events (Events of Default) shall constitute an immediate Event of Default with respect to the Borrower:
(a) The Borrower shall fail to pay principal of, or interest on, any Loan as and when due, or the Borrower shall fail to perform any of its other Obligations; or
(b) There shall be a default by the Borrower under any Credit Arrangement, whether such Credit Arrangement now exists or shall hereafter be created, which default extends beyond any period of grace provided with respect thereto and which default relates to
(i) the obligations to pay the principal of or interest on any such indebtedness under the Credit Arrangement, or
(ii) an obligation other than the obligation to pay the principal of or interest on any such indebtedness and the effect of such default is to cause, or to permit the lender under the Credit Arrangement to cause, with the giving of notice if required, such indebtedness to become due prior to its stated maturity; or
(c) Any representation or warranty made by the Borrower in Section 4 of this Master Agreement, or in connection with any Loan made to or pledge of pledged collateral made by the Borrower, shall prove to have been incorrect in any material respect when made; or
(d) The Borrower shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any governmental or public authority shall take over
11 |
possession or control of a substantial part of the Borrowers business; or any of the Borrowers property shall become subject to attachment or other involuntary lien or levy; or any action or proceeding shall be commenced by the Borrower seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief or debtors, seeking the entry of an order for relief of the appointment of a receiver, trustee, or similar official for it or for any substantial part of its property, or any such proceeding is commenced against it which results in the entry of an order for such relief or such proceeding is not dismissed or stayed for a period of sixty (60) days following such commencement; or
(e) An event of default occurs under any agreement evidencing an outstanding bank loan to the Borrower; provided that, in such circumstance, that event of default will automatically (without need for action or notice by the Lender) constitute an immediate event of default entitling the Lender to call the Loan (and exercise all rights with respect to any collateral) and that such a call will be deemed made if the lending bank exercises its right to call its loan under its agreement with the Borrower.
7.2 Remedies
7.2.1 Arbitration. In the event an Event of Default under Section 7.1(a) has occurred and not been cured within two Business Days from the Loans maturity or from the time the Lender makes a demand for payment (and none of the Events of Default specified in Section 7.1(d) has occurred), the Lender and the Borrower agree that such matter shall be submitted for binding arbitration to an independent arbitrator selected by the Board of Trustees of the Lender and Borrower. If the dispute involves a Lender and Borrower with different Boards of Trustees, the respective Boards of Trustees of the Lender and Borrower will select an independent arbitrator that is satisfactory to each party. Such independent arbitrators decision shall be binding and conclusive between the Lender and the Borrower. Such Arbitrator shall submit at least annually a written report of any dispute to the Boards of Trustees of the Funds describing the nature of any dispute and the actions taken by the Lender and Borrower to resolve the dispute.
7.2.2 Other Rights and Remedies. If an Event of Default has occurred and has not been resolved pursuant to Section 7.2.1, or any other Event of Default has occurred, then the Lender shall be entitled to exercise any and all rights and remedies available to it at law or in equity, including without limitation any rights and remedies that may be available to it under the Security Agreement referred to in Section 3.11 to the Master Agreement and, with respect to an Event of Default specified in Section 7.1(e), any rights and remedies available to it under Section 7.1(e), and the Borrower shall pay to the Lender all reasonable expenses and disbursements incurred by the Lender in connection with the enforcement of its rights and remedies under this Master Agreement including the reasonable fees and out-of-pocket expenses of counsel for the Lender with respect thereto.
8. Notice. Except as otherwise expressly provided herein, all notices hereunder to any party shall be in writing and shall be delivered in hand, mailed by United States registered or certified first-class mail, postage prepaid or sent by fax, addressed to such party to the attention of the
12 |
person specified in the following sentence at the address set forth for such party below, or to such other person or address as such party may designate to the other party hereto by notice delivered in accordance with this Section 8. All notices to the Borrower shall be addressed to the Treasurer of the Borrower and all notices from the Borrower to the Lender shall be addressed to the Treasurer of the Lender. Written notice to the Credit Facility Team shall be sent to the following address: Putnam Investment Management, LLC, One Post Office Square, Boston, MA 02109. The address for all Funds listed in this Master Agreement is: One Post Office Square, Boston, MA 02109.
9. Amendments. Neither this Master Agreement nor any provision hereof may be amended in any respect except by a statement in writing executed by the parties hereto.
10. Assignment. All of the terms of this Master Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns; provided, that the Borrower shall not assign or transfer any of its rights or obligations hereunder without the prior written consent of the Lender.
11. Survival of Covenants, Representations and Warranties. All covenants, agreements, representations and warranties made herein or in any documents or other papers delivered by or on behalf of the Borrowers, or any of them, pursuant hereto shall be deemed to have been relied upon by the Lenders, regardless of any investigation made by or on behalf of the Lenders and shall survive the execution and delivery of this Master Agreement and the making by the Lenders of the Loans as herein contemplated and shall continue in full force and effect so long as any Loan, Obligation or any other amount due under this Agreement remains outstanding and unpaid or unsatisfied.
12. Section Headings. The descriptive section headings in this Master Agreement have been inserted for convenience of reference only and shall not be deemed to limit or otherwise affect the construction of any provision thereof or hereof.
13. Counterparts. This Master Agreement and the documents contemplated hereby may be executed simultaneously in any number of counterparts each of which when so executed and delivered shall be an original, but all of which shall together constitute but one and the same document.
14. Severability. If any of the provisions of this Master Agreement or any instrument delivered hereunder or the application thereof to any party hereto or to any person or circumstances is held invalid, the remainder of this Master Agreement or such instrument and the application thereof to any party hereto or to any other person or circumstances shall not be affected thereby.
15. Governing Law. This Master Agreement shall be governed by, and construed in accordance with, the laws of The Commonwealth of Massachusetts, without giving effect to principles of conflicts of law.
16. Entire Agreement. This Master Agreement and the other documents contemplated hereby and executed in connection herewith express the entire understanding of the parties with respect to the transactions contemplated hereby.
13 |
17. Limitation of Liability of the Board of Trustees. A copy of the Agreement and Declaration of Trust of each Trust is on file with the Secretary of State of The Commonwealth Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Trustees of each Trust as Trustees of such Trust and not individually and that the obligations 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 applicable Trust.
[The remainder of this page is intentionally left blank.] |
14 |
IN WITNESS WHEREOF, each of the parties hereto has caused this Master Agreement to be duly executed as an instrument under seal by its duly authorized officer as of the date first written above.
ALL TRUSTS LISTED ON SCHEDULE A OR SCHEDULE B
By: __ /s/ Jonathan S. Horwitz__________ | ||
Name: | Jonathan S. Horwitz | |
Title: | Executive Vice President and Treasurer |
PUTNAM INVESTMENT MANAGEMENT, LLC
By: ___/s/ James P. Pappas___________ | |||
Name: | James P. Pappas | ||
Title: | Managing Director |
SCHEDULE A Borrowing Funds | |
Putnam American Government Income Fund | |
Putnam Arizona Tax Exempt Income Fund | |
Putnam Asset Allocation Funds | |
-Balanced Portfolio | |
-Conservative Portfolio | |
-Growth Portfolio | |
Putnam California Tax Exempt Income Fund | |
Putnam Convertible Income-Growth Trust | |
Putnam Diversified Income Trust | |
Putnam Equity Income Fund | |
Putnam Europe Equity Fund | |
Putnam Funds Trust | |
- Putnam Absolute Return 100 Fund | |
- Putnam Absolute Return 300 Fund | |
- Putnam Absolute Return 500 Fund | |
- Putnam Absolute Return 700 Fund | |
- Putnam Asia Pacific Equity Fund | |
- Putnam Asset Allocation: Equity Portfolio | |
- Putnam Capital Spectrum Fund | |
- Putnam Emerging Markets Equity Fund | |
- Putnam Equity Spectrum Fund | |
- Putnam Floating Rate Income Fund | |
- Putnam Global Consumer Fund | |
- Putnam Global Energy Fund | |
- Putnam Global Financials Fund | |
- Putnam Global Industrials Fund | |
- Putnam Global Sector Fund | |
- Putnam Global Technology Fund | |
- Putnam Global Telecommunications Fund | |
- Putnam Income Strategies Fund | |
- Putnam International Value Fund | |
- Putnam Small Cap Growth Fund | |
The George Putnam Fund of Boston | |
Putnam Global Equity Fund | |
Putnam Global Health Care Fund | |
Putnam Global Income Trust | |
Putnam Global Natural Resources Fund | |
Putnam Global Utilities Fund | |
The Putnam Fund for Growth and Income | |
Putnam High Yield Advantage Fund | |
Putnam High Yield Trust | |
Putnam Income Fund | |
Putnam International Equity Fund |
Putnam Investment Funds | |
-Putnam Capital Opportunities Fund | |
-Putnam Growth Opportunities Fund | |
-Putnam International Capital Opportunities Fund | |
-Putnam International Growth Fund | |
-Putnam Mid Cap Value Fund | |
-Putnam Research Fund | |
-Putnam Small Cap Value Fund | |
Putnam Investors 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 Opportunities Fund | |
Putnam New York Tax Exempt Income Fund | |
Putnam Ohio Tax Exempt Income Fund | |
Putnam Pennsylvania Tax Exempt Income Fund | |
Putnam RetirementReady ® Funds | |
-Putnam RetirementReady 2050 Fund | |
-Putnam RetirementReady 2045 Fund | |
-Putnam RetirementReady 2040 Fund | |
-Putnam RetirementReady 2035 Fund | |
-Putnam RetirementReady 2030 Fund | |
-Putnam RetirementReady 2025 Fund | |
-Putnam RetirementReady 2020 Fund | |
-Putnam RetirementReady 2015 Fund | |
-Putnam RetirementReady 2010 Fund | |
-Putnam RetirementReady Maturity Fund | |
Putnam Tax Exempt Income Fund | |
Putnam Tax-Free Income Trust | |
-Putnam AMT-Free Municipal Fund | |
-Putnam Tax-Free High Yield Fund | |
Putnam U.S. Government Income Trust | |
Putnam Variable Trust | |
-Putnam VT American Government Income Fund | |
-Putnam VT Capital Opportunities Fund | |
-Putnam VT Diversified Income Fund | |
-Putnam VT Equity Income Fund | |
-Putnam VT The George Putnam Fund of Boston | |
-Putnam VT Global Asset Allocation Fund | |
-Putnam VT Global Equity Fund | |
-Putnam VT Global Health Care Fund | |
-Putnam VT Global Utilities Fund | |
-Putnam VT Growth and Income Fund | |
-Putnam VT Growth Opportunities Fund | |
-Putnam VT High Yield Fund |
-Putnam VT Income Fund | |
-Putnam VT International Equity Fund | |
-Putnam VT International Value Fund | |
-Putnam VT International Growth Fund | |
-Putnam VT Investors Fund | |
-Putnam VT Mid Cap Value Fund | |
-Putnam VT New Opportunities Fund | |
-Putnam VT Research Fund | |
-Putnam VT Small Cap Value Fund | |
-Putnam VT Vista Fund | |
-Putnam VT Voyager Fund | |
Putnam Vista Fund | |
Putnam Voyager Fund |
SCHEDULE B Lending Funds | |
Putnam American Government Income Fund | |
Putnam Asset Allocation Funds | |
-Balanced Portfolio | |
-Conservative Portfolio | |
-Growth Portfolio | |
Putnam Convertible Income-Growth Trust | |
Putnam Diversified Income Trust | |
Putnam Equity Income Fund | |
Putnam Europe Equity Fund | |
Putnam Funds Trust | |
- Putnam Absolute Return 100 Fund | |
- Putnam Absolute Return 300 Fund | |
- Putnam Absolute Return 500 Fund | |
- Putnam Absolute Return 700 Fund | |
- Putnam Asia Pacific Equity Fund | |
- Putnam Asset Allocation: Equity Portfolio | |
- Putnam Capital Spectrum Fund | |
- Putnam Emerging Markets Equity Fund | |
- Putnam Equity Spectrum Fund | |
- Putnam Floating Rate Income Fund | |
- Putnam Global Consumer Fund | |
- Putnam Global Energy Fund | |
- Putnam Global Financials Fund | |
- Putnam Global Industrials Fund | |
- Putnam Global Sector Fund | |
- Putnam Global Technology Fund | |
- Putnam Global Telecommunications Fund | |
- Putnam Income Strategies Fund | |
- Putnam International Value Fund | |
- Putnam Money Market Liquidity Fund | |
- Putnam Small Cap Growth Fund | |
The George Putnam Fund of Boston | |
Putnam Global Equity Fund | |
Putnam Global Health Care Fund | |
Putnam Global Income Trust | |
Putnam Global Natural Resources Fund | |
Putnam Global Utilities Fund | |
The Putnam Fund for Growth and Income | |
Putnam High Income Securities Fund | |
Putnam High Yield Advantage Fund | |
Putnam High Yield Trust | |
Putnam Income Fund | |
Putnam International Equity Fund |
Putnam Investment Funds | |
-Putnam Capital Opportunities Fund | |
-Putnam Growth Opportunities Fund | |
-Putnam International Capital Opportunities Fund | |
-Putnam International Growth Fund | |
-Putnam Mid Cap Value Fund | |
-Putnam Research Fund | |
-Putnam Small Cap Value Fund | |
Putnam Investors Fund | |
Putnam Master Intermediate Income Trust | |
Putnam Money Market Fund | |
Putnam New Opportunities Fund | |
Putnam Premier Income Trust | |
Putnam RetirementReady ® Funds | |
-Putnam RetirementReady 2050 Fund | |
-Putnam RetirementReady 2045 Fund | |
-Putnam RetirementReady 2040 Fund | |
-Putnam RetirementReady 2035 Fund | |
-Putnam RetirementReady 2030 Fund | |
-Putnam RetirementReady 2025 Fund | |
-Putnam RetirementReady 2020 Fund | |
-Putnam RetirementReady 2015 Fund | |
-Putnam RetirementReady 2010 Fund | |
-Putnam RetirementReady Maturity Fund | |
Putnam U.S. Government Income Trust | |
Putnam Variable Trust | |
-Putnam VT American Government Income Fund | |
-Putnam VT Capital Opportunities Fund | |
-Putnam VT Diversified Income Fund | |
-Putnam VT Equity Income Fund | |
-Putnam VT The George Putnam Fund of Boston | |
-Putnam VT Global Asset Allocation Fund | |
-Putnam VT Global Equity Fund | |
-Putnam VT Global Health Care Fund | |
-Putnam VT Global Utilities Fund | |
-Putnam VT Growth and Income Fund | |
-Putnam VT Growth Opportunities Fund | |
-Putnam VT High Yield Fund | |
-Putnam VT Income Fund | |
-Putnam VT International Equity Fund | |
-Putnam VT International Value Fund | |
-Putnam VT International Growth Fund | |
-Putnam VT Investors Fund | |
-Putnam VT Mid Cap Value Fund | |
-Putnam VT Money Market Fund | |
-Putnam VT New Opportunities Fund |
-Putnam VT Research Fund | |
-Putnam VT Small Cap Value Fund | |
-Putnam VT Vista Fund | |
-Putnam VT Voyager Fund | |
Putnam Vista Fund | |
Putnam Voyager Fund |
SCHEDULE C |
COLLATERAL SECURITY AGREEMENT |
This Collateral Security Agreement (this Agreement) is made this 16th day of July, 2010, by and among each investment company listed on the signature pages hereto (each, a Trust and collectively, the Trusts), on behalf of each Borrower and Lender (as such terms are defined in the Master Agreement (defined below)).
WHEREAS, each Trust, on behalf of each Borrower and Lender, have entered into a Master Interfund Lending Agreement dated as of July 16, 2010 by and among each Trust and Putnam Investment Management, LLC (the Master Agreement) in accordance with the terms of (i) the exemptive order from the U.S. Securities and Exchange Commission dated April 10, 2002 exempting such Borrowers and Lenders and Putnam Investment Management, LLC from certain provisions of the Investment Company Act of 1940, as amended; and (ii) the Interfund Lending Procedures, as in effect from time to time, for Loans by and among the Funds;
NOW, THEREFORE, each Borrower, in consideration of Loans heretofore, now or from time to time hereafter made, given or extended to the Borrower by a Lender, hereby agrees with the Lenders as follows:
1. Capitalized terms used herein which are not otherwise defined herein shall have the respective meanings ascribed thereto in the Master Agreement.
2. Effective upon the transfer of collateral, pursuant to Section 3.11 of the Master Agreement, or as provided herein, to an account owned or controlled by a Lender, as security for the payment of any and all loans heretofore, now or from time to time hereafter made, given or extended to a Borrower by the Lender under and pursuant to the Master Agreement (which loans shall hereinafter be referred to collectively as the Secured Liabilities and each individually as a Secured Liability), the Lender shall have, and the Borrower hereby grants to the Lender, a security interest in (i) any and all securities and other instruments owned by the Borrower which have been or at any time shall be delivered to the Lender or its custodian by or on behalf of the Borrower or have or at any time shall otherwi se come into the possession, custody or control of the Lender or its custodian, including securities and other instruments held in depository trust companies and other institutions and clearing agencies in segregated accounts in the name of the Lender; (ii) all right, title, interest and power (including the power of hypothecation and disposition) of the Borrower in, or in respect of any and all securities and other instruments owned by the Borrower which have or at any time shall come into the possession, custody or control of the Lender or its custodian in any way for any purpose whatsoever, whether or not the Lender shall have accepted said property for the purpose or purposes for which said property was delivered to or otherwise caused to come into the possession, custody or control of the Lender or its custodian; and (iii) all proceeds of any of the foregoing. All property shall be deemed to be in the possession, custody or control of the Lender as soon as it is transferred to the Lender or its custodia n or if the Lender and the Borrower enter into a control agreement satisfactory to the Lender with the Borrowers custodian. If the Lender shall at any time deem itself insecure in respect of any Secured Liability, the Borrower will deliver to the Lender or its custodian upon
demand additional collateral owned by the Borrower satisfactory to the Lender. The term collateral as hereinafter used shall mean and include the securities and other instruments, together with proceeds of the securities and other instruments, and any and all property, rights, titles, powers, sums, receivables or claims which by virtue of the provisions of this Agreement are or shall be at the time in question subject to a security interest in favor of the Lender.
3. Upon the occurrence and during the continuance of an Event of Default (as defined in the Master Agreement), or any time or times thereafter, (i) the Lender may exercise any and all rights and remedies (a) granted to the Lender by the Uniform Commercial Code as in effect in The Commonwealth of Massachusetts or otherwise allowed at law, and/or (b) otherwise provided by this Agreement or the Master Agreement, and (ii) any and all Secured Liabilities of the Borrower shall, at the option of the Lender, become due and payable without notice or demand, notwithstanding any credit or time allowed to the Borrower by any instrument or other document evidencing the same or otherwise.
4. Upon the occurrence and during the continuance of an Event of Default, the Lender shall have full power and authority to sell any or all of the collateral of the Borrower. Except as required by law, such sale or other disposition may be made without advertisement or any notice to the Borrower or to any other person. Where reasonable notification of the time or place of such sale or other disposition is so required, such requirement shall be met if such notice is given in the manner prescribed in Paragraph 10 hereof at least five days before the time of such sale or other disposition to each person entitled to such notice, addressed, if to the Borrower, in the manner specified in said Paragraph 10, or, if to any person, to such person at such persons last address known to the Lender. After deducting all costs and expenses of collection, storage, custody, sale or other disposition and delivery (including legal costs and reasonable attorneys fee s) and all other charges against the collateral, the residue of the proceeds of any such sale or other disposition shall be applied to the payment of any and all of the Secured Liabilities, due or to become due, in such order of preference as the Lender may determine, proper allowance for interest on liabilities not then due being made, and, unless otherwise provided by law, any surplus shall be returned to the Borrower.
5. The Borrower will pay when due all taxes, assessments, liens, premiums or other charges against the collateral and, if the Borrower and the Lender agree it is appropriate, the Borrower will fully insure the same in favor and to the satisfaction of the Lender against loss by any risk to which the collateral or any part thereof may be subject and will on demand deposit with the Lender the policies covering any such insurance. Although under no obligation to do so, the Lender may at any time and from time to time pay any taxes, assessments, liens, premiums or other charges against the collateral, and may insure the same or otherwise protect the value thereof and the property represented thereby, and in such event all expenditures so incurred shall be chargeable to the Borrower and secured by the collateral of the Borrower. The Lender shall be under no obligation to take any steps necessary to preserve rights in any collateral against prior parties but may d o so at its option. Upon the occurrence and during the continuance of an Event of Default, the Lender may at any time and from time to time transfer into its own name or that of its nominee any securities constituting part of the collateral of the Borrower and receive the income thereon and hold the same as additional collateral or apply it to
the payment of any or all of the Secured Liabilities and may at any time notify the obligor(s) on any collateral to make payment of the Lender of any amounts due or to become due thereon.
6. Upon the occurrence and during the continuance of an Event of Default, the Lender may, at any time and from time to time, transfer or assign the whole or any part of any Secured Liability and may transfer therewith, or assign to and set apart for the account of the transferee or assignee thereof, in either event as security therefor, the whole or any part of the collateral of the Borrower. If the Lender does so transfer or assign and set apart the whole or any part of the collateral, the transferee or assignee thereof, without notice to the Borrower, shall thereupon become vested with, and may thereafter exercise, every right and power hereby given to the Lender in respect thereof, and the Lender shall thereafter be forever relieved and fully discharged from any liability or responsibility in respect thereof, except that the Lender shall continue to use reasonable care in the custody and preservation of any collateral so assigned and set apart while such collateral remains in the possession of the Lender. Such transferee or assignee shall have no right or power in respect of any part of the collateral not so transferred or assigned and set apart, in respect whereof the Lender shall retain all rights and powers hereby given in respect thereof.
7. Except as provided in Paragraphs 4, 5 and 6 hereof, the Lender shall at no time transfer or assign the whole or any part of any Secured Liability or assign, transfer or set aside the whole or any part of the collateral held in security therefor except to an assignee of the Loans secured thereby.
8. Upon the request of the Borrower following the payment in full of all loans and Secured Liabilities and termination of the Master Agreement, the Lender shall (i) return or cause to be returned to the Borrower all collateral which shall remain in the possession, custody or control of the Lender or its custodian at such time, and (ii) shall deliver to the Borrower such instruments, UCC termination statements and other documents, and provide for delivery of such instructions to the custodian, in each case as the Borrower may reasonably request for the purpose of releasing (in fact and as a matter of record) the security interest created by this Agreement.
9. Except as is otherwise expressly provided herein or by law, the Borrower waives all demands and notices in connection with this Agreement or the enforcement of the Lenders rights hereunder and also waives presentment, demand, notice, protest and all other demands and notices in connection with any Secured Liability or the enforcement of the Lenders rights with respect thereto and hereby consents that the time of payment of any Secured Liability may be extended from time to time and that no such extension or other indulgence granted to any other party primarily or secondarily liable on any Secured Liability, no discharge or release of any such party and no substitution, release or surrender of collateral of the Borrower shall discharge or otherwise affect the liability of the Borrower on or in respect of any Secured Liability. No delay or omission on the part of the Lender in exercising any right hereunder shall operate as a waiver of such rig ht on any one occasion and shall not be construed as a bar to or waiver of any such right on any future occasion.
10. Any demand upon or notice to the Borrower permitted or required hereunder shall be sufficient if, and effective when, deposited in the mails, postage prepaid, addressed to the Borrower at One Post Office Square, Boston, MA 02109 or at such other address of the Borrower appearing on the first page of this Agreement or at such other address as the Borrower may furnish to the Lender as the address to which such demands, notices or other communications addressed to the Borrower shall be mailed or forwarded.
11. This Agreement may be terminated by the Borrower giving written notice of such termination to the Lender, provided, however, that such termination shall not be effective unless and until all loans and Secured Liabilities (including those contingent or not yet due) existing as of the time of receipt of such notice by the Lender have been paid in full.
12. The Borrower will pay on demand all costs and expenses (including legal costs and reasonable attorneys fees) incurred or paid by the Lender in collecting any loan or Secured Liability upon any default in respect thereof, and all costs and expenses so incurred shall be secured by the collateral.
13. This Agreement shall inure to the benefit of the Lender, its successors and assigns, and shall be binding upon the Borrower, its successors and assigns.
14. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Massachusetts.
15. A copy of the Agreement and Declaration of Trust of each 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 each Trust as Trustees of such Trust 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 applicable Trust.
[Signature Page Follows] |
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.
ALL TRUSTS LISTED ON SCHEDULE A OR SCHEDULE B
By: __/s/ Jonathan S. Horwitz_____________ | |||
Name: | Jonathan S. Horwitz | ||
Title: | Executive Vice President and Treasurer |
State Street | Credit Services |
Copley Place Tower | |
Box 5303 | |
Boston, MA 02206 | |
July 6, 2010 |
Each of the Borrowers listed |
on Appendix I hereto |
One Post Office Square |
Boston, MA 02109 |
Attention: Jonathan S. Horwitz, |
Executive Vice President, Principal Executive Officer, |
Treasurer and Compliance Liason |
RE: Putnam Funds Committed Line of Credit |
Ladies and Gentlemen:
State Street Bank and Trust Company (the Bank) is pleased to make available a $285,000,000 committed, unsecured line of credit (the Committed Line) to each of the management investment companies registered under the Investment Company Act listed on Appendix I attached hereto (each, a Borrower), each acting on behalf of itself or on behalf of one or more of its respective Funds (as defined in Section 16), in each case acting separately from all of the other Borrowers and Funds and not jointly or jointly and severally with any of them, on the following terms and conditions:
I. Committed Line
1. Term. The Committed Line shall commence on the date hereof and expire July 5, 2011 (the "Expiration Date"), unless extended in the discretion of the Bank or, with respect to any Fund, terminated by a Borrower on behalf of such Fund as provided herein. A Borrower, on behalf of one of its respective Funds, may terminate the Committed Line with respect to such Fund upon three (3) days prior written notice and payment of all outstanding principal, interest, fees, costs, expenses and other amounts owing by such Fund to the Bank hereunder on the effective date of termination.
2. Notice and Manner of Borrowings. Subject to the terms and conditions hereof, the Bank shall make revolving loans to a Borrower on behalf of any Fund under the Committed Line (each such loan, a "Loan"); provided that, in each case after giving effect to the requested Loan, (a) the aggregate outstanding Indebtedness for borrowed money of such Fund (including the aggregate principal amount of all Loans outstanding to such Fund hereunder, the aggregate
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 2
principal amount of all loans, if any, outstanding to such Fund under the Uncommitted Line, and the aggregate principal amount of all Interfund Loans, if any, outstanding to such Fund) shall not exceed the Maximum Amount applicable to such Fund, (b) the aggregate principal amount of Loans outstanding to such Fund hereunder shall not exceed the Per Fund Limit Amount, and (c) the aggregate principal amount of Loans outstanding to all Borrowers on behalf of all Funds hereunder shall not exceed the Committed Line Amount. Each request for a Loan hereunder, shall be made in writing by any Borrower on behalf of a Fund by delivering a completed loan request in the form of Exhibit B attached hereto and such other information or documentation as the Bank may reasonably request. Each such Loan request shall be made by any Borrower on behalf of a Fund and received by the Bank not later than 3:00 p.m., Boston time, on the Business Day on which such Loan is to be made. Each Loan request hereunder shall be deemed to be a confirmation by the applicable Borrower on behalf of the applicable Fund that no Default or Event of Default has occurred and is continuing hereunder with respect to such Fund, that the representations and warranties of such Borrower on behalf of such Fund described below remain true and correct, and that no borrowing limitations applicable to such Fund or the Committed Line (including those set forth in clauses (a) through (c) of the proviso above in this Section) will be exceeded after giving effect to the requested Loan, each of which shall be a precondition to the making of any Loan hereunder.
3. Evidence of Indebtedness. All Loans will be evidenced by a promissory note in the form attached hereto as Exhibit A executed by each of the Borrowers on behalf of its respective Funds (as amended, restated, extended, replaced or otherwise modified and in effect from time to time, the "Note"). Each Borrower, on behalf of its respective Funds, hereby authorizes the Bank to record each Loan and the corresponding information on the Banks books and records (including the schedule forming part of the Note), and, absent manifest error, this record shall govern and control. The failure by the Bank to record, or any error in so recording, any such amount on the Bank's books and records, such schedule, or any other record maintained by the Bank, shall not limit or otherwise affect the obligation of each of the Borrowers, on behalf of its respective Funds, to make payments of principal of and interest on each Loan as provided herein and in the Note.
4. Interest Rate. Principal on each outstanding Loan shall bear interest at a variable rate per annum equal to the Federal Funds Rate plus 1.25%. Interest on each Loan shall be calculated on the basis of a 360-day year for the actual number of days elapsed. Upon notice from the Bank to a Borrower, on behalf of any of its respective Funds, given at any time following the occurrence and during the continuance of an Event of Default hereunder with respect to such Fund, unpaid principal on any Loan incurred by such Borrower on behalf of such Fund, and to the extent permitted by applicable law, unpaid interest on such Loan, shall thereafter bear interest, compounded monthly and payable on demand, until paid in full (after as well as before judgment) at a rate per annum equal to two percent (2%) above the rate otherwise applicable to such Loan hereunder.
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 3
5. Payments and Prepayments; Recourse. (a) Each of the Borrowers, on behalf of its respective Funds, hereby promises to pay accrued interest on all Loans incurred by it monthly in arrears on the first day of each month; provided, however, that in each such case if such day on which interest on any Loans is due is not a Business Day, interest shall be payable on the next preceding Business Day. Each of the Borrowers, on behalf of its respective Funds, hereby promises to repay the principal amount of each outstanding Loan incurred by it, together with all accrued and unpaid interest thereon, upon the earliest of (i) 60 days following the date on which such Loan is made, (ii) the date on which such Loan becomes due pursuant to Section II(4) below following the continuance of an Event of Default, or (iii) the Expiration Date, provided that no Borrower may have one or more Loans outstanding hereunder with respect to any one Fund for a period in excess of 60 consecutive calendar days. Each of the Borrowers, on behalf of each of its respective Funds, further covenants and agrees to immediately repay (1) the outstanding aggregate principal amount of any Indebtedness for borrowed money of any such Fund at any time (including the then outstanding aggregate principal amount of all Loans to such Fund hereunder and including the aggregate principal amount of all loans, if any, outstanding to such Fund under the Uncommitted Line) to the extent such amount exceeds the Maximum Amount applicable to such Fund at such time, and (2) any amount by which the then outstanding aggregate principal amount of all Loans to any such Fund at any time exceeds the Per Fund Limit Amount, in each case upon the earlier to o ccur of such Borrower first becoming aware of any such circumstance or demand by the Bank. Each of the Borrowers, on behalf of each of its respective Funds having Loans outstanding at any time, further covenants and agrees that it shall make such repayments of the Loans outstanding to each such Fund at any time to the extent required such that the then outstanding aggregate principal amount of all Loans to all Funds hereunder shall at no time exceed the Committed Line Amount, in each case upon the earlier to occur of such Borrower first becoming aware of any such circumstance or demand by the Bank. Loans may be prepaid at the option of the Borrowers without penalty or premium, and any amounts prepaid may be reborrowed subject to the terms hereof.
(b) All payments by the Borrowers on behalf of their respective Funds hereunder and under any of the other Loan Documents shall be made not later than 2:00 p.m. Boston time on the date due in immediately available United States dollars at the Bank's office at 100 Huntington Avenue, Tower 2, Floor 4, Boston, Massachusetts or as otherwise directed in writing by the Bank. Each of the Borrowers, on behalf of its respective Funds, hereby authorizes and instructs the Bank to debit its accounts with the Bank on the date when payment of amounts hereunder is due, and in the amounts of such payments. All such payments by the Borrowers on behalf of their respective Funds hereunder and under any of the other Loan Documents shall be made without recoupment, setoff or counterclaim and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or conditions of any nature now or he reafter imposed or levied by any jurisdiction or any political subdivision thereof or taxing or other authority therein (excluding taxes that are imposed on the Banks overall net income (or franchise taxes imposed in lieu thereof) by the United States and by the state under the laws of which the Bank is organized (all such
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 4
non-excluded taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions and conditions being herein referred to as Taxes)) unless a Borrower is compelled by law to make such deduction or withholding. If any such obligation is imposed upon a Borrower with respect to any amount payable by it hereunder or under any of the Loan Documents, such Borrower will pay to the Bank, on the date on which such amount is due and payable hereunder or under the Loan Documents, such additional amount in United States dollars as shall be necessary to enable the Bank to receive the same net amount which the Bank would have received on such due date had no such obligation been imposed upon such Borrower. The applicable Borrower will deliver promptly to the Bank certificates or other valid vouchers for all taxes or other charges deducted from or paid with respect to payments made by such Borrower hereunder or under the Loan Documents. In addition, each of the Borrowers, on behalf of its respective Funds, shall pay any present or future stamp, documentary, excise, property or similar taxes, charges or levies that arise from any payment made hereunder or from the execution, delivery or registration of, performance under, or otherwise with respect to, this Agreement or any of the Loan Documents (herein referred to as Other Taxes). Each of the Borrowers, on behalf of its respective Funds, shall indemnify the Bank for and hold the Bank harmless against the full amount of Taxes and Other Taxes, and for the full amount of taxes of any kind imposed by any jurisdiction on amounts payable under this Section I(5)(b), imposed on or paid by the Bank and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification payment shall be made within 30 days from the date the Bank makes written demand therefor. If the Bank determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by a Borrower or with respect to which a Borrower has paid additional amounts pursuant to this Section I(5)(b), it shall pay to such Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by such Borrower under this Section I(5)(b) with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses incurred by the Bank and without interest (other than any interest paid by the relevant governmental authority with respect to such refund), provided that each Borrower, upon the request of the Bank, agrees to repay the amount paid over to such Borrower (plus any penalties, interest or other charges imposed by the rele vant governmental authority) to the Bank in the event that the Bank is required to repay such refund to such governmental authority. This subsection shall not be construed to require the Bank to make available its tax returns (or any other information relating to its taxes that it deems confidential) to any Borrower or any other person.
(c) The Bank and each of the Borrowers acknowledge and agree that the Bank shall look solely to the property of each respective Fund for the enforcement of any claim against such Fund. None of the trustees, officers, employees, agents or shareholders of any Borrower or any Fund assumes any personal liability for the obligations entered into by any Borrower on behalf of any Fund with respect to the Committed Line. In addition, the principal amount of any Loan, and accrued interest thereon, and any fees, costs, expenses, indemnities or other amounts payable in connection with or relating to any Fund or any Loan pursuant to this Agreement (other
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 5
than any fees, costs, expenses, indemnities or other amounts payable to the Bank pursuant to the terms hereof not specific or identifiable to any Fund or Funds or any particular Loan), shall be paid or repaid solely from the assets of such Fund (or the Fund to which such Loan is made), and the Bank shall have no right of recourse or offset against the assets of any other Fund or any other series of any Borrower for such amounts. Each Fund shall be severally (and not jointly or jointly and severally) liable to the Bank hereunder for fees, costs, expenses, indemnities or other amounts owed to the Bank pursuant to the terms hereof that are not specific or identifiable to any Fund or Funds or any particular Loan in accordance with such Funds ratable portion thereof based upon the relative Net Assets of each Fund at any time of determination or based upon such other method reasonably acceptable to the Bank as the board of directors or trustees of the respe ctive Borrowers may determine upon prior written notice to the Bank.
6. Use of Loan Proceeds. Proceeds of Loans may be used solely for temporary or emergency purposes, including, without limitation, to temporarily finance the redemption of the shares of an investor of the Fund on behalf of which a Loan is made, or to temporarily finance the purchase or sale of securities for prompt delivery if the Loan is to be repaid promptly in the ordinary course of business upon completion of such purchase or sale transaction, or for other temporary and emergency purposes in each case consistent with the then current investment objectives and investment restrictions of the Fund on behalf of which a Loan is made; provided that such use of proceeds of each such Loan (a) shall constitute an Exempted Transaction as described in section 221.6(f) of Regulation U, (b) shall otherwise constitute an Exempted Transaction under, or shall not constitute a 147;purpose credit for purposes of, Regulation U, or (c) shall not otherwise cause such loans to violate the provisions of Regulation U; provided, further, that no proceeds of any Loan made hereunder shall be used to make any Interfund Loan. In the event that the proposed use of proceeds of any Loan to a Fund shall not constitute an Exempted Transaction under Regulation U, but shall nonetheless constitute a purpose credit for purposes thereof, the applicable Borrower, on behalf of such Fund, at the time of the request for such Loan is made, shall furnish the Bank with an updated statement in conformity with the requirements of Federal Reserve Form U-1 referred to in Regulation U. Each Loan shall be made in compliance with, and subject to, the relevant Funds Prospectus and Regulation U and no portion of any proceeds of any Loan shall be used directly or indirectly in violation of any provision of any statute, regulation, order or restriction applicable to the Bank, any Borr ower or any Fund.
7. Addition of Borrowers and Funds. With the prior written consent of the Bank in its sole discretion (exercised in accordance with the Banks current guidelines and practices) and in any event no more than once per calendar quarter, any Borrower may request the addition to the terms of this Agreement of (a) one or more management investment companies registered under the Investment Company Act as a Borrower hereunder or (b) any fund series of a Borrower as a Fund hereunder. In no event will any such additional management investment company or fund series be added to the terms of this Agreement if such management investment company or fund series is advised or sub-advised by the Bank or an affiliate of the Bank. The addition of any
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 6
such management investment company or fund series shall be subject to consent by the Bank in its sole discretion and completion of an appropriate amendment to this Agreement and such other documentation as the Bank may reasonably require, including without limitation current prospectus and related information; corporate, trust or similar existence and authorization documentation; and appropriate legal opinions, in each case with respect to any proposed new Borrower or Fund as the Bank may reasonably require.
8. Closing Fee. Each of the Borrowers, on behalf of its respective Funds, hereby agrees to pay to the Bank on the date hereof a closing fee in an aggregate amount for all Borrowers equal to 0.03% of the Committed Line Amount, payable as a condition precedent to closing. Such fee shall be non-refundable and shall be deemed fully earned by the Bank on the date hereof.
9. Commitment Fee. Each of the Borrowers, on behalf of its respective Funds, hereby agrees to pay to the Bank a commitment fee at the aggregate rate of 0.15% per annum on the unused portion of the Committed Line Amount. Such commitment fee shall accrue from and including the date hereof to but excluding the Expiration Date. Accrued commitment fees payable by the Borrowers hereunder shall be payable quarterly in arrears on the fifteenth (15th) day of each April, July, October and January for the immediately preceding calendar quarter and on the Expiration Date or any earlier date upon which the Committed Line hereunder may be terminated (including pursuant to Article II, Section 4 hereof upon the occurrence of an Event of Default).
II. General Loan Terms
1. Covenants. Until all obligations of the Borrowers and their respective Funds with respect to the Committed Line have been paid in full and the Committed Line has been terminated, unless otherwise consented to in writing by the Bank, each of the Borrowers hereby covenants and agrees as follows for itself and on behalf of each of its respective Funds but not as to any other Borrower or Funds:
(a) not to create, assume or suffer to exist any Indebtedness for borrowed money such that the outstanding principal amount of Indebtedness for borrowed money (including Loans hereunder and including loans, if any, under the Uncommitted Line) of any one Fund at any time exceeds the Maximum Amount of such Fund;
(b) not to issue any preferred stock or create, incur, assume, suffer to exist, or guarantee, any Indebtedness other than, to the extent permitted by the relevant Prospectus (i) Indebtedness owing to the Bank; (ii) Indebtedness owing to the Custodian of such Borrower or Fund incurred in connection with such custody relationship; (iii) subject to the provisions of Section II(1)(g) below, Indebtedness consisting of Interfund Loans outstanding to any Fund and incurred to the extent permitted by, and consistent with, the Interfund Lending Exemptive Order;
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 7
(iv) other Indebtedness existing as of the date of this Agreement and disclosed on Exhibit C hereto; (v) preferred stock or Indebtedness issued or incurred with the prior written consent of the Bank; and (vi) other Indebtedness incurred in the ordinary course of such Borrowers or Fund's business in connection with portfolio investments or investment techniques permissible under the Investment Company Act (and not for the primary purpose of borrowing money), but only to the extent such Indebtedness is reflected as a liability in the calculation of such Borrowers or Funds Adjusted Net Assets;
(c) not to create, incur, assume or suffer to exist any mortgage, pledge, security interest, lien, hypothecation, or other charge or encumbrance upon any of its assets or properties, or enter into any agreement preventing it from encumbering any such assets or properties other than, to the extent permitted by the relevant Prospectus (i) those in favor of the Bank or its affiliates or subsidiaries; (ii) subject to the provisions of Section II(1)(g) below, liens incurred consistent with the Interfund Lending Exemptive Order securing Interfund Loans; (iii) those existing on the date hereof and described on Exhibit D hereto; (iv) those in favor of the Custodian of such Borrower or Fund securing Indebtedness permitted by Section II(1)(b)(ii) above; (v) those for which the Bank has given its prior written consent; (vi) those arising in the ordinary course of such Borrowers or Funds b usiness out of or in connection with portfolio investments or investment techniques securing Indebtedness permitted by Section II(1)(b)(vi) above; and (vii) liens for taxes, fees, assessments and other governmental charges not yet due and payable and with respect to which reserves or other appropriate provisions as may be required by generally accepted accounting principles are being maintained;
(d) to (i) duly observe and comply in all material respects with all applicable laws, including, without limitation, the Investment Company Act and any asset coverage and borrowing restrictions and restrictions on Indebtedness and extensions of credit contained therein and applicable to such Borrower or Fund, and applicable securities laws and regulations, in each case except to the extent that any failure to observe or comply could not reasonably be expected to have a Material Adverse Effect; (ii) pay all taxes and governmental charges prior to the time they become delinquent, unless such taxes or charges are being contested in good faith by appropriate proceedings and as to which such reserves or other appropriate provisions as may be required by generally accepted accounting principles are being maintained; (iii) maintain in full force and effect all licenses and permits necessary in any material respect for the proper conduct of its business; (iv) maint ain its status as an open-end management investment company registered under the Investment Company Act and its status as a regulated investment company under Subchapter M of the Internal Revenue Code; (v) operate in material compliance with its declaration of trust, certificate or articles of incorporation, by-laws and/or other organizational documents, its Prospectus and all applicable investment policies and restrictions and agreements relating thereto; (vi) except for Permitted Mergers, not merge or consolidate with or into any entity or purchase all or substantially all of the assets or stock of any entity or sell or otherwise transfer all or any substantial portion of such Borrower's or such Funds assets (other than the sale of portfolio assets in the ordinary course of business as described in its Prospectus); (vii) not
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 8
permit there to occur a change in the investment adviser of such Fund from the Investment Adviser without the prior written consent of the Bank; (viii) not permit there to occur a change in the custodian of such Fund's assets from the Custodian; (ix) not permit any change in the investment objectives or in the fundamental investment restrictions of such Borrower or Fund as described in its Prospectus, in any such case without the prior written consent of the Bank; (x) comply with all terms and provisions of all documents evidencing or securing any Indebtedness to or with the Bank and any other Indebtedness owing to any third party, including without limitation any Interfund Loans ("Other Indebtedness"); (xi) immediately notify the Bank of any event of default with respect to any Other Indebtedness and of any default under, or termination of, any agreement with the Custodian or with the Inv estment Adviser and provide to the Bank a copy of any notice or claim of any such default or termination; (xii) promptly notify the Bank of any material litigation or governmental proceeding or investigation commenced or threatened in writing against such Borrower or Fund, to the extent permitted by applicable law; (xiii) immediately notify the Bank of the occurrence of any Default or Event of Default hereunder; and (xiv) maintain with financially sound and reputable insurance companies insurance in such amounts and covering such risks as is consistent with sound business practice and industry standards;
(e) to permit the Bank or its representatives and agents to visit and inspect the properties of such Borrower and its respective Funds and to make copies or abstracts from such Borrowers or Funds books and records at all such reasonable times and as often as may be reasonably desired;
(f) to submit to the Bank: (i) within 60 days after the end of each semi-annual period in each fiscal year, such Borrowers or Funds semi-annual or annual, as the case may be, financial statements, including a statement of assets, liabilities and investments as of the end of each such period in a form reasonably acceptable to the Bank and, in the case of annual statements, audited by PricewaterhouseCoopers LLP, KPMG LLP or by another certified public accountant firm reasonably satisfactory to the Bank; (ii) promptly, all proxy materials, reports to shareholders and other information delivered to shareholders of such Borrower or Fund; (iii) promptly, all material reports, documents or other information relating to the financial condition of such Borrower or Fund that are delivered to the United States Securities and Exchange Commission, including in any event, copies of any material change to any Prospectus or registration statement; (iv) prior to any Loan request or advance, and daily not later than 3:00 p.m. (Boston time) on each Business Day during which any Loans shall have been outstanding to such Fund, a certificate in the form attached as Exhibit B showing compliance by each such Fund with the borrowing limitations in Section I(2) above; and (v) such other financial statements and information as to each Borrower, Fund or the Investment Adviser as the Bank may reasonably request from time to time (all financial statements required hereunder to be prepared in accordance with generally accepted accounting principles consistently applied);
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 9
(g) not engage, as borrower or lender, in Interfund Lending other than in compliance with the following conditions and limitations:
(i) such Interfund Lending (A) is not otherwise prohibited by law, (B) is conducted on terms and conditions in compliance in all respects with the terms of the Interfund Lending Exemptive Order, (C) has been duly authorized by each party thereto, (D) is not in contravention of the relevant lending and/or borrowing Fund's Prospectus, or any applicable law, rule or regulation, or any agreement to which the relevant Borrower on behalf of the relevant borrowing and/or lending Fund is a party or otherwise bound, including, without limitation, any agreement relating to any Interfund Loan, and (E) is deemed to be Indebtedness of the relevant borrowing Fund for all purposes under this Agreement, including for purposes of calculating the borrowing limitations hereunder and the covenant in Section II(1)(a) hereof;
(ii) a Fund may not be a lender of an Interfund Loan at any time during which such Fund has any Loan outstanding hereunder nor may a Fund use the proceeds of any Loan to make an Interfund Loan;
(iii) at the time of the borrowing of any Loan by a Borrower on behalf of a Fund hereunder, such Borrower, on behalf of such Fund, shall not have outstanding as a borrower or a lender any Interfund Loan secured by a lien;
(iv) if at any time a Borrower, on behalf of a Fund, should secure an Interfund Loan or Interfund Loans with collateral, then each Loan to such Borrower, on behalf of such Fund, hereunder will be secured (A) at least on an equal priority basis with an equivalent percentage of collateral to loan value as any outstanding Interfund Loan that requires collateral, which may require such Borrower, on behalf of such Fund, to pledge at least such collateral as is necessary to maintain the market value of the collateral that secures such Loan at least equal to 102% of the outstanding principal amount of such Loans for so long as such Interfund Loan is so secured; and (B) with collateral that is not illiquid and has similar credit characteristics (each as determined by the Borrower in good faith in accordance with its policies and procedures and applicable law) to that of the collateral securing such Interfund Loan or Interfund Loans; and
(v) upon and during the continuance of a Default or Event of Default with respect to any Fund, the applicable Borrower, on behalf of such Fund, will not make or permit any payment or prepayment of any Interfund Loans owing by such Borrower, on behalf of such Fund, unless such Borrower, on behalf of such Fund, concurrently makes a pro rata payment or prepayment of Loans owing by such Borrower, on behalf of such Fund, if any, hereunder; and
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 10
(h) execute and deliver such additional instruments and take such further actions as the Bank may from time to time reasonably request to effect the purpose of the Loan Documents and the Loans.
Notwithstanding anything to the contrary in Section II(1)(f) above, but without in any way limiting the rights of the Bank set forth therein, unless the Bank shall request paper copies of the financial and other information otherwise required to be furnished by the Borrowers to the Bank pursuant to subsections (i) and (ii) of such Section II(1)(f) above, the Borrower may deliver all such information to the Bank in a printable format by electronic means. The Borrower may make such electronic delivery by: (i) sending such information as an electronic mail attachment to such electronic mail addresses as shall be designated by the Bank, as applicable; or (ii) notifying the Bank by electronic mail (to such electronic mail addresses as shall be designated by the Bank, as applicable) that the documents are available on a website accessible to the Bank and further indicating a website hyperlink directing the user directly to the referenced documents posted thereon; provided that such information shall be made available on or before the dates specified in said subsections (i) and (ii) of such Section II(1)(f) above. Nothing contained in this paragraph shall require the Bank to maintain copies of the financial and other information referred to in this paragraph, and the Bank shall be solely responsible for requesting physical delivery of such information, or maintaining any such information, as applicable. Each of the Borrowers, on behalf of its respective Funds, acknowledges that the distribution of material through an electronic medium is not necessarily secure and that there may be confidentiality and other risks associated with such distribution. In no event shall the Bank or any of its officers, directors, employees, agents, advisors or representatives have any liability to the Borrowers or Funds for damages of any kind, including without limitation, direct or indirect, special, incidental or cons equential damages, losses or expenses arising out of the Borrowers transmission of communications through the internet.
2. Representations and Warranties. Each of the Borrowers severally represents and warrants to the Bank, both as to itself and as to each of its respective Funds (but not as to any other Borrower or Fund) that:
(a) each such Borrower (i) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization; (ii) is registered as an open-end management investment company under the Investment Company Act; (iii) is qualified as a regulated investment company within the meaning of the Internal Revenue Code; (iv) has all requisite power and authority to own its property and conduct its business as is now conducted and is duly authorized to do business in each jurisdiction where the nature of its properties or business requires such qualification and where failure to be so qualified would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (v) is in material compliance with its declaration of trust, certificate or articles of incorporation, bylaws and/or other organizational documents and applicable law, including, without limitation, the
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 11
Investment Company Act and Regulations T, U and X; and (vi) has filed all required income tax returns and has paid all taxes due pursuant to such returns, and the charges, accruals and reserves on the books and records of such Borrower or Fund with respect to such taxes and charges are adequate;
(b) the execution, delivery and performance of each of the Loan Documents and the making of any Loan by the Bank to such Borrower, on behalf of its respective Funds, hereunder (i) are, and will be, within such Borrowers or Funds power and authority; (ii) have been authorized by all necessary trust or corporate proceedings, as the case may be; (iii) do not, and will not, require the consent of any shareholders or other equity holders of such Borrower or Fund or approvals of any governmental authority, other than those which have been received; (iv) will not contravene any provision of, or exceed any limitation contained in, the certificate or articles of incorporation, declaration of trust, by-laws and/or other organizational documents of such Borrower or Fund or its Prospectus or any judgment, decree or order or any law, rule or regulation applicable to such Borrower or Fund, including, without limitation, the Investment Company Act; (v) are, an d will be, in compliance with Regulations T, U and X and the Investment Company Act; (vi) do not constitute a default under any other agreement, order or undertaking binding on such Borrower or Fund; and (vii) do not require the consent or approval of any obligee or holder of any instrument relating to any Other Indebtedness or any other party other than for those consents and approvals which have been received;
(c) no portion of any proceeds of any Loan shall be used directly or indirectly in violation of any provision of any statute, regulation, order or restriction applicable to the Bank or such Borrower or Fund, including Regulation U;
(d) each of the Loan Documents constitutes the legal, valid, binding and enforceable obligation of such Borrower, on behalf of its respective Funds, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors' rights generally and by general equitable principles;
(e) all financial statements of the Funds previously furnished to the Bank by such Borrower or Fund were prepared in accordance with generally accepted accounting principles and present fairly in all material respects the financial position of such Fund; since the date of the most recent audited financial statements furnished to the Bank prior to the date of this Agreement, there has been no material adverse change in the assets, liabilities, financial condition or business of such Borrower or any of its respective Funds; and such Borrower has disclosed to the Bank any and all facts which, to the best of such Borrowers knowledge, after due inquiry, materially and adversely affect or could reasonably be expected to materially and adversely affect, the business, assets, operations or financial condition of such Borrower or any of its respective Funds or the ability of such Borrower, on behalf of its respective Funds, to perform its obligations under the Loan Documents;
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 12
(f) such Borrower has good and marketable title to all its material properties, assets and rights of every name and nature purportedly owned by it on behalf of its respective Funds except for encumbrances permitted by Section II(1)(c) above;
(g) there is no litigation, arbitration, proceeding or investigation pending or, to the best of such Borrowers knowledge, overtly threatened against, such Borrower or any of its respective Funds or the Investment Adviser which could reasonably be expected to result in a Material Adverse Effect, except those described on Exhibit E attached hereto;
(h) the shares of such Borrower and its respective Funds have been registered under the Securities Act of 1933 and are eligible for sale under applicable state and federal securities laws and regulations;
(i) with regard to the Employee Retirement Income Security Act of 1974, and the rules and regulations thereunder, collectively, as amended and in effect from time to time (ERISA), neither such Borrower nor its respective Funds is treated as a single employer with any other person under ERISA, and none has any liability with respect to any benefit arrangement, plan or multi-employer plan subject to ERISA;
(j) neither such Borrower nor its respective Funds is an Affiliated Person, as defined in the Investment Company Act, of the Bank;
(k) the Investment Adviser serves as investment adviser to each of the Funds, and the Custodian serves as custodian for the assets of each of the Funds;
(l) such Borrower and its respective Funds have complied with, and is in compliance with, the investment objectives and policies and investment restrictions set forth in its Prospectus; and
(m) none of the requesting or borrowing of the Loans by such Borrower or the use of the proceeds of any Loans by such Borrower will violate the Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the "Trading With the Enemy Act") or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) (the "Foreign Assets Control Regulations") or any enabling legislation or executive order relating thereto (which for the avoidance of doubt shall include, but shall not be limited to (a) Executive Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the "Executive Order") and (b) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)). Furthermore, (a) none of the Borrowers is, and none will become, a "blocked person" as described in the Executive Order, the Trading With the Enemy Act or the Foreign
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 13
Assets Control Regulations and (b) no Borrower engages or will engage in any dealings or transactions, or be otherwise associated, with any such "blocked person".
The making of each Loan hereunder to any Borrower on behalf of any Fund, shall be deemed to be a reaffirmation by such Borrower on behalf of such Fund, as to the representations and warranties contained in this Section II(2) and confirmation that no Default or Event of Default has occurred hereunder or will occur after giving effect to the making of such Loan.
3. Default. It will be a default hereunder with respect to any Fund if any of the following events (each, an Event of Default) occurs with respect to such Fund, with respect to the Borrower acting on behalf of such Fund, or, as applicable, with respect to the Investment Adviser:
(a) such Borrower, acting on behalf of such Fund, fails (i) to pay when due any amount of principal of any Loan, whether on demand, at maturity, upon acceleration, pursuant to a mandatory repayment or prepayment provision hereof or otherwise, or (ii) to pay within three Business Days of when due any amount of interest on any Loan or any fees or expenses or other amounts payable under any of the Loan Documents; or
(b) such Borrower or Fund (i) shall fail to perform any term, covenant or agreement contained in any of Sections II(1)(a)-(c), Sections II(1)(d)(iv)(xiii) or Section II(f) hereof; or (ii) shall fail to perform any term, covenant or agreement contained in any of the Loan Documents (other than those specified elsewhere in this Section II(3)) or a default or event of default occurs thereunder and, in the case of this clause (ii), such failure or default or event of default shall continue for a period of thirty (30) days; or
(c) any material representation or warranty of such Borrower or Fund made in any of the Loan Documents or as an inducement for the Bank to make any Loan shall prove to have been false in any material respect upon the date when made or deemed to have been made; or
(d) such Borrower, acting on behalf of such Fund (i) fails to pay or perform when due any Obligation, whether now existing or hereafter arising, other than those referred to above in this Section II(3), or (ii) fails to pay at maturity, or within any applicable period of grace, any obligations for Other Indebtedness (including any Interfund Loan), or (iii) fails to observe or perform beyond any applicable grace period any term, covenant or agreement evidencing or securing such Other Indebtedness (including any Interfund Loan); or
(e) such Borrower or Fund or the Investment Adviser (i) applies for or consents to the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar official of itself or of all or a substantial part of its property; (ii) is generally not paying its debts as such debts become due; (iii) makes a general assignment for the benefit of
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 14
its creditors; (iv) commences any case or proceeding under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency, reorganization, winding-up or composition or adjustment of debts, or any other law providing for the relief of debtors; (v) fails to contest in a timely or appropriate manner, or acquiesces in writing to, any petition filed against it in an involuntary case under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency, reorganization, winding-up or composition or adjustment of debts, or any other law providing for the relief of debtors; (vi) takes any actions under state, federal or other applicable law in order to commence the liquidation of the Borrower or Fund, (vii) takes any action under the laws of its jurisdiction of incorporation or organization similar to any of the foregoing, or (viii) discontinues its business; or
(f) a proceeding or case shall be commenced against such Borrower or Fund or the Investment Adviser without the application or consent of such party, in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, dissolution, winding-up, or composition or readjustment of its debts; (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets; or (iii) similar relief in respect of it, under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts or any other law providing for the relief of debtors, and such proceeding or case shall continue undismissed, or unstayed and in effect, for a period of 60 days; or an order for relief shall be entered in an involuntary case under the Federal Bankruptcy Code, against such Borrower or Fund or the Investment Adviser or action under the laws of the jurisdiction of incorporat ion or organization of such Borrower or Fund or the Investment Adviser similar to any of the foregoing shall be taken with respect to such Borrower or Fund or the Investment Adviser and shall continue unstayed and in effect for any period of 60 days; or
(g) a final judgment or final order for the payment of money shall be entered against such Borrower or Fund by any court of competent jurisdiction, or an execution or similar process shall be issued or levied against property of such Borrower or Fund, that in the aggregate exceeds 5% of the value of the Net Assets of such Borrower or Fund and such judgment, order, warrant or process shall not be, within 30 days after entry thereof, discharged or stayed pending appeal or shall not be discharged within 30 days after the expiration of such stay; or
(h) such Borrower or Fund shall challenge the validity or enforceability of any portion of any of the Loan Documents; or
(i) any investment advisory agreement which is in effect on the date hereof relating to such Fund shall terminate, the Investment Adviser shall cease to serve as the investment adviser for such Fund, or the Custodian shall cease to serve as the custodian for such Funds assets, in each instance without the prior written consent of the Bank; or
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 15
(j) such Borrower or Fund shall violate, or take any action that would result in a material deviation from, any of its fundamental investment policies or restrictions as in effect from time to time, including those as set forth in its Prospectus.
4. Remedies. Upon the occurrence of an Event of Default described in Section II(3)(e) or (f), immediately and automatically; and upon the occurrence of any other Event of Default, at any time thereafter while such Event of Default is continuing, at the Bank's option and upon the Bank's declaration:
(a) the Committed Line established hereunder shall terminate with respect to the subject Fund;
(b) the unpaid principal amount of the Loans to the Borrower on behalf of the subject Fund, together with accrued and unpaid interest thereon, all fees, expenses and other Obligations, shall become immediately due and payable without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived; and
(c) the Bank may exercise any and all rights it has under any of the Loan Documents and proceed to protect and enforce the Bank's rights by any action at law, in equity or other appropriate proceeding as it relates to the subject Fund.
Each of the Borrowers, on behalf of each of its respective Funds, authorizes the Bank and the Custodian, following the occurrence and during the continuance of an Event of Default, to charge and setoff against any deposit account or other account maintained with either the Bank or the Custodian on behalf of such Borrower on behalf of each applicable Fund, and apply the proceeds thereof against repayment of any unpaid Obligations of the Borrower on behalf of such Fund, as appropriate. In addition, the Custodian, following the occurrence and during the continuance of an Event of Default, is hereby directed by such Borrower, on behalf of each of its respective Funds, to dispose of such Funds assets as selected by the Investment Adviser to the extent necessary to repay all amounts due to the Bank from such Borrower on behalf of such Fund to the extent that the Obligations of such Borrower on behalf of such Fund, have not been paid when due or if any other Event of Default has occurred. If the Investment Adviser does not select a sufficient amount of assets to repay all amounts due to the Bank from such Borrower on behalf of such Fund, within a reasonable time, the Custodian is hereby directed by such Borrower on behalf of such Fund, upon one days prior written notice to such Borrower on behalf of such Fund, and its Investment Adviser, to dispose of such Funds assets to the extent necessary to repay all amounts due to the Bank from such Borrower on behalf of such Fund. The foregoing shall be deemed to be continuing and irrevocable "proper instructions" to the Custodian for all purposes under the applicable custody agreement between such Borrower, on behalf of such Fund, and the Custodian. The foregoing shall be in addition to any other rights or remedies the Bank and the Custodian may have against such Borrower, on behalf of such Fund, following the occurrence of an Event of Default hereunder.
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 16
No right of the Bank shall be exclusive of any other right of the Bank now or hereafter available under the Loan Documents, at law, in equity or otherwise, and no course of dealing or delay by the Bank in exercising any right shall operate as a waiver thereof or otherwise affect any rights or remedies of the Bank.
5. Notices. All notices hereunder shall be in writing and shall be deemed to have been given one Business Day after delivery to an overnight courier or when delivered by hand to the addresses given below and in each case such delivery is confirmed to have been made. Notices (a) to the Bank shall be given to State Street Bank and Trust Company, Copley Place Tower, Box 5303, Boston, Massachusetts 02206, or if by overnight courier service, to State Street Bank and Trust Company, 4 Copley Place, 5th Floor, Boston, Massachusetts 02116, in either case to the attention of: Janet B. Nolin, Vice President or Mutual Fund Lending Department Head, and (b) to any Borrower or Fund shall be deemed to have been given if given at the address stated at the beginning of this Agreement to the attention of: Francis J. McNamara, III, Vice President and Chief Legal Officer.
6. Amendments and Waivers. No waivers shall be effective unless in writing. No right of the Bank shall be exclusive of any other right of the Bank now or hereafter available under the Loan Documents, at law, in equity or otherwise; or by statute or any other provision of law; and no course of dealing or delay by the Bank in exercising any right hereunder shall operate as a waiver thereof or otherwise affect any rights or remedies of the Bank. All amendments hereto must be in writing signed by all parties hereto.
7. Assignments and Participations. No Borrower or Fund may assign or transfer or participate any of its rights under any of the Loan Documents without the prior written consent of the Bank. The Bank may assign or transfer its rights hereunder to any other person or entity with the prior consent of the relevant Borrower, on behalf of the relevant Fund, such consent not to be unreasonably withheld and such consent not being required during the continuance of an Event of Default. The Bank may also pledge or participate its rights hereunder to any Federal Reserve Bank or to any other person or entity without the consent of any Borrower or Fund; provided however, that no such person or entity taking solely a participation interest in any of the Obligations, without the consent of the relevant Borrower on behalf of the r elevant Fund shall have any rights with respect to such participation other than the right to vote on changes in interest, fees, line amount, principal payments, maturity or other payment dates, and any advance rates or borrowing limitations described herein.
8. Setoff. Any amounts owing from the Bank to any Borrower on behalf of any Fund including deposits (general or special, time or demand, provisional or final), may, at any time following the occurrence and during the continuance of an Event of Default, be set off and applied against the obligations of such Borrower, on behalf of such Fund, to the Bank.
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 17
9. Expenses. Subject to the terms of Section I(5)(c) above, each of the Borrowers agrees, on behalf of each of its respective Funds, to pay on demand all reasonable expenses of the Bank in connection with the preparation, negotiation and closing of this Agreement and the other Loan Documents and all reasonable expenses of the Bank in connection with the amendment, waiver, default or collection of the Obligations to the Bank or in connection with the Bank's exercise or enforcement, following an Event of Default, of any of its rights, remedies or options thereunder, including, without limitation, reasonable fees of outside legal counsel or the allocated costs of in-house legal counsel, accounting, consulting, brokerage or other similar professional fees or expenses; and the amount of all such expenses shall, to the extent not paid within thirty (30) days after written demand therefore by the Bank, bear interest at the rate applicable to the Loans (including any default rate) until paid in full.
10. Indemnification. Subject to the terms of Section I(5)(c) above, each of the Borrowers agrees, on behalf of each of its respective Funds (a) to indemnify the Bank against any transfer taxes, documentary taxes, assessments or charges made by any governmental authority by reason of the execution and delivery of this Agreement and the Note; and (b) to indemnify and hold harmless the Bank and its directors, officers, employees, agents and affiliates from and against any and all liabilities, losses, damages, costs, and reasonable expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by the Bank in connection with any civil, investigative, administrative or judicial proceeding (whether or not the Bank shall be a designated party thereto) relating to or arising out of this Agreement or any of the other Loan Documents or any actual or proposed use of proceeds of any Loans hereunder, provided that the Bank shall not have the right to be indemnified hereunder for its own gross negligence or willful misconduct as finally determined by a court of competent jurisdiction. To the extent permitted by applicable law, none of the Borrowers shall assert, and each of the Borrowers, on behalf of its respective Funds, hereby waives, any claim against the Bank or its directors, officers, employees, agents or affiliates, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any of the other Loan Documents or any Loan or the use of proceeds thereof.
11. Waiver of Jury Trial. Except as prohibited by law, neither any of the Borrowers or their respective Funds nor the Bank nor any assignee or successor of any of them, shall seek a jury trial in any lawsuit, proceeding, counterclaim or any other litigation procedure based upon or arising out of any of the Loan Documents. Neither any of the Borrowers or their respective Funds nor the Bank will seek to consolidate any such action in which a jury trial has been waived with any other action in which a jury trial has not been waived. THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND THE PROVISIONS HEREOF SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HERETO HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 18
12. Jurisdiction. EACH OF THE LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH BORROWER AND FUND AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON SUCH BORROWER OR FUND BY MAIL AT THE ADDRESS SPECIFIED ABOVE. EACH BORROWER AND FUND HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
13. Counterparts. This Agreement may be executed in any number of counterparts each of which shall be deemed to be an original document, but all of which together shall constitute one and the same instrument.
14. USA Patriot Act. The Bank hereby notifies each of the Borrowers that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Patriot Act"), it is required to obtain, verify and record information that identifies each Borrower, which information includes the name and address of each Borrower and other information that will allow the Bank to identify the Borrowers in accordance with the Patriot Act.
15. Confidentiality. The Bank will maintain the confidential nature of all non-public information furnished to it by a Borrower in accordance with the Banks customary procedures for maintaining the confidential nature of information of this nature; provided, however, that such information may be disclosed:
(a) to any corporate affiliate of the Bank and to the Banks and to the Banks affiliates respective partners, directors, officers, employees, agents, auditors, advisors and other representatives (it being understood that the persons to whom such disclosure is made will be informed of the confidential nature of such information and instructed to keep such information confidential);
(b) pursuant to any statutory or regulatory requirement or any court order, subpoena or other legal process and to any regulatory authority, including the Securities and Exchange Commission, stock exchanges, state and federal bank and insurance regulators and the National Association of Insurance Commissioners;
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 19
(c) to any assignee or participant or any prospective assignee or participant in the Banks rights and obligations under the Loan Documents; provided, however, that any such person shall agree to comply with the restrictions set forth in this Section with respect to such information;
(d) in connection with the enforcement of any Loan Document or any litigation or other proceeding relating to any Loan Document;
(e) to the extent such information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Bank or any of its affiliates on a non-confidential basis from a source other than a Borrower that to the Banks actual knowledge does not involve the breach by such source of a confidentiality obligation; and
(f) with the prior written consent of a Borrower, to any other person.
In addition, the Bank may include references to a Borrower and the credit facility provided hereby in connection with any advertising or marketing undertaken by the Bank.
16. Definitions. Except as otherwise defined herein, all financial terms shall be defined in accordance with generally accepted accounting principles. The following defined terms as used herein shall have the following meanings:
Adjusted Net Assets shall mean, as applied to any Fund at any time, (a) the value of the Total Assets of such Fund at such time, less (b) Total Liabilities (excluding Indebtedness for borrowed money) of such Fund at such time. For purposes of calculating Adjusted Net Assets for any Fund, the amount of any liability included in Total Liabilities shall be equal to the greater of (i) the outstanding amount of such liability and (ii) the fair market value of all assets pledged or otherwise segregated to secure such liability.
Agreement shall mean this letter agreement and all appendices, exhibits and schedules attached hereto, as any of the same may be amended, restated, extended, replaced or otherwise modified and in effect from time to time.
Bank shall have the meaning given to such term in the preamble hereto.
Borrower shall have the meaning given to such term in the preamble hereto.
Business Day shall mean any day excluding Saturday and Sunday and excluding any other day which shall be in Boston, Massachusetts a legal holiday or a day on which banking institutions are required or authorized by law to close.
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 20
Committed Line shall have the meaning given to such term in the preamble hereto.
Committed Line Amount shall mean $285,000,000.
Custodian shall mean State Street Bank and Trust Company, in its capacity as custodian of the assets of each Fund.
Default shall mean any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default.
ERISA shall have the meaning given to such term in Section II(2)(i) hereof.
Event of Default shall have the meaning given to such term in Section II(3) hereof.
Executive Order shall have the meaning given to such term in Section II(2)(m) hereof.
Expiration Date shall have the meaning given to such term in Section I(1) hereof.
Federal Funds Rate shall mean, at the relevant time of reference thereto, the rate that appears on Bloomberg page BTMM, as quoted by Garban Limited, as of 9:30 a.m. (Boston time), as the "Federal Funds Ask" rate, or, if unavailable, the quotation received by the Bank from a federal funds broker of recognized standing as selected by the Bank in its reasonable discretion.
Foreign Assets Control Regulations shall have the meaning given to such term in Section II(2)(m) hereof.
Fund shall mean each of the respective fund series of the Borrowers from time to time listed on Appendix I hereto, if any, and if at any time any Borrower party hereto shall not have any fund series and shall be a party hereto and borrowing hereunder for itself and not on behalf of any such fund series, the term Fund shall also mean and refer to such Borrower in such capacity.
Indebtedness shall mean (a) all obligations for borrowed money or extensions of credit; (b) all obligations evidenced by bonds, debentures, notes or other similar instruments; (c) all obligations to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business; (d) all obligations under any lease which are or should be capitalized in accordance with generally accepted accounting principles; (e) all
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 21
guarantees, endorsements and other contingent obligations, whether direct or indirect, in respect of Indebtedness of others, including any obligation to supply funds to or in any manner to invest in, directly or indirectly, the debtor (whether by way of loan, stock purchase, capital contribution or otherwise), to purchase Indebtedness, or to assure the owner of Indebtedness against loss, through an agreement to purchase goods, supplies or services for the purpose of enabling the debtor to make payment of the Indebtedness held by such owner or otherwise, and the obligations to reimburse the issuer in respect of any letters of credit or performance or surety bonds, or other similar obligations; (f) all obligations in respect of judgments; (g) all obligations in respect of banker's acceptances and under reverse repurchase agreements; and (h) all obligations in respect of swaps, futures contracts, options, options on futures contracts and other similar portfoli o investments and investment techniques, including all liabilities secured by any mortgage, pledge, security interest, lien, charge or other encumbrance existing on property owned or acquired subject thereto, or with respect to which assets have been segregated, whether or not the liability secured thereby shall have been assumed, including without limitation, any cash or securities held or otherwise pledged as collateral in connection with any such portfolio investments or investment techniques.
"Interfund Lending" shall mean lending by a registered investment company or a series thereof advised by the Investment Adviser to one or more other registered investment companies or series thereof advised by the Investment Adviser, or borrowing by a registered investment company or a series thereof advised by the Investment Adviser from one or more other registered investment companies or series thereof advised by the Investment Adviser, in either case pursuant to the Interfund Lending Exemptive Order.
Interfund Lending Agreement shall mean any agreement between one or more Funds or other investment companies or series thereof advised by the Investment Adviser providing for the making of loans from time to time from one such Fund or such other investment companies or series thereof to other Funds or other investment companies or series thereof, as any such agreements may be from time to time amended.
Interfund Lending Exemptive Order shall mean that certain exemptive order issued by the Securities and Exchange Commission on April 10, 2002 (Investment Company Act of 1940 Release No. 25519) in the matter of Putnam American Government Income Fund, et al. providing exemptive relief permitting an Interfund Lending program pursuant to the terms of the application dated March 13, 2002 (Investment Company Act of 1940 Release Nos. 25461, 812-10806).
Interfund Loan shall mean any loan or advance by or to a Fund pursuant to an Interfund Lending Agreement.
Internal Revenue Code shall mean the Internal Revenue Code of 1986, as amended, together with all related rules and regulations promulgated thereunder.
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 22
Investment Adviser shall mean Putnam Investment Management, LLC, a Delaware limited liability company.
Investment Company Act shall mean the Investment Company Act of 1940, as amended, together with all related rules and regulations promulgated by the United States Securities and Exchange Commission relating thereto.
Loan shall have the meaning given to such term in Section I(2) hereof.
Loan Documents shall mean this Agreement, the Note and any other documents, instruments or agreements executed in connection herewith, as any of the same may be amended, restated, extended, renewed, replaced or otherwise modified and in effect from time to time.
Material Adverse Effect shall mean a material adverse effect on (a) the business condition (financial or otherwise), operations, performance or properties of the applicable Borrower or Fund, (b) the rights or remedies of the Bank under the Loan Documents, or (c) the ability of the applicable Borrower, on behalf of any of its respective Funds, to perform its obligations under the Loan Documents.
Maximum Amount shall mean, at any time with respect to any Fund, the lesser of (a) thirty-three and one third percent (33-1/3%) of the Adjusted Net Assets of such Fund at such time, and (b) the maximum amount which such Fund is permitted to borrow (after taking into account all then outstanding Indebtedness) pursuant to its Prospectus, the Investment Company Act or any registration made thereunder, any vote of the shareholders of such Fund, any agreement of the applicable Borrower or such Fund with any foreign, federal, state or local securities division to which such Borrower or such Fund is subject, any other applicable agreement or document to which such Borrower or such Fund is a party or any law, rule or regulation applicable to such Borrower or such Fund.
Net Assets shall mean, with respect to any Fund at any time, the value of the Total Assets of such Fund at such time less the Total Liabilities of such Fund at such time.
Note shall have the meaning given to such term in Section I(3) hereof.
Obligations shall mean any and all obligations of each of the Borrowers, on behalf of each of its applicable Funds, to the Bank of every kind and description, direct or indirect, absolute or contingent, primary or secondary, due or to become due, now existing or hereafter arising, regardless of how they arise or by what agreement or instrument, if any, and including obligations to perform acts and refrain from taking action as well as obligations to pay money.
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 23
Other Indebtedness shall have the meaning given to such term in Section II(1)(d) hereof.
Other Taxes shall have the meaning given to such term in Section I(5)(b) hereof.
Per Fund Limit Amount shall mean at any time with respect to any Fund, the difference of (a) $200,000,000 minus (b) the aggregate principal amount of all loans, if any, outstanding to such Fund at such time under the Uncommitted Line.
Permitted Merger(s) shall mean (a) the merger of one or more Funds with and into any other Fund, or (b) the merger of any fund series of any Borrower which is not a Fund hereunder with and into any Fund so long as the Fund is the survivor of such merger; provided that, in the case of any such merger pursuant to the foregoing clause (a) or (b), (i) the Borrower shall have provided written notice in reasonable detail to the Bank of its intention to effect such merger, together with a revised Appendix I hereto reflecting such merger, at least ten (10) Business Days prior to the effectiveness of such merger, and (b) no Default or Event of Default shall exist or result from such merger (including, without limitation, any failure to satisfy the bor rowing limitations contained in Section I(2) as a result thereof).
Prospectus shall mean at any time the then current prospectus and statement of additional information of any Borrower or Fund.
Regulation T shall mean Regulation T of the Board of Governors of the Federal Reserve System of the United States, as amended.
Regulation U shall mean Regulation U of the Board of Governors of the Federal Reserve System of the United States, as amended.
Regulation X shall mean Regulation X of the Board of Governors of the Federal Reserve System of the United States, as amended.
Taxes shall have the meaning given to such term in Section I(5)(b) hereof.
Total Assets shall mean, with respect to any Fund at any time, all assets of such Fund which in accordance with generally accepted accounting principles would be classified as assets on a balance sheet of such Fund at such time. For purposes of this definition, the value of each Funds assets shall be determined based upon the current market value thereof with reference to daily prices provided by independent pricing sources and otherwise in accordance with the Investment Company Act.
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 24
Total Liabilities shall mean, with respect to any Fund at any time, the aggregate amount of all items which would be set forth as liabilities on a balance sheet of such Fund at such time in accordance with generally accepted accounting principles.
Trading With the Enemy Act shall have the meaning given to such term in Section II(2)(m) hereof.
Uncommitted Line shall mean the separate discretionary, uncommitted, unsecured line of credit made available by the Bank to the Funds pursuant to a separate line of credit letter agreement dated on or about the date hereof, as the same may be amended, restated, extended, renewed, replaced or otherwise modified and in effect from time to time.
17. Miscellaneous. A copy of the Agreement and Declaration of Trust of each Fund, as amended or restated from time to time, is on file with the Secretary of the Commonwealth of The Commonwealth of Massachusetts. Notice is hereby given, and it is expressly agreed, that the obligations under this Agreement of any such Fund shall not be binding upon any of the trustees, shareholders, nominees, officers, agents or employees of such Fund personally, but bind only the trust property of such Fund. In the case of each Fund, the execution and delivery of this Agreement on its behalf has been authorized by its trustees, and this Agreement has been executed and delivered by an authorized officer, in each case acting in such capacity and not individually, and neither such authorization by the trustees nor such execution and delivery shall be deemed to have been made by any of them individually, but shall only bind the trust property of each Fund.
[Remainder of Page Intentionally Left Blank] |
LIMITED ACCESS
Signature Page 1 |
If the foregoing satisfactorily sets forth the terms and conditions of the Committed Line, please execute and return to the undersigned each of the Loan Documents and such other documents and agreements as the Bank may request. We are pleased to provide the Committed Line hereunder and look forward to the ongoing development of our relationship.
Sincerely, | ||
STATE STREET BANK AND | ||
TRUST COMPANY, as Bank | ||
By: /s/ | Janet B. Nolin | |
Name: | Janet B. Nolin | |
Title: | Vice President |
Acknowledged and Accepted:
PUTNAM AMERICAN GOVERNMENT INCOME FUND
PUTNAM ARIZONA TAX EXEMPT INCOME FUND
PUTNAM ASSET ALLOCATION FUNDS, on behalf of
its fund series as listed in Appendix I attached hereto
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
PUTNAM CONVERTIBLE INCOME-GROWTH TRUST
PUTNAM DIVERSIFIED INCOME TRUST
PUTNAM EQUITY INCOME FUND
PUTNAM EUROPE EQUITY FUND
PUTNAM FUNDS TRUST, on behalf of
its fund series as listed in Appendix I attached hereto
PUTNAM GLOBAL EQUITY FUND
PUTNAM GLOBAL HEALTH CARE FUND
PUTNAM GLOBAL INCOME TRUST
PUTNAM GLOBAL NATURAL RESOURCES FUND
PUTNAM GLOBAL UTILITIES FUND
PUTNAM HIGH YIELD ADVANTAGE FUND
PUTNAM HIGH YIELD TRUST
PUTNAM INCOME FUND
PUTNAM INTERNATIONAL EQUITY FUND
PUTNAM INVESTMENT FUNDS, on behalf of
its fund series as listed in Appendix I attached hereto
PUTNAM INVESTORS FUND
LIMITED ACCESS
Signature Page 2 |
PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND
PUTNAM MICHIGAN TAX EXEMPT INCOME FUND
PUTNAM MINNESOTA TAX EXEMPT INCOME FUND
PUTNAM MONEY MARKET FUND
PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND
PUTNAM NEW OPPORTUNITIES FUND
PUTNAM NEW YORK TAX EXEMPT INCOME FUND
PUTNAM OHIO TAX EXEMPT INCOME FUND
PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND
PUTNAM TAX EXEMPT INCOME FUND
PUTNAM TAX EXEMPT MONEY MARKET FUND
PUTNAM TAX-FREE INCOME TRUST, on behalf of
its fund series as listed in Appendix I attached hereto
PUTNAM US GOVERNMENT INCOME TRUST
PUTNAM VARIABLE TRUST, on behalf of
its fund series as listed in Appendix I attached hereto
PUTNAM VISTA FUND
PUTNAM VOYAGER FUND
THE GEORGE PUTNAM FUND OF BOSTON
THE PUTNAM FUND FOR GROWTH AND INCOME
By: /s/ | Jonathan S. Horwitz |
Name: | Jonathan S. Horwitz |
Title: | Executive Vice President, Principal Executive Officer, |
Treasurer and Compliance Liason, of each of the foregoing |
Acknowledged:
STATE STREET BANK AND TRUST COMPANY,
as Custodian
By: /s/ | Michael F. Rogers |
Name: | Michael F. Rogers |
Title: | Executive Vice President |
LIMITED ACCESS
APPENDIX I |
List of Borrowers and Funds |
PUTNAM AMERICAN GOVERNMENT INCOME FUND
PUTNAM ARIZONA TAX EXEMPT INCOME FUND
PUTNAM ASSET ALLOCATION FUNDS
on behalf of:
Putnam Asset Allocation: Balanced Portfolio
Putnam Asset Allocation: Conservative Portfolio
Putnam Asset Allocation: Growth Portfolio
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
PUTNAM CONVERTIBLE INCOME-GROWTH TRUST
PUTNAM DIVERSIFIED INCOME TRUST
PUTNAM EQUITY INCOME FUND
PUTNAM EUROPE EQUITY FUND
PUTNAM FUNDS TRUST
on behalf of:
Putnam Absolute Return 100 Fund
Putnam Absolute Return 300 Fund
Putnam Absolute Return 500 Fund
Putnam Absolute Return 700 Fund
Putnam Asia Pacific Equity Fund
Putnam Asset Allocation: Equity Portfolio
Putnam Capital Spectrum Fund
Putnam Emerging Markets Equity Fund
Putnam Equity Spectrum Fund
Putnam Floating Rate Income Fund
Putnam Global Consumer Fund
Putnam Global Energy Fund
Putnam Global Financials Fund
Putnam Global Industrials Fund
Putnam Global Technology Fund
Putnam Global Telecommunications Fund
Putnam Income Strategies Fund
Putnam International Value Fund
Putnam Small Cap Growth Fund
PUTNAM GLOBAL EQUITY FUND
PUTNAM GLOBAL HEALTH CARE FUND
PUTNAM GLOBAL INCOME TRUST
PUTNAM GLOBAL NATURAL RESOURCES FUND
PUTNAM GLOBAL UTILITIES FUND
PUTNAM HIGH YIELD ADVANTAGE FUND
PUTNAM HIGH YIELD TRUST
PUTNAM INCOME FUND
PUTNAM INTERNATIONAL EQUITY FUND
LIMITED ACCESS
2 |
PUTNAM INVESTMENT FUNDS
on behalf of:
Putnam Capital Opportunities Fund
Putnam Growth Opportunities Fund
Putnam International Capital Opportunities Fund
Putnam International Growth Fund
Putnam Mid Cap Value Fund
Putnam Research Fund
Putnam Small Cap Value Fund
PUTNAM INVESTORS FUND
PUTNAM MASSACHUSETTS TAX EXEMPT INCOME
FUND
PUTNAM MICHIGAN TAX EXEMPT INCOME FUND
PUTNAM MINNESOTA TAX EXEMPT INCOME FUND
PUTNAM MONEY MARKET FUND
PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND
PUTNAM NEW OPPORTUNITIES FUND
PUTNAM NEW YORK TAX EXEMPT INCOME FUND
PUTNAM OHIO TAX EXEMPT INCOME FUND
PUTNAM PENNSYLVANIA TAX EXEMPT INCOME
FUND
PUTNAM TAX EXEMPT INCOME FUND
PUTNAM TAX EXEMPT MONEY MARKET FUND
PUTNAM TAX-FREE INCOME TRUST
on behalf of:
Putnam AMT-Free Municipal Fund
Putnam Tax-Free High Yield Fund
PUTNAM US GOVERNMENT INCOME TRUST
PUTNAM VARIABLE TRUST
on behalf of:
Putnam VT American Government Income Fund
Putnam VT Capital Opportunities Fund
Putnam VT Diversified Income Fund
Putnam VT Equity Income Fund
Putnam VT Global Asset Allocation Fund
Putnam VT Global Equity Fund
Putnam VT Global Health Care Fund
Putnam VT Global Utilities Fund
Putnam VT Growth and Income Fund
Putnam VT Growth Opportunities Fund
Putnam VT High Yield Fund
Putnam VT Income Fund
Putnam VT International Equity Fund
LIMITED ACCESS
3 |
Putnam VT International Value Fund
Putnam VT International Growth Fund
Putnam VT Investors Fund
Putnam VT Mid Cap Value Fund
Putnam VT Money Market Fund
Putnam VT New Opportunities Fund
Putnam VT Research Fund
Putnam VT Small Cap Value Fund
Putnam VT The George Putnam Fund of Boston
Putnam VT Vista Fund
Putnam VT Voyager Fund
PUTNAM VISTA FUND
PUTNAM VOYAGER FUND
THE GEORGE PUTNAM FUND OF BOSTON
THE PUTNAM FUND FOR GROWTH AND INCOME
LIMITED ACCESS
EXHIBIT A | ||
PROMISSORY NOTE | ||
(COMMITTED LINE) | ||
$285,000,000.00 | July 6, 2010 | |
Boston, Massachusetts |
For value received, each of the undersigned hereby severally promises to pay to State Street Bank and Trust Company (the Bank), or order, at the office of the Bank at 100 Huntington Avenue, Tower 2, Floor 4, Boston, Massachusetts 02116 in immediately available United States dollars, the principal amount of TWO HUNDRED EIGHTY-FIVE MILLION AND 00/100 DOLLARS ($285,000,000.00), or such lesser original principal amount as shall be outstanding hereunder and not have been prepaid as provided herein, together with interest thereon as provided below. Each Loan shall be payable upon the earliest to occur of (a) the Expiration Date, (b) 60 calendar days following the date on which such Loan is made, or (c) the date on which such Loan otherwise becomes due and payable under the terms of the Loan Agreement referred to below, whether following the continuance of an Event of Default or other wise. Interest on the unpaid principal amount outstanding hereunder shall be payable at the rates and at the times as set forth in the Loan Agreement and shall be computed as set forth in the Loan Agreement. Interest shall be computed on the basis of a 360-day year for the actual number of days elapsed, including holidays or other days on which the Bank is not open for the conduct of banking business.
All Loans hereunder and all payments on account of principal and interest hereof shall be recorded by the Bank. The entries on the records of the Bank (including any appearing on this Note), absent manifest error, shall govern and control as to amounts outstanding hereunder, provided that the failure by the Bank to make any such entry shall not affect the obligation of the undersigned to make payments of principal and interest on all Loans as provided herein and in the Loan Agreement.
Upon notice from the Bank to the undersigned given at any time following the occurrence and during the continuance of an Event of Default, unpaid principal on any Loan, and to the extent permitted by applicable law, unpaid interest on any Loan, shall thereafter bear interest, compounded monthly and be payable on demand, until paid in full (after as well as before judgment) at a rate per annum equal to two percent (2%) above the rate otherwise applicable to such Loan under the Loan Agreement.
This Note is issued pursuant to, and entitled to the benefits of, and is subject to, the provisions of a certain letter agreement dated July 6, 2010 by and among the undersigned and the Bank (herein, as the same may from time to time be amended, restated, supplemented, modified or extended, referred to as the Loan Agreement), but neither this reference to the Loan Agreement nor any provision thereof shall affect or impair the absolute and unconditional
LIMITED ACCESS
2 |
obligation of the undersigned makers of this Note to pay the principal of and interest on this Note as herein provided. All terms not otherwise defined herein shall be used as defined in the Loan Agreement.
The undersigned may at its option prepay all or any part of the principal of this Note subject to the terms of the Loan Agreement. Amounts prepaid may be reborrowed subject to the terms of the Loan Agreement.
Each of the undersigned makers and every endorser and guarantor hereof hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement hereof and consents that this Note may be extended from time to time and that no such extension or other indulgence, and no substitution, release or surrender of collateral and no discharge or release of any other party primarily or secondarily liable hereon, shall discharge or otherwise affect the liability of any of the undersigned or any such endorser or guarantor. No delay or omission on the part of the Bank in exercising any right hereunder shall operate as a waiver of such right or of any other right hereunder, and a waiver of any such right on any one occasion shall not be construed as a bar to or waiver of any such right on any future occasion.
A copy of the Agreement and Declaration of Trust of each of the undersigned Borrowers is on file with the Secretary of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trustees of each Borrower as Trustees and not individually and that the obligations of this instrument are not binding on any of the Trustees or officers or shareholders individually, but are binding only on the assets or property of each Fund with respect to its obligations hereunder. In addition, although multiple Borrowers may be party hereto on behalf of multiple Funds, each Borrower is executing this instrument on behalf of each of its Funds individually (and not jointly or jointly and severally) and no Borrower or Fund is liable for any matter relating to any other Borrower or Fund.
This instrument shall have the effect of an instrument executed under seal and shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts (without giving effect to any conflicts of laws provisions contained therein).
WITNESS: | [TRUST NAME] | |
__________________________________________ | ||
[TRUST NAME], on behalf of its fund | ||
series as listed in Appendix I attached hereto | ||
By: __________________________________________ | ||
Name: | ||
Title: |
LIMITED ACCESS
SCHEDULE I TO NOTE DATED JULY 6, 2010 |
Date of | Amount of | Amount of Principal | Outstanding | |||||
Loan | Principal | Paid | Balance | Notation Made By | ||||
LIMITED ACCESS
APPENDIX I |
List of Borrowers and Funds |
[TRUST NAME]
[TRUST NAME]
on behalf of:
[Funds]
LIMITED ACCESS
EXHIBIT B |
ADVANCE/PAYDOWN |
REQUEST FORM |
(COMMITTED LINE) |
DATE: | ___________________________________________________________________________________________________________________ | |
TO: | STATE STREET BANK AND TRUST COMPANY _______________________________________________________________________ | |
ATTN: | LOAN OPERATIONS CUSTOMER SERVICE UNIT | |
telephone 617-937-8806 or 617-937-8808; fax 617-988-6677 _______________________________________________________________________________ | ||
FROM: | [BORROWER][ on behalf of [FUND]] ___________________________________________________________________________________ | |
(Fund # ___________) | (DDA # ____________) |
In connection with the letter agreement dated July 6, 2010 and related documents currently in effect with State Street Bank and Trust Company (as amended, collectively, the Agreement), please increase/reduce (circle one) the outstanding balance on behalf of the above-indicated Fund by $__________. Any requested Loan should be recorded on the books of the Fund with the Bank and interest payable to the Bank should be recorded at the agreed upon rate.
1. This request is (check one): ___ Loan Advance ____ Paydown ____ Overnight Rollover ___
2. The proceeds of any requested Loan shall be used only to the extent consistent with and not prohibited by the Prospectus, the terms of the Agreement and applicable laws and regulations, including, without limitation, Federal Reserve Regulation U, and no Default of Event of Default has occurred under the Agreement.
4. All of the representations and warranties of the undersigned Borrower and Fund set forth in Section II(2) of the Agreement are true and correct on and as of the date hereof.
5. Each of the Borrower and the Fund is in compliance with all the terms and conditions in the Agreement (including the Maximum Amount and other borrowing limitations thereunder) and will remain in compliance therewith after giving effect to the making of any requested Loan.
6. The following amounts and statements are true in connection with any requested Loan:
(a) | Adjusted Net Assets of the Fund: | |
(i) Total Assets of the Fund | $_____________ | |
(ii) Total Liabilities (excluding Indebtedness | ||
for borrowed money) of the Fund1 | $_____________ | |
(iii) item (a)(i) less item (a)(ii) | $_____________ | |
(b) 33-1/3% of item (a)(iii) | $_____________ |
1 For purposes of calculating Adjusted Net Assets for any Fund, the amount of any liability included in Total Liabilities shall be equal to the greater of (i) the outstanding amount of such liability and (ii) the fair market value of all assets pledged or otherwise segregated to secure such liability.
LIMITED ACCESS
2 |
(c) | (i) Beginning Loan Balance: | $_____________ |
(ii) Paydown Amount (if any): | $_____________ | |
(iii) Requested Loan (if any) | $_____________ | |
(iv) Requested Loans Balance ((i) | ||
minus (ii) or (i) plus (iii)): | $_____________ | |
(d) The aggregate outstanding principal amount of | ||
Indebtedness for borrowed money of the Fund other | ||
than the Loans as of the date hereof (including any | ||
loans under the separate Uncommitted Line and | ||
including any Interfund Loans) | $_____________ | |
(e) Total Indebtedness for borrowed money ((c)(iv) plus (d)): | $_____________ |
7. The amount set forth in 6(e) above does not exceed the lesser of (a) the amount set forth in 6(b) above, or (b) the maximum amount which the relevant Fund is permitted to borrow (after taking into account all outstanding Indebtedness) pursuant to its Prospectus, the Investment Company Act or any registration made thereunder, any vote of the shareholders of the applicable Borrower or such Fund, any agreement of such Borrower or Fund with any foreign, federal, state or local securities division to which such Borrower or Fund is subject, any other applicable agreement or document to which such Borrower or Fund, is a party or any law, rule or regulation applicable to such Borrower or Fund.
8. The amount set forth in 6(c)(iv) above does not exceed the Per Fund Limit Amount (defined as the difference of (a) $200,000,000 minus (b) the aggregate principal amount of all loans, if any, outstanding to the Fund under the Uncommitted Line). The aggregate principal amount of all Loans outstanding to all Borrowers on behalf of all Funds under the Agreement (after giving effect to the amount of any requested Loan) does not exceed the Committed Line Amount.
9. The Fund for which any Loan is being requested hereby does not currently have outstanding any Interfund Loans made to such Fund as borrower which are secured by any collateral and does not currently have any outstanding Interfund Loans made by it as the lender.
10. The undersigned is a duly authorized officer of the Borrower identified above with authority to execute and deliver this document to the Bank and request the Loan described herein on behalf of the Fund identified above.
[BORROWER][, on behalf of [FUND]] | ||
By: | ___________________________________________________ | |
Name: | ___________________________________________________ | |
Title | ___________________________________________________ | |
Date: | ___________________________________________________ |
LIMITED ACCESS
EXHIBIT C |
INDEBTEDNESS |
None. |
LIMITED ACCESS
EXHIBIT D |
ENCUMBRANCES |
None. |
LIMITED ACCESS
EXHIBIT E |
LITIGATION |
None. |
LIMITED ACCESS
State Street | Credit Services | |
Copley Place Tower | ||
Box 5303 | ||
Boston, MA 02206 | ||
July 6, 2010 | ||
Each of the Borrowers listed | ||
on Appendix I hereto | ||
One Post Office Square | ||
Boston, MA 02109 | ||
Attention: | Jonathan S. Horwitz, | |
Executive Vice President, Principal Executive Officer, | ||
Treasurer and Compliance Liason | ||
RE: Putnam Funds Uncommitted Line of Credit |
Ladies and Gentlemen:
State Street Bank and Trust Company (the Bank) is pleased to make available a $165,000,000 discretionary, uncommitted, unsecured line of credit (the Uncommitted Line) to each of the management investment companies registered under the Investment Company Act listed on Appendix I attached hereto (each, a Borrower), each acting on behalf of itself or on behalf of one or more of its respective Funds (as defined in Section 16), in each case acting separately from all of the other Borrowers and Funds and not jointly or jointly and severally with any of them, on the following terms and conditions:
I. Uncommitted Line
1. Term. The Uncommitted Line shall commence on the date hereof and expire July 5, 2011 (the "Expiration Date"), unless extended in the discretion of the Bank or, with respect to any Fund, terminated by a Borrower on behalf of such Fund as provided herein; provided that the Uncommitted Line is held available on a discretionary basis and may be terminated by the Bank at any time for any or no reason. A Borrower, on behalf of one of its respective Funds, may terminate the Uncommitted Line with respect to such Fund upon three (3) days prior written notice and payment of all outstanding principal, interest, fees, costs, expenses and other amounts owing by such Fund to the Bank hereunder on the effective date of termination.
2. Notice and Manner of Borrowings. In the sole and absolute discretion of the Bank, and in any event subject to the terms and conditions hereof, the Bank may make revolving loans to a Borrower on behalf of any Fund under the Uncommitted Line (each such loan, a
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 2
"Loan"); provided that, in each case after giving effect to the requested Loan, (a) the aggregate outstanding Indebtedness for borrowed money of such Fund (including the aggregate principal amount of all Loans outstanding to such Fund hereunder, the aggregate principal amount of all loans, if any, outstanding to such Fund under the Committed Line, and the aggregate principal amount of all Interfund Loans, if any, outstanding to such Fund) shall not exceed the Maximum Amount applicable to such Fund, (b) the aggregate principal amount of Loans outstanding to such Fund hereunder shall not exceed the Per Fund Limit Amount, and (c) the aggregate principal amount of Loans outstanding to all Borrowers on behalf of all Funds hereunder shall not exceed the Uncommitted Line Amount. Each request for a Loan h ereunder, shall be made in writing by any Borrower on behalf of a Fund by delivering a completed loan request in the form of Exhibit B attached hereto and such other information or documentation as the Bank may reasonably request. Each such Loan request shall be made by any Borrower on behalf of a Fund and received by the Bank not later than 3:00 p.m., Boston time, on the Business Day on which such Loan is to be made. Each Loan request hereunder shall be deemed to be a confirmation by the applicable Borrower on behalf of the applicable Fund that no Default or Event of Default has occurred and is continuing hereunder with respect to such Fund, that the representations and warranties of such Borrower on behalf of such Fund described below remain true and correct, and that no borrowing limitations applicable to such Fund or the Uncommitted Line (including those set forth in clauses (a) through (c) of the proviso above in this Section ) will be exceeded after giving effect to the requested Loan, each of which shall be a precondition to the making of any Loan hereunder. Notwithstanding the foregoing, each of the Borrowers agrees and understands that the making of any Loan hereunder shall remain in the sole and absolute discretion of the Bank and the Bank shall have no commitment with respect thereto.
3. Evidence of Indebtedness. All Loans will be evidenced by a promissory note in the form attached hereto as Exhibit A executed by each of the Borrowers on behalf of its respective Funds (as amended, restated, extended, replaced or otherwise modified and in effect from time to time, the "Note"). Each Borrower, on behalf of its respective Funds, hereby authorizes the Bank to record each Loan and the corresponding information on the Banks books and records (including the schedule forming part of the Note), and, absent manifest error, this record shall govern and control. The failure by the Bank to record, or any error in so recording, any such amount on the Bank's books and records, such schedule, or any other recor d maintained by the Bank, shall not limit or otherwise affect the obligation of each of the Borrowers, on behalf of its respective Funds, to make payments of principal of and interest on each Loan as provided herein and in the Note.
4. Interest Rate. Principal on each outstanding Loan shall bear interest at a variable rate per annum equal to the Federal Funds Rate plus 1.30%. Interest on each Loan shall be calculated on the basis of a 360-day year for the actual number of days elapsed. Upon notice from the Bank to a Borrower, on behalf of any of its respective Funds, given at any time following the occurrence and during the continuance of an Event of Default hereunder with respect to such Fund, unpaid principal on any Loan incurred by such Borrower on behalf of such Fund, and to the extent permitted by applicable law, unpaid interest on such Loan, shall
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 3
thereafter bear interest, compounded monthly and payable on demand, until paid in full (after as well as before judgment) at a rate per annum equal to two percent (2%) above the rate otherwise applicable to such Loan hereunder.
5. Payments and Prepayments; Recourse. (a) Each of the Borrowers, on behalf of its respective Funds, hereby promises to pay accrued interest on all Loans incurred by it monthly in arrears on the first day of each month; provided, however, that in each such case if such day on which interest on any Loans is due is not a Business Day, interest shall be payable on the next preceding Business Day. Each of the Borrowers, on behalf of its respective Funds, hereby promises to repay the principal amount of each outstanding Loan incurred by it, together with all accrued and unpaid interest thereon, upon the earliest of (i) 60 days following the date on which such Loan is made, (ii) the date on which such Loan becomes due pursuan t to Section II(4) below following the continuance of an Event of Default, or (iii) the Expiration Date, provided that no Borrower may have one or more Loans outstanding hereunder with respect to any one Fund for a period in excess of 60 consecutive calendar days. Each of the Borrowers, on behalf of each of its respective Funds, further covenants and agrees to immediately repay (1) the outstanding aggregate principal amount of any Indebtedness for borrowed money of any such Fund at any time (including the then outstanding aggregate principal amount of all Loans to such Fund hereunder and including the aggregate principal amount of all loans, if any, outstanding to such Fund under the Committed Line) to the extent such amount exceeds the Maximum Amount applicable to such Fund at such time, and (2) any amount by which the then outstanding aggregate principal amount of all Loans to any such Fund at any time exceeds the Per Fund Limit Amount, in each case upon the earlier to occur of such Borrower first becoming aware of any such circumstance or demand by the Bank. Each of the Borrowers, on behalf of each of its respective Funds having Loans outstanding at any time, further covenants and agrees that it shall make such repayments of the Loans outstanding to each such Fund at any time to the extent required such that the then outstanding aggregate principal amount of all Loans to all Funds hereunder shall at no time exceed the Uncommitted Line Amount, in each case upon the earlier to occur of such Borrower first becoming aware of any such circumstance or demand by the Bank. Loans may be prepaid at the option of the Borrowers without penalty or premium, and any amounts prepaid may be reborrowed in the Banks sole discretion and otherwise subject to the terms hereof.
(b) All payments by the Borrowers on behalf of their respective Funds hereunder and under any of the other Loan Documents shall be made not later than 2:00 p.m. Boston time on the date due in immediately available United States dollars at the Bank's office at 100 Huntington Avenue, Tower 2, Floor 4, Boston, Massachusetts or as otherwise directed in writing by the Bank. Each of the Borrowers, on behalf of its respective Funds, hereby authorizes and instructs the Bank to debit its accounts with the Bank on the date when payment of amounts hereunder is due, and in the amounts of such payments. All such payments by the Borrowers on behalf of their respective Funds hereunder and under any of the other Loan Documents shall be made without recoupment, setoff or counterclaim and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans,
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 4
restrictions or conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political subdivision thereof or taxing or other authority therein (excluding taxes that are imposed on the Banks overall net income (or franchise taxes imposed in lieu thereof) by the United States and by the state under the laws of which the Bank is organized (all such non-excluded taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions and conditions being herein referred to as Taxes)) unless a Borrower is compelled by law to make such deduction or withholding. If any such obligation is imposed upon a Borrower with respect to any amount payable by it hereunder or under any of the Loan Documents, such Borrower will pay to the Bank, on the date on which such amount is due and payable hereunder or under the L oan Documents, such additional amount in United States dollars as shall be necessary to enable the Bank to receive the same net amount which the Bank would have received on such due date had no such obligation been imposed upon such Borrower. The applicable Borrower will deliver promptly to the Bank certificates or other valid vouchers for all taxes or other charges deducted from or paid with respect to payments made by such Borrower hereunder or under the Loan Documents. In addition, each of the Borrowers, on behalf of its respective Funds, shall pay any present or future stamp, documentary, excise, property or similar taxes, charges or levies that arise from any payment made hereunder or from the execution, delivery or registration of, performance under, or otherwise with respect to, this Agreement or any of the Loan Documents (herein referred to as Other Taxes). Each of the Borrowers, on behalf of its respective Fun ds, shall indemnify the Bank for and hold the Bank harmless against the full amount of Taxes and Other Taxes, and for the full amount of taxes of any kind imposed by any jurisdiction on amounts payable under this Section I(5)(b), imposed on or paid by the Bank and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification payment shall be made within 30 days from the date the Bank makes written demand therefor. If the Bank determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by a Borrower or with respect to which a Borrower has paid additional amounts pursuant to this Section I(5)(b), it shall pay to such Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by such Borrower under this Section I(5)(b) with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of - -pocket expenses incurred by the Bank and without interest (other than any interest paid by the relevant governmental authority with respect to such refund), provided that each Borrower, upon the request of the Bank, agrees to repay the amount paid over to such Borrower (plus any penalties, interest or other charges imposed by the relevant governmental authority) to the Bank in the event that the Bank is required to repay such refund to such governmental authority. This subsection shall not be construed to require the Bank to make available its tax returns (or any other information relating to its taxes that it deems confidential) to any Borrower or any other person.
(c) The Bank and each of the Borrowers acknowledge and agree that the Bank shall look solely to the property of each respective Fund for the enforcement of any claim against such Fund. None of the trustees, officers, employees, agents or shareholders of any Borrower or any Fund assumes any personal liability for the obligations entered into by any Borrower on
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 5
behalf of any Fund with respect to the Uncommitted Line. In addition, the principal amount of any Loan, and accrued interest thereon, and any fees, costs, expenses, indemnities or other amounts payable in connection with or relating to any Fund or any Loan pursuant to this Agreement (other than any fees, costs, expenses, indemnities or other amounts payable to the Bank pursuant to the terms hereof not specific or identifiable to any Fund or Funds or any particular Loan), shall be paid or repaid solely from the assets of such Fund (or the Fund to which such Loan is made), and the Bank shall have no right of recourse or offset against the assets of any other Fund or any other series of any Borrower for such amounts. Each Fund shall be severally (and not jointly or jointly and severally) liable to the Bank hereunder for fees, costs, expenses, indemnities or other amounts owed to the Bank pursuant to the terms hereof that are not specific or identifiable t o any Fund or Funds or any particular Loan in accordance with such Funds ratable portion thereof based upon the relative Net Assets of each Fund at any time of determination or based upon such other method reasonably acceptable to the Bank as the board of directors or trustees of the respective Borrowers may determine upon prior written notice to the Bank.
6. Use of Loan Proceeds. Proceeds of Loans may be used solely for temporary or emergency purposes, including, without limitation, to temporarily finance the redemption of the shares of an investor of the Fund on behalf of which a Loan is made, or to temporarily finance the purchase or sale of securities for prompt delivery if the Loan is to be repaid promptly in the ordinary course of business upon completion of such purchase or sale transaction, or for other temporary and emergency purposes in each case consistent with the then current investment objectives and investment restrictions of the Fund on behalf of which a Loan is made; provided that such use of proceeds of each such Loan (a) shall constitute an Exempted Transaction as described in section 221.6(f) of Regulation U, (b) shal l otherwise constitute an Exempted Transaction under, or shall not constitute a purpose credit for purposes of, Regulation U, or (c) shall not otherwise cause such loans to violate the provisions of Regulation U; provided, further, that no proceeds of any Loan made hereunder shall be used to make any Interfund Loan.
In the event that the proposed use of proceeds of any Loan to a Fund shall not constitute an Exempted Transaction under Regulation U, but shall nonetheless constitute a purpose credit for purposes thereof, the applicable Borrower, on behalf of such Fund, at the time of the request for such Loan is made, shall furnish the Bank with an updated statement in conformity with the requirements of Federal Reserve Form U-1 referred to in Regulation U. Each Loan shall be made in compliance with, and subject to, the relevant Funds Prospectus and Regulation U and no portion of any proceeds of any Loan shall be used directly or indirectly in violation of any provision of any statute, regulation, order or restriction applicable to the Bank, any Borrower or any Fund.
7. Addition of Borrowers and Funds. With the prior written consent of the Bank in its sole discretion (exercised in accordance with the Banks current guidelines and practices) and in any event no more than once per calendar quarter, any Borrower may request the addition to the terms of this Agreement of (a) one or more management investment companies registered under the Investment Company Act as a Borrower hereunder or (b) any fund series of a
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 6
Borrower as a Fund hereunder. In no event will any such additional management investment company or fund series be added to the terms of this Agreement if such management investment company or fund series is advised or sub-advised by the Bank or an affiliate of the Bank. The addition of any such management investment company or fund series shall be subject to consent by the Bank in its sole discretion and completion of an appropriate amendment to this Agreement and such other documentation as the Bank may reasonably require, including without limitation current prospectus and related information; corporate, trust or similar existence and authorization documentation; and appropriate legal opinions, in each case with respect to any proposed new Borrower or Fund as the Bank may reasonably require.
8. Closing Fee. Each of the Borrowers, on behalf of its respective Funds, hereby agrees to pay to the Bank on the date hereof a closing fee in an aggregate amount for all Borrowers equal to $100,000, payable as a condition precedent to closing. Such fee shall be non-refundable and shall be deemed fully earned by the Bank on the date hereof.
II. General Loan Terms
1. Covenants. Until all obligations of the Borrowers and their respective Funds with respect to the Uncommitted Line have been paid in full and the Uncommitted Line has been
terminated, unless otherwise consented to in writing by the Bank, each of the Borrowers hereby covenants and agrees as follows for itself and on behalf of each of its respective Funds but not as to any other Borrower or Funds (each of the Borrowers hereby acknowledging and agreeing that compliance with the following covenants shall not in any way compromise the absolute discretion of the Bank whether or not to make Loans under the Uncommitted Line):
(a) not to create, assume or suffer to exist any Indebtedness for borrowed money such that the outstanding principal amount of Indebtedness for borrowed money (including Loans hereunder and including loans, if any, under the Committed Line) of any one Fund at any time exceeds the Maximum Amount of such Fund;
(b) not to issue any preferred stock or create, incur, assume, suffer to exist, or guarantee, any Indebtedness other than, to the extent permitted by the relevant Prospectus (i) Indebtedness owing to the Bank; (ii) Indebtedness owing to the Custodian of such Borrower or Fund incurred in connection with such custody relationship; (iii) subject to the provisions of Section II(1)(g) below, Indebtedness consisting of Interfund Loans outstanding to any Fund and incurred to the extent permitted by, and consistent with, the Interfund Lending Exemptive Order; (iv) other Indebtedness existing as of the date of this Agreement and disclosed on Exhibit C hereto; (v) preferred stock or Indebtedness issued or incurred with the prior written consent of the Bank; and (vi) other Indebtedness incurred in the ordinary course of such Borrowers or Fund's business in connection with portfol io investments or investment techniques permissible under the Investment Company Act (and not for the primary purpose of borrowing money), but only to the extent such Indebtedness is reflected as a liability in the calculation of such Borrowers or Funds Adjusted Net Assets;
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 7
(c) not to create, incur, assume or suffer to exist any mortgage, pledge, security interest, lien, hypothecation, or other charge or encumbrance upon any of its assets or properties, or enter into any agreement preventing it from encumbering any such assets or properties other than, to the extent permitted by the relevant Prospectus (i) those in favor of the Bank or its affiliates or subsidiaries; (ii) subject to the provisions of Section II(1)(g) below, liens incurred consistent with the Interfund Lending Exemptive Order securing Interfund Loans; (iii) those existing on the date hereof and described on Exhibit D hereto; (iv) those in favor of the Custodian of such Borrower or Fund securing Indebtedness permitted by Section II(1)(b)(ii) above; (v) those for which the Bank has given its prior written consent; (vi) those arising in the ordinary course of such Borrowers o r Funds business out of or in connection with portfolio investments or investment techniques securing Indebtedness permitted by Section II(1)(b)(vi) above; and (vii) liens for taxes, fees, assessments and other governmental charges not yet due and payable and with respect to which reserves or other appropriate provisions as may be required by generally accepted accounting principles are being maintained;
(d) to (i) duly observe and comply in all material respects with all applicable laws, including, without limitation, the Investment Company Act and any asset coverage and borrowing restrictions and restrictions on Indebtedness and extensions of credit contained therein and applicable to such Borrower or Fund, and applicable securities laws and regulations, in each case except to the extent that any failure to observe or comply could not reasonably be expected to have a Material Adverse Effect; (ii) pay all taxes and governmental charges prior to the time they become delinquent, unless such taxes or charges are being contested in good faith by appropriate proceedings and as to which such reserves or other appropriate provisions as may be required by generally accepted accounting principles are being maintained; (iii) maintain in full force and effect all licenses and permits necessary in any material respect for the proper conduct of its business; (iv) maintain its status as an open-end management investment company registered under the Investment Company Act and its status as a regulated investment company under Subchapter M of the Internal Revenue Code; (v) operate in material compliance with its declaration of trust, certificate or articles of incorporation, by-laws and/or other organizational documents, its Prospectus and all applicable investment policies and restrictions and agreements relating thereto; (vi) except for Permitted Mergers, not merge or consolidate with or into any entity or purchase all or substantially all of the assets or stock of any entity or sell or otherwise transfer all or any substantial portion of such Borrower's or such Funds assets (other than the sale of portfolio assets in the ordinary course of business as described in its Prospectus); (vii) not permit there to occur a change in the investment adviser of such Fund from the Investment Adviser without the prior written consent of the Bank; (viii) not permit there to o ccur a change in the custodian of such Fund's assets from the Custodian; (ix) not permit any change in the investment objectives or in the fundamental investment restrictions of such Borrower or Fund as described in its Prospectus, in any such case without the prior written consent of the Bank; (x) comply with all terms and provisions of all documents evidencing or securing any Indebtedness to or with the Bank and any other Indebtedness owing to any third party, including without limitation any Interfund Loans ("Other Indebtedness"); (xi) immediately notify the Bank of any
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 8
event of default with respect to any Other Indebtedness and of any default under, or termination of, any agreement with the Custodian or with the Investment Adviser and provide to the Bank a copy of any notice or claim of any such default or termination; (xii) promptly notify the Bank of any material litigation or governmental proceeding or investigation commenced or threatened in writing against such Borrower or Fund, to the extent permitted by applicable law; (xiii) immediately notify the Bank of the occurrence of any Default or Event of Default hereunder; and (xiv) maintain with financially sound and reputable insurance companies insurance in such amounts and covering such risks as is consistent with sound business practice and industry standards;
(e) to permit the Bank or its representatives and agents to visit and inspect the properties of such Borrower and its respective Funds and to make copies or abstracts from such Borrowers or Funds books and records at all such reasonable times and as often as may be reasonably desired;
(f) to submit to the Bank: (i) within 60 days after the end of each semi-annual period in each fiscal year, such Borrowers or Funds semi-annual or annual, as the case may be, financial statements, including a statement of assets, liabilities and investments as of the end of each such period in a form reasonably acceptable to the Bank and, in the case of annual statements, audited by PricewaterhouseCoopers LLP, KPMG LLP or by another certified public accountant firm reasonably satisfactory to the Bank; (ii) promptly, all proxy materials, reports to shareholders and other information delivered to shareholders of such Borrower or Fund; (iii) promptly, all material reports, documents or other information relating to the financial condition of such Borrower or Fund that are delivered to the United States Securities and Exchange Commission, including in any event, copies of any material change to any Prospectus or registration statement; (iv) pri or to any Loan request or advance, and daily not later than 3:00 p.m. (Boston time) on each Business Day during which any Loans shall have been outstanding to such Fund, a certificate in the form attached as Exhibit B showing compliance by each such Fund with the borrowing limitations in Section I(2) above; and (v) such other financial statements and information as to each Borrower, Fund or the Investment Adviser as the Bank may reasonably request from time to time (all financial statements required hereunder to be prepared in accordance with generally accepted accounting principles consistently applied); and
(g) not engage, as borrower or lender, in Interfund Lending other than in compliance with the following conditions and limitations:
(i) such Interfund Lending (A) is not otherwise prohibited by law, (B) is conducted on terms and conditions in compliance in all respects with the terms of the Interfund Lending Exemptive Order, (C) has been duly authorized by each party thereto, (D) is not in contravention of the relevant lending and/or borrowing Fund's Prospectus, or any applicable law, rule or regulation, or any agreement to which the relevant Borrower on behalf of the relevant borrowing and/or lending Fund is a party or otherwise bound, including, without limitation, any agreement
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 9
relating to any Interfund Loan, and (E) is deemed to be Indebtedness of the relevant borrowing Fund for all purposes under this Agreement, including for purposes of calculating the borrowing limitations hereunder and the covenant in Section II(1)(a) hereof;
(ii) a Fund may not be a lender of an Interfund Loan at any time during which such Fund has any Loan outstanding hereunder nor may a Fund use the proceeds of any Loan to make an Interfund Loan;
(iii) at the time of the borrowing of any Loan by a Borrower on behalf of a Fund hereunder, such Borrower, on behalf of such Fund, shall not have outstanding as a borrower or a lender any Interfund Loan secured by a lien;
(iv) if at any time a Borrower, on behalf of a Fund, should secure an Interfund Loan or Interfund Loans with collateral, then each Loan to such Borrower, on behalf of such Fund, hereunder will be secured (A) at least on an equal priority basis with an equivalent percentage of collateral to loan value as any outstanding Interfund Loan that requires collateral, which may require such Borrower, on behalf of such Fund, to pledge at least such collateral as is necessary to maintain the market value of the collateral that secures such Loan at least equal to 102% of the outstanding principal amount of such Loans for so long as such Interfund Loan is so secured; and (B) with collateral that is not illiquid and has similar credit characteristics (each as determined by the Borrower in good faith in accordance with its policies and procedures and applicable law) to that of the collateral securing such Interfund Loan or Interfund Loans; and
(v) upon and during the continuance of a Default or Event of Default with respect to any Fund, the applicable Borrower, on behalf of such Fund, will not make or permit any payment or prepayment of any Interfund Loans owing by such Borrower, on behalf of such Fund, unless such Borrower, on behalf of such Fund, concurrently makes a pro rata payment or prepayment of Loans owing by such Borrower, on behalf of such Fund, if any, hereunder; and
(h) execute and deliver such additional instruments and take such further actions as the Bank may from time to time reasonably request to effect the purpose of the Loan Documents and the Loans.
Notwithstanding anything to the contrary in Section II(1)(f) above, but without in any way limiting the rights of the Bank set forth therein, unless the Bank shall request paper copies of the financial and other information otherwise required to be furnished by the Borrowers to the Bank pursuant to subsections (i) and (ii) of such Section II(1)(f) above, the Borrower may deliver all such information to the Bank in a printable format by electronic means. The Borrower may make such electronic delivery by: (i) sending such information as an electronic mail attachment
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 10
to such electronic mail addresses as shall be designated by the Bank, as applicable; or (ii) notifying the Bank by electronic mail (to such electronic mail addresses as shall be designated by the Bank, as applicable) that the documents are available on a website accessible to the Bank and further indicating a website hyperlink directing the user directly to the referenced documents posted thereon; provided that such information shall be made available on or before the dates specified in said subsections (i) and (ii) of such Section II(1)(f) above. Nothing contained in this paragraph shall require the Bank to maintain copies of the financial and other information referred to in this paragraph, and the Bank shall be solely responsible for requesting physical delivery of such information, or maintaining any such information, as applicable. Each of the Borrowers, on behalf of it s respective Funds, acknowledges that the distribution of material through an electronic medium is not necessarily secure and that there may be confidentiality and other risks associated with such distribution. In no event shall the Bank or any of its officers, directors, employees, agents, advisors or representatives have any liability to the Borrowers or Funds for damages of any kind, including without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses arising out of the Borrowers transmission of communications through the internet.
2. Representations and Warranties. Each of the Borrowers severally represents and warrants to the Bank, both as to itself and as to each of its respective Funds (but not as to any other Borrower or Fund) that:
(a) each such Borrower (i) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization; (ii) is registered as an open-end management investment company under the Investment Company Act; (iii) is qualified as a regulated investment company within the meaning of the Internal Revenue Code; (iv) has all requisite power and authority to own its property and conduct its business as is now conducted and is duly authorized to do business in each jurisdiction where the nature of its properties or business requires such qualification and where failure to be so qualified would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (v) is in material compliance with its declaration of trust, certificate or articles of incorporation, bylaws and/or other organizational documents and applicable law, including, without limitation, the Investment Company Act and R egulations T, U and X; and (vi) has filed all required income tax returns and has paid all taxes due pursuant to such returns, and the charges, accruals and reserves on the books and records of such Borrower or Fund with respect to such taxes and charges are adequate;
(b) the execution, delivery and performance of each of the Loan Documents and the making of any Loan by the Bank to such Borrower, on behalf of its respective Funds, hereunder (i) are, and will be, within such Borrowers or Funds power and authority; (ii) have been authorized by all necessary trust or corporate proceedings, as the case may be; (iii) do not, and will not, require the consent of any shareholders or other equity holders of such Borrower or Fund or approvals of any governmental authority, other than those which have been received; (iv) will not contravene any provision of, or exceed any limitation contained in, the certificate or
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 11
articles of incorporation, declaration of trust, by-laws and/or other organizational documents of such Borrower or Fund or its Prospectus or any judgment, decree or order or any law, rule or regulation applicable to such Borrower or Fund, including, without limitation, the Investment Company Act; (v) are, and will be, in compliance with Regulations T, U and X and the Investment Company Act; (vi) do not constitute a default under any other agreement, order or undertaking binding on such Borrower or Fund; and (vii) do not require the consent or approval of any obligee or holder of any instrument relating to any Other Indebtedness or any other party other than for those consents and approvals which have been received;
(c) no portion of any proceeds of any Loan shall be used directly or indirectly in violation of any provision of any statute, regulation, order or restriction applicable to the Bank or such Borrower or Fund, including Regulation U;
(d) each of the Loan Documents constitutes the legal, valid, binding and enforceable obligation of such Borrower, on behalf of its respective Funds, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors' rights generally and by general equitable principles;
(e) all financial statements of the Funds previously furnished to the Bank by such Borrower or Fund were prepared in accordance with generally accepted accounting principles and present fairly in all material respects the financial position of such Fund; since the date of the most recent audited financial statements furnished to the Bank prior to the date of this Agreement, there has been no material adverse change in the assets, liabilities, financial condition or business of such Borrower or any of its respective Funds; and such Borrower has disclosed to the Bank any and all facts which, to the best of such Borrowers knowledge, after due inquiry, materially and adversely affect or could reasonably be expected to materially and adversely affect, the business, assets, operations or financial condition of such Borrower or any of its respective Funds or the ability of such Borrower, on behalf of its respective Funds, to perform its obligations unde r the Loan Documents;
(f) such Borrower has good and marketable title to all its material properties, assets and rights of every name and nature purportedly owned by it on behalf of its respective Funds except for encumbrances permitted by Section II(1)(c) above;
(g) there is no litigation, arbitration, proceeding or investigation pending or, to the best of such Borrowers knowledge, overtly threatened against, such Borrower or any of its respective Funds or the Investment Adviser which could reasonably be expected to result in a Material Adverse Effect, except those described on Exhibit E attached hereto;
(h) the shares of such Borrower and its respective Funds have been registered under the Securities Act of 1933 and are eligible for sale under applicable state and federal securities laws and regulations;
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 12
(i) with regard to the Employee Retirement Income Security Act of 1974, and the rules and regulations thereunder, collectively, as amended and in effect from time to time (ERISA), neither such Borrower nor its respective Funds is treated as a single employer with any other person under ERISA, and none has any liability with respect to any benefit arrangement, plan or multi-employer plan subject to ERISA;
(j) neither such Borrower nor its respective Funds is an Affiliated Person, as defined in the Investment Company Act, of the Bank;
(k) the Investment Adviser serves as investment adviser to each of the Funds, and the Custodian serves as custodian for the assets of each of the Funds;
(l) such Borrower and its respective Funds have complied with, and is in compliance with, the investment objectives and policies and investment restrictions set forth in its Prospectus; and
(m) none of the requesting or borrowing of the Loans by such Borrower or the use of the proceeds of any Loans by such Borrower will violate the Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the "Trading With the Enemy Act") or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) (the "Foreign Assets Control Regulations") or any enabling legislation or executive order relating thereto (which for the avoidance of doubt shall include, but shall not be limited to (a) Executive Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the "
The making of each Loan hereunder to any Borrower on behalf of any Fund, shall be deemed to be a reaffirmation by such Borrower on behalf of such Fund, as to the representations and warranties contained in this Section II(2) and confirmation that no Default or Event of Default has occurred hereunder or will occur after giving effect to the making of such Loan.
3. Default. It will be a default hereunder with respect to any Fund if any of the following events (each, an Event of Default) occurs with respect to such Fund, with respect to the Borrower acting on behalf of such Fund, or, as applicable, with respect to the Investment Adviser:
(a) such Borrower, acting on behalf of such Fund, fails (i) to pay when due any amount of principal of any Loan, whether on demand, at maturity, upon acceleration,
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 13
pursuant to a mandatory repayment or prepayment provision hereof or otherwise, or (ii) to pay within three Business Days of when due any amount of interest on any Loan or any fees or expenses or other amounts payable under any of the Loan Documents; or
(b) such Borrower or Fund (i) shall fail to perform any term, covenant or agreement contained in any of Sections II(1)(a)-(c), Sections II(1)(d)(iv)(xiii) or Section II(f) hereof; or (ii) shall fail to perform any term, covenant or agreement contained in any of the Loan Documents (other than those specified elsewhere in this Section II(3)) or a default or event of default occurs thereunder and, in the case of this clause (ii), such failure or default or event of default shall continue for a period of thirty (30) days; or
(c) any material representation or warranty of such Borrower or Fund made in any of the Loan Documents or as an inducement for the Bank to make any Loan shall prove to have been false in any material respect upon the date when made or deemed to have been made; or
(d) such Borrower, acting on behalf of such Fund (i) fails to pay or perform when due any Obligation, whether now existing or hereafter arising, other than those referred to above in this Section II(3), or (ii) fails to pay at maturity, or within any applicable period of grace, any obligations for Other Indebtedness (including any Interfund Loan), or (iii) fails to observe or perform beyond any applicable grace period any term, covenant or agreement evidencing or securing such Other Indebtedness (including any Interfund Loan); or
(e) such Borrower or Fund or the Investment Adviser (i) applies for or consents to the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar official of itself or of all or a substantial part of its property; (ii) is generally not paying its debts as such debts become due; (iii) makes a general assignment for the benefit of its creditors; (iv) commences any case or proceeding under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency, reorganization, winding-up or composition or adjustment of debts, or any other law providing for the relief of debtors; (v) fails to contest in a timely or appropriate manner, or acquiesces in writing to, any petition filed against it in an involuntary case under the Federal Bankruptcy Code or any other law relating to bankruptcy, insolvency, reorganization, winding-up or composition or adjustment of debts, or any other law providing for the relief of debtors; (vi) takes any actions under state, federal or other applicable law in order to commence the liquidation of the Borrower or Fund, (vii) takes any action under the laws of its jurisdiction of incorporation or organization similar to any of the foregoing, or (viii) discontinues its business; or
(f) a proceeding or case shall be commenced against such Borrower or Fund or the Investment Adviser without the application or consent of such party, in any court of
competent jurisdiction, seeking (i) the liquidation, reorganization, dissolution, winding-up, or composition or readjustment of its debts; (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets; or (iii) similar relief in
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 14
respect of it, under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts or any other law providing for the relief of debtors, and such proceeding or case shall continue undismissed, or unstayed and in effect, for a period of 60 days; or an order for relief shall be entered in an involuntary case under the Federal Bankruptcy Code, against such Borrower or Fund or the Investment Adviser or action under the laws of the jurisdiction of incorporation or organization of such Borrower or Fund or the Investment Adviser similar to any of the foregoing shall be taken with respect to such Borrower or Fund or the Investment Adviser and shall continue unstayed and in effect for any period of 60 days; or
(g) a final judgment or final order for the payment of money shall be entered against such Borrower or Fund by any court of competent jurisdiction, or an execution or similar process shall be issued or levied against property of such Borrower or Fund, that in the aggregate exceeds 5% of the value of the Net Assets of such Borrower or Fund and such judgment, order, warrant or process shall not be, within 30 days after entry thereof, discharged or stayed pending appeal or shall not be discharged within 30 days after the expiration of such stay; or
(h) such Borrower or Fund shall challenge the validity or enforceability of any portion of any of the Loan Documents; or
(i) any investment advisory agreement which is in effect on the date hereof relating to such Fund shall terminate, the Investment Adviser shall cease to serve as the investment adviser for such Fund, or the Custodian shall cease to serve as the custodian for such Funds assets, in each instance without the prior written consent of the Bank; or
(j) such Borrower or Fund shall violate, or take any action that would result in a material deviation from, any of its fundamental investment policies or restrictions as in effect from time to time, including those as set forth in its Prospectus.
4. Remedies. Upon the occurrence of an Event of Default described in Section II(3)(e) or (f), immediately and automatically; and upon the occurrence of any other Event of Default, at any time thereafter while such Event of Default is continuing, at the Bank's option and upon the Bank's declaration:
(a) the Uncommitted Line established hereunder shall terminate with respect to the subject Fund;
(b) the unpaid principal amount of the Loans to the Borrower on behalf of the subject Fund, together with accrued and unpaid interest thereon, all fees, expenses and other Obligations, shall become immediately due and payable without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived; and
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 15
(c) the Bank may exercise any and all rights it has under any of the Loan Documents and proceed to protect and enforce the Bank's rights by any action at law, in equity or other appropriate proceeding as it relates to the subject Fund.
Each of the Borrowers, on behalf of each of its respective Funds, authorizes the Bank and the Custodian, following the occurrence and during the continuance of an Event of Default, to charge and setoff against any deposit account or other account maintained with either the Bank or the Custodian on behalf of such Borrower on behalf of each applicable Fund, and apply the proceeds thereof against repayment of any unpaid Obligations of the Borrower on behalf of such Fund, as appropriate. In addition, the Custodian, following the occurrence and during the continuance of an Event of Default, is hereby directed by such Borrower, on behalf of each of its respective Funds, to dispose of such Funds assets as selected by the Investment Adviser to the extent necessary to repay all amounts due to the Bank from such Borrower on behalf of such Fund to the extent that the Obligations of such Borrower on behalf of such Fund, have not been paid when due or if any other Event of Default has occurred. If the Investment Adviser does not select a sufficient amount of assets to repay all amounts due to the Bank from such Borrower on behalf of such Fund, within a reasonable time, the Custodian is hereby directed by such Borrower on behalf of such Fund, upon one days prior written notice to such Borrower on behalf of such Fund, and its Investment Adviser, to dispose of such Funds assets to the extent necessary to repay all amounts due to the Bank from such Borrower on behalf of such Fund. The foregoing shall be deemed to be continuing and irrevocable "proper instructions" to the Custodian for all purposes under the applicable custody agreement between such Borrower, on behalf of such Fund, and the Custodian. The foregoing shall be in addition to any other rights or remedies the Bank and the Custodian may have against such Borrower, on behalf of such Fund, following the occurrence of an Event of Default hereunder.
No right of the Bank shall be exclusive of any other right of the Bank now or hereafter available under the Loan Documents, at law, in equity or otherwise, and no course of dealing or delay by the Bank in exercising any right shall operate as a waiver thereof or otherwise affect any rights or remedies of the Bank.
NOTWITHSTANDING THE FOREGOING LISTED EVENTS OF DEFAULT AND REMEDIES OF THE BANK ARISING AS A RESULT THEREOF, NOTHING CONTAINED HEREIN SHALL BE DEEMED TO COMPROMISE THE DISCRETIONARY, UNCOMMITTED NATURE OF THE UNCOMMITTED LINE, AND EACH OF THE BORROWERS AGREES AND UNDERSTANDS THAT THE MAKING OF ANY LOAN HEREUNDER SHALL REMAIN IN THE SOLE AND ABSOLUTE DISCRETION OF THE BANK AND THE BANK SHALL HAVE NO COMMITMENT WITH RESPECT THERETO WHETHER OR NOT AN EVENT OF DEFAULT SHALL HAVE OCCURRED OR BE CONTINUING AND WHETHER OR NOT THE UNCOMMITTED LINE SHALL HAVE BEEN FORMALLY TERMINATED PURSUANT TO SECTION II(4)(a) ABOVE.
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 16
5. Notices. All notices hereunder shall be in writing and shall be deemed to have been given one Business Day after delivery to an overnight courier or when delivered by hand to the addresses given below and in each case such delivery is confirmed to have been made. Notices (a) to the Bank shall be given to State Street Bank and Trust Company, Copley Place Tower, Box 5303, Boston, Massachusetts 02206, or if by overnight courier service, to State Street Bank and Trust Company, 4 Copley Place, 5th Floor, Boston, Massachusetts 02116, in either case to the attention of: Janet B. Nolin, Vice President or Mutual Fund Lending Department Head, and (b) to any Borrower or Fund shall be deemed to have been given if given at the address stated at the beginning of this A greement to the attention of: Francis J. McNamara, III, Vice President and Chief Legal Officer.
6. Amendments and Waivers. No waivers shall be effective unless in writing. No right of the Bank shall be exclusive of any other right of the Bank now or hereafter available under the Loan Documents, at law, in equity or otherwise; or by statute or any other provision of law; and no course of dealing or delay by the Bank in exercising any right hereunder shall operate as a waiver thereof or otherwise affect any rights or remedies of the Bank. All amendments hereto must be in writing signed by all parties hereto.
7. Assignments and Participations. No Borrower or Fund may assign or transfer or participate any of its rights under any of the Loan Documents without the prior written consent of the Bank. The Bank may assign or transfer its rights hereunder to any other person or entity with the prior consent of the relevant Borrower, on behalf of the relevant Fund, such consent not to be unreasonably withheld and such consent not being required during the continuance of an Event of Default. The Bank may also pledge or participate its rights hereunder to any Federal Reserve Bank or to any other person or entity without the consent of any Borrower or Fund; provided however, that no such person or entity taking solely a participation interest in any of the Obligations, without the consent of the relevant Borrower on behalf of the relevant Fund shall have any rights with respect to such participation other than the right to vote on changes in interest, fees, line amount, principal payments, maturity or other payment dates, and any advance rates or borrowing limitations described herein.
8. Setoff. Any amounts owing from the Bank to any Borrower on behalf of any Fund including deposits (general or special, time or demand, provisional or final), may, at any time following the occurrence and during the continuance of an Event of Default, be set off and applied against the obligations of such Borrower, on behalf of such Fund, to the Bank.
9. Expenses. Subject to the terms of Section I(5)(c) above, each of the Borrowers agrees, on behalf of each of its respective Funds, to pay on demand all reasonable expenses of the Bank in connection with the preparation, negotiation and closing of this Agreement and the other Loan Documents and all reasonable expenses of the Bank in connection with the amendment, waiver, default or collection of the Obligations to the Bank or in connection with the Bank's exercise or enforcement, following an Event of Default, of any of its rights, remedies or options thereunder, including, without limitation, reasonable fees of outside legal counsel or
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 17
the allocated costs of in-house legal counsel, accounting, consulting, brokerage or other similar professional fees or expenses; and the amount of all such expenses shall, to the extent not paid within thirty (30) days after written demand therefore by the Bank, bear interest at the rate applicable to the Loans (including any default rate) until paid in full.
10. Indemnification. Subject to the terms of Section I(5)(c) above, each of the Borrowers agrees, on behalf of each of its respective Funds (a) to indemnify the Bank against any transfer taxes, documentary taxes, assessments or charges made by any governmental authority by reason of the execution and delivery of this Agreement and the Note; and (b) to indemnify and hold harmless the Bank and its directors, officers, employees, agents and affiliates from and against any and all liabilities, losses, damages, costs, and reasonable expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by the Bank in connection with any civil, investigative, administrative or judicial proceeding (whether or not the Bank shall be a designated party thereto) relating to or arising out of this Agreement or any of the other Loan D ocuments or any actual or proposed use of proceeds of any Loans hereunder, provided that the Bank shall not have the right to be indemnified hereunder for its own gross negligence or willful misconduct as finally determined by a court of competent jurisdiction. To the extent permitted by applicable law, none of the Borrowers shall assert, and each of the Borrowers, on behalf of its respective Funds, hereby waives, any claim against the Bank or its directors, officers, employees, agents or affiliates, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any of the other Loan Documents or any Loan or the use of proceeds thereof.
11. Waiver of Jury Trial. Except as prohibited by law, neither any of the Borrowers or their respective Funds nor the Bank nor any assignee or successor of any of them, shall seek a jury trial in any lawsuit, proceeding, counterclaim or any other litigation procedure based upon or arising out of any of the Loan Documents. Neither any of the Borrowers or their respective Funds nor the Bank will seek to consolidate any such action in which a jury trial has been waived with any other action in which a jury trial has not been waived. THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND THE PROVISIONS HEREOF SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HERETO HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCE D IN ALL INSTANCES.
12. Jurisdiction. EACH OF THE LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH BORROWER AND FUND AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 18
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON SUCH BORROWER OR FUND BY MAIL AT THE ADDRESS SPECIFIED ABOVE. EACH BORROWER AND FUND HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
13. Counterparts. This Agreement may be executed in any number of counterparts each of which shall be deemed to be an original document, but all of which together shall constitute one and the same instrument.
14. USA Patriot Act. The Bank hereby notifies each of the Borrowers that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Patriot Act"), it is required to obtain, verify and record information that identifies each Borrower, which information includes the name and address of each Borrower and other information that will allow the Bank to identify the Borrowers in accordance with the Patriot Act.
15. Confidentiality. The Bank will maintain the confidential nature of all non-public information furnished to it by a Borrower in accordance with the Banks customary procedures for maintaining the confidential nature of information of this nature; provided, however, that such information may be disclosed:
(a) to any corporate affiliate of the Bank and to the Banks and to the Banks affiliates respective partners, directors, officers, employees, agents, auditors, advisors and other representatives (it being understood that the persons to whom such disclosure is made will be informed of the confidential nature of such information and instructed to keep such information confidential);
(b) pursuant to any statutory or regulatory requirement or any court order, subpoena or other legal process and to any regulatory authority, including the Securities and Exchange Commission, stock exchanges, state and federal bank and insurance regulators and the National Association of Insurance Commissioners;
(c) to any assignee or participant or any prospective assignee or participant in the Banks rights and obligations under the Loan Documents; provided, however, that any such person shall agree to comply with the restrictions set forth in this Section with respect to such information;
(d) in connection with the enforcement of any Loan Document or any litigation or other proceeding relating to any Loan Document;
(e) to the extent such information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Bank or any of its affiliates on
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 19
a non-confidential basis from a source other than a Borrower that to the Banks actual knowledge does not involve the breach by such source of a confidentiality obligation; and
(f) with the prior written consent of a Borrower, to any other person.
In addition, the Bank may include references to a Borrower and the credit facility provided hereby in connection with any advertising or marketing undertaken by the Bank.
16. Definitions. Except as otherwise defined herein, all financial terms shall be defined in accordance with generally accepted accounting principles. The following defined terms as used herein shall have the following meanings:
Adjusted Net Assets shall mean, as applied to any Fund at any time, (a) the value of the Total Assets of such Fund at such time, less (b) Total Liabilities (excluding Indebtedness for borrowed money) of such Fund at such time. For purposes of calculating Adjusted Net Assets for any Fund, the amount of any liability included in Total Liabilities shall be equal to the greater of (i) the outstanding amount of such liability and (ii) the fair market value of all assets pledged or otherwise segregated to secure such liability.
Agreement shall mean this letter agreement and all appendices, exhibits and schedules attached hereto, as any of the same may be amended, restated, extended, replaced or otherwise modified and in effect from time to time.
Bank shall have the meaning given to such term in the preamble hereto.
Borrower shall have the meaning given to such term in the preamble hereto.
Business Day shall mean any day excluding Saturday and Sunday and excluding any other day which shall be in Boston, Massachusetts a legal holiday or a day on which banking institutions are required or authorized by law to close.
Committed Line shall mean the separate committed, unsecured line of credit made available by the Bank to the Funds pursuant to a separate line of credit letter agreement dated on or about the date hereof, as the same may be amended, restated, extended, renewed, replaced or otherwise modified and in effect from time to time.
Custodian shall mean State Street Bank and Trust Company, in its capacity as custodian of the assets of each Fund.
Default shall mean any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default.
ERISA shall have the meaning given to such term in Section II(2)(i) hereof.
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 20
Event of Default shall have the meaning given to such term in Section II(3) hereof.
Executive Order shall have the meaning given to such term in Section II(2)(m) hereof.
Expiration Date shall have the meaning given to such term in Section I(1) hereof.
Federal Funds Rate shall mean, at the relevant time of reference thereto, the rate that appears on Bloomberg page BTMM, as quoted by Garban Limited, as of 9:30 a.m. (Boston time), as the "Federal Funds Ask" rate, or, if unavailable, the quotation received by the Bank from a federal funds broker of recognized standing as selected by the Bank in its reasonable discretion.
Foreign Assets Control Regulations shall have the meaning given to such term in Section II(2)(m) hereof.
Fund shall mean each of the respective fund series of the Borrowers from time to time listed on Appendix I hereto, if any, and if at any time any Borrower party hereto shall not have any fund series and shall be a party hereto and borrowing hereunder for itself and not on behalf of any such fund series, the term Fund shall also mean and refer to such Borrower in such capacity.
Indebtedness shall mean (a) all obligations for borrowed money or extensions of credit; (b) all obligations evidenced by bonds, debentures, notes or other similar instruments; (c) all obligations to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business; (d) all obligations under any lease which are or should be capitalized in accordance with generally accepted accounting principles; (e) all guarantees, endorsements and other contingent obligations, whether direct or indirect, in respect of Indebtedness of others, including any obligation to supply funds to or in any manner to invest in, directly or indirectly, the debtor (whether by way of loan, stock purchase, capital contribution or otherwise), to purchase Indebtedness, or to assure the owner of Indebtedness against loss, through an agr eement to purchase goods, supplies or services for the purpose of enabling the debtor to make payment of the Indebtedness held by such owner or otherwise, and the obligations to reimburse the issuer in respect of any letters of credit or performance or surety bonds, or other similar obligations; (f) all obligations in respect of judgments; (g) all obligations in respect of banker's acceptances and under reverse repurchase agreements; and (h) all obligations in respect of swaps, futures contracts, options, options on futures contracts and other similar portfolio investments and investment techniques, including all liabilities secured by any mortgage, pledge, security interest, lien, charge or other encumbrance existing on property owned or acquired subject thereto, or with respect to which assets have been segregated, whether
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 21
or not the liability secured thereby shall have been assumed, including without limitation, any cash or securities held or otherwise pledged as collateral in connection with any such portfolio investments or investment techniques.
Interfund Lending shall mean lending by a registered investment company or a series thereof advised by the Investment Adviser to one or more other registered investment companies or series thereof advised by the Investment Adviser, or borrowing by a registered investment company or a series thereof advised by the Investment Adviser from one or more other registered investment companies or series thereof advised by the Investment Adviser, in either case pursuant to the Interfund Lending Exemptive Order.
Interfund Lending Agreement shall mean any agreement between one or more Funds or other investment companies or series thereof advised by the Investment Adviser providing for the making of loans from time to time from one such Fund or such other investment companies or series thereof to other Funds or other investment companies or series thereof, as any such agreements may be from time to time amended.
Interfund Lending Exemptive Order shall mean that certain exemptive order issued by the Securities and Exchange Commission on April 10, 2002 (Investment Company Act of 1940 Release No. 25519) in the matter of Putnam American Government Income Fund, et al. providing exemptive relief permitting an Interfund Lending program pursuant to the terms of the application dated March 13, 2002 (Investment Company Act of 1940 Release Nos. 25461, 812-10806).
Interfund Loan shall mean any loan or advance by or to a Fund pursuant to an Interfund Lending Agreement.
Internal Revenue Code shall mean the Internal Revenue Code of 1986, as amended, together with all related rules and regulations promulgated thereunder.
Investment Adviser shall mean Putnam Investment Management, LLC, a Delaware limited liability company.
Investment Company Act shall mean the Investment Company Act of 1940, as amended, together with all related rules and regulations promulgated by the United States Securities and Exchange Commission relating thereto.
Loan shall have the meaning given to such term in Section I(2) hereof.
Loan Documents shall mean this Agreement, the Note and any other documents, instruments or agreements executed in connection herewith, as any of the same may be amended, restated, extended, renewed, replaced or otherwise modified and in effect from time to time.
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 22
Material Adverse Effect shall mean a material adverse effect on (a) the business condition (financial or otherwise), operations, performance or properties of the applicable Borrower or Fund, (b) the rights or remedies of the Bank under the Loan Documents, or (c) the ability of the applicable Borrower, on behalf of any of its respective Funds, to perform its obligations under the Loan Documents.
Maximum Amount shall mean, at any time with respect to any Fund, the lesser of (a) thirty-three and one third percent (33-1/3%) of the Adjusted Net Assets of such Fund at such time, and (b) the maximum amount which such Fund is permitted to borrow (after taking into account all then outstanding Indebtedness) pursuant to its Prospectus, the Investment Company Act or any registration made thereunder, any vote of the shareholders of such Fund, any agreement of the applicable Borrower or such Fund with any foreign, federal, state or local securities division to which such Borrower or such Fund is subject, any other applicable agreement or document to which such Borrower or such Fund is a party or any law, rule or regulation applicable to such Borrower or such Fund.
Net Assets shall mean, with respect to any Fund at any time, the value of the Total Assets of such Fund at such time less the Total Liabilities of such Fund at such time.
Note shall have the meaning given to such term in Section I(3) hereof.
Obligations shall mean any and all obligations of each of the Borrowers, on behalf of each of its applicable Funds, to the Bank of every kind and description, direct or indirect, absolute or contingent, primary or secondary, due or to become due, now existing or hereafter arising, regardless of how they arise or by what agreement or instrument, if any, and including obligations to perform acts and refrain from taking action as well as obligations to pay money.
Other Indebtedness shall have the meaning given to such term in Section II(1)(d) hereof.
Other Taxes shall have the meaning given to such term in Section I(5)(b) hereof.
Per Fund Limit Amount shall mean at any time with respect to any Fund, the lesser of (i) the Uncommitted Line Amount, and (ii) the difference of (A) $200,000,000 minus (B) the aggregate principal amount of all loans, if any, outstanding to such Fund at such time under the Committed Line.
Permitted Merger(s) shall mean (a) the merger of one or more Funds with and into any other Fund, or (b) the merger of any fund series of any Borrower which is not a Fund hereunder with and into any Fund so long as the Fund is the survivor of such merger; provided
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 23
that, in the case of any such merger pursuant to the foregoing clause (a) or (b), (i) the Borrower shall have provided written notice in reasonable detail to the Bank of its intention to effect such merger, together with a revised Appendix I hereto reflecting such merger, at least ten (10) Business Days prior to the effectiveness of such merger, and (b) no Default or Event of Default shall exist or result from such merger (including, without limitation, any failure to satisfy the borrowing limitations contained in Section I(2) as a result thereof).
Prospectus shall mean at any time the then current prospectus and statement of additional information of any Borrower or Fund.
Regulation T shall mean Regulation T of the Board of Governors of the Federal Reserve System of the United States, as amended.
Regulation U shall mean Regulation U of the Board of Governors of the Federal Reserve System of the United States, as amended.
Regulation X shall mean Regulation X of the Board of Governors of the Federal Reserve System of the United States, as amended.
Taxes shall have the meaning given to such term in Section I(5)(b) hereof.
Total Assets shall mean, with respect to any Fund at any time, all assets of such Fund which in accordance with generally accepted accounting principles would be classified as assets on a balance sheet of such Fund at such time. For purposes of this definition, the value of each Funds assets shall be determined based upon the current market value thereof with reference to daily prices provided by independent pricing sources and otherwise in accordance with the Investment Company Act.
Total Liabilities shall mean, with respect to any Fund at any time, the aggregate amount of all items which would be set forth as liabilities on a balance sheet of such Fund at such time in accordance with generally accepted accounting principles.
Trading With the Enemy Act shall have the meaning given to such term in Section II(2)(m) hereof.
Uncommitted Line shall have the meaning given to such term in the preamble hereto.
Uncommitted Line Amount shall mean $165,000,000.
17. Miscellaneous. A copy of the Agreement and Declaration of Trust of each
Fund, as amended or restated from time to time, is on file with the Secretary of the
LIMITED ACCESS
Putnam Funds
July 6, 2010
Page 24
Commonwealth of The Commonwealth of Massachusetts. Notice is hereby given, and it is expressly agreed, that the obligations under this Agreement of any such Fund shall not be binding upon any of the trustees, shareholders, nominees, officers, agents or employees of such Fund personally, but bind only the trust property of such Fund. In the case of each Fund, the execution and delivery of this Agreement on its behalf has been authorized by its trustees, and this Agreement has been executed and delivered by an authorized officer, in each case acting in such capacity and not individually, and neither such authorization by the trustees nor such execution and delivery shall be deemed to have been made by any of them individually, but shall only bind the trust property of each Fund.
[Remainder of Page Intentionally Left Blank] |
LIMITED ACCESS
Signature Page 1 |
If the foregoing satisfactorily sets forth the terms and conditions of the Uncommitted Line, please execute and return to the undersigned each of the Loan Documents and such other documents and agreements as the Bank may request. We are pleased to provide the Uncommitted Line hereunder and look forward to the ongoing development of our relationship.
Sincerely, | ||
STATE STREET BANK AND | ||
TRUST COMPANY, as Bank | ||
By: /s/ Janet B. Nolin | ||
Name: Janet B. Nolin | ||
Title: Vice President |
Acknowledged and Accepted:
PUTNAM AMERICAN GOVERNMENT INCOME FUND
PUTNAM ARIZONA TAX EXEMPT INCOME FUND
PUTNAM ASSET ALLOCATION FUNDS, on behalf of its fund series as listed in Appendix I attached hereto
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
PUTNAM CONVERTIBLE INCOME-GROWTH TRUST
PUTNAM DIVERSIFIED INCOME TRUST
PUTNAM EQUITY INCOME FUND
PUTNAM EUROPE EQUITY FUND
PUTNAM FUNDS TRUST, on behalf of its fund series as listed in Appendix I attached hereto
PUTNAM GLOBAL EQUITY FUND
PUTNAM GLOBAL HEALTH CARE FUND
PUTNAM GLOBAL INCOME TRUST
PUTNAM GLOBAL NATURAL RESOURCES FUND
PUTNAM GLOBAL UTILITIES FUND
PUTNAM HIGH YIELD ADVANTAGE FUND
PUTNAM HIGH YIELD TRUST
PUTNAM INCOME FUND
PUTNAM INTERNATIONAL EQUITY FUND
PUTNAM INVESTMENT FUNDS, on behalf of
its fund series as listed in Appendix I attached hereto
PUTNAM INVESTORS FUND
PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND
LIMITED ACCESS
Signature Page 2 |
PUTNAM MICHIGAN TAX EXEMPT INCOME FUND
PUTNAM MINNESOTA TAX EXEMPT INCOME FUND
PUTNAM MONEY MARKET FUND
PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND
PUTNAM NEW OPPORTUNITIES FUND
PUTNAM NEW YORK TAX EXEMPT INCOME FUND
PUTNAM OHIO TAX EXEMPT INCOME FUND
PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND
PUTNAM TAX EXEMPT INCOME FUND
PUTNAM TAX EXEMPT MONEY MARKET FUND
PUTNAM TAX-FREE INCOME TRUST, on behalf of its fund series as listed in Appendix I attached hereto
PUTNAM US GOVERNMENT INCOME TRUST
PUTNAM VARIABLE TRUST, on behalf of its fund series as listed in Appendix I attached hereto
PUTNAM VISTA FUND
PUTNAM VOYAGER FUND
THE GEORGE PUTNAM FUND OF BOSTON
THE PUTNAM FUND FOR GROWTH AND INCOME
By: /s/ Jonathan S. Horwitz
Name: Jonathan S. Horwitz
Title: Executive Vice President, Principal Executive Officer,
Treasurer and Compliance Liason, of each of the foregoing
Acknowledged:
STATE STREET BANK AND TRUST COMPANY,
as Custodian
By: /s/ Michael F. Rogers
Name: Michael F. Rogers
Title: Executive Vice President
LIMITED ACCESS
APPENDIX I |
List of Borrowers and Funds |
PUTNAM AMERICAN GOVERNMENT INCOME FUND
PUTNAM ARIZONA TAX EXEMPT INCOME FUND
PUTNAM ASSET ALLOCATION FUNDS
on behalf of:
Putnam Asset Allocation: Balanced Portfolio
Putnam Asset Allocation: Conservative Portfolio
Putnam Asset Allocation: Growth Portfolio
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
PUTNAM CONVERTIBLE INCOME-GROWTH TRUST
PUTNAM DIVERSIFIED INCOME TRUST
PUTNAM EQUITY INCOME FUND
PUTNAM EUROPE EQUITY FUND
PUTNAM FUNDS TRUST
on behalf of:
Putnam Absolute Return 100 Fund
Putnam Absolute Return 300 Fund
Putnam Absolute Return 500 Fund
Putnam Absolute Return 700 Fund
Putnam Asia Pacific Equity Fund
Putnam Asset Allocation: Equity Portfolio
Putnam Capital Spectrum Fund
Putnam Emerging Markets Equity Fund
Putnam Equity Spectrum Fund
Putnam Floating Rate Income Fund
Putnam Global Consumer Fund
Putnam Global Energy Fund
Putnam Global Financials Fund
Putnam Global Industrials Fund
Putnam Global Technology Fund
Putnam Global Telecommunications Fund
Putnam Income Strategies Fund
Putnam International Value Fund
Putnam Small Cap Growth Fund
PUTNAM GLOBAL EQUITY FUND
PUTNAM GLOBAL HEALTH CARE FUND
PUTNAM GLOBAL INCOME TRUST
PUTNAM GLOBAL NATURAL RESOURCES FUND
PUTNAM GLOBAL UTILITIES FUND
PUTNAM HIGH YIELD ADVANTAGE FUND
PUTNAM HIGH YIELD TRUST
PUTNAM INCOME FUND
PUTNAM INTERNATIONAL EQUITY FUND
LIMITED ACCESS
2
PUTNAM INVESTMENT FUNDS
on behalf of:
Putnam Capital Opportunities Fund
Putnam Growth Opportunities Fund
Putnam International Capital Opportunities Fund
Putnam International Growth Fund
Putnam Mid Cap Value Fund
Putnam Research Fund
Putnam Small Cap Value Fund
PUTNAM INVESTORS FUND
PUTNAM MASSACHUSETTS TAX EXEMPT INCOME
FUND
PUTNAM MICHIGAN TAX EXEMPT INCOME FUND
PUTNAM MINNESOTA TAX EXEMPT INCOME FUND
PUTNAM MONEY MARKET FUND
PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND
PUTNAM NEW OPPORTUNITIES FUND
PUTNAM NEW YORK TAX EXEMPT INCOME FUND
PUTNAM OHIO TAX EXEMPT INCOME FUND
PUTNAM PENNSYLVANIA TAX EXEMPT INCOME
FUND
PUTNAM TAX EXEMPT INCOME FUND
PUTNAM TAX EXEMPT MONEY MARKET FUND
PUTNAM TAX-FREE INCOME TRUST
on behalf of:
Putnam AMT-Free Municipal Fund
Putnam Tax-Free High Yield Fund
PUTNAM US GOVERNMENT INCOME TRUST
PUTNAM VARIABLE TRUST
on behalf of:
Putnam VT American Government Income Fund
Putnam VT Capital Opportunities Fund
Putnam VT Diversified Income Fund
Putnam VT Equity Income Fund
Putnam VT Global Asset Allocation Fund
Putnam VT Global Equity Fund
Putnam VT Global Health Care Fund
Putnam VT Global Utilities Fund
Putnam VT Growth and Income Fund
Putnam VT Growth Opportunities Fund
Putnam VT High Yield Fund
Putnam VT Income Fund
Putnam VT International Equity Fund
Putnam VT International Value Fund
Putnam VT International Growth Fund
LIMITED ACCESS
3
Putnam VT Investors Fund
Putnam VT Mid Cap Value Fund
Putnam VT Money Market Fund
Putnam VT New Opportunities Fund
Putnam VT Research Fund
Putnam VT Small Cap Value Fund
Putnam VT The George Putnam Fund of Boston
Putnam VT Vista Fund
Putnam VT Voyager Fund
PUTNAM VISTA FUND
PUTNAM VOYAGER FUND
THE GEORGE PUTNAM FUND OF BOSTON
THE PUTNAM FUND FOR GROWTH AND INCOME
LIMITED ACCESS
EXHIBIT A |
PROMISSORY NOTE |
(UNCOMMITTED LINE) |
$165,000,000.00 | July 6, 2010 |
Boston, Massachusetts |
For value received, each of the undersigned hereby severally promises to pay to State Street Bank and Trust Company (the Bank), or order, at the office of the Bank at 100 Huntington Avenue, Tower 2, Floor 4, Boston, Massachusetts 02116 in immediately available United States dollars, the principal amount of ONE HUNDRED SIXTY-FIVE MILLION AND 00/100 DOLLARS ($165,000,000.00), or such lesser original principal amount as shall be outstanding hereunder and not have been prepaid as provided herein, together with interest thereon as provided below. Each Loan shall be payable upon the earliest to occur of (a) the Expiration Date, (b) 60 calendar days following the date on which such Loan is made, or (c) the date on which such Loan otherwise becomes due and payable under the terms of the Loan Agreement referred to below, whether followi ng the continuance of an Event of Default or otherwise. Interest on the unpaid principal amount outstanding hereunder shall be payable at the rates and at the times as set forth in the Loan Agreement and shall be computed as set forth in the Loan Agreement. Interest shall be computed on the basis of a 360-day year for the actual number of days elapsed, including holidays or other days on which the Bank is not open for the conduct of banking business.
All Loans hereunder and all payments on account of principal and interest hereof shall be recorded by the Bank. The entries on the records of the Bank (including any appearing on this Note), absent manifest error, shall govern and control as to amounts outstanding hereunder, provided that the failure by the Bank to make any such entry shall not affect the obligation of the undersigned to make payments of principal and interest on all Loans as provided herein and in the Loan Agreement.
Upon notice from the Bank to the undersigned given at any time following the occurrence and during the continuance of an Event of Default, unpaid principal on any Loan, and to the extent permitted by applicable law, unpaid interest on any Loan, shall thereafter bear interest, compounded monthly and be payable on demand, until paid in full (after as well as before judgment) at a rate per annum equal to two percent (2%) above the rate otherwise applicable to such Loan under the Loan Agreement.
This Note is issued pursuant to, and entitled to the benefits of, and is subject to, the provisions of a certain letter agreement dated July 6, 2010 by and among the undersigned and the Bank (herein, as the same may from time to time be amended, restated, supplemented, modified or extended, referred to as the Loan Agreement), but neither this reference to the Loan Agreement nor any provision thereof shall affect or impair the absolute and unconditional obligation of the undersigned makers of this Note to pay the principal of and interest on this Note
LIMITED ACCESS
2
as herein provided. All terms not otherwise defined herein shall be used as defined in the Loan Agreement.
The undersigned may at its option prepay all or any part of the principal of this Note subject to the terms of the Loan Agreement. Amounts prepaid may be reborrowed subject to the terms of the Loan Agreement.
Each of the undersigned makers and every endorser and guarantor hereof hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement hereof and consents that this Note may be extended from time to time and that no such extension or other indulgence, and no substitution, release or surrender of collateral and no discharge or release of any other party primarily or secondarily liable hereon, shall discharge or otherwise affect the liability of any of the undersigned or any such endorser or guarantor. No delay or omission on the part of the Bank in exercising any right hereunder shall operate as a waiver of such right or of any other right hereunder, and a waiver of any such right on any one occasion shall not be construed as a bar to or waiver of any such right on any future occasion.
A copy of the Agreement and Declaration of Trust of each of the undersigned Borrowers is on file with the Secretary of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trustees of each Borrower as Trustees and not individually and that the obligations of this instrument are not binding on any of the Trustees or officers or shareholders individually, but are binding only on the assets or property of each Fund with respect to its obligations hereunder. In addition, although multiple Borrowers may be party hereto on behalf of multiple Funds, each Borrower is executing this instrument on behalf of each of its Funds individually (and not jointly or jointly and severally) and no Borrower or Fund is liable for any matter relating to any other Borrower or Fund.
This instrument shall have the effect of an instrument executed under seal and shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts (without giving effect to any conflicts of laws provisions contained therein).
WITNESS: | [TRUST NAME] |
|
|
[TRUST NAME], on behalf of its fund | |
series as listed in Appendix I attached hereto | |
By: __________________________________ | |
Name: | |
Title: |
LIMITED ACCESS
SCHEDULE I TO NOTE DATED JULY 6, 2010 | ||||
Date of | Amount of | Amount of Principal | Outstanding | |
Loan | Principal | Paid | Balance | Notation Made By |
LIMITED ACCESS
APPENDIX I |
List of Borrowers and Funds |
[TRUST NAME]
[TRUST NAME]
on behalf of:
[Funds]
LIMITED ACCESS
EXHIBIT B | ||
ADVANCE/PAYDOWN | ||
REQUEST FORM | ||
(UNCOMMITTED LINE) | ||
DATE: | ||
| ||
TO: | STATE STREET BANK AND TRUST COMPANY | |
| ||
ATTN: | LOAN OPERATIONS CUSTOMER SERVICE UNIT | |
telephone 617-937-8806 or 617-937-8808; fax 617-988-6677 | ||
| ||
FROM: | [BORROWER][ on behalf of [FUND]] | |
| ||
(Fund # ___________) | (DDA # ____________) |
In connection with the letter agreement dated July 6, 2010 and related documents currently in effect with State Street Bank and Trust Company (as amended, collectively, the Agreement), please increase/reduce (circle one) the outstanding balance on behalf of the above-indicated Fund by $__________. Any requested Loan should be recorded on the books of the Fund with the Bank and interest payable to the Bank should be recorded at the agreed upon rate.
1. This request is (check one): ___ Loan Advance ____ Paydown ____ Overnight Rollover ___
2. The proceeds of any requested Loan shall be used only to the extent consistent with and not prohibited by the Prospectus, the terms of the Agreement and applicable laws and regulations, including, without limitation, Federal Reserve Regulation U, and no Default of Event of Default has occurred under the Agreement.
4. All of the representations and warranties of the undersigned Borrower and Fund set forth in Section II(2) of the Agreement are true and correct on and as of the date hereof.
5. Each of the Borrower and the Fund is in compliance with all the terms and conditions in the Agreement (including the Maximum Amount and other borrowing limitations thereunder) and will remain in compliance therewith after giving effect to the making of any requested Loan.
6. The following amounts and statements are true in connection with any requested Loan:
(a) | Adjusted Net Assets of the Fund: | ||
(i) Total Assets of the Fund | $_____________ | ||
(ii) Total Liabilities (excluding Indebtedness | |||
for borrowed money) of the Fund 1 | $_____________ | ||
(iii) item (a)(i) less item (a)(ii) | $_____________ | ||
(b) | 33-1/3% of item (a)(iii) | $_____________ | |
(c) | (i) Beginning Loan Balance: | $_____________ | |
|
1For purposes of calculating Adjusted Net Assets for any Fund, the amount of any liability included in Total Liabilities shall be equal to the greater of (i) the outstanding amount of such liability and (ii) the fair market value of all assets pledged or otherwise segregated to secure such liability.
LIMITED ACCESS
(ii) Paydown Amount (if any): | $_____________ | ||
(iii) Requested Loan (if any) | $_____________ | ||
(iv) Requested Loans Balance ((i) | |||
minus (ii) or (i) plus (iii)): | $_____________ | ||
(d) The aggregate outstanding principal amount of | |||
Indebtedness for borrowed money of the Fund other | |||
than the Loans as of the date hereof (including any | |||
loans under the separate Committed Line and including | |||
any Interfund Loans) | $_____________ | ||
(e) Total Indebtedness for borrowed money ((c)(iv) plus (d)): | $_____________ |
7. The amount set forth in 6(e) above does not exceed the lesser of (a) the amount set forth in 6(b) above, or (b) the maximum amount which the relevant Fund is permitted to borrow (after taking into account all outstanding Indebtedness) pursuant to its Prospectus, the Investment Company Act or any registration made thereunder, any vote of the shareholders of the applicable Borrower or such Fund, any agreement of such Borrower or Fund with any foreign, federal, state or local securities division to which such Borrower or Fund is subject, any other applicable agreement or document to which such Borrower or Fund, is a party or any law, rule or regulation applicable to such Borrower or Fund.
8. The amount set forth in 6(c)(iv) above does not exceed the Per Fund Limit Amount (defined as the lesser of (a) the Uncommitted Line Amount, and (b) the difference of (i) $200,000,000 minus (ii) the aggregate principal amount of all loans, if any, outstanding to the Fund under the Committed Line). The aggregate principal amount of all Loans outstanding to all Borrowers on behalf of all Funds under the Agreement (after giving effect to the amount of any requested Loan) does not exceed the Uncommitted Line Amount.
9. The Fund for which any Loan is being requested hereby does not currently have outstanding any Interfund Loans made to such Fund as borrower which are secured by any collateral and does not currently have any outstanding Interfund Loans made by it as the lender.
10. The undersigned is a duly authorized officer of the Borrower identified above with authority to execute and deliver this document to the Bank and request the Loan described herein on behalf of the Fund identified above.
[BORROWER][, on behalf of [FUND]] | ||
By: | ||
Name: | ||
Title | ||
Date: |
LIMITED ACCESS
EXHIBIT C |
INDEBTEDNESS |
None. |
LIMITED ACCESS
EXHIBIT D |
ENCUMBRANCES |
None. |
LIMITED ACCESS
EXHIBIT E |
LITIGATION |
None. |
LIMITED ACCESS
working@PUTNAM | JUNE 2010 |
Putnams
Code of Ethics
[Graphic omitted: Portrait of Samuel Putnam]
[Graphic omitted: Putnam Investments logo]
Putnam Investments Code of Ethics
Putnam Investments is required by law to adopt a Code of Ethics (the Code). The objective of the Code is to ensure that Putnams employees comply with all applicable laws and avoid any conflict of interest that might result in any harm to our clients. Putnam owes a fiduciary duty to its clients. This Code of Ethics is designed to strengthen the trust and confidence our clients place in us and to demonstrate that our clients interests come first.
Adherence to the Code is a fundamental condition of employment at Putnam. Every employee is expected to adhere to the requirements of the Code. Any employee failing to do so may be subject to disciplinary action, including financial penalties and termination of employment, as determined by the Code of Ethics Officer, the Code of Ethics Oversight Committee, or the Chief Executive Officer of Putnam Investments.
1 |
Table of Contents
Putnam Investments Code of Ethics | 1 |
Definitions | 3 |
Section 1 Personal Securities Rules for All Employees | 5 |
1.1. Pre-clearance Requirements | 5 |
1.2. Restricted List | 6 |
1.3. Prohibited Transactions | 6 |
Section 2 Putnam Mutual Funds | 7 |
2.1. Holding Putnam Mutual Fund Shares at Putnam | 7 |
2.2. Putnam Mutual Funds Employee Holding Periods and Linked Accounts | 7 |
2.3. Putnam Mutual Funds Closed-End Fund Rules | 8 |
Section 3 Additional Rules for Access Persons and Certain Investment Professionals | 8 |
3.1. 60-Day Short-Term Rule All Access Persons | 8 |
3.2. 7-Day Pre-Trade Rule (Portfolio Managers and Analysts) | 8 |
3.3. 7-Day Post-Trade Rule (Portfolio Managers and Analysts) | 9 |
3.4. Contra-Trading Rule (Portfolio Managers and Team Leaders) | 9 |
3.5. No Personal Benefit (Portfolio Managers and Analysts) | 9 |
Section 4 Reporting Requirements | 9 |
4.1. Brokerage/Securities Accounts Initial and Annual Requirements | 9 |
4.2. Separate Provisions for Brokerage/Securities Accounts That Are | |
Professionally Managed (Discretionary) Accounts Initial and Annual Requirements | 10 |
4.3. Account Confirmations and Statements | 10 |
Section 5 Additional Reporting, Certification, and Training Requirements | 10 |
5.1. Initial/Annual Holdings Report Access Persons Only | 10 |
5.2. Quarterly Transaction Report Access Persons Only | 10 |
5.3. Annual Certification All Employees | 11 |
5.4. Training Requirements All Employees | 11 |
5.5. Maintenance and Distribution of the Code of Ethics | 11 |
5.6. Procedures and Timeliness | 11 |
Section 6 General Ethics Rules for All Employees | 11 |
6.1. Outside Business Activities | 11 |
6.2. Charitable or Non-profit Roles/Role as Trustee or Fiduciary Outside Putnam Investments | 12 |
6.3. Family Members Conflict Policy | 12 |
6.4. CFA Institute Code of Ethics and Standards of Professional Conduct | 12 |
6.5. Business Ethics, Ombudsman, and Hotlines | 13 |
Section 7 Insider Trading | 13 |
7.1. Material, Non-Public Information and Insider Trading | 13 |
7.2. Reporting and Restrictions | 13 |
7.3. Special Provisions Applicable to Putnam Affiliates | 14 |
7.4. PIL Employees | 14 |
Section 8 Sanctions | 14 |
8.1. Sanctions for Violations of Sections 13 | 14 |
8.2. Sanctions for Violations of Sections 46 | 14 |
8.3. Sanctions for Violations of Section 7 | 14 |
Section 9 Procedures for Determinations and Exemptions | 15 |
Appendix A Contra-Trading Rule Clearance Form | 16 |
2 |
Definitions
Access Person Putnam has identified certain employees as Access Persons due to their position or access to investment information. Access Persons are held to a higher standard under the Code than other employees. Please ask the Code of Ethics Officer if you have any question whether you are an Access Person. The following employees are Access Persons:
All employees of Putnams Investment Management Division
Employees of the Operations Division within the following specific groups and departments:
» Fund Administration Group
» Investment Services and Operations Group
» Accounting Services Group
» Custody Services Group
Senior Managing Directors and Managing Directors in:
» Mutual Fund Shareholder Services Group
» Accounting, Custody, and Control Services Group
» Global Marketing and Products Division
» Global Distribution Division
All members of Putnams Operating Committee
All employees of Putnam Investments Limited (PIL) and all other Putnam employees based in Europe
All directors and officers of a registered investment advisor affiliate, e.g., Putnam Investment Management, LLC (PIM), or The Putnam Advisory Company, LLC (PAC)
All employees who have access to My Putnam (unless access is limited to the Wall Street Journal, Factiva, or other systems that do not allow access to non-public information about Putnam products, as determined by the Code of Ethics Officer)
Employees who have systems access or other access to non-public information about any clients purchase or sale of securities or to information regarding portfolio holdings or recommendations with respect to such purchases or sales
Others as determined by the Code of Ethics Officer
Approved Indices means any securities index (which is typically a broad-based index) determined by the Code of Ethics Officer to present minimal risks of abuse. All Approved Indices are posted on the Putnam Compliance intranet homepage and the Code of Ethics PTA system.
Closed-end fund means a fund that has a fixed number of shares outstanding and does not redeem its shares. Closed-end funds typically trade like stocks on an exchange.
The Code of Ethics Officer and the Deputy Code of Ethics Officer are responsible for enforcing and interpreting the Code. The following are the current members of the Code of Ethics staff, each of whom can answer employee questions and provide other assistance regarding the Code:
Code of Ethics Officer: | Bob Leveille | (617) 760-1858 |
| ||
Deputy Code of Ethics Officer: | Rick DeGregorio | (617) 760-1201 |
| ||
Compliance Analyst: | Dana Scribner-Shea | (617) 760-7182 |
|
3 |
Code of Ethics Oversight Committee has oversight responsibility for administering the Code of Ethics. Members include the Code of Ethics Officer and other members of Putnams senior management appointed by the Chief Executive Officer of Putnam. The Committee reviews and approves Code revisions, violations, and sanctions. In certain instances, requests for exemptions may require the approval of the Committee. The Committee meets on a quarterly basis or as otherwise necessary.
Exchange-Traded Fund (ETF) means a fund (other than a closed-end fund) that can be traded on an exchange throughout the day like a stock. ETFs often track an index. Examples include (but are not limited to) SPDRs, WEBs, QQQQs, iShares, and HLDRs.
Immediate Family means the Putnam employees spouse, domestic partner, fiancé(e), or other family members who are living in the same household. Immediate Family also includes any other family members, including in-laws, for whom the Putnam employee can exercise investment discretion, regardless of whether or not they live in the same household.
Private Placement means any offering of a security not offered to the public and not requiring registration with the relevant securities authorities.
Putnam means any or all of Putnam Investments, LLC and its subsidiaries (other than PanAgora Asset Management, Inc.), any one of which shall be a Putnam company.
Putnam employee, or employee, means any employee of Putnam and, for purposes of all rules in Sections 1, 2, and 3, also includes the following:
Members of the Immediate Family of a Putnam employee;
Any trust in which a Putnam employee or Immediate Family member is a trustee with investment discretion;
Any account for a partnership in which a Putnam employee or Immediate Family member is a general partner or a partner with investment discretion;
Any closely held entity (such as a partnership, limited liability company, or corporation) in which a Putnam employee or Immediate Family member holds a controlling interest and with respect to which he or she has investment discretion;
Any account (including any retirement, pension, deferred compensation, or similar account) in which a Putnam employee or Immediate Family member has a substantial economic interest and over which the Putnam employee or Immediate Family member exercises investment discretion;
Any account other than a Putnam client account that 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.
Security The instruments required to be pre-cleared under Section 1.1 are considered to be securities for purposes of this Code and are also required to be reported by Access Persons under Section 4. In addition, transactions in exchange-traded funds (ETFs), exchange-traded notes (ETNs), exchange-traded commodities (ETCs), options, futures, and other derivative securities are required to be reported by Access Persons under Section 4, even for those instruments that are not required to be pre-cleared pursuant to Section 1.1(c).
4 |
Section 1 Personal Securities Rules for All Employees
Putnam maintains the Code of Ethics PTA system to assist employees in fulfilling their obligations under the Code of Ethics. This system can be accessed by selecting the Code of Ethics PTA link, which appears on Putnams intranet page in the Secure Information Section under My Essentials. This system allows the automated pre-clearance of publicly traded equities and other securities trading on major U.S. and other exchanges. To pre-clear an options contract for a publicly traded security, pre-clear the underlying security in the Code of Ethics PTA system. To request clearance to trade bonds or other securities, you must contact the Code of Ethics staff. Pre-clearance hours are 9:00 a.m. to 4:00 p.m. EST.
1.1. Pre-clearance Requirements
1.1(a) Employees must pre-clear all trades in the following securities:
Stocks of companies
Bonds (including corporate, municipal, high-yield, and convertible bonds)
Options, warrants, and all other derivatives of any underlying securities which themselves require pre-clearance. Examples include options and futures based on specific stocks or based on indices that are not Approved Indices (see Definitions section)
Exchange-traded funds (ETFs ) other than those based on Approved Indices or based on other instruments listed below (under Section 1.1(c)) that do not require pre-clearance
Exchange-traded notes (ETNs) other than those based on Approved Indices
Closed-end funds, including Putnam closed-end funds
Employees must also pre-clear the following transactions:
Private placements and purchases of hedge funds or other private investment funds must receive pre-approval from the Code of Ethics Oversight Committee
Donating or gifting of securities
Shares purchased by subscription or by mail (if purchasing directly from a companys transfer agent by check, you must pre-clear the day the check is to be mailed)
Tendering securities from your personal account
1.1(b) Provisions Applicable to Pre-Clearances
A pre-clearance is only valid for trading on the day it is obtained. However, trades by employees in Putnams Asian or European offices, or trades by any employees in securities listed on Asian or European stock exchanges, may be executed within one business day after pre-clearance is obtained. If the Code of Ethics system does not recognize a security, if an employee is unable to use the system, or if he or she has any questions with respect to the system or pre-clearance, the employee must contact the Code of Ethics staff.
1.1(c) Exceptions from Pre-Clearance Requirements
Pre-clearance is not required for certain transactions. (Please note that reporting may still be required for Access Persons even when pre-clearance is not required. See Sections 4 and 5 for reporting requirements.)
Pre-clearance is not required for:
Open-end mutual funds
Currencies
Commodities
Treasury securities and other U.S. and other sovereign government debt (Please note that agency securities, such as securities issued by Fannie Mae and Freddie Mac, require pre-clearance.)
Certificates of deposit (CDs), commercial paper, repurchase agreements, bankers acceptances, and other money market instruments
5 |
Options and futures and all other derivatives of securities not requiring pre-clearance (Please note that examples include options and futures based on Approved Indices (see Definitions) and Treasury futures.)
ETFs and ETNs based on Approved Indices
Exchange-traded commodities (ETCs)
Withdrawals or distributions from a Putnam Retirement Plan that result in the sale of MMC stock
Trades in approved discretionary accounts (see Section 4.2 for additional information)
Transactions that are involuntary (i.e., not initiated by the employee or an immediate family member covered under the Code), including dividend reinvestments under an automatic program of a publicly traded issuer and broker actions not initiated by the employee, such as option assignments or sales out of the brokerage account to cover fees or margin calls (provided the employee may not have withdrawn funds from the margin account in the prior 10 days)
1.2. Restricted List
Employees may not trade in securities that are on Putnams restricted list, except as set forth below under Large-/Mid-Cap Exemption. There are a number of reasons why a security may appear on the Restricted List, and securities are placed on the Restricted List under criteria, and in specific circumstances, as determined by the Code of Ethics Officer or the Code of Ethics Oversight Committee. 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 employees responsibility to identify with particularity the class of securities being pre-cleared.
Large-/Mid-Cap Exemption. An employee may trade up to 1,000 shares of a security appearing on the Restricted List if it is an equity security of an issuer with a market capitalization greater than $2 billion. However, these transactions must still be pre-cleared. Market capitalization is defined as outstanding shares multiplied by current price per share.
1.3. Prohibited Transactions
The following transactions and activities are prohibited for all employees:
1. Good-Until-Canceled Orders (GTC). Any order not executed on the day of pre-clearance must be resubmitted for pre-clearance before being executed on a subsequent day.
2. Short sales of any security that is subject to pre-clearance requirements. However, short sales against the box are permitted. In addition, opening an option position that would result in a short position in the underlying security upon assignment or expiration is also prohibited. For example, buying a put option without owning a number of shares at least equal to the delivery obligation under the contract, or selling a naked call option, would be prohibited.
3. Purchasing securities in an initial public offering (IPO). Although exceptions from this prohibition will rarely be granted, employees may request an exemption from the Code of Ethics Officer, who may grant exceptions in unusual cases such as when an immediate family members association or employment with the issuer warrants consideration or when the employee has had a pre-existing status for at least two years as a policyholder or depositor in connection with a bank or insurance company conversion from mutual or cooperative form to stock form.
4. Trading with Material Non-public Information (see Section 7)
5. Personal Trading with Putnam Client Portfolios. Putnam employees may not buy or sell securities when the employee knows a Putnam client account is on the other side of the trade.
6. Participating in an Investment Club
7. Spread Betting. PIL employees may not enter into any spread betting contracts on financial instruments.
8. Excessive Trading. Employees are prohibited from making more than 10 trades in individual securities in any given quarter across all their accounts (including accounts held by Immediate Family members). For purposes of applying this rule, securities that are required to be pre-cleared shall be the only securities counted, and trading the same security in the same direction (buy or sell) over a period of five business days will be counted as one transaction.
6
Section 2 Putnam Mutual Funds
2.1. Holding Putnam Mutual Fund Shares at Putnam
Putnam employees must hold shares of Putnam open-end U.S. mutual funds through accounts maintained at Putnam, with Putnam Retail Management (PRM) listed as the dealer of record. All transactions must be executed through Putnam and not through an outside broker or other intermediary.
These requirements also apply to:
Self-directed IRA accounts holding Putnam fund shares;
Variable annuities and variable insurance contracts, such as Putnam/Hartford Capital Manager and Allstate Advisor, which invest in Putnam Variable Trusts (must list PRM as dealer but may be held at the insurer).
In limited circumstances, retirement, pension, deferred compensation, and similar accounts (and variable insurance arrangements) that cannot be legally transferred to Putnam may be allowed to hold Putnam funds upon approval of the Code of Ethics Officer. For example, a spouse of a Putnam employee may have a 401(k)/ Profit Sharing Plan with his or her employer that invests in Putnam funds. The employee must notify the Code of Ethics Officer in writing, provide the reason why the account cannot be transferred to Putnam, and arrange for a quarterly statement of transactions in such account to be sent to the Code of Ethics staff, if approved.
2.2. Putnam Mutual Funds Employee Holding Periods and Linked Accounts
Employees may not, within a 90-calendar day period, make a purchase followed by a sale or a sale followed by a purchase of shares of the same open-end Putnam mutual fund, even if the transactions occur in different accounts.
Employees who have sole or shared supervisory or portfolio management responsibility for a Putnam open-end mutual fund or a U.S. registered mutual fund to which Putnam acts as advisor or sub-advisor may not, within a one-year period, make a purchase followed by a sale or a sale followed by a purchase of shares of such fund, even if the transactions occur in different accounts.
All employees are required to ensure that their Immediate Family members accounts holding Putnam mutual funds are linked to comply with the disclosure and holding period requirements. To ensure these accounts are linked, log on to Putnams intranet home page at http://intranet/home/index.shtml, and select My Essentials/Linked Mutual Fund Accounts.
The above holding period restrictions do not apply to:
401(k)/Profit Sharing (or other employee benefit plan) contributions, withdrawals, loans, or distributions, including employer contributions or forfeitures to an employees account. However, exchanges within these accounts are subject to these holding period restrictions.
Putnams Money Market Funds or Putnam Stable Value Fund
Systematic investments, exchanges, or redemptions and payroll deductions. However, once these programs are established/revised, they may not be changed again for 90 days. Employees subject to a one-year holding period with respect to a fund may establish a semiannual or annual automatic rebalancing program, although it may only be changed on an annual basis.
Dividend reinvestments, distributions, fund mergers, and share class conversions
Qualified redemptions (i.e., from the Putnam CollegeAdvantage 529 Plan for matters such as tuition, school fees, books, supplies, and equipment required by the school, room and board, disability, and death)
In special situations, such as financial hardship or disability, an exemption from the holding period requirements may be provided by the Code of Ethics Oversight Committee upon written application by the employee.
7 |
2.3. Putnam Mutual Funds Closed-End Fund Rules
2.3(a) Pre-clearance and Reporting. Putnam closed-end fund shares are subject to the same pre-clearance and reporting requirements as other stocks. A list of the Putnam closed-end funds can be obtained from the Code of Ethics staff.
2.3(b) Special Rules Applicable to Managing Directors in the Investment Division, Operating Committee members, and officers of the Putnam Funds. Managing Directors in Putnams Investment Division, Putnam Operating Committee members, 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, and sales should not be made if you plan to purchase more shares of that fund within six months.
Section 3 Additional Rules for Access Persons and Certain Investment Professionals
3.1. 60-Day Short-Term Rule All Access Persons
Access Persons may not sell a security at a price higher than any price paid for that security within the past 60 calendar days, or buy a security at a price below which he or she sold it within the past 60 days. This rule applies to transactions across all accounts of the employee. All trades for the previous 60 days will be compared to the trade date for the transaction in question to determine whether a violation has occurred. Thus, if an employee buys a security for $10, buys it again for $15, and then sells shares of this security for $12, this will be considered a violation even though some shares of the security in question were bought for a higher price. Access Persons may also not open an option transaction for a contract that expires in 60 days or less. Although 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 Pre-Trade and 7-Day Post-Trade Rules ( described below), any profit must be disgorged to charity.
3.2. 7-Day Pre-Trade Rule (Portfolio Managers and Analysts)
3.2(a) Portfolio Managers: (i) Before a portfolio manager places an order to buy a security for any Putnam client portfolio that he manages, he must sell that security or related derivative security if he has purchased it in his personal account within the preceding seven calendar days; or (ii) upon entering an order to sell a security for any Putnam client portfolio that he manages, he must disgorge to charity any losses avoided if he sold the security in his personal account within the preceding seven calendar days. Disgorgements will be measured by the difference between the selling price for the personal account and the selling price for the client account, multiplied by the number of shares sold for the personal account.
3.2(b) Analysts: (i) Before an analyst makes a purchase or an outperform recommendation for a security (including designation of a security for inclusion in the portfolio of Putnam Research Fund), he must sell that security or related derivative security if he has purchased it in his personal account within the preceding seven calendar days; or (ii) upon making a sell or an underperform recommendation for a security (including designation of a security for sale from the portfolio of Putnam Research Fund), he must disgorge to charity any losses avoided if he sold the security in his personal account within the preceding seven calendar days. Disgorgements will be measured by the difference between the selling price for the personal account and the price at the time that the recommendation is made, multiplied by the number of shares sold for the personal account.
8 |
3.3. 7-Day Post-Trade Rule (Portfolio Managers and Analysts)
3.3(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 after the date of 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 after the date of the most recent sale of that security or related derivative security from any Putnam client portfolio that she manages or co-manages.
3.3(b) Analysts: No analyst shall: (i) sell any security or related derivative security for his personal account until seven calendar days have elapsed after the date of his most recent buy or outperform recommendation for that security or related derivative security (including designation of a security for inclusion in the portfolio of Putnam Research Fund); or (ii) purchase any security or related derivative security for his personal account until seven calendar days have elapsed after the date of his most recent sell or underperform recommendation for that security or related derivative security (including the removal of a security from the portfolio of Putnam Research Fund).
3.4. Contra-Trading Rule (Portfolio Managers and Team Leaders)
3.4(a) Portfolio Managers: No portfolio manager shall, without prior clearance and written approval, sell in his personal account any securities or related derivative securities that are held in any Putnam client portfolio that he manages or co-manages (see Appendix A for the Contra-Trading Rule Clearance Form).
3.4(b) Team Leaders: No Team Leader within the Investment Division shall, without prior clearance and written approval, sell in his personal account any securities or related derivative securities that are held in any Putnam client portfolio managed in his team (see Appendix A for the Contra-Trading Rule Clearance Form).
3.5. No Personal Benefit (Portfolio Managers and Analysts)
No portfolio manager shall cause, and no analyst shall recommend, an action that would cause a Putnam client to take action for the portfolio managers or analysts own personal benefit. 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.
Section 4 Reporting Requirements
4.1. Brokerage/Securities Accounts Initial and Annual Requirements
All employees (on their own behalf and on behalf of their Immediate Family members) are required to report the existence of any accounts which have the capability of purchasing any securities. This Rule includes all brokerage accounts, accounts held directly at an issuers transfer agent, and securities held in physical certificate form by an employee or any Immediate Family member of the employee. The only investment accounts excluded from this rule are accounts that are only permitted to hold open-end mutual funds (other than Putnam open-end funds) and no other investments.
To satisfy this requirement, a new employee must enter the requested information in the Code of Ethics PTA system within the required time frame below:
Access Persons within 10 days of hire
Non-access Persons within 30 days of hire
Existing employees opening a new account (including accounts being opened for Immediate Family members) must disclose them in the system in advance of the first personal securities transaction in the account.
All employees will be required to certify annually that all accounts requiring disclosure are accurately listed in the Code of Ethics PTA system.
9 |
4.2. Separate Provisions for Brokerage/Securities Accounts That Are Professionally Managed (Discretionary) Accounts Initial and Annual Requirements
If you wish to establish a professionally managed or discretionary account (including professionally managed or discretionary accounts being opened for Immediate Family members), where you completely turn over decision-making authority to a professional money manager who is not subject to this Code, you must disclose the existence of the account and receive approval from the Code of Ethics staff in advance of the first personal securities transaction. You do not need to pre-clear or report securities transactions in these accounts. Please note a discretionary account may not purchase an IPO or hold Putnam open-end mutual funds.
The broker or advisor maintaining discretion over the account may not be a family member of the Putnam employee.
In order for the account to be considered discretionary, the employee must:
1. Complete an initial certification (as well as annual certifications each year) in which both the employee and the broker/advisor certify that the Putnam employee does not participate in investment decisions on the account; and
2. Ensure that copies of broker statements are delivered to Putnam Investments.
4.3. Account Confirmations and Statements
All employees are required to ensure that copies of all confirmations and statements are delivered to Putnam for all accounts described in Section 4.1 above, and to ensure that copies of all statements (but not confirmations) are delivered to Putnam for all discretionary accounts described in Section 4.2. When the employee discloses the account as required, the Code of Ethics staff will issue a 407 letter, or other communication to the entity where the employees account is held, requesting that confirmations and statements be sent to Putnam on the employees behalf. However, it is ultimately the employees responsibility to ensure his or her broker has complied with this request.
If it is discovered these reports are not being delivered to Putnam, the Code of Ethics staff will bring this issue to the employees attention and request he or she assist in rectifying the issue. If it is determined that a broker has failed to comply with requests to deliver these reports, Putnam reserves the right to require the employee to close the account within 30 days by transferring the account to another dealer willing to comply with this requirement (any trades as a result of a transfer must be pre-cleared).
Section 5 Additional Reporting, Certification, and Training Requirements
5.1. Initial/Annual Holdings Report Access Persons Only
Access Persons must disclose their securities holdings, including all holdings for Immediate Family member accounts, within 10 days of hire (or within 10 days of becoming an Access Person) and then on an annual basis thereafter (within 45 days after the end of the year). The report of securities holdings must include all securities that require pre-clearance under Section 1.1, as well as holdings in non-U.S. sovereign government debt, ETFs, ETNs, ETCs, options, futures and other derivative securities, and holdings of Putnam open-end U.S. mutual funds not held through a Putnam account and U.S. registered mutual funds to which Putnam acts as advisor or sub-advisor (see Section 4).
5.2. Quarterly Transaction Report Access Persons Only
Access Persons must disclose and certify all of their personal securities transactions, including transactions for Immediate Family member accounts, within 20 calendar days following the end of each quarter. In addition to the securities requiring pre-clearance under Section 1.1, Access Persons are also required to disclose and certify all personal transactions in non-U.S. sovereign government debt, as well as ETFs, ETNs, ETCs, options, futures, and other derivative securities, not just those requiring pre-clearance.
10 |
5.3. Annual Certification All Employees
Each calendar year, all employees will be required to certify that they have reviewed and understand the rules and requirements of the Code and that the list of brokerage accounts (for the employee and all Immediate Family members) disclosed in the Code of Ethics PTA system is accurate. An e-mail notification will be sent informing employees of their requirement and the due date.
5.4. Training Requirements All Employees
As deemed necessary by the Code of Ethics staff, employees will be required to complete training on Putnams Code of Ethics. E-mail notifications will be sent notifying employees of the requirements and the due date.
5.5. Maintenance and Distribution of the Code of Ethics
When revisions are made to the Code of Ethics, all employees will receive a revised version of the Code. The Code will be available to all employees on Putnams intranet site. Hard copies may be requested by contacting the Code of Ethics staff.
5.6. Procedures and Timeliness
The certifications and reports required by the Code are completed in the Code of Ethics PTA system. There are strict deadlines for these filings. Planned absences, vacations, and business trips are not valid excuses for failing to meet a deadline. Employees will receive instructions regarding these submissions and the due dates. Please contact the Code of Ethics staff for assistance.
Section 6 General Ethics Rules for All Employees
Putnam employees are expected to act ethically at all times in connection with their employment. In addition to complying with the specific provisions of this section, employees should contact the Code of Ethics staff or the Ombudsman if they are not sure how to proceed in any circumstances involving ethical issues or questions.
6.1. Outside Business Activities
No Putnam employee shall serve as employee, officer, director, trustee, or general partner of a corporation or entity other than Putnam, without prior written approval of the Code of Ethics Officer, who may also confirm that the employees manager has approved such outside position. Requests for a role at a publicly traded company are especially disfavored and are closely reviewed. Permission will be granted only in extenuating circumstances.
All employees must provide a written request seeking approval from the Code of Ethics Officer by entering the details of the proposed position in the Code of Ethics PTA system. Employees may not engage in any outside employment activity until they receive an e-mail approving their request. Employees hired at Putnam with an outside position must disclose the position upon hire in the system and may be required to resign such position if the position presents conflicts of interest or other issues.
FINRA-licensed employees under PRM also have an obligation to disclose outside positions to, and receive approval from the PRM Compliance Department. Employees must also keep this information accurate by updating their profile in the Code of Ethics system and updating the PRM Compliance Department if they change or terminate a position previously approved.
11 |
6.2. Charitable or Non-profit Roles/Role as Trustee or Fiduciary Outside Putnam Investments
6.2(a) An employee may serve as a volunteer, officer, director, or trustee of a charitable or not-for-profit institution, provided that the employee abides by the Code of Ethics with respect to any investment activity for which she has any discretion or input as a volunteer, 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 a volunteer, officer, director, or trustee unless the employee has discretion for the account. You must contact the Code of Ethics staff if you are asked to serve in a role in which you may have discretion, investment, or financial authority for a charitable or not-for-profit institution to discuss whether such position is permissible and whether you must perform any additional actions prior to serving in such role. P>
6.2(b) Except as stated below, no Putnam employee shall serve as a trustee, an executor, a custodian, or any other fiduciary, or as an investment advisor or a counselor for any account outside Putnam.
Putnam employees may serve as a fiduciary with respect to a religious or charitable trust or foundation, provided that the employee abides by the Code of Ethics with respect to any investment activity for which she has any discretion or input. The pre-clearance and reporting requirements of the Code of Ethics apply to the trading activities of such a religious or charitable trust or foundation if the employee has discretion for the account.
6.2(c) Family Trust or Estate Exception. Putnam employees may serve as a fiduciary with respect to a family trust or estate, as 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.
6.3. Family Members Conflict Policy
No employee or member of an employees Immediate Family shall have any direct or indirect personal financial interests in companies that do business with Putnam, unless such interest is disclosed and approved by the Code of Ethics Officer.
6.3(a) Corporate Purchase of Goods and Services Putnam will not acquire goods and services from any firm in which a member of an employees Immediate Family serves as a sales representative or in a senior management capacity, or has an ownership interest (excluding normal investment holdings in public companies), unless permission is obtained from the Assistant Treasurer and the Code of Ethics Officer. Any employee who is aware of a proposal to purchase goods and services from a firm with which a member of the employees Immediate Family has one of these associations must notify the Assistant Treasurer and the Code of Ethics Officer.
6.3(b) Portfolio Trading Putnam will not allocate any client trades to any firm that employs a member of an employees Immediate Family as a sales representative to Putnam (in a primary, secondary, or backup role). Any Putnam employee who is aware that an Immediate Family member serves as a broker-dealers sales representative to Putnam should inform the Code of Ethics Officer.
6.3(c) Definition of Immediate Family (specific to this rule) Immediate Family of an employee means (1) spouse, fiancé(e), or domestic partner of the employee, (2) any child, sibling, or parent of an employee and any person married to a child, sibling or parent of an employee, and (3) any other person who lives in the same household as the employee.
6.4. CFA Institute Code of Ethics and Standards of Professional Conduct
All members of the Investment Division and any other CFA Institute Members or Candidates must follow and abide by the spirit of the Code of Ethics and the Standards of Professional Conduct of the CFA Institute. The text of the CFA Institute Code of Ethics and Standards of Professional Conduct can be found on the Putnam Compliance Department intranet home page, which is accessible from the Putnam intranet home page. The terms of Putnams Code of Ethics shall govern in any case where there is a conflict between the terms of this Code and the CFA Institute Code of Ethics and Standards of Professional Conduct. Please contact the Code of Ethics Officer with any questions.
12 |
6.5. Business Ethics, Ombudsman, and Hotlines
6.5(a) If a Putnam employee suspects that fraudulent, illegal, or other irregular activity (including violations of the Code of Ethics) might be occurring at Putnam, the activity should be reported immediately to Putnams Controller, Chief Compliance Officer or Code of Ethics Officer, through the Ombudsman or hotlines described below or through Putnams Human Resources department.
6.5(b) Putnam has established the office of the corporate ombudsman as a resource to help employees address legal or ethical issues in the workplace and to allow employees to voice concerns or seek clarity on issues. The Ombudsman provides a confidential, independent, and impartial source to employees to discuss potential violations of law or of company standards without fear of retribution, and serves as a neutral party with no vested interest in a particular outcome.
6.5(c) An employee who does not feel comfortable reporting activity in the manner described in 6.5(a) above may instead contact any of the following on an anonymous basis:
The Putnam Ethics hotline at 1-888-475-4210,
The Putnam Funds Trustees hotline at 1-866-858-4155, or
Putnams Ombudsman at 1-866-ombuds7 (866-662-8377).
Section 7 Material, Non-Public Information and Insider Trading
7.1. Material, Public Information and Insider Trading
Antifraud provisions of the U.S. securities laws as well as the laws of other countries generally prohibit persons who possess material, non-public information from trading on or communicating that information to others. Putnams policy calls for strict compliance with such laws. Unlawful trading while in possession of material, non-public information is a very serious matter and can be a crime punishable by imprisionment. There is also significant monetary liability for an inside trader, which can include liability to private plaintiffs and/or the Securities and Exchange Commission, which can seek a court order requiring a violator to pay back profits, as well as penalties substantially greater than those profits. In certain cases, controlling persons of inside traders, including supervisors of inside traders or Putnam itself, can be liable for penalties.
Employees found to have conducted this activity will be immediately referred to the Code of Ethics Oversight Committee or Putnams Chief Executive Officer to determine the appropriate sanction, up to and including termination.
While employees in the Investment Division are most likely to come into contact with material, non-public information, the rules (and sanctions) in this area apply to all Putnam employees (see Section 7.2 for information on what to do if you believe you may have material, non-public information).
7.2. Reporting and Restrictions
Any employee who believes he or she is (or may be) in possession of material, non-public information must immediately contact Putnams Code of Ethics Officer or an attorney in Putnams Legal Department, and provide details on the information received and the source. The employee must also take precautions to maintain the confidentiality of the information in question.
After reviewing the facts and circumstances, Putnams Code of Ethics Officer or Putnams Legal Department will make a determination as to whether possession of the information warrants restricting trading activity in the issuers securities for client accounts as well as personal securities transactions for employees.
13 |
7.3. Special Provisions Applicable to Putnam Affiliates
Any employee wishing to place a trade in the securities of Great-West Lifeco Inc., Power Financial Corporation, Power Corporation of Canada, or IGM Financial Inc. must contact the Code of Ethics Officer or the Deputy Code of Ethics Officer to request manual approval of the pre-clearance request. An employee requesting such approval must certify that he or she is not in possession of any material, non-public information regarding the company in which he or she is seeking to place a trade. The decision whether or not to grant the pre-clearance request is in the sole discretion of the Code of Ethics Officer and the Deputy Code of Ethics Officer. The Code of Ethics Officer and Deputy Code of Ethics Officer will reject any such request for pre-clearance made by members of Putnams Operating Committee and certain members of the Chief Financial Officers staff from the end of each calendar quarter to the date of announcement of Great-West Lifeco Inc .s earnings for such quarter.
7.4. PIL Employees
For PIL employees, these topics are covered by the FSAs Market Abuse rules. PIL employees receive information on this topic in their annual instructor-led code of ethics and compliance training.
Section 8 Sanctions
The Code of Ethics Oversight Committee has adopted the following minimum monetary sanctions for violations of the Code. These sanctions apply even if the exception results from inadvertence rather than intentional misbehavior. The Code of Ethics Oversight Committee will review and approve sanctions on employees. However, the sanctions noted below are only minimums, and the Committee reserves the right to impose sanctions it believes fit the circumstances, such as higher monetary sanctions, trading bans, suspension, or termination of employment. The Committees belief that an employee has violated the Code of Ethics intentionally may result in more severe sanctions than outlined in the guidelines.
8.1. Sanctions for Violations of Sections 13
The minimum sanction per violation of the Rules in Sections 1, 2, or 3 is disgorgement of any profits or payment of avoided losses and the following payments:
Officer level | SMD/MD/SVP | VP/AVP/Non-officer |
| ||
1st violation | $250 | $50 |
| ||
2nd violation | $500 | $100 |
| ||
Minimum monetary sanction as above with ban on all new personal | ||
3rd violation | securities transactions | |
|
8.2. Sanctions for Violations of Sections 46
The minimum sanction for violations of the rules in Sections 46 is as follows:
Officer level | SMD/MD/SVP | VP/AVP/Non-officer |
| ||
1st violation | Warning | Warning |
| ||
2nd violation | $50 | $25 |
| ||
Subsequent violation | $100 | $50 |
|
8.3. Sanctions for Violations of Section 7
All violations concerning the use of material, non-public information, failure to report inside information, or insider trading will be presented to the Code of Ethics Oversight Committee to determine the appropriate sanction, up to and including termination. Severe criminal penalties may also be imposed.
The reference period for determining generally whether a violation is initial or subsequent will be three years.
14 |
Section 9 Procedures for Determinations and Exemptions
No perceived ambiguity in the Code of Ethics shall excuse any violation. Any employee who has a question concerning the applicability of the Code or believes the Code to be ambiguous in a particular situation should request a determination from the Code of Ethics Officer in advance of the conduct. Employees may also request an exemption from the Code of Ethics if they do so in advance of the conduct or transaction sought to be exempted.
Any employee seeking a determination or exemption shall provide the Code of Ethics Officer with such information as the Code of Ethics Officer deems necessary to render the determination or make a decision on the exemption.
15 |
Appendix A Contra-Trading Rule Clearance Form
To: Code of Ethics Officer
From: | Date: |
| |
Re: Sale of Personal Security |
This serves as prior written approval to sell the following personal security:
Name of portfolio manager contemplating personal sale: | |
| |
Security to be sold: | |
| |
Number of shares to be sold: | |
| |
Fund(s) holding security: | |
| |
Number of shares held by fund: | |
| |
Reason for the personal sale: | |
| |
Specify the reason why the sale is inappropriate for fund: (Please attach additional sheets if necessary.) | |
| |
CIO approval: | Date: |
| |
Code of Ethics Officer: | |
| |
Deputy Code of Ethics Officer approval: | Date: |
|
16 |
Putnam Investments | One Post Office Square | Boston, MA 02109 | putnam.com
262362 6/10