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Vote Today
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A world of investing.™ | (Scale logo) Putnam Investments |
A message from Putnam Investments and
the Board of Trustees of the Putnam Funds
Dear Fellow Shareholder:
We are writing to ask you for your vote on important matters affecting Putnam Asia Pacific Equity Fund and Putnam International Value Fund. Each fund will hold a shareholder meeting on March 25, 2011, in Boston, Massachusetts, to decide the proposals below. While you are welcome to attend in person, the vast majority of shareholders vote by “proxy,” which means they give instructions to persons designated by their fund’s Board of Trustees to vote on their behalf.
Please vote today on the following proposals:
1. Approving a new management contract that would change your fund’s performance index.
Each fund’s management contract includes performance fees, which means that the management fees the fund pays reflect the strength or weakness of the fund’s performance compared to the returns of a performance index. The proposed new management contracts for these funds would use new performance indexes. Your fund’s management fees will decline from the standard base fee if the fund underperforms the new performance index and will rise if the fund outperforms.
In the case of Putnam Asia Pacific Equity Fund, if the new management contract is approved, the Fund will change its investment policy to increase emphasis on emerging markets in Asia and the Pacific Basin and to reduce significantly its emphasis on Japan and Australia. For Putnam International Value Fund, there would be no change in investment policy.We recommend you vote for the new management contract.
2. Approving an amendment to your fund’s fundamental investment restriction with respect to the acquisition of voting securities of any issuer.
This change would align the restriction with the requirements of the Investment Company Act of 1940.We recommend you vote to amend this investment restriction.
Please vote today
Delaying your vote will increase expenses if further mailings are required. If you complete and return your proxy card, your shares will be voted on your behalf exactly as you have instructed.If you simply sign and return your proxy card, your shares will be voted in accordance with the Trustees’ recommendations.
We appreciate your attention to these important matters. If you have questions about the proposals, please call a Putnam customer service representative at 1-888-399-3986 or contact your financial advisor.
Sincerely yours,
Robert L. Reynolds
President and Chief Executive Officer
Putnam Investments
John A. Hill
Chairman of the Trustees
Table of contents | |
Notice of a Special Meeting of Shareholders | [ ] |
Trustees’ Recommendations | [ ] |
Proposal 1.: Approving an New Management Contract that would change your fund’s | |
performance index | [ ] |
1.A.: Putnam Asia Pacific Equity Fund | [ ] |
1.B.: Putnam International Value Fund | [ ] |
Proposal 2.: Fundamental Investment Restriction Amendment – Acquisition of | |
Voting Securities | [ ] |
Further Information About Voting and the | |
Special Meeting | [ ] |
Fund Information | [ ] |
Appendix A – Forms of the Proposed New | |
Management Contracts | [ ] |
Appendix B – Current and Pro Forma Information | |
about each Fund’s Total Annual Operating Expenses | [ ] |
Appendix C – Description of Contract Approval | |
Process | [ ] |
Appendix D – 5% Beneficial Ownership | [ ] |
Appendix E – Other Similar Funds Advised by Putnam | |
Management | [ ] |
PROXY CARD(S) ENCLOSED
If you have any questions, please contact a Putnam customer service representative at 1-888-399-3986 or call your financial advisor.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on March 25, 2011.
The proxy statement is available atwww.eproxy.com/Putnam.
Notice of a Special Meeting of Shareholders
To the Shareholders of:
PUTNAM FUNDS TRUST
PUTNAM ASIA PACIFIC EQUITY FUND | |
PUTNAM INTERNATIONAL VALUE FUND |
This is the formal agenda for your fund’s shareholder meeting. It tells you what matters will be voted on and the time and place of the meeting, in the event that you attend in person.
A Special Meeting of Shareholders of each fund will be held on March 25, 2011, at 11:00 a.m. Eastern time, on the 8thFloor of One Post Office Square, Boston, Massachusetts 02109, to consider the following proposals:
1. Approving a new management contract that would change your fund’s performance index; and
2. Approving an amendment to your fund’s fundamental investment restriction with respect to the acquisition of voting securities of any issuer.
By Judith Cohen, Clerk, and by the Trustees
John A. Hill, Chairman | Paul L. Joskow |
Jameson A. Baxter, Vice Chairman | Kenneth R. Leibler |
Ravi Akhoury | Robert E. Patterson |
Barbara M. Baumann | George Putnam, III |
Charles B. Curtis | Robert L. Reynolds |
Robert J. Darretta | W. Thomas Stephens |
In order for you to be represented at your fund’s shareholder meeting, we urge you to record your voting instructions over the Internet or by telephone, or to mark, sign, date, and mail the enclosed proxy card in the postage-paid envelope provided.
February [••], 2011
Proxy Statement
This document will give you the information you need to vote on the proposals. Much of the information is required under rules of the Securities and Exchange Commission (“SEC”); some of it is technical. If there is anything you don’t understand, please contact a Putnam customer service representative toll-free at 1-888-399-3986, or call your financial advisor.
When you record your voting instructions over the Internet or by telephone, or when you complete, sign and return your proxy card, your shares will be voted on your behalf exactly as you have instructed. If you simply sign and return your proxy card, your shares will be voted in accordance with the Trustees’ recommendations. If any other business is brought before your fund’s meeting, your shares will be voted at the discretion of the persons designated on the proxy card.
► Who is asking for your proxy?
The Trustees of the Putnam Funds are asking for your proxy for use at the Special Meeting of Shareholders of each fund to be held on March 25, 2011 (the “Meeting”) and, if your fund’s Meeting is adjourned, at any later meetings, for the purposes stated in the Notice of a Special Meeting of Shareholders (see previous page). The Notice of a Special Meeting of Shareholders, the enclosed proxy card(s) and this proxy statement are being mailed on or about February [••], 2011.
► How do your fund’s Trustees recommend that shareholders vote on the proposals?
The Trustees recommend that you vote FOR all proposals.
Who is eligible to vote?
Shareholders of record of each fund at the close of business on December 27, 2010 (the “Record Date”) are entitled to be present and to vote at the Meeting or at any adjourned session of the Meeting.
The number of shares of each fund outstanding on the Record Date is shown on page [••]. Each share is entitled to one vote, with fractional shares voting proportionately. Shareholders of each fund vote separately on each proposal.
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The Proposals
1. APPROVING A NEW MANAGEMENT CONTRACT THAT WOULD CHANGEYOUR FUND’S PERFORMANCE INDEX
►What is this proposal?
The Trustees are recommending approval of a new management contract for your fund that includes a new index of securities prices (“performance index”) for use, prospectively, in calculating performance adjustments to the fund’s base management fee.
Performance adjustments link the compensation of the funds’ manager, Putnam Investment Management, LLC (“Putnam Management”), to each fund’s investment performance. Putnam Management’s philosophy is that strong investment performance should be rewarded with higher management fees, while poor performance should result in lower management fees. Performance fees more closely align shareholders’ and Putnam Management’s economic interests. Each fund’s current management contract provides for a performance adjustment based on the fund’s performance as compared to a performance index.
Proposal 1.A. (see page [••]) relates to the approval of a new management contract for Putnam Asia Pacific Equity Fund and Proposal 1.B. (see page [••]) relates to the approval of a new management contract management contract for Putnam International Value Fund. The outcome of the vote on the proposal for one fund will not affect the vote for the other fund.
►What is the voting requirement for approval of the proposed new contract?
Approval of the proposed new management contract for your fund requires the affirmative vote of the lesser of (a) the holders of 67% or more of the shares of the fund present (in person or by proxy) and entitled to vote at the meeting, if the holders of more than 50% of the outstanding shares of the fund entitled to vote at the meeting are present in person or by proxy, or (b) the holders of more than 50% of the outstanding shares of the fund entitled to vote at the meeting. The outcome of the vote on the proposal for one fund will not affect the vote for the other fund.
►General Plan for Implementation of Proposed New Management Contracts
If this proposal is approved by the shareholders of your fund, it is expected that the new management contract would be implemented for your fund on April 1, 2011 (or, if later, the first day of the first calendar month following shareholder approval).
If implemented, the new management contract for your fund would remain in effect (unless terminated) through June 30, 2011, and would continue in effect from year to year after that so long as its continuance is approved at least annually by (i) the Trustees, or the shareholders by the affirmative vote of a majority of the outstanding shares of your fund, and (ii) a majority of the Independent Trustees, by vote cast in person at a meeting called for the purpose of voting on such approval.
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►Other Information
Under the management contract between your fund and Putnam Management, subject to such policies as the Trustees may determine, Putnam Management, at its expense, furnishes continuously an investment program for the fund and makes investment decisions on behalf of the fund. The current management contract for your fund, dated January 1, 2010, was last approved by shareholders on November 19, 2009, after receiving the unanimous approval of the Trustees in July 2009. Shareholders of your fund voted to approve the current management contract to include fund family breakpoints and performance adjustments in the management fee structure. The management contract has not been submitted for approval by the shareholders of your fund since that date.
1.A. Putnam Asia Pacific Equity Fund
►Why did Putnam Management propose a new management contract for your fund?
Putnam Management proposes a new management contract for your fund to change the fund’s performance index to conform more closely to the fund’s proposed investment policy. Putnam Asia Pacific Equity Fund pursues its objective by investing in equity securities of Asian and Pacific Basin companies. It currently has substantial (i.e., more than 50%) exposure to Japanese and Australian companies. Putnam Management proposes to change the fund’s investment policy to increase emphasis on emerging market economies in Asia and the Pacific Basin (e.g., China, India, Hong Kong, Taiwan, and Indonesia), and to reduce emphasis on developed market economies such as Japan and Australia. The change in investment policy is contingent upon shareholder approval of the proposed new management contract.
Your fund’s current investment policy.Your fund currently invests in accordance with this policy:
“Under normal circumstances, 80% of your fund’s net assets are invested in equity securities of Asian or Pacific Basin companies. This policy may be changed only after 60 days’ notice to shareholders. Equity securities include common stocks, preferred stocks, convertible securities and depositary receipts for those securities. Putnam Management determines whether a company is an Asian or Pacific Basin company by considering whether the company is economically linked and exposed to the economic fortunes and risks of Asian or Pacific Basin countries. In making these determinations, Putnam Management considers, in particular, where the company’s securities are primarily listed for trading, where the company maintains its principal place of business or is organized, where the majority of the company’s assets are located, or where the company derives a majority of its revenues or profits. Asian or Pacific Basin countries include, but are not limited to: Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Taiwan and Thailand.”
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The fund’s largest country weights as of January 31, 2011) were in Japan (38.54% of the fund’s net assets) and Australia (15.01% of the fund’s net assets).
Proposed new investment policy. Putnam Management proposes to reposition the fund to increase its focus on Asian and Pacific Basin emerging markets, although the fund would retain flexibility to invest in developed countries such as Japan, Australia and New Zealand. As demonstrated below, the Asia Pacific (ex-Japan) market has significantly outperformed the Asia Pacific (with Japan) market in recent years. Putnam Management believes that this indicates that Asia Pacific emerging markets have offered superior growth prospects relative to Asia Pacific developed markets, and that this may continue in the future. Repositioning the fund to increase its focus on Asian and Pacific Basin emerging markets may benefit the fund’s shareholders.
If shareholders approve the proposed new management contract with the new performance fee index, the fund’s 80% non-fundamental investment policy would be changed to read as follows:
“Under normal circumstances, we invest at least 80% of the fund’s net assets in equity securities of Asian or Pacific Basin companies, other than Japan, Australia, and New Zealand. [… For purposes of the 80% investment policy above,] Asian or Pacific Basin countries exclude Japan, Australia and New Zealand, and include, but are not otherwise limited to, the following countries: China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand. Although investments in equity securities of Japanese, Australian and New Zealand companies are excluded for purposes of the 80% investment policy, the fund may invest up to 20% of its net assets in such securities and in securities of other non-Asian or non-Pacific Basin companies.”
The Fund has provided its shareholders with at least 60 days’ prior notice of this proposed change in its 80% non-fundamental investment policy, indicating that implementation of the investment policy change is subject to shareholder approval of a new performance fee benchmark.
Corresponding change to your fund’s performance index.The fund’s current management contract provides for performance adjustments to the fund’s management fees based on the fund’s performance compared to the MSCI AC Asia Pacific Index (ND). The proposed new management contract would provide, prospectively, that the MSCI AC Asia ex-Japan Index (ND)1would be the index used for determining performance adjustments. The proposed index conforms more closely to the fund’s proposed investment policy, which would significantly de-emphasize investments in developed market countries like Japan and
___________________________________________
1MSCI publishes two versions of some indices reflecting the reinvestment of dividends using two different methodologies: gross dividends (GD) and net dividends (ND). While both versions reflect reinvested dividends, they differ in the way they treat taxes associated with dividend payments. The net dividends version incorporates reinvested dividends by applying the withholding tax rate applicable to foreign non-resident institutional investors that do not benefit from double taxation treaties. Putnam Management believes that the net dividends version better reflects the returns U.S. investors might expect were they to invest directly in the component securities of the index.
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Australia. The proposed index has no exposure to Japan or Australia and correspondingly higher country weights for China, Korea, Taiwan, India, Hong Kong, and other rapidly growing developing economies.
Accordingly, Putnam Management proposed, and the Trustees agreed, to a new management contract for the fund that would use the MSCI AC Asia ex-Japan Index (ND) prospectively as the performance index for purposes of determining the fund’s performance fees. The proposed new management contract differs in substance from the fund’s current management contract solely in the choice of the performance index used to calculate performance fees; the base management fee and the methodology for calculating performance fee adjustments to the base fee would remain the same as in the fund’s current management contract.
►Will the proposed change in the performance index for the fund result in a change in the investment objective or strategies of the fund?
The fund’s investment objective, which is to seek long-term capital appreciation, will remain the same. The fund expects to maintain its current investment strategy of investing mainly in equity securities of Asian or Pacific Basin companies. However, as described above, subject to shareholder approval of the proposed new management contract, the fund would no longer consider Japan, Australia and New Zealand to be Asian or Pacific Basin companies for purposes of the fund’s 80% investment policy. This may have an impact on the fund’s future investment performance;see“What are the implications for the fund if the proposed new management contract is approved? – Comparison of current and proposed performance indexes” below.
The fund would retain the flexibility to invest up to 20% of its net assets in securities of Japan, Australia and New Zealand and in securities of other non-Asian or non-Pacific Basin companies. Although the repositioning of the fund to increase its focus on Asian and Pacific Basin emerging markets may result in a greater proportion of the fund’s net assets being invested in small- to mid-capitalization companies, the fund will continue to be able to invest in companies of any size.
►What are the implications for the fund if the proposed new management contract is approved?
If the proposed new management contract is approved, the fund’s performance index would change from the MSCI AC Asia Pacific Index (ND) to the MSCI AC Asia ex-Japan Index (ND). In addition, the investment policy change described above would become effective, and the fund would reposition itself to focus on emerging market Asia Pacific countries and would reduce its exposure to Japan and Australia. Repositioning the fund’s investment portfolio is expected to be complete shortly after the investment policy change becomes effective. This repositioning is expected to result in turnover of between 45% and 55% of the fund’s portfolio, with the estimated transactions costs of approximately 0.25% of the aggregate net asset value of the fund.
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As described below, the change in performance index is prospective only. The fund’s performance would be compared to the current index for periods before changing the fund’s index, and it would be compared to the new index thereafter. All other terms and conditions of the proposed new management contract for the fund are substantially identical to those of the fund’s current management contract. A form of the proposed new management contract showing the proposed changes is included inAppendix A.
Calculation of current management fee.The fund’s current management contract provides for the monthly payment of a management fee based on two components: a base fee and a performance adjustment.
The monthly base fee for your fund is calculated by multiplying a base fee rate by the average net assets of the fund for the month. The base fee rate takes into account the aggregate net assets of the Putnam fund family – all open-end mutual funds sponsored by Putnam Management, except for the Putnam RetirementReady® Funds, Putnam Global Sector Fund, and Putnam Money Market Liquidity Fund – and is determined in accordance with a schedule set forth in the management contract. For January 2011, the base fee rate was [••%] based on aggregate net Putnam fund family assets of approximately [$••billion].
The performance adjustment is a dollar amount added to or subtracted from your fund’s base fee each month based upon the fund’s performance relative to its performance index. Performance adjustments commenced beginning at the end of January 2011, your fund’s thirteenth complete calendar month of operations under its current management contract.
For each month, performance adjustments are determined based on performance over theperformance period, which is the thirty-six-month period then ended or, if the management contract has not yet been effective for thirty-six complete calendar months, the period from the date the management contract became effective to the end of the month for which the fee adjustment is being computed. Each month, the performance adjustment is calculated by multiplying theperformance adjustment rateand the fund’s average net assets over the performance period and dividing the result by twelve. The resulting dollar amount is added to, or subtracted from, the base fee for that month. The performance adjustment rate is equal to 0.03% multiplied by the difference between the fund’s annualized performance (net of fees and expenses, measured by the fund’s class A shares) and the annualized performance of the performance index (MSCI Asia Pacific Index (ND)), each measured over the performance period. The maximum annualized performance adjustment rates are ± 0.21%.
The monthly base fee is determined based on the fund’s average net assets for the month, while the performance adjustment is determined based on the fund’s average net assets over the performance period of up to thirty-six months. This means it is possible that the amount of any dollar adjustment as a percentage of a fund’s current assets could exceed the maximum annualized performance adjustment rate of ± 0.21%. Also, if the fund underperforms significantly over the performance period, and the fund’s assets have declined significantly over that period, the negative performance adjustment may exceed the base fee. In this event, Putnam Management would make a payment to the fund.
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The fund’s performance is calculated net of expenses. The fund’s benchmark index does not include any fees or expenses. Reinvestment of dividends and distributions are included in calculating the performance of both the fund and the fund’s performance index.
During the most recently completed fiscal year, the fund did not pay any management fees as a result of expense limitation arrangements. Without these expense limitation arrangements, the fund would have paid management fees to Putnam Management in the amount of $58,961. This amount does not include any performance adjustment; performance adjustments, as noted above, did not commence until January 2011.
Calculation of management fee with proposed benchmark index.The proposed new management contract would have the same fund family breakpoint fee structure for determining the base fee as described above for the current management contract. Furthermore, the proposed new management contract’s methodology for calculating performance adjustments would fundamentally remain the same as described above for the current management contract.
If the proposal is approved, the fund’s performance adjustments will be calculated by comparing the fund’s performance (Class A, net of fees and expenses) with the performance of the MSCI AC Asia ex-Japan Index (ND) rather than the performance of the MSCI AC Asia Pacific Index (ND).
The change in the fund’s performance index would be implemented on a prospective basis beginning with the first day of the month following shareholder approval. However, because the performance adjustment is based on a rolling thirty-six month performance period, there will be a transition period during which the fund’s performance would be compared to a composite index that reflects the performance of the current index for the portion of the performance period before adoption of the new index and the performance of the new index for the remainder of the period. For example, assuming an effective date of April 1, 2011 for the proposed new management contract, the performance adjustment for April 2011 (the first full month following shareholder approval) would be calculated using the performance of the current performance index, MSCI AC Asia Pacific Index (ND), for the first fifteen months of the performance period (i.e., January 1, 2010 through March 31, 2011) and the performance of the new performance index, MSCI AC Asia ex-Japan Index (ND), for the sixteenth month (i.e., April 2011). For each of the ensuing months, the composite index return would reflect an additional month of the MSCI AC Asia ex-Japan Index (ND) performance and eventually, beginning with the performance adjustment for the month of January 2013 (by when the fund would have a thirty-six month performance period), one less month of the MSCI AC Asia Pacific Index (ND) performance. At the conclusion of the transition period (February 28, 2014, if the new management contract becomes effective on April 1, 2011), the performance of the current index would be eliminated from the performance fee calculation, and future calculations (starting for the month of March 2014) would include only the performance of the new index.
Comparison of current and proposed performance indexes.
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The proposed performance index, the MSCI AC Asia ex-Japan Index (ND), is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of stock markets in 10 Pacific-region countries (China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan, and Thailand).
The MSCI AC Asia Pacific Index (ND) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of stock markets in 13 Pacific region countries (Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Taiwan, and Thailand).
Data as of December 31, 2010 concerning the absolute and relative performance of the fund, the MSCI AC Asia Pacific Index (ND) and the MSCI AC Asia ex-Japan Index (ND) are provided below. As of December 31, 2010, over the periods presented, the proposed new performance index has outperformed the current performance index. However, the proposed new performance index underperformed the current performance index in three out of eight years. Of course, if the proposed performance index were to regularly underperform the current performance index, Putnam Management would be more likely to earn positive performance adjustments, and less likely to suffer negative performance adjustments, in the future under the proposed new management contract. However, past performance is no guarantee of future performance, and Putnam Management does not believe that either index will regularly outperform the other in the future.
As of December 31, 2010
Fund or Index | Since Fund | 1-Year | 3-Year | 5-Year | 10-Year |
Inception | Annualized | Annualized | Annualized | Annualized | |
(6/12/09) | |||||
Cumulative | |||||
Fund (net | 23.04% | 16.20% | N/A | N/A | N/A |
return) | |||||
MSCI AC Asia | 21.64% | 17.02% | -2.17% | 4.51% | N/A* |
Pacific Index | |||||
(ND)(current | |||||
performance | |||||
index) | |||||
MSCI AC Asia | 28.67% | 19.62% | -0.66% | 12.86% | N/A* |
ex-Japan Index | |||||
(ND)(proposed | |||||
performance | |||||
index) | |||||
* Both MSCI indices incepted on 1/1/01.
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Gross Annual Returns for Calendar Years 2002-2010
Fund or Index | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 |
Fund | [ ]% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
MSCI AC Asia | |||||||||
Pacific Index | |||||||||
(ND)(current | |||||||||
performance | |||||||||
index) | 17.02% | 37.59% | -41.85% | 14.29% | 16.49% | 23.34% | 18.23% | 40.38% | -8.62% |
MSCI AC Asia | |||||||||
ex-Japan Index | |||||||||
(ND)(proposed | |||||||||
performance | |||||||||
index) | 19.62% | 72.07% | -52.38% | 40.13% | 33.32% | 22.69% | 17.35% | 46.55% | -8.49% |
Comparison of management fee rates under current and proposed performance index.The table below shows what the management fees for the fund were under its current contract for its most recent fiscal year (ended April 30, 2010), and what the management fees for the fund would have been for its most recent fiscal year had its proposed new contract been in effect for that year. Of course, during the most recent fiscal year, the fund made no performance adjustments to the base management fee it paid Putnam Management. (It did not begin to make performance adjustments until January 2011.) Accordingly, the table below shows that there would have been no differences in management fee rates for the fiscal year ended April 30, 2010 under the current and proposed performance index. Because the change in performance index will be implemented prospectively, the future impact on management fees will depend on the fund’s future performance relative to the proposed performance index. Management fee rates are expressed in dollars and as a percentage of the fund’s average net assets for the fiscal year ended April 30, 2010.
EXAMPLES |
FOR THE FISCAL YEAR ENDED APRIL 30, 2010 |
(Performance adjustments had not commenced) |
Current Contract | Proposed Contract | Difference | ||||
$ | % | $ | % | $ | % | |
Base Fee | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
Performance Adjustment | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
Total Management Fee | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
Included atAppendix Bare examples of the fund’s total annual operating expenses (as a percentage of average net assets) under the current management contract and pro forma total annual operating expenses under the proposed new management contract.
►What factors did the Independent Trustees consider in evaluating the new management contract?
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At their meeting on December 10, 2010, the Independent Trustees approved a new management contract with Putnam Management. In substance, the new management contract differed from the existing management contract only in that it provided for a new performance index for use, prospectively, in calculating performance adjustments to the fund’s base management fee.
In considering whether to approve the new management contract, the Trustees took into account that they had most recently approved the annual continuation of the fund’s existing management contract with Putnam Management in June 2010. Because, other than the difference in performance index, the effective date of the contract, and the initial term of the contract (through June 30, 2011), the new management contract was identical to the fund’s existing management contract, the Trustees relied to a considerable extent on their previous approval of the continuance of the fund’s existing management contract, which is described atAppendix Cbelow.
The Trustees also considered information regarding the proposed repositioning of the fund from its current investment policy to increase emphasis on developing market economies in Asia and the Pacific Basin (e.g., China, India, Hong Kong, Taiwan, and Indonesia), and to reduce emphasis on developed market economies such as Japan and Australia. The board concluded that changing the fund’s investment policy to reposition it as proposed was in the best interests of shareholders and that the fund’s performance index should be revised to align more closely with the fund’s proposed investment policy. The Trustees considered information provided by Putnam Management about the proposed repositioning of the fund, the current performance index (MSCI AC Asia Pacific Index (ND)) and the performance index proposed in the management contract (the MSCI AC Asia ex-Japan Index (ND)). This included, among other things, comparative data regarding the characteristics (e.g., capitalization, risk, sector weightings, and country weightings), and returns over various periods, of the fund, the MSCI AC Asia Pacific Index (ND) and the MSCI AC Asia ex-Japan Index (ND).
In recommending approval of the proposed new management contract, the Trustees noted that the MSCI AC Asia ex-Japan Index (ND) more closely resembles the proposed composition of the repositioned fund and, accordingly, the interests of fund shareholders and Putnam Management would be more closely aligned if the performance index is changed.
General conclusion
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After considering the factors described above relating to the performance index under the proposed new management contract, and taking into account all of the factors considered, as described inAppendix C, as part of the recent approval of the continuance of the fund’s current management contract in June 2010, the Trustees, including the Independent Trustees, approved the proposed new management contract.
►What are the Trustees recommending?
The Trustees of your fund, including all of the Independent Trustees, unanimously recommend that shareholders approve the proposed new management contract that would change your fund’s performance index.
1.B. Putnam International Value Fund
►Why did Putnam Management propose a new management contract for your fund?
Putnam Management proposes that a new management contract for your fund that would change the fund’s performance index to a more widely recognized index. Putnam International Value Fund pursues capital growth with current income as a secondary objective by investing mainly in common stocks of companies outside the United States, with a focus on value stocks. The fund’s current management contract provides for performance adjustments to the fund’s management fees based on the fund’s performance compared to the S&P Developed/Ex-U.S. LargeMidCap Value Index. Putnam Management recommends a new management contract for your fund that changes the fund’s performance index to the MSCI EAFE Value Index (ND), which is a free float-adjusted market capitalization index that is designed to measure the equity market performance of common stocks in 22 developed-market countries within Europe, Australia and the Far East.2Putnam Management believes that the MSCI EAFE Value Index (ND) is a more widely recognized measure for assessing the performance of funds like Putnam International Value Fund. The use of the MSCI index would also be more consistent with the other Putnam large-cap international funds with performance fees, both of which use MSCI EAFE indexes.
Accordingly, Putnam Management proposed, and the Trustees agreed, to approve a new management contract for your fund so that the MSCI EAFE Value Index (ND) would be used prospectively as the performance index for purposes of determining the fund’s performance fees. The proposed new management contract differs in substance from the fund’s current management contract solely in the choice of the performance index used to calculate performance fees; the base management fee and the methodology for calculating performance fee adjustments to the base fee would remain the same as in the fund’s current management contract.
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2MSCI publishes two versions of some indices reflecting the reinvestment of dividends using two different methodologies: gross dividends (GD) and net dividends (ND). While both versions reflect reinvested dividends, they differ in the way they treat taxes associated with dividend payments. The net dividends version incorporates reinvested dividends by applying the withholding tax rate applicable to foreign non-resident institutional investors that do not benefit from double taxation treaties. Putnam Management believes that the net dividends version better reflects the returns U.S. investors might expect were they to invest directly in the component securities of the index.
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►Will the proposed change in the performance index for the fund result in a change in the investment objective or strategies of the fund?
No. The fund’s investment objective, which is to seek capital growth with current income as a secondary objective, will remain the same. There will also be no change in the fund’s investment strategies. The fund will continue to invest mainly in common stocks of companies outside the United States, with a focus on value stocks. In addition, the fund will continue to invest mainly in midsize and large companies in developed countries, although the fund will also continue to be able to invest in companies of any size and to invest in emerging markets.
►What are the implications for the fund if the proposed new management contract is approved?
If the proposed new management contract is approved, the fund’s performance index would change from the S&P Developed/Ex-U.S. LargeMidCap Value Index to the MSCI EAFE Value Index (ND).
As described below, the change in performance index is prospective only. The fund’s performance would be compared to the current index for periods before changing the fund’s index, and it would be compared to the new index thereafter. All other terms and conditions of the proposed new management contract for the fund are substantially identical to those of the fund’s current management contract. A form of the proposed new management contract showing the proposed changes is included inAppendix A.
Calculation of current management fee.The fund’s current management contract provides for the monthly payment of a management fee based on two components: a base fee and a performance adjustment.
The monthly base fee for your fund is calculated by multiplying a base fee rate by the average net assets of the fund for the month. The base fee rate takes into account the aggregate net assets of the Putnam fund family – all open-end mutual funds sponsored by Putnam Management, except for the Putnam RetirementReady® Funds, Putnam Global Sector Fund, and Putnam Money Market Liquidity Fund – and is determined in accordance with a schedule set forth in the management contract. For January 2011, the base fee rate was [••%] based on aggregate net Putnam fund family assets of approximately [$••billion].
The performance adjustment is a dollar amount added to or subtracted from your fund’s base fee each month based upon the fund’s performance relative to its performance index. Performance adjustments commenced beginning at the end of January 2011, your fund’s thirteenth complete calendar month of operations under its current management contract.
For each month, performance adjustments are determined based on performance over theperformance period, which is the thirty-six-month period then ended or, if the management contract has not yet been effective for thirty-six complete calendar months, the period from the date the management contract became effective to the end of the month for which the fee
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adjustment is being computed. Each month, the performance adjustment is calculated by multiplying theperformance adjustment rateand the fund’s average net assets over the performance period and dividing the result by twelve. The resulting dollar amount is added to, or subtracted from, the base fee for that month. The performance adjustment rate is equal to 0.03% multiplied by the difference between the fund’s annualized performance (net of fees and expenses, measured by the fund’s class A shares) and the annualized performance of the performance index (S&P Developed/Ex-U.S. LargeMidCap Value Index), each measured over the performance period. The maximum annualized performance adjustment rates are ± 0.15%.
The monthly base fee is determined based on the fund’s average net assets for the month, while the performance adjustment is determined based on the fund’s average net assets over the performance period of up to thirty-six months. This means it is possible that the amount of any dollar adjustment as a percentage of a fund’s current assets could exceed the maximum annualized performance adjustment rate of ± 0.15%. Also, if the fund underperforms significantly over the performance period, and the fund’s assets have declined significantly over that period, the negative performance adjustment may exceed the base fee. In this event, Putnam Management would make a payment to the fund.
The fund’s performance is calculated net of expenses. The fund’s benchmark index does not include any fees or expenses. Reinvestment of dividends and distributions are included in calculating the performance of both the fund and the fund’s performance index.
During the most recently completed fiscal year, the fund paid management fees to Putnam Management in the amount of $2,397,165. This amount does not include any performance adjustment; performance adjustments, as noted above, did not commence until January 2011.
Calculation of management fee with proposed benchmark index.The proposed new management contract would have the same fund family breakpoint fee structure for determining the base fee as described above for the current management contract. Furthermore, the proposed new management contract’s methodology for calculating performance adjustments would fundamentally remain the same as described above for the current management contract.
If the proposal is approved, the fund’s performance adjustments will be calculated by comparing the fund’s performance (Class A, net of fees and expenses) with the performance of the MSCI EAFE Value Index (ND) rather than the performance of the S&P Developed/Ex-U.S. LargeMidCap Value Index.
The change in the fund’s performance index would be implemented on a prospective basis beginning with the first day of the month following shareholder approval. However, because the performance adjustment is based on a rolling thirty-six month performance period, there will be a transition period during which the fund’s performance would be compared to a composite index that reflects the performance of the current index for the portion of the performance period before adoption of the new index and the performance of the new index for the remainder of the period. For example, assuming an effective date of April 1, 2011 for
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the proposed new management contract, the performance adjustment for April 2011 (the first full month following shareholder approval) would be calculated using the performance of the current performance index, S&P Developed/Ex-U.S. LargeMidCap Value Index, for the first fifteen months of the performance period (i.e., January 1, 2010 through March 31, 2011) and the performance of the new performance index, MSCI EAFE Value Index (ND), for the sixteenth month (i.e., April 2011). For each of the ensuing months, the composite index return would reflect an additional month of MSCI EAFE Value Index (ND) performance and eventually, beginning with the performance adjustment for the month of January 2013 (by when the fund would have a thirty-six-month performance period), one less month of S&P Developed/Ex-U.S. LargeMidCap Value Index performance. At the conclusion of the transition period (February 28, 2014, if the new management contract becomes effective on April 1, 2011), the performance of the current index would be eliminated from the performance fee calculation, and future calculations (starting for the month of March 2014) would include only the performance of the new index.
Comparison of current and proposed performance indexes.
The proposed performance index, the MSCI EAFE Value Index (ND), is a free float-adjusted market capitalization index that is designed to measure the equity market performance of common stocks in 22 developed-market countries within Europe, Australia and the Far East. It is a subset of the MSCI EAFE Index, and constituents of the index include securities from Europe, Australasia and the Far East. The index generally represents approximately 50% of the free float-adjusted market capitalization of the underlying MSCI EAFE Index, and consists of those securities classified by MSCI, Inc. (MSCI) as most representing the value style. Value style securities typically have higher book value-to-price ratios, higher forward earnings-to-price ratios, higher dividend yields and lower forecasted growth rates than securities representing the growth style.
The S&P Developed/Ex-U.S. LargeMidCap Value Index is an unmanaged index of index of mostly large and some small-cap stocks from developed countries, excluding the United States, chosen for their value orientation.
Data as of December 31, 2010 concerning the absolute and relative performance of the fund, the S&P Developed/Ex-U.S. LargeMidCap Value Index and the MSCI EAFE Value Index (ND) are provided below. As of December 31, 2010, over the periods presented, the proposed new performance index has underperformed the current performance index. However, the proposed new performance index outperformed the current performance index in four out of the last ten years through 2010. Of course, if the proposed performance index were to regularly underperform the current performance index, Putnam Management would be more likely to earn positive performance adjustments, and less likely to suffer negative performance adjustments, in the future under the proposed new management contract. However, past performance is no guarantee of future performance, and Putnam Management does not believe that either index will regularly outperform the other in the future.
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As of December 31, 2010
Fund or Index | Since Fund | 1-Year | 3-Year | 5-Year | 10-Year |
Inception | Annualized | Annualized | Annualized | Annualized | |
(8/1/96) | |||||
Cumulative | |||||
Fund (net return) | 6.21% | 7.29% | -10.00% | -0.03% | 2.53% |
S&P Developed/Ex- | 6.87% | 10.02% | -5.80% | 3.81% | 5.87% |
U.S. LargeMidCap | |||||
Value Index | |||||
(current | |||||
performance index) | |||||
MSCI EAFE Value | 5.91% | 3.25% | -8.15% | 1.37% | 4.19% |
Index (ND) | |||||
(proposed | |||||
performance index) | |||||
Gross Annual Returns for Calendar Years 2002-2010
Fund or | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001 |
Index | ||||||||||
Fund | [ ]% | 27.68 % | -45.32% | 8.87% | 29.29% | 16.28% | 22.70% | 39.99% | -13.12% | -20.51% |
S&P | 10.02% | 33.96 | -43.29 | 13.39 | 27.22 | 16.38 | 23.38 | 43.05 | -12.83 | -18.06 |
Developed/Ex | ||||||||||
-U.S. | ||||||||||
LargeMidCap | ||||||||||
Value Index | ||||||||||
(current | ||||||||||
performance | ||||||||||
index) | ||||||||||
MSCI EAFE | 3.25% | 34.23 | -44.09 | 5.96 | 30.38 | 13.80 | 24.33 | 45.30 | -15.91 | -18.52 |
Value Index | ||||||||||
(ND) | ||||||||||
(proposed | ||||||||||
performance | ||||||||||
index) | ||||||||||
Comparison of management fee rates under current and proposed performance index.The table below shows what the management fees for the fund were under its current contract for its most recent fiscal year (ended June 30, 2010), and what the management fees for the fund would have been for its most recent fiscal year had its proposed new contract been in effect for that year. Of course, during the most recent fiscal year, the fund made no performance adjustments to the base management fee it paid Putnam Management. (It did not begin to make performance adjustments until January 2011.) Accordingly, the table below shows that there would have been no differences in management fee rates for the fiscal year ended June 30, 2010 under the current and proposed performance index. Because the change in performance index will be implemented prospectively, the future impact on management fees will depend on the fund’s future performance relative to the proposed performance index. Management fee rates are expressed in dollars and as a percentage of the fund’s average net assets for the fiscal year ended June 30, 2010.
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EXAMPLES |
FOR THE FISCAL YEAR ENDED JUNE 30, 2010 |
(Performance adjustments had not commenced) |
Current Contract | Proposed Contract | Difference | ||||
$ | % | $ | % | $ | % | |
Base Fee | $2,397,165 | 0.69% | $2,397,165 | 0.69% | 0 | 0.00% |
Performance | ||||||
Adjustment | 0 | 0.00% | 0 | 0.00% | 0 | 0.00% |
Total Management Fee | $2,397,165 | 0.69% | $2,397,165 | 0.69% | 0 | 0.00% |
Included atAppendix Bare examples of the fund’s total annual operating expenses (as a percentage of average net assets) under the current management contract and pro forma total annual operating expenses under the proposed new management contract.
►What factors did the Independent Trustees consider in evaluating the proposed new management contract?
At their meeting on December 10, 2010, the Independent Trustees approved a new management contract with Putnam Management. In substance, the new management contract differed from the existing management contract only in that it provided for a new performance index for use, prospectively, in calculating performance adjustments to the fund’s base management fee.
In considering whether to approve the new management contract, the Trustees took into account that they had most recently approved the annual continuation of the fund’s existing management contract with Putnam Management in June 2010. Because, other than the difference in performance index, the effective date of the contract, and the initial term of the contract (through June 30, 2011), the new management contract was identical to the fund’s existing management contract, the Trustees relied to a considerable extent on their previous approval of the continuance of the fund’s existing management contract, which is described atAppendix Cbelow.
The proposed new management contract provided that the MSCI EAFE Value Index (ND) would be the performance index used in calculating performance adjustments to the fund’s base management fee. The S&P Developed/Ex-U.S. LargeMidCap Value Index is the fund’s performance index under the existing management contract. In approving the change in performance index for the fund, the Trustees considered information provided by Putnam Management, including, among other things comparative data regarding the characteristics (e.g., capitalization, risk, sector weightings, and country weightings), and returns over various periods, of the fund, the S&P Developed/Ex-U.S. LargeMidCap Value Index and the MSCI EAFE Value Index (ND), as well as hypothetical examples comparing what performance adjustments would have occurred to base management fees under both the current and proposed contracts, had the fund been calculating performance adjustments since
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January 1, 2010. The Trustees took into account that for certain historical periods ending December 31, 2010, the proposed performance index underperformed the current performance index, but, based on Putnam Management’s report and on the fact that in some calendar years the proposed performance index underperformed the current performance index but in other calendar years the reverse was true, concluded that there was not systemic reason to believe that one performance index would regularly outperform the other.
The Trustees also considered Putnam Management’s belief that the MSCI EAFE Value Index (ND) is more widely recognized, in particular by financial intermediaries and investment professionals, than the S&P Developed/Ex-U.S. LargeMidCap Value Index and that MSCI provides strong support and service to users of its indices (e.g., servicing during index rebalancing periods). In addition, they noted that the use of the MSCI EAFE Value Index (ND) would be more consistent with other Putnam large-cap international funds that have performance fees.
General conclusion
After considering the factors described above relating to the performance index under the proposed new management contract, and taking into account all of the factors considered, as described inAppendix C, as part of the recent approval of the continuance of the fund’s current management contract in June 2010, the Trustees, including the Independent Trustees, approved the proposed new management contract.
►What are the Trustees recommending?
The Trustees of your fund, including all of the Independent Trustees, unanimously recommend that shareholders approve the proposed new management contract that would change your fund’s performance index.
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2. APPROVING AN AMENDMENT TO YOUR FUND’S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO THE ACQUISITION OF VOTING SECURITIES OF ANY ISSUER
► What is this proposal?
The Trustees recommend that each fund’s fundamental investment restriction with respect to the acquisition of voting securities of any issuer be revised.
The Investment Company Act of 1940, as amended (the “1940 Act”), requires registered investment companies like the funds to havefundamentalinvestment restrictions governing specified investment practices. Investment companies may also voluntarily designate restrictions relating to other investment practices as fundamental. Fundamental investment restrictions can be changed only by a shareholder vote.
Each fund is a diversified fund under the 1940 Act. Compared with a non-diversified fund, a diversified fund would be generally expected to have lesser exposures to individual portfolio securities. The 1940 Act requires that to qualify as adiversifiedfund, among other things, with respect to at least 75% of its total assets, the fund must not acquire more than 10% of the outstanding voting securities of any issuer. Under the 1940 Act, however, this requirement does not apply to securities issued by investment companies or to securities issued by or guaranteed as to interest or principal by the U.S. government or its agencies or instrumentalities. The remaining 25% of the fund’s total assets is not subject to this restriction.
Each fund has a fundamental investment restriction that prohibits it from acquiring more than 10% of the outstanding voting securities of any issuer. The current investment restriction states that your fund may not:
“With respect to 75% of its total assets, acquire more than 10% of the voting securities of any issuer.”
We are proposing to amend this fundamental restriction to align it with the requirements of the 1940 Act. The amended restriction would state that your fund may not:
“With respect to 75% of its total assets, acquire more than 10% of the voting securities of any issuer; provided that this limitation does not apply to obligations issued or guaranteed as to interest or principal by the U.S. government or its agencies or instrumentalities or to securities issued by other investment companies.”
► What effect will amending the current restriction with respect to the acquisition ofvoting securities of any issuer have on your fund?
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By aligning the restriction with the requirements of the 1940 Act, the proposed change would permit your fund greater flexibility to invest in certain U.S. government securities and in the securities of other investment companies without limiting its right to exercise voting power with respect to those securities. Investing in other investment companies involves expenses at the investment company level, such as portfolio management fees and operating expenses, which are in addition to the fees and expenses of the fund.
► What are the Trustees recommending?
The Trustees unanimously recommend that shareholders approve an amendment to your fund’s fundamental investment restriction with respect to the acquisition of voting securities of any issuer.
► What is the voting requirement for approving the proposal?
Approval of this proposal for each fund requires the affirmative vote of the lesser of (1) more than 50% of the fund’s outstanding shares, or (2) 67% or more of the fund’s shares present at the Meeting if more than 50% of the outstanding shares of the fund are present at the Meeting in person or by proxy. The outcome of the vote on the proposal for one fund will not affect the vote for the other fund.
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Further Information About Voting and the Special Meeting
Quorum and Methods of Tabulation.The shareholders of each fund vote separately with respect to each proposal. Shares of all classes of each fund vote together as a single class. Thirty percent of the shares entitled to vote constitutes a quorum for the transaction of business with respect to the proposals. Any lesser number is sufficient for adjournments. Votes cast by proxy or in person at the Meeting will be counted by persons your fund appoints as tellers for the Meeting. The tellers will count the total number of votes cast for approval of a proposal for purposes of determining whether sufficient affirmative votes have been cast. Shares represented by proxies that reflect abstentions and broker non-votes (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or the persons entitled to vote and (ii) the broker or nominee does not have the discretionary voting power on a particular matter) will be counted as shares that are present and entitled to vote on the matter for purposes of determining the presence of a quorum.
The documents that authorize Putnam Fiduciary Trust Company to act as Trustee for certain individual retirement accounts (including traditional, Roth and SEP IRAs, 403(b)(7) accounts, and Coverdell Education Savings Accounts) provide that if an account owner does not submit voting instructions for his or her shares, Putnam Fiduciary Trust Company will vote the shares in the same proportions as other shareholders with similar accounts that have submitted voting instructions for their shares. Shareholders should be aware that this practice, known as “echo-voting,” may have the effect of increasing the likelihood that a proposal will be acted upon (approved or disapproved).
Abstentions and broker non-votes have the effect of votes against the proposals. Treating broker non-votes as negative votes may result in a proposal not being approved, even though the votes cast in favor would have been sufficient to approve the proposal if some or all of the broker non-votes had been withheld. In certain circumstances in which a fund has received sufficient votes to approve a matter being recommended for approval by the fund’s Trustees, the fund may request that brokers and nominees, in their discretion, withhold submission of broker non-votes in order to avoid the need for solicitation of additional votes in favor of the proposal. A fund may also request that selected brokers and nominees, in their discretion, submit broker non-votes, if doing so is necessary to obtain a quorum.
As of the Record Date, the funds had the following shares outstanding:
Number of shares outstanding of | Number of shares outstanding of | |
Class | Putnam Asia Pacific Equity Fund | Putnam International Value Fund |
Class A | 651,346.153 | 25,443,987.903 |
Class B | 17,411.476 | 1,816,029.814 |
Class C | 13,611.791 | 1,174,052.266 |
Class M | 2,842.001 | 538,901.251 |
Class R | 3,593.633 | 259,833.463 |
Class Y | 42,401.214 | 501,140.758 |
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Share Ownership.At December 31, 2010, the officers and Trustees of the funds as a group owned less than 1% of the outstanding shares of each class of each fund, and, except as noted atAppendix D, no person owned of record or to the knowledge of the funds beneficially 5% or more of any class of shares of each fund. As of December 31, 2010, Putnam Management maintained a seed capital position in the Fund of $5,745,702.84, which represents ownership of approximately 65% of the Fund’s net assets. Putnam Management expects to “echo-vote” its shares on each proposal, which means it will vote its shares in the same proportions as other shareholders who have submitted voting instructions for their shares.
Other business.The Trustees know of no matters other than those described in this proxy statement to be brought before the Meeting. If, however, any other matters properly come before the Meeting, proxies will be voted on these matters in accordance with the judgment of the persons named in the enclosed form of proxy.
Simultaneous meetings.The meeting of shareholders of each fund is called to be held at the same time. It is anticipated that both funds’ meetings will be held simultaneously.
If any shareholder at the meeting objects to the holding of a simultaneous meeting and moves for an adjournment of his or her fund’s meeting to a time promptly after the other fund’s meeting, the persons named as proxies will vote in favor of such adjournment.
Solicitation of proxies.In addition to soliciting proxies by mail, Trustees of your fund and employees of Putnam Management, PSERV, and PRM, as well as their agents, may solicit proxies in person or by telephone. Your fund may arrange to have a proxy solicitation firm call you to record your voting instructions by telephone. Your fund has been advised by counsel that these procedures are consistent with the requirements of applicable law. If these procedures were subject to a successful legal challenge, these votes would not be counted at the Meeting. Your fund is unaware of any challenge at this time. Shareholders would be called at the phone number Putnam Management has in its records for their accounts and would be given an opportunity to authorize the proxies to vote their shares at the Meeting in accordance with their instructions. To ensure that shareholders’ instructions have been recorded correctly, they will also receive a confirmation of their instructions in the mail. A special toll-free number will be available in case the information contained in the confirmation is incorrect.
Shareholders have the opportunity to submit their voting instructions over the Internet by using a program provided by a third-party vendor hired by Putnam Management, or by automated telephone service. To use the Internet, please access the Internet address listed on the proxy card and follow the instructions on the Internet site. To record your voting instructions using the automated telephone service, call the toll-free number listed on your proxy card. The Internet and telephone voting procedures are designed to authenticate shareholder identities, to allow shareholders to authorize the voting of their shares in accordance with their instructions, and to confirm that shareholders’ instructions have been recorded properly. Shareholders voting over the Internet should understand that there may be
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costs associated with electronic access, such as usage charges from Internet access providers and telephone companies, that must be borne by the shareholders.
Your fund’s Trustees have adopted a general policy of maintaining confidentiality in the voting of proxies. Consistent with this policy, your fund may solicit proxies from shareholders who have not voted their shares or who have abstained from voting, including brokers and nominees.
Persons holding shares as nominees will, upon request, be reimbursed for their reasonable expenses in soliciting instructions from their principals. Putnam Management has retained at its own expense Boston Financial Data Solutions, 2000 Crown Colony Drive, Quincy, MA 02159 to aid in the solicitation of instructions for nominee and registered accounts, for a fee not to exceed $[ ] plus reasonable out-of-pocket expenses. The expenses of the preparation of proxy statements and related materials, including printing and delivery costs, are being borne by Putnam Management.
Revocation of proxies.Giving your proxy, whether by returning the proxy card or providing voting instructions over the Internet or by telephone, does not affect your right to attend the Meeting and vote in person. Proxies, including proxies given by telephone or over the Internet, may be revoked at any time before they are voted either (i) by a written revocation received by the Clerk of your fund, (ii) by properly executing and submitting a later-dated proxy, (iii) by recording later-dated voting instructions by telephone or over the Internet, (iv) in the case of brokers and nominees, by submitting written instructions to your fund’s solicitation agent or the applicable record shareholders, or (v) by attending the Meeting and voting in person.
Date for receipt of shareholders’ proposals for subsequent meetings of shareholders.Your fund does not regularly hold an annual shareholder meeting, but may from time to time schedule a special meeting. In accordance with SEC regulations, to be eligible for inclusion in a fund’s proxy statement for a meeting, a shareholder proposal must be received a reasonable time before the fund prints and mails its proxy statement.
The Board Policy and Nominating Committee of the Board of Trustees, which consists of Independent Trustees only, will also consider nominees recommended by shareholders of a fund to serve as Trustees. A shareholder must submit the names of any such nominees in writing to the fund, to the attention of the Clerk, at the address of the principal offices of the fund.
If a shareholder who wishes to present a proposal at a special shareholder meeting fails to notify the fund within a reasonable time before the fund mails its proxy statement, the persons named as proxies will have discretionary authority to vote on the shareholder’s proposal if it is properly brought before the meeting. If a shareholder makes a timely notification, the proxies may still exercise discretionary voting authority under circumstances consistent with the SEC’s proxy rules. All shareholder proposals must also comply with other requirements of the SEC’s rules and each fund’s Agreement and Declaration of Trust and Bylaws.
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Adjournment.For either fund, if the quorum required for its Meeting has not been met, the persons named as proxies intend to propose adjournment of the Meeting and to vote all shares that they are entitled to vote in favor of such adjournment. If the quorum required for a Meeting has been met, but sufficient votes in favor of one or more of the proposals are not received by the time scheduled for the Meeting, the persons named as proxies may also propose adjournment of the Meeting with respect to one or more of the proposals in order to permit solicitation of additional proxies. The persons named as proxies will vote in favor of adjournment with respect to any proposal those proxies that they are entitled to vote in favor of a proposal, and will vote against any adjournment those proxies required to be voted against a proposal. Any adjournment with respect to a proposal will require the affirmative vote of a majority of the votes cast on the question in person or by proxy at the session of the meeting to be adjourned. Adjournments proposed may be for a period or periods of not more than 60 days in the aggregate. Any proposal for which sufficient favorable votes have been received may be acted upon and considered final regardless of whether the meeting is adjourned to permit additional solicitation with respect to any other proposal.
Duplicate mailings.As permitted by SEC rules, Putnam’s policy is to send a single copy of the proxy statement to shareholders who share the same last name and address, unless a shareholder previously has requested otherwise. Separate proxy cards will be included with the proxy statement for each account registered at that address. If you would prefer to receive your own copy of the proxy statement, or if you are currently receiving multiple copies at a shared address and would prefer to receive a single copy of the proxy statement, please contact Putnam Investor Services, Inc. by phone at 1-800-225-1581 or by mail at P.O. Box 8383, Boston, MA 02266-8383.
Financial information. Your fund’s Clerk will furnish to you, upon request and without charge, a copy of the fund’s annual report for its most recent fiscal year, and a copy of its semiannual report for any subsequent semiannual period. You may direct these requests to Putnam Investor Services, Inc., P.O. Box 8383, Boston, MA 02266-8383 or by phone at 1-800-225-1581. You may also access copies of these reports by visiting Putnam’s Web site at http://www.putnam.com/individual.
Fund Information
Putnam Investments.Putnam Management, your fund’s investment manager and administrator, is owned through a series of holding companies by Putnam Investments, LLC (“Putnam Investments”). Putnam Investments is a holding company that, except for a minority stake owned by employees, is owned (through a series of holding companies) by Great-West Lifeco Inc., which is a financial services holding company with interests in the life insurance, retirement, savings, and reinsurance businesses. Its businesses have operations in Canada, the United States and Europe. Great-West Lifeco Inc. is a majority-owned subsidiary of Power Financial Corporation. Power Financial Corporation is a diversified management and holding company that has interests, directly or indirectly, in companies that are active in the financial services sector in Canada, the United States and Europe. It also has substantial holdings in a group of energy, water, waste services, specialty minerals and cement and building materials companies in Europe. Power Corporation of Canada, a diversified international management and holding company, owns a majority of the voting
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securities of Power Financial Corporation. The Hon. Paul Desmarais, Sr., through a group of holding companies that he controls, has voting control of Power Corporation of Canada.
The address of each of Putnam Investments and Putnam Management is One Post Office Square, Boston, Massachusetts 02109. The address of Great-West Lifeco Inc. is 100 Osborne Street North, Winnipeg, Manitoba R3C 3A5. The address of Mr. Desmarais, Power Corporation of Canada and Power Financial Corporation is 751 Victoria Square, Montreal, Quebec H2Y 2J3, Canada. Robert L. Reynolds is the President and Chief Executive Officer of Putnam Investments. His address is One Post Office Square, Boston, Massachusetts 02109.
Putnam Management provides investment advisory services to other funds that may have investment objectives and policies similar to those of your fund. The table inAppendix Eidentifies these other funds and states their net assets and their current management fee schedules.
Putnam Investments Limited.Putnam Investments Limited, which has been retained by Putnam Management as investment sub-adviser with respect to a portion of the assets of each fund as may be designated from time to time, is owned by Putnam International Holdings, LLC, which is a holding company owned by Putnam Investments. The directors of Putnam Investments Limited, listed along with their principal business occupations at Putnam Investments, are [William T. Connolly (Head of Global Distribution), Simon L. Davis (Head of International Large Cap Equities), Alan G. McCormack (Head of Quantitative Equities), Jenny S. Mortan (Head of Global Consultant Relations), and Joseph T. Phoenix (Head of International Business). The address of Putnam Investments Limited and each of the directors other than William T. Connolly is Cassini House, 57-59 St. James’s Street, London, England SW1A 1LD. The address of Putnam International Holdings, LLC and of Mr. Connolly is One Post Office Square, Boston, Massachusetts 02109.]
The Putnam Advisory Company, LLC.The Putnam Advisory Company, LLC, which has also been retained by Putnam Management to serve as sub-adviser for a portion of the assets of each fund as may be designated from time to time, is owned by Putnam Advisory Company, Limited Partnership, a holding company whose general partner (and minority owner) is Putnam Advisory Company GP, Inc., a holding company that is owned by Putnam, LLC, a holding company subsidiary (through a series of other holding companies) of Putnam Investments that is also the majority owner of Putnam Advisory Company, Limited Partnership and the sole owner of Putnam Advisory Company GP, Inc. The address of each of The Putnam Advisory Company, LLC, Putnam Advisory Company, Limited Partnership, Putnam Advisory Company GP, Inc. and Putnam, LLC is One Post Office Square, Boston, Massachusetts 02109.
Putnam Retail Management.Putnam Retail Management, your fund’s principal underwriter, is a limited partnership whose general partner (and minority owner) is Putnam Retail Management GP, Inc. and whose limited partner and majority owner is Putnam, LLC, which is also the sole owner of Putnam Retail Management GP, Inc. The address of each of Putnam Retail Management and Putnam Retail Management GP, Inc. is One Post Office Square, Boston, Massachusetts 02109.
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Putnam Investor Services, Inc.Putnam Investor Services, Inc. serves as your fund’s investor servicing agent. Before January 1, 2009, your fund’s investor servicing agent was Putnam Fiduciary Trust Company (“PFTC”). Both Putnam Investor Services, Inc. and PFTC are subsidiaries of Putnam Investments. The address of Putnam Investor Services, Inc. and PFTC is One Post Office Square, Boston, Massachusetts 02109.
The table below shows fee amounts paid to Putnam Management or its affiliates during each fund’s most recent fiscal year (April 30, 2010 for Putnam Asia Pacific Equity Fund and June 30, 2010 for Putnam International Value Fund) for the services noted (other than under a management contract). The funds made no other material payments to Putnam Management or its affiliates during the periods shown. These services will continue to be provided regardless of whether the proposed management contract is approved.
Fees paid to Putnam Investor Services, Inc. for | Fees paid to Putnam Retail Management Limited | |||
serving as investor servicing agent ($) | Partnership pursuant to distribution plans ($) | |||
Putnam Asia | $22,555 | [ ] | ||
Pacific Equity Fund | ||||
Putnam | $1,311,018 | [ ] | ||
International Value | ||||
Fund | ||||
Limitation of Trustee liability.Your fund’s Declaration of Trust provides that the fund will indemnify its Trustees and officers against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices with the fund, except if it is determined in the manner specified in the Declaration of Trust that they have not acted in good faith in the reasonable belief that their actions were in the best interests of the fund or that such indemnification would relieve any officer or Trustee of any liability to the fund or its shareholders arising by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of his or her duties. Your fund, at its expense, provides liability insurance for the benefit of its Trustees and officers.
Officers and other information.All of the officers of your fund are employees of Putnam Management or its affiliates or serve on the staff of the Office of the Trustees. Because of his positions with Putnam Management or its affiliates, Mr. Reynolds, as well as the other affiliated officers of your fund, will benefit indirectly from the management fees and investor servicing fees paid or allowed by your fund. The other officers of your fund are as follows:
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Name (year of birth), | Year first elected | Business experience | |
Office with the fund | to office | during past 5 years | |
Robert L. Reynolds | 2009 | President and Chief Executive Officer, | |
(Born 1952) | The Putnam Funds | ||
Executive Vice President, | |||
Principal Executive Officer, | |||
Treasurer and Compliance Liaison | |||
Jonathan S. Horwitz | 2004 | Senior Vice President and | |
(Born 1955)* | Treasurer, The Putnam | ||
Executive Vice President, | Funds. | ||
Principal Executive Officer, | |||
Treasurer and Compliance Liaison | |||
Steven D. Krichmar | 2002 | Senior Managing Director, | |
(Born 1958) | Putnam Investments. | ||
Vice President and | |||
Principal Financial Officer | |||
Janet C. Smith | 2006 | Managing Director, | |
(Born 1965) | Putnam Investments. | ||
Vice President, Assistant | |||
Treasurer and Principal | |||
Accounting Officer | |||
Susan G. Malloy | 2007 | Managing Director, | |
(Born 1957) | Putnam Investments. | ||
Vice President and | |||
Assistant Treasurer | |||
Beth S. Mazor (Born 1958) | 2002 | Managing Director, | |
Vice President | Putnam Investments. |
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Robert R. Leveille | 2007 | Managing Director, | |
(Born 1969) | Putnam Investments. | ||
Vice President and Chief | |||
Compliance Officer | |||
Mark C. Trenchard | 2002 | Managing Director, | |
(Born 1962) | Putnam Investments. | ||
Vice President and BSA | |||
Compliance Officer | |||
Francis J. McNamara, III | 2004 | Senior Managing Director, | |
(Born 1955) | Putnam Investments, | ||
Vice President and Chief | Putnam Management | ||
Legal Officer | and Putnam Retail | ||
Management. | |||
James P. Pappas | 2004 | Managing Director, | |
(Born 1953) | Putnam Investments and | ||
Vice President | Putnam Management. | ||
Judith Cohen | 1993 | Vice President, Clerk and | |
(Born 1945)* | Assistant Treasurer, The | ||
Vice President, Clerk and | Putnam Funds. | ||
Assistant Treasurer | |||
Michael Higgins | |||
(Born 1976) | 2010 | Manager of Finance, Dunkin Brands | |
Vice President, Senior Associate | (2008-2010); Senior Financial Analyst, | ||
Treasurer and Assistant Clerk | Old Mutual Asset Management (2007-2008); | ||
Senior Financial Analyst, Putnam Investments | |||
(1999-2007) | |||
Nancy E. Florek | 2000 | Vice President, Assistant | |
(Born 1957)* | Clerk, Assistant Treasurer | ||
Vice President, Assistant | and Proxy Manager, The | ||
Clerk, Assistant Treasurer | Putnam Funds. | ||
and Proxy Manager |
* Officers of each fund who are members of the Trustees’ independent administrative staff. Compensation for these individuals is fixed by the Trustees and reimbursed to Putnam Management.
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Appendix A | |
DOUBLE UNDERLINEDLANGUAGE WILL BE ADDED | |
PUTNAM ASIA PACIFIC EQUITY FUND | |
FORM OF | |
PUTNAM FUNDS TRUST | |
MANAGEMENT CONTRACT |
This Management Contract is dated as ofJanuary 1, 2010April 1, 2011between PUTNAM FUNDS TRUST, a Massachusetts business trust (the “Fund”), and PUTNAM INVESTMENT MANAGEMENT, LLC, a Delaware limited liability company (the “Manager”).
In consideration of the mutual covenants herein contained, it is agreed as follows:
1. SERVICES TO BE RENDERED BY MANAGER TO FUND.
(a) The Manager, at its expense, will furnish continuously an investment program for the Fund or, in the case of a Fund that has divided its shares into two or more series under Section 18(f)(2) of the Investment Company Act of 1940, as amended (the “1940 Act”), each series of the Fund identified from time to time onSchedule Ato this Contract (each reference in this Contract to “a Fund” or to “the Fund” is also deemed to be a reference to any existing series of the Fund, as appropriate in the particular context), will determine what investments will be purchased, held, sold or exchanged by the Fund and what portion, if any, of the assets of the Fund will be held uninvested and will, on behalf of the Fund, make changes in such investments. Subject always to the control of the Trustees of the Fund and except for the functions carried out by the officers and personnel referred to in Section 1(d), the Manager will also manage, supervise and conduct the other affairs and business of the Fund and matters incidental thereto. In the performance of its duties, the Manager will comply with the provisions of the Agreement and Declaration of Trust and By-Laws of the Fund and the stated investment objectives, policies and restrictions of the Fund, will use its best efforts to safeguard and promote the welfare of the Fund and to comply with other policies which the Trustees may from time to time determine and will exercise the same care and diligence expected of the Trustees.
(b) The Manager, at its expense, except as such expense is paid by the Fund as provided in Section 1(d), will furnish (1) all necessary investment and management facilities, including salaries of personnel, required for it to execute its duties faithfully; (2) suitable office space for the Fund; and (3) administrative facilities, including bookkeeping, clerical personnel and equipment necessary for the efficient conduct of the affairs of the Fund, including determination of the net asset value of the Fund, but excluding shareholder accounting services. Except as otherwise provided in Section 1(d), the Manager will pay the compensation, if any, of the officers of the Fund.
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(c) The Manager, at its expense, will place all orders for the purchase and sale of portfolio investments for the Fund’s account with brokers or dealers selected by the Manager. In the selection of such brokers or dealers and the placing of such orders, the Manager will use its best efforts to obtain for the Fund the most favorable price and execution available, except to the extent it may be permitted to pay higher brokerage commissions for brokerage and research services as described below. In using its best efforts to obtain for the Fund the most favorable price and execution available, the Manager, bearing in mind the Fund’s best interests at all times, will consider all factors it deems relevant, including by way of illustration, price, the size of the transaction, the nature of the market for the security, the amount of the commission, the timing of the transaction taking into account market prices and trends, the reputation, experience and financial stability of the broker or dealer involved and the quality of service rendered by the broker or dealer in other transactions. Subject to such policies as the Trustees of the Fund may determine, the Manager will not be deemed to have acted unlawfully or to have breached any duty created by this Contract or otherwise solely by reason of its having caused the Fund to pay a broker or dealer that provides brokerage and research services to the Manager an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Manager determines in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Manager’s overall responsibilities with respect to the Fund and to other clients of the Manager as to which the Manager exercises investment discretion. The Manager agrees that in connection with purchases or sales of portfolio investments for the Fund’s account, neither the Manager nor any officer, director, employee or agent of the Manager shall act as a principal or receive any commission other than as provided in Section 3.
(d) The Fund will pay or reimburse the Manager for the compensation in whole or in part of such officers of the Fund and persons assisting them as may be determined from time to time by the Trustees of the Fund. The Fund will also pay or reimburse the Manager for all or part of the cost of suitable office space, utilities, support services and equipment attributable to such officers and persons as may be determined in each case by the Trustees of the Fund. The Fund will pay the fees, if any, of the Trustees of the Fund.
(e) The Manager will not be obligated to pay any expenses of or for the Fund not expressly assumed by the Manager pursuant to this Section 1 other than as provided in Section 3.
(f) Subject to the prior approval of a majority of the Trustees, including a majority of the Trustees who are not “interested persons” and, to the extent required by the 1940 Act and the rules and regulations under the 1940 Act, subject to any applicable guidance or interpretation of the Securities and Exchange Commission or its staff, by the shareholders of the Fund, the Manager may, from time to time, delegate to a sub-adviser or sub-administrator any of the Manager’s duties under this Contract, including the management of all or a portion of the assets being managed. In all instances, however, the Manager must oversee the provision of delegated services, the Manager must bear the separate costs of employing any sub-adviser or
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sub-administrator, and no delegation will relieve the Manager of any of its obligations under this Contract.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and employees of the Fund may be a shareholder, director, officer or employee of, or be otherwise interested in, the Manager, and in any person controlled by or under common control with the Manager, and that the Manager and any person controlled by or under common control with the Manager may have an interest in the Fund. It is also understood that the Manager and any person controlled by or under common control with the Manager may have advisory, management, service or other contracts with other organizations and persons and may have other interests and business.
3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.
The Fund will pay to the Manager as compensation for the Manager’s services rendered, for the facilities furnished and for the expenses borne by the Manager pursuant to paragraphs (a), (b), and (c) of Section 1, a Base Fee, computed and paid monthly on the Average Net Assets of the Fund at the annual rates set forth onSchedule Battached to this Contract, as from time to time amended, subject to adjustment as set forth onSchedule Cattached to this Contract, as from time to time amended. The Fund’s “Average Net Assets” means the average of all of the determinations of the Fund’s net asset value at the close of business on each business day during each period for which such computation is made. The Base Fee, as adjusted, is payable for each month within 15 days after the close of the month.
The fees payable by the Fund to the Manager pursuant to this Section 3 will be reduced by any commissions, fees, brokerage or similar payments received by the Manager or any affiliated person of the Manager in connection with the purchase and sale of portfolio investments of the Fund, less any direct expenses approved by the Trustees incurred by the Manager or any affiliated person of the Manager in connection with obtaining such payments.
In the event that expenses of the Fund for any fiscal year exceed the expense limitation on investment company expenses imposed by any statute or regulatory authority of any jurisdiction in which shares of the Fund are qualified for offer or sale, the compensation due the Manager for such fiscal year will be reduced by the amount of excess by a reduction or refund thereof. In the event that the expenses of the Fund exceed any expense limitation which the Manager may, by written notice to the Fund, voluntarily declare to be effective subject to such terms and conditions as the Manager may prescribe in such notice, the compensation due the Manager will be reduced, and if necessary, the Manager will assume expenses of the Fund, to the extent required by the terms and conditions of such expense limitation.
If the Manager serves for less than the whole of a month, the foregoing compensation will be prorated.
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4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THISCONTRACT.
This Contract will automatically terminate, without the payment of any penalty, in the event of its assignment, provided that no delegation of responsibilities by the Manager pursuant to Section 1(f) will be deemed to constitute an assignment. No provision of this Contract may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. No amendment of this Contract is effective until approved in a manner consistent with the 1940 Act, the rules and regulations under the 1940 Act and any applicable guidance or interpretation of the Securities and Exchange Commission or its staff.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract is effective upon its execution and will remain in full force and effect as to a Fund continuously thereafter (unless terminated automatically as set forth in Section 4 or terminated in accordance with the following paragraph) through June 30,20102011, and will continue in effect from year to year thereafter so long as its continuance is approved at least annually by (i) the Trustees, or the shareholders by the affirmative vote of a majority of the outstanding shares of the respective Fund, and (ii) a majority of the Trustees who are not interested persons of the Fund or of the Manager, by vote cast in person at a meeting called for the purpose of voting on such approval.
Either party hereto may at any time terminate this Contract as to a Fund by not less than 60 days’ written notice delivered or mailed by registered mail, postage prepaid, to the other party. Action with respect to a Fund may be taken either (i) by vote of a majority of the Trustees or (ii) by the affirmative vote of a majority of the outstanding shares of the respective Fund.
Termination of this Contract pursuant to this Section 5 will be without the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the “affirmative vote of a majority of the outstanding shares” of a Fund means the affirmative vote, at a duly called and held meeting of shareholders of the respective Fund, (a) of the holders of 67% or more of the shares of the Fund present (in person or by proxy) and entitled to vote at the meeting, if the holders of more than 50% of the outstanding shares of the Fund entitled to vote at the meeting are present in person or by proxy or (b) of the holders of more than 50% of the outstanding shares of the Fund entitled to vote at the meeting, whichever is less.
For the purposes of this Contract, the terms “affiliated person,” “control,” “interested person” and “assignment” have their respective meanings defined in the 1940 Act, subject, however, to the rules and regulations under the 1940 Act and any applicable guidance or interpretation of the Securities and Exchange Commission or its staff; the term “approve at
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least annually” will be construed in a manner consistent with the 1940 Act and the rules and regulations under the 1940 Act and any applicable guidance or interpretation of the Securities and Exchange Commission or its staff; and the term “brokerage and research services” has the meaning given in the Securities Exchange Act of 1934 and the rules and regulations under the Securities Exchange Act of 1934 and under any applicable guidance or interpretation of the Securities and Exchange Commission or its staff.
7. NON-LIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross negligence on the part of the Manager, or reckless disregard of its obligations and duties hereunder, the Manager shall not be subject to any liability to the Fund or to any shareholder of the Fund for any act or omission in the course of, or connected with, rendering services hereunder.
8. LIMITATION OF LIABILITY OF THE TRUSTEES, OFFICERS, ANDSHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Fund is on file with the Secretary of The Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Trustees of the Fund as Trustees and not individually and that the obligations of or arising out of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the respective Fund.
[The remainder of this page intentionally left blank.] |
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IN WITNESS WHEREOF, PUTNAM FUNDS TRUST and PUTNAM INVESTMENT MANAGEMENT, LLC have each caused this instrument to be signed on its behalf by its President or a Vice President thereunto duly authorized, all as of the day and year first above written.
PUTNAM FUNDS TRUST, on behalf of the series listed | ||
on Schedule A | ||
By: | [/s/ Jonathan S. Horwitz] | |
Jonathan S. Horwitz | ||
Executive Vice President, Treasurer, Principal | ||
Executive Officer and Compliance Liaison | ||
PUTNAM INVESTMENT MANAGEMENT, LLC | ||
By: | [/s/ James P. Pappas] | |
James P. Pappas | ||
Managing Director |
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Schedule A | |
Putnam Asia Pacific Equity Fund |
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Schedule B |
Putnam Asia Pacific Equity Fund
Base Fee:
1.080% of the first $5 billion of Total Open-End Mutual Fund Average Net Assets;
1.030% of the next $5 billion of Total Open-End Mutual Fund Average Net Assets;
0.980% of the next $10 billion of Total Open-End Mutual Fund Average Net Assets;
0.930% of the next $10 billion of Total Open-End Mutual Fund Average Net Assets;
0.880% of the next $50 billion of Total Open-End Mutual Fund Average Net Assets;
0.860% of the next $50 billion of Total Open-End Mutual Fund Average Net Assets;
0.850% of the next $100 billion of Total Open-End Mutual Fund Average Net Assets;
0.845% of any excess thereafter.
Benchmark: MSCI All Country (AC) Asia Pacific Index (Net Dividends)(until April 1, 2011, or, if later, the first day of the calendar month following shareholder approval of this Management Contract)
Replacement Benchmark: MSCI All Country (AC) Asia ex-Japan Index (Net Dividends) (effective on April 1, 2011, or, if later, the first day of the calendar month following shareholder approval of this Management Contract)
Maximum Annualized Performance Adjustment Rate: 0.21%
Minimum Annualized Performance Adjustment Rate: -0.21%
“Total Open-End Mutual Fund Average Net Assets” means the average of all of the determinations of the aggregate net assets of all open-end funds sponsored by Putnam Management (excluding the net assets of such funds investing in, or invested in by, other such funds, such as Putnam RetirementReady® Funds and Putnam Money Market Liquidity Fund, to the extent necessary to avoid “double-counting” of such net assets) at the close of business on each business day during each month while the Management Contract is in effect.
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Schedule C |
Commencing with the thirteenth whole calendar month after the later of January 1, 2010 and the date of execution of this Contract, the Fund’s Base Fee computed in accordance withSchedule Bwill be adjusted, on a monthly basis, upward or downward, as the case may be, by an amount computed by applying the Performance Adjustment Rate to the Average Net Assets of the Fund for the Performance Period and dividing the result by twelve.
Performance Period.The Performance Period is equal to the shorter of (i) the period from January 1, 2010 to the end of the month for which the fee adjustment is being computed or (ii) the thirty-six month period then ended.
Performance Adjustment Rate.The Performance Adjustment Rate is equal to the product of 0.03 multiplied by the difference, positive or negative, obtained by subtracting (i) the Investment Record of the Benchmark for the Performance Period from (ii) the Investment Performance of the Measuring Class for the Performance Period;providedthat the Performance Adjustment Rate for the Fund may not exceed the Maximum Performance Adjustment Rate set forth onSchedule Bor be less than the Minimum Performance Adjustment Rate set forth onSchedule B.
Investment Performance and Investment Record.These terms are used as defined in Rule 205-1 under the Investment Advisers Act of 1940, as amended, and shall each be computed on an annualized basis for any Performance Period greater than one year.
Benchmark.The Fund’s initial Benchmark is set forth inSchedule B. If the Trustees determine that another appropriate index of securities prices should be substituted as the Benchmark, the Trustees may determine, with the consent of the Manager, to use such other appropriate index of securities prices for purposes of thisSchedule C(the “Replacement Benchmark”) without shareholder approval, unless shareholder approval of the change is otherwise required by applicable law. Any Replacement Benchmark will be applied prospectively to determine the amount of the Performance Adjustment. The Benchmark will continue to be used to determine the amount of the Performance Adjustment for that part of the Performance Period prior to the effective date of the Replacement Benchmark.The Fund’s initial Replacement Benchmark is set forth in Schedule B, together with its effective date of incorporation into the calculation of any adjustment to the Fund’s Base Fee. Any further Replacement Benchmark, and its effective date of incorporation into the calculation of any adjustment to the Fund’s Base Fee, will also be identified on Schedule B.
Measuring Class.The “Measuring Class” of shares of the Fund initially is Class A shares of the Fund. If the Trustees determine that a different class of shares of the Fund is the most appropriate for use in calculating the Performance Adjustment, the Trustees may change, with the consent of the Manager, the class of shares used as the Measuring Class without shareholder approval, unless shareholder approval of such change is otherwise required by applicable law. If a different class of shares (“Replacement Measuring Class”) is substituted in calculating the Performance Adjustment, the use of that Replacement Measuring Class of
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shares for purposes of calculating the Performance Adjustment may apply to the entire Performance Period so long as the Replacement Measuring Class was outstanding at the beginning of such period. If the Replacement Measuring Class of shares was not outstanding for all or a portion of the Performance Period, it may only be used in calculating that portion of the Performance Adjustment attributable to the period during which the Replacement Measuring Class was outstanding and any previous portion of the Performance Period will be calculated using the Measuring Class.
Notwithstanding any other provisions in thisSchedule C, the computation of the Performance Adjustment Rate, the Investment Performance of the Measuring Class and the Investment Record of the Benchmark will be made in accordance with the Investment Advisers Act of 1940, as amended, and any applicable rules thereunder.
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DOUBLE UNDERLINEDLANGUAGE WILL BE ADDED |
PUTNAM INTERNATIONAL VALUE FUND |
FORM OF |
PUTNAM FUNDS TRUST |
MANAGEMENT CONTRACT |
This Management Contract is dated as ofJanuary 1, 2010April 1, 2011between PUTNAM FUNDS TRUST, a Massachusetts business trust (the “Fund”), and PUTNAM INVESTMENT MANAGEMENT, LLC, a Delaware limited liability company (the “Manager”).
In consideration of the mutual covenants herein contained, it is agreed as follows:
1. SERVICES TO BE RENDERED BY MANAGER TO FUND.
(a) The Manager, at its expense, will furnish continuously an investment program for the Fund or, in the case of a Fund that has divided its shares into two or more series under Section 18(f)(2) of the Investment Company Act of 1940, as amended (the “1940 Act”), each series of the Fund identified from time to time onSchedule Ato this Contract (each reference in this Contract to “a Fund” or to “the Fund” is also deemed to be a reference to any existing series of the Fund, as appropriate in the particular context), will determine what investments will be purchased, held, sold or exchanged by the Fund and what portion, if any, of the assets of the Fund will be held uninvested and will, on behalf of the Fund, make changes in such investments. Subject always to the control of the Trustees of the Fund and except for the functions carried out by the officers and personnel referred to in Section 1(d), the Manager will also manage, supervise and conduct the other affairs and business of the Fund and matters incidental thereto. In the performance of its duties, the Manager will comply with the provisions of the Agreement and Declaration of Trust and By-Laws of the Fund and the stated investment objectives, policies and restrictions of the Fund, will use its best efforts to safeguard and promote the welfare of the Fund and to comply with other policies which the Trustees may from time to time determine and will exercise the same care and diligence expected of the Trustees.
(b) The Manager, at its expense, except as such expense is paid by the Fund as provided in Section 1(d), will furnish (1) all necessary investment and management facilities, including salaries of personnel, required for it to execute its duties faithfully; (2) suitable office space for the Fund; and (3) administrative facilities, including bookkeeping, clerical personnel and equipment necessary for the efficient conduct of the affairs of the Fund, including determination of the net asset value of the Fund, but excluding shareholder accounting services. Except as otherwise provided in Section 1(d), the Manager will pay the compensation, if any, of the officers of the Fund.
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(c) The Manager, at its expense, will place all orders for the purchase and sale of portfolio investments for the Fund’s account with brokers or dealers selected by the Manager. In the selection of such brokers or dealers and the placing of such orders, the Manager will use its best efforts to obtain for the Fund the most favorable price and execution available, except to the extent it may be permitted to pay higher brokerage commissions for brokerage and research services as described below. In using its best efforts to obtain for the Fund the most favorable price and execution available, the Manager, bearing in mind the Fund’s best interests at all times, will consider all factors it deems relevant, including by way of illustration, price, the size of the transaction, the nature of the market for the security, the amount of the commission, the timing of the transaction taking into account market prices and trends, the reputation, experience and financial stability of the broker or dealer involved and the quality of service rendered by the broker or dealer in other transactions. Subject to such policies as the Trustees of the Fund may determine, the Manager will not be deemed to have acted unlawfully or to have breached any duty created by this Contract or otherwise solely by reason of its having caused the Fund to pay a broker or dealer that provides brokerage and research services to the Manager an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Manager determines in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Manager’s overall responsibilities with respect to the Fund and to other clients of the Manager as to which the Manager exercises investment discretion. The Manager agrees that in connection with purchases or sales of portfolio investments for the Fund’s account, neither the Manager nor any officer, director, employee or agent of the Manager shall act as a principal or receive any commission other than as provided in Section 3.
(d) The Fund will pay or reimburse the Manager for the compensation in whole or in part of such officers of the Fund and persons assisting them as may be determined from time to time by the Trustees of the Fund. The Fund will also pay or reimburse the Manager for all or part of the cost of suitable office space, utilities, support services and equipment attributable to such officers and persons as may be determined in each case by the Trustees of the Fund. The Fund will pay the fees, if any, of the Trustees of the Fund.
(e) The Manager will not be obligated to pay any expenses of or for the Fund not expressly assumed by the Manager pursuant to this Section 1 other than as provided in Section 3.
(f) Subject to the prior approval of a majority of the Trustees, including a majority of the Trustees who are not “interested persons” and, to the extent required by the 1940 Act and the rules and regulations under the 1940 Act, subject to any applicable guidance or interpretation of the Securities and Exchange Commission or its staff, by the shareholders of the Fund, the Manager may, from time to time, delegate to a sub-adviser or sub-administrator any of the Manager’s duties under this Contract, including the management of all or a portion of the assets being managed. In all instances, however, the Manager must oversee the provision of delegated services, the Manager must bear the separate costs of employing any sub-adviser or
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sub-administrator, and no delegation will relieve the Manager of any of its obligations under this Contract.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and employees of the Fund may be a shareholder, director, officer or employee of, or be otherwise interested in, the Manager, and in any person controlled by or under common control with the Manager, and that the Manager and any person controlled by or under common control with the Manager may have an interest in the Fund. It is also understood that the Manager and any person controlled by or under common control with the Manager may have advisory, management, service or other contracts with other organizations and persons and may have other interests and business.
3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.
The Fund will pay to the Manager as compensation for the Manager’s services rendered, for the facilities furnished and for the expenses borne by the Manager pursuant to paragraphs (a), (b), and (c) of Section 1, a Base Fee, computed and paid monthly on the Average Net Assets of the Fund at the annual rates set forth onSchedule Battached to this Contract, as from time to time amended, subject to adjustment as set forth onSchedule Cattached to this Contract, as from time to time amended. The Fund’s “Average Net Assets” means the average of all of the determinations of the Fund’s net asset value at the close of business on each business day during each period for which such computation is made. The Base Fee, as adjusted, is payable for each month within 15 days after the close of the month.
The fees payable by the Fund to the Manager pursuant to this Section 3 will be reduced by any commissions, fees, brokerage or similar payments received by the Manager or any affiliated person of the Manager in connection with the purchase and sale of portfolio investments of the Fund, less any direct expenses approved by the Trustees incurred by the Manager or any affiliated person of the Manager in connection with obtaining such payments.
In the event that expenses of the Fund for any fiscal year exceed the expense limitation on investment company expenses imposed by any statute or regulatory authority of any jurisdiction in which shares of the Fund are qualified for offer or sale, the compensation due the Manager for such fiscal year will be reduced by the amount of excess by a reduction or refund thereof. In the event that the expenses of the Fund exceed any expense limitation which the Manager may, by written notice to the Fund, voluntarily declare to be effective subject to such terms and conditions as the Manager may prescribe in such notice, the compensation due the Manager will be reduced, and if necessary, the Manager will assume expenses of the Fund, to the extent required by the terms and conditions of such expense limitation.
If the Manager serves for less than the whole of a month, the foregoing compensation will be prorated.
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4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THISCONTRACT.
This Contract will automatically terminate, without the payment of any penalty, in the event of its assignment, provided that no delegation of responsibilities by the Manager pursuant to Section 1(f) will be deemed to constitute an assignment. No provision of this Contract may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. No amendment of this Contract is effective until approved in a manner consistent with the 1940 Act, the rules and regulations under the 1940 Act and any applicable guidance or interpretation of the Securities and Exchange Commission or its staff.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract is effective upon its execution and will remain in full force and effect as to a Fund continuously thereafter (unless terminated automatically as set forth in Section 4 or terminated in accordance with the following paragraph) through June 30,20102011, and will continue in effect from year to year thereafter so long as its continuance is approved at least annually by (i) the Trustees, or the shareholders by the affirmative vote of a majority of the outstanding shares of the respective Fund, and (ii) a majority of the Trustees who are not interested persons of the Fund or of the Manager, by vote cast in person at a meeting called for the purpose of voting on such approval.
Either party hereto may at any time terminate this Contract as to a Fund by not less than 60 days’ written notice delivered or mailed by registered mail, postage prepaid, to the other party. Action with respect to a Fund may be taken either (i) by vote of a majority of the Trustees or (ii) by the affirmative vote of a majority of the outstanding shares of the respective Fund.
Termination of this Contract pursuant to this Section 5 will be without the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the “affirmative vote of a majority of the outstanding shares” of a Fund means the affirmative vote, at a duly called and held meeting of shareholders of the respective Fund, (a) of the holders of 67% or more of the shares of the Fund present (in person or by proxy) and entitled to vote at the meeting, if the holders of more than 50% of the outstanding shares of the Fund entitled to vote at the meeting are present in person or by proxy or (b) of the holders of more than 50% of the outstanding shares of the Fund entitled to vote at the meeting, whichever is less.
For the purposes of this Contract, the terms “affiliated person,” “control,” “interested person” and “assignment” have their respective meanings defined in the 1940 Act, subject, however, to the rules and regulations under the 1940 Act and any applicable guidance or interpretation of the Securities and Exchange Commission or its staff; the term “approve at
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least annually” will be construed in a manner consistent with the 1940 Act and the rules and regulations under the 1940 Act and any applicable guidance or interpretation of the Securities and Exchange Commission or its staff; and the term “brokerage and research services” has the meaning given in the Securities Exchange Act of 1934 and the rules and regulations under the Securities Exchange Act of 1934 and under any applicable guidance or interpretation of the Securities and Exchange Commission or its staff.
7. NON-LIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross negligence on the part of the Manager, or reckless disregard of its obligations and duties hereunder, the Manager shall not be subject to any liability to the Fund or to any shareholder of the Fund for any act or omission in the course of, or connected with, rendering services hereunder.
8. LIMITATION OF LIABILITY OF THE TRUSTEES, OFFICERS, ANDSHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Fund is on file with the Secretary of The Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Trustees of the Fund as Trustees and not individually and that the obligations of or arising out of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the respective Fund.
[The remainder of this page intentionally left blank.] |
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IN WITNESS WHEREOF, PUTNAM FUNDS TRUST and PUTNAM INVESTMENT MANAGEMENT, LLC have each caused this instrument to be signed on its behalf by its President or a Vice President thereunto duly authorized, all as of the day and year first above written.
PUTNAM FUNDS TRUST, on behalf of the series listed | ||
on Schedule A | ||
By: | [/s/ Jonathan S. Horwitz] | |
Jonathan S. Horwitz | ||
Executive Vice President, Treasurer, Principal | ||
Executive Officer and Compliance Liaison | ||
PUTNAM INVESTMENT MANAGEMENT, LLC | ||
By: | [/s/ James P. Pappas] | |
James P. Pappas | ||
Managing Director |
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Schedule A |
Putnam International Growth and Income Fund (effective 1/1/2010, Putnam International Value Fund)
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Schedule B |
Putnam International Growth and Income Fund (effective 1/1/2010, Putnam International Value Fund)
Base Fee:
0.850% of the first $5 billion of Total Open-End Mutual Fund Average Net Assets;
0.800% of the next $5 billion of Total Open-End Mutual Fund Average Net Assets;
0.750% of the next $10 billion of Total Open-End Mutual Fund Average Net Assets;
0.700% of the next $10 billion of Total Open-End Mutual Fund Average Net Assets;
0.650% of the next $50 billion of Total Open-End Mutual Fund Average Net Assets;
0.630% of the next $50 billion of Total Open-End Mutual Fund Average Net Assets;
0.620% of the next $100 billion of Total Open-End Mutual Fund Average Net Assets;
0.615% of any excess thereafter.
Benchmark: S&P Developed/Ex-U.S. LargeMidCap Value Index(until April 1, 2011, or, if later, the first day of the calendar month following shareholder approval of this Management Contract)
Replacement Benchmark: MSCI EAFE Value Index (Net Dividends) (effective on April 1, 2011, or, if later, the first day of the calendar month following shareholder approval of this Management Contract)
Maximum Annualized Performance Adjustment Rate: 0.15%
Minimum Annualized Performance Adjustment Rate: -0.15%
“Total Open-End Mutual Fund Average Net Assets” means the average of all of the determinations of the aggregate net assets of all open-end funds sponsored by Putnam Management (excluding the net assets of such funds investing in, or invested in by, other such funds, such as Putnam RetirementReady® Funds and Putnam Money Market Liquidity Fund, to the extent necessary to avoid “double-counting” of such net assets) at the close of business on each business day during each month while the Management Contract is in effect.
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Schedule C |
Commencing with the thirteenth whole calendar month after the later of January 1, 2010 and the date of execution of this Contract, the Fund’s Base Fee computed in accordance withSchedule Bwill be adjusted, on a monthly basis, upward or downward, as the case may be, by an amount computed by applying the Performance Adjustment Rate to the Average Net Assets of the Fund for the Performance Period and dividing the result by twelve.
Performance Period.The Performance Period is equal to the shorter of (i) the period from January 1, 2010 to the end of the month for which the fee adjustment is being computed or (ii) the thirty-six month period then ended.
Performance Adjustment Rate.The Performance Adjustment Rate is equal to the product of 0.03 multiplied by the difference, positive or negative, obtained by subtracting (i) the Investment Record of the Benchmark for the Performance Period from (ii) the Investment Performance of the Measuring Class for the Performance Period;providedthat the Performance Adjustment Rate for the Fund may not exceed the Maximum Performance Adjustment Rate set forth onSchedule Bor be less than the Minimum Performance Adjustment Rate set forth onSchedule B.
Investment Performance and Investment Record.These terms are used as defined in Rule 205-1 under the Investment Advisers Act of 1940, as amended, and shall each be computed on an annualized basis for any Performance Period greater than one year.
Benchmark.The Fund’s initial Benchmark is set forth inSchedule B. If the Trustees determine that another appropriate index of securities prices should be substituted as the Benchmark, the Trustees may determine, with the consent of the Manager, to use such other appropriate index of securities prices for purposes of thisSchedule C(the “Replacement Benchmark”) without shareholder approval, unless shareholder approval of the change is otherwise required by applicable law. Any Replacement Benchmark will be applied prospectively to determine the amount of the Performance Adjustment. The Benchmark will continue to be used to determine the amount of the Performance Adjustment for that part of the Performance Period prior to the effective date of the Replacement Benchmark.The Fund’s initial Replacement Benchmark is set forth in Schedule B, together with its effective date of incorporation into the calculation of any adjustment to the Fund’s Base Fee. Any further Replacement Benchmark, and its effective date of incorporation into the calculation of any adjustment to the Fund’s Base Fee, will also be identified on Schedule B.
Measuring Class.The “Measuring Class” of shares of the Fund initially is Class A shares of the Fund. If the Trustees determine that a different class of shares of the Fund is the most appropriate for use in calculating the Performance Adjustment, the Trustees may change, with the consent of the Manager, the class of shares used as the Measuring Class without shareholder approval, unless shareholder approval of such change is otherwise required by applicable law. If a different class of shares (“Replacement Measuring Class”) is substituted in calculating the Performance Adjustment, the use of that Replacement Measuring Class of
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shares for purposes of calculating the Performance Adjustment may apply to the entire Performance Period so long as the Replacement Measuring Class was outstanding at the beginning of such period. If the Replacement Measuring Class of shares was not outstanding for all or a portion of the Performance Period, it may only be used in calculating that portion of the Performance Adjustment attributable to the period during which the Replacement Measuring Class was outstanding and any previous portion of the Performance Period will be calculated using the Measuring Class.
Notwithstanding any other provisions in thisSchedule C, the computation of the Performance Adjustment Rate, the Investment Performance of the Measuring Class and the Investment Record of the Benchmark will be made in accordance with the Investment Advisers Act of 1940, as amended, and any applicable rules thereunder.
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Appendix B |
Current and Pro Forma Examples of each Fund’s Total Annual Operating Expenses
All mutual funds pay ongoing fees for investment management and other services. These charges are known as the total annual fund operating expenses. The tables below show examples of each fund’s total annual operating expenses (as a percentage of average net assets) under their current management contract and pro forma total annual operating expenses under the proposed new management contracts, in each case assuming fund assets and fund family assets as of [ ], 20[10] throughout the period. Of course, during the most recent fiscal year, the fund made no performance adjustments to the base management fee it paid Putnam Management. (It did not begin to make performance adjustments until January 2011.) Accordingly, the tables below show that there would have been no differences in total annual fund operating expenses for each fund’s most recent fiscal year under the current and proposed performance index. Because the change in performance index for each fund will be implemented prospectively, the future impact on management fees will depend on each fund’s future performance relative to each fund’s proposed performance index.
The following tables also describe the fees and expenses that may be incurred when you buy, hold, or sell shares of each fund. The examples below take the maximum up-front sales charge (or applicable contingent deferred sales charge) and the annual operating expenses shown in the table for each share class and translate them into dollar amounts, showing the cumulative effect of these costs over time. This is intended to help you more easily compare the cost of investing in the funds, under their current management contracts and the proposed new management contracts, to the cost of investing in other mutual funds. The examples make certain assumptions. They assume that you invest $10,000 in each fund for the time periods shown and then, except as shown for class B shares and class C shares, redeem all your shares at the end of those periods. They also assume a 5% return on your investment each year and that the funds’ operating expenses remain the same. The examples are hypothetical; your actual costs and returns may be higher or lower.
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PUTNAM ASIA PACIFIC EQUITY FUND | ||||||
EXAMPLES | ||||||
COMPARATIVE EXPENSE TABLES FOR THE FISCAL YEAR ENDED | ||||||
APRIL 30, 2010 | ||||||
Annual fund operating expenses* | ||||||
(expenses you pay each year as a percentage of the value of your investment) | ||||||
Total annual | ||||||
fund | ||||||
Total annual | operating | |||||
Distribution | fund | expenses | ||||
Management | and service | Other | operating | Expense | after expense | |
Share class | fees | (12b-1) fees | expenses | expenses | reimbursement | reimbursement |
Class A (Actual | ||||||
Expenses Under | ||||||
Current | ||||||
Management | ||||||
Contract) | 0.93% | 0.25% | 1.54% | 2.72% | (0.98)% | 1.74% |
Class A (Pro Forma | ||||||
Expenses Based | ||||||
on Proposed | ||||||
Contract) | 0.93% | 0.25% | 1.54% | 2.72% | (0.98)% | 1.74% |
Class B (Actual | ||||||
Expenses Under | ||||||
Current | ||||||
Management | ||||||
Contract) | 0.93% | 1.00% | 1.54% | 3.47% | (0.98)% | 2.49% |
Class B (Pro Forma | ||||||
Expenses Based | ||||||
on Proposed | ||||||
Contract) | 0.93% | 1.00% | 1.54% | 3.47% | (0.98)% | 2.49% |
Class C (Actual | ||||||
Expenses Under | ||||||
Current | ||||||
Management | ||||||
Contract) | 0.93% | 1.00% | 1.54% | 3.47% | (0.98)% | 2.49% |
Class C (Pro | ||||||
Forma Expenses | ||||||
Based on Proposed | ||||||
Contract) | 0.93% | 1.00% | 1.54% | 3.47% | (0.98)% | 2.49% |
Class M (Actual | ||||||
Expenses Under | ||||||
Current | ||||||
Management | ||||||
Contract) | 0.93% | 0.75% | 1.54% | 3.22% | (0.98)% | 2.24% |
Class M (Pro | ||||||
Forma Expenses | ||||||
Based on Proposed | ||||||
Contract) | 0.93% | 0.75% | 1.54% | 3.22% | (0.98)% | 2.24% |
Class R (Actual | ||||||
Expenses Under | ||||||
Current | ||||||
Management | ||||||
Contract) | 0.93% | 0.50% | 1.54% | 2.97% | (0.98)% | 1.99% |
Class R (Pro | ||||||
Forma Expenses | ||||||
Based on Proposed | ||||||
Contract) | 0.93% | 0.50% | 1.54% | 2.97% | (0.98)% | 1.99% |
Class Y (Actual |
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Expenses Under | ||||||
Current | ||||||
Management | ||||||
Contract) | 0.93% | N/A | 1.54% | 2.47% | (0.98)% | 1.49% |
Class Y (Pro Forma | ||||||
Expenses Based | ||||||
on Proposed | ||||||
Contract) | 0.93% | N/A | 1.54% | 2.47% | (0.98)% | 1.49% |
* Reflects Putnam Management’s contractual obligation to limit certain fund expenses through 8/30/2011. This obligation may be modified or discontinued only with the approval of the Board of Trustees.
How do these fees and expenses look in dollar terms?
Example: Sales charge plus annual operating expenses on a $10,000 investment over time
Share class | 1 year | 3 years | 5 years | 10 years |
Class A (Actual Expenses Under Current Management Contract) | $742 | $1,283 | $1,850 | $3,383 |
Class A (Pro Forma Expenses Based on Proposed Contract) | $742 | $1,283 | $1,850 | $3,383 |
Class B (Actual Expenses Under Current Management Contract) | $752 | $1,274 | $1,919 | $3,514 |
Class B (Pro Forma Expenses Based on Proposed Contract) | $752 | $1,274 | $1,919 | $3,514 |
Class B (no redemption) | $252 | $974 | $1,719 | $3,514 |
(Actual Expenses Under Current Management Contract) | ||||
Class B (no redemption) (Pro Forma Expenses Based on Proposed Contract) | $252 | $974 | $1,719 | $3,514 |
Class C (Actual Expenses Under Current Management Contract) | $352 | $974 | $1, 719 | $3,683 |
Class C (Pro Forma Expenses Based on Proposed Contract) | $352 | $974 | $1, 719 | $3,683 |
Class C (no redemption) | ||||
(Actual Expenses Under Current Management Contract) | $252 | $974 | $1,719 | $3,683 |
Class C (no redemption) (Pro Forma Expenses Based on Proposed Contract) | $252 | $974 | $1,719 | $3,683 |
Class M (Actual Expenses Under Current Management Contract) | $569 | $1,219 | $1,893 | $3,684 |
Class M (Pro Forma Expenses Based on Proposed Contract) | $569 | $1,219 | $1,893 | $3,684 |
Class R (Actual Expenses Under Current Management Contract) | $202 | $826 | $1,476 | $3,220 |
Class R (Pro Forma Expenses Based on Proposed Contract) | $202 | $826 | $1,476 | $3,220 |
Class Y (Actual Expenses Under Current Management Contract) | $152 | $676 | $1,227 | $2,732 |
Class Y (Pro Forma Expenses Based on Proposed Contract) | $152 | $676 | $1,227 | $2,732 |
The purpose of this example and the table is to assist investors in understanding the various costs and expenses of investing in shares of the fund. The example above should not be considered as a representation of past or future expenses of the fund. Actual expenses may vary from year to year and may be higher or lower than those shown above.
PUTNAM INTERNATIONAL VALUE FUND |
EXAMPLES |
COMPARATIVE EXPENSE TABLES FOR THE FISCAL YEAR ENDED |
JUNE 30, 2010 |
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Annual fund operating expenses
(expenses you pay each year as a percentage of the value of your investment)
Distribution | Total annual | ||||
Management | and service | Other | fund operating | ||
Share class | fees | (12b-1) fees | expenses | expenses | |
Class A (Actual Expenses Under Current Management Contract) | 0.71% | 0.25% | 0.49% | 1.45% | |
Class A (Pro Forma Expenses Based on Proposed Contract) | 0.71% | 0.25% | 0.49% | 1.45% | |
Class B (Actual Expenses Under Current Management Contract) | 0.71% | 1.00% | 0.49% | 2.20% | |
Class B (Pro Forma Expenses Based on Proposed Contract) | 0.71% | 1.00% | 0.49% | 2.20% | |
Class C (Actual Expenses Under Current Management Contract) | 0.71% | 1.00% | 0.49% | 2.20% | |
Class C (Pro Forma Expenses Based on Proposed Contract) | 0.71% | 1.00% | 0.49% | 2.20% | |
Class M (Actual Expenses Under Current Management Contract) | 0.71% | 0.75% | 0.49% | 1.95% | |
Class M (Pro Forma Expenses Based on Proposed Contract) | 0.71% | 0.75% | 0.49% | 1.95% | |
Class R (Actual Expenses Under Current Management Contract) | 0.71% | 0.50% | 0.49% | 1.70% | |
Class R (Pro Forma Expenses Based on Proposed Contract) | 0.71% | 0.50% | 0.49% | 1.70% | |
Class Y (Actual Expenses Under Current Management Contract) | 0.71% | N/A | 0.49% | 1.20% | |
Class Y (Pro Forma Expenses Based on Proposed Contract) | 0.71% | N/A | 0.49% | 1.20% | |
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How do these fees and expenses look in dollar terms?
Example: Sales charge plus annual operating expenses on a $10,000 investment over time
Share class | 1 year | 3 years | 5 years | 10 years | |
Class A (Actual Expenses Under Current Management Contract) | $714 | $1,007 | $1,322 | $2,210 | |
Class A (Pro Forma Expenses Based on Proposed Contract) | $714 | $1,007 | $1,322 | $2,210 | |
Class B (Actual Expenses Under Current Management Contract) | $723 | $988 | $1,380 | $2,344 | |
Class B (Pro Forma Expenses Based on Proposed Contract) | $723 | $988 | $1,380 | $2,344 | |
Class B (no redemption) | |||||
(Actual Expenses Under Current Management Contract) | $223 | $688 | $1,180 | $2,344 | |
Class B (no redemption) (Pro Forma Expenses Based on Proposed Contract) | $223 | $688 | $1,180 | $2,344 | |
Class C (Actual Expenses Under Current Management Contract) | $323 | $688 | $1,180 | $2,534 | |
Class C (Pro Forma Expenses Based on Proposed Contract) | $323 | $688 | $1,180 | $2,534 | |
Class C (no redemption) | |||||
(Actual Expenses Under Current Management Contract) | $223 | $688 | $1,180 | $2,534 | |
Class C (no redemption) (Pro Forma Expenses Based on Proposed Contract) | $223 | $688 | $1,180 | $2,534 | |
Class M (Actual Expenses Under Current Management Contract) | $541 | $941 | $1,365 | $2,545 | |
Class M (Pro Forma Expenses Based on Proposed Contract) | $541 | $941 | $1,365 | $2,545 | |
Class R (Actual Expenses Under Current Management Contract) | $173 | $536 | $923 | $2,009 | |
Class R (Pro Forma Expenses Based on Proposed Contract) | $173 | $536 | $923 | $2,009 | |
Class Y (Actual Expenses Under Current Management Contract) | $122 | $381 | $660 | $1,455 | |
Class Y (Pro Forma Expenses Based on Proposed Contract) | $122 | $381 | $660 | $1,455 |
The purpose of this example and the table is to assist investors in understanding the various costs and expenses of investing in shares of the fund. The example above should not be considered as a representation of past or future expenses of the fund. Actual expenses may vary from year to year and may be higher or lower than those shown above.
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Appendix C |
Previous Trustee approval of management contract for the Funds
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, the sub-management contract with respect to your fund between Putnam Management and its affiliate, Putnam Investments Limited (“PIL”), and the sub-advisory contract among Putnam Management, PIL, and another affiliate, Putnam Advisory Company (“PAC”).
In this regard, the Board of Trustees, with the assistance of its Contract Committee consisting solely of Trustees who are not “interested persons” (as this 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 ending in June 2010, the Contract Committee met on a number of occasions with representatives of Putnam Management and in executive session 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. At the Trustees’ June 11, 2010 meeting, the Contract Committee recommended, and the Independent Trustees approved, the continuance of your fund’s management, sub-management and sub-advisory contracts, effective July 1, 2010. (Because PIL and PAC are affiliates of Putnam Management and Putnam Management remains fully responsible for all services provided by PIL and PAC, the Trustees have not evaluated PIL or PAC as separate entities, and all subsequent references to Putnam Management below should be deemed to include reference to PIL and PAC as necessary or appropriate in the context.)
The Independent Trustees’ approval was based on the following conclusions:
• That the fee schedule in effect for your fund represented 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 the fee schedule represented an appropriate sharing between fund shareholders and Putnam Management of such economies of scale as may exist in the management of each 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
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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 the arrangements may receive greater scrutiny in some years than others, and that the Trustees’ conclusions may be based, in part, on their consideration of fee arrangements in prior years.
Consideration of implementation of strategic pricing initiative
The Trustees were mindful that new management contracts had been implemented for all but a few funds at the beginning of 2010 as part of Putnam Management’s strategic pricing initiative. These new management contracts reflected the implementation of more competitive fee levels for many funds, complex-wide breakpoints for the open-end funds and performance fees for some funds. The Trustees had approved these new management contracts on July 10, 2009 and submitted them to shareholder meetings of the affected funds in late 2009, where the contracts were in all cases approved by overwhelming majorities of the shares voted.
Because the management contracts had been implemented only recently, the Contract Committee had limited practical experience with the operation of the new fee structures. The financial data available to the Committee reflected actual operations under the prior contracts; information was also available on a pro forma basis, adjusted to reflect the fees payable under the new management contracts. In light of the limited information available regarding operations under the new management contracts, in recommending the continuation of the new management contracts in June 2010, the Contract Committee relied to a considerable extent on its review of the financial information and analysis that formed the basis of the Board’s approval of the new management contracts on July 10, 2009.
Management fee schedules and categories; total expenses
The Trustees reviewed the management fee schedules in effect for all Putnam funds, including fee levels and breakpoints. In reviewing management fees, the Trustees generally focus their attention on material changes in circumstances – for example, changes in assets under management or investment style, changes in Putnam Management’s operating costs, or changes in competitive practices in the mutual fund industry – that suggest that consideration of fee changes might be warranted. The Trustees concluded that the circumstances did not warrant changes to the management fee structure of your fund.
As in the past, the Trustees continued to focus on the competitiveness of the total expense ratio of each fund. In order to ensure that expenses of the Putnam funds continue to meet evolving competitive standards, the Trustees and Putnam Management agreed in 2009 to implement certain expense limitations. Most funds had sufficiently low expenses that these expense limitations did not apply. However, in the case of Putnam Asia Pacific Equity Fund, both of the expense limitations applied, and, in the case of Putnam International Value Fund, the first of the expense limitations applied. The expense limitations were: (i) a contractual expense limitation applicable to all retail open-end funds of 37.5 basis points on investor
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servicing fees and expenses and (ii) a contractual expense limitation applicable to all open-end funds of 20 basis points on so-called “other expenses” (i.e., all expenses exclusive of management fees, investor servicing fees, distribution fees, taxes, brokerage commissions and extraordinary expenses). These expense limitations serve in particular to maintain competitive expense levels for funds with large numbers of small shareholder accounts and funds with relatively small net assets.
The Trustees reviewed comparative fee and expense information for a custom group of competitive funds selected by Lipper Inc. This comparative information included your fund’s percentile ranking for effective management fees and total expenses (excluding any applicable 12b-1 fee), which provides a general indication of your fund’s relative standing. In the applicable custom peer groups, Putnam Asia Pacific Equity Fund and Putnam International Value Fund ranked in the 1st and 2nd quintile, respectively, in effective management fees (determined for your fund and the other funds in the custom peer group based on fund asset size and the applicable contractual management fee schedule) and Putnam International Value Fund ranked in the 1st quintile in total expenses (excluding any applicable 12b-1 fees) as of December 31, 2009 (the first quintile representing the least expensive funds and the fifth quintile the most expensive funds). The Trustees also considered that each Fund ranked in the 1st quintile in effective management fees, on a pro forma basis adjusted to reflect the impact of the strategic pricing initiative discussed above, as of December 31, 2009.
Your fund currently has the benefit of breakpoints in its management fee that provide shareholders with significant economies of scale in the form of reduced fee levels as assets under management in the Putnam family of funds increase. The Contract Committee observed that the complex-wide breakpoints of the open-end funds have only been in place for a short while, and the Trustees will examine the operation of this new breakpoint structure in future years in light of actual experience.
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 provided and the profits realized by Putnam Management and its affiliates from their contractual relationships with the funds. This information included trends in revenues, expenses and profitability of Putnam Management and its affiliates relating to the investment management, investor servicing and distribution services provided to the funds. In this regard, the Trustees also reviewed an analysis of Putnam Management’s revenues, expenses and profitability, allocated on a fund-by-fund basis, with respect to the funds’ management, distribution, and investor servicing contracts. For each fund, the analysis presented information about revenues, expenses and profitability for each of the agreements separately and for the agreements taken together on a combined basis. The Trustees concluded that, at current asset levels, the fee schedules currently in place represented an appropriate sharing of economies of scale at that time.
The information examined by the Trustees as part of their annual contract review for the Putnam funds 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, and the like. This information included comparisons of such fees with
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fees charged to the funds, as well as an 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 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 may reflect historical competitive forces operating in separate marketplaces. The Trustees considered the fact that fee rates across different asset classes are typically 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 its institutional clients, and did not rely on these comparisons to any significant extent in concluding that the management fees paid by your fund are reasonable.
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 Putnam funds’ investment process and performance by the work of the Investment Oversight Coordinating Committee of the Trustees and the Investment Oversight Committees of the Trustees, which met on a regular basis with the funds’ portfolio teams throughout the year. The Trustees concluded that Putnam Management generally provides a high-quality investment process – based on the experience and skills of the individuals assigned to the management of fund portfolios, the resources made available to them, and in general Putnam Management’s ability to attract and retain high-quality personnel – but also recognized 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 each fund’s performance with various benchmarks and with the performance of competitive funds.
The Committee noted the substantial improvement in the performance of most Putnam funds during 2009. The Committee also noted the disappointing investment performance of a number of the funds for periods ended December 31, 2009 and considered information provided by Putnam Management regarding the factors contributing to the underperformance and actions being taken to improve performance. The Trustees indicated their intention to continue to monitor performance trends to assess the effectiveness of these efforts and to evaluate whether additional changes to address areas of underperformance are warranted.
Putnam Asia Pacific Equity Fund.In the case of your fund, the Trustees considered that your fund’s class A share cumulative total return performance at net asset value was in the 1st quartile of its Lipper Inc. peer group (Lipper Pacific Region Funds) for the period measuring from its inception on June 12, 2009 through December 31, 2009 (the first quartile representing the best-performing funds and the fourth quartile the worst-performing funds). (When considering performance information, shareholders should be mindful that past performance is not a guarantee of future results.)
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Putnam International Value Fund.In the case of your fund, the Trustees considered that your fund’s class A share cumulative total return performance at net asset value was in the following quartiles of its Lipper Inc. peer group (Lipper International Large-Cap Value Funds) for the one-year, three-year and five-year periods ended December 31, 2009 (the first quartile representing the best-performing funds and the fourth quartile the worst-performing funds):
One-year period | Three-year period | Five-year period |
3rd | 4th | 4th |
Over the one-year, three-year and five-year periods ended December 31, 2009, there were 132, 105 and 77 funds, respectively, in your fund’s Lipper peer group. (When considering performance information, shareholders should be mindful that past performance is not a guarantee of future results.)
The Trustees took note of your fund’s fourth-quartile performance for the three-year and five-year periods ended December 31, 2009 and considered the circumstances that may have contributed to the disappointing performance. The Trustees also considered the actions taken by Putnam Management intended to improve performance, including the following actions:
•Hiring a new chief investment officer to oversee the investment division.
•Increasing accountability and reduced complexity in the portfolio management process for the Putnam equity funds by replacing a team management structure with a decision-making process that vests full authority and responsibility with individual portfolio managers. In January 2010, a new portfolio manager took over sole responsibility for managing the fund’s investments. Putnam Management has also taken other steps, such as eliminating sleeves in certain Putnam equity funds, to reduce process complexity in the portfolio management of these funds;
•Clarifying its investment process by affirming a fundamental-driven approach to investing, with quantitative analysis providing additional input for investment decisions;
•Strengthening its large-cap equity research capability by adding multiple new investment personnel to the team and by bringing U.S. and international research under common leadership; and
•Realigning the compensation structure for portfolio managers and research analysts so that only those who achieve top-quartile returns over a rolling three-year basis are eligible for full bonuses.
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 noted 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 performance issues, the Trustees concluded that it is preferable to seek change within Putnam Management to address performance
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shortcomings. In the Trustees’ view, the alternative of 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; investor servicing
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 benefits related to brokerage and soft-dollar allocations, whereby a portion of the commissions paid by a fund for brokerage may be used to acquire research services that are expected to be useful to Putnam Management in managing the assets of your fund and of other clients. The Trustees considered a change made, at Putnam Management’s request, to the Putnam funds’ brokerage allocation policies commencing in 2010, which increased the permitted soft dollar allocation to third-party services over what had been authorized in previous years. The Trustees noted that a portion of available soft dollars continues to be allocated to the payment of fund expenses. The Trustees indicated their continued intent to monitor regulatory developments in this area with the assistance of their Brokerage Committee and also indicated their continued intent to monitor the potential benefits associated with fund brokerage and soft-dollar allocations and trends in industry practices to ensure that the principle of seeking best price and execution remains paramount in the portfolio trading process.
Putnam Management may also receive benefits from payments that the funds make to Putnam Management’s affiliates for investor or distribution services. In conjunction with the annual review of your fund’s management contract, the Trustees reviewed your fund’s investor servicing agreement with Putnam Investor Services, Inc. (“PSERV”) and its distributor’s contracts and distribution plans with Putnam Retail Management Limited Partnership (“PRM”), both of which are affiliates of Putnam Management. The Trustees concluded that the fees payable by the funds to PSERV and PRM, as applicable, for such services are reasonable in relation to the nature and quality of such services.
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Appendix D |
5% Beneficial Ownership.As of December 31, 2010, to the knowledge of the funds, no person owned beneficially or of record 5% or more of any class of shares of each fund, except as shown below.
Putnam Asia Pacific Equity Fund
Class | Shareholder name and address | Holdings | Percentage |
owned | |||
Putnam International Value Fund
Class | Shareholder name and address | Holdings | Percentage |
owned | |||
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Appendix E | |||||||||
Other Similar Funds Advised by Putnam Management | |||||||||
The following table contains certain information regarding funds for which Putnam Management provides investment advisory | |||||||||
services and that may have similar investment objectives and policies to your fund. | |||||||||
Fund | Net Assets as of | Current Management Fee Schedule | Has compensation been | Current Investment | |||||
December 31, 2010 ($) | waived, reduced or | Objective | |||||||
(in millions) | otherwise agreed to be | ||||||||
reduced under any | |||||||||
applicable contract? | |||||||||
Putnam Emerging | 52.01 | First $5 billion | 1.080% | Yes | Long-term capital | ||||
Markets Equity Fund | Next $5 billion | 1.030% | appreciation. | ||||||
Next $10 billion | 0.980% | ||||||||
Next $10 billion | 0.930% | ||||||||
Next $50 billion | 0.880% | ||||||||
Next $50 billion | 0.860% | ||||||||
Next $100 billion | 0.850% | ||||||||
Any excess thereafter | 0.845% | ||||||||
Benchmark: MSCI Emerging Markets Index (Net | |||||||||
Dividends) | |||||||||
Maximum Performance Adjustment Rate: | 0.21% | ||||||||
Minimum Performance Adjustment Rate: | -0.21% | ||||||||
Putnam International | 446.90 | First $5 billion | 1.080% | Yes | Long-term capital | ||||
Growth Fund | Next $5 billion | 1.030% | appreciation. | ||||||
Next $10 billion | 0.980% | ||||||||
Next $10 billion | 0.930% | ||||||||
Next $50 billion | 0.880% | ||||||||
Next $50 billion | 0.860% | ||||||||
Next $100 billion | 0.850% | ||||||||
Any excess thereafter | 0.845% | ||||||||
Benchmark: MSCI EAFE Growth Index (Net Dividends) | |||||||||
Maximum Performance Adjustment Rate: | 0.21% | ||||||||
Minimum Performance Adjustment Rate: | -0.21% | ||||||||
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Fund | Net Assets as of | Current Management Fee Schedule | Has compensation been | Current Investment | |||||
December 31, 2010 ($) | waived, reduced or | Objective | |||||||
(in millions) | otherwise agreed to be | ||||||||
reduced under any | |||||||||
applicable contract? | |||||||||
Putnam International | 1,298.44 | First $5 billion | 1.080% | Yes | Long-term capital | ||||
Capital Opportunities | Next $5 billion | 1.030% | appreciation. | ||||||
Fund | Next $10 billion | 0.980% | |||||||
Next $10 billion | 0.930% | ||||||||
Next $50 billion | 0.880% | ||||||||
Next $50 billion | 0.860% | ||||||||
Next $100 billion | 0.850% | ||||||||
Any excess thereafter | 0.845% | ||||||||
Benchmark: S&P Developed Ex-U.S. SmallCap Index | |||||||||
Maximum Performance Adjustment Rate: | 0.21% | ||||||||
Minimum Performance Adjustment Rate: | -0.21% | ||||||||
Putnam International | 1,499.66 | First $5 billion | 0.850% | Yes | Capital appreciation. | ||||
Equity Fund | Next $5 billion | 0.800% | |||||||
Next $10 billion | 0.750% | ||||||||
Next $10 billion | 0.700% | ||||||||
Next $50 billion | 0.650% | ||||||||
Next $50 billion | 0.630% | ||||||||
Next $100 billion | 0.620% | ||||||||
Any excess thereafter | 0.615% | ||||||||
Benchmark: MSCI EAFE Index (Net Dividends) | |||||||||
Maximum Performance Adjustment Rate: | 0.15% | ||||||||
Minimum Performance Adjustment Rate: | -0.15% | ||||||||
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Vote by mail: | Vote by phone: | Vote online: |
Check the appropriate boxes | 1-800-337-3503 | www.proxy-direct.com |
on the reverse side. Sign and | There is no need to return | There is no need to return |
date the proxy card. Return | your proxy card. | your proxy card. |
the proxy card in the | ||
envelope provided. |
Proxy card
Putnam Asia Pacific Fund
By signing below, you, as a Putnam fund shareholder, appoint Trustees John A. Hill and Robert E. Patterson, and each of them separately, with power of substitution to each, to be your proxies. You are empowering them to vote your Putnam fund shares on your behalf at the meeting of shareholders of the above referenced fund to be held on March 25, 2011, at 11:00 a.m., Eastern time, on the 8thFloor of One Post Office Square, Boston, Massachusetts 02109, and may be adjourned to later times and dates.Your vote is being solicited on behalf of the Trustees.When you complete and sign the proxy card, your shares will be voted on your behalf exactly as you have indicated on the reverse side of this card.If you simply sign the proxy card, and do not vote on a specific proposal, your shares will be automatically voted as the Trustees recommend.The proxies are also authorized to vote at their discretion on any other matter that arises at the meeting or any adjournment of the meeting.
Please sign and date the other side of this card.
Please vote by filling in the appropriate box below.
PLEASE MARK VOTES AS IN THIS EXAMPLE:■
□ Mark this box to vote on the proposals as the Trustees recommend.(No other vote is necessary.)
THE TRUSTEES RECOMMEND A VOTEFORALL PROPOSALS.
FOR | AGAINST | ABSTAIN | ||
1. | Approving a new management contract that would change | □ | □ | □ |
your fund’s performance index. | ||||
FOR | AGAINST | ABSTAIN | ||
2. | Approving an amendment to your fund’s fundamental investment restriction | □ | □ | □ |
with respect to the acquisition of voting securities of any issuer. |
Important Notice Regarding the Availability of Proxy Materials |
for the Putnam Asia Pacific Fund Shareholder Meeting to be held on March 25, 2011. |
The Proxy Statement for this meeting is available atwww. proxy-direct.com/put22190 |
If you have any questions on the proposal, please call 1-866-963-5821. | Please sign and date the other side of this card. |
PUT22190A_010611 |
Vote by mail: | Vote by phone: | Vote online: |
Check the appropriate boxes | 1-800-337-3503 | www.proxy-direct.com |
on the reverse side. Sign and | There is no need to return | There is no need to return |
date the proxy card. Return | your proxy card. | your proxy card. |
the proxy card in the | ||
envelope provided. |
Proxy card
Putnam International Value Fund
By signing below, you, as a Putnam fund shareholder, appoint Trustees John A. Hill and Robert E. Patterson, and each of them separately, with power of substitution to each, to be your proxies. You are empowering them to vote your Putnam fund shares on your behalf at the meeting of shareholders of the above referenced fund to be held on March 25, 2011, at 11:00 a.m., Eastern time, on the 8thFloor of One Post Office Square, Boston, Massachusetts 02109, and may be adjourned to later times and dates.Your vote is being solicited on behalf of the Trustees.When you complete and sign the proxy card, your shares will be voted on your behalf exactly as you have indicated on the reverse side of this card.If you simply sign the proxy card, and do not vote on a specific proposal, your shares will be automatically voted as the Trustees recommend.The proxies are also authorized to vote at their discretion on any other matter that arises at the meeting or any adjournment of the meeting.
Please sign and date the other side of this card.
Please vote by filling in the appropriate box below.
PLEASE MARK VOTES AS IN THIS EXAMPLE:■
□ Mark this box to vote on the proposals as the Trustees recommend.(No other vote is necessary .)
THE TRUSTEES RECOMMEND A VOTEFORALL PROPOSALS. | ||||
FOR | AGAINST | ABSTAIN | ||
1. | Approving a new management contract that would change | □ | □ | □ |
your fund’s performance index. | ||||
FOR | AGAINST | ABSTAIN | ||
2. | Approving an amendment to your fund’s fundamental investment restriction | □ | □ | □ |
with respect to the acquisition of voting securities of any issuer. |
Important Notice Regarding the Availability of Proxy Materials |
for the Putnam International Value Fund Shareholder Meeting to be held on March 25, 2011. |
The Proxy Statement for this meeting is available atwww. proxy-direct.com/put22190 |
If you have any questions on the proposal, please call 1-866-963-5821. | Please sign and date the other side of this card. |
PUT22190B_010611 |