SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(A)
of the Securities Exchange Act of 1934

Filed by the Registrant / X /

Filed by a Party other than the Registrant /     /

Check the appropriate box:

PUTNAM AMERICAN GOVERNMENT INCOME FUND
PUTNAM ARIZONA TAX EXEMPT INCOME FUND
PUTNAM ASSET ALLOCATION FUNDS
PUTNAM CALIFORNIA INVESTMENT GRADE MUNICIPAL TRUST
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
PUTNAM CAPITAL APPRECIATION FUND
PUTNAM CLASSIC EQUITY FUND
PUTNAM CONVERTIBLE INCOME-GROWTH TRUST
PUTNAM DISCOVERY GROWTH FUND
PUTNAM DIVERSIFIED INCOME TRUST
PUTNAM EQUITY INCOME FUND
PUTNAM EUROPE EQUITY FUND
THE PUTNAM FUND FOR GROWTH AND INCOME
PUTNAM FUNDS TRUST
THE GEORGE PUTNAM FUND OF BOSTON
PUTNAM GLOBAL EQUITY FUND
PUTNAM GLOBAL INCOME TRUST
PUTNAM GLOBAL NATURAL RESOURCES FUND
PUTNAM HEALTH SCIENCES TRUST
PUTNAM HIGH INCOME SECURITIES FUND
PUTNAM HIGH YIELD ADVANTAGE FUND
PUTNAM HIGH YIELD MUNICIPAL TRUST
PUTNAM HIGH YIELD TRUST
PUTNAM INCOME FUND
PUTNAM INTERNATIONAL EQUITY FUND
PUTNAM INVESTMENT FUNDS
PUTNAM INVESTMENT GRADE MUNICIPAL TRUST
PUTNAM INVESTORS FUND
PUTNAM LIMITED DURATION GOVERNMENT INCOME FUND

PUTNAM MANAGED MUNICIPAL INCOME TRUST
PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND
PUTNAM MASTER INTERMEDIATE INCOME TRUST
PUTNAM MICHIGAN TAX EXEMPT INCOME FUND
PUTNAM MINNESOTA TAX EXEMPT INCOME FUND
PUTNAM MONEY MARKET FUND
PUTNAM MUNICIPAL BOND FUND
PUTNAM MUNICIPAL OPPORTUNITIES TRUST
PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND
PUTNAM NEW OPPORTUNITIES FUND
PUTNAM NEW YORK INVESTMENT GRADE MUNICIPAL TRUST
PUTNAM NEW YORK TAX EXEMPT INCOME FUND
PUTNAM OHIO TAX EXEMPT INCOME FUND
PUTNAM OTC & EMERGING GROWTH FUND
PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND
PUTNAM PREMIER INCOME TRUST
PUTNAM RETIREMENTREADY® FUNDS
PUTNAM TAX EXEMPT INCOME FUND
PUTNAM TAX EXEMPT MONEY MARKET FUND
PUTNAM TAX-FREE HEALTH CARE FUND
PUTNAM TAX-FREE INCOME TRUST
PUTNAM TAX SMART FUNDS TRUST
PUTNAM U.S. GOVERNMENT INCOME TRUST
PUTNAM UTILITIES GROWTH AND INCOME FUND
PUTNAM VARIABLE TRUST
PUTNAM VISTA FUND
PUTNAM VOYAGER FUND

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement,
if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

The proxyProxy statement

March 9, 2007

A Message from the Chairman of the Putnam California Investment Grade Municipal TrustFunds

Dear Fellow Shareholder:

I am writing to ask you, as a shareholder of your Putnam High Yield Municipal Trust
Putnam Municipal Bond Fund
Putnam Municipal Opportunities Trust
Putnam New York Investment Grade Municipal Trust

This proxy statement can help you decide how you wantfund, to vote on important issues relatingthe sale of Putnam Investments to Great-West Lifeco Inc., a subsidiary of Power Financial Corporation, by approving new management contracts. This proposal will be considered at a special meeting of shareholders called for May 15, 2007. Great-West Lifeco has agreed to acquire Putnam Investments Trust, which owns your fund’s investment adviser, Putnam fund. WhenInvestment Management, LLC (“Putnam Management”).

The Putnam funds’ Board of Trustees has been actively involved in the sale process, and will continue in its role of overseeing the Putnam funds on your behalf. We are asking you complete and signto approve a new management contract with Putnam Management that will become effective when the transaction with Great-West Lifeco is completed, so that there will not be any disruption in the investment management or in the services that your proxy ballot, thefund receives. The Trustees of the Putnam funds unanimously recommend that you vote FOR the approval of a new management contract.

It is important for you, as a Putnam fund shareholder, to know that no changes to the Putnam funds, to the way Putnam manages money, or to the funds’ management teams are expected as a result of this transaction. Putnam will continue to operate as a separate company headquartered in Boston, and will retain its name. There will be no change in your fund’s fee rates or in the services that your fund receives as a result of the transaction. In addition, the funds will vote on your behalf exactly as you have indicated. If you simply sign the proxy ballot, it will be voted in accordance with the Trustees’ recommendations on page 6 and 7not bear any of the costs associated with this proxy statement.solicitation.

Please take a few moments and decide how you want to vote.vote promptly. When shareholders don’tdo not return their proxies in sufficient numbers, follow-up solicitations are required, which cost your fund money.

required. You can vote by returning your proxy ballotsballot in the envelope provided. Or you can call ourthe toll-free number or go tovisit the Internet. See your proxy ballot forWeb site address indicated on the phone number and Internet address. If you have proxy related questions, please call 1-800-225-1581 or contact your financial advisor.

Table of contents

PROXY CARD(S) ENCLOSED

If you have any questions, please contact us at 1-800-225-1581 or call your financial advisor.

A Message from the Chairman

Dear Fellow Shareholder:

I am writing to ask for your vote on important matters affecting your investment in the Putnam funds. 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 cards by calling or by voting via the Internet. We are asking for your voteon the following matters:

* Fixing the number of Trustees at 11 and electing your fund’s nominees for Trustees

Although Trustees do not manage fund portfolios, they play an important role in protecting fund shareholders, and are responsible for approving the fees paid to the fund’s investment adviser and its affiliates, reviewing overall fund expenses, selecting the fund’s auditors, monitoring conflicts of interest, overseeing the fund’s compliance with federal securities laws and voting proxies for the fund’s portfolio securities.

Your fund’s Trustees have also in the past three years been at the forefront of reform efforts affecting the mutual fund industry, including ending the practice of directing fund brokerage commissions to brokers in connection with sales of fund shares, instituting measures to discourage excessive short-term trading in open-end funds and other initiatives to reduce shareholder expenses and improve fund disclosures.

* Converting your fund to an open-end investment company(Putnam High Yield Municipal Trust only)

Your fund’s governing documents require the fund to submit for shareholder vote a proposal to convert the fund to an open-end investment company if the fund’s shares trade at a discount from net asset value over a specified time period. The Trustees recommend that shareholders vote against converting your fund. As discussed in this Proxy Statement, the Trustees believe that your fund’s status as a closed-end fund offers potential investment benefits, including the ability to remain more fully invested in longer-term, higher-yielding securities. The Trustees do not believe that recent discount levels are currently a sufficient justification for abandoning the advantages of the closed-end structure through conversion to open-end status.

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* Shareholder proposals requesting the Trustees to take the steps necessary to merge Putnam California Investment Grade Municipal Trust and Putnam New York Investment Grade Municipal Trust into their respective open-end Putnam fund counterparts or otherwise to permit shareholders of the funds to realize the net asset value of their shares.(Putnam California Investment Grade Municipal Trust and Putnam New York Investment Grade Municipal Trust only)

A shareholder of both Putnam California Investment Grade Municipal Trust and Putnam New York Investment Grade Municipal Trust has submitted shareholder proposals that call for your funds’ Trustees to take steps to merge each fund into its Putnam open-end fund counterpart or consider other means of permitting fund shareholders to receive the net asset value of their shares. It is important to note that these proposals are not proposals formally to approve mergers or other transactions; they only request the Trustees to consider further action. As discussed in the Proxy Statement, the Trustees believe that each fund’s closed-end status offers potential investment benefits, including the ability to utilize leverage through the issuance of preferred shares and the ability to remain more fully invested in longer-term, higher-yielding securities. Over most periods, both funds have outperformed their respective Putnam open-end fund counterparts at net asset value. In addition, these funds have historically offered significantly higher yields than their open-end fund counterparts. The Trustees believe that this outperformance is primarily attributable to the funds’ status as leveraged closed-end funds. The Trustees do not believe that recent discount levels are currently a sufficient justification for abandoning the advantages of the closed-end structure through merger into an open-end fund.

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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 vote their proxies, their fund may have to incur the expense of follow-up solicitations. All shareholders benefit from the speedy return of proxies.ballot.

Your vote is important to us. We appreciate the time and consideration I am sure you will give these important matters. If you have questions about any of these proposals,the proposal, please call a Putnam customer services representativeour proxy information line at 1-800-225-15811-866-905-2396 or contact your financial advisor.representative.

Sincerely yours,

3John A. Hill
Chairman of the Trustees

PUTNAM CALIFORNIA INVESTMENT GRADETable of contents

PROXY CARD(S) ENCLOSED

If you have any questions, please call our proxy information line at 1-866-905-2396 or call your financial advisor.

Notice of Annuala Special Meeting of Shareholders

To the Shareholders of:

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* This is the formal agendanotice for your fund’s shareholder meeting. It tells you what proposalsproposal will be voted on and the time and place of the meeting, in the eventcase you wish to attend in person.

To the Shareholders of Putnam California Investment Grade Municipal Trust, Putnam High Yield Municipal Trust, Putnam Municipal Bond Fund, Putnam Municipal Opportunities Trust and Putnam New York Investment Grade Municipal Trust:

The AnnualA Special Meeting of Shareholders of your fund will be held on October 30, 2006Tuesday, May 15, 2007 at 11:00 a.m., Boston time, at the principal offices of the fund on the 8th floor of One Post Office Square, Boston, Massachusetts 02109, to consider the following:

1. Fixing the number of Trustees at 11 and electingApproving a new management contract for your fund’s nominees for Trustees. See page 8.fund.

2. Converting your fund to an open-end investment company(Putnam High Yield Municipal Trust only). See page 35.

3. Shareholder proposal requesting the Trustees to take the steps necessary to merge your fund into Putnam California Tax Exempt Income Fund, an open-end fund, or otherwise to permit shareholders to realize the net asset value of their shares(Putnam California Investment Grade Municipal Trust only). See page 44.

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4. Shareholder proposal requesting the Trustees to take the steps necessary to merge your fund into Putnam New York Tax Exempt Income Fund, an open-end fund, or otherwise to permit shareholders to realize the net asset value of their shares(Putnam New York Investment Grade Municipal Trust only). See page 60.

By Judith Cohen, Clerk, on behalf ofand by the Trustees:Trustees


John A. Hill, Chairman
Jameson A. Baxter, Vice Chairman
George Putnam, III, President


Charles B. Curtis
Myra R. Drucker
Charles E. Haldeman, Jr.
Paul L. Joskow
Elizabeth T. Kennan
Kenneth R. Leibler
Robert E. Patterson
W. Thomas Stephens
Richard B. Worley

We urge you to mark, sign, date, and mail the enclosed proxy in the postage-paid envelope provided or to record your voting instructions by telephone or via the Internet so that you will be represented at the meeting.

September 15, 2006March 9, 2007

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Proxy Statement

This document will givegives you the information you need to vote on the proposals.proposal. 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 uscall our proxy information line at our toll-free number, 1-800-225-1581,1-866-905-2396 or call your financial advisor.representative.

* Why has a special meeting of shareholders been called?

On January 31, 2007, Marsh & McLennan Companies, Inc. (“Marsh & McLennan”), the ultimate parent company of Putnam Investment Management, LLC (“Putnam Management”), your fund’s investment adviser, entered into a Stock Purchase Agreement with Great-West Lifeco Inc. (“Lifeco”). Lifeco is a financial services holding company with operations in Canada, the United States and Europe and is a member of the Power Financial Corporation group of companies. Under the Stock Purchase Agreement, Lifeco will, through a direct or indirect wholly owned subsidiary (“Great-West”), acquire 100% of Putnam Investments Trust, which owns Putnam, LLC (Putnam Investments), the parent company of Putnam Management and the other Putnam companies.

As a result of this transaction, your fund’s management contract with Putnam Management will terminate. This is because the Investment Company Act of 1940, as amended (the “1940 Act”), which regulates investment companies such as your fund, requires management contracts to terminate automatically when there is a “change of control” of a fund’s investment adviser. The transaction with Lifeco will result in a “change of control” of Putnam Management, your fund’s investment adviser. Thus, your fund’s management contract with Putnam Management will automatically terminate when the transaction closes, and your fund’s shareholders must approve a new management contract. We are recommending that you approve a new management contract with Putnam Management so that Putnam Management can continue as your fund’s investment adviser after the transaction. This proxy statement describes Lifeco, the transaction, and the new ma nagement contract proposed for your fund.

*How will the change of control affect Putnam Management?

The change of control is not expected to have a material effect on Putnam Management. Putnam Management will operate as a stand-alone subsidiary of Lifeco and is expected to retain its brand and its existing management, investment and other service teams.

*How does the proposed new management contract differ from your fund’s current management contract?

The proposed new management contract is substantially identical to the current contract. Although there are some differences between your fund’s current management contract and the proposed new management contract, which are described in this proxy statement, there will be no change in the services that your fund will receive.

*Will your fund’s total fees for advisory and administrative services change?

No, there will be no change in your fund’s total fees for investment management and administrative services. For the two funds mentioned above that currently have separate management and administrative services contracts, both sets of services are proposed to be covered by a single management contract with a single fee that will not exceed the sum of the current investment management and administrative services fee.

*Who is asking for your vote?

The enclosed proxy is solicited by the Trustees of the Putnam California Investment Grade Municipal Trust, Putnam High Yield Municipal Trust, Putnam Municipal Bond Fund, Putnam Municipal Opportunities Trust and New York Investment Grade Municipal Trustfunds for use at the Annual Meetingspecial meeting of Shareholdersshareholders of each fund to be held on October 30, 2006,Tuesday, May 15, 2007 and, if your fund’s meeting is adjourned, at any later meetings, for the purposes stated in the Notice of Annuala Special Meeting (see page 4)previous pages). The Notice of Annuala Special Meeting, the proxy and the Proxy Statement are being mailed beginning on or about September 15, 2006.March 14, 2007.

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** How do your fund’s Trustees recommend that shareholders vote on these proposals?the proposal?

The Trustees unanimously recommend that you vote:vote FOR the proposal.

*1. FOR fixing the number of Trustees as proposed by the Board Policy and Nominating Committee and electing your fund’s nominees for Trustees.

2. AGAINST converting your fund to an open-end investment company and authorizing certain related amendments to your fund’s Agreement and Declaration of Trust(Putnam High Yield Municipal Trust only).

3. AGAINST the shareholder proposal requesting the Trustees to take the steps necessary to merge your fund into Putnam California Tax Exempt Income Fund, an open-end fund, or otherwise to permit shareholders to realize the net asset value of their shares(Putnam California Investment Grade Municipal Trust only).

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4. AGAINST the shareholder proposal requesting the Trustees to take the steps necessary to merge your fund into Putnam New York Tax Exempt Income Fund, an open-end fund, or otherwise to permit shareholders to realize the net asset value of their shares(Putnam New York Investment Grade Municipal Trust only).

* Who is eligible to vote?

Shareholders of record of each fund at the close of business on August 3, 2006Thursday, February 15, 2007 (the “Record Date”) are entitled to be present and to vote at the special meeting or any adjourned meeting.

The number of shares of each fund outstanding on the Record Date is shown inAppendix A. Each share is entitled to one vote. Unless otherwise noted, the holders of your fund’s preferredvote, with fractional shares and holders of your fund’s common shares will vote as separate classes.voting proportionately. Shares represented by your duly executed proxy will be voted in accordance with your instructions. If you sign the proxy card but don’t fill in a vote, your shares will be voted in accordance with the Trustees’ recommendations.recommendation. If any other business is brought before your fund’s special meeting, your shares will be voted at the discretion of the persons designated on the proxy card.

Shareholders of each fund vote separately with respect to eachthe proposal. The outcome of a vote affecting one fund does not affect any other fund.

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The ProposalsProposal

1. ELECTION OF TRUSTEESAPPROVING A NEW MANAGEMENTCONTRACT FOR YOUR FUND

*Who areBackground Information about the nominees for Trustees?Transaction

On January 31, 2007, Marsh & McLennan, the ultimate parent company of Putnam Management, your fund’s investment adviser, entered into a Stock Purchase Agreement with Lifeco. Under the Stock Purchase Agreement, Lifeco will, through Great-West, its direct or indirect wholly owned subsidiary, acquire 100% of Putnam Investments Trust, a holding company that, except for a minority stake owned by employees, is owned by Marsh & McLennan. Putnam Investments Trust owns Putnam, LLC (Putnam Investments), which in turn owns Putnam Management and the other Putnam companies.

After the transaction, Putnam Management will continue to be a wholly owned subsidiary of Putnam Investments. Putnam Investments will continue to be a wholly owned subsidiary of Putnam Investments Trust. Putnam Investments Trust will become a wholly owned subsidiary of Great-West, which will be a wholly owned holding company subsidiary of Lifeco. Lifeco is a Canadian financial services holding company with interests in the life insurance, health insurance, retirement, savings, and reinsurance businesses. Its businesses have operations in Canada, the United States and Europe. Power Financial Corporation (“Power Financial”), an international management and holding company of financial services businesses, owns approximately 70.6% of the voting shares of Lifeco. Power Corporation of Canada, a diversified international management and holding company, owns approximately 66.4% of the voting securities of Power Financial. The Honorable Paul Desmarais, Sr., through a g roup of private holding companies which he controls, has voting control of Power Corporation of Canada.

The address of Mr. Desmarais, Power Corporation of Canada, and Power Financial is 751 Victoria Square, Montreal, Quebec H2Y 2J3. The address of Lifeco is 100 Osborne Street North, Winnipeg, Manitoba, R3C 3A5. The address of Great-West will be 8515 East Orchard Road, Greenwood Village, Colorado 80111.

The funds have been informed that Lifeco’s strategic purpose for acquiring Putnam Investments is to establish a strong presence in the United States asset management business. Lifeco values Putnam

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Investments’ focus on the advice segment of the U.S. market, its significant investment management capabilities and diversified range of investment products, its high quality wholesaling organization with strong relationships with financial advisers, its distribution capabilities in Japan and Europe, and its experienced management team. Lifeco has said that it intends to operate Putnam Investments as a separate business unit, retaining Putnam Investments’ and Putnam Management’s existing management team and other key professionals. Although Lifeco may pursue sub-advisory and other synergistic opportunities for Putnam Investments within the Power Financial group of companies, it does not anticipate significant integration issues or other disruption, in light of its intent to continue to operate Putnam Investments, Putnam Management and the other Putnam companies on a stand-alone basis and its experience in operating other companies that it has acquired as s tand-alone businesses. Lifeco has advised the funds that it has no current plans to make any changes to the operations of the funds. In particular, it has advised that it has no current plans to make changes with respect to existing management fees, expense limitations, distribution arrangements, or quality of services provided to shareholders. In addition, Lifeco has advised that it intends to retain the Putnam brand and to support Putnam Investments’ current business strategy and Putnam Management’s investment management philosophy so as to minimize disruption and change for fund shareholders and the Putnam organization. Lifeco does not plan to consolidate any Putnam fund with any other company in the Power Financial group of companies. Putnam Management has been advised that, following the transaction, it is contemplated that its organizational form will be converted from a Delaware limited liability company to a Delaware limited partnership. The General Partner will be Putnam Investments LP. Th is will not have any effect on Putnam Management’s operations or the services provided to your fund.

Although the transaction is not expected to result in significant change in the operations of Putnam Management or its management of the funds, as a result of this transaction, which is expected to close in the middle of 2007, your fund’s management contract with Putnam Management will terminate. This is because the 1940 Act, which regulates investment companies such as your fund, requires management contracts to terminate automatically when there is a “change of control” of the investment adviser. The transaction with Lifeco will result in a “change ofcontrol” of Putnam Management, your fund’s investment adviser. Thus, your fund’s shareholders must approve a new management contract. The Trustees are recommending that you approve a new management contract with Putnam Management so that Putnam Management can continue as your fund’s investment adviser.

*The Stock Purchase Agreement

Under the Stock Purchase Agreement, Lifeco will acquire 100% of the ownership interests of Putnam Investments Trust, which owns Putnam Investments, the owner of Putnam Management, your fund’s current investment adviser. These Putnam Investments Trust ownership interests are in the form of class A shares, all of which are owned by Marsh & McLennan, and class B shares and options to purchase class B shares, all of which are held by Putnam employees. The estimated total value of the transaction is approximately $3.9 billion (based on the estimated value of Putnam Investments Trust’s equity interests on September 30, 2006). The final price is subject to certain adjustments at closing.

The Stock Purchase Agreement requires Lifeco, or its permitted assignee, at the closing of the transaction, to purchase all of the issued and outstanding class A common shares of Putnam Investments Trust currently held by Marsh & McLennan. Lifeco will assign its right to purchase the class A shares of Putnam Investments Trust to Great-West. Lifeco remains fully liable for its obligations under the Stock Purchase Agreement. Also at the closing, all of the issued and outstanding class B common shares and options currently held by Putnam employees under Putnam Investments Trust’s Equity Partnership Plan will be cancelled according to the terms of the Equity Partnership Plan, and each Putnam employee will receive cash payments for these shares and options, a portion of which will be paid at the closing and the remainder of which will, subject to the satisfaction of certain conditions, be paid over a three-year period, provided generally that the employee is still em ployed by Putnam on the date of payment. These deferred payments to employees may increase or decrease based upon, among other things, the performance of the Putnam funds. The transaction structure is subject to modification by Marsh & McLennan and Lifeco before closing to improve the tax efficiency of the transaction for Lifeco and to limit the extent to which the transaction consideration is subject to withholding requirements. It is not expected that any modification would result in any significant change in

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Putnam Management’s operations or its management of the funds.

Consummation of the transaction is subject to customary terms and conditions, including, among others, Marsh & McLennan and Lifeco obtaining certain regulatory approvals and the approval of new management contracts by shareholders of a substantial number of the Putnam funds. Although there is no assurance that the transaction will be completed, if each of the terms and conditions is satisfied or waived, the parties to the transaction anticipate that the closing will take place in the middle of 2007. If the transaction is not completed, your fund’s current management contract with Putnam Management will not terminate because there will be no change of control. Putnam Management would continue to serve as your fund’s investment adviser under the current management contract or, if approved at the shareholder meeting, under the proposed new management contract described in this proxy statement, effective as of January 1, 2008 or such other date as the Trustees may establish.

*Section 15(f) of the 1940 Act

Lifeco has agreed to comply with Section 15(f) of the 1940 Act. Section 15(f) provides a non-exclusive “safe harbor” for an investment company’s adviser or any affiliated persons of the adviser to receive any amount or benefit in connection with a change of control of the investment adviser as long as two conditions are met. First, for a period of three years after the change of control, at least 75% of the directors of the investment company must not be interested persons of the adviser or the predecessor adviser. Second, there must not be any “unfair burden” imposed on the investment company as a result of the transaction or any express or implied terms, conditions or understandings relating to the transaction. Section 15(f) defines “unfair burden” to include any arrangement during the two-year period after the transaction in which the adviser or predecessor adviser, or any interested person of the adviser or predecessor adviser, rece ives or is entitled to receive any compensation, directly or indirectly, from the investment company or its security holders (other than fees forbona fideinvestment advisory or other services) or from any person in connection with the purchase or sale of securities or other property to, from or on behalf of the investment company (other thanbona fideordinary compensation as principal underwriter for the investment company). Putnam Management has advised the funds that neither it, Marsh & McLennan nor Lifeco, after reasonableinquiry, is aware of any express or implied term, condition, arrangement or understanding that would impose an “unfair burden” on the funds as a result of the transaction. Marsh & McLennan and Lifeco have agreed to pay all costs incurred by the funds in connection with this transaction, including all costs of this proxy solicitation.

*The Proposed New Management Contract; Comparison with the Funds’ Current Management Contracts

The Trustees have unanimously approved, and recommend to the shareholders of each fund that they approve, a new management contract between each fund and Putnam Management. The form of the proposed new management contract is attached atAppendix B. You should refer toAppendix Bfor the complete terms of your fund’s proposed management contract.

On being presented with the need to approve new management contracts, the Trustees decided to take the opportunity to standardize, clarify and modernize various provisions of the current contracts. Because they were implemented at different times, the funds’ current management contracts differ in some cases from fund to fund, and some contain outdated provisions. The Trustees believe that this standardization will benefit shareholders by making the administration of the funds’ management contracts more efficient. In addition, Putnam Municipal Opportunities Trust and Putnam Prime Money Market Fund, which currently have both a management contract and an administrative services contract, will each combine those two contracts into a single management contract. All of the other Putnam funds receive investment management and administrative services under their current management contracts.

Except as described below, the terms of the proposed new management contracts are substantially identical to those of the current contracts. The terms of the proposed new management contracts, and certain differences between the proposed new management contracts and the current contracts, are described generally below. A more detailed description of certain differences between the proposed and current management (and administrative services, as applicable) contracts is attached atAppendix C. The date of each fund’s current management contract, the date on which it was last approved by shareholders, and the date on which its continuance was last approved by the Board Policyof Trustees is set forth inAppendix D.

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Fees.There is no change in the rate of the fees that the funds will pay Putnam Management under the proposed new management contract, except in the case of Putnam Municipal Opportunities Trust and Nominating CommitteePutnam Prime Money Market Fund (see below). The current fee schedule for investment management services and, if applicable, administrative services, for each fund is set forth inAppendix E.The actual fees paid by some funds are subject to expense limitations to which Putnam Management has agreed. It is not anticipated that any existing expense limitation commitment will change as a result of the transaction.

Putnam Municipal Opportunities Trust and Putnam Prime Money Market Fund currently have separate investment management and administrative services contracts with Putnam Management. However, the proposed new management contract for each fund, including Putnam Municipal Opportunities Trust and Putnam Prime Money Market Fund, addresses the provision of both investment management and administrative services and includes a single fee for both of these services. There is no change in the aggregate rate that Putnam Municipal Opportunities Trust and Putnam Prime Money Market Fund will pay to Putnam Management for investment management and administrative services.

Investment Management Services.The proposed new management contract for your fund provides that Putnam Management will furnish continuously an investment program for the fund, determining what investments to purchase, hold, sell or exchange and what portion of the fund’s assets will be held uninvested, in compliance with the fund’s governing documents, investment objectives, policies and restrictions, and subject to the oversight and control of the Trustees. Putnam Management has assured the funds and the Trustees that after the transaction it will continue to provide the same level of services to each fund and that the transaction will not have an adverse impact on the scope or nature of the services that each fund receives.

Putnam Management is authorized under the proposed new management contract to place orders for the purchase and sale of portfolio investments for your fund with brokers or dealers that Putnam Management selects. Putnam Management must select brokers and dealers, and place orders, using its best efforts to obtain for the funds the most favorable price and execution available, except that Putnam Management may pay higher brokerage commissions if it determines ingood faith that the commission is reasonable in relation to the value of brokerage and research services provided by the broker or dealer (a practice commonly known as “soft dollars”). Putnam Management may make this determination in terms of either the particular transaction or Putnam Management’s overall responsibilities with respect to a fund and to other clients of Putnam Management as to which Putnam Management exercises investment discretion. Putnam Management 6;s use of soft dollars is subject to policies established by the SEC and by the Trustees from time to time.

Each of the funds’ current management contracts contains similar provisions relating to the provision of investment management services.

Delegation of Responsibilities.The proposed new management contract for your fund expressly provides that Putnam Management may, in its discretion and with the approval of the Trustees (including a majority of each fund makes recommendations concerning the nominees for Trustees of that fund. The Board Policy and Nominating Committee consists solely of Trustees who are not “interested persons” (as) and, if required, the approval of shareholders, delegate responsibilities under the contract to one or more sub-advisers or sub-administrators. The separate costs of employing any sub-adviser or sub-administrator must be borne by Putnam Management or the sub-adviser or sub-administrator, not by the fund. Putnam Management is responsible for overseeing the performance of any sub-adviser or sub-administrator and remains fully responsible to the fund under the proposed new management contract regardless of whether it delegates any responsibilities.

None of the current management contracts addresses delegation of responsibilities. Putnam Management has no plans to delegate services except as described below.

At present, Putnam Management has delegated certain responsibilities to sub-advisers, as described below under the heading “Sub-Adviser Arrangements.” The sub-management contracts governing these arrangements will terminate at the same time as the current management contracts of these funds. Pursuant to the proposed new management contract (and as otherwise permitted by law), Putnam Management will enter into equivalent sub-management contracts with these sub-advisers, effective at the time the proposed new management contracts become effective, with respect to these funds. See “Sub-Adviser Arrangements” below for a description of the sub-advisers, and seeAppendix Ffor copies of the current sub-management contracts. The new sub-management contracts will be identical to the

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current sub-management contracts except for the effective dates. Shareholders should be aware that a vote to approve your fund’s new contract will have the effect of voting for the continuation of these arrangements.

In addition, Putnam Management has delegated certain administrative, pricing and bookkeeping services to State Street Bank and Trust Company. This delegation will not be affected by the transaction.

Administrative Services.The proposed new management contracts, and all of the current management contracts with the exception of those applying to Putnam Municipal Opportunities Trust and Putnam Prime Money Market Fund, provide that Putnam Management will manage, supervise and conduct the other (i.e., non-investment) affairs and business of the fund and incidental matters. These administrative services include providing suitable office space for the fund and administrative facilities, such as bookkeeping, clerical personnel and equipment necessary for the efficient conduct of the fund’s affairs, including determination of the net asset value of the fund, but excluding shareholder accounting services.

Expenses.The proposed new management contracts require Putnam Management to bear the expenses associated with (i) furnishing all necessary investment and management facilities, including salaries of personnel, required for it to execute its duties faithfully, (ii) providing suitable office space for the fund and (iii) providing administrative services. The proposed new management contracts also provide that the fund will pay the fees of its Trustees and will reimburse Putnam Management for compensation paid to officers and persons assisting officers of the fund, and all or part of the cost of suitable office space, utilities, support services and equipment used by such officers and persons, as the Trustees may determine. Under this provision, the fund will bear the costs of the Trustees’ independent staff, which assists the Trustees in overseeing each of the funds.

The current management contracts contain similar expense and reimbursement provisions.

Term and Termination.If approved by shareholders of your fund, the proposed new management contract will become effective upon its execution and will remain in effect continuously, unless terminated under the termination provisions of the contract. The proposed new management contract provides that the management contract may be terminated at any time, without the payment of any penalty by the fund, by either Putnam Management or the fund by not less than 60 days’written notice to the other party. A fund may effect termination by vote of a majority of its Trustees or by the affirmative vote of a “majority of the outstanding shares” of the fund, as defined in the Investment Company Act1940 Act. The proposed new management contracts will also terminate automatically in the event of 1940,their “assignment.”

The proposed new management contract will, unless terminated as amended (the “1940 Act”))described above, continue until June 30, 2008 and will continue in effect from year to year thereafter so long as its continuance is approved at least annually by (i) the Trustees of yourthe fund or the shareholders by the affirmative vote of Putnam Investment Management, LLC, your fund’s investment manager (“Putnam Management”). Thosea majority of the outstanding shares of the fund and (ii) a majority of the Trustees who are not “interested persons” of yourthe fund or of Putnam Management, by vote cast in person at a meeting called for the purpose of voting on such approval.

All of the current management contracts have similar provisions for their term and termination, except that the initial terms of the contracts differ and the current management contracts require that written notice be given not more than 60 nor less than 30 days before termination.

Limitation of Liability.Under the proposed new management contract, Putnam Management is not liable to a fund or to any shareholder of the fund for any act or omission in the course of, or connected with, rendering services under the proposed management contract, unless there is willful misfeasance, bad faith or gross negligence on the part of Putnam Management or reckless disregard of its obligations and duties under the proposed management contract. Each current management contract contains substantially identical provisions.

As required under each fund’s Declaration of Trust, the proposed management contract contains a notice provision stating that the fund’s Declaration of Trust is on file with the Secretary of The Commonwealth of Massachusetts and that the proposed management contract is executed on behalf of the Trustees as Trustees of the fund and not individually. Also, the obligations arising out of the proposed management contract are limited only to the assets and property of the fund and are not binding on any of the Trustees, officers or shareholders individually. Each current management contract contains a substantially identical notice.

Amendments; Defined Terms.The proposed new management contract may only be amended in writing, and any amendments must be approved in a manner consistent with the 1940 Act, the rules and regulations under the 1940 Act and any applicable guidance or

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interpretations of the SEC or its staff. Similarly, certain terms used in the proposed management contract are used as defined in the 1940 Act, the rules and regulations under the 1940 Act and any applicable guidance or interpretation of the SEC or its staff. The current management contracts contain similar terms, except that they generally do not make reference to guidance or interpretation of the SEC or its staff. Thus, the proposed new management contracts explicitly permit the funds and Manager to operate in a manner consistent with regulatory guidance and interpretations, which may provide advantages and operational flexibility from time to time.

*Sub-Adviser Arrangements

For certain funds listed below, Putnam Management has retained an affiliate to provide sub-management services. Putnam Management has retained Putnam Investments Limited (“PIL”), a wholly owned subsidiary of The Putnam Advisory Company, LLC (“PAC,” which is itself a subsidiary of Putnam Investments) and an affiliate of Putnam Management, as the sub-adviser for a portion of certain funds’ assets as determined by Putnam Management from time to time. PIL is currently authorized to serve as the sub-adviser, to the extent determined by Putnam Management from time to time, for the following funds: Putnam Diversified Income Trust, Putnam VT Diversified Income Fund, Putnam Europe Equity Fund, Putnam Global Equity Fund, Putnam VT Global Equity Fund, Putnam Global Income Trust, Putnam Global Natural Resources Fund, Putnam High Income Securities Fund, Putnam High Yield Advantage Fund, Putnam High Yield Trust, Putnam VT High Yield Fund, Putnam International Capital Opportunities Fund, Putnam International Equity Fund, Putnam VT International Equity Fund, Putnam International Growth and Income Fund, Putnam VT International Growth and Income Fund, Putnam International New Opportunities Fund, Putnam VT International New Opportunities Fund, Putnam Master Intermediate Income Trust, Putnam Premier Income Trust, Putnam Research Fund, Putnam VT Research Fund, Putnam Utilities Growth and Income Fund, and Putnam VT Utilities Growth and Income Fund.

PIL serves as sub-adviser for those funds under a sub-management agreement between Putnam Management and PIL. Pursuant to the terms of the sub-management agreement, Putnam Management (and not the fund) pays a quarterly sub-management fee to PIL for its services at the annual rate of 0.35% of the average aggregate net asset value of the portion of a fund’sassets invested in equity securities and 0.40% of the portion of a fund’s assets invested in fixed-income securities, if any, that PIL manages from time to time except that, in the case of Putnam High Income Securities Fund, Putnam Master Intermediate Income Trust and Putnam Premier Income Trust, Putnam Management (and not the fund) pays PIL a quarterly sub-management fee for its services at the annual rate of 0.40% of the funds’ average weekly assets, if any, that PIL manages from time to time.

Under the terms of the sub-management contract, PIL, at its own expense, furnishes continuously an investment program for the portion of each fund that Putnam Management allocates to PIL from time to time and makes investment decisions on behalf of these portions of the fund, subject to Putnam Management’s supervision. Putnam Management may also, at its discretion, request PIL to provide assistance with purchasing and selling securities for the fund, including order placement with certain broker-dealers. PIL, at its expense, furnishes all necessary investment and management facilities, including salaries of personnel, required for it to execute its duties.

The sub-management contract provides that PIL is not subject to any liability to Putnam Management, the fund or any shareholder of the fund for any act or omission in the course of or connected with rendering services to the fund in the absence of PIL’s willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations and duties.

The sub-management contract may be terminated with respect to a fund without penalty by vote of the Trustees or the shareholders of the fund, or by PIL or Putnam Management, are referredon 30 days’ written notice. The sub-management contract also terminates without payment of any penalty in the event of its assignment. Subject to as “Independent Trustees” throughout this Proxy Statement.

The Board Policy and Nominating Committeeapplicable law, it may be amended by a majority of the Trustees who are not “interested persons” of each fund recommendsPutnam Management or the fund. The sub-management contract provides that it will continue in effect only so long as such continuance is approved at least annually by vote of either the number of Trustees be fixed at 11or the shareholders and, that you vote for the electionin either case, by a majority of the nominees describedTrustees who are not “interested persons” of Putnam Management or the fund. In each of the foregoing cases, the vote of the shareholders is the affirmative vote of a “majority of the outstanding voting securities” as defined in the following pages. Each nominee is currently1940 Act.

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PAC has been retained as a Trustee of your fund andsub-adviser for a portion of the otherassets of Putnam funds.

International Equity Fund as determined from time to time by Putnam Management or, with respect to portions of that fund’s assets for which PIL acts as sub-adviser as described above, by PIL. PAC serves as sub-adviser under a sub-advisory agreement among Putnam Management, PIL and PAC.

Pursuant to the bylawsterms of the sub-advisory agreement, Putnam Management or, with respect to portions of Putnam International Equity Fund’s assets for which PIL acts as sub-adviser, PIL (and not the fund) pays a quarterly sub-advisory fee to PAC for its services at the annual rate of 0.10% of the average aggregate net asset value of the portion of the fund with respect to which PAC acts as sub-adviser.

Under the terms of the sub-advisory contract, PAC, at its own expense, furnishes recommendations to purchase, hold, sell or exchange investments, securities and assets for that portion of Putnam International Equity Fund that is allocated to PAC from time to time by Putnam Management or PIL. Putnam Management or PIL, as applicable, determines whether to execute each such recommendation by PAC, whose activities as sub-adviser are subject to the supervision of Putnam Management and PIL, as applicable. PAC, at its expense, furnishes all necessary investment and management facilities, including salaries of personnel, required for it to execute its duties.

The sub-advisory contract provides that PAC is not subject to any liability to Putnam Management, PIL, Putnam International Equity Fund or any shareholder of the fund for any act or omission in the course of or connected with rendering services to the fund in the absence of PAC’s willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations and duties.

The sub-advisory contract may be terminated without penalty by vote of the Trustees or the shareholders of Putnam International Equity Fund, or by PAC, PIL or Putnam Management, on 30 days’ written notice. The sub-advisory contract also terminates without payment of any penalty in the event of its assignment. Subject to applicable law, it may be amended by a majority of the Trustees who are not “interested persons” of Putnam Management or the fund. The sub-advisory contract provides that it will continue in effect only so long as its continuance is approved at least annually by vote of either the Trustees or the shareholders and, in either case, by a majority of the Trustees who are not “interested persons” of Putnam Management or the fund. In each of the foregoing cases, the vote of the shareholdersis the affirmative vote of a “majority of the outstanding voting securities” as defined in the 1940 Act.

A “change of control” that constitutes an assignment terminating automatically the funds’ management contracts will also terminate automatically the sub-management contract with PIL and the sub-advisory contract with PIL and PAC. So that your fund will not lose the benefit of PIL’s or PAC’s services, Putnam Management intends to enter into a new sub-management contract with PIL and a new sub-advisory contract with PIL and PAC, each identical to the current contract except for the effective date. The Trustees have unanimously approved these new contracts. SeeAppendix Ffor copies of the current contracts.

*What did the Trustees consider in evaluating the proposal?

The Trustees met in person on October 12 and 13, 2006 to discuss the implications of a possible sale of Putnam Investments in light of a decision made by its parent company, Marsh & McLennan, to explore the possibility of a sale. At this meeting, the Trustees considered information relating to the operations, competitive position in the mutual fund industry and recent history of a number of firms that had indicated to Marsh & McLennan a preliminary interest in acquiring Putnam Investments. During the course of this meeting, the Trustees received presentations on these matters from two consultants with recognized expertise in the mutual fund industry. In addition, the Trustees reviewed information about recent significant acquisitions in the mutual fund industry and considered the possible effects of a sale transaction on Putnam Management and the 1940 Act, holdersrest of the preferred sharesPutnam organization. The Trustees received a report from the chief executive officer of your fund, votingMarsh & McLenn an and considered analyst reports relating to Marsh & McLennan and its ownership of Putnam Investments. The Trustees also received advice from their independent legal counsel regarding their responsibilities in evaluating a possible sale transaction.

The Trustees actively monitored the sale process throughout the period leading up to the public announcement of a final sale agreement on February 1, 2007. The Trustees discussed developments at telephone meetings on October 18, October 25, November 1, November 29, December 20, January 12, January 18, and February 5, and at their regular in-person meetings on November 9-10, December 14-15, January 11-12, February 8-9, and March 8-9. The Trustees who are not affiliated with Putnam Investments met separately to discuss these matters during most of these meetings.

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Mr. Haldeman, the only Trustee affiliated with Putnam Investments, participated in portions of these meetings to provide the perspective of the Putnam organization, but did not otherwise participate in the deliberations of the Trustees regarding a possible sale.

Over the course of these meetings, the Trustees discussed and developed general principles to guide their evaluation of a possible sale transaction. Following the emergence of a number of interested bidders by early November 2006, the Trustees conducted due diligence on these bidders with the assistance of their independent legal counsel. The Trustees communicated their perspectives on these bidders to Marsh & McLennan and also submitted specific requests for information to be provided by bidders. After learning in December 2006 that Marsh & McLennan was negotiating exclusively with Power Financial and Lifeco, the Trustees focused their diligence efforts on Power Financial and Lifeco.

On January 2, 2007, a committee of the Trustees, together with their independent legal counsel, met with representatives of Power Financial and Lifeco to discuss the proposal to acquire Putnam Investments and responses to the Trustees’ diligence requests. The Trustees were advised in this meeting that Power Financial and Lifeco intended to maintain Putnam Investments as a class, are entitledseparate, stand-alone organization under the Putnam brand and to elect two nomineesretain Putnam Investments’ current management team. Power Financial and Lifeco expressed their intention to maintain the quality of services that the Putnam organization currently provides to the funds and the funds’ current cost structure. At the same time, they indicated their intention, consistent with this commitment, to pursue opportunities for Trustees. The holdersimproving the profitability of the preferred sharesPutnam organization. Power Financial and Lifeco indicated interest in pursuing the common sharespossibility of your fund, voting together as a single class, are entitled to vote for the remaining 9 of the 11 nominees. Therefore, Messrs. Hill and Patterson have been nominated to be elected as Trustees by the holders of the preferred shares, while the other 9 nominees have been nominated to be elected by the holders of the preferred shares and common shares voting together as a single class.

The nominees for Trustees and their backgrounds are shown in the following pages. This information includes each nominee’s name, year of birth, principal occupation(s) during the past 5 years, and other information about the nominee’s professional background, including other directorships the nominee holds. Each Trustee oversees all ofmaking the Putnam funds and serves untilother Putnam Investments products available through cer tain of their distribution channels, but indicated that no significant operational changes were envisioned. Power Financial and Lifeco also raised the election and qualificationpossibility of his or her successor, or until he or she sooner dies, resigns or is removed. The address of allusing Putnam Investments’ distribution network to distribute certain of the products of one or more of the Power Financial or Lifeco companies. The Trustees is One Post Office Square, Boston, Massachusetts 02109.noted that these proposals may benefit Lifeco and may also enable Putnam Investments to allocate the costs of its distribution network across a greater number of products. At December 31, 2005, there were 108 Putnam funds.

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Jameson A. Baxter(Born 1943)
Trustee since 1994this meeting, the Trustees reviewed with Power Financial and Vice Chairman since 2005
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Ms. Baxter isLifeco the President of Baxter Associates, Inc., a private investment firm that she founded in 1986.

Ms. Baxter serves as a Director of ASHTA Chemicals, Inc., Banta Corporation (a printingrole and digital imaging firm), Ryerson Tull, Inc. (a steel servicecorporation), the Mutual Fund Directors Forum, Advocate Health Care and BoardSource, formerly the National Center for Nonprofit Boards. She is Chairman Emeritusoperation of the Board of Trustees, Mount Holyoke College, having servedemphasizing its historical independence and activism in such areas as Chairman for five yearsfees and as a board member for thirteen years. Until 2002,expenses, regulatory issues, quality of service provided by Putnam to the funds, soft dollars and proxy voting. On January 10, 2007, Ms. Baxter, was a Director of Intermatic Corporation (a manufacturer of energy control products).

Ms. Baxter has held various positions in investment banking and corporate finance, including Vice President and Principal of the Regency Group, and Vice President of and Consultant to First Boston Corporation. She is a graduate of Mount Holyoke College.

Charles B. Curtis(Born 1940)
Trustee since 2001
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Mr. Curtis is President and Chief Operating Officer of the Nuclear Threat Initiative (a private foundation dealing with national security issues) and serves as Senior Advisor to the United Nations Foundation.

Mr. Curtis is a member of the Council on ForeignRelations, the Trustee Advisory Council of the Applied Physics Laboratory, Johns Hopkins University and serves as a Director of Edison International and Southern California Edison. Until 2003, Mr. Curtis was a member of the Electric Power Research Institute Advisory Council and the University of Chicago Board of Governors for Argonne National Laboratory. Prior to 2002, Mr. Curtis was a Member of the Board of Directors of the Gas Technology Institute and the Board of Directors of the Environment and Natural Resources Program Steering Committee, John F. Kennedy School of Government, Harvard University. Until 2001, Mr. Curtis was a member of the Department of Defense Policy Board and Director of EG&G Technical Services, Inc. (a fossil energy research and development support company).

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From August 1997 to December 1999, Mr. Curtis was a Partner at Hogan & Hartson L.L.P., a Washington, D.C. law firm. Prior to May 1997, Mr. Curtis was Deputy Secretary and Under Secretary of the U.S. Department of Energy. He served as Chairman of the Federal Energy Regulatory Commission from 1977 to 1981Trustees and has held positionsthe Chairman of the Contract Committee, also met with a representative of Power Financial and Lifeco for further d iscussion of these matters. At a telephonic meeting on January 18, 2007, the Trustees received a presentation on the staffterms of the U.S. Treasury Department,proposed sale and unanimously expressed their support for the SEC.

proposed sale, subject to their review of final agreements.

Myra R. Drucker(Born 1948)
Trustee since 2004
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Ms. Drucker is ChairMr. Hill, Chairman of the Board of Trustees, met with the Chairman and Co-Chief Executive Officer and the President and Co-Chief Executive Officer of Commonfund (a not-for-profit firm specializing in asset management for educational endowmentsPower Corporation of Canada and foundations), Vice Chairthe Chairman of the Board of Trustees of Sarah Lawrence College, and a member of the Investment Committee of the Kresge Foundation (a charitable trust). She is also a director of New York Stock Exchange LLC, a wholly-owned subsidiary of the publicly-traded NYSE Group, Inc. She is an advisor to Hamilton Lane LLC and RCM Capital Management (investment management firms).

Ms. Drucker is an ex-officio member of the New York Stock Exchange (NYSE) Pension Managers Advisory Committee, having served as Chair for seven years and a member of the Executive Committee of the Committee on Investment of Employee Benefit Assets. She is Chair of the Advisory Board of Hamilton Lane Advisors (an investment management firm) and a member of the Advisory Board of RCM (an investment management firm). Until August 31, 2004, Ms. Drucker was Managing Director and a member of the Board of Directors of General Motors Asset Management and Chief Investment Officer of General Motors Trust Bank. Ms. Drucker also served as a member of the NYSE Corporate Accountability and Listing Standards Committee and the NYSE/NASD IPO Advisory Committee.

Prior to joining General Motors Asset Management in 2001, Ms. Drucker held various executive positions in the investment management industry. Ms. Drucker served as Chief Investment Officer of Xerox Corporation (a technology and service company in the document industry), where she was responsible for the investment of the company’s pension assets. Ms. Drucker was also Staff Vice President and Director of Trust Investments for International Paper (a paper, paper distribution, packaging and forest products company) and previously served as Manager of Trust Investments for Xerox

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Corporation. Ms. Drucker received a B.A. degree in Literature and Psychology from Sarah Lawrence College and pursued graduate studies in economics, statistics and portfolio theory at Temple University.

John A. Hill(Born 1942)
Trustee since 1985 and Chairman since 2000
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Mr. Hill is Vice Chairman of First ReserveCorporation, a private equity buyout firm that specializes in energy investments in the diversified worldwide energy industry.

Mr. Hill is a Director of Devon Energy Corporation,TransMontaigne Oil Company and various private companies controlled by First Reserve Corporation, as well as Chairman of TH Lee, Putnam Investment Trust (a closed-end investment company advised by an affiliate of Putnam Management). He is also a Trustee of Sarah Lawrence College. Until 2005, he was a Director of Continuum Health Partners of New York.

Prior to acquiring First Reserve Corporation in 1983, Mr. Hill held executive positions in investment banking and investment management with several firms and with the federal government, including Deputy Associate Director of the Office of Management and Budget, and Deputy Director of the Federal Energy Administration. He is active in various business associations, including the Economic Club of New York, and lectures on energy issues in the United States and Europe. Mr. Hill holds a B.A. degree in Economics from Southern Methodist University and pursued graduate studies there as a Woodrow Wilson Fellow.

Paul L. Joskow(Born 1947)
Trustee since 1997
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Dr. Joskow is the Elizabeth and James Killian Professor of Economics and Management, and Director of the Center for Energy and Environmental Policy Research at the Massachusetts Institute of Technology.

Dr. Joskow serves as a Director of National Grid plc (aUK-based holding company with interests in electric and gas transmis sion and distribution and telecommunications infrastructure) and TransCanada Corporation (an energy company focused on natural gas transmission and power services). He also serves on the Board of Overseers of the Boston Symphony Orchestra. Prior to February 2005, he served on the board of the Whitehead Institute for Biomedical

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Research (a non-profit research institution) and has been President of the Yale University Council since 1993. Prior to February 2002, he was a Director of State Farm Indemnity Company (an automobile insurance company), and prior to March 2000, he was a Director of New England Electric System (a public utility holding company).

Dr. Joskow has published five books and numerous articles on topics in industrial organization, government regulation of industry, and competition policy. He is active in industry restructuring, environmental, energy, competition and privatization policies — serving as an advisor to governments and corporations worldwide. Dr. Joskow holds a Ph.D. and M. Phil from Yale University and B.A. from Cornell University.

Elizabeth T. Kennan(Born 1938)
Trustee since 1992
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Dr. Kennan is a Partner of Cambus-Kenneth Farm (thoroughbred horse and cattle breeding). She is President Emeritus of Mount Holyoke College.

Dr. Kennan served as Chairman and is now Lead Director of Northeast Utilities. She has served asDirector on a number of other boards, including Bell Atlantic, Chastain Real Estate, Shawmut Bank, Berkshire Life Insurance, Kentucky Home Life Insurance and Talbots, Inc. She is a Trustee of the National Trust for Historic Preservation, of Centre College and of Midway College in Midway, Kentucky. Until 2006, she was a member of The Trustees of Reservations. Dr. Kennan has served on the oversight committee of the Folger Shakespeare Library, as President of Five Colleges Incorporated, as a Trustee of Notre Dame University, and is active in various educational and civic associations.

As a member of the faculty of Catholic University for twelve years, until 1978, Dr. Kennan directed the post-doctoral program in Patristic and Medieval Studies, taught history and published numerous articles. Dr. Kennan holds a Ph.D. from the University of Washington in Seattle, an M.S. from St. Hilda’s College at Oxford University and an A.B. from Mount Holyoke College. She holds several honorary doctorates.

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Robert E. Patterson(Born 1945)
Trustee since 1984

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Mr. Patterson is Senior Partner of Cabot Properties, L.P. and Chairman of Cabot Properties, Inc. (a private equity firm investing in commercial real estate).

Mr. Patterson serves as Chairman Emeritus and Trustee of the Joslin Diabetes Center and as a Director ofBrandywine Trust Group, LLC. Prior to June 2003, he was a Trustee of the Sea Education Association. Prior to December 2001, he was President and Trustee of Cabot Industrial Trust (a publicly traded real estate investment trust). Prior to February 1998, he was Executive Vice President and Director of Acquisitions of Cabot Partners Limited Partnership (a registered investment adviser involved in institutional real estate investments). Prior to 1990, he served as Executive Vice President of Cabot, Cabot & Forbes Realty Advisors, Inc. (the predecessor company of Cabot Partners).

Mr. Patterson practiced law and held various positions in state government and was the founding Executive Director of the Massachusetts Industrial Finance Agency. Mr. Patterson is a graduate of Harvard College and Harvard Law School.

W. Thomas Stephens(Born 1942)
Trustee since 1997
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Mr. Stephens is Chairman and Chief Executive Officer of Boise Cascade, L.L.C. (a paper, forest products and timberland assets company).

Until 2005, Mr. Stephens was a director ofTransCanadaPipelines, Ltd. Until 2004, Mr. Stephenswas a Director of Xcel Energy Incorporated (a public utility company), Quest Communications, and Norske Canada, Inc. (a paper manufacturer). Until 2003, Mr. Stephens was a Director of Mail-Well, Inc. (a diversified printing company). He served as Chairman of Mail-Well until 2001 and as CEO of MacMillan-Bloedel, Ltd. (a forest products company) until 1999.

Prior to 1996, Mr. Stephens was Chairman and Chief Executive Officer of Johns Manville Corporation. He holds B.S. and M.S. degrees from the University of Arkansas.

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Richard B. Worley(Born 1945)
Trustee since 2004
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Mr. Worley is Managing Partner of Permit Capital LLC, an investment management firm.

Mr. Worley serves on the Executive Committee of the University of Pennsylvania Medical Center, is a Trustee of The Robert Wood Johnson Foundation (aphilanthropic organization devoted to health care issues) and is a Director of The Colonial Williamsburg Foundation (a historical preservation organization). Mr. Worley also serves on the investment committees of Mount Holyoke College and World Wildlife Fund (a wildlife conservation organization).

Prior to joining Permit Capital LLC in 2002, Mr. Worley served as Chief Strategic Officer of Morgan Stanley Investment Management. He previously served as President, Chief Executive Officer and Chief Investment Officer of Morgan Stanley Dean Witter Investment Management and as a Managing Director of Morgan Stanley, a financial services firm. Mr. Worley also was the Chairman of Miller Anderson & Sherrerd, an investment management firm. Mr. Worley holds a B.S. degree from University of Tennessee and pursued graduate studies in economics at the University of Texas.

*Interested Trustees

Charles E. Haldeman, Jr.*(Born 1948)
Trustee since 2004
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Mr. Haldeman is President and Chief Executive Officer of Power Financial on January 28, 2007 to further discuss the role of the Board of Trustees in overseeing the funds and Power Financial’s and Lifeco’s commitment to the Putnam LLC (“brand, to Putnam Investments”). He isInvestments’ management team, and to support Putnam Investments’ management team and the team’s strategy following the transaction with the aim of minimizing disruption and change for the Putnam shareholders. Following the public announcement of the transaction on February 1, 2007, the Trustees received a memberreport from Putnam Investments on the final terms of the transaction at a telephonic meeting on February 5, 2007.

At an in-person meeting on February 8-9, 2007, the Trustees received further presentations regarding the final terms of the transaction. At this meeting, the Trustees considered the approval of new management contracts for each fund proposed to become effective upon the closing of the sale, and the filing of a preliminary proxy statement. At an in-person meeting on March 8-9, 2007, the Trustees considered the approval of the final forms of the proposed new management contracts for each fund and the proxy statement. They reviewed the terms of the proposed new management contracts and the differences between the proposed new management contracts and the current management contracts (and administrative services contracts, in the case of Putnam Investments’ Executive BoardMunicipal Opportunities Trust and Putnam Prime Money Market Fund). They noted that the terms of Directorsthe proposed new management contracts were substantially identical to the current management contracts, except for certain changes develop ed at the initiative of the Trustees and Advisory Council.designed largely to address inconsistencies among various of the existing contracts, which had been developed and implemented at different times in the past. (These differences are described elsewhere in this proxy statement.)

Prior to November 2003, Mr. Haldeman served as Co-Head11

In considering the approval of the proposed new management contracts, the Trustees also considered the following matters:

(i) their belief that the transaction will not adversely affect the Putnam funds, and by addressing uncertainty regarding the ownership of Putnam Investments’ Investment Division. PriorInvestments, should enhance the ability of Putnam Management and its affiliates to joining Putnam Investments in 2002, Mr. Haldeman held executive positions in thecontinue to provide high quality investment management industry. He previously served as Chief Executive Officer of Delaware Investments and President & Chief Operating Officer of United Asset Management. Mr. Haldeman was also a partner and director of Cooke & Bieler, Inc. (an investment management firm).

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Mr. Haldeman currently serves as a Trustee of Dartmouth College and is a member of the Partners HealthCare Systems Investment Committee. He is a graduate of Dartmouth College, Harvard Law School and Harvard Business School. Mr. Haldeman is also a Chartered Financial Analyst (CFA) charterholder.

George Putnam, III*(Born 1951)
Trustee since 1984 and President since 2000
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Mr. Putnam is Chairman of New Generation Research, Inc. (a publisher of financial advisory and other research services),services to the funds;

(ii) the intention expressed by representatives of Power Financial and PresidentLifeco to retain the existing Putnam Investments’ management team and other key professionals and that Putnam Investments would be operated as a separate business unit;

(iii) Power Financial’s and Lifeco’s commitment to support the continued effort of New Generation Advisers, Inc. (a registeredPutnam Management’s current management team to rebuild Putnam’s reputation and enhance the investment advisorprocess;

(iv) that representatives of Power Financial, Lifeco and Putnam Management advised that they have no current plans to private funds). Mr.make changes with respect to existing management fees, expense limitations, distribution arrangements or quality of services provided to fund shareholders and committed to maintain the current program of fund expense limitations, at least through June 30, 2009, which ensures that all Putnam foundedfunds will have expense levels at or below competitive industry averages;

(v) the New Generationfinancial condition and reputation of Power Financial and Lifeco, their record of operating acquired companies with minimal disruption to their businesses, their high level of respect for the mutual fund governance process and the independence of the Trustees and their decisions, and their commitment to maintain the high level of cooperation and support that the Putnam organization has historically provided;

(vi) the possible benefits that the funds may receive as a result of Putnam Management joining the Power Financial group of companies, which is expected to promote stability of the Putnam organization and eliminate the previous uncertainty with respect to the future ownership of Putnam Investments;

(vii) Power Financial’s and Lifeco’s commitment to maintaining competitive compensation arrangements to allow the Putnam organization to attract and retain highly qualified personnel;

(viii) that the current senior management team at Putnam Investments has indicated its strong support of the transaction; and

(ix) the commitments of Marsh & McLennan and Lifeco to bear all expenses incurred by the Putnam funds in 1986.connection with the transaction, including all costs associated with this proxy solicitation.

Finally, in considering the proposed new management contracts, the Trustees also took into account their deliberations and conclusions in connection with their most recent annual approval of the continuance of the funds’ management contracts effective July 1, 2006, and the extensive materials that they had reviewed in connection with that approval process. Appendix Gcontains a summary description of the matters considered by the Trustees in connection with that approval.

Mr.Based upon the foregoing considerations, on March 9, 2007, the Trustees, including all of the Trustees present who are not “interested persons” of the funds or Putnam is a DirectorInvestments, unanimously approved the proposed new management contracts and determined to recommend their approval to the shareholders of The Boston Family Office, LLC (a registered investment adviser). He is a Trusteethe Putnam funds.

*Additional Information Regarding Potential Interests of St. Mark’s School and Shore Country Day School, and until 2002 wasCertain Trustees in the Transaction

Charles E. Haldeman, Jr., a Trustee of the Sea Education Association.

Mr. Putnam previously workedfunds, serves as an attorney with the law firm of Dechert LLP (formerly known as Dechert Price & Rhoads) in Philadelphia. He is a graduate of Harvard College, Harvard Business School, and Harvard Law School.

* Nominees who are or may be deemed to be “interested persons” (as defined in the 1940 Act) of the fund, Putnam Management, Putnam Retail Management Limited Partnership (“Putnam Retail Management”) or Marsh & McLennan Companies, Inc., the parent company of Putnam Investments and its affiliated companies. Messrs. Putnam, III and Haldeman are deemed “interested persons” by virtue of their positions as officers of the funds, Putnam Management or Putnam Retail Management and as shareholders of Marsh & McLennan Companies, Inc. Mr. Haldeman is the President and Chief Executive Officer of Putnam Investments. Mr. Haldeman is also a stockholder of Putnam Investments Trust as a result of various equity compensation grants made to him in recent years. On March 15, 2005, Putnam Investments Trust granted Mr. Haldeman 210,635 shares of class B common stock pursuant to the Putnam Investments Trust Equity Partnership Plan. With respect to this grant, Mr. Haldeman’s shares vest over a four-year period, with 25% of the shares vesting on each anniversary of the grant, although vesting may be accelerated under certain circumstances if Mr. Haldeman’s employment with Putnam terminates. On September 29, 2005, Mr. Haldeman participated in the Putnam Option Exchange Program, in which holders of eligible options to purchase class B common stock were permitted to elect to exchange their options for restricted shares of class B common stock with a value equal to the value of the exchanged options. Mr. Haldeman was granted 14,226 restricted shares of class B common stock in exchange for an option to purchase 99,200 shares of

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class B common stock. On March 15, 2006, Putnam Investments Trust granted Mr. Haldeman 111,693 restricted shares of class B common stock for his performance in 2005. With respect to such grant, Mr. Haldeman’s shares vest over a four-year period, with 25% of the shares vesting on each anniversary of the grant. On March 15, 2006, Mr. Haldeman received an additional grant of 314,136 restricted shares of class B common stock and an option to purchase 510,638 shares as a special grant as a result of his employment contract with Marsh & McLennan. With respect to each such grant, Mr. Haldeman’s shares vest 10%, 20%, 30% and 40% over the next four years, subject to acceleration provisions based on investment performance. Mr. Haldeman also holds other restricted shares of class B common stock from grants in years prior to 2005, and it is expected that an additional grant of such restricted shares will be made in March 2007.

As a result of his interests in the stock of Putnam Investments Trust as described above, Mr. Haldeman will benefit directly from the sale of your fund’s investment adviser to Lifeco in an estimated amount of approximately $54 million, which is the value of his holdings in Putnam Investments Trust stock and stock options. Approximately 37% of this amount will be paid at the closing of the transaction and the remainder will be paid, subject to the satisfaction of certain conditions, over a three-year period. In addition, Mr. Haldeman has agreed to amend his employment agreement with Putnam Investments, which will remain in effect following the transaction with Lifeco, among other things, to defer his right to terminate his employment as a result of the transaction and receive severance payments (equal to two times his 2006 total compensation, or approximately $26 million), and Putnam Investments Trust has agreed to pay Mr. Haldeman additional incentive compensation of $8.5 million in the future, continge nt upon the achievement of certain specified business objectives.

In addition to the interests described above, Mr. Haldeman currently owns 33,334 vested shares and 42,554 unvested shares, which will vest when the transaction with Lifeco closes, of stock and options to purchase 89,350 shares of stock of Marsh & McLennan and may benefit indirectly from the sale of your fund’s investment adviser to Lifeco to the extent of his interests in Marsh & McLennan.

George Putnam, III, is the President of your fund and each of the other Putnam funds. The balance of the nominees are not “interested persons.”

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All the nominees were elected by the shareholders of each fund other than Putnam California Investment Grade Municipal Trust on October 28, 2005 and by shareholders of Putnam California Investment Grade Municipal Trust on December 6, 2005.

The nine nominees for election as Trustees by the holders of common and preferred shares, voting as a single class, who receive the greatest number of votes from the preferred and common shareholders will be elected as Trustees of your fund. In addition, the two nominees for election as Trustees by the preferred shareholders, voting as a class, who receive the greatest number of votes from the preferred shareholders will be elected as Trustees of your fund.

Each Trustee serves until his or her successor is elected and qualified or until his or her earlier resignation, retirement at age 72, death or removal. Each of the nominees has agreed to serve as a Trustee, if elected. If any of the nominees is unavailable for election at the time of the meeting, which is not anticipated, the Trustees may vote for other nominees at their discretion, or the Trustees may fix the number of Trustees to be elected by the holders of common and preferred shares voting as a single class at fewer than 9.

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* What are the Trustees’ responsibilities?

Your fund’s Trustees are responsible for the general oversight of your fund’s affairs and for assuring that your fund is managed in the best interests of its shareholders. The Trustees regularly review your fund’s investment performance as well as the quality of other services provided to your fund and its shareholders bya Trustee. Mr. Putnam Management and its affiliates, including administration, custody, and shareholder servicing. At least annually, the Trustees review and evaluate the fees and operating expenses paid by your fund for these services and negotiate changes that they deem appropriate. In carrying out these responsibilities, the Trustees are assisted by an independent administrative staff and by your fund’s auditors, independent counsel and other experts as appropriate, selected by and responsible to the Trustees.

At least 75% of the trustees of your fund are required to not be “interested persons” (as defined in the 1940 Act) of your fund or your fund’s investment manager. These independent trustees, who are referred to in this proxy statement as “Independent Trustees,” must vote separately to approve all financial arrangements and other agreements with your fund’s investment manager and other affiliated parties. The role of independent trustees has been characterized as that of a “watchdog” charged with oversight to protect shareholders’ interests against overreaching and abuse by those who are in a position to control or influence a fund. Your fund’s Independent Trustees meet regularly as a group in executive session. Nine of the 11 nominees for election as Trustee would be Independent Trustees.

Board committees.Your fund’s Trustees have determined that the effi-cient conduct of your fund’s affairs makes it desirable to delegate responsibility for certain specific matters to committees of the board. Certain committees (the Executive Committee, Distributions Committee, and Audit and Compliance Committee) are authorized to act for the Trustees as specified in their charters. The other committees review and evaluate matters specified in their charters and make recommendations to the Trustees as they deem appropriate. Each committee may utilize the resources of your fund’s independent staff, counsel and auditors as well as other experts. The committees meet as often as necessary, either in conjunction with regular meetings of the Trustees or otherwise. The membership and chairperson of each committee are appointed by the Trustees upon recommendation of the Board Policy and Nominating Committee.

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Audit and Compliance Committee.The Audit and Compliance Committee provides oversight on matters relating to the preparation of the fund’s financial statements, compliance matters and Code of Ethics issues. This oversight is discharged by regularly meeting with management and the funds’ independent registered public accounting firms and keeping current on industry developments. Duties of this Committee also include the review and evaluation of all matters and relationships pertaining to the funds’ independent registered public accounting firms, including their independence. The members of your Committee include only Independent Trustees. Each member of the Committee is “independent” as defined in Sections 303.01(B)(2)(a) and (3) of the listing standards of the New York Stock Exchange and as defined in Section 121(A) of the listing standards of the American Stock Exchange. The Trustees have adopted a written charter for the Committee. The Audit and Compliance Committee’s charter, which is included in this Proxy Statement as Exhibit A, is also available on the fund’s web site at https://content.putnam.com/individual_investor/pdf/committee_charter.pdf. Print copiesa stockholder of the charter are available free of charge upon request by calling 1-800-225-1581. The Committee currently consists of Messrs. Patterson (Chairperson), Hill and Stephens.

Board Policy and Nominating Committee.The Board Policy and Nominating Committee reviews policy matters pertaining to the operations of the Board of Trustees and its Committees, the compensation of the Trustees and their staff and the conduct of legal affairs for the funds. The Committee also oversees the voting of proxies associated with portfolio investments of the Putnam funds, with the goal of ensuring that these proxies are voted in the best interest of the funds’ shareholders.

The Committee evaluates and recommends all candidates for election as Trustees and recommends the appointment of members and chairs of each board committee. The Committee also identifies prospective nominees for election as trustee by considering individuals that come to its attention through current Trustees, Putnam Management or shareholders. Candidates properly submitted by shareholders (as described below) will be considered and evaluated on the same basis as candidates recommended by other sources. The Committee may, but is not required to, engage a third-party professional search firm to assist it in identifying and evaluating potential nominees.

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When evaluating a potential candidate for membership on the Board of Trustees, the Committee considers the skills and characteristics that it feels would most benefit the Putnam funds at the time the evaluation is made. The Committee may take into account a wide variety of attributes in considering potential trustee candidates, including, but not limited to: (i) availability and commitment of a candidate to attend meetings, (ii) other board experience, (iii) relevant industry and related experience, (iv) educational background, (v) financial expertise, (vi) an assessment of the candidate’s ability, judgment and expertise, (vii) an assessment of the perceived needs of the Board of Trustees and its committees at that point in time and (viii) the overall composition of the Board of Trustees. In connection with this evaluation, the Committee will determine whether to interview prospective nominees, and, if warranted, one or more members of the Committee, and other Trustees and representatives of the funds, as appropriate, will interview prospective nominees in person or by telephone. Once this evaluation is completed, the Committee recommends such candidates as it determines appropriate to the Independent Trustees for nomination, and the Independent Trustees select the nominees after considering the recommendation of the Committee.

The Committee will consider nominees for trustee recommended by shareholders of a fund provided shareholders submit their recommendations by the date disclosed in the paragraph entitled “Date for receipt of shareholders’ proposals for the next annual meeting,” and provided the shareholders’ recommendations otherwise comply with applicable securities laws, including Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “1934 Act”).

The Committee consists only of Independent Trustees. The Committee currently consists of Dr. Kennan (Chairperson), Ms. Baxter and Messrs. Hill and Patterson.

Brokerage Committee.The Brokerage Committee reviews the policies and procedures of the funds regarding the execution of portfolio transactions for the funds, including policies regarding: the selection of brokers and dealers to execute portfolio transactions; the establishment of brokerage commissions rates; and the generation and use of soft dollar credits. The Committee also oversees the implementation by Putnam Management of such policies and procedures. The Committee reviews periodic reports regarding payments made, the quality of execution obtained by the funds, and the value of research obtained by Putnam Management in connection with portfolio transactions on

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behalf of the funds. The Committee currently consists of Dr. Joskow (Chairperson), Ms. Drucker and Mr. Putnam, III.

Contract Committee.The Contract Committee reviews and evaluates, at least annually, all arrangements pertaining to (i) the engagement of Putnam Management and its affiliates to provide services to the funds, (ii) the expenditure of the funds’ assets for distribution purposes pursuant to the distribution plans of the open-end funds and (iii) the engagement of other persons to provide material services to the funds, including in particular those instances where the cost of services is shared between the funds and Putnam Management and its affiliates or where Putnam Management or its affiliates have a material interest. The Committee recommends to the Trustees such changes in arrangements as it deems appropriate. After review and evaluation, the Committee recommends to the Trustees the proposed organization of new fund products and proposed structural changes to existing funds. Its oversight of the closed-end funds includes (i) investment performance, (ii) trading activity, (iii) determinations with respect to conversion of a closed-end fund to an open-end fund, and (iv) other measures in response to trading discounts, including share repurchase programs. The Committee consists only of Independent Trustees. The Committee currently consists of Ms. Baxter (Chairperson), Messrs. Curtis and Worley and Dr. Kennan.

Distributions Committee.The Distributions Committee oversees all fund distributions. The Committee makes recommendations to the Trustees of the funds regarding the amount and timing of distributions paid by the funds, and approves such matters when the Trustees are not in session. The Committee also oversees the policies and procedures pursuant to which Putnam Management prepares recommended distributions, and meets regularly with representatives of Putnam Management to review the implementation of such policies and procedures. The Committee currently consists of Mr. Putnam, III, (Chairperson), Ms. Drucker and Dr. Joskow.

Executive Committee.The functions of the Executive Committee are twofold. The first is to ensure that the funds’ business may be conducted at times when it is not feasible to convene a meeting of the Trustees or for the Trustees to act by written consent. The Committee may exercise any or all of the power and authority of the Trustees when the Trustees are not in session. The second is to establish annual and ongoing goals, objectives and priorities for the Board of Trustees and to

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ensure coordination of all efforts between the Trustees and Putnam Management and its affiliates on behalf of the shareholders of the Putnam funds. The Committee currently consists of Messrs. Hill (Chairperson), Curtis, Patterson and Putnam, III (ex officio), Dr. Joskow and Ms. Baxter.

Investment Oversight Committees.These Committees regularly meet with investment personnel of Putnam Management to review the investment performance and strategies of the funds in light of their stated investment objectives and policies. Investment Oversight Committee A currently consists of Mses. Drucker (Chairperson) and Baxter and Mr. Curtis. Investment Oversight Committee B currently consists of Drs. Joskow (Chairperson) and Kennan and Mr. Stephens. Investment Committee C currently consists of Messrs. Patterson (Chairperson) and Putnam, III. Investment Oversight Committee D currently consists of Messrs. Worley (Chairperson), Haldeman and Hill.

Investment Process Committee.The Investment Process Committee complements the work of the Investment Oversight Committees by monitoring Putnam Management’s investment philosophies, investment processes and investment personnel. The Committee reviews Putnam Management’s research capabilities; risk management processes; recruiting, training and compensation of investment personnel; performance measurement; and portfolio construction. The Committee currently consists of Ms. Drucker (Chairperson), Dr. Joskow and Mr. Putnam, III.

Marketing Committee.The Marketing Committee oversees the marketing and sale of fund shares by Putnam Retail Management. The Committee reviews (i) services provided by Putnam Retail Management under its Distributor’s Contracts with the open-end funds, (ii) sales charges imposed in connection with the sale of fund shares, (iii) expenditure of the funds’ assets for distribution and shareholder services pursuant to distribution plans of the open-end funds, (iv) financial arrangements between Putnam Retail Management and financial intermediaries related to the sale of fund shares, and (v) compliance by Putnam Retail Management with applicable federal and state laws and regulations governing the sale of fund shares. The Committee also exercises general oversight of marketing and sales communications used by Putnam Retail Management in connection with the sale of fund shares. The Committee currently consists of Messrs. Curtis (Chairperson) and Worley, Ms. Baxter and Dr. Kennan.

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Pricing Committee.The Pricing Committee oversees the implementation of your fund’s policies and procedures for achieving accurate and timely pricing of the funds’ shares, including oversight of fair value determinations of individual securities made by Putnam Management or other designated agents of your fund. The Committee oversees compliance by money market funds with Rule 2a-7 under the 1940 Act, interfund transactions pursuant to Rule 17a-7 under the 1940 Act, and the correction of occasional pricing errors. The Committee also receives reports on various matters including reports on the liquidity of portfolio securities. The Committee currently consists of Messrs. Stephens (Chairperson), Hill and Patterson.

Shareholder Communications and Relations Committee.The Shareholder Communications and Relations Committee reviews certain communications sent to fund shareholders, including shareholder reports, prospectuses, proxy statements and other materials. The Committee oversees the policies and procedures pursuant to which such shareholder communications are prepared, and the implementation by Putnam Management of such policies and procedures. The Committee reviews periodic reports regarding the costs to the funds of preparing and distributing such communications. The Committee also reviews periodic reports regarding comments and suggestions received with respect to such communications. The Committee currently consists of Mr. Putnam, III (Chairperson), Ms. Drucker and Dr. Joskow.

* How large a stake do the Trustees and nominees have in the Putnam family of funds?

The Trustees allocate their investments among the Putnam funds based on their own investment needs. The table below shows the number of shares beneficially owned by each nominee for Trustee and the value of each nominee’s holdings in each fund and in all of the Putnam funds as of June 30, 2006. As a group, the Trustees owned shares of the Putnam funds valued at approximately $87 million as of June 30, 2006.

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Putnam California Investment Grade Municipal Trust

Putnam High Yield Municipal Trust

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Putnam Municipal Bond Fund

Putnam Municipal Opportunities Trust

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Putnam New York Investment Grade Municipal Trust

At June 30, 2006, the Trustees and officers, as a group, owned on that date less than 1% of the outstanding common shares of each fund, except Putnam New York Investment Grade Municipal Trust, of which their aggregate ownership was approximately 1.39% .

None of the Trustees owns any preferred shares of any of the funds.

* What are some of the ways in which the Trustees represent shareholder interests?

Among other ways, the Trustees seek to represent shareholder interests:

* by carefully reviewing your fund’s investment performance on an individual basis with your fund’s investment team;

* by carefully reviewing the quality of the various other services provided to the funds and their shareholders by Putnam Management and its affiliates;

* by discussing with senior management of Putnam Management steps being taken to address any performance deficiencies;

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* by reviewing in depth the fees paid by each fund and by negotiating with Putnam Management to ensure that such fees remain reasonable and competitive with those of comparable funds, while at the same time providing Putnam Management sufficient resources to continue to provide high quality services in the future;

* by reviewing brokerage costs and fees, allocations among brokers, soft dollar expenditures and similar expenses of the fund;

* by monitoring potential conflicts of interest between the funds and Putnam Management and its affiliates to ensure that the funds continue to be managed in the best interests of their shareholders; and

* by monitoring potential conflicts among funds managed by Putnam to ensure that shareholders continue to realize the benefits of participation in a large and diverse family of funds.

* How can shareholders communicate with the Trustees?

The Board of Trustees provides a process for shareholders to send communications to the Trustees. Shareholders may direct communications to the Board of Trustees as a whole or to specified individual Trustees by submitting them in writing to the following address:

The Putnam Funds
Attention: “Board of Trustees” or any specified Trustee(s)
One Post Office Square
Boston, Massachusetts 02109

Written communications must include the shareholder’s name, be signed by the shareholder, refer to the Putnam fund(s) in which the shareholder holds shares and include the class and number of shares held by the shareholder as of a recent date.

The Office of the Trustees will respond to all correspondence sent to Trustees. Due to the volume of correspondence, all communications are not sent directly to the Trustees; the correspondence is reviewed, summarized and presented to Trustees on a periodic basis.

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* How often do the Trustees meet?

The Trustees meet each month (except August) over a two-day period to review the operations of your fund and of the other Putnam funds. A portion of these meetings is devoted to meetings of various committees of the board that focus on particular matters. Each Trustee generally attends at least two formal committee meetings during each regular meeting of the Trustees. In addition, the Trustees meet in small groups with Chief Investment Officers, Portfolio Leaders and Portfolio Members to review recent performance and the current investment climate for selected funds. These meetings ensure that each fund’s performance is reviewed in detail at least twice a year. The committees of the board, including the Executive Committee, may also meet on special occasions as the need arises. During calendar year 2005, the average Trustee participated in approximately 55 committee and board meetings.

The number of times each committee met during your fund’s last fiscal year is shown in the table below:

Putnam California Investment Grade Municipal Trust

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Putnam High Yield Municipal Trust

Putnam Municipal Bond Fund

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Putnam Municipal Opportunities Trust

Putnam New York Investment Grade Municipal Trust

* Effective January 2006, the responsibilities of the Audit and Pricing Committee were divided between two separate committees, the Audit and Compliance Committee and the Pricing Committee. The number of meetings shown represents the number of meetings held by the former combined Audit and Pricing Committee prior to the formation of the new committees and by the relevant new committee after its formation.

** Effective January 2006, the Brokerage and Custody Committee was renamed the Brokerage Committee.

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*** Effective January 2006, the responsibilities of the Communication, Service and Marketing Committee were divided between two separate committees, the Marketing Committee and the Shareholder Communications and Relations Committee. The number of meetings shown represents the number of meetings held by the former combined Communication, Service and Marketing Committee prior to the formation of the new committees and by the relevant new committee after its formation.

****The Investment Process Committee began meeting in January 2006.

Your fund does not have a policy with respect to Trustee attendance at shareholder meetings. Although your fund’s Trustees did not attend the last annual meeting of your fund, they were represented at the meeting by their staff.

* What are the Trustees paid for their services?

Each Independent Trustee of the fund receives an annual retainer fee and additional fees for each Trustees’ meeting attended, for attendance at industry seminars and for certain compliance-related services. Independent Trustees who serve on board committees receive additional fees for attendance at certain committee meetings and for special services rendered in that connection. Independent Trustees also are reimbursed for costs incurred in connection with their services, including costs of travel, seminars and educational materials. All of the current Independent Trustees of the fund are Trustees of all the Putnam funds and receive fees for their services. Mr. Putnam, III also receives the foregoing fees for his services as Trustee.

The Trustees periodically review their fees to ensure that such fees continue to be appropriate in light of their responsibilities as well as in relation to fees paid to trustees of other mutual fund complexes. The Board Policy and Nominating Committee, which consists solely of Independent Trustees of the fund, estimates that committee and Trustee meeting time, together with the appropriate preparation, requires the equivalent of at least three business days per Trustee meeting. The following table shows the year each Trustee became a Trustee of the Putnam funds and the fees paid to each Trustee by your fund for its most recent fiscal year and the fees paid to each Trustee by all of the Putnam funds during calendar year 2005:

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Putnam California Investment Grade Municipal Trust
Compensation Table

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Putnam Municipal Bond Fund Compensation Table

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Putnam New York Investment Grade Municipal Trust
Compensation Table

(1) Estimated benefits for each Trustee are based on Trustee fee rates for calendar years 2003, 2004 and 2005. For Mr. Jackson, the annual benefits equal the actual benefits he is currently receiving under the Retirement Plan for Trustees of the Putnam funds.

(2)Marsh & McLennan. As of December 31, 2005, there were 108 funds2006, he and his children own in the aggregate 12,110 shares of Marsh & McLennan. In addition, Mr. Putnam family. Forserves as a trustee of trusts holding in the aggregate 102,317 shares of Marsh & McLennan; Mr. Hill, amounts shownPutnam is a likely beneficiary of these trusts. Mr. Putnam is also include compensation for service as Chairmana director of TH Lee,a charitable organization that owns 12,000 shares of Marsh & McLennan in which Mr. Putnam Emerging Opportunities Portfolio, a closed-end fund advised by an affiliatehas no economic interest. In addition, certain other members of Mr. Putnam’s family own in the aggregate 518,846 shares of Marsh & McLennan in which Mr. Putnam Management.

(3) Includes amounts (ranging from approximately $1,500 to $15,250 per Trustee) for which thehas no current economic interest. Mr. Putnam funds were reimbursed by Putnam Management for special Board and committee meetings and additional time spent on behalf of the Putnam funds in connection with certain regulatory and investigatory matters.

(4) Certain Trustees are also owed compensation deferred pursuant to a Trustee Compensation Deferral Plan. As of the dates identified below, the total amounts of deferred compensation payable by the fund, including income earned on such amounts, to certain Trustees were:

Putnam California Investment Grade Municipal Trust(April 30, 2006) Ms. Baxter —$1,020; Ms. Drucker — $41; Mr. Hill — $4,371; Mr. Jackson — $1,947; Dr. Joskow — $1,208; Dr. Kennan — $47; Mr. Mullin — $1,196; and Mr. Stephens — $112.

Putnam High Yield Municipal Trust(March 31, 2006) Ms. Baxter — $1,261; Ms. Drucker — $24; Mr. Hill — $5,264; Mr. Jackson — $2,409; Dr. Joskow — $1,494; Dr. Kennan — $27; Mr. Mullin — $1,480; and Mr. Stephens — $139.

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Putnam Municipal Bond Fund(April 30, 2006) Ms. Baxter — $1,375; Ms. Drucker — $55; Mr. Hill — $5,891; Mr. Jackson — $2,624; Dr. Joskow — $1,629; Dr. Kennan — $63; Mr. Mullin — $1,612; and Mr. Stephens — $151.

Putnam Municipal Opportunities Trust(April 30, 2006) Ms. Baxter — $1,365; Ms. Drucker — $55; Mr. Hill — $5,848; Mr. Jackson — $2,605; Mr. Joskow — $1.617; Dr. Kennan — $62; Mr. Mullin — $1,600; and Mr. Stephens — $150.

Putnam New York Investment Grade Municipal Trust(April 30, 2006) Ms. Baxter — $1,003; Ms. Drucker — $40; Mr. Hill — $4,297; Mr. Jackson — $1,914; Dr. Joskow — $1,188; Dr. Kennan — $46; Mr. Mullin — $1,176; and Mr. Stephens — $110.

(5) Includes additional compensation to Messrs. Hill and Putnam, III, for service as Chairman of the Trustees and President of the Funds, respectively.

(6) Mr. Jackson retiredmay benefit indirectly from the Board of Trustees of the Putnam funds on June 10, 2005, and Mr. Mullin retired from the Board on June 30, 2006.

Under a Retirement Plan for Trustees of the Putnam funds (the “Plan”), each Trustee who retires with at least five years of service as a Trustee of the funds is entitled to receive an annual retirement benefit equal to one-half of the average annual attendance and retainer fees paid to such Trustee for calendar years 2003, 2004 and 2005. This retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. A death benefit, also available under the Plan, ensures that the Trustee and his or her beneficiaries will receive benefit payments for the lesser of an aggregate period of (i) ten years or (ii) such Trustee’s total years of service.

The Plan Administrator (currently the Board Policy and Nominating Committee) may terminate or amend the Plan at any time, but no termination or amendment will result in a reduction in the amount of benefits (i) currently being paid to a Trustee at the time of such termination or amendment, or (ii) to which a current Trustee would have been entitled had he or she retired immediately prior to such termination or amendment. The Trustees have terminated the Plan with respect to any Trustee first elected to the board after 2003.

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2. APPROVAL OR DISAPPROVAL OF THE CONVERSION OF YOUR FUND FROM CLOSED-END TO OPEN-END STATUS AND CERTAIN RELATED AMENDMENTS TO YOUR FUND’S AGREEMENT AND DECLARATION OF TRUST(For Putnam High Yield Municipal Trust only)

* What is this proposal?

Shareholders will have the opportunity to vote at the meeting on the question of whether your fund should be converted from a closed-end fund to an open-end fund. If the conversion is approved, your fund’s shares would become redeemable directly from your fund at net asset value, eliminating any discount of market price to net asset value. In order to address the organizational changes necessitated by any conversion from closed-end to open-end status, approval of this proposal would also authorize the Trustees to make such amendments to your fund’s Agreement and Declaration of Trust (the “Declaration of Trust”) as they may deem necessary.

* Why is this question being submitted to shareholders?

Your fund’s Declaration of Trust requires that shareholders of your fund be given the opportunity to vote on a proposal to convert your fund from closed-end to open-end status if the fund’s common shares have traded at an average discount of more than 10% from their net asset value per share during the last twelve calendar weeks of the preceding fiscal year (measured as of the last trading day in each such week). For the twelve weeks ended March 31, 2006, your fund’s shares traded at an average discount from net asset value of –11.51%, requiring that this proposal be submitted to shareholders.

* What do the Trustees recommend?

The Trustees of your fund believe that the continued operation of your fund as a closed-end fund is in the best long-term interestssale of your fund’s shareholders. Accordingly, the Trustees of your fund unanimously recommend that shareholders vote “AGAINST” this proposal.

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* Why are the Trustees recommending a vote against a conversion?

In recommending a vote against converting your fundinvestment adviser to open-end status, the Trustees considered the following factors:

* Potential investment advantages.The Trustees believe that your fund’s closed-end status provides potential investment advantages not available to open-end fund investors. Because your fund’s shares are not redeemable, your fund is not required to maintain short-term, lower-yielding investments in anticipation of possible redemptions, and generally can be more fully invested in higher-yielding securities. As a closed-end fund, your fund does not experience the cash flows associated with sales and redemptions of open-end fund shares, which create transaction costs that are borne by long-term shareholders. Such cash flows may at times also require temporary investment in short-term, lower-yielding securities, pending investment in longer-term, higher-yielding securities.

* Advantages of leverage through preferred shares.The Trustees considered the fact that your fund has engaged in investment leverage by issuing preferred shares, a strategy that is not available to open-end funds. This form of investment leverage offers your fund opportunities for increased investment yield. If the fund were to convert to open-end status, the fund would be required to redeem its preferred shares.

* Other recent measures in response to discounts.In reviewing the trading information for your fund, the Trustees took into account the fact that its shares have consistently traded at a discount to net asset value over the past few years. They reviewed the possible causes and effects of discounts, which are discussed at more length below, and noted that discount levels for your fund have fluctuated over the years and that, for some periods, fund shares have traded at substantially lower discounts or at premiums.

Both in response to recent discounts and as part of their general oversight responsibilities, the Trustees have since 2005 reviewed various measures to increase shareholder value for each of the Putnam closed-end funds. The Trustees recently authorized a share repurchase program for all of the Putnam closed-end funds, which is discussed below. Furthermore, the Trustees initiated changes to your fund’s management contract, which went into effect in January 2006, resulting in a reduction of the effective management fee rate from 0.70% to 0.55%, measured as a percentage of

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average assets of the fund (including assets attributable to preferred shares). The Trustees believe that these steps have the potential to enhance shareholder returns, which in turn may support increased demand for your fund’s shares.

* Possible changes in fund size and expenses.Following conversion to open-end status, redemptions by shareholders could cause your fund to shrink, in the near term, resulting in an increased expense ratio for remaining shareholders. Putnam Retail Management has advised the Trustees that your fund may experience significant net redemptions shortly following a conversion to open-end status, thereby shrinking the fund’s size and creating significant transaction costs. If shareholders approve a conversion to open-end status, the Trustees would intend to instate a redemption fee for a period of time following conversion, with the purpose of at least partly offsetting the transaction costs that may result from significant redemptions of shares. The terms of any redemption fee would be determined at a later time, but the Trustees do not expect that the fee would exceed 2% or be imposed on redemptions for a period of longer than one year following conversion.

Since open-end funds may continuously offer new shares to the public, they also have the ability to increase in size in the long term, and growth in your fund’s size following a conversion to open-end status could result in efficiencies and the ability to spread fixed costs over a larger pool of assets. In order to increase assets in the face of redemptions following a conversion, the Trustees would likely consider commencing a continuous offering of shares of your fund. In that instance, to support the marketing of fund shares, the Trustees might also propose that your fund adopt a distribution plan under Rule 12b-1 under the 1940 Act similar to the plans of other open-end Putnam funds, under which Putnam Retail Management, those funds’ principal underwriter, currently receives annual distribution fees of 0.25% of net assets, though the applicable plans permit fees of up to 0.35% ..

If, following a conversion, your fund were to experience a significant loss of assets and corresponding increase in expenses, the Trustees might alternatively consider initiating a merger of your fund into another open-end Putnam fund with a comparable investment strategy.

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* What does it mean when fund shares trade at a discount?

Since closed-end funds are not required to redeem their shares, investors in closed-end funds who wish to liquidate their investment must sell their shares in the secondary markets. To promote the availability of active secondary markets for shareholders who wish to sell their shares, your fund has listed its shares for trading on the New York Stock Exchange. Prices in these secondary markets are determined by market forces and will fluctuate over time. They will also fluctuate in relation to a fund’s net asset value. Closed-end fund shares generally trade at discounts to their net asset value but at times may trade at a premium to net asset value.

Putnam Management has advised the Trustees that discount levels for closed-end funds investing primarily in fixed-income securities — such as your fund — appear to fluctuate in relation to conditions in the broader fixed-income markets, generally increasing during periods of rising interest rates and declining during periods of falling interest rates. Accordingly, these funds may be more suitable for investors who have a longer investment horizon and who will less likely face the need to liquidate their investments under unfavorable market conditions. The existence of discounts at times may also provide attractive opportunities to investors seeking potential additional returns from reductions in discount levels between the time of their purchase and their sale.

As indicated in the table below, while your fund’s common shares have traded at a discount to their net asset value over more recent periods, the discount has fluctuated over time, and at times your fund’s shares have traded at a premium to net asset value. In order to show the range of discounts and premiums at which your fund’s shares have historically traded, the table below presents both the highest market price and the lowest market price at which your fund’s shares closed on any trading day over the course each full calendar year since inception, in each case expressed as a percentage discount from, or premium to, net asset value (NAV). Thus, the “Highest Market Price” column presents the lowest discount or, if the fund traded above NAV during the year, the highest premium achieved in a given year; conversely, the “Lowest Market Price” column presents the highest discount or, if the fund only traded above NAV during the year, the lowest premium. In addition, the “Average Discount/Premium” column presents the average daily differential between market price and net asset value over the course of each full calendar year since inception.

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Putnam High Yield Municipal Trust

* How do the Trustees monitor and address trading discounts?

The Trustees carefully monitor the trading prices of your fund’s shares, recognizing that trading prices and discounts will fluctuate over time. At times when the fund trades at a material discount for an extended period of time, the Trustees may examine possible factors contributing to the situation and consider a broad range of possible actions in an effort to reduce or eliminate the discount. Such actions that could be implemented consistent with your fund’s closed-end structure might include:

* Communications with the marketplace regarding the benefits of investing in the fund in an effort to increase investor demand for the fund’s shares;

* Repurchases by the fund of its shares at prevailing market prices; and

* Tender offers by the fund to repurchase its shares at net asset value (or at a price above market and below net asset value).

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It is possible that these actions may have a temporary effect on a fund’s trading discount, although there is little industry experience that would suggest a long-term impact. Repurchases of shares, whether in the market or in tender offers, reduce the fund’s size and may result in an increase in the fund’s expense ratio. To the extent that shares are repurchased at prices below net asset value, however, such repurchases will enhance the net asset value of the fund’s shares and the total return for the remaining shareholders. Recognizing this benefit, the Trustees have authorized share repurchases by certain Putnam closed-end funds on past occasions. More recently, in October 2005, the Trustees authorized all of the Putnam closed-end funds, including your fund, to repurchase up to 5% of their outstanding shares at market prices through October 6, 2006. In March 2006, the Trustees increased this repurchase program to permit the funds to repurchase up to 10% of their outstanding shares over the same time period. The Trustees continue to study the results of the repurchase program to determine its impact on trading discounts and on investment performance. To date, the Trustees have not authorized tender offers but may consider that alternative in the future.

In considering these actions and the current proposal, the Trustees have considered the fact that all shareholders who purchased your fund’s shares presumably made their choice from among a broad array of available investment products available in the marketplace, with an understanding of the potential advantages and disadvantages of closed-end funds. Thus, in considering whether to recommend a fundamental change in the structure of the fund and its investment characteristics, the Trustees have considered whether the closed-end structure of the fund continues to offer the investment advantages contemplated when the fund was originally offered to the marketplace.

* How has your fund performed?

The following table summarizes the annualized total return of your fund for the periods shown based on the net asset value and the market price of its shares. The table also shows the performance of your fund’s primary benchmark index and the average performance of funds in your fund’s peer group of closed-end funds as determined by Lipper Inc., an independent fund rating agency. Of course, past performance is no guarantee of future performance. Benchmark index and Lipper peer group results should be compared to your fund’s performance at net asset value.

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Total Return (Annualized) for Periods Ended June 30, 2006*

* Returns for periods ended June 30, 2006 only partially reflect the impact of a reduction by 0.15% (of average assets) in the management fees payable by Putnam High Yield Municipal Trust that went into effect on January 1, 2006. This fee reduction had a corresponding effect of reducing the fund’s total expenses (measured as a percentage of average assets) by 0.15% .

* What are additional differences between a closed-end and open-end fund?

In addition to the differences outlined above, shareholders evaluating this proposal may wish to consider the following:

* Investment flexibility.Because they are required to maintain the ability to honor redemption requests, open-funds are prohibited by the 1940 Act from investing more than 15% of their assets in securities that are deemed illiquid. Closed-end funds are not subject to this restriction.

* Annual shareholder meetings.Your fund is currently required by the rules of the New York Stock Exchange to hold annual meetings of shareholders. Conversion of your fund to open-end status would result in termination of the fund’s listing on the New York Stock Exchange, with the result that your fund would no longer be required to hold annual meetings. The open-end Putnam funds have committed to holding shareholder meetings for the purpose of electing their Trustees at least every five years (beginning in 2004).

* Dividend reinvestment.Shareholders of your fund currently have the option of participating in the fund’s Dividend Reinvestment Plan, under which cash distributions paid by your fund are generally reinvested through the purchase of additional fund shares at market prices, which currently reflect a discount from net asset value. (At times when your fund’s shares are trading at a premium over their net asset value, such reinvestments are made at the higher of net asset value or 95% of

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market value.) Shareholders of open-end Putnam funds have the option to reinvest their distributions in additional shares at net asset value at all times. If the fund were to convert to open-end status, shareholders would no longer be able to reinvest dividends at a price below net asset value per share during times when shares are trading at a discount to net asset value.

* Exchange privileges.Shareholders of open-end funds in the Putnam family of funds currently have the privilege of exchanging their investment at net asset value and without sales charges for shares of the same class of more than 65 open-end funds in the Putnam group.Shareholders of your fund do not have that privilege.

* What changes to your fund’s Declaration of Trust and other effects would follow if shareholders vote to convert the fund to open-end status?

Conversion of your fund from a closed-end to an open-end fund would require certain changes to your fund’s Declaration of Trust and, therefore, a vote in favor of such conversion would also authorize the Trustees to amend your fund’s Declaration of Trust to reflect such changes. These changes would bring your fund’s Declaration of Trust more in line with most other Putnam open-end funds.

The Declaration of Trust would be amended to require your fund to purchase all shares offered to it for redemption at a price equal to the net asset value of the shares next determined, less any redemption charge fixed by the Trustees. In addition,Lifeco to the extent permitted by applicable law, the fund would be authorized, at its option, to redeemof his interests in shares held in a shareholder’s account at net asset value if at any time a shareholder owned shares in an amount either less than or greater than, as the case may be, an amount determined by the Trustees.Notwithstanding this provision, all shares would be redeemable at a shareholder’s option.of Marsh & McLennan.

The Declaration of Trust would also be amended to eliminate certain provisions that relate specifically to the fund’s closed-end status, such as the conversion provision that has necessitated this proposal. In addition, if shareholders were to vote to convert your fund to open-end status, the provision in your fund’s Declaration of Trust requiring that Trustees be elected annually at the annual shareholder meeting or at a special meeting in lieu thereof would be eliminated. The Trustees

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would also make certain necessary technical and non-material changes to the Declaration of Trust.

Certain legal, accounting and other costs would be incurred in connection with the conversion of your fund to open-end status. These costs are not expected to exceed an amount equal to 0.5% of your fund’s current net assets.

** What is the voting requirement for approving the conversion?proposal?

Approval of the conversion of your fund to open-end status and of the related amendments to each fund’s Declaration of Trust requires the “yes” vote of a majority of the fund’s outstanding common shares.

Although the Declaration of Trust would technically also require the “yes” vote of a majority of the fund’s outstanding preferred shares entitled to vote, if the proposal receives the threshold vote from common shareholders the Trustees will nevertheless act to redeem all of the outstanding preferred shares and to effect the conversion of your fund to open-end status.

If such conversion is approved, the conversion would become effective following compliance with all necessary regulatory requirements under federal and state law. Your fund would seek to complete this process as soon as reasonably practicable. Prior to the conversion, the common shares of your fund would continue to be listed and traded on the New York Stock Exchange.

* If the conversion is not approved, will your fund continue in its current form?

Yes. In the event that shareholders do not approve the conversion of your fund to open-end status, your fund would continue to operate as a closed-end fund. Shareholders would be given the opportunity to vote on a proposed conversion to open-end status in future years if your fund’s shares again trade at discounts sufficient to meet the requirement of the Declaration of Trust described above.

The Trustees believe that the continued operation of your fund as a closed-end fund is in the best long-term interests of your fund’s shareholders, and unanimously recommend a vote against the conversion of your fund to open-end status at this time.

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Approval of the shareholder proposal requesting that the Trustees of your fund take the steps necessary to convert your fund to an open-end investment company or otherwise permit shareholders of your fund to realize the net asset value of their shares requires the affirmative vote of the lesser of (a) more than 50% of the outstanding shares of the fund, or (b) 67% or more of the shares of the fund present (in person or by proxy) 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 Trustees, including a majority of the shares voted on the proposal. The fund’s common shareholders and preferred shareholders will vote together as a single class on this proposal.

The Trustees believe that the continued operation of your fund as a closed-end fund is in the best long-term interests of your fund’s shareholders, and unanimously recommend a vote against the shareholder proposal.

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