SCHEDULE 14A INFORMATION
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OF THE SECURITIES EXCHANGE ACT OF 1934
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PUTNAM INVESTMENT FUNDS
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IMPORTANT INFORMATION
FOR SHAREHOLDERS IN
PUTNAM GLOBAL AGGRESSIVE GROWTH FUND
(FORMERLY PUTNAM WORLDWIDE EQUITY FUND)
The document you hold in your hands contains your proxy statement and
proxy card. A proxy card is, in essence, a ballot. When you vote your
proxy, it tells us how to vote on your behalf on important issues
relating to your fund. If you complete and sign the proxy, we'll vote it
exactly as you tell us. If you simply sign the proxy, we'll vote it in
accordance with the Trustees' recommendation on page___.
We urge you to spend a couple of minutes with the proxy statement, and
fill out your proxy card and return it to us via the mail. When
shareholders don't return their proxies in sufficient numbers, we have
to incur the expense of follow-up solicitations, which can cost your
fund money.
We want to know how you would like to vote and welcome your comments.
Please take a few moments with these materials and return your proxy to
us.
[PUTNAM SCALES LOGO]
Table of contents
A Message from the Chairman................................... 1
Notice of Shareholder Meeting................................. 2
Trustees' Recommendation......................................[ ]
Proxy card enclosed
If you have any questions, please contact us at the special toll-free
number we have set up for you (1-800-225-1581) or call your financial
advisor.
A Message from the Chairman
Dear Shareholder:
[photo of John A. Hill]
I am writing to you to ask for your vote on an important question that
affects your fund. While you are, of course, welcome to join us at your
fund's meeting, most shareholders cast their vote by filling out and
signing the enclosed proxy card. Instructions are listed at the top of
your proxy card. We are asking for your vote on the matter of approving
a new management contract between your fund and Putnam Investment
Management Inc. ("Putnam Management") including an increase in the
management fee payable at current asset levels.
A word about the management fee increase. A fee increase is proposed
only after a great deal of thought and analysis on the part of the
Trustees and only if we conclude that it is absolutely justified.
Several years ago the Trustees completed a study of the management fees,
investment performance and expense ratios of each of the Putnam funds.
We also looked at comparable funds. This comprehensive review resulted
in fee increases for some funds and decreases for others. After giving
careful consideration to your fund's investment performance, the
Trustees are recommending the approval of a new management fee schedule
that is in line with fee schedules of similar Putnam funds and
competitive relative to comparable funds in the industry. Under the
proposed new management contract, instead of the current top rate of
0.80% of the fund's average annual net assets, the fund would pay Putnam
Management a fee, at the top rate of 1.00%, based on the fund's average
annual net assets. More information about the proposed new management
fee schedule is provided in the Proposal.
At the current level of assets, the new management fee will result in an
increase of approximately $2.00 in annual expenses for each $1,000
invested. The Trustees believe that this proposal, the first since the
fund's inception, will provide Putnam Management with a fee that is fair
and reasonable when compared with the fees paid to other high-quality
fund managers. We encourage you to support the Trustees' recommendation.
Although we would like very much to have each shareholder attend his or
her fund's meeting, we realize this may not be possible. Whether or not
you plan to be present, we need your vote. We urge you to complete,
sign, and return the enclosed proxy card promptly. A postage-paid
envelope is enclosed for mailing.
I'm sure that you, like most people, lead a busy life and are tempted to
put this proxy aside for another day. Please don't. When shareholders do
not return their proxies, their fund may have to incur the expense of
follow-up solicitations. All shareholders benefit from the speedy return
of proxies.
Your vote is important to us. We appreciate the time and consideration I
am sure you will give this important matter. If you have questions about
the proposal, contact your financial adviser or call a Putnam customer
service representative at 1-800-225-1581.
Sincerely yours,
/s/ John A. Hill
- ----------------------
John A. Hill, Chairman
PUTNAM GLOBAL AGGRESSIVE GROWTH FUND
(FORMERLY PUTNAM WORLDWIDE EQUITY FUND)
Notice of a Meeting of Shareholders
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,
if you can attend in person.
To the Shareholders of Putnam Global Aggressive Growth Fund:
A Meeting of Shareholders of your fund will be held on January 11, 2001
at 2:00 p.m., Boston time, on the eighth floor of One Post Office
Square, Boston, Massachusetts, to consider the following:
1. Approving a new management contract between your fund and Putnam
Investment Management, Inc., including an increase in the management fee
payable by the fund at current asset levels.
By the Trustees
John A. Hill, Chairman
George Putnam, III, President
Jameson A. Baxter John H. Mullin, III
Hans H. Estin Robert E. Patterson
Ronald J. Jackson A.J.C. Smith
Paul L. Joskow W. Thomas Stephens
Elizabeth T. Kennan W. Nicholas Thorndike
Lawrence J. Lasser
WE URGE YOU TO MARK, SIGN, DATE, AND MAIL THE ENCLOSED PROXY IN THE
POSTAGE-PAID ENVELOPE PROVIDED SO YOU WILL BE REPRESENTED AT THE
MEETING.
December 15, 2000
Proxy Statement
This document will give you the information you need to vote on the
matters listed on the previous page. Much of the information in the
proxy statement 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 us at our special toll-free number,
1-800-225-1581, or call your financial advisor.
Who is asking for your vote?
The enclosed proxy is solicited by the Trustees of Putnam Global
Aggressive Growth Fund for use at the Meeting of Shareholders of the
fund to be held on January 11, 2001, and, if your fund's meeting is
adjourned, at any later meetings, for the purposes stated in the Notice
of Meeting (see previous page). The Notice of Meeting, the proxy, and
the Proxy Statement are being mailed on or about December 18, 2000.
How do your fund's Trustees recommend that shareholders vote on the
proposal?
The Trustees recommend that you vote
1. For approving a new management contract between your fund and Putnam
Investment Management Inc., including an increase in the management fee
payable by the fund at current asset levels.
Who is eligible to vote?
Shareholders of record at the close of business on December 15, 2000 are
entitled to be present and to vote at the meeting or any adjourned
meeting.
Each share is entitled to one vote. Shares represented by duly executed
proxies will be voted in accordance with your instructions. If you sign
the proxy, but don't fill in a vote, 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
Trustees' discretion.
The Proposal
I. APPROVAL OF A NEW MANAGEMENT CONTRACT
The Trustees recommend that shareholders approve a new management
contract with Putnam Management, the fund's investment manager, which will
result in an increase in the management fees payable by the fund to Putnam
Management at current asset levels and will change the fee computation and
payment schedule from quarterly to monthly. The proposed contract, which is
attached as Exhibit A, is identical to the existing contract in all
other substantive respects. As discussed in more detail below, the proposal
would replace the current fee, which begins at 0.80% of net assets per annum,
with a fee rate that gradually decreases as the fund increases in size
starting at 1.00% for the first $500 million of net assets and ending at 0.67%
of net assets above $55 billion.
For its fiscal year ended October 31, 2000, the fund paid management
fees to Putnam Management of $229,392. If the proposed new management
contract had been in effect for the year, the fund would have paid fees of
$286,864, which is an increase of approximately $57,472 or 25%.
Further information about both the current and proposed management
contract, the termination and renewal procedures, the services provided
by Putnam Management and its affiliates, and information concerning
brokerage and related matters can be found under "Additional Information
Relating to Management Contract Approval" on page ____.
* What do management fees pay for?
Management fees pay Putnam Management for the services it provides in
conducting the day-to-day operations of the fund. These include
providing the personnel, equipment, and office facilities necessary for the
management of the fund's investment portfolio, determining the fund's
daily net asset value, maintaining the accounts and records of the fund,
preparation of reports to shareholders, compliance with regulatory
requirements, and general administration of the fund's affairs.
* Why did Putnam Management recommend a new management fee schedule to the
Trustees?
In recent years, Putnam Management has noted a general increase in the
complexity of the investment process and in the competition for talented
investment personnel. Putnam Management recommended the new management
fee schedule to help ensure that Putnam Management receives fees for its
services that are competitive with fees paid to high-quality investment
managers by other mutual funds, and to compensate for the costs associated
with managing a fund that invests aggressively in both international and
domestic markets. Putnam Management believes that maintaining competitive
management fees will, over the longer term, enable it to continue to provide
high-quality management services to your fund and to the other funds in the
Putnam group.
Several years ago, the Trustees undertook a comprehensive review of the
management fees paid by the Putnam funds. This review was conducted largely
through the Contract Committee of the Trustees, which consists solely of
independent Trustees who have no financial interest in Putnam Management.
As a result of this review, the Trustees and Putnam Management reached
agreement on a system of model fee schedules for the various types of
funds in the Putnam group. These model fee schedules have now been implemented
for most of the Putnam funds. As part of the Trustees' regular review of
all fees paid by the funds to Putnam Management and its affiliates, the
Trustees and Putnam Management have from time to time agreed to
adjustments to these model fee schedules previously implemented for
particular funds. These adjustments have generally reflected changes in
competitive market conditions and in the investment characteristics of
various funds. Upon further review of the current fee schedule of yur
fund, as requested by Putnam Management, the Trustees concluded that the
fee increase was appropriate to conform the fund's fee schedule to that
which has been implemented for other Putnam funds investing in the
specialty growth and international disciplines.
* What factors did the Trustees consider?
The Trustees placed primary emphasis upon the nature and quality of the
services being provided by Putnam Management, including, in particular,
the strong relative investment performance of the fund in recent years. In
this regard, the Trustees also considered the relative complexity of managing
the fund, and a comparison of recent management fees and other expenses
paid by the fund with those of similar funds managed by Putnam Management
and other investment advisers.
The Trustees also considered, among other things, the benefits to Putnam
Management and its affiliates resulting from the fact that affiliates of
Putnam Management currently serve as shareholder servicing agent,
distributor, and custodian for each of the Putnam funds pursuant to
separate contractual arrangements, and Putnam Management's placing of
portfolio transactions to recognize research and brokerage services.
Information about certain of the factors considered by the Trustees is
set forth below and in the section "Additional Information Relating to
Management Contract Approval" on page ____.
Following consideration of these and the other factors described above,
the Trustees of your fund, including all of the independent Trustees,
unanimously approved the proposed new contract.
* How has the fund performed?
As part of any decision regarding management fees, shareholders should
consider how the fund has performed. The table that follows shows the
fund's performance on an average annual basis of the different classes of
the fund over various periods and during the life of the fund. The table
also provides information concerning the Saloman Brothers Extended Market
Index a broad measure of global equity performance of small companies.
Average Annual Total Returns (for periods ending October 31, 2000)
Class A **Extended Market World Index
- ------------------------------------------------------------------------
1 year 48.67% 13.66%
*Life of fund 74.04 5.28%
- ------------------------------------------------------------------------
* Inception Date 5/6/98
** Life Return of the Extended Market World Index is from fund inception.
The Salomon Brothers Extended Market World Index is an unmanaged index
of approximately ____equity securities listed on the stock exchanges of
the United States, Europe, Canada, Australia, New Zealand and the Far
East. Securities indexes assume reinvestment of all distributions and
interest payments and do not take into account brokerage fees or taxes.
Securities in the fund do not match those in the indexes and performance
of the fund will differ. Past performance is not indicative of future
performance. More recent returns may be more or less than those shown.
* How has the fund performed in comparison to similar funds?
Another way of evaluating the performance of your fund is to compare it
to other global equity funds. In reviewing the fund's relative performance,
your Trustees compared it to a list, developed by Putnam Management with
review and oversight by the Trustees, of other funds with similar
investment objectives and strategies. When evaluated in that group, the
total return of the Class A shares of the fund ranks as follows:
For periods ended October 31, 2000
- ------------------------------------------------------------------------
1 year top 11% 5 out of 47 funds
Life of Fund top 3% 1 out of 44 funds
- ------------------------------------------------------------------------
* What is the effect of the new management fee schedule?
Under the new management contract, the annual management fee paid by
your fund to Putnam Management would be amended as follows:
* Proposed Fee*
1.00% of the first $500 million;
0.90% of the next $500 million;
0.85% of the next $500 million;
0.80% of the next $5 billion;
0.775% of the next $5 billion;
0.755% of the next $5 billion;
0.74% of the next $5 billion;
0.73% of the next $5 billion;
0.72% of the next $5 billion;
0.71% of the next $5 billion;
0.70% of the next $5 billion;
0.69% of the next $5 billion;
0.68% of the next $8.5 billion; and
0.67% above $55 billion
* Existing Fee*
0.80% of the first $500 million;
0.70% of the next $500 million;
0.65% of the next $500 million;
0.60% of the next $5 billion
0.575% of the next $5 billion;
0.555% of the next $5 billion;
0.54% of the next $5 billion; and
0.53% thereafter.
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*Based on average net assets
Based on average net assets of the fund for the fiscal year ended
October 31, 2000 of approximately $29 million, the effective annual
management fee rate under the proposed fee schedule (absent any expense
limitation) would be 1.00% as compared to 0.80% under the existing
schedule. This represents an increase of approximately $2 in annual
expenses for each $1000 invested in the fund. Like the current
management fee schedule, the new management fee schedule provides for
lower management fee rates as the fund's net assets increase.
The following tables summarize the expenses incurred by the fund in the
most recent fiscal year under the current fee schedule and also restate
these expenses to show what the expenses would have been, had the
proposed fee schedule been in effect. The figures for the current
contract do not reflect theeffect of the current expense limitation of
1.45%, which is in effect until at least October 31, 2001.
(Current)
Annual fund operating expenses
(expenses that are deducted from fund assets)
Management Other Operating
Fees Expenses Expenses
- ------------------------------------------------------------------------
Class A .80% 1.08% 1.88%
- ------------------------------------------------------------------------
(Proposed)
Total Annual
Fund
Management Other Operating
Fees Expenses Expenses
- ------------------------------------------------------------------------
Class A 1.00% 1.08% 2.08%
- ------------------------------------------------------------------------
* Examples
Your investment of $10,000 would incur the following expenses, assuming
5% annual return and, except as indicated, redemption at the end of each
period:
(Current)
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------
Class A $755 $1,132 $1,533 $2,649
- ------------------------------------------------------------------------
(Proposed)
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------
Class A $774 $1,189 $1,629 $2,847
- ------------------------------------------------------------------------
The examples do not represent actual past or future expense levels.
Actual expenses may be greater or less than those shown. Federal regulations
require the examples to assume a 5% annual return, but actual annual
return varies. The example does not reflect the impact of any expense
limtiations.
* What percentage of shareholders' votes are required to pass the proposal?
Approval of the new management contract will require the "yes" vote of a
"majority of the outstanding voting securities" of the fund, as provided
in the Investment Company Act of 1940. For this purpose, this means the
"yes" vote of the lesser of (1) more than 50% of the outstanding shares of the
fund or (2) 67% or more of the shares present at the meeting, if more than 50%
of the outstanding shares are present at the meeting in person or by proxy.
If the shareholders do not approve the new contract, the existing management
contract will continue in effect.
The Trustees believe that the proposed new management fee is fair and
reasonable and in the best interests of the shareholders. Accordingly,
the Trustees recommend that shareholders vote for approval of the proposed
new contract.
Quorum and Methods of Tabulation. Thirty percent of the shares entitled
to vote--present in person or represented by proxy--constitutes a quorum
for the transaction of business with respect to any proposal at the
meeting (unless otherwise noted in the proxy statement). 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. Votes cast by proxy or in
person at the meeting will be counted by persons appointed by your fund
as tellers for the meeting.
The tellers will count the total number of votes cast "for" approval of
the proposals for purposes of determining whether sufficient affirmative
votes have been cast. With respect to the election of Trustees and
selection of auditors, neither abstentions nor broker non-votes have any
effect on the outcome of the proposal. With respect to any other
proposals, abstentions and broker non-votes have the effect of a
negative vote on the proposal.
Other business. The Trustees know of no other business to be brought
before the meeting. However, if any other matters properly come before
the meeting, it is their intention that proxies that do not contain
specific restrictions to the contrary will be voted on such matters in
accordance with the judgment of the persons named as proxies in the
enclosed form of proxy.
Solicitation of proxies. In addition to soliciting proxies by mail,
Trustees of your fund and employees of Putnam Management, Putnam
Fiduciary Trust Company, and Putnam Retail Management may solicit
proxies in person or by telephone. Your fund may also arrange to have
voting instructions recorded by telephone. The telephone voting
procedure is designed to authenticate shareholders' identities, to allow
them to authorize the voting of their shares in accordance with their
instructions and to confirm that their instructions have been properly
recorded. 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, such votes
would not be counted at the meeting. Your fund is unaware of any such
challenge at this time. Shareholders would be called at the phone number
Putnam Investments has in its records for their accounts, and would be
asked for their Social Security number or other identifying information.
The shareholders would then be given an opportunity to authorize proxies
to vote their shares at the meeting in accordance with their
instructions. To ensure that the 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.
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.
Persons holding shares as nominees will upon request be reimbursed for
their reasonable expenses in soliciting instructions from their
principals.
Revocation of proxies. 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 Associate Clerk of
your fund, (ii) by properly executing a later-dated proxy, or (iii) by
attending the meeting and voting in person.
Date for receipt of shareholders' proposals for subsequent meetings of
shareholders. Your fund does not hold regular annual shareholder
meetings, but may from time to time schedule special meetings. In
accordance with the regulations of the SEC, in order to be eligible for
inclusion in the fund's proxy statement for such a meeting, a
shareholder proposal must be received a reasonable time before the fund
prints and mails its proxy statement. Also, SEC rules permit management
to exercise discretionary authority to vote on shareholder proposals not
included in the fund's proxy statement if the proponent has not notified
the fund of the proposal a reasonable time before the fund mails its
proxy statement. All shareholder proposals must also comply with other
requirements of the SEC's rules and the fund's Declaration of Trust.
Adjournment. If sufficient votes in favor of the proposal set forth in
the Notice of the Meeting are not received by the time scheduled for the
meeting, the persons named as proxies may propose adjournments of the
meeting for a period or periods of not more than 60 days in the
aggregate to permit further solicitation of proxies. Any adjournment
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. The persons named as proxies will vote in favor of
adjournment those proxies that they are entitled to vote in favor of the
proposal. They will vote against adjournment those proxies required to
be voted against the proposal.
Financial information. Your fund 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. Such requests may be directed to Putnam Investor
Services, P.O. Box 41203, Providence, RI 02940-1203 or 1-800-225-1581.
Fund Information
Putnam Investments. Putnam Investment Management, Inc., the fund's
investment manager, and its affiliates, and its affiliates, Putnam
Retail Management, Inc., the fund's principal underwriter for shares of
your fund and, Putnam Fiduciary Trust Company, the fund's investor
servicing agent and custodian (collectively, the "Putnam companies"),
are owned by Putnam Investments, Inc., a holding company that, except
for a minority stake owned by employees, is in turn owned by Marsh &
McLennan Companies, Inc., a leading professional services firm that
includes risk and insurance services, investment management and
consulting businesses. The address of Putnam Investments, Inc., and each
of the Putnam companies is One Post Office Square, Boston, Massachusetts
02109. The address of the executive offices of Marsh & McLennan
Companies, Inc. is 1166 Avenue of the Americas, New York, New York
10036.
Limitation of Trustee liability. The Agreement and Declaration of Trust
of each fund provides that the fund will indemnify its Trustees and
officers against liabilities and expenses incurred in connection with
litigation in which they may be involved because of their offices with
the fund, except if it is determined in the manner specified in the
Agreement and Declaration of Trust that they have not acted in good
faith in the reasonable belief that their actions were in the best
interests of the fund or that such indemnification would relieve any
officer or Trustee of any liability to the fund or its shareholders
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.
Audit Committee and Board Policy and Nominating Committee. The members
of the Audit Committee of your fund include only Trustees who are not
"interested persons" of the fund or Putnam Management. The Audit
Committee currently consists of Dr. Kennan and Messrs. Estin, Mullin and
Stephens (Chairman). The Board Policy and Nominating Committee consists
only of Trustees who are not "interested persons" of your fund or Putnam
Management. The Board Policy and Nominating Committee currently consists
of Dr. Kennan (Chairperson), Messrs. Hill, Patterson and Thorndike.
During the fund's last fiscal year, the Audit Committee met seven times,
and the Board Policy and Nominating Committee met six times.
Officers and other information. All of the officers of your fund are
employees of Putnam Management or its affiliates. Because of their
positions with Putnam Management or its affiliates or their ownership of
stock of Marsh & McLennan Companies, Inc., the parent corporation of
Putnam Management and Putnam Retail Management, Messrs. Putnam, III,
Lasser and Smith, as well as the officers of your fund, will benefit
from the management fees, distribution fees, custodian fees, and
investor servicing fees paid or allowed by the fund. In addition to
George Putnam III and Lawrence J. Lasser, the officers of your fund are
as follows:
Year first
elected to
Name (age) office Five Year Business History
Office with the fund
- ---------------------------- -------------------------- -----------
Charles E. Porter ( ) 1998 Putnam Investments, Inc.
Executive Vice President and Putnam Management
Patricia C. Flaherty ( ) 1998 Putnam Investments, Inc.
Senior Vice President and Putnam Management
John D. Hughes ( ) 1998 Putnam Funds
Senior Vice President
& Treasurer
Gordon H. Silver ( ) 1998 Putnam Investments, Inc.
Vice President Putnam Management
Ian C, Ferguson ( ) 1998 Putnam Investments, Inc.
Vice President and Putnam Management
Brett C. Browchuck ( ) 1998 Putnam Management
Vice President
Stephen Oristaglio ( ) 1998 Senior Managing Director
Vice President Putnam Management
Roland Gillis* ( ) 1998 Managing Director
Vice President Putnam Management
Stephen Dexter* ( ) 1999 Senior Vice President
Vice President Putnam Management
Peter J. Hadden* ( ) 1998 Senior Vice President
Vice President Putnam Managment
Richard A. Monaghan** ( ) 1998 Putnam Investments, Inc.
Vice President Putnam Management, and Putnam Retail
Richard J. Leibovitch ( ) 1998 Putnam Management
Vice President
John R. Verani ( ) 1998 Putnam Investments, Inc.
Vice President and Putnam Managment
- -------------------------------------------------------------------------------
*The fund's portfolio manager
**President of Putnam Retail Management
Additional Information Relating to Management Contract Approval
In addition to the services it provides to your fund, Putnam Management
acts as investment adviser or subadviser of other publicly owned
investment companies having different investment objectives. For the
names of such funds having investment objectives similar to those of
your fund and the current rates of Putnam Management's annual fees as
adviser or subadviser of such funds, see Exhibit B in this Proxy Statement.
Putnam Management is also affiliated with The Putnam Advisory Company,
Inc., which together with its subsidiaries furnishes investment advice
to domestic and foreign institutional clients and foreign mutual funds.
Another affiliate, Putnam Fiduciary Trust Company, provides investment
advice to institutional clients under its banking and fiduciary powers.
The advisory fees charged by such firms to their institutional clients are
generally at lower rates than those charged to the Putnam funds. The
services performed and responsibilities assumed by these firms for such
clients are, however, not as extensive as those performed or assumed by
Putnam Management for the Putnam funds.
Some officers and directors of Putnam Management, including some who are
officers of your fund, serve as officers or directors of some of these
affiliates. Putnam Management may also enter into other business.
The Management Contract. Putnam Management serves as investment manager
of your fund pursuant to a Management Contract. The management fee payable
under the contract is described above in Proposal 1. The fees paid to
Putnam Management in the most recent fiscal year are shown on page __.
Under the contract, subject to such policies as the Trustees may determine,
Putnam Management, at its expense, furnishes continuously an investment
program for your fund and makes investment decisions on behalf of your
fund. Subject to the control of the Trustees, Putnam Management manages,
supervises, and conducts the other affairs and business of your fund,
furnishes office space and equipment, provides bookkeeping and clerical
services (including determination of your fund's net asset value, but
excluding shareholder accounting services) and places all orders for the
purchase and sale of your fund's portfolio securities. Putnam Management
may place fund portfolio transactions with broker-dealers that furnish
Putnam Management, without cost to it, certain brokerage and research
services of value to Putnam Management and its affiliates in advising
your fund and other clients. In so doing, Putnam Management may cause your
fund to pay greater brokerage commissions than it might otherwise pay.
Your fund also pays, or reimburses Putnam Management for, the compensation
and related expenses of certain officers of your fund and their assistants.
Currently, your fund reimburses Putnam Management for a portion of the
compensation and related expenses of certain officers of your fund who
provide certain administrative services to your fund and the other Putnam
funds, each of which bears an allocated share of the costs. The aggregate
amount of all such payments and reimbursements is determined annually by the
Trustees, and the amount paid in the most recent fiscal year is set forth
on page __. Putnam Management pays all other salaries of officers of your
fund. Your fund pays all expenses not assumed by Putnam Management including,
without limitation, auditing, legal, custodial, investor servicing agent,
and shareholder reporting expenses.
The contract provides that Putnam Management shall not be subject to any
liability to your fund or to any shareholder of your fund for any act or
omission in the course of or connected with rendering services thereunder
in the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties.
The contract may be terminated without penalty upon 30 days' written notice
by Putnam Management, by the Trustees, or by the affirmative vote of the
holders of a "majority of the outstanding voting securities" of the fund
(as defined in the Investment Company Act of 1940). It may be amended
only by an affirmative vote of the holders of a majority of the outstanding
voting securities of the fund and by a majority of the Trustees who are
not "interested persons" of the fund or Putnam Management.
The contract will terminate automatically if it is assigned, or unless
its continuance is approved at least annually by either the Trustees or
Shareholders of the fund and in either case by a majority of the Trustees
who are not "interested persons" of Putnam Management or your fund.
Payments to Affiliates of Putnam Management. Putnam Fiduciary Trust
Company is the fund's investor servicing agent and custodian. The investor
servicing fees and custodian fees paid by the fund to Putnam Fiduciary
Trust Company in the fund's most recent fiscal year are set forth below.
Management Contract
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The management contract dated March 6, 1998 was initially approved by
the trustees of Putnam Investment Funds (the name of the parent trust of
Putnam Global Aggressive Growth Fund) on December 4, 1994 and was most
recently approved by the Trustees on June____, 2000.
Reimbursement paid by your fund to Putnam
Management for compensation and related
expenses including employee benefit plan
contributions for your fund's Executive Vice
President (Charles E. Porter), Senior Vice
President (Patricia C. Flaherty), and their
assistants $3,338
----------
Payment to Affiliates
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Investor servicing and custodian fees paid to
Putnam Fiduciary Trust Company (before
application of credits, if any) $246, 583
----------
Net Assets and Shares Outstanding as of October 31, 2000:
- ------------------------------------------------------------
Class A $30,604,514
Shares Outstanding and Authorized to Vote as of October
31, 2000:
- ------------------------------------------------------------
Class A 1,044,092
5% Beneficial Ownership of the Fund as of October 31, 2000:
- ------------------------------------------------------------
The Putnam Companies 64.3%
- ---------------------
*Shares held of record on behalf of its customers, but not
beneficially.
PUTNAM INVESTMENTS
P.O. Box 41203
Providence, RI 02940-9966
Exhibit A
[Deleted text is struck through. New text is underlined.]
PUTNAM INVESTMENT FUNDS
MANAGEMENT CONTRACT
Management Contract dated as of December 2, 1994, as revised July 14,
1995, December 1, 1995, April 1, 1997, March 6, 1998, July 10, 1998,
March 12, 1999, July 1, 1999 September 10, 1999, and _______, 2001
between PUTNAM INVESTMENT FUNDS, a Massachusetts business trust (the
"Fund"), and PUTNAM INVESTMENT MANAGEMENT, INC., a Massachusetts
corporation (the "Manager").
WITNESSETH:
That 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 each series of the Fund, will determine what investments shall
be purchased, held, sold or exchanged by each series of the Fund and what
portion, if any, of the assets of each series of the Fund shall be held
uninvested and shall, on behalf of each series of the Fund, make changes
in such series' 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 each series of the Fund, and 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 shall
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 each series of the
Fund, but excluding shareholder accounting services. Except as otherwise
provided in Section 1(d), the Manager will pay the compensation, if any,
of the officers of the Fund.
(c) The Manager, at its expense, shall 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 shall 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, shall
consider all factors it deems relevant, including by way of illustration,
price, the size of the transaction, the nature of the market for the security,
the amount of the commission, the timing of the transaction taking into
account market prices and trends, the reputation, experience and financial
stability of the broker or dealer involved and the quality of service rendered
by the broker or dealer in other transactions. Subject to such policies as
the Trustees of the Fund may determine, the Manager shall not be deemed to
have acted unlawfully or to have breached any duty created by this Contract
or otherwise solely by reason of its having caused 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 shall pay all expenses incurred in connection with the
organization of the Fund and the initial public offering and sale of its
shares of beneficial interest, provided that upon the issuance and sale of
such shares to the public pursuant to the offering, and only in such event,
the Fund shall become liable for, and to the extent requested reimburse the
Manager for, registration fees payable to the Securities and Exchange
Commission and for an additional amount not exceeding $125,000 as its agreed
share of such expenses.
(f) The Manager shall 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.
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 have and 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), (c) and (e) of
Section 1, a fee, computed and paid quarterly or monthly (for Putnam
Global Aggressive Growth Fund) at the following annual rates for each
series of the Fund:
Putnam Balanced Fund and Putnam Capital Opportunities Fund:
(a) 0.65% of the first $500 million of the average net asset value of
the series;
(b) 0.55% of the next $500 million of such average net asset value;
(c) 0.50% of the next $500 million of such average net asset value;
(d) 0.45% of the next $5 billion of such average net asset value;
(e) 0.425% of the next $5 billion of such average net asset value;
(f) 0.405% of the next $5 billion of such average net asset value;
(g) 0.39% of the next $5 billion of such average net asset value; and
(h) 0.38% of any excess thereafter.
Putnam New Value Fund, Putnam Growth Opportunities Fund and Putnam
Mid-Cap Value Fund:
(a) 0.70% of the first $500 million of the average net asset value of
the series;
(b) 0.60% of the next $500 million of such average net asset value;
(c) 0.55% of the next $500 million of such average net asset value;
(d) 0.50% of the next $5 billion of such average net asset value;
(e) 0.475% of the next $5 billion of such average net asset value;
(f) 0.455% of the next $5 billion of such average net asset value;
(g) 0.44% of the next $5 billion of such average net asset value; and
(h) 0.43% of any excess thereafter.
Putnam Global Growth and Income Fund, Putnam International Fund and
Putnam Small Cap Value Fund:
(a) 0.80% of the first $500 million of the average net asset value of
the series;
(b) 0.70% of the next $500 million of such average net asset value;
(c) 0.65% of the next $500 million of such average net asset value;
(d) 0.60% of the next $5 billion of such average net asset value;
(e) 0.575% of the next $5 billion of such average net asset value;
(f) 0.555% of the next $5 billion of such average net asset value;
(g) 0.54% of the next $5 billion of such average net asset value; and
(h) 0.53% of any excess thereafter.
Putnam International New Opportunities Fund, Putnam International
Voyager Fund and Putnam Emerging Markets Fund:
(a) 1.00% of the first $500 million of the average net asset value of
the series;
(b) 0.90% of the next $500 million of such average net asset value;
(c) 0.85% of the next $500 million of such average net asset value;
(d) 0.80% of the next $5 billion of such average net asset value;
(e) 0.775% of the next $5 billion of such average net asset value;
(f) 0.755% of the next $5 billion of such average net asset value;
(g) 0.74% of the next $5 billion of such average net asset value; and
(h) 0.73% of any excess thereafter.
Putnam Global Aggressive Growth Fund:
(a) 1.00% of the first $500 million of the average net asset value of
the series;
(b) 0.90% of the next $500 million of such average net asset value;
(c) 0.85% of the next $500 million of such average net asset value;
(d) 0.80% of the next $5 billion of such average net asset value;
(e) 0.775% of the next $5 billion of such average net asset value;
(f) 0.755% of the next $5 billion of such average net asset value;
(g) 0.74% of the next $5 billion of such average net asset value;
(b) 0.73% of the next $5 billion of such average net asset value;
(c) 0.72% of the next $5 billion of such average net asset value;
(d) 0.71% of the next $5 billion of such average net asset value;
(e) 0.70% of the next $5 billion of such average net asset value;
(f) 0.69% of the next $5 billion of such average net asset value;
(h) 0.68% of the next $8.5 billion of such average net asset value; and
(h) 0.67% of any excess thereafter.
Putnam Research Fund:
(a) 0.65% of the first $500 million of the average net asset value of
the series;
(b) 0.55% of the next $500 million of such average net asset value;
(c) 0.50% of the next $500 million of such average net asset value;
(d) 0.45% of the next $5 billion of such average net asset value;
(e) 0.425% of the next $5 billion of such average net asset value;
(f) 0.405% of the next $5 billion of such average net asset value;
(g) 0.39% of the next $5 billion of such average net asset value; and
(h) 0.38% of any excess thereafter;
provided, however, that the applicable base fee will be increased or
decreased for each calendar quarter by 0.01% of average net asset value
of the Fund for each full 1% increment in excess of 3% (with fractional
amounts rounded to the nearest whole number) by which the Fund's
cumulative return (calculated in accordance with regulations of the
Securities and Exchange Commission) over the 36-month period immediately
preceding such calendar quarter (or the life of the Fund, if shorter)
exceeds or is exceeded by, respectively, the cumulative change in value
(expressed as a percentage) of the Standard & Poor's 500 Composite Stock
Price Index (with dividends reinvested) over the same period, provided
that the maximum increase or decrease to the base fee shall not exceed
in the aggregate 0.07% of average net asset value of the Fund. For
purposes of calculating the rate payable by the Fund, the Fund's
cumulative return for any relevant period shall equal the change,
expressed as a percentage, in the Fund's net asset value per share,
including the value of any distributions of net realized capital gains
or net investment income and capital gains taxes paid or payable on
undistributed realized long-term capital gains, over such period.
Such average net asset value shall be determined by taking an average of
all of the determinations of such net asset value during such month or
quarter at the close of business on each business day during such month
or quarter while this Contract is in effect. Such fee shall be payable
for each fiscal quarter within 30 days (15 days for fees payable
monthly) after the close of such month or quarter and shall commence
accruing as of the date of the initial issuance of shares of the Fund to
the public.
The fees payable by the Fund to the Manager pursuant to this Section 3
shall 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 or any series of the Fund for any
fiscal year should exceed the expense limitation on investment company
expenses imposed by any statute or regulatory authority of any
jurisdiction in which shares of the Fund or such series are qualified
for offer or sale, the compensation due the Manager for such fiscal year
shall be reduced by the amount of excess by a reduction or refund
thereof. In the event that the expenses of the Fund or any series 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 shall be reduced, and, if necessary, the
Manager shall assume expenses of the Fund or such series to the extent
required by the terms and conditions of such expense limitation.
If the Manager shall serve for less than the whole of a quarter, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT.
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment; and this Contract shall not be
amended as to any series of the Fund unless such amendment be approved
at a meeting by the affirmative vote of a majority of the outstanding
shares of such series, and by the vote, cast in person at a meeting
called for the purpose of voting on such approval, of a majority of the
Trustees of the Fund who are not interested persons of the Fund or of
the Manager.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and shall
remain in full force and effect as to a particular series continuously
thereafter (unless terminated automatically as set forth in Section 4)
until terminated as follows:
(a) Either party hereto may at any time terminate this Contract as to
any series by not more than sixty days' nor less than thirty days'
written notice delivered or mailed by registered mail, postage prepaid,
to the other party, or
(b) If (i) the Trustees of the Fund or the shareholders by the
affirmative vote of a majority of the outstanding shares of such series,
and (ii) a majority of the Trustees of the Fund 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, do not
specifically approve at least annually the continuance of this Contract,
then this Contract shall automatically terminate at the close of
business on the second anniversary of its execution, or upon the
expiration of one year from the effective date of the last such
continuance, whichever is later.
Action by the Fund under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority
of the outstanding shares of the relevant series.
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 series means the affirmative vote, at a
duly called and held meeting of shareholders of such series, (a) of the
holders of 67% or more of the shares of such series present (in person
or by proxy) and entitled to vote at such meeting, if the holders of
more than 50% of the outstanding shares of such series entitled to vote
at such meeting are present in person or by proxy, or (b) of the holders
of more than 50% of the outstanding shares of such series entitled to
vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person",
"control", "interested person" and "assignment" shall have their
respective meanings defined in the Investment Company Act of 1940 and
the Rules and Regulations thereunder (the "1940 Act"), subject, however,
to such exemptions as may be granted by the Securities and Exchange
Commission under said Act; the term "specifically approve at least
annually" shall be construed in a manner consistent with the 1940 Act,
and the Rules and Regulations thereunder; and the term "brokerage and
research services" shall have the meaning given in the Securities
Exchange Act of 1934 and the Rules and Regulations thereunder.
7. NON-LIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross negligence on
the part of the Manager, or reckless disregard of its obligations and
duties hereunder, the Manager shall not be subject to any liability to
the Fund or to any shareholder of the Fund, for any act or omission in
the course of, or connected with, rendering services hereunder.
8. LIMITATION OF LIABILITY OF THE TRUSTEES, OFFICERS, AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Fund is on file
with the Secretary of State 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 relevant series of the
Fund.
IN WITNESS WHEREOF, PUTNAM INVESTMENT FUNDS and PUTNAM INVESTMENT
MANAGEMENT, INC. have each caused this instrument to be signed in
duplicate in its behalf by its President or a Vice President thereunto
duly authorized, all as of the day and year first above written.
PUTNAM INVESTMENT FUNDS
Signature Lines Ommitted
Exhibit B
[To be included in Definitive Materials.]
PUTNAM INVESTMENTS
[SCALE LOGO OMITTED]
BOSTON * LONDON * TOKYO
This is your PROXY CARD
Please vote this proxy card, sign it below, and return it
promptly in the envelope provided. Your vote is important.
Proxy for a meeting of shareholders to be held on January 11, 2001 for
Putnam Global Aggressive Growth Fund.
This proxy is solicited on behalf of the Trustees of the fund.
The undersigned shareholder hereby appoints John A. Hill, Hans H. Estin,
and Robert E. Patterson, and each of them separately, Proxies, with
power of substitution, and hereby authorizes them to represent and to
vote, as designated below, at the meeting of shareholders of Putnam
Global Aggressive Growth Fund on January 11, 2001, at 2:00 p.m., Boston
time, and at any adjournments thereof, all of the shares that the
undersigned shareholder would be entitled to vote if personally present.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY.
Please sign your name exactly as it appears on this card. If you are a
joint owner, each owner should sign. When signing as executor,
administrator, attorney, trustee, or guardian, or as custodian for a
minor, please give your full title as such. If you are signing for a
corporation, please sign the full corporate name and indicate the
signer's office. If you are a partner, sign the partnership name.
- ---------------------------------------------
Shareholder sign here
Date
- ---------------------------------------------
Co-owner sign here
Date
If you complete and sign the proxy, we'll vote it exactly as you tell
us. If you simply sign the proxy, it will be voted FOR Proposal 1. In
their discretion, the Proxies will also be authorized to vote upon such
other matters that may properly come before the meeting.
THE TRUSTEES RECOMMEND A VOTE FOR THE PROPOSALS LISTED BELOW:
Please vote by filling in the appropriate boxes below.
FOR AGAINST ABSTAIN
1. Proposal to approve a new
management contract between
your fund and Putnam Investment
Management, Inc.
Note: If you have questions on any of the proposals, please call
1-800-225-1581.
"Fund number" "Share amt"
DEAR SHAREHOLDER:
Your vote is important. Please help us to eliminate the expense of
follow-up mailings by signing and returning this proxy card as soon as
possible. A postage-paid envelope is enclosed for your convenience.
THANK YOU!
"Address"
HAS YOUR ADDRESS CHANGED?
Please use this form to notify us of any change in address or telephone
number. Detach this form from the proxy card and return it with your
signed proxy in the enclosed envelope.
Name
Street
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City State Zip
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Telephone
DO YOU HAVE ANY COMMENTS?
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