-----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, QFOu6MDC1Q7W0vhfdxDK0A5FtYDK6scNApxBwKj25MAQdFA5tRAulvOg/IKQqmff uKnwBxf1OkR1yM8b1ybW0g== 0000928816-05-001122.txt : 20050829 0000928816-05-001122.hdr.sgml : 20050829 20050829164405 ACCESSION NUMBER: 0000928816-05-001122 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20050630 FILED AS OF DATE: 20050829 DATE AS OF CHANGE: 20050829 EFFECTIVENESS DATE: 20050829 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM NEW OPPORTUNITIES FUND CENTRAL INDEX KEY: 0000865177 IRS NUMBER: 043091455 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06128 FILM NUMBER: 051055938 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQUARE CITY: BOSTON STATE: A6 ZIP: 02109 BUSINESS PHONE: 6172921000 N-CSR 1 nof1.txt PUTNAM NEW OPPORTUNITIES FUND Item 1. Report to Stockholders: - ------------------------------- The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940: Putnam New Opportunities Fund 6 | 30 | 05 Annual Report [GRAPHICS OMITTED: VINEYARD COVER, SCALE AND LOGO] GROWTH FUNDS look for stocks of companies that have the potential to grow over time. What makes Putnam different? [GRAPHIC OMITTED: FOUNDER] In 1830, Massachusetts Supreme Judicial Court Justice Samuel Putnam established The Prudent Man Rule, a legal foundation for responsible money management. THE PRUDENT MAN RULE All that can be required of a trustee to invest is that he shall conduct himself faithfully and exercise a sound discretion. He is to observe how men of prudence, discretion, and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of the capital to be invested. [GRAPHIC OMITTED: SIGNATURE, JUSTICE SAMUEL PUTNAM 1830] A time-honored tradition in money management Since 1937, our values have been rooted in a profound sense of responsibility for the money entrusted to us. A prudent approach to investing We use a research-driven team approach to seek consistent, dependable, superior investment results over time, although there is no guarantee a fund will meet its objectives. Funds for every investment goal We offer a broad range of mutual funds and other financial products so investors and their advisors can build diversified portfolios. A commitment to doing what's right for investors We have below-average expenses and stringent investor protections, and provide a wealth of information about the Putnam funds. Industry-leading service We help investors, along with their financial advisors, make informed investment decisions with confidence. Putnam New Opportunities Fund 6 | 30 | 05 Annual Report Message from the Trustees 2 About the fund 4 The year in review 7 Performance 12 Expenses 15 Turnover 17 Risk 18 Your fund's management 19 Terms and definitions 22 Trustee approval of management contract 24 Other information for shareholders 29 Financial statements 30 Federal tax information 57 Shareholder meeting results 58 Brokerage commissions 60 About the Trustees 61 Officers 67 Cover photograph: Vineyard, Napa County, California[C] Charles O'Rear Message from the Trustees Dear Fellow Shareholder During the fiscal year ended June 30, 2005, the Federal Reserve Board's more restrictive monetary policy, along with high energy prices, began to moderate the pace of economic expansion. International markets generally outperformed stock and bond markets in the United States. However, the U.S. dollar strengthened against foreign currencies, partially offsetting the effects of these gains. Amid the uncertainties of this environment, the in-depth, professional research and active management that mutual funds can provide makes them an intelligent choice for today's investors. We want you to know that Putnam Investments' management team, under the leadership of Chief Executive Officer Ed Haldeman, continues to focus on investment performance and remains committed to putting the interests of shareholders first. In keeping with these goals, we have redesigned and expanded our shareholder reports to make it easier for you to learn more about your fund. More information about your fund's strategy and history has been added to this report. We have also included additional information about your fund's management team, including compensation data pertaining to your fund. Furthermore, on page 24 we provide information about the 2005 approval by the Trustees of your fund's management contract with Putnam. We would also like to take this opportunity to announce the retirement of one of your fund's Trustees, Ronald J. Jackson, who has been an independent Trustee of the Putnam funds since 1996. We thank him for his service. In the following pages, members of your fund's management team discuss the fund's performance, strategies, and their outlook for the months ahead. Respectfully yours, /S/ GEORGE PUTNAM, III George Putnam, III President of the Funds /S/ JOHN A. HILL John A. Hill Chairman of the Trustees August 17, 2005 [GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM, III] Putnam New Opportunities Fund: investing through 15 years of unprecedented innovation Long before most Americans could imagine the Internet, digital music files, or owning a cell phone small enough to fit in their pockets, Putnam New Opportunities Fund was seeking growth potential in emerging, cutting-edge companies. The fund was also targeting stocks in more traditional industries, such as restaurants, retail stores, health care, and broadcasting, which can also offer strong growth potential. Among the holdings in the fund's portfolio shortly after it was introduced in 1990 was the stock of Symantec, then a 9-year-old emerging software company. Today, Symantec is a leading maker of antivirus software, which has seen explosive demand as the Internet and computer networks have become an essential component of everyday life. The managers of the fund focus on bottom-up stock selection in seeking above-average growth for investors. Putnam's in-house research organization, whose dedicated analysts work in teams, helps the management teams find growth stocks that other investors may have overlooked. The specialized expertise of these Putnam analysts, who visit with the managements of thousands of companies each year, is critical to the success of the fund's growth strategy. An important benefit of the fund's strategy is its flexibility -- it diversifies across a range of industries and capitalizations. The fund can invest in smaller companies that are in their emerging- or expansionary-growth phases, and these companies can remain in the fund's portfolio until they grow to become market leaders. [GRAPHIC OMITTED: CD STACK] Holdings can grow from emerging stocks to market leaders. Many leading companies in the fund's portfolio were also in the portfolio when they were smaller, emerging companies. The management teams have strategically bought and sold these and other stocks of growing companies across a wide range of industries. [GRAPHICS OMITTED: SAFE, MOUSE, BEAKERS AND TOOLBOX] 1991 Symantec Initial public offering was in 1989; today, the world's leading maker of antivirus software 1993 Cisco Systems Went public in February 1990; today, a dominant force in computer networking systems 1995 Amgen Established in 1980 with 3 employees; today, a leading biotechnology company with over 14,000 employees (as of 2004) 1997 The Home Depot Opened in 1979 with 3 stores and $7 million in sales; today, the largest home-improvement retailer with over 1,800 stores and $73 billion in sales (fiscal 2004) Of course, historically, markets have been volatile at times for growing companies; the growth potential offered by these stocks comes with the risk of greater price fluctuations. Combining small-cap stocks with the stocks of larger, well-established companies provides a more diversified approach to help manage those risks. While the next decade will bring as many extraordinary changes as the last one, the teams managing Putnam New Opportunities Fund will continue to focus on capturing growth potential for investors. In-depth analysis is key to successful stock selection. Drawing on the expertise of a dedicated team of stock analysts, the fund's management teams seek attractive growth stocks. Once a stock is selected for the portfolio, it is regularly assessed by the members of the teams to ensure that it continues to meet their criteria, including: Growth They examine each company's financials, including its sales and earnings, and target those believed to offer growth potential. Quality They look for high-quality companies, seeking characteristics such as solid management teams, sound business models, a record of strong performance, and high levels of free-cash flow. Valuation They carefully consider how each stock is valued, seeking stocks whose valuations are attractive relative to the company's growth potential. [GRAPHICS OMITTED: FIRST AID KIT AND PALETTE] 2000 UnitedHealth Group Founded in 1974 as Charter Med; today, a leading health-care services company 2002 Adobe Systems Went public in 1986; today, one of the largest software companies, creator of the hugely successful Adobe Acrobat[R] Source: Company Web sites as of 6/30/05. Identified holdings were held during the specific year; they will vary over time. The fund may not have continued to hold the security in the portfolio, and may have sold it at a loss. Performance of identified holdings in a year may not be representative of the fund's returns during the same period. Securities purchased in the future may not generate similar returns. This is not an offer to sell or a recommendation to buy any individual security. For more information on current fund holdings, see page 9. Putnam New Opportunities Fund has a multi-cap strategy, seeking to invest in the highest-quality large-cap companies as well as small- and mid-cap growth companies. The fund's management teams seek to identify dynamic companies that are positioned in sectors believed to offer above-average growth potential. The fund may be appropriate for investors who are seeking long-term growth potential from stocks of small, midsize, and large companies. - ----------------------------------------------------------------------------- Highlights * For the 12 months ended June 30, 2005, Putnam New Opportunities Fund's class A shares had a total return of 6.78% at net asset value (NAV, or without sales charges). * The fund's primary benchmark, the Russell 3000 Growth Index, returned 1.90% for the same period. * The average return for the fund's Lipper category, Multi-Cap Growth Funds, was 5.01%. * The fund's benchmark changed from the Russell Midcap Growth Index to the Russell 3000 Growth Index. See the Strategy Overview section for details. * Additional fund performance, comparative performance, and Lipper data can be found in the performance section beginning on page 12. - ----------------------------------------------------------------------------- Performance Total return for class A shares for periods ended 6/30/05 Since the fund's inception (8/31/90), annualized return is 14.04% at NAV; and 13.63% at POP. - ----------------------------------------------------------------------------- Annualized return Cumulative return NAV POP NAV POP - ----------------------------------------------------------------------------- 10 years 6.50% 5.92% 87.67% 77.81% - ----------------------------------------------------------------------------- 5 years -13.17 -14.10 -50.65 -53.24 - ----------------------------------------------------------------------------- 1 year 6.78 1.17 6.78 1.17 - ----------------------------------------------------------------------------- Data is historical. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate and you may have a gain or a loss when you sell your shares. Performance assumes reinvestment of distributions and does not account for taxes. Returns at NAV do not reflect a sales charge of 5.25%. For the most recent month-end performance, visit www.putnam.com. A short-term trading fee of up to 2% may apply. Report from the fund managers The year in review Looking back over the past 12 months, it would appear that the U.S. stock market, and growth stocks specifically, should have had solid performance. The economy has continued to grow at a steady pace; long-term interest rates and mortgage rates have remained at historically low levels; and inflation has also been low. However, growth-oriented stocks have only seen sluggish, albeit positive performance, in part because forward-looking investors have been concerned about other factors, including high energy prices, rising short-term interest rates, and large trade and federal budget deficits. In this environment, we increased the fund's focus on fundamental research and individual stock selection. Our "all-cap" approach, which seeks outperforming returns from stocks of companies of all sizes, produced results that were ahead of the fund's benchmark index and Lipper category average (based on performance at net asset value). Market overview In the first half of your fund's fiscal year, the stock market posted gains, although investors were distracted by a number of concerns. While the economy continued to expand, job creation improved, and corporate profits were generally solid, investors grew concerned about rising short-term interest rates, soaring energy prices, and the outcome of U.S. elections. Stocks fell sharply from July to mid-August, responding to a series of interest-rate increases by the Federal Reserve Board, the dramatic rise in oil prices, and a series of destabilizing events in Iraq. However, stocks posted strong gains in November and December, as investors responded positively to lower oil prices and the completion of the presidential election and appeared to focus on reports of sustained economic expansion and strong corporate earnings. The new year brought little relief to the flat overall returns in the stock market during 2004. From January through March 2005, growth stocks generally declined, as investors renewed concerns about the effects of higher short-term interest rates and energy prices on the economy and corporate profits. Despite earnings reports that were generally positive, investors continued to look ahead with caution. Adding to their concerns were difficulties in the pharmaceutical and automotive industries, which significantly underperformed the market. In the final three months of the fiscal year, growth stocks staged a solid recovery. Investors were finally attracted by valuations that had reached low levels -- especially considering the generally solid fundamental health and favorable earnings prospects of many growth-oriented companies. Strategy overview Drawing on the expertise of a dedicated team of stock analysts, we streamlined the portfolio during the period. Our goal was (and remains) to invest in a smaller number of stocks in order to better focus our research and analysis on what we consider the most attractive investment opportunities in the growth-stock universe. Through a systematic investment process, we develop computer models to test companies on a number of variables -- particularly their quality, growth potential, and valuations. Once a stock is selected for the fund's portfolio, it is regularly assessed to ensure that it continues to meet our criteria. Using this disciplined, company-by-company approach, we pared the fund's holdings down significantly during the period. - ----------------------------------------------------------------------------- Market sector performance These indexes provide an overview of performance in different market sectors for the 12 months ended 6/30/05. - ----------------------------------------------------------------------------- Equities - ----------------------------------------------------------------------------- Russell 3000 Growth Index (multi-cap growth stocks) 1.90% - ----------------------------------------------------------------------------- Russell Midcap Growth Index (midsize-company growth stocks) 10.86% - ----------------------------------------------------------------------------- S&P 500/Barra Value Index (large-company value stocks) 11.18% - ----------------------------------------------------------------------------- MSCI EAFE Index (international stocks) 13.65% - ----------------------------------------------------------------------------- Bonds - ----------------------------------------------------------------------------- Lehman Aggregate Bond Index (broad bond market) 6.80% - ----------------------------------------------------------------------------- Lehman Government Bond Index (U.S. Treasury and agency securities) 6.65% - ----------------------------------------------------------------------------- Citigroup World Government Bond Index (global government bonds) 7.61% - ----------------------------------------------------------------------------- It is also important to note that your fund has a new benchmark, the Russell 3000 Growth Index. Putnam management believes that this index, which includes companies of all sizes, is a better reflection of the fund's holdings than its former benchmark, the Russell Midcap Growth Index, which measures the performance of a more narrowly focused group of mid-cap stocks. Your fund's holdings Consumer stocks made solid contributions to performance during the period. In the retail sector, American Eagle Outfitters, a retailer of casual clothing for 15- to 25-year-olds, was a significant contributor. After delivering sluggish earnings in 2003, American Eagle made several improvements to its product line in order to appeal to its target customers. In 2004, the company's sales grew 30% -- at a time when overall retail sales were weak as consumers worried about job losses and rising energy prices. We chose this stock because of its growth potential as well as its valuation, which we found to be attractive in the wake of the company's struggling sales prior to 2004. Also in the retail sector, Michael's Stores, Inc. bolstered the fund's performance. This specialty retailer sells a wide range of arts, crafts, framing, floral, decorative wall decor, and seasonal products to hobbyists and do-it-yourself home decorators in the U.S. and Canada. The company has benefited greatly from an aging population that enjoys doing home decorating and crafts projects. - ----------------------------------------------------------------------------- Comparison of top industry weightings This chart shows how the fund's top weightings have changed over the last six months. Weightings are shown as a percentage of net assets. Holdings will vary over time. [GRAPHIC OMITTED: horizontal bar chart COMPARISON OF TOP INDUSTRY WEIGHTINGS] as of as of 12/31/04 6/30/05 Medical technology 8.5% 10.4% - ------------------------------------------------------------------------------ Retail 8.6% 8.7% - ------------------------------------------------------------------------------ Software 11.4% 8.7% - ------------------------------------------------------------------------------ Electronics 5.0% 7.0% - ------------------------------------------------------------------------------ Pharmaceuticals 8.0% 6.2% - ------------------------------------------------------------------------------ In the technology sector, Adobe Sys tems, a computer software company, was a strong contributor to the fund's relative returns. Adobe's strong revenue growth in 2004 was due in large part to the growing popularity of its products among consumers and creative arts professionals. Its most successful products include Adobe Acrobat[R] for creating PDF files and Adobe Photoshop for editing digital photographs. In addition to its growth potential, we selected Adobe for its quality -- it is a fundamentally strong company that generates a lot of free cash flow. Autodesk, another software company, also helped the fund's relative performance due to strong sales and earnings results. Auto desk is a world-leader in computer-aided design and engineering products. In another move that was beneficial, management reduced or eliminated certain poor-performing stocks from the portfolio, such as Pfizer, Inc., which declined after one of its products, Celebrex, was linked to heart problems. We reduced the fund's holdings over several months and eliminated the position before the period ended. Another stock that detracted from performance was Career Education Corp. This stock was highly volatile over the past year, in large part due to a management scandal that hurt earnings and made investors skeptical about the company's prospects. We reduced this holding before the period's end but have not yet eliminated the position. Lexmark International, a manufacturer of computer printers, also declined due to increased competition from Hewlett Packard. We have reduced the fund's exposure to this holding. - ------------------------------------------------------------------------------ Top holdings This table shows the fund's top holdings, and the percentage of the fund's net assets that each comprised, as of 6/30/05. The fund's holdings will change over time. - ------------------------------------------------------------------------------ Holding (percent of fund's net assets) Industry - ------------------------------------------------------------------------------ Johnson & Johnson (3.8%) Pharmaceuticals - ------------------------------------------------------------------------------ Microsoft Corp. (3.5%) Software - ------------------------------------------------------------------------------ Cisco Systems, Inc. (2.8%) Communications equipment - ------------------------------------------------------------------------------ Procter & Gamble Co. (The) (2.7%) Consumer goods - ------------------------------------------------------------------------------ Intel Corp. (2.3%) Electronics - ------------------------------------------------------------------------------ UnitedHealth Group, Inc. (2.2%) Health-care services - ------------------------------------------------------------------------------ Home Depot, Inc. (The) (2.0%) Retail - ------------------------------------------------------------------------------ Black & Decker Manufacturing Co. (1.7%) Consumer cyclicals - ------------------------------------------------------------------------------ Dell, Inc. (1.6%) Computers - ------------------------------------------------------------------------------ St. Jude Medical, Inc. (1.6%) Medical technology - ------------------------------------------------------------------------------ Finally, Home Depot detracted from the fund's relative performance due to short-term concerns about a potential bubble in the housing market and competition from Lowe's, a major competitor. However, we believe the stock has been overlooked by investors. Management has bought back shares and reduced capital spending, the company's growth rate has been solid, and we believe the home-improvement business should remain strong, even if new home sales decline. Please note that all holdings discussed in this report are subject to review in accordance with the fund's investment strategy and may vary in the future. - ------------------------------------------------------------------------------ The outlook for your fund The following commentary reflects anticipated developments that could affect your fund over the next six months, as well as your management teams' plans for responding to them. With inflation under control, earnings are growing at a healthy pace, and long-term interest rates remain at low levels. We consequently believe we may see gains in the stock market over the next 6 to 12 months. In our opinion, there are many healthy companies that have not seen the kind of stock price gains we believe they deserve. We also believe many strong companies that have seen some price appreciation may be poised for further increases. Having said that, we remain mindful of certain headwinds that have held stocks back thus far in 2005. These concerns include continued increases in short-term interest rates, high energy prices, a potential bubble in the housing market, and the effects of the federal trade and budget deficits on long-term interest rates. As always, we will monitor economic and market conditions, adjusting the portfolio to pursue opportunities as they arise. The views expressed in this report are exclusively those of Putnam Management. They are not meant as investment advice. The fund invests some or all of its assets in small and/or midsize companies. Such investments increase the risk of greater price fluctuations. Your fund's performance This section shows your fund's performance during its fiscal year, which ended June 30, 2005. Performance should always be considered in light of a fund's investment strategy. Data represents past performance. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate and you may have a gain or a loss when you sell your shares. For the most recent month-end performance, please visit www.putnam.com.
- ---------------------------------------------------------------------------------------- Fund performance Total return for periods ended 6/30/05 - ---------------------------------------------------------------------------------------- Class A Class B Class C Class M Class R (inception dates) (8/31/90) (3/1/93) (7/26/99) (12/1/94) (1/21/03) - ---------------------------------------------------------------------------------------- NAV POP NAV CDSC NAV CDSC NAV POP NAV - ---------------------------------------------------------------------------------------- Annual average (life of fund) 14.04% 13.63% 13.21% 13.21% 13.19% 13.19% 13.45% 13.18% 13.77% - ---------------------------------------------------------------------------------------- 10 years 87.67 77.81 74.68 74.68 74.11 74.11 78.51 72.26 83.17 - ---------------------------------------------------------------------------------------- Annual average 6.50 5.92 5.74 5.74 5.70 5.70 5.97 5.59 6.24 - ---------------------------------------------------------------------------------------- 5 years -50.65 -53.24 -52.43 -53.25 -52.48 -52.48 -51.86 -53.55 -51.23 - ---------------------------------------------------------------------------------------- Annual average -13.17 -14.10 -13.81 -14.11 -13.82 -13.82 -13.60 -14.22 -13.38 - ---------------------------------------------------------------------------------------- 1 year 6.78 1.17 5.97 0.97 5.98 4.98 6.27 2.54 6.51 - ----------------------------------------------------------------------------------------
Performance assumes reinvestment of distributions and does not account for taxes. Returns at public offering price (POP) for class A and M shares reflect a sales charge of 5.25% and 3.50%, respectively (which for class M shares does not reflect a reduction in sales charges that went into effect on April 1, 2005; if this reduction had been in place for all periods indicated, returns would have been higher). Class B share returns reflect the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declining to 1% in the sixth year, and is eliminated thereafter. Class C shares reflect a 1% CDSC the first year that is eliminated thereafter. Class R shares have no initial sales charge or CDSC. Performance for class B, C, M, and R shares before their inception is derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and higher operating expenses for such shares. A 2% short-term trading fee may be applied to shares exchanged or sold within 5 days of purchase. - ---------------------------------------------------------------------------- Change in the value of a $10,000 investment ($9,475 after sales charge) Cumulative total return from 6/30/95 to 6/30/05 [GRAPHIC OMITTED: worm chart CHANGE IN THE VALUE OF A $10,000 INVESTMENT] Putnam New Opportunities Fund class A shares Russell Midcap Russell 3000 at POP Growth Index Growth Index - ---------------------------------------------------------------------------- 6/30/95 9,475 10,000 10,000 6/30/96 13,770 12,359 12,767 6/30/97 14,357 14,533 16,408 6/30/98 19,059 18,024 21,264 6/30/99 22,454 21,685 26,703 6/30/00 36,034 32,222 33,608 6/30/01 20,503 22,068 21,743 6/30/02 13,797 16,256 16,006 6/30/03 14,015 17,451 16,452 6/30/04 16,652 22,220 19,548 6/30/05 $17,781 $24,634 $19,919 Past performance does not indicate future results. At the end of the same time period, a $10,000 investment in the fund's class B and class C shares would have been valued at $17,468 and $17,411, respectively, and no contingent deferred sales charges would apply. A $10,000 investment in the fund's class M shares would have been valued at $17,851 ($17,226 at public offering price). A $10,000 investment in the fund's class R shares would have been valued at $18,317. See first page of performance section for performance calculation method. The Russell 3000 Growth Index has replaced the Russell Midcap Growth Index because it more accurately reflects the types of securities generally held by the fund. - ---------------------------------------------------------------------------- Comparative index returns For periods ended 6/30/05 - ---------------------------------------------------------------------------- Russell Midcap Russell 3000 Lipper Multi-Cap Growth Growth Index Growth Index Funds category average* - ---------------------------------------------------------------------------- Annual average (life of fund) 12.08% 9.69% 11.40% - ---------------------------------------------------------------------------- 10 years 146.34 99.19 137.26 Annual average 9.43 7.13 8.46 - ---------------------------------------------------------------------------- 5 years -23.55 -40.73 -32.05 Annual average -5.23 -9.93 -8.58 - ---------------------------------------------------------------------------- 1 year 10.86 1.90 5.01 - ---------------------------------------------------------------------------- Index and Lipper results should be compared to fund performance at net asset value. * Over the 1-, 5-, and 10-year periods ended 6/30/05 there were 419, 247, and 73 funds, respectively, in this Lipper category. - ---------------------------------------------------------------------------- Fund price and distribution* information For the 12-month period ended 6/30/05 - ---------------------------------------------------------------------------- Class A Class B Class C Class M Class R - ---------------------------------------------------------------------------- Share value: NAV POP NAV NAV NAV POP NAV - ---------------------------------------------------------------------------- 6/30/04 $38.96 $41.12 $35.34 $37.49 $36.83 $38.17 $38.85 - ---------------------------------------------------------------------------- 6/30/05 41.60 43.91 37.45 39.73 39.14 40.45+ 41.38 - ---------------------------------------------------------------------------- * The fund made no distributions during the period. + Reflects a reduction in sales charges that took effect on April 1, 2005. - ---------------------------------------------------------------------------- Your fund's expenses As a mutual fund investor, you pay ongoing expenses, such as management fees, distribution fees (12b-1 fees), and other expenses. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You may also pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund's prospectus or talk to your financial advisor. - ---------------------------------------------------------------------------- Review your fund's expenses The table below shows the expenses you would have paid on a $1,000 investment in Putnam New Opportunities Fund from January 1, 2005, to June 30, 2005. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses. - ---------------------------------------------------------------------------- Class A Class B Class C Class M Class R - ---------------------------------------------------------------------------- Expenses paid per $1,000* $5.46 $9.17 $9.16 $7.93 $6.70 - ---------------------------------------------------------------------------- Ending value (after expenses) $1,001.70 $998.10 $998.00 $999.50 $1,000.50 - ---------------------------------------------------------------------------- * Expenses for each share class are calculated using the fund's annualized expense ratio for each class, which represents the ongoing expenses as a percentage of net assets for the six months ended 6/30/05. The expense ratio may differ for each share class (see the table at the bottom of the next page). Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period; and then dividing that result by the number of days in the year. - ---------------------------------------------------------------------------- Estimate the expenses you paid To estimate the ongoing expenses you paid for the six months ended June 30, 2005, use the calculation method below. To find the value of your investment on January 1, 2005, go to www.putnam.com and log on to your account. Click on the "Transaction History" tab in your Daily Statement and enter 01/01/2005 in both the "from" and "to" fields. Alternatively, call Putnam at 1-800-225-1581. - ------------------------------------------------------------------------------ How to calculate the expenses you paid - ------------------------------------------------------------------------------ Total Value of your Expenses paid = expenses investment on 1/1/05 [D] $1,000 x per $1,000 paid - ------------------------------------------------------------------------------ Example Based on a $10,000 investment in class A shares of your fund. - ------------------------------------------------------------------------------ $10,000 [D] $1,000 x $5.46 (see table above) = $54.60 - ------------------------------------------------------------------------------ - ---------------------------------------------------------------------------- Compare expenses using the SEC's method The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund's expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total costs) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period. - ------------------------------------------------------------------------------- Class A Class B Class C Class M Class R - ------------------------------------------------------------------------------- Expenses paid per $1,000* $5.51 $9.25 $9.25 $8.00 $6.76 - ------------------------------------------------------------------------------- Ending value (after expenses) $1,019.34 $1,015.62 $1,015.62 $1,016.86 $1,018.10 - ------------------------------------------------------------------------------- * Expenses for each share class are calculated using the fund's annualized expense ratio for each class, which represents the ongoing expenses as a percentage of net assets for the six months ended 6/30/05. The expense ratio may differ for each share class (see the table at the bottom of this page). Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period; and then dividing that result by the number of days in the year. - ---------------------------------------------------------------------------- Compare expenses using industry averages You can also compare your fund's expenses with the average of its peer group, as defined by Lipper, an independent fund-rating agency that ranks funds relative to others that Lipper considers to have similar investment styles or objectives. The expense ratio for each share class shown below indicates how much of your fund's net assets have been used to pay ongoing expenses during the period. - ------------------------------------------------------------------------------- Class A Class B Class C Class M Class R - ------------------------------------------------------------------------------- Your fund's annualized expense ratio+ 1.10% 1.85% 1.85% 1.60% 1.35% - ------------------------------------------------------------------------------- Average annualized expense ratio for Lipper peer group++ 1.57% 2.32% 2.32% 2.07% 1.82% - ------------------------------------------------------------------------------- + For the fund's most recent fiscal half year; may differ from expense ratios based on one-year data in the financial highlights. ++ Simple average of the expenses of all front-end load funds in the fund's Lipper peer group, calculated in accordance with Lipper's standard method for comparing fund expenses (excluding 12b-1 fees and without giving effect to any expense offset and brokerage service arrangements that may reduce fund expenses). This average reflects each fund's expenses for its most recent fiscal year available to Lipper as of 6/30/05. To facilitate comparison, Putnam has adjusted this average to reflect the 12b-1 fees carried by each class of shares. The peer group may include funds that are significantly smaller or larger than the fund, which may limit the comparability of the fund's expenses to the simple average, which typically is higher than the asset-weighted average. Your fund's portfolio turnover Putnam funds are actively managed by teams of experts who buy and sell securities based on intensive analysis of companies, industries, economies, and markets. Portfolio turnover is a measure of how often a fund's managers buy and sell securities for your fund. A portfolio turnover of 100%, for example, means that the managers sold and replaced securities valued at 100% of a fund's assets within a one-year period. Funds with high turnover may be more likely to generate capital gains and dividends 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. - ---------------------------------------------------------------------------- Turnover comparisons Percentage of holdings that change every year - ----------------------------------------------------------------- 2005 2004 2003 2002 2001 - ----------------------------------------------------------------- Putnam New Opportunities Fund 97% 61% 42% 77% 68% - ----------------------------------------------------------------- Lipper Multi-Cap Growth Funds category average 150% 150% 177% 152% 180% - ----------------------------------------------------------------- Turnover data for the fund is calculated based on the fund's fiscal-year period, which ends on June 30. Turnover data for the fund's Lipper category is calculated based on the average of the turnover of each fund in the category for its fiscal year ended during the indicated year. Fiscal years vary across funds in the Lipper category, which may limit the comparability of the fund's portfolio turnover rate to the Lipper average. Comparative data for 2005 is based on information available as of 6/30/05. Your fund's risk This risk comparison is designed to help you understand how your fund compares with other funds. The comparison utilizes a risk measure developed by Morningstar, an independent fund-rating agency. This risk measure is referred to as the fund's Overall Morningstar Risk. - ---------------------------------------------------------------------------- Your fund's Overall Morningstar Risk Your fund's Overall Morningstar Risk is shown alongside that of the average fund in its broad asset class, as determined by Morningstar. The risk bar broadens the comparison by translating the fund's Overall Morningstar Risk into a percentile, which is based on the fund's ranking among all funds rated by Morningstar as of June 30, 2005. A higher Overall Morningstar Risk generally indicates that a fund's monthly returns have varied more widely. [GRAPHIC OMITTED: chart MORNINGSTAR RISK] Fund's Overall Morningstar Risk 5.84 U.S. stock fund average 3.10 0% INCREASING RISK 100% Morningstar determines a fund's Overall Morningstar Risk by assessing variations in the fund's monthly returns -- with an emphasis on downside variations -- over 3-, 5-, and 10-year periods, if available. Those measures are weighted and averaged to produce the fund's Overall Morningstar Risk. The information shown is provided for the fund's class A shares only; information for other classes may vary. Overall Morningstar Risk is based on historical data and does not indicate future results. Morningstar does not purport to measure the risk associated with a current investment in a fund, either on an absolute basis or on a relative basis. Low Overall Morningstar Risk does not mean that you cannot lose money on an investment in a fund. Copyright 2004 Morningstar, Inc. All Rights Reserved. The information contained herein (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Your fund's management Your fund is managed by the members of the Putnam Mid-Cap Growth and Small and Emerging Growth teams. Kevin Divney is the Portfolio Leader and Brian DeChristopher and Richard Weed are Portfolio Members of your fund. The Portfolio Leader and Portfolio Members coordinate the teams' management of the fund. For a complete listing of the members of the Putnam Mid-Cap Growth and Small and Emerging Growth teams, including those who are not Portfolio Leaders or Portfolio Members of your fund, visit Putnam's Individual Investor Web site at www.putnam.com.
- ---------------------------------------------------------------------------- Fund ownership by the Portfolio Leader and Portfolio Members The table below shows how much the fund's current Portfolio Leader and Portfolio Members have invested in the fund (in dollar ranges). Information shown is as of June 30, 2005, and June 30, 2004. - ----------------------------------------------------------------------------------------------------------------- $1 - $10,001 - $50,001 - $100,001 - $500,001 - $1,000,001 Year $0 $10,000 $50,000 $100,000 $500,000 $1,000,000 and over - ----------------------------------------------------------------------------------------------------------------- Kevin Divney 2005 * - ----------------------------------------------------------------------------------------------------------------- Portfolio Leader N/A - ----------------------------------------------------------------------------------------------------------------- Brian DeChristopher N/A - ----------------------------------------------------------------------------------------------------------------- Portfolio Member N/A - ----------------------------------------------------------------------------------------------------------------- Richard Weed 2005 * - ----------------------------------------------------------------------------------------------------------------- Portfolio Member 2004 * - ----------------------------------------------------------------------------------------------------------------- N/A indicates the individual became a Portfolio Leader or Portfolio Member after the reporting date.
- ---------------------------------------------------------------------------- Fund manager compensation The total 2004 fund manager compensation that is attributable to your fund is approximately $2,800,000. This amount includes a portion of 2004 compensation paid by Putnam Management to the fund managers assigned to the fund as of June 30, 2005, for their portfolio management responsibilities, calculated based on the fund assets they manage taken as a percentage of the total assets they manage. The compensation amount also includes a portion of the 2004 compensation paid to the Chief Investment Officers of the team and the Group Chief Investment Officer of the fund's broader investment category for their oversight responsibilities, calculated based on the fund assets they oversee taken as a percentage of the total assets they oversee. This amount does not include compensation of other personnel involved in research, trading, administration, systems, compliance, or fund operations; nor does it include non-compensation costs. These percentages are determined as of the fund's fiscal period-end. For personnel who joined Putnam Management during or after 2004, the calculation reflects annualized 2004 compensation or an estimate of 2005 compensation, as applicable. The calculation does not reflect compensation of individuals who became portfolio team members after the fiscal period-end. - ---------------------------------------------------------------------------- Other Putnam funds managed by the Portfolio Leader and Portfolio Members Kevin Divney is also a Portfolio Leader of Putnam Vista Fund. Brian DeChristopher is also a Portfolio Member of Putnam Vista Fund. Richard Weed is also a Portfolio Leader of Putnam Discovery Growth Fund, Putnam OTC & Emerging Growth Fund, and Putnam Small Cap Growth Fund. Kevin Divney, Brian DeChristopher, and Richard Weed may also manage other accounts and variable trust funds advised by Putnam Management or an affiliate. - ---------------------------------------------------------------------------- Changes in your fund's Portfolio Leader and Portfolio Members During the year ended June 30, 2005, your fund's management teams shifted from the Putnam Large-Cap Growth and Specialty Growth teams to the Mid-Cap Growth and Small and Emerging Growth teams. Consequently, Kevin Divney became a Portfolio Leader of your fund. In addition, Portfolio Leader Dan Miller and Portfolio Members Kevin Doerr and Brian O'Toole left your fund's management team. Shortly after the close of the period, Brian DeChristopher became a Portfolio Member of your fund, following the departure of Portfolio Leader Paul Marrkand.
- ---------------------------------------------------------------------------- Fund ownership by Putnam's Executive Board The table below shows how much the members of Putnam's Executive Board have invested in the fund (in dollar ranges). Information shown is as of June 30, 2005, and June 30, 2004. - ----------------------------------------------------------------------------------------- $1 - $10,001 - $50,001 - $100,001 Year $0 $10,000 $50,000 $100,000 and over - ----------------------------------------------------------------------------------------- Philippe Bibi 2005 * - ----------------------------------------------------------------------------------------- Chief Technology Officer 2004 * - ----------------------------------------------------------------------------------------- John Boneparth 2005 * - ----------------------------------------------------------------------------------------- Head of Global Institutional Mgmt 2004 * - ----------------------------------------------------------------------------------------- Joshua Brooks 2005 * - ----------------------------------------------------------------------------------------- Deputy Head of Investments N/A - ----------------------------------------------------------------------------------------- Kevin Cronin 2005 * - ----------------------------------------------------------------------------------------- Head of Investments 2004 * - ----------------------------------------------------------------------------------------- Charles Haldeman, Jr. 2005 * - ----------------------------------------------------------------------------------------- President and CEO 2004 * - ----------------------------------------------------------------------------------------- Amrit Kanwal 2005 * - ----------------------------------------------------------------------------------------- Chief Financial Officer 2004 * - ----------------------------------------------------------------------------------------- Steven Krichmar 2005 * - ----------------------------------------------------------------------------------------- Chief of Operations 2004 * - ----------------------------------------------------------------------------------------- Francis McNamara, III 2005 * - ----------------------------------------------------------------------------------------- General Counsel 2004 * - ----------------------------------------------------------------------------------------- Richard Monaghan 2005 * - ----------------------------------------------------------------------------------------- Head of Retail Management 2004 * - ----------------------------------------------------------------------------------------- Richard Robie, III 2005 * - ----------------------------------------------------------------------------------------- Chief Administrative Officer 2004 * - ----------------------------------------------------------------------------------------- Edward Shadek 2005 * - ----------------------------------------------------------------------------------------- Deputy Head of Investments N/A - ----------------------------------------------------------------------------------------- N/A indicates the individual was not a member of Putnam's Executive Board as of 6/30/04.
Terms and definitions - ---------------------------------------------------------------------------- Important terms Total return shows how the value of the fund's shares changed over time, assuming you held the shares through the entire period and reinvested all distributions in the fund. Net asset value (NAV) is the price, or value, of one share of a mutual fund, without a sales charge. NAVs fluctuate with market conditions. NAV is calculated by dividing the net assets of each class of shares by the number of outstanding shares in the class. Public offering price (POP) is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. POP performance figures shown here assume the 5.25% maximum sales charge for class A shares and 3.50% for class M shares (since reduced to 3.25%). Contingent deferred sales charge (CDSC) is a charge applied at the time of the redemption of class B or C shares and assumes redemption at the end of the period. Your fund's class B CDSC declines from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. The CDSC for class C shares is 1% for one year after purchase. - ---------------------------------------------------------------------------- Share classes Class A shares are generally subject to an initial sales charge and no sales charge on redemption (except on certain redemptions of shares bought without an initial sales charge). Class B shares may be subject to a sales charge upon redemption. Class C shares are not subject to an initial sales charge and are subject to a contingent deferred sales charge only if the shares are redeemed during the first year. Class M shares have a lower initial sales charge and a higher 12b-1 fee than class A shares and no sales charge on redemption (except on certain redemptions of shares bought without an initial sales charge). Class R shares are not subject to an initial sales charge or CDSC and are available only to certain defined contribution plans. - ---------------------------------------------------------------------------- Comparative indexes Citigroup World Government Bond Index is an unmanaged index of global investment-grade fixed-income securities. Lehman Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities. Lehman Government Bond Index is an unmanaged index of U.S. Treasury and agency securities. Morgan Stanley Capital International (MSCI) EAFE Index is an unmanaged index of equity securities from developed countries in Western Europe, the Far East, and Australasia. Russell 3000 Growth Index is an unmanaged index of those companies in the broad-market Russell 3000 Index chosen for their growth orientation. Russell Midcap Growth Index is an unmanaged index of those companies in the Russell Midcap Index chosen for their growth orientation. S&P 500/Barra Value Index is an unmanaged capitalization-weighted index of large-cap stocks chosen for their value orientation. Indexes assume reinvestment of all distributions and do not account for fees. Securities and performance of a fund and an index will differ. You cannot invest directly in an index. Lipper is a third-party industry ranking entity that ranks funds (without sales charges) with similar current investment styles or objectives as determined by Lipper. Lipper category averages reflect performance trends for funds within a category and are based on total return at net asset value. Trustee approval of management contract - ---------------------------------------------------------------------------- General conclusions The Board of Trustees of the Putnam funds oversees the management of each fund and, as required by law, determines annually whether to approve the continuance of your fund's management contract with Putnam Management. In this regard, the Board of Trustees, with the assistance of its Contract Committee consisting solely of Trustees who are not "interested persons" (as such term is defined in the Investment Company Act of 1940, as amended) of the Putnam funds (the "Independent Trustees"), requests and evaluates all information it deems reasonably necessary under the circumstances. Over the course of several months beginning in March and ending in June 2005, the Contract Committee met five times to consider the information provided by Putnam Management and other information developed with the assistance of the Board's independent counsel and independent staff. The Contract Committee reviewed and discussed key aspects of this information with all of the Independent Trustees. Upon completion of this review, the Contract Committee recommended and the Independent Trustees approved the continuance of your fund's management contract, effective July 1, 2005. This approval was based on the following conclusions: * That the fee schedule currently in effect for your fund represents reasonable compensation in light of the nature and quality of the services being provided to the fund, the fees paid by competitive funds and the costs incurred by Putnam Management in providing such services, and * That such fee schedule represents an appropriate sharing between fund shareholders and Putnam Management of such economies of scale as may exist in the management of the fund at current asset levels. These conclusions were based on a comprehensive consideration of all information provided to the Trustees and were not the result of any single factor. Some of the factors that figured particularly in the Trustees' deliberations and how the Trustees considered these factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors. It is also important to recognize that the fee arrangements for your fund and the other Putnam funds are the result of many years of review and discussion between the Independent Trustees and Putnam Management, that certain aspects of such arrangements may receive greater scrutiny in some years than others, and that the Trustees' conclusions may be based, in part, on their consideration of these same arrangements in prior years. - ---------------------------------------------------------------------------- Model fee schedules and categories; total expenses The Trustees' review of the management fees and total expenses of the Putnam funds focused on three major themes: * Consistency. The Trustees, working in cooperation with Putnam Management, have developed and implemented a series of model fee schedules for the Putnam funds designed to ensure that each fund's management fee is consistent with the fees for similar funds in the Putnam family of funds and compares favorably with fees paid by competitive funds sponsored by other investment advisers. Under this approach, each Putnam fund is assigned to one of several fee categories based on a combination of factors, including competitive fees and perceived difficulty of management, and a common fee schedule is implemented for all funds in a given fee category. The Trustees reviewed the model fee schedule currently in effect for your fund, including fee levels and breakpoints, and the assignment of the fund to a particular fee category under this structure. ("Breakpoints" refer to reductions in fee rates that apply to additional assets once specified asset levels are reached.) The Trustees concluded that no changes should be made in the fund's current fee schedule at this time. * Competitiveness. The Trustees also reviewed comparative fee and expense information for competitive funds, which indicated that, in a custom peer group of competitive funds selected by Lipper Inc., your fund ranked in the 7th percentile in management fees and in the 7th percentile in total expenses (less any applicable 12b-1 fees) as of December 31, 2004 (the first percentile being the least expensive funds and the 100th percentile being the most expensive funds). The Trustees noted that expense ratios for a number of Putnam funds, which show the percentage of fund assets used to pay for management and administrative services, distribution (12b-1) fees and other expenses, had been increasing recently as a result of declining net assets and the natural operation of fee breakpoints. They noted that such expense ratio increases were currently being controlled by expense limitations implemented in January 2004 and which Putnam Management, in consultation with the Contract Committee, has committed to maintain at least through 2006. The Trustees expressed their intention to monitor this information closely to ensure that fees and expenses of the Putnam funds continue to meet evolving competitive standards. * Economies of scale. The Trustees concluded that the fee schedule currently in effect for your fund represents an appropriate sharing of economies of scale at current asset levels. Your fund currently has the benefit of breakpoints in its management fee that provide shareholders with significant economies of scale, which means that the effective management fee rate of a fund (as a percentage of fund assets) declines as a fund grows in size and crosses specified asset thresholds. The Trustees examined the existing breakpoint structure of the funds' management fees in light of competitive industry practices. The Trustees considered various possible modifications to the current breakpoint structure, but ultimately concluded that the current breakpoint structure continues to serve the interests of fund shareholders. Accordingly, the Trustees continue to believe that the fee schedules currently in effect for the funds represent an appropriate sharing of economies of scale at current asset levels. The Trustees noted that significant redemptions in many Putnam funds, together with significant changes in the cost structure of Putnam Management, have altered the economics of Putnam Management's business in significant ways. In view of these changes, the Trustees intend to consider whether a greater sharing of the economies of scale by fund shareholders would be appropriate if and when aggregate assets in the Putnam funds begin to experience meaningful growth. In connection with their review of the management fees and total expenses of the Putnam funds, the Trustees also reviewed the costs of the services to be provided and profits to be realized by Putnam Management and its affiliates from the relationship with the funds. This information included trends in revenues, expenses and profitability of Putnam Management and its affiliates relating to the investment management and distribution services provided to the funds. In this regard, the Trustees also reviewed an analysis of Putnam Management's revenues, expenses and profitability with respect to the funds' management contracts, allocated on a fund-by-fund basis. - ---------------------------------------------------------------------------- Investment performance The quality of the investment process provided by Putnam Management represented a major factor in the Trustees' evaluation of the quality of services provided by Putnam Management under your fund's management contract. The Trustees were assisted in their review of the funds' investment process and performance by the work of the Investment Oversight Committees of the Trustees, which meet on a regular monthly basis with the funds' portfolio teams throughout the year. The Trustees concluded that Putnam Management generally provides a high quality investment process - as measured by the experience and skills of the individuals assigned to the management of fund portfolios, the resources made available to such personnel, and in general the ability of Putnam Management to attract and retain high-quality personnel - but also recognize that this does not guarantee favorable investment results for every fund in every time period. The Trustees considered the investment performance of each fund over multiple time periods and considered information comparing the fund's performance with various benchmarks and with the performance of competitive funds. The Trustees noted the satisfactory investment performance of many Putnam funds. They also noted the disappointing investment performance of certain funds in recent years and continued to discuss with senior management of Putnam Management the factors contributing to such underperformance and actions being taken to improve performance. The Trustees recognized that, in recent years, Putnam Management has made significant changes in its investment personnel and processes and in the fund product line to address areas of underperformance. The Trustees indicated their intention to continue to monitor performance trends to assess the effectiveness of these changes and to evaluate whether additional remedial changes are warranted. In the case of your fund, the Trustees considered that your fund's Class A share performance at net asset value was in the following percentiles of its Lipper Inc. peer group for the one-, three- and five-year periods ended December 31, 2004 (the first percentile being the best performing funds and the 100th percentile being the worst performing funds): One-year period Three-year period Five-year period - ---------------------------------------------------------------------------- 56th 64th 81st (Because of the passage of time, these performance results may differ from the performance results for more recent periods shown elsewhere in this report.) The Trustees noted the disappointing performance for your fund for the five-year period ended December 31, 2004. In this regard, the Trustees considered that, over the last year, Putnam Management has clarified the fund's investment philosophy and made changes to the investment team. In addition, the fund has adopted a redesigned investment process which incorporates a blend of quantitative techniques and fundamental analysis. As a general matter, the Trustees believe that cooperative efforts between the Trustees and Putnam Management represent the most effective way to address investment performance problems. The Trustees believe that investors in the Putnam funds have, in effect, placed their trust in the Putnam organization, under the oversight of the funds' Trustees, to make appropriate decisions regarding the management of the funds. Based on the responsiveness of Putnam Management in the recent past to Trustee concerns about investment performance, the Trustees believe that it is preferable to seek change within Putnam Management to address performance shortcomings. In the Trustees' view, the alternative of terminating a management contract and engaging a new investment adviser for an underperforming fund would entail significant disruptions and would not provide any greater assurance of improved investment performance. - ---------------------------------------------------------------------------- Brokerage and soft-dollar allocations; other benefits The Trustees considered various potential benefits that Putnam Management may receive in connection with the services it provides under the management contract with your fund. These include principally benefits related to brokerage and soft-dollar allocations, whereby a portion of the commissions paid by a fund for brokerage is earmarked to pay for research services that may be utilized by a fund's investment adviser. The Trustees believe that soft-dollar credits and other potential benefits associated with the allocation of fund brokerage, which pertains mainly to funds investing in equity securities, represent assets of the funds that should be used for the benefit of fund shareholders. This area has been marked by significant change in recent years. In July 2003, acting upon the Contract Committee's recommendation, the Trustees directed that allocations of brokerage to reward firms that sell fund shares be discontinued no later than December 31, 2003. In addition, commencing in 2004, the allocation of brokerage commissions by Putnam Management to acquire research services from third-party service providers has been significantly reduced, and continues at a modest level only to acquire research that is customarily not available for cash. The Trustees will continue to monitor the allocation of the funds' brokerage to ensure that the principle of "best price and execution" remains paramount in the portfolio trading process. The Trustees' annual review of your fund's management contract also included the review of its distributor's contract and distribution plan with Putnam Retail Management Limited Partnership and the custodian agreement and investor servicing agreement with Putnam Fiduciary Trust Company, all of which provide benefits to affiliates of Putnam Management. - ---------------------------------------------------------------------------- Comparison of retail and institutional fee schedules The information examined by the Trustees as part of their annual contract review has included for many years information regarding fees charged by Putnam Management and its affiliates to institutional clients such as defined benefit pension plans, college endowments, etc. This information included comparison of such fees with fees charged to the funds, as well as a detailed assessment of the differences in the services provided to these two types of clients. The Trustees observed, in this regard, that the differences in fee rates between institutional clients and the mutual funds are by no means uniform when examined by individual asset sectors, suggesting that differences in the pricing of investment management services to these types of clients reflect to a substantial degree historical competitive forces operating in separate market places. The Trustees considered the fact that fee rates across all asset sectors are higher on average for mutual funds than for institutional clients, as well as the differences between the services that Putnam Management provides to the Putnam funds and those that it provides to institutional clients of the firm, but have not relied on such comparisons to any significant extent in concluding that the management fees paid by your fund are reasonable. Other information for shareholders - ---------------------------------------------------------------------------- Putnam's policy on confidentiality In order to conduct business with our shareholders, we must obtain certain personal information such as account holders' addresses, telephone numbers, Social Security numbers, and the names of their financial advisors. We use this information to assign an account number and to help us maintain accurate records of transactions and account balances. It is our policy to protect the confidentiality of your information, whether or not you currently own shares of our funds, and in particular, not to sell information about you or your accounts to outside marketing firms. We have safeguards in place designed to prevent unauthorized access to our computer systems and procedures to protect personal information from unauthorized use. Under certain circumstances, we share this information with outside vendors who provide services to us, such as mailing and proxy solicitation. In those cases, the service providers enter into confidentiality agreements with us, and we provide only the information necessary to process transactions and perform other services related to your account. We may also share this information with our Putnam affiliates to service your account or provide you with information about other Putnam products or services. It is also our policy to share account information with your financial advisor, if you've listed one on your Putnam account. If you would like clarification about our confidentiality policies or have any questions or concerns, please don't hesitate to contact us at 1-800-225-1581, Monday through Friday, 8:30 a.m. to 7:00 p.m., or Saturdays from 9:00 a.m. to 5:00 p.m. Eastern Time. - ---------------------------------------------------------------------------- Proxy voting Putnam is committed to managing our mutual funds in the best interests of our shareholders. The Putnam funds' proxy voting guidelines and procedures, as well as information regarding how your fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2005, are available on the Putnam Individual Investor Web site, www.putnam.com/individual, and on the SEC's Web site, www.sec.gov. If you have questions about finding forms on the SEC's Web site, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds' proxy voting guidelines and procedures at no charge by calling Putnam's Shareholder Services at 1-800-225-1581. - ---------------------------------------------------------------------------- Fund portfolio holdings The fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Shareholders may obtain the fund's Forms N-Q on the SEC's Web site at www.sec.gov. In addition, the fund's Forms N-Q may be reviewed and copied at the SEC's public reference room in Washington, D.C. You may call the SEC at 1-800-SEC-0330 for information about the SEC's Web site or the operation of the public reference room. Financial statements - ---------------------------------------------------------------------------- A guide to the financial statements These sections of the report, as well as the accompanying Notes, preceded by the Report of Independent Registered Public Accounting Firm, constitute the fund's financial statements. The fund's portfolio lists all the fund's investments and their values as of the last day of the reporting period. Holdings are organized by asset type and industry sector, country, or state to show areas of concentration and diversification. Statement of assets and liabilities shows how the fund's net assets and share price are determined. All investment and noninvestment assets are added together. Any unpaid expenses and other liabilities are subtracted from this total. The result is divided by the number of shares to determine the net asset value per share, which is calculated separately for each class of shares. (For funds with preferred shares, the amount subtracted from total assets includes the net assets allocated to remarketed preferred shares.) Statement of operations shows the fund's net investment gain or loss. This is done by first adding up all the fund's earnings -- from dividends and interest income -- and subtracting its operating expenses to determine net investment income (or loss). Then, any net gain or loss the fund realized on the sales of its holdings -- as well as any unrealized gains or losses over the period -- is added to or subtracted from the net investment result to determine the fund's net gain or loss for the fiscal year. Statement of changes in net assets shows how the fund's net assets were affected by the fund's net investment gain or loss, by distributions to shareholders, and by changes in the number of the fund's shares. It lists distributions and their sources (net investment income or realized capital gains) over the current reporting period and the most recent fiscal year-end. The distributions listed here may not match the sources listed in the Statement of operations because the distributions are determined on a tax basis and may be paid in a different period from the one in which they were earned. Financial highlights provide an overview of the fund's investment results, per-share distributions, expense ratios, net investment income ratios, and portfolio turnover in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlight table also includes the current reporting period. For open-end funds, a separate table is provided for each share class. Report of Independent Registered Public Accounting Firm To the Trustees and Shareholders of Putnam New Opportunities Fund In our opinion, the accompanying statement of assets and liabilities, including the fund's 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 New Opportunities Fund (the "fund") at June 30, 2005, 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 fund's 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 standards 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 June 30, 2005, by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts August 9, 2005
The fund's portfolio 6/30/05 - ---------------------------------------------------------------------------------------------------------------------- COMMON STOCKS (100.5%)* - ---------------------------------------------------------------------------------------------------------------------- Shares Value - ---------------------------------------------------------------------------------------------------------------------- Aerospace and Defense (0.7%) Raytheon Co. 596,200 $23,323,344 Rockwell Collins, Inc. 403,900 19,257,952 42,581,296 - ---------------------------------------------------------------------------------------------------------------------- Banking (1.2%) TCF Financial Corp. 529,800 13,711,224 UnionBanCal Corp. 314,600 21,053,032 Westcorp 177,800 9,320,276 Zions Bancorp. 387,800 28,514,934 72,599,466 - ---------------------------------------------------------------------------------------------------------------------- Beverage (0.3%) Pepsi Bottling Group, Inc. (The) 620,500 17,752,505 - ---------------------------------------------------------------------------------------------------------------------- Biotechnology (2.8%) Affymetrix, Inc. + 297,900 16,065,747 Amgen, Inc. + 1,002,700 60,623,242 Celgene Corp. + 434,600 17,718,642 Connetics Corp. + 417,400 7,362,936 Genzyme Corp. + 896,400 53,864,676 Invitrogen Corp. + 178,800 14,892,252 170,527,495 - ---------------------------------------------------------------------------------------------------------------------- Broadcasting (0.6%) XM Satellite Radio Holdings, Inc. Class A + 1,145,920 38,571,667 - ---------------------------------------------------------------------------------------------------------------------- Building Materials (0.3%) Sherwin Williams Co. 345,900 16,288,431 - ---------------------------------------------------------------------------------------------------------------------- Chemicals (0.3%) PPG Industries, Inc. 273,800 17,183,688 - ---------------------------------------------------------------------------------------------------------------------- Coal (0.4%) CONSOL Energy, Inc. 399,400 21,399,852 - ---------------------------------------------------------------------------------------------------------------------- Commercial and Consumer Services (1.4%) Administaff, Inc. 23,800 565,487 Corporate Executive Board Co. (The) 715,500 56,045,115 Google, Inc. Class A + 94,600 27,826,590 84,437,192 - ---------------------------------------------------------------------------------------------------------------------- Communications Equipment (4.9%) Cisco Systems, Inc. + 8,795,300 168,078,183 F5 Networks, Inc. + 346,700 16,376,375 Harris Corp. 1,683,700 52,548,277 Nokia OYJ ADR (Finland) 1,379,900 22,961,536 Scientific-Atlanta, Inc. 991,500 32,987,205 Tellabs, Inc. + 375,800 3,269,460 296,221,036 - ---------------------------------------------------------------------------------------------------------------------- Computers (4.9%) Anixter International, Inc. + 521,300 19,376,721 Apple Computer, Inc. + 1,018,300 37,483,623 Dell, Inc. + 2,486,000 98,221,860 Lexmark International, Inc. Class A + 291,300 18,884,979 Micros Systems, Inc. + 590,400 26,420,400 NCR Corp. + 418,300 14,690,696 Network Appliance, Inc. + 1,716,700 48,531,109 Take-Two Interactive Software, Inc. + 333,750 8,493,938 Western Digital Corp. + 1,451,600 19,480,472 291,583,798 - ---------------------------------------------------------------------------------------------------------------------- Conglomerates (0.5%) Danaher Corp. 374,300 19,590,862 Textron, Inc. 146,100 11,081,685 30,672,547 - ---------------------------------------------------------------------------------------------------------------------- Consumer Cyclicals (2.2%) Black & Decker Manufacturing Co. 1,142,200 102,626,670 Harman International Industries, Inc. 327,000 26,604,720 129,231,390 - ---------------------------------------------------------------------------------------------------------------------- Consumer Finance (2.2%) Capital One Financial Corp. 849,800 67,992,498 Countrywide Financial Corp. 704,300 27,193,023 First Marblehead Corp. (The) + 36,054 1,264,053 Providian Financial Corp. + 1,966,500 34,669,395 131,118,969 - ---------------------------------------------------------------------------------------------------------------------- Consumer Goods (4.1%) Energizer Holdings, Inc. + 822,000 51,103,740 Newell Rubbermaid, Inc. 413,300 9,853,072 Procter & Gamble Co. (The) 3,112,900 164,205,475 Weight Watchers International, Inc. + 290,000 14,966,900 Yankee Candle Co., Inc. (The) 206,800 6,638,280 246,767,467 - ---------------------------------------------------------------------------------------------------------------------- Consumer Services (1.9%) Alliance Data Systems Corp. + 1,248,200 50,626,992 Getty Images, Inc. + 684,100 50,801,266 Labor Ready, Inc. + 81,700 1,904,427 Valueclick, Inc. + 1,081,600 13,336,128 116,668,813 - ---------------------------------------------------------------------------------------------------------------------- Distributors (0.2%) Hughes Supply, Inc. 389,400 10,942,140 - ---------------------------------------------------------------------------------------------------------------------- Electrical Equipment (0.4%) WESCO International, Inc. + 740,240 23,228,731 - ---------------------------------------------------------------------------------------------------------------------- Electronics (7.0%) Amphenol Corp. Class A 564,100 22,659,897 Arrow Electronics, Inc. + 387,400 10,521,784 Atmel Corp. + 4,579,300 10,852,941 Freescale Semiconductor, Inc. Class A + 914,100 19,205,241 Intel Corp. 5,322,300 138,699,138 International Rectifier Corp. + 366,400 17,484,608 Linear Technology Corp. 1,659,000 60,868,710 Microchip Technology, Inc. 505,800 14,981,796 Motorola, Inc. 2,250,400 41,092,304 National Semiconductor Corp. 535,900 11,805,877 SanDisk Corp. + 1,441,700 34,211,541 Storage Technology Corp. + 574,500 20,848,605 Texas Instruments, Inc. 679,900 19,084,793 422,317,235 - ---------------------------------------------------------------------------------------------------------------------- Energy (1.1%) CAL Dive International, Inc. + 372,900 19,528,773 Cooper Cameron Corp. + 325,700 20,209,685 Superior Energy Services + 627,900 11,176,620 Unit Corp. + 339,100 14,923,791 65,838,869 - ---------------------------------------------------------------------------------------------------------------------- Entertainment (0.5%) Pixar, Inc. + 601,200 30,090,060 - ---------------------------------------------------------------------------------------------------------------------- Financial (1.8%) American Express Co. 389,600 20,738,408 Chicago Mercantile Exchange Holdings, Inc. (The) 98,500 29,106,750 First American Corp. 47,300 1,898,622 Moody's Corp. 1,228,000 55,210,880 106,954,660 - ---------------------------------------------------------------------------------------------------------------------- Food (0.2%) 7-Eleven, Inc. + 463,800 14,025,312 - ---------------------------------------------------------------------------------------------------------------------- Forest Products and Packaging (0.2%) Crown Holdings, Inc. + 765,000 10,885,950 - ---------------------------------------------------------------------------------------------------------------------- Gaming & Lottery (1.1%) Ameristar Casinos, Inc. 800,800 20,892,872 Boyd Gaming Corp. 351,700 17,982,421 GTECH Holdings Corp. 836,000 24,444,640 63,319,933 - ---------------------------------------------------------------------------------------------------------------------- Health Care Services (5.1%) AmerisourceBergen Corp. 275,200 19,030,080 Coventry Health Care, Inc. + 276,800 19,583,600 Laboratory Corp. of America Holdings + 267,100 13,328,290 Lincare Holdings, Inc. + 551,300 22,515,092 McKesson Corp. 481,400 21,561,906 PacifiCare Health Systems, Inc. + 246,300 17,598,135 UnitedHealth Group, Inc. 2,493,000 129,985,020 VCA Antech, Inc. + 224,800 5,451,400 WellPoint, Inc. + 809,700 56,387,508 305,441,031 - ---------------------------------------------------------------------------------------------------------------------- Homebuilding (1.7%) KB Home 212,200 16,176,006 NVR, Inc. + 102,500 83,025,000 99,201,006 - ---------------------------------------------------------------------------------------------------------------------- Insurance (2.1%) Everest Re Group, Ltd. (Barbados) 453,900 42,212,700 Genworth Financial, Inc. Class A 496,300 15,003,149 Selective Insurance Group 294,800 14,607,340 W.R. Berkley Corp. 1,093,950 39,032,136 Zenith National Insurance Corp. 181,200 12,296,232 123,151,557 - ---------------------------------------------------------------------------------------------------------------------- Investment Banking/Brokerage (2.3%) Bear Stearns Cos., Inc. (The) 462,400 48,061,856 Eaton Vance Corp. 587,800 14,054,298 Goldman Sachs Group, Inc. (The) 360,300 36,757,806 Lazard, Ltd. Class A (Bermuda) + 656,000 15,252,000 Lehman Brothers Holdings, Inc. 258,800 25,693,664 139,819,624 - ---------------------------------------------------------------------------------------------------------------------- Leisure (0.6%) Brunswick Corp. 297,600 12,892,032 Polaris Industries, Inc. 394,500 21,303,000 34,195,032 - ---------------------------------------------------------------------------------------------------------------------- Lodging/Tourism (0.2%) Choice Hotels International, Inc. 181,200 11,904,840 - ---------------------------------------------------------------------------------------------------------------------- Machinery (0.8%) Cummins, Inc. 247,400 18,458,514 Terex Corp. + 306,800 12,087,920 Timken Co. 816,400 18,858,840 49,405,274 - ---------------------------------------------------------------------------------------------------------------------- Manufacturing (0.3%) Mettler-Toledo International, Inc. (Switzerland) + 433,000 20,169,140 - ---------------------------------------------------------------------------------------------------------------------- Medical Technology (10.4%) Bausch & Lomb, Inc. 299,400 24,850,200 Becton, Dickinson and Co. 584,400 30,663,468 Biomet, Inc. 1,118,300 38,737,912 C.R. Bard, Inc. 1,049,700 69,815,547 Charles River Laboratories International, Inc. + 1,008,300 48,650,475 Dade Behring Holdings, Inc. 347,300 22,577,973 Gen-Probe, Inc. + 362,642 13,138,520 Haemonetics Corp. + 593,800 24,132,032 Immucor, Inc. + 511,400 14,805,030 Kinetic Concepts, Inc. + 664,500 39,870,000 Medtronic, Inc. 1,207,400 62,531,246 Respironics, Inc. + 1,490,000 53,803,900 St. Jude Medical, Inc. + 2,159,500 94,175,795 Sybron Dental Specialties, Inc. + 320,400 12,053,448 Varian Medical Systems, Inc. + 1,608,700 60,052,771 Waters Corp. + 348,100 12,938,877 622,797,194 - ---------------------------------------------------------------------------------------------------------------------- Metals (1.2%) AK Steel Holding Corp. + 1,638,400 10,502,144 Century Aluminum Co. + 390,200 7,960,080 Nucor Corp. 314,800 14,361,176 Phelps Dodge Corp. 300,800 27,824,000 Steel Dynamics, Inc. 477,000 12,521,250 73,168,650 - ---------------------------------------------------------------------------------------------------------------------- Oil & Gas (3.6%) Amerada Hess Corp. 257,400 27,415,674 Burlington Resources, Inc. 927,500 51,235,100 Noble Energy, Inc. 268,600 20,319,590 Oil States International, Inc. + 442,400 11,135,208 Southwestern Energy Co. + 280,400 13,173,192 Sunoco, Inc. 375,300 42,664,104 Tesoro Petroleum Corp. 473,500 22,027,220 Valero Energy Corp. 314,100 24,848,451 212,818,539 - ---------------------------------------------------------------------------------------------------------------------- Pharmaceuticals (6.2%) Barr Pharmaceuticals, Inc. + 856,150 41,728,751 Caremark Rx, Inc. + 774,600 34,485,192 Cephalon, Inc. + 1,147,100 45,666,051 Johnson & Johnson 3,454,400 224,536,000 Medicis Pharmaceutical Corp. Class A 212,300 6,736,279 Mylan Laboratories, Inc. 958,300 18,437,692 371,589,965 - ---------------------------------------------------------------------------------------------------------------------- Railroads (0.4%) Canadian National Railway Co. (Canada) 461,100 26,582,415 - ---------------------------------------------------------------------------------------------------------------------- Restaurants (0.8%) CEC Entertainment, Inc. + 613,400 25,818,006 Darden Restaurants, Inc. 605,300 19,962,794 45,780,800 - ---------------------------------------------------------------------------------------------------------------------- Retail (8.7%) Abercrombie & Fitch Co. Class A 219,200 15,059,040 Advance Auto Parts, Inc. + 449,400 29,008,770 Aeropostale, Inc. + 958,100 32,192,160 American Eagle Outfitters, Inc. 2,365,100 72,490,315 Best Buy Co., Inc. 514,301 35,255,299 Coach, Inc. + 714,000 23,968,980 Coldwater Creek, Inc. + 796,850 19,849,534 Home Depot, Inc. (The) 3,088,800 120,154,320 Michaels Stores, Inc. 1,770,000 73,224,900 Pantry, Inc. (The) + 404,800 15,677,904 PETCO Animal Supplies, Inc. + 778,300 22,819,756 Staples, Inc. 2,950,050 62,895,066 522,596,044 - ---------------------------------------------------------------------------------------------------------------------- Schools (1.3%) Apollo Group, Inc. Class A + 584,100 45,688,302 Career Education Corp. + 657,959 24,087,879 ITT Educational Services, Inc. + 166,000 8,867,720 78,643,901 - ---------------------------------------------------------------------------------------------------------------------- Semiconductor (0.4%) Lam Research Corp. + 654,800 18,949,912 Photronics, Inc. + 289,800 6,763,932 25,713,844 - ---------------------------------------------------------------------------------------------------------------------- Shipping (0.5%) J. B. Hunt Transport Services, Inc. 1,427,000 27,541,100 - ---------------------------------------------------------------------------------------------------------------------- Software (8.7%) Adobe Systems, Inc. 2,710,400 77,571,648 Amdocs, Ltd. (Guernsey) + 699,400 18,485,142 Autodesk, Inc. 499,400 17,164,378 BMC Software, Inc. + 2,132,700 38,281,965 Citrix Systems, Inc. + 3,125,400 67,696,164 Cognos, Inc. (Canada) + 485,500 16,574,970 McAfee, Inc. + 774,000 20,263,320 Microsoft Corp. # 8,543,500 212,220,540 MicroStrategy, Inc. + 261,200 13,854,048 Symantec Corp. + 1,782,500 38,751,550 520,863,725 - ---------------------------------------------------------------------------------------------------------------------- Technology (0.2%) Dun & Bradstreet Corp. (The) + 160,500 9,894,825 - ---------------------------------------------------------------------------------------------------------------------- Technology Services (1.9%) Accenture, Ltd. Class A (Bermuda) + 894,000 20,266,980 Automatic Data Processing, Inc. 997,700 41,873,469 Global Payments, Inc. 320,100 21,702,780 Ingram Micro, Inc. Class A + 623,600 9,765,576 VeriSign, Inc. + 649,900 18,691,124 112,299,929 - ---------------------------------------------------------------------------------------------------------------------- Telecommunications (0.3%) Earthlink, Inc. + 2,380,771 20,617,477 - ---------------------------------------------------------------------------------------------------------------------- Textiles (1.6%) NIKE, Inc. Class B 1,082,700 93,761,820 - ---------------------------------------------------------------------------------------------------------------------- Total common stocks (cost $5,365,391,606) $6,019,166,234 - ---------------------------------------------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS (0.4%) * (cost $22,083,196) Shares Value - ---------------------------------------------------------------------------------------------------------------------- Putnam Prime Money Market Fund (e) 22,083,196 $22,083,196 - ---------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS - ---------------------------------------------------------------------------------------------------------------------- Total investments (cost $5,387,474,802) $6,041,249,430 * Percentages indicated are based on net assets of $5,987,549,800. + Non-income-producing security. # A portion of this security was pledged and segregated with the custodian to cover margin requirements for futures contracts at June 30, 2005. (e) See Note 5 to the financial statements regarding investments in Putnam Prime Money Market Fund. At June 30, 2005, liquid assets totaling $13,920,652 have been designated as collateral for forward commitments and open futures contracts. ADR after the name of a foreign holding stands for American Depositary Receipts, representing ownership of foreign securities on deposit with a custodian bank.
- -------------------------------------------------------------------------------------------------- FUTURES CONTRACTS OUTSTANDING at 6/30/05 - -------------------------------------------------------------------------------------------------- Unrealized Number of Expiration appreciation/ contracts Value date (depreciation) - -------------------------------------------------------------------------------------------------- NASDAQ 100 Index Mini (Long) 79 $2,374,740 Sep-05 $(57,078) Russell 2000 Index Mini (Long) 92 5,916,520 Sep-05 191,636 S&P 500 Index (Long) 5 1,494,375 Sep-05 (4,456) - -------------------------------------------------------------------------------------------------- Total $130,102 The accompanying notes are an integral part of these financial statements.
Statement of assets and liabilities 6/30/05 - ------------------------------------------------------------------------------------------- ASSETS - ------------------------------------------------------------------------------------------- Investment in securities, at value (Note 1): Unaffiliated issuers (identified cost $5,365,391,606) $6,019,166,234 Affiliated issuers (identified cost $22,083,196) (Note 5) 22,083,196 - ------------------------------------------------------------------------------------------- Cash 79,467 - ------------------------------------------------------------------------------------------- Dividends, interest and other receivables 5,444,091 - ------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 302,355 - ------------------------------------------------------------------------------------------- Receivable for securities sold 98,002,260 - ------------------------------------------------------------------------------------------- Total assets 6,145,077,603 - ------------------------------------------------------------------------------------------- LIABILITIES - ------------------------------------------------------------------------------------------- Payable for variation margin (Note 1) 113,409 - ------------------------------------------------------------------------------------------- Payable for securities purchased 60,736,807 - ------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 82,290,877 - ------------------------------------------------------------------------------------------- Payable for compensation of Manager (Notes 2 and 5) 8,029,644 - ------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 1,395,515 - ------------------------------------------------------------------------------------------- Payable for Trustee compensation and expenses (Note 2) 885,455 - ------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 5,731 - ------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 3,662,483 - ------------------------------------------------------------------------------------------- Other accrued expenses 407,882 - ------------------------------------------------------------------------------------------- Total liabilities 157,527,803 Net assets $5,987,549,800 - ------------------------------------------------------------------------------------------- REPRESENTED BY - ------------------------------------------------------------------------------------------- Paid-in capital (Unlimited shares authorized) (Notes 1 and 4) $9,968,268,145 - ------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (Note 1) (4,634,622,523) - ------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currencies 653,904,178 - ------------------------------------------------------------------------------------------- Total -- Representing net assets applicable to capital shares outstanding $5,987,549,800 - ------------------------------------------------------------------------------------------- COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE - ------------------------------------------------------------------------------------------- Net asset value and redemption price per class A share ($4,650,755,271 divided by 111,784,890 shares) $41.60 - ------------------------------------------------------------------------------------------- Offering price per class A share (100/94.75 of $41.60)* $43.91 - ------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($784,295,056 divided by 20,943,188 shares)** $37.45 - ------------------------------------------------------------------------------------------- Net asset value and offering price per class C share ($42,826,552 divided by 1,077,806 shares)** $39.73 - ------------------------------------------------------------------------------------------- Net asset value and redemption price per class M share ($104,545,463 divided by 2,671,350 shares) $39.14 - ------------------------------------------------------------------------------------------- Offering price per class M share (100/96.75 of $39.14)* $40.45 - ------------------------------------------------------------------------------------------- Net asset value, offering price and redemption price per class R share ($184,396 divided by 4,456 shares) $41.38 - ------------------------------------------------------------------------------------------- Net asset value, offering price and redemption price per class Y share ($404,943,062 divided by 9,424,613 shares) $42.97 - ------------------------------------------------------------------------------------------- * On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales, 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.
Statement of operations Year ended 6/30/05 - --------------------------------------------------------------------------- INVESTMENT INCOME - --------------------------------------------------------------------------- Dividends (net of foreign tax of $122,921) $70,507,490 - --------------------------------------------------------------------------- Interest (including interest income of $1,419,410 from investments in affiliated issuers) (Note 5) 1,757,408 - --------------------------------------------------------------------------- Other income (Note 6) 3,010,524 - --------------------------------------------------------------------------- Total investment income 75,275,422 - --------------------------------------------------------------------------- EXPENSES - --------------------------------------------------------------------------- Compensation of Manager (Note 2) 35,159,932 - --------------------------------------------------------------------------- Investor servicing fees (Note 2) 21,022,191 - --------------------------------------------------------------------------- Custodian fees (Note 2) 323,123 - --------------------------------------------------------------------------- Trustee compensation and expenses (Note 2) 186,509 - --------------------------------------------------------------------------- Administrative services (Note 2) 115,905 - --------------------------------------------------------------------------- Distribution fees -- Class A (Note 2) 11,860,206 - --------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 11,321,067 - --------------------------------------------------------------------------- Distribution fees -- Class C (Note 2) 471,469 - --------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 861,994 - --------------------------------------------------------------------------- Distribution fees -- Class R (Note 2) 546 - --------------------------------------------------------------------------- Non-recurring costs (Notes 2 and 6) 256,854 - --------------------------------------------------------------------------- Costs assumed by Manager (Notes 2 and 6) (256,854) - --------------------------------------------------------------------------- Fees waived and reimbursed by Manager (Note 5) (103,341) - --------------------------------------------------------------------------- Other 1,792,812 - --------------------------------------------------------------------------- Total expenses 83,012,413 - --------------------------------------------------------------------------- Expense reduction (Note 2) (4,571,344) - --------------------------------------------------------------------------- Net expenses 78,441,069 - --------------------------------------------------------------------------- Net investment loss (3,165,647) - --------------------------------------------------------------------------- Net realized gain on investments (Notes 1 and 3) 886,644,417 - --------------------------------------------------------------------------- Net realized gain on futures contracts (Note 1) 11,217,378 - --------------------------------------------------------------------------- Net realized gain on foreign currency transactions (Note 1) 2,030 - --------------------------------------------------------------------------- Net realized gain on written options (Notes 1 and 3) 430,519 - --------------------------------------------------------------------------- Net unrealized depreciation of assets and liabilities in foreign currencies during the year (1,285) - --------------------------------------------------------------------------- Net unrealized depreciation of investments, futures contracts and written options during the year (506,148,398) - --------------------------------------------------------------------------- Net gain on investments 392,144,661 - --------------------------------------------------------------------------- Net increase in net assets resulting from operations $388,979,014 The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets - --------------------------------------------------------------------------------------------- DECREASE IN NET ASSETS - --------------------------------------------------------------------------------------------- Year ended Year ended 6/30/05 6/30/04 - --------------------------------------------------------------------------------------------- Operations: Net investment loss $(3,165,647) $(59,236,644) - --------------------------------------------------------------------------------------------- Net realized gain on investments and foreign currency transactions 898,294,344 1,627,695,547 - --------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investments and assets and liabilities in foreign currencies (506,149,683) 34,872,707 - --------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 388,979,014 1,603,331,610 - --------------------------------------------------------------------------------------------- Redemption fees (Note 1) 13,971 1,447 - --------------------------------------------------------------------------------------------- Decrease from capital share transactions (Note 4) (2,191,303,347) (3,093,016,196) - --------------------------------------------------------------------------------------------- Total decrease in net assets (1,802,310,362) (1,489,683,139) - --------------------------------------------------------------------------------------------- NET ASSETS - --------------------------------------------------------------------------------------------- Beginning of year 7,789,860,162 9,279,543,301 - --------------------------------------------------------------------------------------------- End of year $5,987,549,800 $7,789,860,162 The accompanying notes are an integral part of these financial statements.
Financial highlights (For a common share outstanding throughout the period) CLASS A - ------------------------------------------------------------------------------------------------------------------------------ PER-SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Year ended 6/30/05 6/30/04 6/30/03 6/30/02 6/30/01 - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $38.96 $32.79 $32.28 $47.97 $96.61 - ------------------------------------------------------------------------------------------------------------------------------ Investment operations: Net investment income (loss) (a) .03 (d,f,g) (.19) (d) (.17) (.22) (.37) - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments 2.61 6.36 .68 (15.47) (38.81) - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 2.64 6.17 .51 (15.69) (39.18) - ------------------------------------------------------------------------------------------------------------------------------ Less distributions: From net realized gain on investments -- -- -- -- (9.46) - ------------------------------------------------------------------------------------------------------------------------------ Total distributions -- -- -- -- (9.46) - ------------------------------------------------------------------------------------------------------------------------------ Redemption fees -- (e) -- (e) -- -- -- - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $41.60 $38.96 $32.79 $32.28 $47.97 - ------------------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(b) 6.78 (g) 18.82 1.58 (32.71) (43.10) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $4,650,755 $5,075,005 $6,262,164 $7,683,016 $12,595,034 - ------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) 1.12 (d) 1.09 (d) 1.09 .98 .89 - ------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average net assets (%) .07 (d,f,g) (.52) (d) (.57) (.57) (.55) - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 97.25 60.86 42.43 76.67 67.74 (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 waivers of certain fund expenses in connection with investments in Putnam Prime Money Market Fund during the period. As a result of such waivers, the expenses of the fund for the periods ended June 30, 2005 and June 30, 2004 reflect a reduction of less than 0.01% of average net assets for class A shares (Note 5). (e) Amount represents less than $0.01 per share. (f) Reflects a special dividend which amounted to $0.15 per share and 0.39% of average net assets. (g) Reflects a non-recurring accrual related to Putnam Management's settlement with the SEC regarding brokerage allocation practices, which amounted to $0.02 per share and 0.05% of average net assets for class A shares (Note 6). The accompanying notes are an integral part of these financial statements.
Financial highlights (For a common share outstanding throughout the period) CLASS B - ------------------------------------------------------------------------------------------------------------------------------ PER-SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Year ended 6/30/05 6/30/04 6/30/03 6/30/02 6/30/01 - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $35.34 $29.96 $29.72 $44.50 $91.07 - ------------------------------------------------------------------------------------------------------------------------------ Investment operations: Net investment loss (a) (.24) (d,f,g) (.43) (d) (.36) (.48) (.77) - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments 2.35 5.81 .60 (14.30) (36.34) - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 2.11 5.38 .24 (14.78) (37.11) - ------------------------------------------------------------------------------------------------------------------------------ Less distributions: From net realized gain on investments -- -- -- -- (9.46) - ------------------------------------------------------------------------------------------------------------------------------ Total distributions -- -- -- -- (9.46) - ------------------------------------------------------------------------------------------------------------------------------ Redemption fees -- (e) -- (e) -- -- -- - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $37.45 $35.34 $29.96 $29.72 $44.50 - ------------------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(b) 5.97 (g) 17.96 .81 (33.21) (43.48) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $784,295 $1,674,238 $1,850,775 $2,739,100 $6,137,938 - ------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) 1.87 (d) 1.84 (d) 1.84 1.73 1.53 - ------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment loss to average net assets (%) (.68) (d,f,g) (1.27) (d) (1.33) (1.32) (1.19) - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 97.25 60.86 42.43 76.67 67.74 (a) Per share net investment 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 waivers of certain fund expenses in connection with investments in Putnam Prime Money Market Fund during the period. As a result of such waivers, the expenses of the fund for the periods ended June 30, 2005 and June 30, 2004 reflect a reduction of less than 0.01% of average net assets for class B shares (Note 5). (e) Amount represents less than $0.01 per share. (f) Reflects a special dividend which amounted to $0.15 per share and 0.42% of average net assets. (g) Reflects a non-recurring accrual related to Putnam Management's ettlement with the SEC regarding brokerage allocation practices, which amounted to $0.01 per share and 0.04% of average net assets for class B shares (Note 6). The accompanying notes are an integral part of these financial statements.
Financial highlights (For a common share outstanding throughout the period) CLASS C - ------------------------------------------------------------------------------------------------------------------------------ PER-SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Year ended 6/30/05 6/30/04 6/30/03 6/30/02 6/30/01 - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $37.49 $31.79 $31.53 $47.21 $95.94 - ------------------------------------------------------------------------------------------------------------------------------ Investment operations: - ------------------------------------------------------------------------------------------------------------------------------ Net investment loss (a) (.25) (d,f,g) (.45) (d) (.37) (.50) (.82) - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments 2.49 6.15 .63 (15.18) (38.45) - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 2.24 5.70 .26 (15.68) (39.27) - ------------------------------------------------------------------------------------------------------------------------------ Less distributions: From net realized gain on investments -- -- -- -- (9.46) - ------------------------------------------------------------------------------------------------------------------------------ Total distributions -- -- -- -- (9.46) - ------------------------------------------------------------------------------------------------------------------------------ Redemption fees -- (e) -- (e) -- -- -- - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $39.73 $37.49 $31.79 $31.53 $47.21 - ------------------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(b) 5.98 (g) 17.93 .83 (33.21) (43.53) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $42,827 $55,005 $64,015 $79,149 $136,417 - ------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) 1.87 (d) 1.84 (d) 1.84 1.73 1.64 - ------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment loss to average net assets (%) (.68) (d,f,g) (1.27) (d) (1.32) (1.32) (1.29) - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 97.25 60.86 42.43 76.67 67.74 (a) Per share net investment 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 waivers of certain fund expenses in connection with investments in Putnam Prime Money Market Fund during the period. As a result of such waivers, the expenses of the fund for the periods ended June 30, 2005 and June 30, 2004 reflect a reduction of less than 0.01% of average net assets for class C shares (Note 5). (e) Amount represents less than $0.01 per share. (f) Reflects a special dividend which amounted to $0.15 per share and 0.40% of average net assets. (g) Reflects a non-recurring accrual related to Putnam Management's settlement with the SEC regarding brokerage allocation practices, which amounted to $0.02 per share and 0.05% of average net assets for class C shares (Note 6). The accompanying notes are an integral part of these financial statements.
Financial highlights (For a common share outstanding throughout the period) CLASS M - ------------------------------------------------------------------------------------------------------------------------------ PER-SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Year ended 6/30/05 6/30/04 6/30/03 6/30/02 6/30/01 - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $36.83 $31.15 $30.82 $46.03 $93.63 - ------------------------------------------------------------------------------------------------------------------------------ Investment operations: Net investment loss (a) (.16) (d,f,g) (.36) (d) (.30) (.40) (.69) - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments 2.47 6.04 .63 (14.81) (37.45) - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 2.31 5.68 .33 (15.21) (38.14) - ------------------------------------------------------------------------------------------------------------------------------ Less distributions: From net realized gain on investments -- -- -- -- (9.46) - ------------------------------------------------------------------------------------------------------------------------------ Total distributions -- -- -- -- (9.46) - ------------------------------------------------------------------------------------------------------------------------------ Redemption fees -- (e) -- (e) -- -- -- - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $39.14 $36.83 $31.15 $30.82 $46.03 - ------------------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(b) 6.27 (g) 18.24 1.07 (33.04) (43.38) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $104,545 $134,157 $171,675 $223,964 $411,251 - ------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) 1.62 (d) 1.59 (d) 1.59 1.48 1.39 - ------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment loss to average net assets (%) (.43) (d,f,g) (1.02) (d) (1.07) (1.07) (1.05) - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 97.25 60.86 42.43 76.67 67.74 (a) Per share net investment 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 waivers of certain fund expenses in connection with investments in Putnam Prime Money Market Fund during the period. As a result of such waivers, the expenses of the fund for the periods ended June 30, 2005 and June 30, 2004 reflect a reduction of less than 0.01% of average net assets for class M shares (Note 5). (e) Amount represents less than $0.01 per share. (f) Reflects a special dividend which amounted to $0.15 per share and 0.40% of average net assets. (g) Reflects a non-recurring accrual related to Putnam Management's settlement with the SEC regarding brokerage allocation practices, which amounted to $0.02 per share and 0.05% of average net assets for class M shares (Note 6). The accompanying notes are an integral part of these financial statements.
Financial highlights (For a common share outstanding throughout the period) CLASS R - ------------------------------------------------------------------------------------------------------------------------------ PER-SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Year ended Year ended Period 6/30/05 6/30/04 1/21/03+-6/30/03 - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $38.85 $32.76 $28.90 - ------------------------------------------------------------------------------------------------------------------------------ Investment operations: Net investment loss (a) (.09) (d,f,g) (.27) (d) (.10) - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 2.62 6.36 3.96 - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 2.53 6.09 3.86 - ------------------------------------------------------------------------------------------------------------------------------ Redemption fees -- (e) -- (e) -- - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $41.38 $38.85 $32.76 - ------------------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(b) 6.51 (g) 18.59 13.36 * - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $184 $25 $1 - ------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) 1.37 (d) 1.34 (d) .59 * - ------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment loss to average net assets (%) (.23) (d,f,g) (.76) (d) (.36) * - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 97.25 60.86 42.43 + Commencement of operations. * Not annualized. (a) Per share net investment loss has been determined on the basis of the weighted average number of shares outstanding during the period. (b) Total return assumes dividend reinvestment. (c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2). (d) Reflects waivers of certain fund expenses in connection with investments in Putnam Prime Money Market Fund during the period. As a result of such waivers, the expenses of the fund for the periods ended June 30, 2005 and June 30, 2004 reflect a reduction of less than 0.01% of average net assets for class R shares (Note 5). (e) Amount represents less than $0.01 per share. (f) Reflects a special dividend which amounted to $0.12 per share and 0.31% of average net assets. (g) Reflects a non-recurring accrual related to Putnam Management's settlement with the SEC regarding brokerage allocation practices, which amounted to $0.03 per share and 0.08% of average net assets for class R shares (Note 6). The accompanying notes are an integral part of these financial statements.
Financial highlights (For a common share outstanding throughout the period) CLASS Y - ------------------------------------------------------------------------------------------------------------------------------ PER-SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------------ Year ended 6/30/05 6/30/04 6/30/03 6/30/02 6/30/01 - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $40.14 $33.70 $33.09 $49.05 $98.28 - ------------------------------------------------------------------------------------------------------------------------------ Investment operations: Net investment income (loss) (a) .13(d,f,g) (.10) (d) (.10) (.13) (.21) - ------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments 2.70 6.54 .71 (15.83) (39.56) - ------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 2.83 6.44 .61 (15.96) (39.77) - ------------------------------------------------------------------------------------------------------------------------------ Less distributions: From net realized gain on investments -- -- -- -- (9.46) - ------------------------------------------------------------------------------------------------------------------------------ Total distributions -- -- -- -- (9.46) - ------------------------------------------------------------------------------------------------------------------------------ Redemption fees --(e) -- (e) -- -- -- - ------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $42.97 $40.14 $33.70 $33.09 $49.05 - ------------------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(b) 7.05(g) 19.11 1.85 (32.54) (42.96) - ------------------------------------------------------------------------------------------------------------------------------ RATIOS AND SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $404,943 $851,430 $930,912 $1,170,852 $1,703,399 - ------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(c) .87(d) .84(d) .84 .73 .64 - ------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average net assets (%) .34(d,f,g) (.27)(d) (.33) (.32) (.30) - ------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 97.25 60.86 42.43 76.67 67.74 (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. (c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2). (d) Reflects waivers of certain fund expenses in connection with investments in Putnam Prime Money Market Fund during the period. As a result of such waivers, the expenses of the fund for the periods ended June 30, 2005 and June 30, 2004 reflect a reduction of less than 0.01% of average net assets for class Y shares (Note 5). (e) Amount represents less than $0.01 per share. (f) Reflects a special dividend which amounted to $0.17 per share and 0.43% of average net assets. (g) Reflects a non-recurring accrual related to Putnam Management's settlement with the SEC regarding brokerage allocation practices, which amounted to $0.01 per share and 0.04% of average net assets for class Y shares (Note 6). The accompanying notes are an integral part of these financial statements.
Notes to financial statements 6/30/05 Note 1: Significant accounting policies Putnam New Opportunities Fund (the "fund"), a Massachusetts business trust, is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The fund seeks capital appreciation by investing principally in common stocks of companies in sectors of the economy which, in the judgment of Putnam Investment Management, LLC ("Putnam Management"), the fund's manager, an indirect wholly-owned subsidiary of Putnam, LLC, possess above-average, long-term growth potential. 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 5.25% and 3.25%, respectively, and do not pay a contingent deferred sales charge. Prior to April 1, 2005, the maximum front-end sales charge for class M shares was 3.50%. 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 are subject to the same fees as class B shares, except that 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 without a front-end sales charge or a contingent deferred sales charge. The expenses for class A, class B, class C, class M and class R shares may differ based on each class' distribution fee, 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 sold to certain eligible purchasers including certain defined contribution plans (including corporate IRAs), bank trust departments, trust companies and certain college savings plans. A 2.00% redemption fee may apply to any shares that are redeemed (either by selling or exchanging into another fund) within 5 days of purchase. The redemption fee is accounted for as an addition to paid-in-capital. Prior year redemption fee balances have been reclassified to conform with current year financial statement presentation. 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. Shares of each class would receive their pro-rata share of the net assets of the fund, if the fund were liquidated. 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 fund's 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 fund 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 reporting period. Actual results could differ from those estimates. 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. 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. 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 securities taking into account multiple factors, including movements in the U.S. securities markets. 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. Securities quoted in foreign currencies are translated into U.S. dollars at the current exchange rate. Short-term investments having remaining maturities of 60 days or less are valued at amortized cost, which approximates fair value. Other investments, including certain restricted securities, are valued at fair value following procedures approved by the Trustees. Such valuations and procedures are reviewed periodically by the Trustees. B) Joint trading account Pursuant to an exemptive order from the Securities and Exchange Commission, 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 high-grade, 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) Repurchase agreements The fund, or any joint trading account, through its custodian, receives delivery of the underlying securities, the market value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. Collateral for certain tri-party repurchase agreements is held at the counterparty's custodian in a segregated account for the benefit of the fund and the counterparty. Putnam Management is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. D) Security transactions and related investment income Security transactions are recorded on the trade date (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 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. E) 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 are 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 losses 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 fund's 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. F) Futures and options contracts The fund may use futures and options contracts to hedge against changes in the values of securities the fund owns or expects to purchase. The fund may also write options on securities it owns or in which it may invest to increase its current returns. 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 underlying instruments, if there is an illiquid secondary market for the contracts, or if the counterparty to the contract is unable to perform. 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 fund's portfolio. G) Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code of 1986 (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, as amended. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. At June 30, 2005, the fund had a capital loss carryover of $4,613,472,142 available to the extent allowed by the Code to offset future net capital gain, if any. The amount of the carryover and the expiration dates are: - -------------------------------- Loss Carryover Expiration - -------------------------------- $2,836,984,224 June 30, 2010 - -------------------------------- 1,776,487,918 June 30, 2011 - -------------------------------- H) 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 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 permanent differences of losses on wash sale transactions, foreign currency gains and losses, both realized and unrealized gains and losses on certain futures contracts and net operating loss. Reclassifications are made to the fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. For the year ended June 30, 2005, the fund reclassified $3,165,647 to decrease accumulated net investment loss and $3,660,465 to decrease paid-in-capital, with a decrease to accumulated net realized loss of $494,818. The tax basis components of distributable earnings and the federal tax cost as of period end were as follows: Unrealized appreciation $815,875,338 Unrealized depreciation (183,125,665) -------------- Net unrealized appreciation 632,749,673 Capital loss carryforward (4,613,472,142) Cost for federal income tax purposes $5,408,499,757 Note 2: Management fee, administrative services and other transactions Putnam Management is paid for management and investment advisory services quarterly based on the average net assets of the fund. Such fee is 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. Putnam Management has agreed to waive fees and reimburse expenses of the fund through June 30, 2006, to the extent necessary to ensure that the fund's expenses do 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. The expense reimbursement is based on a comparison of the fund's expenses with the average annualized operating expenses of the funds in its Lipper peer group for each calendar quarter during the fund's last fiscal year, excluding 12b-1 fees and without giving effect to any expense offset and brokerage service arrangements that may reduce fund expenses. For the year ended June 30, 2005, Putnam Management did not waive any of its management fee from the fund. For the period ended June 30, 2005, Putnam Management has assumed $256,854 of legal, shareholder servicing and communication, audit and Trustee fees incurred by the fund in connection with certain legal and regulatory matters (including those described in Note 6). 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 fund's assets are provided by Putnam Fiduciary Trust Company ("PFTC"), a subsidiary of Putnam, LLC. PFTC receives fees for custody services based on the fund's asset level, the number of its security holdings and transaction volumes. Putnam Investor Services, a division of PFTC, provides investor servicing agent functions to the fund. Putnam Investor Services receives fees for investor servicing based on the number of shareholder accounts in the fund and the level of defined contribution plan assets in the fund. During the year ended June 30, 2005, the fund paid PFTC $20,834,890 for these services. The fund has entered into an arrangement with PFTC whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the fund's expenses. The fund also reduced expenses through brokerage service arrangements. For the year ended June 30, 2005, the fund's expenses were reduced by $4,571,344 under these arrangements. Each independent Trustee of the fund receives an annual Trustee fee, of which $1,271, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees receive additional fees for attendance at certain committee meetings. George Putnam III, who is not an independent Trustee, also receives the foregoing fees for his services as Trustee. 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. Benefits under the Pension Plan are equal to 50% of the Trustee's average total retainer and meeting fees for the three years preceding retirement. 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, a wholly-owned subsidiary of Putnam, 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 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 year ended June 30, 2005, Putnam Retail Management, acting as underwriter, received net commissions of $177,030 and $5,450 from the sale of class A and class M shares, respectively, and received $1,925,900 and $3,563 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, respectively. For the year ended June 30, 2005, Putnam Retail Management, acting as underwriter, received $7,803 and no monies on class A and class M redemptions, respectively. Note 3: Purchases and sales of securities During the year ended June 30, 2005, cost of purchases and proceeds from sales of investment securities other than short-term investments aggregated $6,447,441,893 and $8,522,576,263, respectively. There were no purchases or sales of U.S. government securities. Written option transactions during the year are summarized as follows: - ---------------------------------------------------------- Contract Premiums Amounts Received - ---------------------------------------------------------- Written options outstanding at beginning of year 566,310 $281,528 - ---------------------------------------------------------- Options opened 1,219,544 711,697 Options exercised (185,956) (114,131) Options expired (1,387,177) (762,864) Options closed (212,721) (116,230) - ---------------------------------------------------------- Written options outstanding at end of year -- -- - ---------------------------------------------------------- Note 4: Capital shares At June 30, 2005, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: - ------------------------------------------------------------------------ CLASS A Shares Amount - ------------------------------------------------------------------------ Year ended 6/30/05: Shares sold 22,948,084 $886,479,528 - ------------------------------------------------------------------------ Shares issued in connection with reinvestment of distributions -- -- - ------------------------------------------------------------------------ 22,948,084 886,479,528 - ------------------------------------------------------------------------ Shares repurchased (41,417,076) (1,620,097,643) - ------------------------------------------------------------------------ Net decrease (18,468,992) $(733,618,115) Year ended 6/30/04: Shares sold 14,590,688 $535,347,675 - ------------------------------------------------------------------------ Shares issued in connection with reinvestment of distributions -- -- - ------------------------------------------------------------------------ 14,590,688 535,347,675 - ------------------------------------------------------------------------ Shares repurchased (75,306,819) (2,799,613,692) - ------------------------------------------------------------------------ Net decrease (60,716,131) $(2,264,266,017) - ------------------------------------------------------------------------ CLASS B Shares Amount - ------------------------------------------------------------------------ Year ended 6/30/05: Shares sold 1,409,602 $49,728,811 - ------------------------------------------------------------------------ Shares issued in connection with reinvestment of distributions -- -- - ------------------------------------------------------------------------ 1,409,602 49,728,811 - ------------------------------------------------------------------------ Shares repurchased (27,845,983) (971,691,503) - ------------------------------------------------------------------------ Net decrease (26,436,381) $(921,962,692) Year ended 6/30/04: Shares sold 3,322,964 $111,478,176 - ------------------------------------------------------------------------ Shares issued in connection with reinvestment of distributions -- -- - ------------------------------------------------------------------------ 3,322,964 111,478,176 - ------------------------------------------------------------------------ Shares repurchased (17,708,510) (600,679,415) - ------------------------------------------------------------------------ Net decrease (14,385,546) $(489,201,239) - ------------------------------------------------------------------------ CLASS C Shares Amount - ------------------------------------------------------------------------ Year ended 6/30/05: Shares sold 101,542 $3,817,980 - ------------------------------------------------------------------------ Shares issued in connection with reinvestment of distributions -- -- - ------------------------------------------------------------------------ 101,542 3,817,980 - ------------------------------------------------------------------------ Shares repurchased (490,866) (18,373,952) - ------------------------------------------------------------------------ Net decrease (389,324) $(14,555,972) Year ended 6/30/04: Shares sold 231,436 $8,172,503 - ------------------------------------------------------------------------ Shares issued in connection with reinvestment of distributions -- -- - ------------------------------------------------------------------------ 231,436 8,172,503 - ------------------------------------------------------------------------ Shares repurchased (777,907) (27,913,184) - ------------------------------------------------------------------------ Net decrease (546,471) $(19,740,681) - ------------------------------------------------------------------------ CLASS M Shares Amount - ------------------------------------------------------------------------ Year ended 6/30/05: Shares sold 249,786 $9,211,102 - ------------------------------------------------------------------------ Shares issued in connection with reinvestment of distributions -- -- - ------------------------------------------------------------------------ 249,786 9,211,102 - ------------------------------------------------------------------------ Shares repurchased (1,220,735) (45,132,105) - ------------------------------------------------------------------------ Net decrease (970,949) $(35,921,003) Year ended 6/30/04: Shares sold 456,573 $15,939,886 - ------------------------------------------------------------------------ Shares issued in connection with reinvestment of distributions -- -- - ------------------------------------------------------------------------ 456,573 15,939,886 - ------------------------------------------------------------------------ Shares repurchased (2,324,721) (81,851,788) - ------------------------------------------------------------------------ Net decrease (1,868,148) $(65,911,902) - ------------------------------------------------------------------------ CLASS R Shares Amount - ------------------------------------------------------------------------ Year ended 6/30/05: Shares sold 5,012 $196,076 - ------------------------------------------------------------------------ Shares issued in connection with reinvestment of distributions -- -- - ------------------------------------------------------------------------ 5,012 196,076 - ------------------------------------------------------------------------ Shares repurchased (1,204) (48,601) - ------------------------------------------------------------------------ Net increase 3,808 $147,475 Year ended 6/30/04: Shares sold 633 $24,270 - ------------------------------------------------------------------------ Shares issued in connection with reinvestment of distributions -- -- - ------------------------------------------------------------------------ 633 24,270 - ------------------------------------------------------------------------ Shares repurchased (20) (802) - ------------------------------------------------------------------------ Net increase 613 $23,468 - ------------------------------------------------------------------------ CLASS Y Shares Amount - ------------------------------------------------------------------------ Year ended 6/30/05: Shares sold 2,889,224 $114,469,140 - ------------------------------------------------------------------------ Shares issued in connection with reinvestment of distributions -- -- - ------------------------------------------------------------------------ 2,889,224 114,469,140 - ------------------------------------------------------------------------ Shares repurchased (14,676,760) (599,862,180) - ------------------------------------------------------------------------ Net decrease (11,787,536) $(485,393,040) Year ended 6/30/04: Shares sold 8,529,967 $320,027,694 - ------------------------------------------------------------------------ Shares issued in connection with reinvestment of distributions -- -- - ------------------------------------------------------------------------ 8,529,967 320,027,694 - ------------------------------------------------------------------------ Shares repurchased (14,943,384) (573,947,519) - ------------------------------------------------------------------------ Net decrease (6,413,417) $(253,919,825) Note 5: Investment in Putnam Prime Money Market Fund Pursuant to an exemptive order from the Securities and Exchange Commission, the fund invests in Putnam Prime Money Market Fund, an open-end management investment company managed by Putnam Management. Management fees paid by the fund are reduced by an amount equal to the management and administrative services fees paid by Putnam Prime Money Market Fund with respect to assets invested by the fund in Putnam Prime Money Market Fund. For the year ended June 30, 2005, management fees paid were reduced by $103,341 relating to the fund's investment in Putnam Prime Money Market Fund. Income distributions earned by the fund are recorded as income in the statement of operations and totaled $1,419,410 for the period ended June 30, 2005. During the year ended June 30, 2005, cost of purchases and cost of sales of investments in Putnam Prime Money Market Fund aggregated $1,576,602,478 and $1,625,539,257, respectively. Note 6: Regulatory matters and litigation Putnam Management has entered into agreements with the Securities and Exchange Commission and the Massachusetts Securities Division settling charges connected with excessive short-term trading by Putnam employees and, in the case of the charges brought by the Massachusetts Securities Division, by participants in some Putnam-administered 401(k) plans. Pursuant to these settlement agreements, Putnam Management will pay a total of $193.5 million in penalties and restitution, with $153.5 million being paid to shareholders and the funds. The restitution amount will be allocated to shareholders pursuant to a plan developed by an independent consultant, with payments to shareholders following approval of the plan by the SEC and the Massachusetts Securities Division. The Securities and Exchange Commission's and Massachusetts Securities Division's allegations and related matters also serve as the general basis for numerous lawsuits, including purported class action lawsuits filed against Putnam Management and certain related parties, including certain Putnam funds. Putnam Management will bear any costs incurred by Putnam funds in connection with these lawsuits. Putnam Management believes that the likelihood that the pending private lawsuits and purported class action lawsuits will have a material adverse financial impact on the fund is remote, and the pending actions are not likely to materially affect its ability to provide investment management services to its clients, including the Putnam funds. On March 23, 2005, Putnam Management entered into a settlement with the Securities and Exchange Commission resolving its inquiry into Putnam Management's alleged failure to fully and effectively disclose a former brokerage allocation practice to the Board of Trustees and shareholders of the Putnam Funds. This practice, which Putnam Management ceased as of January 1, 2004, involved allocating a portion of the brokerage on mutual fund portfolio transactions to certain broker-dealers who sold shares of Putnam mutual funds. Under the settlement order, Putnam Management has paid a civil penalty of $40 million and disgorgement of $1 to the Securities and Exchange Commission. These amounts, which are included in Other income on the Statement of operations, subsequently will be distributed to certain Putnam funds pursuant to a plan to be approved by the Securities and Exchange Commission. As part of the settlement, Putnam Management neither admitted nor denied any wrongdoing. Putnam Investments has recorded a charge of $30 million for the estimated cost that it believes will be necessary to address issues relating to the calculation of certain amounts paid by the Putnam mutual funds in previous years. The previous payments were cost reimbursements by the Putnam funds to Putnam for transfer agent services relating to defined contribution operations. Putnam currently anticipates that any payments made by Putnam related to this issue will be paid to the Putnam funds. Review of this issue is ongoing. Putnam Management and Putnam Retail Management are named as defendants in a civil suit in which the plaintiffs allege that the management and distribution fees paid by certain Putnam funds were excessive and seek recovery under the Investment Company Act of 1940. Putnam Management and Putnam Retail Management have contested the plaintiffs' claims and the matter is currently pending in the U.S. District Court for the District of Massachusetts. Based on currently available information, Putnam Management believes that this action is without merit and that it is unlikely to have a material effect on Putnam Management's and Putnam Retail Management's ability to provide services to their clients, including the fund. Federal tax information (Unaudited) The Form 1099 you receive in January 2006 will show the tax status of all distributions paid to your account in calendar 2005. Shareholder meeting results (Unaudited) A special meeting of shareholders of the fund was held on November 11, 2004. At that meeting consideration of certain proposals was adjourned to a final meeting held on January 10, 2005. - ---------------------------------------------------------------------------- November 11, 2004 meeting At the meeting, each of the nominees for Trustees was elected, as follows: - ---------------------------------------------------- Votes Votes For Withheld - ---------------------------------------------------- Jameson A. Baxter 113,453,010 5,295,919 - ---------------------------------------------------- Charles B. Curtis 113,103,198 5,645,731 - ---------------------------------------------------- Myra R. Drucker 114,336,142 4,412,787 - ---------------------------------------------------- Charles E. Haldeman, Jr. 114,335,290 4,413,639 - ---------------------------------------------------- John A. Hill 113,462,522 5,286,407 - ---------------------------------------------------- Ronald J. Jackson* 113,496,027 5,252,902 - ---------------------------------------------------- Paul L. Joskow 113,454,552 5,294,377 - ---------------------------------------------------- Elizabeth T. Kennan 113,355,675 5,393,254 - ---------------------------------------------------- John H. Mullin, III 113,468,723 5,280,206 - ---------------------------------------------------- Robert E. Patterson 113,423,684 5,325,245 - ---------------------------------------------------- George Putnam, III 113,400,111 5,348,818 - ---------------------------------------------------- A.J.C. Smith+ 113,360,795 5,388,134 - ---------------------------------------------------- W. Thomas Stephens 113,433,818 5,315,111 - ---------------------------------------------------- Richard B. Worley 114,332,735 4,416,194 - ---------------------------------------------------- * Mr. Jackson retired from the Board of Trustees on June 10, 2005. + Mr. Smith retired from the Board of Trustees on January 14, 2005. All tabulations are rounded to nearest whole number. - ---------------------------------------------------------------------------- January 10, 2005 meeting A proposal to amend the fund's fundamental investment restriction with respect to borrowing to allow the fund the investment flexibility permitted by the Investment Company Act was defeated as follows: - --------------------------------------------- Votes For Votes Against Abstentions - --------------------------------------------- 72,516,047 8,322,183 37,841,141 - --------------------------------------------- A proposal to amend the fund's fundamental investment restriction with respect to making loans to enhance the fund's ability to participate in an interfund borrowing and lending program was defeated as follows: - --------------------------------------------- Votes For Votes Against Abstentions - --------------------------------------------- 72,912,864 8,034,507 37,732,000 - --------------------------------------------- A proposal to amend the fund's fundamental investment restriction with respect to diversification of investments to enhance the fund's ability to invest in registered investment companies such as Putnam Prime Money Market Fund was defeated as follows: - --------------------------------------------- Votes For Votes Against Abstentions - --------------------------------------------- 77,103,763 4,088,773 37,486,835 - --------------------------------------------- A proposal to amend the fund's Agreement and Declaration of Trust to permit the fund to satisfy redemption requests other than in cash was defeated as follows: - --------------------------------------------- Votes For Votes Against Abstentions - --------------------------------------------- 67,711,783 12,439,915 38,527,673 - --------------------------------------------- All tabulations are rounded to nearest whole number. Brokerage commissions (Unaudited) Brokerage commissions are paid to firms that execute trades on behalf of your fund. When choosing these firms, Putnam is required by law to seek the best execution of the trades, taking all relevant factors into consideration, including expected quality of execution and commission rate. Listed below are the largest relationships based upon brokerage commissions for your fund and the other funds in Putnam's U.S. Small- and Mid-Cap group for the year ended June 30, 2005. The other Putnam mutual funds in this group are Putnam Capital Opportunities Fund, Putnam Discovery Growth Fund, Putnam Mid Cap Value Fund, Putnam OTC & Emerging Growth Fund, Putnam Small Cap Growth Fund, Putnam Small Cap Value Fund, Putnam Vista Fund, Putnam VT Capital Opportunities Fund, Putnam VT Discovery Growth Fund, Putnam VT Mid Cap Value Fund, Putnam VT New Opportunities Fund, Putnam VT OTC & Emerging Growth Fund, Putnam VT Small Cap Value Fund, and Putnam VT Vista Fund. The top five firms that received brokerage commissions for trades executed for the U.S. Small- and Mid-Cap group are (in descending order) Citigroup Global Markets, Goldman Sachs, JP Morgan Clearing, Merrill Lynch, and SG Cowen. Commissions paid to these firms together represented approximately 37% of the total brokerage commissions paid for the year ended June 30, 2005. Commissions paid to the next 10 firms together represented approximately 37% of the total brokerage commissions paid during the period. These firms are (in alphabetical order) Bank of America, Bear Stearns & Company, CIBC World Markets, Credit Suisse First Boston, Deutsche Bank Securities, Lazard Freres & Co., Lehman Brothers, Morgan Stanley Dean Witter, RBC Capital Markets, and UBS Warburg. Additional information about brokerage commissions is available on the Securities and Exchange Commission (SEC) Web site at www.sec.gov. Putnam funds disclose commissions by firm to the SEC in semiannual filings on form N-SAR. About the Trustees - ---------------------------------------------------------------------------- Jameson A. Baxter (9/6/43), Trustee since 1994 Ms. Baxter is the President of Baxter Associates, Inc., a private investment firm that she founded in 1986. Ms. Baxter serves as a Director of ASHTA Chemicals, Inc., Banta Corporation (a printing and digital imaging firm), Ryerson Tull, Inc. (a steel service corporation), the Mutual Fund Directors Forum, Advocate Health Care and BoardSource, formerly the National Center for Nonprofit Boards. She is Chairman Emeritus of the Board of Trustees, Mount Holyoke College, having served as Chairman for five years and as a board member for thirteen years. Until 2002, Ms.Baxter was a Director of Intermatic Corporation (a manufacturer of energy control products). Ms. Baxter has held various positions in investment banking and corporate finance, including Vice President and Principal of the Regency Group, and Vice President of and Consultant to First Boston Corporation. She is a graduate of Mount Holyoke College. - ---------------------------------------------------------------------------- Charles B. Curtis (4/27/40), Trustee since 2001 Mr. Curtis is President and Chief Operating Officer of the Nuclear Threat Initiative (a private foundation dealing with national security issues) and serves as Senior Advisor to the United Nations Foundation. Mr. Curtis is a member of the Council on Foreign Relations and the Trustee Advisory Council of the Applied Physics Laboratory, Johns Hopkins University. Until 2003, Mr. Curtis was a member of the Electric Power Research Institute Advisory Council and the University of Chicago Board of Governors for Argonne National Laboratory. Prior to 2002, Mr. Curtis was a Member of the Board of Directors of the Gas Technology Institute and the Board of Directors of the Environment and Natural Resources Program Steering Committee, John F. Kennedy School of Government, Harvard University. Until 2001, Mr. Curtis was a member of the Department of Defense Policy Board and Director of EG&G Technical Services, Inc. (a fossil energy research and development support company). From August 1997 to December 1999, Mr. Curtis was a Partner at Hogan & Hartson L.L.P., a Washington, D.C. law firm. Prior to May 1997, Mr. Curtis was Deputy Secretary of Energy. He served as Chairman of the Federal Energy Regulatory Commission from 1977 to 1981 and has held positions on the staff of the U.S. House of Representatives, the U.S. Treasury Department, and the SEC. - ---------------------------------------------------------------------------- Myra R. Drucker (1/16/48), Trustee since 2004 Ms. Drucker is a Vice Chair of the Board of Trustees of Sarah Lawrence College, a Trustee of Commonfund (a not-for-profit firm specializing in asset management for educational endowments and foundations) and a member of the Investment Committee of the Kresge Foundation (a charitable trust). She is also an ex-officio member of the New York Stock Exchange (NYSE) Pension Managers Advisory Committee, having served as Chair for seven years and a member of the Executive Committee of the Committee on Investment of Employee Benefit Assets. She is Chair of the Advisory Board of Hamilton Lane Advisors (an investment management firm) and a member of the Advisory Board of RCM (an investment management firm). Until August 31, 2004, Ms. Drucker was Managing Director and a member of the Board of Directors of General Motors Asset Management and Chief Investment Officer of General Motors Trust Bank. Ms. Drucker also served as a member of the NYSE Corporate Accountability and Listing Standards Committee and the NYSE/NASD IPO Advisory Committee. Prior to joining General Motors Asset Management in 2001, Ms. Drucker held various executive positions in the investment management industry. Ms. Drucker served as Chief Investment Officer of Xerox Corporation (a technology and service company in the document industry), where she was responsible for the investment of the company's pension assets. Ms. Drucker was also Staff Vice President and Director of Trust Investments for International Paper (a paper, paper distribution, packaging and forest products company) and previously served as Manager of Trust Investments for Xerox Corporation. Ms. Drucker received a B.A. degree in Literature and Psychology from Sarah Lawrence College and pursued graduate studies in economics, statistics and portfolio theory at Temple University. - ---------------------------------------------------------------------------- John A. Hill (1/31/42), Trustee since 1985 and Chairman since 2000 Mr. Hill is Vice Chairman of First Reserve Corporation, a private equity buyout firm that specializes in energy investments in the diversified worldwide energy industry. Mr. Hill is a Director of Devon Energy Corporation, TransMontaigne Oil Company and various private companies controlled by First Reserve Corporation, as well as a Trustee of TH Lee, Putnam Investment Trust (a closed-end investment company advised by an affiliate of Putnam Management). He is also a Trustee of Sarah Lawrence College. Until 2005, he was a Director of Continuum Health Partners of New York. Prior to acquiring First Reserve Corporation in 1983, Mr. Hill held executive positions in investment banking and investment management with several firms and with the federal government, including Deputy Associate Director of the Office of Management and Budget and Deputy Director of the Federal Energy Administration. He is active in various business associations, including the Economic Club of New York, and lectures on energy issues in the United States and Europe. Mr. Hill holds a B.A. degree in Economics from Southern Methodist University and pursued graduate studies there as a Woodrow Wilson Fellow. - ---------------------------------------------------------------------------- Paul L. Joskow (6/30/47), Trustee since 1997 Dr. Joskow is the Elizabeth and James Killian Professor of Economics and Management, and Director of the Center for Energy and Environmental Policy Research at the Massachusetts Institute of Technology. Dr. Joskow serves as a Director of National Grid Transco (a UK-based holding company with interests in electric and gas transmission and distribution and telecommunications infrastructure) and TransCanada Corporation (an energy company focused on natural gas transmission and power services). Prior to February 2005, he served on the board of the Whitehead Institute for Biomedical Research (a non-profit research institution) and has been President of the Yale University Council since 1993. Prior to February 2002, he was a Director of State Farm Indemnity Company (an automobile insurance company), and, prior to March 2000, he was a Director of New England Electric System (a public utility holding company). Dr. Joskow has published five books and numerous articles on topics in industrial organization, government regulation of industry, and competition policy. He is active in industry restructuring, environmental, energy, competition and privatization policies -- serving as an advisor to governments and corporations worldwide. Dr. Joskow holds a Ph.D. and M. Phil from Yale University and a B.A. from Cornell University. - ---------------------------------------------------------------------------- Elizabeth T. Kennan (2/25/38), Trustee since 1992 Dr. Kennan is a Partner of Cambus-Kenneth Farm (thoroughbred horse and cattle breeding). She is President Emeritus of Mount Holyoke College. Dr. Kennan served as Chairman and is now Lead Director of Northeast Utilities. Until 2005, she was a Director of Talbots, Inc. She has served as Director on a number of other boards, including Bell Atlantic, Chastain Real Estate, Shawmut Bank, Berkshire Life Insurance and Kentucky Home Life Insurance. She is a Trustee of the National Trust for Historic Preservation, of Centre College and of Midway College in Midway, Kentucky. She is also a member of The Trustees of Reservations. Dr. Kennan has served on the oversight committee of the Folger Shakespeare Library, as President of Five Colleges Incorporated, as a Trustee of Notre Dame University and is active in various educational and civic associations. As a member of the faculty of Catholic University for twelve years, until 1978, Dr. Kennan directed the post-doctoral program in Patristic and Medieval Studies, taught history and published numerous articles. Dr. Kennan holds a Ph.D. from the University of Washington in Seattle, an M.S. from St.Hilda's College at Oxford University and an A.B. from Mount Holyoke College. She holds several honorary doctorates. - ---------------------------------------------------------------------------- John H. Mullin, III (6/15/41), Trustee since 1997 Mr. Mullin is the Chairman and CEO of Ridgeway Farm (a limited liability company engaged in timber and farming). Mr. Mullin serves as a Director of The Liberty Corporation (a broadcasting company), Progress Energy, Inc. (a utility company, formerly known as Carolina Power & Light) and Sonoco Products, Inc. (a packaging company). Mr. Mullin is Trustee Emeritus of The National Humanities Center and Washington & Lee University, where he served as Chairman of the Investment Committee. Prior to May 2001, he was a Director of Graphic Packaging International Corp. Prior to February 2004, he was a Director of Alex Brown Realty, Inc. Mr. Mullin is also a past Director of Adolph Coors Company; ACX Technologies, Inc.; Crystal Brands, Inc.; Dillon, Read & Co., Inc.; Fisher-Price, Inc.; and The Ryland Group, Inc. Mr. Mullin is a graduate of Washington & Lee University and The Wharton Graduate School, University of Pennsylvania. - ---------------------------------------------------------------------------- Robert E. Patterson (3/15/45), Trustee since 1984 Mr. Patterson is Senior Partner of Cabot Properties, L.P. and Chairman of Cabot Properties, Inc. (a private equity firm investing in commercial real estate). Mr. Patterson serves as Chairman Emeritus and Trustee of the Joslin Diabetes Center and as a Director of Brandywine Trust Group, LLC. Prior to June 2003, he was a Trustee of Sea Education Association. Prior to December 2001, he was President and Trustee of Cabot Industrial Trust (apublicly traded real estate investment trust). Prior to February 1998, he was Executive Vice President and Director of Acquisitions of Cabot Partners Limited Partnership (a registered investment adviser involved in institutional real estate investments). Prior to 1990, he served as Executive Vice President of Cabot, Cabot & Forbes Realty Advisors, Inc. (the predecessor company of Cabot Partners). Mr. Patterson practiced law and held various positions in state government and was the founding Executive Director of the Massachusetts Industrial Finance Agency. Mr. Patterson is a graduate of Harvard College and Harvard Law School. - ---------------------------------------------------------------------------- W. Thomas Stephens (9/2/42), Trustee since 1997 Mr. Stephens is Chairman and Chief Executive Officer of Boise Cascade, L.L.C. (a paper, forest products and timberland assets company). Mr. Stephens serves as a Director of TransCanada Pipelines Limited. Until 2004, Mr. Stephens was a Director of Xcel Energy Incorporated (a public utility company), Qwest Communications, and Norske Canada, Inc. (a paper manufacturer). Until 2003, Mr. Stephens was a Director of Mail-Well, Inc. (a diversified printing company). He served as Chairman of Mail-Well until 2001 and as CEO of MacMillan-Bloedel, Ltd. (a forest products company) until 1999. Prior to 1996, Mr. Stephens was Chairman and Chief Executive Officer of Johns Manville Corporation. He holds B.S. and M.S. degrees from the University of Arkansas. - ---------------------------------------------------------------------------- Richard B. Worley (11/15/45), Trustee since 2004 Mr. Worley is Managing Partner of Permit Capital, LLC, an investment management firm. Mr. Worley serves on the Executive Committee of the University of Pennsylvania Medical Center, is a Trustee of The Robert Wood Johnson Foundation (a philanthropic organization devoted to health care issues) and is a Director of The Colonial Williamsburg Foundation (a historical preservation organization). Mr. Worley also serves on the investment committees of Mount Holyoke College and World Wildlife Fund (a wildlife conservation organization). Prior to joining Permit Capital LLC in 2002, Mr. Worley served as Chief Strategic Officer of Morgan Stanley Investment Management. He previously served as President, Chief Executive Officer and Chief Investment Officer of Morgan Stanley Dean Witter Investment Management and as a Managing Director of Morgan Stanley, a financial services firm. Mr. Worley also was the Chairman of Miller Anderson & Sherrerd, an investment management firm. Mr. Worley holds a B.S. degree from University of Tennessee and pursued graduate studies in economics at the University of Texas. - ---------------------------------------------------------------------------- Charles E. Haldeman, Jr.* (10/29/48), Trustee since 2004 Mr. Haldeman is President and Chief Executive Officer of Putnam, LLC ("Putnam Investments"). He is a member of Putnam Investments' Executive Board of Directors and Advisory Council. Prior to November 2003, Mr. Haldeman served as Co-Head of Putnam Investments' Investment Division. Prior to joining Putnam Investments in 2002, Mr. Haldeman held executive positions in the investment management industry. He previously served as Chief Executive Officer of Delaware Investments and President & Chief Operating Officer of United Asset Management. Mr.Haldeman was also a partner and director of Cooke & Bieler, Inc. (an investment management firm). Mr. Haldeman currently serves as a Trustee of Dartmouth College and as Emeritus Trustee of Abington Memorial Hospital. He is a graduate of Dartmouth College, Harvard Law School and Harvard Business School. Mr. Haldeman is also a Chartered Financial Analyst (CFA) charterholder. - ---------------------------------------------------------------------------- George Putnam, III* (8/10/51), Trustee since 1984 and President since 2000 Mr. Putnam is President of New Generation Research, Inc. (a publisher of financial advisory and other research services), and of New Generation Advisers, Inc. (a registered investment advisor to private funds). Mr. Putnam founded the New Generation companies in 1986. Mr. Putnam is a Director of The Boston Family Office, LLC (a registered investment adviser). He is a Trustee of St. Mark's School, Shore Country Day School, and until 2002 was a Trustee of the Sea Education Association. Mr. Putnam previously worked as an attorney with the law firm of Dechert LLP (formerly known as Dechert Price & Rhoads) in Philadelphia. He is a graduate of Harvard College, Harvard Business School and Harvard Law School. The address of each Trustee is One Post Office Square, Boston, MA 02109. As of June 30, 2005, there were 108 Putnam Funds. All Trustees serve as Trustees of all Putnam funds. Each Trustee serves for an indefinite term, until his or her resignation, retirement at age 72, death, or removal. * Trustees who are or may be deemed to be "interested persons" (as defined in the Investment Company Act of 1940) of the fund, Putnam Management, Putnam Retail Management, or Marsh & McLennan Companies, Inc., the parent company of Putnam, LLC and its affiliated companies. Messrs. Haldeman and Putnam III are deemed "interested persons" by virtue of their positions as officers of the fund, Putnam Management or Putnam Retail Management and as shareholders of Marsh & McLennan Companies, Inc. Mr. Putnam, III is the President of your fund and each of the other Putnam funds. Mr. Haldeman is President and Chief Executive Officer of Putnam Investments.* Officers In addition to George Putnam, III, the other officers of the fund are shown below: Charles E. Porter (7/26/38) Executive Vice President, Associate Treasurer and Principal Executive Officer Since 1989 Jonathan S. Horwitz (6/4/55) Senior Vice President and Treasurer Since 2004 Prior to 2004, Managing Director, Putnam Investments Steven D. Krichmar (6/27/58) Vice President and Principal Financial Officer Since 2002 Senior Managing Director, Putnam Investments. Prior to July 2001, Partner, PricewaterhouseCoopers LLP Michael T. Healy (1/24/58) Assistant Treasurer and Principal Accounting Officer Since 2000 Managing Director, Putnam Investments Beth S. Mazor (4/6/58) Vice President Since 2002 Senior Vice President, Putnam Investments Daniel T. Gallagher (2/27/62) Senior Vice President, Staff Counsel and Compliance Liaison Since 2004 Prior to 2004, Associate, Ropes & Gray LLP; prior to 2000, Law Clerk, Massachusetts Supreme Judicial Court Francis J. McNamara, III (8/19/55) Vice President and Chief Legal Officer Since 2004 Senior Managing Director, Putnam Investments, Putnam Management and Putnam Retail Management. Prior to 2004, General Counsel, State Street Research & Management Company James P. Pappas (2/24/53) Vice President Since 2004 Managing Director, Putnam Investments and Putnam Management. During 2002, Chief Operating Officer, Atalanta/Sosnoff Management Corporation; prior to 2001, President and Chief Executive Officer, UAM Investment Services, Inc. Richard S. Robie, III (3/30/60) Vice President Since 2004 Senior Managing Director, Putnam Investments, Putnam Management and Putnam Retail Management. Prior to 2003, Senior Vice President, United Asset Management Corporation Charles A. Ruys de Perez (10/17/57) Vice President and Chief Compliance Officer Since 2004 Managing Director, Putnam Investments Mark C. Trenchard (6/5/62) Vice President and BSA Compliance Officer Since 2002 Senior Vice President, Putnam Investments Judith Cohen (6/7/45) Vice President, Clerk and Assistant Treasurer Since 1993 Wanda M. McManus (1/4/47) Vice President, Senior Associate Treasurer and Assistant Clerk Since 2005 Nancy T. Florek (6/13/57) Vice President, Assistant Clerk, Assistant Treasurer and Proxy Manager Since 2005 The address of each Officer is One Post Office Square, Boston, MA 02109. Fund information Founded over 65 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We manage over 100 mutual funds in growth, value, blend, fixed income, and international. Investment Manager Putnam Investment Management, LLC One Post Office Square Boston, MA 02109 Marketing Services Putnam Retail Management One Post Office Square Boston, MA 02109 Custodian Putnam Fiduciary Trust Company Legal Counsel Ropes & Gray LLP Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP Trustees John A. Hill, Chairman Jameson Adkins Baxter Charles B. Curtis Myra R. Drucker Charles E. Haldeman, Jr. Paul L. Joskow Elizabeth T. Kennan John H. Mullin, III Robert E. Patterson George Putnam, III W. Thomas Stephens Richard B. Worley Officers George Putnam, III President Charles E. Porter Executive Vice President, Associate Treasurer and Principal Executive Officer Jonathan S. Horwitz Senior Vice President and Treasurer Steven D. Krichmar Vice President and Principal Financial Officer Michael T. Healy Assistant Treasurer and Principal Accounting Officer Beth S. Mazor Vice President Daniel T. Gallagher Senior Vice President, Staff Counsel and Compliance Liaison James P. Pappas Vice President Richard S. Robie, III Vice President Mark C. Trenchard Vice President and BSA Compliance Officer Francis J. McNamara, III Vice President and Chief Legal Officer Charles A. Ruys de Perez Vice President and Chief Compliance Officer Judith Cohen Vice President, Clerk and Assistant Treasurer Wanda M. McManus Vice President, Senior Associate Treasurer and Assistant Clerk Nancy T. Florek Vice President, Assistant Clerk, Assistant Treasurer and Proxy Manager This report is for the information of shareholders of Putnam New Opportunities Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, the most recent copy of Putnam's Quarterly Performance Summary, and Putnam's Quarterly Ranking Summary. For more recent performance, please visit www.putnam.com. Investors should carefully consider the investment objective, risks, charges, and expenses of a fund, which are described in its prospectus. For this and other information or to request a prospectus, call 1-800-225-1581 toll free. Please read the prospectus carefully before investing. The fund's Statement of Additional Information contains additional information about the fund's Trustees and is available without charge upon request by calling 1-800-225-1581. [blank page] [LOGO OMITTED] PUTNAM INVESTMENTS One Post Office Square Boston, Massachusetts 02109 www.putnam.com 1-800-225-1581 Founded in 1937, Putnam Investments began with the principle that a balance between risk and reward is the mark of a well-rounded financial program. Today, we manage money with a focus on seeking consistent results over time. This balanced approach continues to underscore everything we do. PRSRT STD U.S. POSTAGE PAID PUTNAM INVESTMENTS [GRAPHIC OMITTED: SCALE] Not FDIC Insured May Lose Value No Bank Guarantee AN013 226459 8/05 [GRAPHIC OMITTED: PUTNAM LOGO] - -------------------------------------------------------------------------------- Putnam New Opportunities Fund Supplement to Annual Report dated 6/30/05 The following information has been prepared to provide class Y shareholders with a performance overview specific to their holdings. Class Y shares are offered exclusively to clients that meet the eligibility requirements specified in the fund's prospectus for such shares. Performance of class Y shares, which do not incur a front-end load, a distribution fee, or a contingent deferred sales charge, will differ from the performance of class A, B, C, M, and R shares, which are discussed more extensively in the annual report. RESULTS AT A GLANCE - -------------------------------------------------------------------------------- Total return for periods ended 6/30/05 NAV Life of fund (since class A inception, 8/31/90) Annual average 14.26% 10 years 92.45 Annual average 6.77 5 years -50.03 Annual average -12.95 1 year 7.05 Share value: NAV 6/30/04 $40.14 6/30/05 $42.97 Distributions: No. Income Capital gains Total -- -- Long-term Short-term -- -- -- - -------------------------------------------------------------------------------- Data represents past performance. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate and you may have a gain or a loss when you sell your shares. For the most recent month-end performance, please visit www.putnaminvestments.com. Performance assumes reinvestment of distributions and does not account for taxes. Returns shown for class Y shares for periods prior to their inception (7/19/94) are derived from the historical performance of class A shares, and are not adjusted to reflect the initial sales charge currently applicable to class A shares. Returns have not been adjusted to reflect differences in operating expenses which, for class Y shares, are lower than the operating expenses applicable to class A shares. See full report for information on comparative benchmarks. If you have questions, please consult your fund prospectus or call Putnam toll free at 1-800-752-9894. A short-term trading fee of up to 2% may apply. Please see pages 15-16 of the accompanying shareholder report for a discussion of the information appearing in the tables below: - -------------------------------------------------------------------------------- EXPENSES AND VALUE OF A $1,000 INVESTMENT assuming actual returns for the 6 months ended 6/30/05 Class Y Expenses paid per $1,000* $4.22 Ending value (after expenses) $1,003.30 - -------------------------------------------------------------------------------- EXPENSES AND VALUE OF A $1,000 INVESTMENT assuming a hypothetical 5% annualized return for the 6 months ended 6/30/05 Class Y Expenses paid per $1,000* $4.26 Ending value (after expenses) $1,020.58 - -------------------------------------------------------------------------------- EXPENSE RATIO COMPARISON USING ANNUALIZED DATA Your fund's annualized expense ratio + 0.85% Average annualized expense ratio for Lipper peer group ++ 1.32% + For the fund's most recent fiscal half year; may differ from expense rations based on one-year data in financial highlights. ++ For class Y shares, Putnam has adjusted the Lipper total expense average to reflect that class Y shares do not incur 12b-1 fees. - -------------------------------------------------------------------------------- Item 2. Code of Ethics: - ---------------------------------------------------------------------------- (a) All officers of the Fund, including its principal executive, financial and accounting officers, are employees of Putnam Investment Management, LLC, the Fund's investment manager. As such they are subject to a comprehensive Code of Ethics adopted and administered by Putnam Investments which is designed to protect the interests of the firm and its clients. The Fund has adopted a Code of Ethics which incorporates the Code of Ethics of Putnam Investments with respect to all of its officers and Trustees who are employees of Putnam Investment Management, LLC. For this reason, the Fund has not adopted a separate code of ethics governing its principal executive, financial and accounting officers. (c) In July 2004, Putnam Investment Management, LLC, the Fund's investment manager, Putnam Retail Management Limited Partnership, the Fund's principal underwriter, and Putnam Investments Limited, the sub-manager for a portion of the assets of certain funds as determined by Putnam Management from time to time, adopted several amendments to their Code of Ethics. Some of these amendments were adopted as a result of Putnam Investment Management's partial settlement order with the SEC on November 13, 2003. Insofar as such Code of Ethics applies to the Fund's principal executive officer, principal financial officer and principal accounting officer, the amendments provided for the following: (i) a 90-day blackout period for all shares of Putnam open-end funds (except for money market funds) purchased or sold (including exchanges into or out of a fund) by Putnam employees and certain family members; (ii) a one-year holding period for all access persons that operates in the same manner as the 90-day rule; (iii) delivery by Putnam employees to the Code of Ethics Administrator of both quarterly account statements for all brokerage accounts (irrespective of activity in the accounts) and account statements for any Putnam funds not held at Putnam or for any funds sub-advised by Putnam; (iv) a prohibition of Putnam employees from making more than 25 trades in individual securities in their personal accounts in any given quarter; (v) the extension of the existing prohibition of access persons from a purchase and sale or sale and purchase of an individual security within 60 days to include trading based on tax-lot election; (vi) the inclusion of trades in Marsh & McLennan Companies, Inc. (ultimate parent company of Putnam Investment Management) securities in pre-clearance and reporting requirements; (vii) a prohibition of limit and good-until-canceled orders as inconsistent with the requirements of daily pre-clearance; (viii) new limits and procedures for accounts managed by outside managers and brokers, in order for trading in such accounts to be exempt from pre-clearance requirements; (ix) a new gift and entertainment policy that imposes a reporting obligation on all meals and entertainment and new limits on non-meal entertainment; (x) a number of alternatives for the reporting of irregular activity. In December 2004, additional amendments to the Code of Ethics were adopted. Insofar as such Code of Ethics applies to the Fund's principal executive officer, principal financial officer and principal accounting officer, the amendments provided for the following: (i) implementation of minimum monetary sanctions for violations of the Code; (ii) expansion of the definition of "access person" under the Code include all Putnam employees with access to non-public information regarding Putnam-managed mutual fund portfolio holdings; (iii) lengthening the period during which access persons are required to complete quarterly reports; (iv) reducing the maximum number of trades than can be made by Putnam employees in their personal accounts in any calendar quarter from 25 trades to 10 trades; and (v) lengthening the required holding period for securities by access persons from 60 days to 90 days. In March 2005, additional amendments to the Code of Ethics were adopted, that went into effect on April 1, 2005. Insofar as such Code of Ethics applies to the Fund's principal executive officer, principal financial officer and principal accounting officer, the amendments (i) prohibit Putnam employees and their immediate family members from having any direct or indirect personal financial interest in companies that do business with Putnam (excluding investment holdings in public companies that are not material to the employee), unless such interest is disclosed and approved by the Code of Ethics Officer; (ii) prohibit Putnam employees from using Putnam assets, letterhead or other resources in making political or campaign contributions, solicitations or endorsements;(iii) require Putnam employees to obtain pre-clearance of personal political or campaign contributions or other gifts to government officials or political candidates in certain jurisdictions and to officials or candidates with whom Putnam has or is seeking to establish a business relationship and (iv) require Putnam employees to obtain pre-approval from Putnam's Director of Government Relations prior to engaging in lobbying activities. Item 3. Audit Committee Financial Expert: - ---------------------------------------------------------------------------- The Funds' Audit and Pricing Committee is comprised solely of Trustees who are "independent" (as such term has been defined by the Securities and Exchange Commission ("SEC") in regulations implementing Section 407 of the Sarbanes-Oxley Act (the "Regulations")). The Trustees believe that each of the members of the Audit and Pricing Committee also possess a combination of knowledge and experience with respect to financial accounting matters, as well as other attributes, that qualify them for service on the Committee. In addition, the Trustees have determined that all members of the Funds' Audit and Pricing Committee meet the financial literacy requirements of the New York Stock Exchange's rules and that Mr. Patterson, Mr. Stephens and Mr. Worley qualify as "audit committee financial experts" (as such term has been defined by the Regulations) based on their review of their pertinent experience and education. Certain other Trustees, although not on the Audit and Pricing Committee, would also qualify as "audit committee financial experts." The SEC has stated that the designation or identification of a person as an audit committee financial expert pursuant to this Item 3 of Form N-CSR does not impose on such person any duties, obligations or liability that are greater than the duties, obligations and liability imposed on such person as a member of the Audit and Pricing Committee and the Board of Trustees in the absence of such designation or identification. Item 4. Principal Accountant Fees and Services: - ---------------------------------------------------------------------------- The following table presents fees billed in each of the last two fiscal years for services rendered to the fund by the fund's independent auditors: Fiscal year ended Audit Fees Audit-Related Fees Tax Fees All Other Fees June 30, 2005 $108,521* $-- $3,408 $3,876 June 30, 2004 $96,366* $-- $3,868 $1,637 * Includes fees of $7,901 and $3,399 billed by the fund's independent auditor to the fund for audit procedures necessitated by regulatory and litigation matters for the fiscal years ended June 30, 2005 and June 30, 2004, respectively. These fees were reimbursed to the fund by Putnam. For the fiscal years ended June 30, 2005 and June 30, 2004, the fund's independent auditors billed aggregate non-audit fees in the amounts of $ 197,609 and $ 139,133 respectively, to the fund, Putnam Management and any entity controlling, controlled by or under common control with Putnam Management that provides ongoing services to the fund. Audit Fees represents fees billed for the fund's last two fiscal years. Audit-Related Fees represents fees billed in the fund's last two fiscal years for services traditionally performed by the fund's auditor, including accounting consultation for proposed transactions or concerning financial accounting and reporting standards and other audit or attest services not required by statute or regulation. Tax Fees represent fees billed in the fund's last two fiscal years for tax compliance, tax planning and tax advice services. Tax planning and tax advice services include assistance with tax audits, employee benefit plans and requests for rulings or technical advice from taxing authorities. All Other Fees Fees represent fees billed for services relating to an analysis of recordkeeping fees and fund expense processing. Pre-Approval Policies of the Audit and Pricing Committee. The Audit and Pricing Committee of the Putnam funds has determined that, as a matter of policy, all work performed for the funds by the funds' independent auditors will be pre-approved by the Committee and will generally not be subject to pre-approval procedures. Under certain circumstances, the Audit and Pricing Committee believes that it may be appropriate for Putnam Investment Management, LLC ("Putnam Management") and certain of its affiliates to engage the services of the funds' independent auditors, but only after prior approval by the Committee. Such requests are required to be submitted in writing to the Committee and explain, among other things, the nature of the proposed engagement, the estimated fees, and why this work must be performed by that particular audit firm. The Committee will review the proposed engagement at its next meeting. Since May 6, 2003, all work performed by the independent auditors for the funds, Putnam Management and any entity controlling, controlled by or under common control with Putnam Management that provides ongoing services to the fund was pre-approved by the Committee or a member of the Committee pursuant to the pre-approval policies discussed above. Prior to that date, the Committee had a general policy to pre-approve the independent auditor's engagements for non-audit services with the funds, Putnam Management and any entity controlling, controlled by or under common control with Putnam Management that provides ongoing services to the fund. The following table presents fees billed by the fund's principal auditor for services required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. Total Audit-Related All Non-Audit Fiscal year ended Fees Tax Fees Other Fees Fees - ----------------- ------------- ---------- ----------- ---------- June 30, 2005 $-- $-- $-- $-- June 30, 2004 $-- $-- $-- $-- Item 5. Audit Committee: - ---------------------------------------------------------------------------- Not applicable Item 6. Schedule of Investments: - ---------------------------------------------------------------------------- Not applicable Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End - ---------------------------------------------------------------------------- Management Investment Companies: - ------------------------------------ Not applicable Item 8. Purchases of Equity Securities by Closed-End Management Investment - ---------------------------------------------------------------------------- Companies and Affiliated Purchasers: - ------------------------------------ Not applicable Item 9. Submission of Matters to a Vote of Security Holders: - ---------------------------------------------------------------------------- Not applicable Item 10. Controls and Procedures: - ---------------------------------------------------------------------------- (a) The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms. (b) Changes in internal control over financial reporting: Not applicable Item 11. Exhibits: - ---------------------------------------------------------------------------- (a) The Code of Ethics of The Putnam Funds, which incorporates the Code of Ethics of Putnam Investments, is filed herewith. (b) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Investment Company Act of 1940, as amended, and the officer certifications as required by Section 906 of the Sarbanes-Oxley Act of 2002 are filed herewith. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NAME OF REGISTRANT By (Signature and Title): /s/Michael T. Healy --------------------------- Michael T. Healy Principal Accounting Officer Date: August 29, 2005 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title): /s/Charles E. Porter --------------------------- Charles E. Porter Principal Executive Officer Date: August 29, 2005 By (Signature and Title): /s/Steven D. Krichmar --------------------------- Steven D. Krichmar Principal Financial Officer Date: August 29, 2005 EX-99.CERT 2 exnn2.txt EX-99.CERT Certifications - -------------- I, Charles E. Porter, a Principal Executive Officer of the funds listed on Attachment A, certify that: 1. I have reviewed each report on Form N-CSR of the funds listed on Attachment A: 2. Based on my knowledge, each report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by each report; 3. Based on my knowledge, the financial statements, and other financial information included in each report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in each report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which each report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of each report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to each registrant's auditors and the audit committee of each registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect each registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in each registrant's internal control over financial reporting. /s/ Charles E. Porter -------------------------- Date: August 29, 2005 Charles E. Porter Principal Executive Officer Certifications - -------------- I, Steven D. Krichmar, the Principal Financial Officer of the funds listed on Attachment A, certify that: 1. I have reviewed each report on Form N-CSR of the funds listed on Attachment A: 2. Based on my knowledge, each report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by each report; 3. Based on my knowledge, the financial statements, and other financial information included in each report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in each report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which each report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of each report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to each registrant's auditors and the audit committee of each registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect each registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in each registrant's internal control over financial reporting. /s/ Steven D. Krichmar ------------------------------- Date: August 29, 2005 Steven D. Krichmar Principal Financial Officer Attachment A - ------------ N-CSR Period (s) ended June 30, 2005 057 Putnam Europe Equity Fund 841 Putnam International Equity Fund 852 Putnam New Opportunities Fund 2HF Putnam Small Cap Growth Fund 2CE Putnam International Growth & Income Fund 377 Putnam Discovery Growth Fund 2PX Putnam VT American Government Income Fund 2TP Putnam VT Capital Appreciation Fund 961 Putnam VT Diversified Income Fund 2IS Putnam VT The George Putnam Fund of Boston 070 Putnam VT Global Asset Allocation Fund 016 Putnam VT Global Equity Fund 066 Putnam VT Growth and Income Fund 2PU Putnam VT Growth Opportunities Fund 2IW Putnam VT Health Sciences Fund 067 Putnam VT High Yield Fund 068 Putnam VT Income Fund 2DO Putnam VT International Equity Fund 2DN Putnam VT International Growth and Income Fund 2DP Putnam VT International New Opportunities Fund 2IO Putnam VT Investors Fund 069 Putnam VT Money Market Fund 098 Putnam VT New Opportunities Fund 2DR Putnam VT New Value Fund 2IP Putnam VT OTC & Emerging Growth Fund 2LA Putnam VT Research Fund 2MJ Putnam VT Small Cap Value Fund 152 Putnam VT Utilities Growth and Income Fund 2DQ Putnam VT Vista Fund 065 Putnam VT Voyager Fund 2TJ Putnam VT Discovery Growth Fund 23N Putnam VT Equity Income Fund 23K Putnam VT Capital Opportunities Fund 23H Putnam VT Mid Cap Value Fund EX-99.906 CERT 3 exnnos3.txt EX-99.906 CERT Section 906 Certifications - --------------------------- I, Charles E. Porter, a Principal Executive Officer of the Funds listed on Attachment A, certify that, to my knowledge: 1. The form N-CSR of the Funds listed on Attachment A for the period ended June 30, 2005 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Form N-CSR of the Funds listed on Attachment A for the period ended June 30, 2005 fairly presents, in all material respects, the financial condition and results of operations of the Funds listed on Attachment A. /s/ Charles E. Porter -------------------------- Date: August 29, 2005 Charles E. Porter Principal Executive Officer Section 906 Certifications - --------------------------- I, Steven D. Krichmar, a Principal Financial Officer of the Funds listed on Attachment A, certify that, to my knowledge: 1. The form N-CSR of the Funds listed on Attachment A for the period ended June 30, 2005 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Form N-CSR of the Funds listed on Attachment A for the period ended June 30, 2005 fairly presents, in all material respects, the financial condition and results of operations of the Funds listed on Attachment A. /s/ Steven D. Krichmar ------------------------------- Date: August 29, 2005 Steven D. Krichmar Principal Financial Officer Attachment A - ------------ N-CSR Period (s) ended June 30, 2005 057 Putnam Europe Equity Fund 841 Putnam International Equity Fund 852 Putnam New Opportunities Fund 2HF Putnam Small Cap Growth Fund 2CE Putnam International Growth & Income Fund 377 Putnam Discovery Growth Fund 2PX Putnam VT American Government Income Fund 2TP Putnam VT Capital Appreciation Fund 961 Putnam VT Diversified Income Fund 2IS Putnam VT The George Putnam Fund of Boston 070 Putnam VT Global Asset Allocation Fund 016 Putnam VT Global Equity Fund 066 Putnam VT Growth and Income Fund 2PU Putnam VT Growth Opportunities Fund 2IW Putnam VT Health Sciences Fund 067 Putnam VT High Yield Fund 068 Putnam VT Income Fund 2DO Putnam VT International Equity Fund 2DN Putnam VT International Growth and Income Fund 2DP Putnam VT International New Opportunities Fund 2IO Putnam VT Investors Fund 069 Putnam VT Money Market Fund 098 Putnam VT New Opportunities Fund 2DR Putnam VT New Value Fund 2IP Putnam VT OTC & Emerging Growth Fund 2LA Putnam VT Research Fund 2MJ Putnam VT Small Cap Value Fund 152 Putnam VT Utilities Growth and Income Fund 2DQ Putnam VT Vista Fund 065 Putnam VT Voyager Fund 2TJ Putnam VT Discovery Growth Fund 23N Putnam VT Equity Income Fund 23K Putnam VT Capital Opportunities Fund 23H Putnam VT Mid Cap Value Fund EX-99.CODE ETH 4 coe1.txt working@Putnam August 2004 CODE OF ETHICS CODE OF ETHICS PUTNAM INVESTMENTS [SCALE LOGO OMITTED] It is the personal responsibility of every Putnam employee to avoid any conduct that could create a conflict, or even the appearance of a conflict, with our fund shareholders and other clients, or to do anything that could damage or erode the trust our fund shareholders and other clients place in Putnam and its employees. TABLE OF CONTENTS OVERVIEW.............................................................iii PREAMBLE..............................................................vi DEFINITIONS: Code of Ethics .........................................vii SECTION I. Personal Securities Rules for All Employees ............... 1 A. Pre-clearance and the Restricted List ............................. 1 B. Prohibited Transactions.............................................5 C. Discouraged Transactions.......................................... 11 D. Exempted Transactions .............................................11 SECTION II. Additional Special Rules for Personal Securities Transactions of Access Persons and Certain Investment Professionals.. 13 SECTION III. General Rules for All Employees .........................18 SECTION IV. Special Rules for Officers and Employees of Putnam Investments Limited ................................................. 29 SECTION V. Reporting Requirements for All Employees.................. 31 SECTION VI. Education Requirements ...................................34 SECTION VII. Compliance and Appeal Procedures.........................35 APPENDIX A: Policy Statement Concerning Insider Trading Prohibitions PREAMBLE ............................................................ 37 DEFINITIONS: Insider Trading..........................................38 SECTION I. Rules Concerning Inside Information .......................39 SECTION II. Overview of Insider Trading ..............................41 APPENDIX B: Policy Statement Regarding Employee Trades in Shares of Putnam Closed-End Funds ..............................................45 APPENDIX C: Contra-Trading Rule Clearance Form........................46 APPENDIX D: AIMR Code of Ethics and Standards of Professional Conduct .................................................47 APPENDIX E: Report of Entertainment Form..............................53 INDEX ................................................................55 OVERVIEW Every Putnam employee is required, as a condition of continued employment, to read, understand, and comply with the entire Code of Ethics. Additionally, employees are expected to comply with the policies and procedures contained within the Putnam Employee Handbook, which can be accessed online through www.ibenefitcenter.com. This overview is provided only as a convenience and is not intended to substitute for a careful reading of the complete document. It is the personal responsibility of every Putnam employee to avoid any conduct that could create a conflict, or even the appearance of a conflict, with our fund shareholders or other clients, or do anything that could damage or erode the trust our clients place in Putnam and its employees. This is the spirit of the Code of Ethics. In accepting employment at Putnam, every employee accepts the absolute obligation to comply with the letter and the spirit of the Code of Ethics. Failure to comply with the spirit of the Code of Ethics is just as much a violation of the Code as failure to comply with the written rules of the Code. The rules of the Code cover activities, including personal securities transactions, of Putnam employees, certain family members of employees, and entities (such as corporations, trusts, or partnerships) that employees may be deemed to control or influence. Sanctions will be imposed for violations of the Code of Ethics. Sanctions may include bans on personal trading, reductions in salary increases or bonuses, disgorgement of trading profits, suspension of employment, and termination of employment. Insider trading Putnam employees are forbidden to buy or sell any security while either Putnam or the employee is in possession of material, non-public information (inside information) concerning the security or the issuer. A violation of Putnam's insider trading policies may result in criminal and civil penalties, including imprisonment and substantial fines. An employee aware of or in possession of inside information must report it immediately to the Code of Ethics Officer. See Appendix A, Section ll: Overview of Insider Trading. Conflicts of interest The Code of Ethics imposes limits on activities of Putnam employees where the activity may conflict with the interests of Putnam or its clients. These include limits on the receipt and solicitation of gifts and on service as a fiduciary for a person or entity outside of Putnam. For example, Putnam employees generally may not accept gifts over $100 in total value in a calendar year from any entity or any supplier of goods or services to Putnam. In addition, a Putnam employee may not serve as a director of any corporation or other entity without prior approval of the Code of Ethics Officer, and Putnam employees may not be members of investment clubs. Confidentiality Information about Putnam clients and Putnam investment activity and research is proprietary and confidential and may not be disclosed or used by any Putnam employee outside Putnam without a valid business purpose. Personal securities trading Putnam employees may not buy or sell any security for their own account without clearing the proposed transaction in advance. Clearance is facilitated through the online pre-clearance system for equity securities, and directly with the Code of Ethics Administrator for fixed-income securities and transactions in Putnam closed-end funds. Certain securities are exempted from this pre-clearance requirement (e.g., shares of open-end (not closed-end) mutual funds). Clearance must be obtained in advance, between 11:30 a.m. and 4:00 p.m. Eastern Standard Time (EST) on the day of the trade, except in the case of a trade for up to 1,000 shares of stock of an issuer whose capitalization exceeds $5 billion, clearance may be obtained between 9:00 a.m. and 4:00 p.m. EST on the day of the trade. A clearance is valid only for the day it is obtained. Putnam employees are strongly discouraged from engaging in excessive trading for their personal accounts. Beginning with the fourth quarter of 2004, employees will be prohibited from making more than 25 trades in individual securities. Trading in excess of this level will be reviewed with the Code of Ethics Oversight Committee. Putnam mutual funds All employees and certain family members are subject to a minimum 90-day holding period for shares in Putnam's open-end mutual funds. This restriction does not apply to Putnam's money market funds. Except in limited circumstances, all employees must hold Putnam open-end fund shares in accounts at Putnam Preferred Access. Portfolio managers and others with access to investment information (so-called "Access Persons") are subject to a minimum one-year holding period for holding Putnam open-end fund shares. Short selling Putnam employees are prohibited from short selling any security, whether or not it is held in a Putnam client portfolio, except that short selling against broad market indexes and "against the box" are permitted. Note, however, that short selling "against the box" or otherwise hedging an investment in shares of Marsh & McLennan (MMC) stock is prohibited. Confirmations of trading and periodic account statements All Putnam employees must have their brokers send confirmations and statements of personal securities transactions, including transactions of immediate family members and accounts over which the employee has investment discretion, to the Code of Ethics Officer. Employees must contact the Code of Ethics Administrator to obtain an authorization letter from Putnam for setting up a personal brokerage account. Quarterly and annual reporting Access persons must report all their securities transactions in each calendar quarter to the Code of Ethics Officer within 10 days after the end of the quarter. All Access Persons must disclose all personal securities holdings (even those to which pre-clearance may not apply) upon commencement of employment and thereafter on an annual basis. You will be notified if these requirements apply to you. If these requirements apply to you and you fail to report as required, salary increases and bonuses may be reduced. Egregious conduct, e.g., willful failures to report, will be subject to harsher sanctions, which may include termination of employment. IPOs and private placements Putnam employees may not buy any securities in an initial public offering or in a private placement, except in limited circumstances when prior written authorization is obtained. Personal securities transactions by Access Persons and certain investment professionals The Code imposes several special restrictions on personal securities transactions by Access Persons and certain investment professionals, which are summarized as follows. (Refer to Section II for details): * 60-Day Holding Period. No Access Person shall purchase and then sell at a profit, or sell and then repurchase at a lower price, any security or related derivative security within 60 calendar days. * 7-Day Rule. Before a portfolio manager places an order to buy a security for any portfolio he manages, he must sell from his personal account any such security or related derivative security purchased within the preceding seven calendar days and disgorge any profit from the sale. * Blackout Rules. No portfolio manager may sell any security or related derivative security for her personal account until seven calendar days have passed since the most recent purchase of that security or related derivative security by any portfolio she manages. No portfolio manager may buy any security or related derivative security for his personal account until seven calendar days have passed since the most recent sale of that security or related derivative security by any portfolio he manages. * Contra-Trading Rule. No portfolio manager may sell out of her personal account any security or related derivative security that is held in any portfolio she manages unless she has received the written approval of an appropriate CIO and the Code of Ethics Officer. * No portfolio manager may cause a Putnam client to take action for the manager's own personal benefit. Similar rules limit personal securities transactions by analysts, co-managers, and chief investment officers. Please read these rules carefully as you are responsible for understanding the restrictions. PREAMBLE It is the personal responsibility of every Putnam employee to avoid any conduct that would create a conflict, or even the appearance of a conflict, with our fund shareholders or other clients, or do anything that could damage or erode the trust our clients place in Putnam and its employees. This is the spirit of the Code of Ethics. In accepting employment at Putnam, every employee also accepts the absolute obligation to comply with the letter and the spirit of the Code of Ethics. Failure to comply with the spirit of the Code of Ethics is just as much a violation of the Code as failure to comply with the written rules of the Code. Sanctions will be imposed for violations of the Code of Ethics, including the Code's reporting requirements. Sanctions may include bans on personal trading, reductions in salary increases or bonuses, disgorgement of trading profits, suspension of employment, and termination of employment. Putnam Investments is required by law to adopt a Code of Ethics. The purposes of the law are to ensure that companies and their employees comply with all applicable laws and to prevent abuses in the investment advisory business that can arise when conflicts of interest exist between the employees of an investment advisor and its clients. By adopting and enforcing a Code of Ethics, we strengthen the trust and confidence reposed in us by demonstrating that, at Putnam, client interests come before personal interests. The Code that follows represents a balancing of important interests. On the one hand, as a registered investment advisor, Putnam owes a duty of undivided loyalty to its clients, and must avoid even the appearance of a conflict that might be perceived as abusing the trust they have placed in Putnam. On the other hand, Putnam does not want to prevent conscientious professionals from investing for their own account where conflicts do not exist or are so attenuated as to be immaterial to investment decisions affecting Putnam clients. When conflicting interests cannot be reconciled, the Code makes clear that, first and foremost, Putnam employees owe a fiduciary duty to Putnam clients. In most cases, this means that the affected employee will be required to forego conflicting personal securities transactions. In some cases, personal investments will be permitted, but only in a manner, which, because of the circumstances and applicable controls, cannot reasonably be perceived as adversely affecting Putnam client portfolios or taking unfair advantage of the relationship Putnam employees have to Putnam clients. The Code contains specific rules prohibiting defined types of conflicts. Because every potential conflict cannot be anticipated in advance, the Code also contains certain general provisions prohibiting conflict situations. In view of these general provisions, it is critical that any individual who is in doubt about the applicability of the Code in a given situation seek a determination from the Code of Ethics Officer about the propriety of the conduct in advance. The procedures for obtaining such a determination are described in Section VII of the Code. It is critical that the Code be strictly observed. Not only will adherence to the Code ensure that Putnam renders the best possible service to its clients, it will ensure that no individual is liable for violations of law. It should be emphasized that adherence to this policy is a fundamental condition of employment at Putnam. Every employee is expected to adhere to the requirements of this Code of Ethics despite any inconvenience that may be involved. Any employee failing to do so may be subject to such disciplinary action, including financial penalties and termination of employment, as determined by the Code of Ethics Oversight Committee or the Chief Executive Officer of Putnam Investments. DEFINITIONS: Code of Ethics The words below are defined specifically for the purpose of Putnam's Code of Ethics. Gender references in the Code of Ethics alternate. Rule of construction regarding time periods Unless the context indicates otherwise, time periods used in the Code of Ethics shall be measured inclusively, i.e., beginning on the dates from which the measurement is made. Access Persons Access Persons are (a) employees within Putnam's Investment Division, and (b) all other employees of Putnam who, in connection with their regular duties, have access to information regarding purchases or sales of portfolio securities by a Putnam mutual fund, or who have access to information regarding recommendations with respect to such purchases or sales (such as certain Information Services Division employees and certain members of the Legal and Compliance Department). Each employee will be informed if he or she is considered a Code of Ethics Access Person. The Code of Ethics Officer maintains a list of all Access Persons. Code of Ethics Administrator The individual designated by the Code of Ethics Officer to assume responsibility for day-to-day, nondiscretionary administration of this Code. The current Code of Ethics Administrator is Laura Rose, who can be reached at extension 11104. Code of Ethics Officer The Putnam officer who has been assigned the responsibility of enforcing and interpreting this Code. The Code of Ethics Officer shall be the Chief Compliance Officer or such other person as is designated by the Chief Executive Officer of Putnam Investments. If the Code of Ethics Officer is unavailable, the Deputy Code of Ethics Officer shall act in his or her stead. The Code of Ethics Officer is Tony Ruys de Perez. The Deputy Code of Ethics Officer is Kathleen Griffin. 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 Putnam's senior management approved by the Chief Executive Officer of Putnam. Immediate family Spouse, minor children, or other relatives living in the same household as the Putnam employee. Narrow-based derivative A future, swap, option, or similar derivative instrument whose return is determined by reference to fewer than 25 underlying issuers. Single stock futures and exchange traded funds based on fewer than 25 issuers are included. Policy statements The Policy Statement Concerning Insider Trading Prohibitions attached to the Code as Appendix A and the Policy Statement Regarding Employee Trades in Shares of Putnam closed-end funds attached to the Code as Appendix B. Private placement Any offering of a security not offered to the public and not requiring registration with the relevant securities authorities. Purchase or sale of a security Any acquisition or transfer of any interest in the security for direct or indirect consideration; this includes the writing of an option. Putnam Any or all of Putnam Investments Trust, and its subsidiaries, any one of which shall be a Putnam company. Putnam client Any of the Putnam mutual funds, or any advisory, trust, or other client of Putnam. Putnam employee (or employee) Any employee of Putnam Restricted list The list established in accordance with Rule 1 of Section I.A. Security Any type or class of equity or debt security; any rights relating to a security, such as warrants, convertible securities, and any narrow-based derivative. Pre-clearance in all trades for any narrow-based derivative is required. Unless otherwise noted, the term security does not include: currencies, direct and indirect obligations of the U.S. government and its agencies, commercial paper, certificates of deposit, repurchase agreements, bankers' acceptances, any other money market instruments. Exchange traded index funds containing a portfolio or securities of 25 or more issuers (e.g., SPDRs, WEBs, QQQs), commodities, and any option on a broad-based market index or an exchange-traded futures contract or option thereon are excluded. Transaction for a personal account (or personal securities transaction) Securities transactions: (a) for the personal account of any employee; (b) for the account of a member of the family of any employee; (c) for the account of a partnership in which a Putnam employee or immediate family member is a general partner or a partner with investment discretion; (d) for the account of a trust in which a Putnam employee or immediate family member is a trustee with investment discretion; (e) for the account of a closely-held corporation in which a Putnam employee or immediate family member holds shares and for which he has investment discretion; and (f ) for any account other than a Putnam client account, which receives investment advice of any sort from the employee or immediate family member, or as to which the employee or immediate family member has investment discretion. SECTION I Personal Securities Rules for All Employees A. Pre-clearance and the Restricted List Rule 1 No Putnam employee shall purchase or sell for his personal account any security (other than shares of open-end investment companies) without prior clearance obtained through Putnam's intranet pre-clearance system (under the @Putnam tab of www.ibenefitcenter.com). Fixed-income securities must be pre-cleared by calling the Code of Ethics Administrator, and there are special rules for trading in Putnam closed-end funds. See Appendix B. Subject to the limited exceptions below, no clearance will be granted for securities appearing on the Restricted List. Securities will be placed on the Restricted List in the following circumstances: (a) When orders to purchase or sell such security have been entered for any Putnam client, or the security is being actively considered for purchase for any Putnam client, unless the security is a nonconvertible investment grade rated (BBB by S&P or Baa by Moody's) fixed-income investment; (b) When such a security is a voting security of a corporation in the banking, savings and loan, communications, or gaming (i.e., casinos) industries, if holdings of Putnam clients in that corporation exceed 7% (for public utilities, the threshold is 4%); (c) When, in the judgment of the Code of Ethics Officer, other circumstances warrant restricting personal transactions of Putnam employees in a particular security; (d) The circumstances described in the Policy Statement Concerning Insider Trading Prohibitions, attached as Appendix A. Reminder: Securities for an employee's personal account include securities owned by certain family members of a Putnam employee. Thus, this Rule prohibits certain trades by family members of Putnam employees. See Definitions. Compliance with this rule does not exempt an employee from complying with any other applicable rules of the Code, such as those described in Section III. In particular, Access Persons and certain investment professionals must comply with the special rules set forth in Section II. IMPLEMENTATION A. Maintenance of Restricted List. The Restricted List shall be maintained by the Code of Ethics Administrator. B. Consulting Restricted List. An employee wishing to trade any security for his personal account shall first obtain clearance through Putnam's Intranet pre-clearance system. The system may be accessed online at ibenefitcenter.com. Select Employee Essentials under the @Putnam tab. Employees may pre-clear all securities between 11:30 a.m. and 4:00 p.m. EST, and may pre-clear purchases or sales of up to 1,000 shares of issuers having a market capitalization of more than $5 billion between 9:00 a.m. and 4:00 p.m. EST. Requests to make personal securities transactions may not be made using the system or presented to the Code of Ethics Administrator after 4:00 p.m. EST. Pre-clearance of fixed income securities and Putnam closed-end funds must be made by calling the Code of Ethics Administrator. The pre-clearance system will inform the employee whether the security may be traded and whether trading in the security is subject to the "Large Cap" limitation. The response of the pre-clearance system as to whether a security appears on the Restricted List and, if so, whether it is eligible for the exceptions set forth after this Rule shall be final, unless the employee appeals to the Code of Ethics Officer, using the procedure described in Section VII, regarding the request to trade a particular security. A clearance is only valid for trading on the day it is obtained. Trades in securities listed on Asian or European stock exchanges, however, may be executed within one business day after pre-clearance is obtained. If a security is not on the Restricted List, other classes of securities of the same issuer (e.g., preferred or convertible preferred stock) may be on the Restricted List. It is the employee's responsibility to identify with particularity the class of securities for which permission is being sought for a personal investment. If the pre-clearance system does not recognize a security, or if an employee is unable to use the system or has any questions with respect to the system or pre-clearance, the employee may consult the Code of Ethics Administrator. The Code of Ethics Administrator shall not have authority to answer any questions about a security other than whether trading is permitted. The response of the Code of Ethics Administrator as to whether a security appears on the Restricted List and, if so, whether it is eligible for any applicable exceptions set forth after this Rule shall be final, unless the employee appeals to the Code of Ethics Officer, using the procedure described in Section VII, regarding the request to trade a particular security. EXCEPTIONS A. Large Cap Exception. If a security appearing on the Restricted List is an equity security for which the issuer has a market capitalization (defined as outstanding shares multiplied by current price per share) of over $5 billion, then a Putnam employee may purchase or sell up to 1,000 shares of the security per day for his personal account. This exception does not apply if the security appears on the Restricted List in the circumstances described in subpart (b), (c), or (d) of Rule 1. B. Pre-clearing Transactions Effected by Share Subscription. The purchase of securities made by subscription rather than on an exchange are limited to issuers having a market capitalization of $5 billion or more and are subject to a 1,000 share limit. The following are procedures to comply with Rule 1 when effecting a purchase or sale of shares by subscription: (a) The Putnam employee must pre-clear the trade on the day he or she submits a subscription to the issuer, rather than on the actual day of the trade since the actual day of the trade typically will not be known to the employee who submits the subscription. At the time of pre-clearance, the employee will be told whether the purchase is permitted (in the case of a corporation having a market capitalization of $5 billion or more), or not permitted (in the case of a smaller capitalization issuer). (b) The subscription for any purchase or sale of shares must be reported on the employee's quarterly personal securities transaction report, noting the trade was accomplished by subscription. (c) Because no brokers are involved in the transaction, the confirmation requirement will be waived for these transactions, although the Putnam employee must provide the Legal and Compliance Department with any transaction summaries or statements sent by the issuer. C. Trades in Approved Discretionary Brokerage Accounts. A transaction does not need to be pre-cleared if it takes place in an account that the Code of Ethics Officer has approved in writing as exempt from the pre-clearance requirement. In the sole discretion of the Code of Ethics Officer accounts that will be considered for exclusion from the pre-clearance requirement are only those for which an employee's securities broker or investment advisor has complete discretion (a discretionary account) and the following conditions are met (i) the employee certifies annually in writing that the employee has no influence over the transactions in the discretionary account and is not aware of the transactions in the discretionary account prior to their execution, (ii) the compliance department of the employee's broker or investment advisor certifies annually in writing that the employee has no influence over the transactions in the discretionary account and is not aware of the transactions in the discretionary account prior to their execution; and (iii) each calendar quarter, the broker or investment advisor sends Putnam's Code of Ethics Administrator copies of each quarterly statement for the discretionary account. Employees wishing to seek such an exemption must send a written request to the Code of Ethics Administrator. COMMENTS * Pre-clearance. Subpart (a) of Rule 1 is designed to avoid the conflict of interest that might occur when an employee trades for his personal account a security that currently is being traded or is likely to be traded for a Putnam client. Such conflicts arise, for example, when the trades of an employee might have an impact on the price or availability of a particular security, or when the trades of the client might have an impact on price to the benefit of the employee. Thus, exceptions involve situations where the trade of a Putnam employee is unlikely to have an impact on the market. * Regulatory Limits. Owing to a variety of federal statutes and regulations in the banking, savings and loan, communications, and gaming industries, it is critical that accounts of Putnam clients not hold more than 10% of the voting securities (5% for public utilities) of any issuer in those industries. Because of the risk that the personal holdings of Putnam employees may be aggregated with Putnam holdings for these purposes, subpart (b) of this Rule limits personal trades in these areas. The 7% limit (4% for public utilities) will allow the regulatory limits to be observed. * Options. For the purposes of this Code, options are treated like the underlying security. See Definitions. Thus, an employee may not purchase, sell, or "write" option contracts for a security that is on the Restricted List. The automatic exercise of an options contract (the purchase or writing of which was previously pre-cleared) does not have to be pre-cleared. Note, however, that the sale of securities obtained through the exercise of options must be pre-cleared. * Involuntary transactions. Involuntary personal securities transactions are exempted from the Code. Special attention should be paid to this exemption. (See Section I.D.) * Tender offers. This Rule does not prohibit an employee from tendering securities from his personal account in response to an any and all tender offer, even if Putnam clients are also tendering securities. A Putnam employee is, however, prohibited from tendering securities from his personal account in response to a partial tender offer, if Putnam clients are also tendering securities. * MMC securities. The pre-clearance, reporting and the rules applicable to personal trading apply to securities of MMC, including MMC shares held in the Putnam 401(k) plans and in the MMC Stock Purchase Plan. SANCTION GUIDELINES A. Failure to Pre-clear a Personal Trade * First violation: One month trading ban with written warning that a future violation will result in a longer trading ban. * Second violation: Three month trading ban and written notice to the Senior Managing Director of the employee's division. * Third violation: Six month trading ban with possible longer or permanent trading ban based upon review by Code of Ethics Oversight Committee. B. Failure to Pre-clear Securities on the Restricted List * First violation: Disgorgement of any profit from the transaction, one month trading ban, and written warning that a future violation will result in a longer trading ban. * Second violation: Disgorgement of any profit from the transaction, three month trading ban, and written notice to the Senior Managing Director of the employee's division. * Third violation: Disgorgement of any profit from the transaction, and six month trading ban with possible longer or permanent trading ban based upon review by Code of Ethics Oversight Committee. NOTE These are the sanction guidelines for successive failures to pre-clear personal trades within a two-year period. The Code of Ethics Oversight Committee retains the right to increase or decrease the sanction for a particular violation in light of the circumstances. The Committee's belief that an employee has violated the Code of Ethics intentionally will result in more severe sanctions than outlined in the guidelines above. The sanctions described in paragraph B apply to Restricted List securities that are: (a) small-cap stocks (i.e., stocks not entitled to the Large Cap exception) and (b) large-cap stocks that exceed the daily 1,000 share maximum permitted under the Large Cap exception. Failure to pre-clear an otherwise permitted trade of up to 1,000 shares of a large-cap security is subject to the sanctions described above in paragraph A. B. Prohibited Transactions Rule 1 Putnam employees are prohibited from short selling any security, whether or not the security is held in a Putnam client portfolio. Employees are prohibited from hedging investments made in securities of MMC. EXCEPTIONS Short selling against broad market indexes (such as the Dow Jones Industrial Average, the NASDAQ index, and the S&P 100 and 500 indexes) and short selling against the box are permitted (except that short selling shares of MMC against the box is not permitted). Rule 2 No Putnam employee shall purchase any security for her personal account in an initial public offering. EXCEPTION Pre-existing Status Exception. A Putnam employee shall not be barred by this Rule or by Rule 1(a) of Section I.A. from purchasing securities for her personal account in connection with an initial public offering of securities by a bank or insurance company when the employee's status as a policyholder or depositor entitles her to purchase securities on terms more favorable than those available to the general public, in connection with the bank's conversion from mutual or cooperative form to stock form, or the insurance company's conversion from mutual to stock form, provided that the employee has had the status entitling her to purchase on favorable terms for at least two years. This exception is only available with respect to the value of bank deposits or insurance policies that an employee owns before the announcement of the initial public offering. This exception does not apply, however, if the security appears on the Restricted List in the circumstances set forth in subparts (b), (c), or (d) of Section I.A., Rule 1. IMPLEMENTATION A. General Implementation. An employee shall inquire, before any purchase of a security for her personal account, whether the security to be purchased is being offered pursuant to an initial public offering. If the security is offered through an initial public offering, the employee shall refrain from purchasing that security for her personal account unless the exception applies. B. Administration of Exception. If the employee believes the exception applies, she shall consult the Code of Ethics Administrator concerning whether the security appears on the Restricted List and if so, whether it is eligible for this exception. COMMENTS * The purpose of this Rule is twofold. First, it is designed to prevent a conflict of interest between Putnam employees and Putnam clients who might be in competition for the same securities in a limited public offering. Second, the Rule is designed to prevent Putnam employees from being subject to undue influence as a result of receiving favors in the form of special allocations of securities in a public offering from broker-dealers who seek to do business with Putnam. * Purchases of securities in the immediate after-market of an initial public offering are not prohibited, provided they do not constitute violations of other portions of the Code of Ethics. For example, participation in the immediate after-market as a result of a special allocation from an underwriting group would be prohibited by Section III, Rule 3 concerning gifts and other favors. * Public offerings subsequent to initial public offerings are not deemed to create the same potential for competition between Putnam employees and Putnam clients because of the pre-existence of a market for the securities. Rule 3 No Putnam employee shall purchase any security for his personal account in a limited private offering or private placement. Privately placed limited partnerships are specifically included in this Rule. COMMENTS * The purpose of this Rule is to prevent a Putnam employee from investing in securities for his own account pursuant to a limited private offering that could compete with or disadvantage Putnam clients, and to prevent Putnam employees from being subject to efforts to curry favor by those who seek to do business with Putnam. * Exemptions to the prohibition will generally not be granted where the proposed investment relates directly or indirectly to investments by a Putnam client, or where individuals involved in the offering (including the issuers, broker, underwriter, placement agent, promoter, fellow investors and affiliates of the foregoing) have any prior or existing business relationship with Putnam or a Putnam employee, or where the Putnam employee believes that such individuals may expect to have a future business relationship with Putnam or a Putnam employee. * An exemption may be granted, subject to reviewing all the facts and circumstances, for investments in: (a) Pooled investment funds, including hedge funds, subject to the condition that an employee investing in a pooled investment fund would have no involvement in the activities or decision-making process of the fund except for financial reports made in the ordinary course of the fund's business, and subject to the condition that the hedge fund does not invest significantly in registered investment companies. (b) Private placements where the investment cannot relate, or be expected to relate, directly or indirectly to Putnam or investments by a Putnam client. * Employees who apply for an exemption will be expected to disclose to the Code of Ethics Officer in writing all facts and relationships relating to the proposed investment. * Applications to invest in private placements will be reviewed by the Code of Ethics Oversight Committee. This review will take into account, among other factors, the considerations described in the preceding comments. Rule 4 No Putnam employee shall purchase or sell any security for her personal account or for any Putnam client account while in possession of material, nonpublic information concerning the security or the issuer. EXCEPTIONS None. Please read Appendix A, Policy Statement Concerning Insider Trading Prohibitions. Rule 5 No Putnam employee shall purchase from or sell to a Putnam client any securities or other property for his personal account, nor engage in any personal transaction to which a Putnam client is known to be a party, or which transaction may have a significant relationship to any action taken by a Putnam client. EXCEPTIONS None. IMPLEMENTATION It shall be the responsibility of every Putnam employee to make inquiry prior to any personal transaction sufficient to satisfy himself that the requirements of this Rule have been met. COMMENT This rule is required by federal law. It does not prohibit a Putnam employee from purchasing any shares of an open-end Putnam fund. The policy with respect to employee trading in closed-end Putnam funds is attached as Appendix B. Rule 6 Putnam employees may not hold shares of Putnam open-end U.S. mutual funds other than through accounts maintained at Putnam through Putnam Preferred Access (PPA). Employees placing purchase orders in shares of Putnam open-end funds must place such orders through Putnam and not through an outside broker or other intermediary. Employees redeeming or exchanging shares of Putnam open-end funds must place those orders through Putnam and not through an outside broker or other intermediary. Contact a PPA representative at 1-800-634-1590 for instructions on how to transfer these funds. NOTE: For purposes of this Rule, "employee" includes: * Members of the immediate family of a Putnam employee who share the same household as the employee or for whom the Putnam employee has investment discretion (family member); * Any trust in which a Putnam employee or family member is a trustee with investment discretion and in which such Putnam employee or any family member are collectively beneficiaries; * Any closely-held entity (such as a partnership, limited liability company, or corporation) in which a Putnam employee and his or her family members hold a controlling interest and with respect to which they have investment discretion; and * Any account (including any retirement, pension, deferred compensation, or similar account) in which a Putnam employee or family member has a substantial economic interest and over which said Putnam employee or family member exercises investment discretion. COMMENTS * These requirements also apply to self-directed IRA accounts holding Putnam fund shares. * For Putnam Profit Sharing Plan or other Putnam deferred compensation accounts, trades may continue to be placed through ibenefitcenter.com. * These Rules apply to variable insurance accounts, which invest in Putnam Variable Trust such as the Putnam/Hartford Capital Manager. Employees must designate Putnam Retail Management as the broker of record for all such accounts. EXCEPTION Retirement, pension, deferred compensation and similar accounts that cannot be legally transferred to Putnam are not subject to the requirement. For example, a spouse of a Putnam employee may have a 401(k) plan with her employer that invests in Putnam funds. Any employee who continues to hold shares in open-end Putnam funds outside of Putnam must notify the Code of Ethics Officer in writing of the account information, provide the reason why the account cannot be transferred to Putnam and arrange for a quarterly statement of transaction in such account to be sent to the Code of Ethics Administrator. Rule 7 (a) Employees defined in Rule 6 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. (b) Employees who are Access Persons may not, within a one-year 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 or of shares of any U.S. registered mutual fund to which Putnam acts as advisor or sub-advisor even if the transactions occur in different accounts. COMMENTS * This restriction applies across all accounts maintained by an employee as follows: An employee who buys shares of an open-end Putnam mutual fund may not sell any shares of the same mutual fund until 90 calendar days have passed. Example. If an employee buys shares of a Putnam fund on Day 1 for a retail account and then sells (by exchange) shares of the same fund for his or her Putnam Profit Sharing 401(k) Plan account on Day 85, the employee has violated the rule. Similarly, an employee who sells shares of an open-end Putnam mutual fund may not buy any shares of the same mutual fund until 90 calendar days have passed. Example. If an employee sells shares of a Putnam fund on day 1 for a retail account and then sells (by exchange out) shares of the same fund for his or her Putnam Profit Sharing 401(k) Plan account on day 85, the employee may not buy (or exchange in) shares of that fund in any account until day 176, which is more than 90 days after the most recent sale of shares of that fund. * The purpose of these blackout periods restriction is to prevent any market timing, or appearance of market timing activity. * This Rule applies to transactions by a Putnam employee in any type of account, including retail, IRA, variable annuity, college savings 529 plans, Profit Sharing 401(k) Plan, and any deferred compensation accounts. * The minimum sanction for an initial violation of the blackout period shall be disgorgement of any profit made on the transaction. Additional sanctions may apply, including termination of employment. EXCEPTIONS A. This restriction does not apply to Putnam's money market funds and Putnam Stable Value Fund. B. Profit Sharing 401(k) Plan Contributions and Payroll Deductions. The 90-day restriction is not triggered by initial allocation of regular employee or employer contributions or forfeitures to an employee's account under the terms of Putnam employee benefit plans or a Putnam payroll deduction direct investment program; later exchanges of these contributions will be subject to the 90-day blackout period. C. Systematic Programs. This restriction does not apply with respect to shares sold or acquired as a result of participation in a systematic program for contributions, withdrawals or exchanges, provided that an election to participate in any such program and the participation dates of the program may not be changed more often than quarterly after the program is elected by the employee. Access Persons may elect a quarterly or semiannual rebalancing program although it may only be changed on an annual basis; D. Employee Benefit Plan Withdrawals and Distributions. This restriction does not apply with respect to shares sold for withdrawals, loans or distributions under the terms of Putnam employee benefit plans; E. Dividends, Distributions, Mergers, and Share Class Conversions. This restriction does not apply with respect to the requisitioned shares as a result of reinvestment of dividends, distributions, mergers, conversions of share classes, or other similar actions. Subsequent transactions with respect to the shares will be covered. F. In special situations, Putnam's Code of Ethics Oversight Committee may grant exceptions to the blackout periods as a result of death, disability, or special circumstances (such as, personal hardship), all as determined from time to time by the Committee. Employees can request an exception by submitting a written request to the Code of Ethics Officer. Rule 8: Good Until Canceled Orders Good Until Canceled (GTC) Orders and Limit Orders are prohibited. Any order not executed on the day of pre-clearance must be resubmitted for pre-clearance before being executed on a subsequent day. "Good until canceled" or "limit" orders are prohibited because of the potential failure to pre-clear. Rule 9: Excessive Trading Putnam employees are strongly discouraged from engaging in excessive trading for their personal accounts. Beginning with the fourth quarter of 2004, employees will be prohibited from making more than 25 trades in individual securities in any given quarter. Excessive trading within Putnam open-end mutual funds is prohibited. COMMENTS * Although a Putnam employee's excessive trading may not itself constitute a conflict of interest with Putnam clients, Putnam believes that its clients' confidence in Putnam will be enhanced and the likelihood of Putnam achieving better investment results for its clients over the long term will be increased if Putnam employees rely on their investment-- as opposed to trading-- skills in transactions for their own account. Moreover, excessive trading by a Putnam employee for his or her own account diverts an employee's attention from the responsibility of servicing Putnam clients, and increases the possibilities for transactions that are in actual or apparent conflict with Putnam client transactions. Short-term trading is strongly discouraged while employees are encouraged to take a long-term view. * Employees should be aware that their trading activity is closely monitored. Ten trades or more per quarter will be discouraged and will warrant a review memo. Activity exceeding 25 trades per quarter will be prohibited by the Code of Ethics Oversight Committee. Sanctions will be imposed such as a trading ban or a more stringent sanction may be determined at the discretion of the Committee. Different rules apply with respect to trading in shares of Putnam open-end mutual funds. See Section I. B, Rule 7 above. C. Discouraged Transactions Rule 1 Putnam employees are strongly discouraged from engaging in writing (selling) naked options for their personal accounts. Naked option transactions are particularly dangerous, because a Putnam employee may be prevented by the restrictions in this Code of Ethics from covering the naked option at the appropriate time. All employees should keep in mind the limitations on their personal securities trading imposed by this Code when contemplating such an investment strategy. Engaging in naked options transactions on the basis of material, nonpublic information is prohibited. See Appendix A, Policy Statement Concerning Insider Trading Prohibitions. EXCEPTIONS None. D. Exempted Transactions Rule 1 Transactions that are involuntary on the part of a Putnam employee are exempt from the prohibitions set forth in Sections I.A., I.B., and I.C. EXCEPTIONS None. COMMENTS * This exemption is based on categories of conduct that the Securities and Exchange Commission does not consider "abusive." * Examples of involuntary personal securities transactions include: (a) Sales out of the brokerage account of a Putnam employee as a result of bona fide margin call, provided that withdrawal of collateral by the Putnam employee within the ten days previous to the margin call was not a contributing factor to the margin call; (b) Purchases arising out of an automatic dividend reinvestment program of an issuer of a publicly traded security. * Transactions by a trust in which the Putnam employee (or a member of his immediate family) holds a beneficial interest, but for which the employee has no direct or indirect influence or control with respect to the selection of investments, are involuntary transactions. In addition, these transactions do not fall within the definition of "personal securities transactions." See Definitions. * A good-faith belief on the part of the employee that a transaction was involuntary will not be a defense to a violation of the Code of Ethics. In the event of confusion as to whether a particular transaction is involuntary, the burden is on the employee to seek a prior written determination of the applicability of this exemption. The procedures for obtaining such a determination appear in Section VII, Part 4. Rule 2 Transactions that have been determined in writing by the Code of Ethics Officer before the transaction occurs to be no more than remotely harmful to Putnam clients because the transaction would be very unlikely to affect a highly institutional market, or because the transaction is clearly not related economically to the securities to be purchased, sold, or held by a Putnam client, are exempt from the prohibitions set forth in Sections I.A., I.B., and I.C. IMPLEMENTATION An employee may seek an ad-hoc exemption under this Rule by following the procedures in Section VII, Part 4. COMMENTS * This exemption is also based upon categories of conduct that the Securities and Exchange Commission does not consider "abusive." * The burden is on the employee to seek a prior written determination that the proposed transaction meets the standards for an ad hoc exemption set forth in this Rule. SECTION II Additional Special Rules for Personal Securities Transactions of Access Persons and Certain Investment Professionals Access Persons (including all investment professionals and other employees as defined on page vii) Rule 1: 60-Day Rule No Access Person shall purchase and then sell at a profit, or sell and then repurchase at a lower price, any security or related derivative security within 60 calendar days. EXCEPTIONS None, unless prior written approval from the Code of Ethics Officer is obtained. Exceptions may be granted on a case-by-case basis when no abuse is involved and the equities of the situation support an exemption. For example, although an Access Person may buy a stock as a long-term investment, that stock may have to be sold involuntarily due to unforeseen activity such as a merger. IMPLEMENTATION A. The 60-Day Rule applies to all Access Persons, as defined in the Definitions section of the Code. B. Calculation of whether there has been a profit is based upon the market prices of the securities. The calculation is not net of commissions or other sales charges. C. As an example, an Access Person would not be permitted to sell a security at $12 that he purchased within the prior 60 days for $10. Similarly, an Access Person would not be permitted to purchase a security at $10 that she had sold within the prior 60 days for $12. COMMENTS * The prohibition against short-term trading profits by Access Persons is designed to minimize the possibility that they will capitalize inappropriately on the market impact of trades involving a client portfolio about which they might possibly have information. * Although chief investment officers, portfolio managers, and analysts may sell securities at a profit within 60 days of purchase in order to comply with the requirements of the 7-Day Rule applicable to them (described below), the profit will have to be disgorged to charity under the terms of the 7-Day Rule. * Effective in the fourth quarter of 2004, the 60-Day Rule will become a Black Out Rule. An Access Person cannot trade a security within 60 days regardless of tax lot election. Certain Investment Professionals Rule 2: 7-Day Rule (a) Portfolio Managers: Before a portfolio manager (including a chief investment officer with respect to an account he manages) places an order to buy a security for any Putnam client portfolio that he manages, he shall sell any such security or related derivative security purchased in a transaction for his personal account within the preceding seven calendar days. (b) Comanagers: Before a portfolio manager places an order to buy a security for any Putnam client he manages, his comanager shall sell any such security or related derivative security purchased in a transaction for his personal account within the preceding seven calendar days. (c) Analysts: Before an analyst makes a buy recommendation for a security (including designation of a security for inclusion in the portfolio of the Putnam Research Fund), he shall sell any such security or related derivative security purchased in a transaction for his personal account within the preceding seven calendar days. COMMENTS * This Rule applies to portfolio managers (including chief investment officers (CIO) with respect to accounts they manage) in connection with any purchase (no matter how small) in any client account managed by that portfolio manager or CIO (even so-called "clone accounts"). In particular, it should be noted that the requirements of this Rule also apply with respect to purchases in client accounts, including "clone accounts," resulting from "cash flows." To comply with the requirements of this Rule, it is the responsibility of each portfolio manager or CIO to be aware of the placement of all orders for purchases of a security by client accounts that he or she manages for seven days following the purchase of that security for his or her personal account. * An investment professional who must sell securities to be in compliance with the 7-Day Rule must absorb any loss and disgorge to charity any profit resulting from the sale. The recipient charity will be chosen by the Code of Ethics Officer. * This Rule is designed to avoid even the appearance of a conflict of interest between an investment professional and a Putnam client. A greater burden is placed on these professionals given their positions in the organization. Transactions executed for the employee's personal account must be conducted in a manner consistent with the Code of Ethics and in such a manner as to avoid any actual or perceived conflict of interest or any abuse of the employee's position of trust and responsibility. * "Portfolio manager" is used in this Section as a functional label, and is intended to cover any employee with authority to authorize a trade on behalf of a Putnam client, whether or not such employee bears the title "portfolio manager." "Analyst" is also used in this Section as a functional label, and is intended to cover any employee who is not a portfolio manager but who may make recommendations regarding investments for Putnam clients. EXCEPTIONS None. Rule 3: Blackout Rule (a) Portfolio Managers: No portfolio manager (including a chief investment officer with respect to an account she manages) shall: (i) sell any security or related derivative security for her personal account until seven calendar days have elapsed since the most recent purchase of that security or related derivative security by any Putnam client portfolio she manages or comanages; or (ii) purchase any security or related derivative security for her personal account until seven calendar days have elapsed since the most recent sale of that security or related derivative security from any Putnam client portfolio that she manages or comanages. (b) Analysts: No analyst shall: (i) sell any security or related derivative security for his personal account until seven calendar days have elapsed since his most recent buy recommendation for that security or related derivative security (including designation of a security for inclusion in the portfolio of the Putnam Research Fund); or (ii) purchase any security or related derivative security for his personal account until seven calendar days have elapsed since his most recent sell recommendation for that security or related derivative security (including the removal of a security from the portfolio of the Putnam Research Fund). COMMENTS * This Rule applies to portfolio managers (including chief investment officers with respect to accounts they manage) in connection with any purchase (no matter how small) in any client account managed by that portfolio manager or CIO (even clone accounts). In particular, it should be noted that the requirements of this rule also apply with respect to transactions in client accounts, including clone accounts, resulting from cash flows. In order to comply with the requirements of this Rule, it is the responsibility of each portfolio manager and CIO to be aware of all transactions in a security by client accounts that he or she manages that took place within the seven days preceding a transaction in that security for his or her personal account. * This Rule is designed to prevent a Putnam portfolio manager or analyst from engaging in personal investment conduct that appears to be counter to the investment strategy she is pursuing or recommending on behalf of a Putnam client. * Trades by a Putnam portfolio manager for her personal account in the "same direction" as the Putnam client portfolio she manages, and trades by an analyst for his personal account in the same direction as his recommendation, do not present the same danger, so long as any same direction trades do not violate other provisions of the Code or the Policy Statements. EXCEPTIONS None. Rule 4: Contra Trading Rule (a) Portfolio Managers: No portfolio manager shall, without prior clearance, sell out of his personal account securities or related derivative securities held in any Putnam client portfolio that he manages or comanages (b) Chief Investment Officers: No chief investment officer shall, without prior clearance, sell out of his personal account securities or related derivative securities held in any Putnam client portfolio managed in his investment group. EXCEPTIONS None, unless prior clearance and written approval are given. IMPLEMENTATION A. Individuals Authorized to Give Approval. Prior to engaging in any such sale, a portfolio manager shall seek approval, in writing, of the proposed sale. In the case of a portfolio manager or director, prior written approval of the proposed sale shall be obtained from a chief investment officer to whom he reports or, in his absence, another chief investment officer. In the case of a chief investment officer, prior written approval of the proposed sale shall be obtained from another chief investment officer. In addition to the foregoing, prior written approval must also be obtained from the Code of Ethics Officer. B. Contents of Written Approval. In every instance, the written approval form attached as Appendix C (or such other form as the Code of Ethics Officer shall designate) shall be used. The written approval should be signed by the chief investment officer giving approval and dated the date such approval was given, and shall state, briefly, the reasons why the trade was allowed and why the investment conduct pursued by the portfolio manager, director, or chief investment officer was deemed inappropriate for the Putnam client account controlled by the individual seeking to engage in the transaction for his personal account. Such written approval shall be sent by the chief investment officer approving the transaction to the Code of Ethics Officer, for her approval, within 24 hours or as promptly as circumstances permit. Approvals obtained after a transaction has been completed or while it is in process will not satisfy the requirements of this Rule. COMMENT This Rule, like Rule 3 of this Section, is designed to prevent a Putnam portfolio manager from engaging in personal investment conduct that appears to be counter to the investment strategy that he is pursuing on behalf of a Putnam client. Rule 5 No portfolio manager shall cause, and no analyst shall recommend, a Putnam client to take action for the portfolio manager's or analyst's own personal benefit. EXCEPTIONS None. COMMENTS * A portfolio manager who trades in, or an analyst who recommends, particular securities for a Putnam client account in order to support the price of securities in his personal account, or who "front runs" a Putnam client order is in violation of this Rule. Portfolio managers and analysts should be aware that this Rule is not limited to personal transactions in securities (as that word is defined in Definitions). Thus, a portfolio manager or analyst who front runs a Putnam client purchase or sale of obligations of the U.S. government is in violation of this Rule, although U.S. government obligations are excluded from the definition of security. * This Rule is not limited to instances when a portfolio manager or analyst has malicious intent. It also prohibits conduct that creates an appearance of impropriety. Portfolio managers and analysts who have questions about whether proposed conduct creates an appearance of impropriety should seek a prior written determination from the Code of Ethics Officer, using the procedures described in Section VII, Part 3. SECTION III General Rules for All Employees Rule 1: Compliance with All Laws, Regulations and Policies All employees must comply with applicable laws and regulations as well as company policies. This includes tax, anti-trust, political contribution, and international boycott laws. In addition, no employee at Putnam may engage in fraudulent conduct of any kind. EXCEPTIONS None. COMMENTS * Putnam may report to the appropriate legal authorities conduct by Putnam employees that violates this Rule. * It should also be noted that the U.S. Foreign Corrupt Practices Act makes it a criminal offense to make a payment or offer of payment to any non-U.S. governmental official, political party, or candidate to induce that person to affect any governmental act or decision, or to assist Putnam's obtaining or retaining business. Rule 2: Conflicts of Interest No Putnam employee shall conduct herself in a manner, which is contrary to the interests of, or in competition with, Putnam or a Putnam client, or which creates an actual or apparent conflict of interest with a Putnam client. EXCEPTIONS None. COMMENTS * This Rule is designed to recognize the fundamental principle that Putnam employees owe their chief duty and loyalty to Putnam and Putnam clients. * It is expected that a Putnam employee who becomes aware of an investment opportunity that she believes is suitable for a Putnam client who she services will present it to the appropriate portfolio manager, prior to taking advantage of the opportunity herself. Rule 3: Gifts and Entertainment Policy No Putnam employee shall accept anything of material value from any broker-dealer, financial institution, corporation or other entity, any existing or prospective supplier of goods or services with a business relationship to Putnam, or any company or other entity whose securities are held in or are being considered as investments for the Putnam funds, or any other client account. Included are gifts, favors, preferential treatment, special arrangements, or access to special events. COMMENTS This Rule is intended to permit the acceptance of only proper types of customary and limited business amenities. A Putnam employee may not, under any circumstances, accept anything that could create the appearance of any kind of conflict of interest. For example, acceptance of any consideration is prohibited if it would create the appearance of a reward or inducement for conducting Putnam business either with the person providing the gift or his employer. IMPLEMENTATION A. Gifts. An employee may not accept small gifts with an aggregate value of more than $100 in any year from any one source. Any Putnam employee who is offered or receives an item exceeding $100 in value is prohibited by this Rule and must report the details to the Code of Ethics Officer. Any entertainment event provided to an employee where the host is not in attendance is treated as a gift and is subject to the $100 per year per source limit. B. Entertainment. Putnam's rules are designed to permit reasonable, ordinary business entertainment, but prohibit any events, which may be perceived as extravagant or involving lavish expenditures. 1. Occasional lunches, dinners, cocktail parties, or comparable gatherings conducted for business purposes are permitted. For example, occasional attendance at group functions sponsored by sell side firms is permitted where the function relates to investments or other business activity. Occasional attendance at these functions is not required to be counted against the limits described in paragraph 2(b) below. 2. Other entertainment events, such as, sporting events, theater, movies, concerts, or other forms of entertainment conducted for business purposes, are permitted only under the following conditions: (i) The host must be present for the event. (ii) The location of the event must be in the metropolitan area in which the office of the employee is located. (iii) Spouses or other family members of the employee may not attend the entertainment event or any meals before or after the entertainment event. (iv) The value of the entertainment event provided to the employee may not exceed $150, not including the value of any meals that may be provided to the employee before or after the event. Acceptance of entertainment events having a market value materially exceeding the face value of the entertainment including, for example, attendance at sporting event playoff games, is prohibited. This prohibition applies even if the face value of tickets to the events is $150 or less or when the Putnam employee offers to pay for the tickets. If there is any ambiguity about whether to accept an entertainment event in these circumstances, please consult the Code of Ethics Officer. (v) The employee may not accept entertainment events under this provision (B)(2) more than six times a year and not more than two times in any year from any single source. (vi) The Code of Ethics Officer may grant exceptions to these rules. For example, it may be appropriate for an employee attending a legitimate conference in a location away from the office to attend a business entertainment event in that location. All exceptions must be approved in advance by written request to the Code of Ethics Officer. 3. Any employee attending any entertainment event under (B)(1) or (B)(2) above must file a Report of Entertainment Form (attached as Appendix E) with the Code of Ethics Officer within 10 days following the date of the entertainment event. Failure to file the notice is a violation of the Code of Ethics. 4. Meals and entertainment, which are part of the regular program at an investment conference (i.e., open to all participants) are not subject to the limits of this section (B)(2) above. C. Among the items that are prohibited are: 1. Any entertainment event attendance, which would reflect badly on Putnam as a firm of the highest fiduciary and ethical standards. For example, events involving adult entertainment or gambling must be avoided. 2. Entertainment involving travel away from the metropolitan area in which the employee is located. Even in the event an exception is granted as contemplated by (B)(2)(vi) above, payment by a third party of the cost of transportation to a location outside the employee's metropolitan area, lodging while in another location, and any meals not specifically approved by the Code of Ethics officer, are prohibited; 3. Personal loans to a Putnam employee on terms more favorable than those generally available for comparable credit standing and collateral; and 4. Preferential brokerage or underwriting commissions or spreads or allocations of shares or interests in an investment for the personal account of a Putnam employee; and 5. Cash or cash equivalents D. As with any of the provisions of the Code of Ethics, a sincere belief by the employee that he was acting in accordance with the requirements of this Rule will not satisfy his obligations under the Rule. Therefore, an employee who is in doubt concerning the propriety of any gift or favor should seek a prior written determination from the Code of Ethics Officer, as provided in number 3 of Section VII. E. No Putnam employee may solicit any gift or entertainment from any person, even if the gift or entertainment, if unsolicited, would be permitted. F. The Rule does not prohibit employees on business travel from using local transportation and arrangements customarily supplied by brokers or similar entities. For example, it is customary for brokers in developing markets to make local transportation arrangements. These arrangements are permitted so long as the expense of lodging and air travel are paid by Putnam. Rule 4: Anti-bribery/Kickback Policy No Putnam employee shall pay, offer, or commit to pay any amount of consideration which might be or appear to be a bribe or kickback in connection with Putnam's business. EXCEPTIONS None. COMMENT Although the rule does not specifically address political contributions (which are described in Rule 5 below), Putnam employees should be aware that it is against corporate policy to use company assets to fund political contributions of any sort, even where such contributions may be legal. No Putnam employee should offer or agree to make any political contributions (including political dinners and similar fundraisers) on behalf of Putnam, and no employee will be reimbursed by Putnam for such contributions made by the employee personally. Rule 5: Political Contributions/Solicitations Policy No contributions may be made with corporate funds to any political party or campaign, whether directly or by reimbursement to an employee for the expense of such a contribution. No Putnam employee shall solicit any charitable, political, or other contributions using Putnam letterhead or making reference to Putnam in the solicitation. No Putnam employee shall personally solicit any such contribution while on Putnam business. EXCEPTIONS None. COMMENTS * Putnam has established a political action committee (PAC) that contributes to worthy candidates for political office. Any request received by a Putnam employee for a political contribution must be directed to Putnam's Legal and Compliance Department. * This rule prohibits solicitation on personal letterhead by Putnam employees except as approved by the Code of Ethics Officer. * Certain officers and employees of Putnam Retail Management and other employees involved in Putnam's College Advantage Section 529 Plan with Ohio Tuition Trust Authority are subject to special rules on political contributions. For questions on these requirements, please call the Code of Ethics Administrator. Rule 6: Confidentiality of Putnam Business Information No unauthorized disclosure may be made by any employee or former employee of any trade secrets or proprietary information of Putnam or of any confidential information. No information regarding any Putnam client portfolio, actual or proposed securities trading activities of any Putnam client, or Putnam research shall be disclosed outside the Putnam organization unless doing so has a valid business purpose and is in accord with any relevant procedures established by Putnam relating to such disclosures. COMMENT All information about Putnam and Putnam clients is strictly confidential. Putnam research information should not be disclosed without proper approval and never for personal gain. Rule 7: Roles At Other Entities No Putnam employee shall serve as officer, employee, director, trustee, or general partner of a corporation or entity other than Putnam, without prior approval of the Code of Ethics Officer. Requests for a role at a publicly-traded company will be closely reviewed and permission will be granted on an ad-hoc basis. EXCEPTION Charitable or Non-profit Exception. This Rule shall not prevent any Putnam employee from serving as officer, director, or trustee of a charitable or not-for-profit institution, provided that the employee abides by the Code of Ethics and the Policy Statements with respect to any investment activity for which she has any discretion or input as officer, director, or trustee. The pre-clearance and reporting requirements of the Code of Ethics do not apply to the trading activities of such charitable or not-for-profit institutions for which an employee serves as an officer, director, or trustee unless the employee is responsible for day-to-day portfolio management of the account. COMMENTS * This Rule is designed to ensure that Putnam cannot be deemed an affiliate of any issuer of securities by virtue of service by one of its officers or employees as director or trustee. * Positions with public companies are especially problematic and will normally not be approved. * Certain charitable or not-for-profit institutions have assets (such as endowment funds or employee benefit plans) which require prudent investment. To the extent that a Putnam employee (because of her position as officer, director, or trustee of an outside entity) is charged with responsibility to invest such assets prudently, she may not be able to discharge that duty while simultaneously abiding by the spirit of the Code of Ethics and the Policy Statements. Employees are cautioned that they should not accept service as an officer, director, or trustee of an outside charitable or not-for-profit entity where such investment responsibility is involved, without seriously considering their ability to discharge their fiduciary duties with respect to such investments. Rule 8: Role as Trustee or Fiduciary Outside of Putnam No Putnam employee shall serve as a trustee, executor, custodian, any other fiduciary, or as an investment advisor or counselor for any account outside Putnam. EXCEPTIONS A. Charitable or Religious Exception. This Rule shall not prevent any Putnam employee from serving as fiduciary with respect to a religious or charitable trust or foundation, so long as the employee abides by the spirit of the Code of Ethics and the Policy Statements with respect to any investment activity over which he has any discretion or input. The pre-clearance and reporting requirements of the Code of Ethics do not apply to the trading activities of such a religious or charitable trust or foundation unless the employee is responsible for day-to-day portfolio management of the account. B. Family Trust or Estate Exception. This Rule shall not prevent any Putnam employee from serving as fiduciary with respect to a family trust or estate, so long as the employee abides by all of the Rules of the Code of Ethics with respect to any investment activity over which he has any discretion. COMMENT The roles permissible under this Rule may carry with them the obligation to invest assets prudently. Once again, Putnam employees are cautioned that they may not be able to fulfill their duties in that respect while abiding by the Code of Ethics and the Policy Statements. Rule 9: Investment Clubs No Putnam employee may be a member of any investment club. EXCEPTIONS None. COMMENT This Rule guards against the danger that a Putnam employee may be in violation of the Code of Ethics and the Policy Statements by virtue of his personal securities transactions in or through an entity that is not bound by the restrictions imposed by this Code of Ethics and the Policy Statements. Please note that this restriction also applies to the spouse of a Putnam employee and any relatives of a Putnam employee living in the same household as the employee, as their transactions are covered by the Code of Ethics (see page vii). Rule 10: Business Negotiations For Putnam No Putnam employee may become involved in a personal capacity in consultations or negotiations for corporate financing, acquisitions, or other transactions for outside companies (whether or not held by any Putnam client), nor negotiate nor accept a fee in connection with these activities without obtaining the prior written permission of the president of Putnam Investments. EXCEPTIONS None. Rule 11: Accurate Records No employee may create, alter or destroy (or participate in the creation, alteration or destruction of) any record that is intended to mislead anyone or to conceal anything that is, or is reasonably believed to be, improper. In addition, all employees responsible for the preparation, filing, or distribution of any regulatory filings or public communications must ensure that such filings or communications are timely, complete, fair, accurate, and understandable. EXCEPTIONS None. COMMENTS * In many cases, this is not only a matter of company policy and ethical behavior but also required by law. Our books and records must accurately reflect the transactions represented and their true nature. For example, records must be accurate as to the recipient of all payments; expense items, including personal expense reports, must accurately reflect the true nature of the expense. No unrecorded fund or asset shall be established or maintained for any reason. * All financial books and records must be prepared and maintained in accordance with Generally Accepted Accounting Principles and Putnam's existing accounting controls, to the extent applicable. Rule 12: Interest in Entities Doing Business with Putnam No employee shall have any direct or indirect (including by a family member or close relative) personal financial interest (other than normal investments not material to the employee in the entity's publicly-traded securities) in any business, with which Putnam has dealings unless such interest is disclosed and approved by the Code of Ethics Officer. Rule 13: Affiliated Entities No employee shall, with respect to any affiliate of Putnam that provides investment advisory services and is listed below in Comment 4 to this Rule, as revised from time to time (each a Non-Putnam affiliate or NPA), (a) Directly or indirectly seek to influence the purchase, retention, or disposition of, or exercise of voting consent, approval or similar rights with respect to, any portfolio security in any account or fund advised by the NPA and not by Putnam, (b) Transmit any information regarding the purchase, retention or disposition of, or exercise of voting, consent, approval, or similar rights with respect to, any portfolio security held in a Putnam or NPA client account to any personnel of the NPA, (c) Transmit any trade secrets, proprietary information, or confidential information of Putnam to the NPA unless doing so has a valid business purpose and is in accord with any relevant procedures established by Putnam relating to such disclosures, (d) Use confidential information or trade secrets of the NPA for the benefit of the employee, Putnam, or any other NPA, or (e) Breach any duty of loyalty to the NPA derived from the employee's service as a director or officer of the NPA. COMMENTS * Sections (a) and (b) of the Rule are designed to help ensure that the portfolio holdings of Putnam clients and clients of the NPA need not be aggregated for purposes of determining beneficial ownership under Section 13(d) of the Securities Exchange Act or applicable regulatory or contractual investment restrictions that incorporate such definition of beneficial ownership. Persons who serve as directors or officers of both Putnam and an NPA should take care to avoid even inadvertent violations of Section (b). Section (a) does not prohibit a Putnam employee who serves as a director or officer of the NPA from seeking to influence the modification or termination of a particular investment product or strategy in a manner that is not directed at any specific securities. Sections (a) and (b) do not apply when a Putnam affiliate serves as an advisor or sub-advisor to the NPA or one of its products, in which case normal Putnam aggregation rules apply. * As a separate entity, any NPA may have trade secrets or confidential information that it would not choose to share with Putnam. This choice must be respected. * When Putnam employees serve as directors or officers of an NPA, they are subject to common law duties of loyalty to the NPA, despite their Putnam employment. In general, this means that when performing their duties as NPA directors or officers, they must act in the best interest of the NPA and its shareholders. Putnam's Legal and Compliance Department will assist any Putnam employee who is a director or officer of an NPA and has questions about the scope of his or her responsibilities to the NPA. * Entities that are currently non-Putnam affiliates within the scope of this Rule are: Cisalpina Gestioni, S.p.A., Nissay Asset Management Co., Ltd., Thomas H. Lee Partners, L.P., Ampega Asset Management, GMBH, and Sceptre Investment Counsel, Ltd. Rule 14: Computer System/Network Policies No employee shall use computer hardware, software, data, Internet, electronic mail, voice mail, electronic messaging (e-mail or cc: Mail), or telephone communications systems in a manner that is inconsistent with their use as set forth in policy statements governing their use that are adopted from time to time by Putnam. No employee shall introduce a computer virus or computer code that may result in damage to Putnam's information or computer systems. COMMENT Putnam's policy statements relating to these matters are contained in the Computer System and Network Responsibilities section of the Employment Issues category within the Employee Handbook. The online Employee Handbook is located online at www.ibenefitcenter.com under Policies and Procedures under the @Putnam tab. EXCEPTIONS None. Rule 15: AIMR Code of Ethics All employees must follow and abide by the spirit of the Code of Ethics and the Standards of Professional Conduct of the Association of Investment Management and Research (AIMR). The texts of the AIMR Code of Ethics and Standards of Professional Conduct are set forth in Exhibit D. EXCEPTIONS None. Rule 16: Privacy Policy Except as provided below, no employee may disclose to any outside organization or person any nonpublic personal information about any individual who is a current or former shareholder of any Putnam retail or institutional fund, or current or former client of a Putnam company. All employees shall follow the security procedures as established from time to time by a Putnam company to protect the confidentiality of all shareholder and client account information. Except as Putnam's Legal and Compliance Department may expressly authorize, no employee shall collect any nonpublic personal information about a prospective or current shareholder of a Putnam Fund or prospective or current client of a Putnam company, other than through an account application (or corresponding information provided by the shareholder's financial representative) or in connection with executing shareholder or client transactions, nor shall any information be collected other than the following: name, address, telephone number, Social Security number, and investment, broker, and transaction information. EXCEPTIONS A. Putnam Employees. Nonpublic personal information may be disclosed to Putnam employees in connection with processing transactions or maintaining accounts for shareholders of a Putnam fund and clients of a Putnam company, to the extent that access to such information is necessary to the performance of that employee's job functions. B. Shareholder Consent Exception. Nonpublic personal information about a shareholder's or client's account may be provided to a non-Putnam organization at the specific request of the shareholder or client or with the shareholder's or client's prior written consent. C. Broker or Advisor Exception. Nonpublic personal information about a shareholder's or client's account may be provided to the shareholder's or client's broker of record. D. Third-Party Service Provider Exception. Nonpublic personal information may be disclosed to a service provider that is not affiliated with a Putnam fund or Putnam company only when such disclosure is necessary for the service provider to perform the specific services contracted for, and only (a) if the service provider executes Putnam's standard confidentiality agreement, or (b) pursuant to an agreement containing a confidentiality provision that has been approved by the Legal and Compliance Department. Examples of such service providers include proxy solicitors and proxy vote tabulators, mail services, and providers of other administrative services, and Information Services Division consultants who have access to nonpublic personal information. COMMENTS * Nonpublic personal information is any information that personally identifies a shareholder of a Putnam fund or client of a Putnam company and is not derived from publicly available sources. This privacy policy applies to shareholders or clients who are individuals, not institutions. However, as a general matter, all information that we receive about a shareholder of a Putnam fund or client of a Putnam company shall be treated as confidential. No employee may sell or otherwise provide shareholder or client lists or any other information relating to a shareholder or client to any marketing organization. * All Putnam employees with access to shareholder or client account information must be trained in and follow Putnam's security procedures designed to safeguard that information from unauthorized use. For example, a telephone representative must be trained in and follow Putnam's security procedures to verify the identity of a caller requesting account information. * Any questions regarding this privacy policy should be directed to Putnam's Legal and Compliance Department. A violation of this policy will be subject to the sanctions imposed for violations of Putnam's Code of Ethics. * Employees must report any violation of this policy or any possible breach of the confidentiality of client information (whether intentional or accidental) to the managing director in charge of the employee's business unit. Managing directors who are notified of such a violation or possible breach must immediately report it in writing to Putnam's chief compliance officer and, in the event of a breach of computerized data, Putnam's chief technology officer. Rule 17: Anti-money Laundering Policy No employee may engage in any money laundering activity or facilitate any money-laundering activity through the use of any Putnam account or client account. Any situations giving rise to a suspicion that attempted money laundering may be occurring in any account must be reported immediately to the managing director in charge of the employee's business unit. Managing directors who are notified of such a suspicion of money laundering activity must immediately report it in writing to Putnam's chief compliance officer and chief financial officer. Rule 18: Record Retention All employees must comply with the record retention requirements applicable to the business unit. Employees should check with their managers or the chief administrative officer of their division to determine what record retention requirements apply to their business unit. SECTION IV Special Rules for Officers and Employees of Putnam Investments Limited Rule 1 In situations subject to Section I.A., Rule 1 (Restricted List Personal Securities Transactions, the Putnam Investments Limited (PIL) employee must obtain clearance not only as provided in that rule, but also from PIL's Compliance Officer or her designee, who must approve the transaction before any trade is placed and record the approval. EXCEPTIONS None. IMPLEMENTATION Putnam's Code of Ethics Administrator in Boston (the Boston Administrator) has also been designated the Assistant Compliance Officer of PIL and has been delegated the right to approve or disapprove personal securities transactions in accordance with the requirements of Section I.A. Therefore, approval from the Code of Ethics Administrator for PIL employees to make personal securities investments constitutes approval under the Code of Ethics and also for purposes of compliance with the Financial Services Authority, the U.K. self-regulatory organization that regulates PIL. The position of London Code of Ethics Administrator (the London Administrator) has also been created (Jane Barlow is the current London Administrator). All requests for clearances must be made by e-mail to the Boston Administrator copying the London Administrator. The e-mail must include the number of shares to be bought or sold and the name of the broker(s) involved. Where time is of the essence clearances may be made by telephone to the Boston Administrator but they must be followed up by e-mail. Both the Boston and London Administrators will maintain copies of all clearances for inspection by senior management and regulators. Rule 2 No PIL employee may trade with any broker or dealer unless that broker or dealer has sent a letter to the London Administrator agreeing to deliver copies of trade confirmations and statements to PIL. No PIL employee may enter into any margin or any other special dealing arrangement with any broker-dealer without the prior written consent of the PIL compliance officer. EXCEPTIONS None. IMPLEMENTATION PIL employees will be notified separately of this requirement once a year by the PIL compliance officer, and are required to provide an annual certification of compliance with the Rule. All PIL employees must inform the London Administrator of the names of all brokers and dealers with whom they trade prior to trading. The London Administrator will send a letter to the broker(s) in question requesting them to agree to deliver copies of confirms to PIL. The London Administrator will forward copies of the confirms to the Boston Administrator. PIL employees may trade with a broker only when the London Administrator has received the signed agreement from that broker. Rule 3 For purposes of the Code of Ethics, including Putnam's Policy Statement on Insider Trading Prohibitions, PIL employees must also comply with Part V of the Criminal Justice Act 1993 on insider dealing. EXCEPTIONS None. IMPLEMENTATION To ensure compliance with UK insider dealing legislation, PIL employees must observe the relevant procedures set forth in PIL's Compliance Manual, a copy of which is sent to each PIL employee, and sign an annual certification as to compliance. SECTION V Reporting Requirements for All Employees Reporting of Personal Securities Transactions Rule 1 Each Putnam employee shall ensure that copies of all confirmations for securities transactions for his personal brokerage accounts, and, beginning in the fourth quarter 2004, brokerage account statements are sent to the Putnam Compliance Department's (Code of Ethics Administrator). (For the purpose of this Rule, securities shall also include ETFs, futures, and other derivatives on broad-based market indexes excluded from the pre-clearance requirement.) Statements and confirmations are required for Putnam funds not held at PPA or in a Putnam retirement plan, as well as for U.S. mutual funds sub-advised by Putnam. EXCEPTION None. IMPLEMENTATION A. Putnam employees must instruct their broker-dealers to send statements and confirmations to Putnam and must follow up with the broker-dealer on a reasonable basis to ensure that the instructions are being followed. For brokerage accounts, Putnam employees should contact the Code of Ethics Administrator to obtain a letter from Putnam authorizing the setting up of a personal brokerage account. B. Statements and confirmations should be submitted to the Code of Ethics Administrator. C. Specific procedures apply to employees of PIL. Employees of PIL should contact the London Code of Ethics Administrator. D. Failure of a broker-dealer to comply with the instructions of a Putnam employee to send confirmations shall be a violation by the Putnam employee of this Rule. Similarly, failure by an employee to report the existence of a personal account (and, if the account is opened after joining Putnam, failure to obtain proper authorization to establish the account) shall be a violation of this Rule. E. Statements and confirmations must also be sent for members of an employees' immediate family, including statements received with respect to a family member's 401(k) plan at another employer. COMMENTS * Transactions for personal accounts is defined broadly to include more than transaction in accounts under an employee's own name. See Definitions. * Statements and confirmations are required for all personal securities transactions, whether or not exempted or excepted by this Code. * To the extent that a Putnam employee has investment authority over securities transactions of a family trust or estate, confirmations of those transactions must also be made, unless the employee has received a prior written exception from the Code of Ethics Officer. Rule 2 Every Access Person shall file a quarterly report, within ten calendar days of the end of each quarter, recording all purchases and sales of any securities for personal accounts as defined in the Definitions. (For the purpose of this Rule, "securities" shall include exchange traded funds (ETF), futures, and any option on a security or securities index, including broad-based market indexes excluded from the pre-clearance requirement and also includes transactions in Putnam open-end funds if the account for the Putnam funds is not held at PPA or in a Putnam retirement plan and for transactions in U.S. mutual funds sub-advised by Putnam.) EXCEPTIONS None. IMPLEMENTATION All employees required to file such a report will receive by e-mail a blank form at the end of the quarter from the Code of Ethics Administrator. The form will specify the information to be reported. The form shall also contain a representation that employees have complied fully with all provisions of the Code of Ethics. COMMENTS * The date for each transaction required to be disclosed in the quarterly report is the trade date for the transaction, not the settlement date. * If the requirement to file a quarterly report applies to you and you fail to report within the required 10-day period, salary increases and bonuses will be reduced in accordance with guidelines stated in the form. It is the responsibility of the employee to request an early report if he has knowledge of a planned absence, i.e., vacation or business trip. Reporting of Personal Securities Holdings Rule 3 Access Persons must disclose all personal securities holdings to the Code of Ethics Officer upon commencement of employment within ten calendar days of hire and thereafter on an annual basis. This requirement is mandated by SEC regulations and is designed to facilitate the monitoring of personal securities transactions. Putnam's Code of Ethics Administrator will provide Access Persons with the form for making these reports and the specific information that must be disclosed at the time that the disclosure is required. Reporting Irregular Activity Rule 4 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 the managing director in charge of that employee's business unit. Managing directors who are notified of any such activity must immediately report it in writing to Putnam's financial officer and Putnam's Chief Compliance Officer. An employee who does not feel comfortable reporting this activity to the relevant managing director may instead contact the chief compliance officer, the Putnam or MMC Ethics hotlines or the ombudsman. Rule 5 Putnam has established a formal Office of the Ombudsman as an additional mechanism for an employee to report an impropriety or conduct that is not in line with the company's value system. The ombudsman is a person who is authorized to receive complaints or questions confidentially about alleged acts, omissions, improprieties, and broader systemic problems within the organization. Communication with the Ombudsman is confidential. SECTION VI Education Requirements Every Putnam employee has an obligation to fully understand the requirements of the Code of Ethics. The Rules set forth below are designed to enhance this understanding. Rule 1 A copy of the Code of Ethics will be distributed to every Putnam employee periodically. All Access Persons will be required to certify annually that they have read, understood, and will comply with the provisions of the Code of Ethics, including the Code's Policy Statement Concerning Insider Trading Prohibitions. Rule 2 Every employee will annually be required to complete training on Putnam's Code of Ethics. SECTION VII Compliance and Appeal Procedures A. Assembly of Restricted List The Code of Ethics Administrator will coordinate the assembly and maintenance of the Restricted List. The list will be assembled each day by 11:30 a.m. No employee may engage in a personal securities transaction without prior clearance on any day, even if the employee believes that the trade will be subject to an exception. Note that pre-clearance may be obtained after 9:00 a.m. for purchases or sales of up to 1,000 shares of issuers having a market capitalization in excess of $5 billion. B. Consultation of Restricted List It is the responsibility of each employee to pre-clear through the pre-clearance system or consult with the Code of Ethics Administrator prior to engaging in a personal securities transaction, to determine if the security he proposes to trade is on the Restricted List and, if so, whether it is subject to the large-cap exception. The pre-clearance system and the Code of Ethics Administrator will be able to tell an employee whether a security is on the Restricted List. No other information about the Restricted List is available through the pre-clearance system. The Code of Ethics Administrator shall not be authorized to answer any questions about the Restricted List, or to render an opinion about the propriety of a particular personal securities transaction. Any such questions shall be directed to the Code of Ethics Officer. C. Request for Determination An employee who has a question concerning the applicability of the Code of Ethics to a particular situation shall request a determination from the Code of Ethics Officer before engaging in the conduct or personal securities transaction about which he has a question. If the question pertains to a personal securities transaction, the request shall state for whose account the transaction is proposed, the relationship of that account to the employee, the security proposed to be traded, the proposed price and quantity, the entity with whom the transaction will take place (if known), and any other information or circumstances of the trade that could have a bearing on the Code of Ethics Officer's determination. If the question pertains to other conduct, the request for determination shall give sufficient information about the proposed conduct to assist the Code of Ethics Officer in ascertaining the applicability of the Code. In every instance, the Code of Ethics Officer may request additional information, and may decline to render a determination if the information provided is insufficient. The Code of Ethics Officer shall make every effort to render a determination promptly. No perceived ambiguity in the Code of Ethics shall excuse any violation. Any person who believes the Code to be ambiguous in a particular situation shall request a determination from the Code of Ethics Officer. D. Request for Ad Hoc Exemption Any employee who wishes to obtain an ad hoc exemption under Section I.D., Rule 2, shall request from the Code of Ethics Officer an exemption in writing in advance of the conduct or transaction sought to be exempted. In the case of a personal securities transaction, the request for an ad hoc exemption shall give the same information about the transaction required in a request for determination under number 3 of this section, and shall state why the proposed personal securities transaction would be unlikely to affect a highly institutional market, or is unrelated economically to securities to be purchased, sold, or held by any Putnam client. In the case of other conduct, the request shall give information sufficient for the Code of Ethics Officer to ascertain whether the conduct raises questions of propriety or conflict of interest (real or apparent). The Code of Ethics Officer shall make reasonable efforts to promptly render a written determination concerning the request for an ad hoc exemption. E. Appeal to Code of Ethics Officer with Respect to Restricted List If an employee ascertains that a security that he wishes to trade for his personal account appears on the Restricted List, and thus the transaction is prohibited, he may appeal the prohibition to the Code of Ethics Officer by submitting a written memorandum containing the same information as would be required in a request for a determination. The Code of Ethics Officer shall make every effort to respond to the appeal promptly. F. Information Concerning Identity of Compliance Personnel The names of Code of Ethics personnel are available by contacting the Legal and Compliance Department and will be published on Putnam's Web site. APPENDIX A: Policy Statement Concerning Insider Trading Prohibitions PREAMBLE Putnam has always forbidden trading on material nonpublic information (inside information) by its employees. Tough federal laws make it important for Putnam to state that prohibition in the strongest possible terms, and to establish, maintain, and enforce written policies and procedures to prevent the misuse of material nonpublic information. Unlawful trading while in possession of inside information can be a crime. Federal law provides that an individual convicted of trading on inside information may go to jail for a period of time. There is also significant monetary liability for an inside trader; the Securities and Exchange Commission can seek a court order requiring a violator to pay back profits, as well as penalties substantially greater than those profits. In addition private plaintiffs can seek recovery for harm suffered by them. The inside trader is not the only one subject to liability. In certain cases, controlling persons of inside traders (including supervisors of inside traders or Putnam itself ) can be liable for large penalties. Section 1 of this Policy Statement contains rules concerning inside information. Section 2 contains a discussion of what constitutes unlawful insider trading. Neither material nonpublic information nor unlawful insider trading is easy to define. Section 2 of this Policy Statement gives a general overview of the law in this area. However, the legal issues are complex and must be resolved by the Code of Ethics Officer. If an employee has any doubt as to whether she has received material nonpublic information, she must consult with the Code of Ethics Officer prior to using that information in connection with the purchase or sale of a security for his own account or the account of any Putnam client, or communicating the information to others. A simple rule of thumb is if you think the information is not available to the public at large, don't disclose it to others and don't trade securities to which the inside information relates. An employee aware of or in possession of inside information must report it immediately to the Code of Ethics Officer. If an employee has failed to consult the Code of Ethics Officer, Putnam will not excuse employee misuse of inside information on the ground that the employee claims to have been confused about this Policy Statement or the nature of the information in his possession. If Putnam determines, in its sole discretion, that an employee has failed to abide by this Policy Statement, or has engaged in conduct that raises a significant question concerning insider trading, he will be subject to disciplinary action, including termination of employment. There are no exceptions to this policy statement and no one is exempt. APPENDIX A DEFINITIONS: Insider Trading Gender references in Appendix A alternate. Code of Ethics Administrator The individual designated by the Code of Ethics Officer to assume responsibility for day-to-day, non-discretionary administration of this Policy Statement. Code of Ethics Officer The Putnam officer who has been assigned the responsibility of enforcing and interpreting this Policy Statement. The Code of Ethics Officer shall be the chief compliance officer or such other person as is designated by the chief executive officer of Putnam Investments. If he or she is unavailable, the Deputy Code of Ethics Officer (to be appointed by the Code of Ethics Officer) shall act in his or her stead. Immediate family Spouse, minor children or other relatives living in the same household as the Putnam employee. Purchase or sale of a security Any acquisition or transfer of any interest in the security for direct or indirect consideration, including the writing of an option. Putnam Any or all of Putnam, LLC, and its subsidiaries, any one of which shall be a Putnam company. Putnam client Any of the Putnam Funds, or any advisory or trust client of Putnam. Putnam employee (or employee) Any employee of Putnam. Security Anything defined as a security under federal law. The term includes any type of equity or debt security, any interest in a business trust or partnership, and any rights relating to a security, such as put and call options, warrants, convertible securities, and securities indices. (Note: The definition of security in this Policy Statement varies significantly from that in the Code of Ethics. For example, the definition in this Policy Statement specifically includes all securities of any type.) Transaction for a personal account (or personal securities transaction) Securities transactions: (a) for the personal account of any employee; (b) for the account of a member of the immediate family of any employee; (c) for the account of a partnership in which a Putnam employee or immediate family member is a partner with investment discretion; (d) for the account of a trust in which a Putnam employee or immediate family member is a trustee with investment discretion; (e) for the account of a closely-held corporation in which a Putnam employee or immediate family member holds shares and for which he has investment discretion; and (f ) for any account other than a Putnam client account which receives investment advice of any sort from the employee or immediate family member, or as to which the employee or immediate family member has investment discretion. Officers and employees of PIL must also consult the relevant procedures on compliance with U.K. insider dealing legislation set forth in PIL's Compliance Manual (See Rule 3 of Section IV of the Code of Ethics). APPENDIX A SECTION I: Rules Concerning Inside Information Rule 1 No Putnam employee shall purchase or sell any security listed on the Inside Information List (the Red List) either for his personal account or for a Putnam client. IMPLEMENTATION When an employee contacts the Code of Ethics Administrator seeking clearance for a personal securities transaction, the Code of Ethics Administrator's response as to whether a security appears on the Restricted List will include securities on the Red List. COMMENT This Rule is designed to prohibit any employee from trading a security while Putnam may have inside information concerning that security or the issuer. Every trade, whether for a personal account or for a Putnam client, is subject to this Rule. Rule 2 No Putnam employee shall purchase or sell any security, either for a personal account or for the account of a Putnam client, while in possession of material, nonpublic information concerning that security or the issuer, without the prior written approval of the Code of Ethics Officer. IMPLEMENTATION In order to obtain prior written approval of the Code of Ethics Officer, a Putnam employee should follow the reporting steps prescribed in Rule 3. COMMENTS * Rule 1 concerns the conduct of an employee when Putnam possesses material nonpublic information. Rule 2 concerns the conduct of an employee who herself possesses material, nonpublic information about a security that is not yet on the Red List. * If an employee has any question as to whether information she possesses is material and/or nonpublic information, she must contact the Code of Ethics Officer in accordance with Rule 3 prior to purchasing or selling any security related to the information or communicating the information to others. The Code of Ethics Officer shall have the sole authority to determine what constitutes material, nonpublic information for the purposes of this Policy Statement. Rule 3 Any Putnam employee who believes he may have received material, nonpublic information concerning a security or the issuer shall immediately report the information to the Code of Ethics Officer, the Deputy Code of Ethics Officer or, in their absence, the general counsel and to no one else. After reporting the information, the Putnam employee shall comply strictly with Rule 2 by not trading in the security without the prior written approval of the Code of Ethics Officer and shall: (a) take precautions to ensure the continued confidentiality of the information; and (b) refrain from communicating the information in question to any person. IMPLEMENTATION A. In order to make any use of potential material, nonpublic information, including purchasing or selling a security or communicating the information to others, an employee must communicate that information to the Code of Ethics Officer in a way designed to prevent the spread of such information. Once the employee has reported potential material, nonpublic information to the Code of Ethics Officer, the Code of Ethics Officer will evaluate whether information constitutes material, nonpublic information, and whether a duty exists that makes use of such information improper. If the Code of Ethics Officer determines either (a) that the information is not material or is public, or (b) that use of the information is proper, he will issue a written approval to the employee specifically authorizing trading while in possession of the information, if the employee so requests. If the Code of Ethics Officer determines (a) that the information may be nonpublic and material, and (b) that use of such information may be improper, he will place the security that is the subject of such information on the Red List. B. An employee who reports potential inside information to the Code of Ethics Officer should expect that the Code of Ethics Officer will need significant information (and time to gather such information) to make the evaluation described in the foregoing paragraph, including information about (a) the manner in which the employee acquired the information, and (b) the identity of individuals to whom the employee has revealed the information, or who have otherwise learned the information. In appropriate situations, the Code of Ethics Officer shall place the affected security or securities on the Red List pending the completion of his evaluation. C. If an employee possesses documents, disks, or other materials containing the potential inside information, an employee must take precautions to ensure the confidentiality of the information in question. Those precautions include (a) putting documents containing such information out of the view of a casual observer, and (b) securing files containing such documents or ensuring that computer files reflecting such information are secure from viewing by others. D. Members of the executive board of directors and members of chief financial officer's staff may not trade securities of MMC in the period from the end of each calendar quarter to the date of announcement of MMC's earnings for such quarter. COMMENTS While all employees must pre-clear trades of MMC securities and make sure they are not in possession of material inside information about MMC when trading, certain employees who may receive information about Putnam's earnings are subject to the rules above concerning trading black out periods. APPENDIX A SECTION II: Overview of Insider Trading Introduction This section of the Policy Statement provides guidelines for employees as to what may constitute inside information. It is possible that in the course of her employment, an employee may receive inside information. No employee should misuse that information, either by trading for her own account or by communicating the information to others. What constitutes unlawful insider trading? The basic definition of unlawful insider trading is trading on material, nonpublic information (also called inside information) by an individual who has a duty not to take advantage of the information. The following sections help explain the definition. What is material information? Trading on inside information is not a basis for liability unless the information is material. Information is material if a reasonable person would attach importance to the information in determining his course of action with respect to a security. Information that is reasonably likely to affect the price of a company's securities is material, but effect on price is not the sole criterion for determining materiality. Information that employees should consider material includes but is not limited to: dividend changes, earnings estimates, changes in previously released earnings estimates, reorganization, recapitalization, asset sales, plans to commence a tender offer, merger or acquisition proposals or agreements, major litigation, liquidity problems, significant contracts, and extraordinary management developments. Material information does not have to relate to a company's business. For example, a court considered as material certain information about the contents of a forthcoming newspaper column that was expected to affect the market price of a security. In that case, a reporter for The Wall Street Journal was found criminally liable for disclosing to others the dates that reports on various companies would appear in the Journal's "Heard on the Street" column and whether those reports would be favorable or not. What is nonpublic information? Information is nonpublic until it has been effectively communicated to, and sufficient opportunity has existed for it to be absorbed by, the marketplace. One must be able to point to some fact to show that the information is generally public. For example, information found in a report filed with the Securities and Exchange Commission, or appearing in Dow Jones, Reuters Economic Services, The Wall Street Journal, or other publications of general circulation would be considered public. Who has a duty not to "take advantage" of inside information? Unlawful insider trading occurs only if there is a duty not to take advantage of material nonpublic information. When there is no such duty, it is permissible to trade while in possession of such information. Questions as to whether a duty exists are complex, fact-specific, and must be answered by a lawyer. Insiders and Temporary Insiders Corporate insiders have a duty not to take advantage of inside information. The concept of insider is broad. It includes officers, directors, and employees of a corporation. In addition, a person can be a temporary insider if she enters into a special confidential relationship with a corporation and as a result is given access to information concerning the corporation's affairs. A temporary insider can include, among others, accounting firms, consulting firms, law firms, banks, and the employees of such organizations. Putnam would generally be a temporary insider of a corporation it advises or for which it performs other services, because typically Putnam clients expect Putnam to keep any information disclosed to it confidential. EXAMPLE An investment advisor to the pension fund of a large publicly-traded corporation, Acme, Inc., learns from an Acme employee that Acme will not be making the minimum required annual contribution to the pension fund because of a serious downturn in Acme's financial situation. The information conveyed is material and nonpublic. COMMENT Neither the investment advisor or its employees, nor its clients can trade on the basis of that information, because the investment advisor and its employees could be considered "temporary insiders" of Acme. Misappropriators Certain people who are not insiders (or temporary insiders) also have a duty not to deceptively take advantage of inside information. Included in this category is an individual who misappropriates (or takes for his own use) material, nonpublic information in violation of a duty owed either to the corporation that is the subject of inside information or some other entity. Such a misappropriator can be held liable if he trades while in possession of that material, nonpublic information. EXAMPLE The Chief Investment Officer of Acme, Inc., is aware of Acme's plans to engage in a hostile takeover of Profit, Inc. The proposed hostile takeover is material and nonpublic. COMMENT The Chief Investment Officer of Acme cannot trade in Profit, Inc.'s stock for his own account. Even though he owes no duty to Profit, Inc., or its shareholders, he owes a duty to Acme not to take advantage of the information about the proposed hostile takeover by using it for his personal benefit. Tippers and Tippees A person (the tippee) who receives material, nonpublic information from an insider or misappropriator (the tipper) has a duty not to trade while in possession of that information if he knew or should have known that the information was provided by the tipper for an improper purpose and in breach of a duty owed by the tipper. In this context, it is an improper purpose for a person to provide such information for personal benefit, such as money, affection, or friendship. EXAMPLE The Chief Executive Officer of Acme, Inc., tells his daughter that negotiations concerning a previously announced acquisition of Acme have been terminated. This news is material and, at the time the father tells his daughter, nonpublic. The daughter sells her shares of Acme. COMMENT The father is a tipper because he has a duty to Acme and its shareholders not to take advantage of the information concerning the breakdown of negotiations, and he has conveyed the information for an improper purpose (here, out of love and affection for his daughter). The daughter is a tippee and is liable for trading on inside information because she knew or should have known that her father was conveying the information to her for his personal benefit, and that her father had a duty not to take advantage of Acme information. A person can be a tippee even if he did not learn the information directly from the tipper, but learned it from a previous tippee. EXAMPLE An employee of a law firm which works on mergers and acquisitions learns at work about impending acquisitions. She tells her friend and her friend's stockbroker about the upcoming acquisitions on a regular basis. The stockbroker tells the brother of a client on a regular basis, who in turn tells two friends, A and B. A and B buy shares of the companies being acquired before public announcement of the acquisition, and regularly profit from such purchases. A and B do not know the employee of the law firm. They do not, however, ask about the source of the information. COMMENT A and B, although they have never heard of the tipper, are tippees because they did not ask about the source of the information, even though they were experienced investors, and were aware that the "tips" they received from this particular source were always right. Who can be liable for insider trading? The categories of individuals discussed above (insiders, temporary insiders, misappropriators, or tippees) can be liable if they trade while in possession of material nonpublic information. In addition, individuals other than those who actually trade on inside information can be liable for trades of others. A tipper can be liable if (a) he provided the information in exchange for a personal benefit in breach of a duty, and (b) the recipient of the information (the tippee) traded while in possession of the information. Most importantly, a controlling person can be liable if the controlling person knew or recklessly disregarded the fact that the controlled person was likely to engage in misuse of inside information and failed to take appropriate steps to prevent it. Putnam is a controlling person of its employees. In addition, certain supervisors may be controlling persons of those employees they supervise. EXAMPLE A supervisor of an analyst learns that the analyst has, over a long period of time, secretly received material inside information from Acme, Inc.'s Chief Investment Officer. The supervisor learns that the analyst has engaged in a number of trades for his personal account on the basis of the inside information. The supervisor takes no action. COMMENT Even if he is not liable to a private plaintiff, the supervisor can be liable to the Securities and Exchange Commission for a civil penalty of up to three times the amount of the analyst's profit. (Penalties are discussed in the following section.) Penalties for insider trading Penalties for misuse of inside information are severe, both for individuals involved in such unlawful conduct and their employers. A person who violates the insider trading laws can be subject to some or all of the types penalties below, even if he does not personally benefit from the violation. Penalties include: * Jail sentences, criminal monetary penalties. * Injunctions permanently preventing an individual from working in the securities industry. * Injunctions ordering an individual to pay over profits obtained from unlawful insider trading. * Civil penalties substantially greater than the profit gained or loss avoided by the trader, even if the individual paying the penalty did not trade or did not benefit personally. * Civil penalties for the employer or other controlling person. * Damages in the amount of actual losses suffered by other participants in the market for the security at issue. Regardless of whether penalties or money damages are sought by others, Putnam will take whatever action it deems appropriate (including dismissal) if Putnam determines, in its sole discretion, that an employee appears to have committed any violation of this Policy Statement, or to have engaged in any conduct which raises significant questions about whether an insider trading violation has occurred. APPENDIX B: Policy Statement Regarding Employee Trades in Shares of Putnam Closed-End Funds Pre-clearance for all employees Any purchase or sale of Putnam closed-end fund shares by a Putnam employee must be pre-cleared by the Code of Ethics Officer or, in his absence, the Deputy Code of Ethics Officer. A list of the closed-end funds can be obtained from the Code of Ethics Administrator. The automated pre-clearance system is not available for Putnam closed-end fund clearance. Trading in shares of closed-end funds is subject to all the rules of the Code of Ethics. Contact the Code of Ethics Administrator with these pre-clearance requests. Special Rules Applicable to Managing Directors of Putnam Investment Management, LLC and officers of the Putnam Funds. Please be aware that any employee who is a managing director of Putnam Investment Management, Inc. (the investment manager of the Putnam mutual funds) and officers of the Putnam Funds will not receive clearance to engage in any combination of purchase and sale or sale and purchase of the shares of a given closed-end fund within six months of each other. Therefore, purchases should be made only if you intend to hold the shares more than six months; no sales of fund shares should be made if you intend to purchase additional shares of that same fund within six months. You are also required to file certain forms with the Securities and Exchange Commission in connection with purchases and sales of Putnam closed-end funds. Please contact the Code of Ethics Officer Administrator for further information. Reporting by all employees As with any purchase or sale of a security, duplicate confirmations of all such purchases and sales must be forwarded to the Code of Ethics Officer by the broker-dealer utilized by an employee. If you are required to file a quarterly report of all personal securities transactions, this report should include all purchases and sales of closed-end fund shares. Please contact the Code of Ethics Officer or Deputy Code of Ethics Officer if there are any questions regarding these matters. APPENDIX C: Contra-Trading Rule Clearance Form To: Code of Ethics Officer From: __________________________________________________________________ Date: __________________________________________________________________ Re: Personal Securities Transaction of__________________________________ This serves as prior written approval of the personal securities transaction described below: Name of portfolio manager contemplating personal trade: ______________________ Security to be traded: _______________________________________________________ Amount to be traded: _________________________________________________________ Fund holding securities: _____________________________________________________ Amount held by fund: _________________________________________________________ Reason for personal trade: ___________________________________________________ Specific reason sale of securities is inappropriate for fund: ________________ ________________________________________________________________________ ________________________________________________________________________ (Please attach additional sheets if necessary.) CIO approval: ___________________________________ Date:_______________________ Legal/compliance approval: ________________________ Date:_____________________ APPENDIX D: AIMR Code of Ethics and Standards of Professional Conduct The Code of Ethics (Full Text) Members of the Association for Investment Management and Research shall: * Act with integrity, competence, dignity, and in an ethical manner when dealing with the public, clients, prospects, employers, employees, and fellow members. * Practice and encourage others to practice in a professional and ethical manner that will reflect credit on members and their profession. * Strive to maintain and improve their competence and the competence of others in the profession. * Use reasonable care and exercise independent professional judgment. The Standards of Professional Conduct All members of the Association for Investment Management and Research and the holders of and candidates for the Chartered Financial Analyst designation are obligated to conduct their activities in accordance with the following Code of Ethics. Disciplinary sanctions may be imposed for violations of the Code and Standards. * Fundamental responsibilities * Relationships with and responsibilities to a profession * Relationships with and responsibilities to an employer * Relationships with and responsibilities to clients and prospects * Relationships with and responsibilities to the public * Standards of Practice Handbook Fundamental Responsibilities Members shall maintain knowledge of and comply with all applicable laws, rules, and regulations (including AIMR's Code of Ethics and Standards of Professional Conduct) of any government, governmental agency, regulatory organization, licensing agency, or professional association governing the members' professional activities. Not knowingly participate in or assist any violation of such laws, rules, or regulations. Relationships with and Responsibilities to the Profession Use of Professional Designation AIMR members may reference their membership only in a dignified and judicious manner. The use of the reference may be accompanied by an accurate explanation of the requirements that have been met to obtain membership in these organizations. Those who have earned the right to use the Chartered Financial Analyst designation may use the marks "Chartered Financial Analyst" or "CFA" and are encouraged to do so, but only in a proper, dignified, and judicious manner. The use of the designation may be accompanied by an accurate explanation of the requirements that have been met to obtain the right to use the designation. Candidates in the CFA Program, as defined in the AIMR Bylaws, may reference their participation in the CFA Program, but the reference must clearly state that an individual is a candidate in the CFA Program and cannot imply that the candidate has achieved any type of partial designation. Professional Misconduct Members shall not engage in any professional conduct involving dishonesty, fraud, deceit, or misrepresentation or commit any act that reflects adversely on their honesty, trustworthiness, or professional competence. Members and candidates shall not engage in any conduct or commit any act that compromises the integrity of the CFA designation or the integrity or validity of the examinations leading to the award of the right to use the CFA designation. Prohibition against Plagiarism Members shall not copy or use, in substantially the same form as the original, material prepared by another without acknowledging and identifying the name of the author, publisher, or source of such material. Members may use, without acknowledgment, factual information published by recognized financial and statistical reporting services or similar sources. Relationships with and Responsibilities to the Employer Obligation to Inform Employer of Code and Standards Members shall inform their employer in writing, through their direct supervisor, that they are obligated to comply with the Code and Standards and are subject to disciplinary sanctions for violations thereof. Members shall deliver a copy of the Code and Standards to their employer if the employer does not have a copy. Duty to Employer Members shall not undertake any independent practice that could result in compensation or other benefit in competition with their employer unless they obtain written consent from both their employer and the persons or entities for whom they undertake independent practice. Disclosure of Conflicts to Employer Members shall comply with any prohibitions on activities imposed by their employer if a conflict of interest exists. Disclosure of Additional Compensation Arrangements Members shall disclose to their employer in writing all monetary compensation or other benefits that they receive for their services that are in addition to compensation or benefits conferred by a member's employer. Responsibilities of Supervisors Members with supervisory responsibility, authority, or the ability to influence the conduct of others shall exercise reasonable supervision over those subject to their supervision or authority to prevent any violation of applicable statutes, regulations, or provisions of the Code and Standards. In so doing, members are entitled to rely on reasonable procedures to detect and prevent such violations. Relationships with and Responsibilities to Clients and Prospects Investment Process REASONABLE BASIS AND REPRESENTATIONS * Exercise diligence and thoroughness in making investment recommendations or in taking investment actions. * Have a reasonable and adequate basis, supported by appropriate research and investigation, for such recommendations or actions. * Make reasonable and diligent efforts to avoid any material misrepresentation in any research report or investment recommendation. * Maintain appropriate records to support the reasonableness of such recommendations or actions. RESEARCH REPORTS * Use reasonable judgment regarding the inclusion or exclusion of relevant factors in research reports. * Distinguish between facts and opinions in research reports. * Indicate the basic characteristics of the investment involved when preparing for public distribution a research report that is not directly related to a specific portfolio or client. INDEPENDENCE AND OBJECTIVITY * Members shall use reasonable care and judgment to achieve and maintain independence and objectivity in making investment recommendations or taking investment action. Interactions with Clients and Prospects FIDUCIARY DUTIES In relationships with clients, members shall use particular care in determining applicable fiduciary duty and shall comply with such duty as to those persons and interests to whom the duty is owed. Members must act for the benefit of their clients and place their clients' interests before their own. PORTFOLIO INVESTMENT RECOMMENDATIONS AND ACTIONS Members shall: * Make a reasonable inquiry into a client's financial situation, investment experience, and investment objectives prior to making any investment recommendations and shall update this information as necessary, but no less frequently than annually, to allow the members to adjust their investment recommendations to reflect changed circumstances. * Consider the appropriateness and suitability of investment recommendations or actions for each portfolio or client. In determining appropriateness and suitability, members shall consider applicable relevant factors, including the needs and circumstances of the portfolio or client, the basic characteristics of the investment involved, and the basic characteristics of the total portfolio. * Members shall not make a recommendation unless they reasonably determine that the recommendation is suitable to the client's financial situation, investment experience, and investment objectives. * Distinguish between facts and opinions in the presentation of investment recommendations. * Disclose to clients and prospects the basic format and general principles of the investment processes by which securities are selected and portfolios are constructed and shall promptly disclose to clients and prospects any changes that might significantly affect those processes. FAIR DEALING Members shall deal fairly and objectively with all clients and prospects when disseminating investment recommendations, disseminating material changes in prior investment recommendations, and taking investment action. PRIORITY OF TRANSACTIONS Transactions for clients and employers shall have priority over transactions in securities or other investments of which a member is the beneficial owner so that such personal transactions do not operate adversely to their clients' or employer's interests. If members make a recommendation regarding the purchase or sale of a security or other investment, they shall give their clients and employer adequate opportunity to act on their recommendations before acting on their own behalf. For purposes of the Code and Standards, a member is a "beneficial owner" if the member has: * direct or indirect pecuniary interest in the securities; * the power to vote or direct the voting of the shares of the securities or investments; * the power to dispose or direct the disposition of the security or investment. PRESERVATION OF CONFIDENTIALITY Members shall preserve the confidentiality of information communicated by clients, prospects, or employers concerning matters within the scope of the client-member, prospect-member, or employer-member relationship unless a member receives information concerning illegal activities on the part of the client, prospect, or employer. PROHIBITION AGAINST MISREPRESENTATION Members shall not make any statements, orally or in writing, that misrepresent * the services that they or their firms are capable of performing; * their qualifications or the qualifications of their firm; * the member's academic or professional credentials. Members shall not make or imply, orally or in writing, any assurances or guarantees regarding any investment except to communicate accurate information regarding the terms of the investment instrument and the issuer's obligations under the instrument. DISCLOSURE OF CONFLICTS TO CLIENTS AND PROSPECTS Members shall disclose to their clients and prospects all matters, including beneficial ownership of securities or other investments, that reasonably could be expected to impair the members' ability to make unbiased and objective recommendations. DISCLOSURE OF REFERRAL FEES Members shall disclose to clients and prospects any consideration or benefit received by the member or delivered to others for the recommendation of any services to the client or prospect. Relationships with and Responsibilities to the Public PROHIBITION AGAINST USE OF MATERIAL NONPUBLIC INFORMATION Members who possess material nonpublic information related to the value of a security shall not trade or cause others to trade in that security if such trading would breach a duty or if the information was misappropriated or relates to a tender offer. If members receive material nonpublic information in confidence, they shall not breach that confidence by trading or causing others to trade in securities to which such information relates. Members shall make reasonable efforts to achieve public dissemination of material nonpublic information disclosed in breach of a duty. PERFORMANCE PRESENTATION Members shall not make any statements, orally or in writing, that misrepresent the investment performance that they or their firms have accomplished or can reasonably be expected to achieve. If members communicate individual or firm performance information directly or indirectly to clients or prospective clients, or in a manner intended to be received by clients or prospective clients, members shall make every reasonable effort to assure that such performance information is a fair, accurate, and complete presentation of such performance. APPENDIX E: Report of Entertainment Form This form must be filed with the Putnam Legal and Compliance Department within 10 days of date of entertainment. Send to: Laura Rose Assistant Vice President and Code of Ethics Administrator Mailstop L-5 OR Attach to an e-mail to: laura_rose@putnam.com Name of employee:____________________________________________ Name of party providing entertainment: Firm: _______________________________________________________ Person:______________________________________________________ Date of entertainment:_______________________________________ Describe entertainment provided:_____________________________ (e.g., name and location of restaurant, sporting, or cultural event) Value of entertainment (excluding meals):____________________ Signature: ____________________________________ Date:_______________ INDEX 7-Day Rule transactions by portfolio managers, analysts, and CIOs .......................................................14 60-Day Rule...............................................................13 A Access Persons definition ............................................................. vii special rules on trading..................................................13 AIMR Code of Ethics and Standards of Professional Conduct .................................................... 47 Analysts special rules on trading................................................. 14 Appeals Procedures................................................................36 B Bankers' acceptances excluded from securities ...............................................viii Blackout rule trading by portfolio managers, analysts and CIOs........................................................ 15 Boycott anti-trust and other laws.................................................18 Bribes ...................................................................21 C Certificates of Deposit excluded from securities ...............................................viii Clearance how long pre-clearance is valid............................................2 required for personal securities transactions ...................................................1 Closed-end funds pre-clearance and reporting ..............................................45 Commercial paper excluded from securities ...............................................viii Commodities (other than securities indices) excluded from securities ...............................................viii Computer use compliance with corporate policies required ........................................................26 Confidentiality required of all employees.............................................22, 26 Confirmations and broker statements required for personal transactions........................................31 Conflicts of interest with Putnam and Putnam clients............................................18 Contra-trading rule transactions by portfolio managers and CIOs .................................................................16 Convertible securities defined as securities...................................................viii Currencies excluded as securities..................................................viii D Definitions..............................................................vii Director prohibited to serve for another entity....................................23 Dividend reinvestment program.............................................11 E Employee prohibited to serve for another entity ...................................23 Excessive trading (over 25 trades) prohibited ............................10 Exchange traded index funds, excluded from securities ...............................................viii Exemptions..........................................................3, 4, 11 F Family members covered in personal securities transactions .........................................viii, 7, 38 Fiduciary prohibited to serve for another entity....................................23 Fraudulent or irregular activities reporting ................................................................24 G Gifts and Entertainment Policy .......................................18, 19 Good-until-canceled orders................................................10 H Holdings of securities disclosure by Access Persons..............................................32 I Initial public offerings/IPOs purchases are prohibited...................................................5 Insider trading policy statement and explanations ........................................38 prohibited............................................................iii, 5 Investment clubs prohibited................................................................23 Involuntary personal securities transactions exemptions ............................................................4, 11 L Large Cap Exception for clearance of securities on Restricted List............................................................2 Limit Orders..............................................................10 M Market timing prohibition..................................................9 Money market instruments excluded from securities............................................... viii N Naked options by employees discouraged..................................................11 Non-Putnam affiliates (NPAs) transactions and relationships............................................25 O Officer prohibited to serve for another entity ...............................22, 23 Options defined as securities...................................................viii relationship to securities on Restricted or Red Lists....................................................3 Ombudsman.................................................................33 P Partner prohibited to serve as general partner of another entity........................................................... 23 Partnerships covered in personal securities transactions ...................................................... viii, 37 Personal securities transaction defined ............................................................viii, 38 Political contributions...................................................21 Portfolio managers special rules on trading..............................................14, 17 Privacy policy ...........................................................26 Private offerings, purchases in private placements................................................................ 6 Putnam Investments Limited special rules ............................................................29 Q Quarterly Report of securities transactions ..............................32 R Reporting requirements....................................................31 Repurchase agreements excluded from securities................................................viii S Sanctions ................................................................vi for failure to pre-clear properly ........................................ 4 Shares by subscription procedures to preclear trades............................................. 2 Short sales prohibited conduct........................................................ 5 T Tender offers .............................................................4 Trustee prohibited to serve for another entity....................................23 Trusts covered in personal securities transactions .......................................................viii, 38 U U.S. government obligations excluded from securities................................................viii V Violations of Law reporting ................................................................33 W Warrants defined as securities...................................................viii PUTNAM INVESTMENTS One Post Office Square Boston, Massachusetts 02109 1-800-225-1581 www.putnaminvestments.com 215845 8/04 EX-99.CODE ETH 5 mo1.txt Supplement - dated December 15, 2004 to Putnam Code of Ethics The Putnam Code of Ethics Oversight Committee has approved the following amendments to the August 2004 Code of Ethics. Sanctions Guidelines The Sanctions Guidelines in Section 1A of the Code (page 4 of August Code) have been withdrawn and are replaced with the following new Sanctions Guidelines effective with the first quarter of 2005: "The Code of Ethics Oversight Committee is responsible for setting sanctions policies for violating the Code. The 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 Officer is authorized to impose the minimum sanction on employees without further Committee action. However, the sanctions noted below are only minimums and the Committee reserves the right to impose additional sanctions such as higher monetary sanctions, trading bans, suspension or termination of employment as it determines to be appropriate. The minimum sanction for a violation of the following Rules is disgorgement of any profits or payment of avoided losses and the following payments: Section IA, Rule 1 (Pre-clearance and Restricted List) Section IB, Rule 1 (Short-selling) Section IB, Rule 2 (IPOs) Section IB, Rule 3 (Private Placements) Section IB, Rule 4 (Trading with Inside Information) Section IB, Rules 6-8 (Holding and trading of Putnam Funds) Section II, Rule 2 (7-Day Rule) Section II, Rule 3 (Black-out Rule) Section II, Rule 4, (Contra-Trading Rule) Section II, Rule 5 (Trading for personal benefit) Officer Level SMD/MD SVP/VP AVP/non-officer - -------------------------------------------------------------------------- 1st violation $500 $250 $50 2nd $1,000 $500 $100 3rd Minimum monetary sanction as above with ban on all new personal individual investments. The minimum sanction for violations of all other rules in the Code is as follows: Officer Level SMD/MD SVP/VP AVP/non-officer - -------------------------------------------------------------------------- 1st violation $100 $50 $25 Subsequent $200 $100 $50 The reference period for determining whether a violation is initial or subsequent will be five years. Excessive Trading Effective with the 2nd quarter of 2005, the maximum number of trades permitted in individual securities per quarter is reduced from 25 to 10. Section 1B, Rule 9 is effective April 1, 2005, will read as follows: "Putnam employees are strongly discouraged from engaging in excessive trading for their personal accounts. Beginning in the second quarter of 2005, employees will be prohibited from making more than 10 trades in individual securities in any given quarter. Excessive trading within Putnam open-end funds is prohibited." Access Persons; Holding Period for Individual Securities Effective with the 2nd quarter of 2005, the holding period rule for Access Person investments in individual securities will increase from 60 to 90 days. Section II, Rule 1 will read, effective April 1, 2005 as follows: "No Access Person shall purchase and then sell at a profit, or sell and then repurchase at a lower price, any security or related derivative security with 90 calendar days." Access Person Reporting The deadline by which Access Persons are required to file quarterly statements of all transactions has been increased from 10 to 15 calendar days after the end of each quarter. This change will be effective in the April, 2005 filing. Accordingly Section V, Rule 2, will now read as follows: "Every Access Person shall file a quarterly report within 15 calendar days of the end of each quarter, recording all purchases and sales of any securities for personal accounts as defined in the Definitions. (For purposes of this Rule, securities shall include exchange traded funds (ETFs), futures and any option on a security or securities index, including broad based market indices excluded from the pre-clearance requirement and also includes transactions in Putnam open-end funds if the account for the Putnam funds is not held at Putnam Securities Services or in a Putnam retirement plan and for transactions in US mutual funds sub-advised by Putnam." Access Person Definition As required by new SEC rule 204A-1, the definition of Access Persons under the Code has been amended, effective February 1, 2005 to include Putnam employees with access to non public information about affiliated mutual fund portfolio holdings. The definition of Access Person will read as of February 1, 2005 as follows: "Access Persons are: (a) all employees in Putnam's Investment Division; (b) all directors and officers of all Putnam entities which are SEC registered investment advisers; (c) all members of Putnam's Executive Board and all Managing Directors in Putnam's marketing and sales organizations; and (d) any other employee of Putnam who, in connection with regular duties, has access to nonpublic information about any client's purchase or sale of securities or to information regarding recommendations with respect to such purchases or sales or who has access to nonpublic information regarding the portfolio holdings of any Putnam advised or sub-advised mutual fund. Each employee will be informed if he or she is considered an Access Person. The Code of Ethics Officer maintains a list of all Access Persons." EX-99.CODE ETH 6 co1.txt THE PUTNAM FUNDS Code of Ethics Each of The Putnam Funds (the "Funds") has determined to adopt this Code of Ethics with respect to certain types of personal securities transactions by officers and Trustees of the Funds which might be deemed to create possible conflicts of interest and to establish reporting requirements and enforcement procedures with respect to such transactions. I. Rules Applicable to Officers and Trustees Affiliated with Putnam Investments Trust or Its Subsidiaries A. Incorporation of Adviser's Code of Ethics. The provisions of the Code of Ethics for employees of Putnam Investments Trust and its subsidiaries (the "Putnam Investments Code of Ethics"), which is attached as Appendix A hereto, are hereby incorporated herein as the Funds' Code of Ethics applicable to officers and Trustees of the Funds who are employees of the Funds or officers, directors or employees of Putnam Investments Trust or its subsidiaries. A violation of the Putnam Investments' Code of Ethics shall constitute a violation of the Funds' Code. B. Reports. Officers and Trustees of each of the Funds who are made subject to the Putnam Investments' Code of Ethics pursuant to the preceding paragraph shall file the reports required by the Putnam Investments' Code of Ethics with the Code of Ethics Officer designated therein. A report filed with the Code of Ethics Officer shall be deemed to be filed with each of the Funds of which the reporting individual is an officer or Trustee. C. Review and Reporting. (1) The Code of Ethics Officer shall cause the reported personal securities transactions to be compared with completed and contemplated portfolio transactions of each of the Funds to determine whether a violation of this Code may have occurred. Before making any determination that a violation has been committed by any person, the Code of Ethics Officer shall give such person an opportunity to supply additional explanatory material. (2) If the Code of Ethics Officer determines that a violation of any provision of this Code has or may have occurred, he shall submit his written determination, together with any additional explanatory material, to the Audit and Pricing Committee of the Funds at its next meeting. D. Sanctions. In addition to reporting violations of this Code to the Audit and Pricing Committee of the Funds as provided in Section I-C(2), the Code of Ethics officer shall also report to such Committee any sanctions imposed with respect to such violations. The Committee reserves the right to impose such additional sanctions as it deems appropriate. II. Rules Applicable to Unaffiliated Trustees A. Definitions. (1) "Beneficial ownership" shall be interpreted in the same manner as it would be in determining whether a person is subject to the provisions of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder. (2) "Control" means the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company. (3) "Interested Trustee" means a Trustee of a Fund who is an "interested person" of the Fund within the meaning of the Investment Company Act. (4) "Purchase or sale of a security" includes, among other things, the writing of an option to purchase or sell a security. (5) "Security" shall have the same meaning as that set forth in Section 2(a)(36) of the Investment Company Act (in effect, all securities) except that it shall not include securities issued by the Government of the United States or an agency thereof, bankers' acceptances, bank certificates of deposit, commercial paper and high-quality short-term debt investments, including repurchase agreements, and shares of registered open-end investment companies, but shall include any security convertible into or exchangeable for a security. (6) "Unaffiliated Trustee" means a Trustee who is not made subject to the Putnam Investments Code of Ethics pursuant to Part I hereof. B. Prohibited Purchases and Sales. No Unaffiliated Trustee of any of the Funds shall purchase or sell, directly or indirectly, any security in which he has, or by reason of such transaction acquires, any direct or indirect beneficial ownership and which to his actual knowledge at the time of such purchase or sale: (1) is being considered for purchase or sale by the Fund; (2) is being purchased or sold by the Fund; or (3) was purchased or sold by the Fund within the most recent five days if such person participated in the recommendation to, or the decision by, Putnam Investment Management to purchase or sell such security for the Fund. C. Exempted Transactions. The prohibitions of Section II-B of this Code shall not apply to: (1) purchases or sales of securities effected in any account over which the Unaffiliated Trustee has no direct or indirect influence or control; (2) purchases or sales of securities which are non-volitional on the part of either the Unaffiliated Trustee or the Fund; (3) purchases of securities which are part of an automatic dividend reinvestment plan; (4) purchases of securities effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired; (5) purchases or sales of securities other than those exempted in (1) through (4) above which do not cause the Unaffiliated Trustee to gain improperly a personal benefit through his relationship with the Fund and are only remotely potentially harmful to a Fund because they would be very unlikely to affect a highly institutional market, and are previously approved by the Legal and Compliance Liaison Officer of the Funds, in consultation with the Code of Ethics Officer, which approval shall be confirmed in writing. D. Reporting. (1) Whether or not one of the exemptions listed in Section II-C applies and except as provided in Section II-C(5), every Unaffiliated Trustee of a Fund shall file with the Funds' Legal and Compliance Liaison Officer a report containing the information described in Section II-D(2) of this Code with respect to purchases or sales of any security in which such Unaffiliated Trustee has, or by reason of such transaction acquires, any direct or indirect beneficial ownership, if such Trustee, at the time of that transaction, knew or, in the ordinary course of fulfilling his official duties as a Trustee of the Fund, should have known that, during the 15-day period immediately preceding or after the date of the transaction by the Trustee: (a) such security was or is to be purchased or sold by the Fund or (b) such security was or is being considered for purchase or sale by the Fund; provided, however, that an Unaffiliated Trustee shall not be required to make a report with respect to transactions effected for any account over which such person does not have any direct or indirect influence or control. (2) Every report shall be made not later than 10 days after the end of the calendar quarter in which the transaction to which the report relates was effected, and shall contain the following information: (a) The date of the transaction, the title, the number of shares, the interest rate and maturity date (if applicable) and the principal amount of each security involved; (b) The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition); (c) The price at which the transaction was effected; and (d) The name of the broker, dealer or bank with or through whom the transaction was effected; and (e) the date that the report is submitted by each Unaffiliated Trustee. (3) Every report concerning a purchase or sale prohibited under Section II-B hereof with respect to which the reporting person relies upon one of the exemptions provided in Section II-C shall contain a brief statement of the exemption relied upon and the circumstances of the transaction. (4) Any such report may contain a statement that the report shall not be construed as an admission by the person making such report that he has any direct or indirect beneficial ownership in the security to which the report relates. (5) Notwithstanding anything to the contrary contained herein, an Unaffiliated Trustee who is an "interested person" of the Funds shall file the reports required by Rule 17j-1(d)(1) under the Investment Company Act of 1940 with the Code of Ethics Officer of Putnam Investments. Such reports shall be reviewed by such Officer as provided in Section I-C(1) and any related violations shall be reported by him to the Audit and Pricing Committee as provided in Section I-C(2). The Committee may impose such additional sanctions as it deems appropriate. E. Review and Reporting. (1) The Legal and Compliance Liaison Officer of the Funds, in consultation with the Code of Ethics Officer of Putnam Investments, shall cause the reported personal securities transactions that he receives pursuant to Section II-D(1) to be compared with completed and contemplated portfolio transactions of the Funds to determine whether any transaction ("Reviewable Transactions") listed in Section II-B (disregarding exemptions provided by Section II-C(1) through (5)) may have occurred. (2) If the Legal and Compliance Liaison Officer determines that a Reviewable Transaction may have occurred, he shall then determine whether a violation of this Code may have occurred, taking into account all the exemptions provided under Section II-C. Before making any determination that a violation has occurred, the Legal and Compliance Liaison Officer shall give the person involved an opportunity to supply additional information regarding the transaction in question. F. Sanctions. If the Legal and Compliance Liaison determines that a violation of this Code has occurred, he shall so advise the Funds' Audit and Pricing Committee, and provide the Committee with a report of the matter, including any additional information supplied by such person. The Committee may impose such sanctions as it deems appropriate. III. Miscellaneous A. Amendments to the Putnam Investments' Code of Ethics. Any amendment to the Putnam Investments' Code of Ethics shall be deemed an amendment to Section I-A of this Code effective 30 days after written notice of such amendment shall have been received by the Chairman of the Funds, unless the Trustees of the Funds expressly determine that such amendment shall become effective at an earlier or later date or shall not be adopted. B. Records. The Funds shall maintain records in the manner and to the extent set forth below, which records may be maintained on microfilm under the conditions described in Rule 31a-2(f)(1) under the Investment Company Act and shall be available for examination by representatives of the Securities and Exchange Commission. (1) A copy of this Code and any other code which is, or at any time within the past five years has been, in effect shall be preserved in an easily accessible place; (2) A record of any violation of this Code and of any action taken as a result of such violation shall be preserved in an easily accessible place for a period of not less than five years following the end of the fiscal year in which the violation occurs; (3) A copy of each report made by an officer or Trustee pursuant to this Code shall be preserved for a period of not less than five years from the end of the fiscal year in which it is made, the first two years in an easily accessible place; and (4) A list of all persons who are, or within the past five years have been, required to make reports pursuant to this Code shall be maintained in an easily accessible place. To the extent any record required to be kept by this section is also required to be kept by Putnam Investments pursuant to the Putnam Investments' Code of Ethics, Putnam Investments shall maintain such record on behalf of the Funds as well. C. Confidentiality. All reports of securities transactions and any other information filed with any Fund pursuant to this Code shall be treated as confidential, but are subject to review as provided herein and by personnel of the Securities and Exchange Commission. D. Interpretation of Provisions. The Trustees may from time to time adopt such interpretations of this Code as they deem appropriate. E. Delegation by Chairman. The Chairman of the Funds may from time to time delegate any or all of his responsibilities under this Code, either generally or as to specific instances, to such officer or Trustee of the Funds as he may designate. As revised November 1, 2004 EX-99.CODE ETH 7 gp1.txt Supplement - dated April 1, 2005 to Putnam's Code of Ethics The Putnam Code of Ethics Oversight Committee has approved the following amendments, effective April 1, 2005: Section III - Rule 12: Interest in Entities Doing Business with Putnam Family Member Conflicts Policy No employee or member of an employee's immediate family shall have any direct or indirect personal financial interests in companies which do business with Putnam, unless such interest is disclosed and approved by the Code of Ethics Officer. Investment holdings in public companies which are not material to the employee are excluded from this prohibition. The Code also provides more detailed supplemental rules to address potential conflicts of interests which may arise if members of employees' families are closely involved in doing business with Putnam. Corporate purchase of goods and services Putnam will not acquire goods and services from any firm in which a member of an employee's immediate family serves as the sales representative in a senior management capacity or has an ownership interest with the supplier firm (excluding normal investment holdings in public companies) without permission from the Director of Procurement and the Code of Ethics Officer. Any employee who is aware of a proposal to purchase goods and services from a firm at which a member of the employee's immediate family meets one of the previously mentioned conditions must notify the Director of Procurement and the Code of Ethics Officer. Portfolio Trading Putnam will not allocate any trades for a portfolio to any firm that employs a member of an employee's immediate family as a sales representative to Putnam (in a primary, secondary or back up role). Any Putnam employee who is aware that an immediate family member serves as a broker-dealer's sales representative to Putnam should inform the Code of Ethics Officer. Definition of Immediate Family "Immediate family" of an employee means (1) husband or wife 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. Section III - Rule 5: Political Contributions/Solicitations Policy Political Activities, Contributions and Lobbying Corporate Contributions and Solicitation. Political activities of corporations such as Putnam are highly regulated, and corporate political contributions are largely prohibited. Accordingly, no contributions may be made with Putnam corporate funds to any political party or campaign, whether directly or by reimbursement of such a contribution, unless pre-approved in advance by the Chief Compliance Officer. Employee contributions to any pending or proposed client of Putnam, regardless of whether the employee will seek reimbursement from Putnam for such contributions, must be pre-approved in advance by the Chief Compliance Officer. Donations of Putnam property and of employee time when working for Putnam are also prohibited. No Putnam employee may make any solicitation for or endorsement of any campaign or candidate using Putnam letterhead, referencing Putnam, or while on Putnam business. Employee Personal Political Contributions. Employees, so long as they do not use Putnam assets, or state or imply that Putnam is involved in a campaign, are free to engage in political activities subject to three restrictions as follows: 1. Some states and localities have laws that prohibit employees from making political contributions to candidates for state and local office if their employer has an investment management contract with, or is seeking one from, the state or locality. Accordingly, Putnam employees must pre-clear with the Chief Compliance Officer any contributions to candidates for any of the following offices: * State or local offices in California * The office of State Treasurer of Connecticut or Vermont * State or local offices in New Jersey * Any local office in the city of Houston, Texas 2. Contributions to state and local officials with whom Putnam has a business relationship or from whom is seeking a business relationship must be pre-cleared with the Chief Compliance Officer. 3. Certain employees at PRM involved in the CollegeAdvantage program are restricted from making contributions to candidates for offices in Ohio under the rules of the Municipal Securities Rulemaking Board. These employees are separately identified and informed by Putnam's Compliance Department of applicable requirements. Gifts. Employees must obtain pre-approval from the Chief Compliance Officer prior to providing any gift (including meals, entertainment, transportation or lodging) to any government official or employee. Lobbying. Federal and state law imposes limits and registration requirements on efforts by individuals and companies to influence the passage of legislation or to obtain business from governments. Accordingly, Putnam employees should not engage in any lobbying activities without approval from Putnam's Director of Government Relations. Lobbying does not include solicitation of investment management business through the ordinary course of business, such as responding to RFPs. -----END PRIVACY-ENHANCED MESSAGE-----