SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
- ----
Filed by the Registrant /
X /
- ----
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Filed by a party other than the Registrant /
/
- ----
Check the appropriate box:
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/ X / Preliminary Proxy Statement
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/ / Confidential, for Use of the Commission Only
---- (as permitted by Rule 14a-6(e)(2))
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/ / Definitive Proxy Statement
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/ / Definitive Additional Materials
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/ / Soliciting Material Pursuant to Sec.
240.14a-11(c)
---- or Sec. 240.14a-12
PUTNAM TAX-FREE INCOME TRUST
(Name of Registrant as Specified In Its
Charter)
(Name of Person(s) Filing Proxy Statement if other
than
Registrant)
Payment of Filing Fee (Check the appropriate box):
----
/ X / No fee required
----
----
/ / Fee computed on table below per Exchange Act
---- Rule 14a-6(i)(1) and 0-11
(1) Title of each class of securities to
which
transaction applies:
(2) Aggregate number of securities to which
transaction applies:
(3) Per unit price or other underlying value
of
transaction computed pursuant to Exchange
Act Rule
0-11 (set forth the amount on which the
filing fee
is calculated and state how it was
determined):
(4) Proposed maximum aggregate value of
transaction:
(5) Total fee paid:
----
/ / Fee paid previously with preliminary
materials.
----
----
/ / Check box if any part of the fee is offset as
provided
---- by Exchange Act Rule 0-11(a)(2) and identify
the filing
for which the offsetting fee was paid
previously.
Identify the previous filing by registration
statement
number, or the Form or Schedule and the date
of its
filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement
No.:
(3) Filing Party:
(4) Date Filed:
IMPORTANT INFORMATION
FOR SHAREHOLDERS OF
PUTNAM TAX-FREE HIGH YIELD FUND
PUTNAM TAX-FREE INSURED FUND
The document you hold in your hands contains your proxy
statement
and proxy card. A proxy card is, in essence, a ballot.
When you
vote your proxy, it tells us how to vote on your behalf
on
important issues relating to your fund. If you complete
and sign
the proxy, we'll vote it exactly as you tell us. If you
simply
sign the proxy, we'll vote it in accordance with the
Trustees'
recommendations on pages [ ] and [ ].
We urge you to spend a couple of minutes with the proxy
statement, fill out your proxy card, and return it to
us. When
shareholders don't return their proxies in sufficient
numbers, we
have to incur the expense of follow-up solicitations,
which can
cost your fund money.
We want to know how you would like to vote and welcome
your
comments. Please take a few moments with these
materials and
return your proxy to us.
(PUTNAM LOGO APPEARS HERE)
BOSTON * LONDON * TOKYO
Table of contents
A Message from the Chairman
1
Notice of Shareholder Meeting
2
Trustees' Recommendations
[4]
Proxy card enclosed
If you have any questions, please contact us at the
special toll-
free number we have set up for you (1-800-225-1581) or
call your
financial adviser.
A Message from the Chairman
(Photograph of George Putnam appears here)
Dear Shareholder:
I am writing to you to ask for your vote on important
questions
that affect your investment in your fund. While you
are, of
course, welcome to join us at your fund's meeting, most
shareholders cast their vote by filling out and signing
the
enclosed proxy. We are asking for your vote on the
following
matters:
1. Electing Trustees to oversee your fund;
2. Ratifying the selection by the Trustees of the
independent
auditors of your fund for its current fiscal year;
3. Approving amendments to certain of your fund's
fundamental
investment restrictions; and
4. Approving the elimination of certain of your fund's
fundamental investment restrictions.
Although we would like very much to have each
shareholder attend
their fund's meeting, we realize this is not possible.
Whether
or not you plan to be present, we need your vote. We
urge you to
complete, sign, and return the enclosed proxy card
promptly. A
postage-paid envelope is enclosed.
I'm sure that you, like most people, lead a busy life
and are
tempted to put this proxy aside for another day. Please
don't.
When shareholders do not return their proxies, their
fund may
have to incur the expense of follow-up solicitations.
All
shareholders benefit from the speedy return of proxies.
Your vote is important to us. We appreciate the time
and
consideration that I am sure you will give this
important matter.
If you have questions about the proposals, contact your
financial
adviser or call a Putnam customer service representative
at
1-800-225-1581.
Sincerely yours,
(signature of George
Putnam)
George Putnam, Chairman
PUTNAM TAX-FREE INCOME TRUST
PUTNAM TAX-FREE HIGH YIELD FUND
PUTNAM TAX-FREE INSURED FUND
Notice of a Meeting of Shareholders
This is the formal agenda for your fund's shareholder
meeting.
It tells you what matters will be voted on and the time
and place
of the meeting, if you can attend in person.
To the Shareholders of Putnam Tax-Free High Yield Fund
(the "Tax-
Free High Yield Fund") and Putnam Tax-Free Insured Fund
(the
"Tax-Free Insured Fund") (each a "fund" and,
collectively, the
"funds"), each a series of Putnam Tax-Free Income Trust
(the
"Trust"):
A Meeting of Shareholders of the funds will be held on
February 6, 1997 at 2:00 p.m., Boston time, on the
eighth floor
of One Post Office Square, Boston, Massachusetts, to
consider the
following:
1. Electing Trustees. (Shareholders of the funds
voting
together) See page [ ].
2. Ratifying the selection by the Trustees of the
independent
auditors of the funds for its current fiscal year.
(Shareholders of the funds voting together) See
page [ ].
3.A. Approving an amendment to the fund's fundamental
investment
restriction with respect to diversification.
(Shareholders
of each fund voting separately) See page [ ].
3.B. Approving an amendment to the fund's fundamental
investment
restriction with respect to investments in the
voting
securities of a single issuer. (Shareholders of
each fund
voting separately) See page [ ].
3.C. Approving an amendment to the fund's fundamental
investment
restriction with respect to making loans.
(Shareholders of
each fund voting separately) See page [ ].
3.D. Approving an amendment to the fund's fundamental
investment
restriction with respect to investments in real
estate.
(Shareholders of each fund voting separately) See
page
[ ].
3.E. Approving an amendment to the fund's fundamental
investment
restriction with respect to concentration of its
assets.
(Shareholders of each fund voting separately) See
page
[ ].
3.F. Approving an amendment to the fund's fundamental
investment
restriction with respect to investments in
commodities.
(Shareholders of each fund voting separately) See
page [
].
3.G. Approving an amendment to the fund's fundamental
investment
restriction with respect to senior securities.
(Shareholders of each fund voting separately) See
Page
[ ].
4.A. Approving the elimination of the fund's fundamental
investment restriction with respect to investments
in
securities of issuers in which management of the
fund or
Putnam Investment Management owns securities.
(Shareholders
of each fund voting separately) See page [ ].
4.B. Approving the elimination of the fund's fundamental
investment restriction with respect to margin
transactions.
(Shareholders of each fund voting separately) See
page [
].
4.C. Approving the elimination of the fund's fundamental
investment restriction with respect to short sales.
(Shareholders of each fund voting separately) See
page [
].
4.D. Approving the elimination of the fund's fundamental
investment restriction with respect to pledging
assets.
(Shareholders of each fund voting separately) See
page [
].
4.E. Approving the elimination of the fund's fundamental
investment restriction with respect to investments
in
restricted securities. (Shareholders of each fund
voting
separately) See page [ ].
4.F. Approving the elimination of the fund's fundamental
investment restriction with respect to investments
in
certain oil, gas and mineral interests.
(Shareholders of
each fund voting separately) See page [ ].
4.G. Approving the elimination of the fund's fundamental
investment restriction with respect to investing to
gain
control of a company's management. (Shareholders
of each
fund voting separately) See page [ ].
5. Transacting other business as may properly come
before the
meeting.
By the Trustees
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson A. Baxter Robert E. Patterson
Hans H. Estin Donald S. Perkins
John A. Hill George Putnam, III
Ronald J. Jackson Eli Shapiro
Elizabeth T. Kennan A.J.C. Smith
Lawrence J. Lasser W. Nicholas
Thorndike
WE URGE YOU TO MARK, SIGN, DATE, AND MAIL THE ENCLOSED
PROXY IN
THE POSTAGE-PAID ENVELOPE PROVIDED SO YOU WILL BE
REPRESENTED AT
THE MEETING.
[November __], 1996
Proxy Statement
This document will give you the information you need to
vote on
the matters listed on the previous pages. Much of the
information in the proxy statement is required under
rules of the
Securities and Exchange Commission ("SEC"); some of it
is
technical. If there is anything you don't understand,
please
contact us at our special toll-free number,
1-800-225-1581, or
call your financial adviser.
Who is asking for my vote?
The enclosed proxy is solicited by the Trustees of
Putnam Tax-
Free Income Trust (the "Trust") (the Trust consists of
the
following portfolio series (each a "fund and
collectively, the
"funds"): Putnam Tax-Free High Yield Fund ("Tax-Free
High Yield
Fund")and Putnam Tax-Free Insured Fund ("Tax-Free
Insured Fund"))
for use at the Meeting of Shareholders of each fund to
be held on
February 6, 1997, and, if your fund's meeting is
adjourned, at
any later meetings, for the purposes stated in the
Notice of
Meeting (see previous pages).
How do the Trustees recommend that shareholders vote on
these
proposals?
The Trustees recommend that you vote
1. For the election of all nominees;
2. For selecting Price Waterhouse LLP as the
independent
auditors of the funds;
3.A. For amending the fund's fundamental investment
restriction
with respect to diversification;
3.B. For amending the fund's fundamental investment
restriction
with respect to investments in the voting
securities of a
single issuer;
3.C. For amending the fund's fundamental investment
restriction
with respect to making loans;
3.D. For amending the fund's fundamental investment
restriction
with respect to investments in real estate;
3.E. For amending the fund's fundamental investment
restriction
with respect to concentration of its assets;
3.F. For amending the fund's fundamental investment
restriction
with respect to investments in commodities;
3.G. For amending the fund's fundamental investment
restriction
with respect to senior securities;
4.A. For eliminating the fund's fundamental investment
restriction with respect to investments in
securities of
issuers in which management of the fund or Putnam
Investment
Management owns securities;
4.B. For eliminating the fund's fundamental investment
restriction with respect to margin transactions;
4.C. For eliminating the fund's fundamental investment
restriction with respect to short sales;
4.D. For eliminating the fund's fundamental investment
restriction with respect to pledging assets;
4.E. For eliminating the fund's fundamental investment
restriction with respect to investments in
restricted
securities;
4.F. For eliminating the fund's fundamental investment
restriction with respect to investments in certain
oil, gas
and mineral interests; and
4.G. For eliminating the fund's fundamental investment
restriction with respect to investing to gain
control of a
company's management.
Who is eligible to vote?
Shareholders of record at the close of business on
November 8, 1996, are entitled to be present and to vote
at the
meeting or any adjourned meeting. The Notice of
Meeting, the
proxy, and the Proxy Statement have been mailed to
shareholders
of record on or about [November __,] 1996.
Each share is entitled to one vote. Shares represented
by duly
executed proxies will be voted in accordance with
shareholders'
instructions. If you sign the proxy, but don't fill in
a vote,
your shares will be voted in accordance with the
Trustees'
recommendations. If any other business is brought
before the
meeting, your shares will be voted at the Trustees'
discretion.
Shareholders of the funds will vote together with
respect to
Proposal 1 and Proposal 2, and will vote separately for
each fund
with respect to Proposals 3.A-3.G, and 4.A-4.G
The Proposals
1. ELECTION OF TRUSTEES
Who are the nominees for Trustees?
The Nominating Committee of the Trustees recommends that
the
number of Trustees be fixed at fourteen and that you
vote for the
election of the nominees described below. Each nominee
is
currently a Trustee of the Trust and of the other Putnam
funds.
The Nominating Committee of the Trustees consists solely
of
Trustees who are not "interested persons" (as defined in
the
Investment Company Act of 1940) of the Trust or of
Putnam
Investment Management, Inc., the funds' investment
manager
("Putnam Management").
Jameson Adkins Baxter
[Insert Picture]
Ms. Baxter, age 53, is the President of Baxter
Associates, Inc.,
a management and financial consulting firm which she
founded in
1986. During that time, she was also a Vice President
and
Principal of the Regency Group, Inc., and a Consultant
to First
Boston Corporation, both of which are investment banking
firms.
From 1965 to 1986, Ms. Baxter held various positions in
investment banking and corporate finance at First
Boston.
Ms. Baxter currently also serves as a Director of Banta
Corporation, Avondale Federal Savings Bank, and ASHTA
Chemicals,
Inc. She is also the Chairman Emeritus of the Board of
Trustees
of Mount Holyoke College, having previously served as
Chairman
for five years and as a Board member for thirteen years;
an
Honorary Trustee and past President of the Board of
Trustees of
the Emma Willard School; and Chair of the Board of
Governors of
Good Shepherd Hospital. Ms. Baxter is a graduate of
Mount
Holyoke College.
Hans H. Estin
[Insert Picture]
Mr. Estin, age 68, is a Chartered Financial Analyst and
the Vice
Chairman of North American Management Corp., a
registered
investment adviser serving individual clients and their
families.
Mr. Estin currently also serves as a Director of The
Boston
Company, Inc., a registered investment adviser which
provides
administrative and investment management services to
mutual funds
and other institutional investors, and Boston Safe
Deposit and
Trust Company; a Corporation Member of Massachusetts
General
Hospital; and a Trustee of New England Aquarium. He
previously
served as the Chairman of the Board of Trustees of
Boston
University and is currently active in various other
civic
associations, including the Boys & Girls Clubs of
Boston, Inc.
Mr. Estin is a graduate of Harvard College and holds
honorary
doctorates from Merrimack College and Boston University.
John A. Hill
[Insert Picture]
Mr. Hill, age 54, is the Chairman and Managing Director
of First
Reserve Corporation, a registered investment adviser
investing in
companies in the world-wide energy industry on behalf of
institutional investors.
Prior to acquiring First Reserve in 1983, Mr. Hill held
executive
positions with several investment advisory firms and
held various
positions with the Federal government, including
Associate
Director of the Office of Management and Budget and
Deputy
Administrator of the Federal Energy Administration.
Mr. Hill currently also serves as a Director of Snyder
Oil
Corporation, an exploration and production company which
he
founded, Maverick Tube Corporation, a manufacturer of
structural
steel, pipe and well casings, PetroCorp Incorporated, an
exploration and production company, Weatherford Enterra,
Inc., an
oil field service company, various private companies
controlled
by First Reserve Corporation, and various First Reserve
Funds.
He is also a Member of the Board of Advisors of Fund
Directions.
He is currently 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 is a
graduate
of Southern Methodist University.
Ronald J. Jackson
[Insert Picture]
Mr. Jackson, age 52, was Chairman of the Board,
President and
Chief Executive Officer of Fisher-Price, Inc., a major
toy
manufacturer, from 1990 to 1993. He previously served
as
President and Chief Executive Officer of Stride-Rite,
Inc., a
manufacturer and distributor of footwear, from 1989 to
1990, and
as President and Chief Executive Officer of Kenner
Parker Toys,
Inc., a major toy and game manufacturer, from 1985 to
1987.
Prior to that, he held various financial and marketing
positions
at General Mills, Inc. from 1966 to 1985, including Vice
President, Controller and Vice President of Marketing
for Parker
Brothers, a toy and game company, and President of
Talbots, a
retailer and direct marketer of women's apparel.
Mr. Jackson currently serves as a Director of Safety
1st, Inc., a
company which markets a wide range of child care and
safety
products. He also serves as a Trustee of Salem Hospital
and an
Overseer of the Peabody Essex Museum. He previously
served as a
Director of a number of public companies including
Fisher-Price,
Inc., Kenner Parker Toys, Inc., Stride-Rite, Inc., and
Mattel,
Inc., a major toy manufacturer. Mr. Jackson is a
graduate of
Michigan State University Business School.
Elizabeth T. Kennan
[Insert Picture]
Ms. Kennan, age 58, is President Emeritus and Professor
of Mount
Holyoke College. From 1978 through June 1995, she was
President
of Mount Holyoke College. From 1966 to 1978, she was on
the
faculty of Catholic University, where she taught history
and
published numerous articles.
Ms. Kennan currently also serves as a Director of NYNEX
Corporation, a telecommunications company, Northeast
Utilities,
the Kentucky Home Life Insurance Companies, and Talbots.
She
also serves as a Member of The Folger Shakespeare
Library
Committee. She is currently active in various
educational and
civic associations, including the Committee on Economic
Development and the Council on Foreign Relations. Ms.
Kennan is
a graduate of Mount Holyoke College, the University of
Washington
and St. Hilda College at Oxford University and holds
several
honorary doctorates.
Lawrence J. Lasser*
[Insert Picture]
Mr. Lasser, age 54, is the Vice President of your fund
and the
other Putnam funds. He has been the President, Chief
Executive
Officer and a Director of Putnam Investments, Inc. and
Putnam
Management since 1985, having begun his career there in
1969.
Mr. Lasser currently also serves as a Director of Marsh
&
McLennan Companies, Inc., the parent company of Putnam
Management, and INROADS/Central New England, Inc., a job
market
internship program for minority high school and college
students.
He is a Member of the Board of Overseers of the Museum
of
Science, the Museum of Fine Arts and the Isabella
Stewart Gardner
Museum in Boston. He is also a Trustee of the Beth
Israel
Hospital and Buckingham, Browne and Nichols School. Mr.
Lasser
is a graduate of Antioch College and Harvard Business
School.
Robert E. Patterson
[Insert Picture]
Mr. Patterson, age 51, is the Executive Vice President
and
Director of Acquisitions of Cabot Partners Limited
Partnership, a
registered investment adviser which manages real estate
investments for institutional investors. Prior to 1990,
he was
the Executive Vice President of Cabot, Cabot & Forbes
Realty
Advisors, Inc., the predecessor company of Cabot
Partners. Prior
to that, he was a Senior Vice President of the Beal
Companies, a
real estate management, investment and development
company. He
has also worked as an attorney and held various
positions in
state government, including the founding Executive
Director of
the Massachusetts Industrial Finance Agency.
Mr. Patterson currently also serves as Chairman of the
Joslin
Diabetes Center and as a Director of Brandywine Trust
Company.
Mr. Patterson is a graduate of Harvard College and
Harvard Law
School.
Donald S. Perkins*
[Insert Picture]
Mr. Perkins, age 69, is the retired Chairman of the
Board of
Jewel Companies, Inc., a diversified retailer, where
among other
roles he served as President, Chief Executive Officer
and
Chairman of the Board from 1965 to 1980. He currently
also
serves as a Director of various other public
corporations,
including AON Corp., an insurance company, Cummins
Engine
Company, Inc., an engine and power generator equipment
manufacturer and assembler, Current Assets L.L.C., a
corporation
providing financial staffing services, Illinova and
Illinois
Power Co., Inland Steel Industries, Inc., LaSalle Street
Fund,
Inc., a real estate investment trust, Lucent
Technologies Inc.,
Springs Industries, Inc., a textile manufacturer, and
Time
Warner, Inc., one of the nation's largest media
conglomerates.
He previously served as a Director of several other
major public
corporations, including Corning Glass Works, Eastman
Kodak
Company, Firestone Tire & Rubber Company and Kmart
Corporation.
Mr. Perkins currently also serves as a Trustee and Vice
Chairman
of Northwestern University and as a Trustee of the
Hospital
Research and Education Trust. He is currently active in
various
civic and business associations, including the Business
Council
and the Civic Committee of the Commercial Club of
Chicago, of
which he is the founding Chairman. Mr. Perkins is a
graduate of
Yale University and Harvard Business School and holds an
honorary
doctorate from Loyola University of Chicago.
William F. Pounds
[Insert Picture]
Dr. Pounds, age 68, is the Vice Chairman of the funds
and of the
other Putnam funds. He has been a Professor of
Management at the
Alfred P. Sloan School of Management at the
Massachusetts
Institute of Technology since 1961 and served as Dean of
that
School from 1966 to 1980. He previously served as
Senior Advisor
to the Rockefeller Family and Associates and was a past
Chairman
of Rockefeller & Co., Inc., a registered investment
adviser which
manages Rockefeller family assets, and Rockefeller Trust
Company.
Dr. Pounds currently also serves as a Director of IDEXX
Laboratories, Inc., EG&G, Inc., Perseptive Biosystems,
Inc.,
Management Sciences For Health, Inc. and Sun Company,
Inc. He is
also a Trustee of the Museum of Fine Arts in Boston; an
Overseer
of WGBH Educational Foundation, and a Fellow of The
American
Academy of Arts and Sciences. He previously served as a
Director
of Fisher-Price, Inc. and General Mills, Inc. Dr.
Pounds is a
graduate of Carnegie-Mellon University.
George Putnam*
[Insert Picture]
Mr. Putnam, age 70, is the Chairman and President of the
funds
and of the other Putnam funds. He is the Chairman and a
Director
of Putnam Management and Putnam Mutual Funds Corp. and a
Director
of Marsh & McLennan, their parent company. Mr. Putnam
is the son
of the founder of the Putnam funds and Putnam Management
and has
been employed in various capacities by Putnam Management
since
1951, including Chief Executive Officer from 1961 to
1973. He is
a former Overseer and Treasurer of Harvard University; a
past
Chairman of the Harvard Management Company; and a
Trustee
Emeritus of Wellesley College and Bradford College.
Mr. Putnam currently also serves as a Director of The
Boston
Company, Inc., Boston Safe Deposit and Trust Company,
Freeport-
McMoRan, Inc., Freeport Copper and Gold, Inc., McMoRan
Oil and
Gas, Inc., mining and natural resources companies,
General Mills,
Inc., Houghton Mifflin Company, a major publishing
company, and
Rockefeller Group, Inc., a real estate manager. He is
also a
Trustee of Massachusetts General Hospital, McLean
Hospital,
Vincent Memorial Hospital, WGBH Educational Foundation
and the
Museum of Fine Arts and the Museum of Science in Boston;
the New
England Aquarium; an Overseer of Northeastern
University; and a
Fellow of The American Academy of Arts and Sciences.
Mr. Putnam
is a graduate of Harvard College and Harvard Business
School and
holds honorary doctorates from Bates College and Harvard
University.
George Putnam, III*
[Insert Picture]
Mr. Putnam, age 45, is the President of New Generation
Research,
Inc., a publisher of financial advisory and other
research
services relating to bankrupt and distressed companies,
and New
Generation Advisers, Inc., a registered investment
adviser which
provides advice to private funds specializing in
investments in
such companies. Prior to founding New Generation in
1985, Mr.
Putnam was an attorney with the Philadelphia law firm
Dechert
Price & Rhoads.
Mr. Putnam currently also serves as a Director of the
Massachusetts Audubon Society. He is also a Trustee of
the Sea
Education Association and St. Mark's School and an
Overseer of
the New England Medical Center. Mr. Putnam is a
graduate of
Harvard College, Harvard Business School and Harvard Law
School.
Eli Shapiro
[Insert Picture]
Dr. Shapiro, age 80, is the Alfred P. Sloan Professor of
Management, Emeritus at the Alfred P. Sloan School of
Management
at the Massachusetts Institute of Technology, having
served on
the faculty of the Sloan School for eighteen years. He
previously was also on the faculty of Harvard Business
School,
The University of Chicago School of Business and
Brooklyn
College. During his academic career, Dr. Shapiro
authored
numerous publications concerning finance and related
topics. He
previously served as the President and Chief Executive
Officer of
the National Bureau of Economic Research and also
provided
economic and financial consulting services to various
clients.
Dr. Shapiro is a past Director of many companies,
including
Nomura Dividend Income Fund, Inc., a privately held
registered
investment company managed by Putnam Management, Reece
Corporation, a sewing machine manufacturer, Commonwealth
Mortgage, Dexter Corporation, a manufacturer of plastics
and
related products, Avis Corporation, a car rental
company,
Connecticut Bank and Trust Company, Connecticut National
Gas
Corporation, the Federal Home Loan Bank of Boston, where
he
served as Chairman from 1977 to 1989, Travelers'
Corporation, an
insurance company, and Norlin Corporation, a musical
instrument
manufacturer; and a past Trustee of Mount Holyoke
College and the
Putnam funds (from 1984 to 1989).
Dr. Shapiro is a Fellow of The American Academy of Arts
and
Sciences and is active in various professional and civic
associations, including the American Economic
Association, the
American Finance Association and the Council on Foreign
Relations. Dr. Shapiro is a graduate of Brooklyn
College and
Columbia University.
A.J.C. Smith*
[Insert Picture]
Mr. Smith, age 62, is the Chairman and Chief Executive
Officer of
Marsh & McLennan Companies, Inc. He has been employed
by Marsh &
McLennan and related companies in various capacities
since 1961.
Mr. Smith is a Director of the Trident Corp., and he
also serves
as a Trustee of the Carnegie Hall Society, the Central
Park
Conservancy, The American Institute for Chartered
Property
Underwriters, and is a Founder of the Museum of Scotland
Society.
He was educated in Scotland and is a Fellow of the
Faculty of
Actuaries in Edinburgh, a Fellow of the Canadian
Institute of
Actuaries, a Fellow of the Conference of Actuaries in
Public
Practice, an Associate of the Society of Actuaries, a
Member of
the American Academy of Actuaries, the International
Actuarial
Association and the International Association of
Consulting
Actuaries.
W. Nicholas Thorndike**
[Insert Picture]
Mr. Thorndike, age 63, serves as a Director of various
corporations and charitable organizations, including
Data General
Corporation, a computer and high technology company,
Bradley Real
Estate, Inc., a real estate investment firm, Providence
Journal
Co., a newspaper publisher and owner of television
stations, and
Courier Corporation, a book binding and printing
company. He is
also a Trustee of Eastern Utilities Associates,
Massachusetts
General Hospital, where he previously served as chairman
and
president, and Northeastern University.
Prior to December 1988, he was the Chairman of the Board
and
Managing Partner of Wellington Management
Company/Thorndike,
Doran, Paine & Lewis, a registered investment adviser
which
manages mutual funds and institutional assets. He also
previously served as a Trustee of the Wellington Group
of Funds
(now The Vanguard Group) and was the Chairman and a
Director of
Ivest Fund, Inc. Mr. Thorndike is a graduate of Harvard
College.
----------------------------
* Nominees who are or may be deemed to be "interested
persons"
(as defined in the Investment Company Act of 1940)
of the
funds, Putnam Management and Putnam Mutual Funds
Corp.
("Putnam Mutual Funds"), the principal underwriter
for all
the open-end Putnam funds and an affiliate of
Putnam
Management. Messrs. Putnam, Lasser, and Smith are
deemed
"interested persons" by virtue of their positions
as
officers or shareholders of your fund, or directors
of
Putnam Management, Putnam Mutual Funds or Marsh &
McLennan
Companies, Inc., the parent company of Putnam
Management and
Putnam Mutual Funds. Mr. George Putnam, III, Mr.
Putnam's
son, is also an "interested person" of the funds,
Putnam
Management and Putnam Mutual Funds. Mr. Perkins
may be
deemed to be an "interested person" of the funds
because of
his service as a director of a certain publicly
held company
that includes registered broker-dealer firms among
its
subsidiaries. Neither your fund nor any of the
other Putnam
funds currently engages in any transactions with
such firms
except that certain of such firms act as dealers in
the
retail sale of shares of certain Putnam funds in
the
ordinary course of their business. The balance of
the
nominees are not "interested persons."
** In February 1994 Mr. Thorndike accepted appointment
as a
successor trustee of certain private trusts in
which he has
no beneficial interest. At that time he also
became
Chairman of the Board of two privately owned
corporations
controlled by such trusts, serving in that capacity
until
October 1994. These corporations filed voluntary
petitions
for relief under Chapter 11 of the U.S. Bankruptcy
Code in
August 1994.
Except as indicated above, the principal occupations and
business
experience of the nominees for the last five years have
been with
the employers indicated, although in some cases they
have held
different positions with those employers. [Except for
Dr. Shapiro and Mr. Jackson, all the nominees were
elected by the
shareholders in October 1994. Dr. Shapiro and Mr.
Jackson were
elected by the other Trustees in April 1995 and May
1996,
respectively.] As indicated above, Dr. Shapiro also
previously
served as a Trustee of the Putnam funds from 1984 to
1989. The
14 nominees for election as Trustees at the shareholder
meeting
of the Trust who receive the greatest number of votes
will be
elected Trustees of the Trust. Shares of both funds
will be
counted together to determine the number of votes for
each
Trustee. The Trustees serve until their successors are
elected
and qualified. 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 recommend that the shareholders fix the
number
of Trustees at less than 14 for the Trust.
What are the Trustees' responsibilities?
The Trust's Trustees are responsible for the general
oversight of
the Trust's business and for assuring that your fund is
managed
in the best interests of shareholders. The Trustees
periodically
review your fund's investment performance as well as the
quality
of other services provided to your fund and shareholders
by
Putnam Management and its affiliates, including
administration,
custody, distribution and investor servicing. At least
annually,
the Trustees review the fees paid to Putnam Management
and its
affiliates for these services and the overall level of
your
fund's operating expenses. In carrying out these
responsibilities, the Trustees are assisted by an
independent
administrative staff and by the funds' auditors and
legal
counsel, which are selected by the Trustees and are
independent
of Putnam Management and its affiliates.
Do the Trustees have a stake in your fund?
The Trustees believe it is important that each Trustee
have a
significant investment in the Putnam funds. The
Trustees
allocate their investments among the more than 99 Putnam
funds
based on their own investment needs. The Trustees'
aggregate
investments in the Putnam funds total over $47 million.
The
table below lists each Trustee's current investments in
each fund
and in the Putnam funds as a group.
Share Ownership by Trustees as
of [ ]*
Year first Number of
Number of Number of Shares
elected as Shares of
Shares of of all Putnam funds
Trustee of Tax-Free
Tax-Free owned** as of
the Putnam High Yield
Insured ________
funds Fund owned*
Fund owned*
as of as of
__________
__________
- -----------------------------------------------------------------
- --------------------------------
Jameson A. Baxter 1994
Hans H. Estin 1972
John A. Hill 1985
Ronald J. Jackson 1996
Elizabeth T. Kennan 1992
Lawrence J. Lasser 1992
Robert E. Patterson 1984
Donald S. Perkins 1982
William F. Pounds 1971
George Putnam 1957
George Putnam, III 1984
Eli Shapiro 1995***
A.J.C. Smith 1986
W. Nicholas Thorndike 1992
- -----------------------------------------------------------------
- --------------------------------
*[Except as noted below] [Each/each] Trustee has
sole investment voting power with respect to
his or her shares of the fund.
**These holdings do not include shares of Putnam
money market funds.
***Dr. Shapiro previously served as a Trustee of
the Putnam funds from 1984 to 1989.
As of [________, 1996], the Trustees and officers
of the Trust owned a total of [ ] shares
of the fund, comprising less than 1% of its
outstanding shares on that date. [A total of
[ ] of these shares are held by certain
"interested" Trustees and officers of your fund
and Putnam Management in their Putnam Investments,
Inc. Profit Sharing Retirement Plan
accounts. Each individual accountholder has sole
investment power and shared voting power
with respect to his/her account.]
What are some of the ways in which the Trustees
represent
shareholder interests?
The Trustees believe that, as substantial investors in
the Putnam
funds, their interests are closely aligned with those of
individual shareholders. 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
managers;
- by also 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;
- by reviewing the fees paid to Putnam
Management to
ensure that such fees remain reasonable and
competitive
with those of other mutual funds, while at the
same
time providing Putnam Management sufficient
resources
to continue to provide high quality services
in the
future;
- by monitoring potential conflicts 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;
- by also monitoring potential conflicts among
funds to
ensure that shareholders continue to realize
the
benefits of participation in a large and
diverse family
of funds.
How often do the Trustees meet?
The Trustees meet each month (except August) over a
two-day
period to review the operations of the funds and of the
other
Putnam funds. A portion of these meetings is devoted to
meetings
of various Committees of the board which focus on
particular
matters. These include: the Contract Committee, which
reviews
all contractual arrangements with Putnam Management and
its
affiliates; the Communication and Service Committee,
which
reviews the quality of services provided by the funds'
investor
servicing agent, custodian and distributor; the Pricing,
Brokerage and Special Investments Committee, which
reviews
matters relating to valuation of securities, best
execution,
brokerage costs and allocations and new investment
techniques;
the Audit Committee, which reviews accounting policies
and the
adequacy of internal controls and supervises the
engagement of
the funds' auditors; the Compensation, Administration
and Legal
Affairs Committee, which reviews the compensation of the
Trustees
and their administrative staff and supervises the
engagement of
the funds' independent counsel; and the Nominating
Committee,
which is responsible for selecting nominees for election
as
Trustees.
Each Trustee generally attends at least two formal
committee
meetings during such monthly meeting of the Trustees.
During
1995, the average Trustee participated in approximately
40
committee and board meetings. In addition, the Trustees
meet in
small groups with Chief Investment Officers and
Portfolio
Managers 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 Contract Committee typically meets on several
additional
occasions during the year to carry out its
responsibilities.
Other Committees, including an Executive Committee, may
also meet
on special occasions as the need arises.
What are the Trustees paid for their services?
The Trust pays each Trustee a fee for his or her
services with
respect to each fund. Each Trustee also receives fees
for
serving as Trustee of the other Putnam funds. The
Trustees
periodically review their fees to assure 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 fees paid to each Trustee by the funds
and by all
of the Putnam funds are shown below:
Compensation Table+
Aggregate
compensation from:
Total
compensation
Tax Free Tax-Free
from all
High Yield Insured
Putnam
Trustees Fund* Fund*
funds**
Jameson A. Baxter $2,997 $1,333
$150,854
Hans H. Estin 2,981 1,328
150,854
John A. Hill*** 2,965 1,322
149,854
Ronald J. Jackson ***,**** 479 215
N/A
Elizabeth T. Kennan 2,981 1,328
148,854
Lawrence J. Lasser 2,965 1,319
150,854
Robert E. Patterson 3,126 1,379
152,854
Donald S. Perkins 2,965 1,322
150,854
William F. Pounds ***** 3,016 1,337
149,854
George Putnam 2,981 1,328
150,854
George Putnam, III 2,981 1,328
150,854
Eli Shapiro****** 3,140 1,384
95,372
A.J.C. Smith 2,956 1,319
149,854
W. Nicholas Thorndike 3,114 1,375
152,854
* Includes an annual retainer and an attendance
fee for each meeting attended.
** Reflects total payments received from all
Putnam funds in
the most recent calendar year. As of December
31, 1995,
there were 99 funds in the Putnam family.
*** Includes compensation deferred during the
fiscal year
pursuant to a Trustee Compensation Deferral
Plan. The
total amounts of deferred compensation payable
to Mr. Hill
and Mr. Jackson by the Tax-Free High Yield
Fund and the
Tax-Free Insured Fund as of July 31, 1996 was
$3,346,
$1,494 and $408, $185, respectively,
including, in each
case, income earned on such amounts.
**** Elected as a Trustee in May 1996
***** Includes additional compensation for services
as Vice
Chairman of the Putnam Funds.
****** Elected as a Trustee in April 1995.
The Trustees have approved Retirement Guidelines for
Trustees of the
Putnam funds. These guidelines provide generally that a
Trustee who
retires after reaching age 72 and who has at least 10
years of
continuous service will be eligible to receive a
retirement benefit
from each Putnam fund for which he or she served as a
Trustee. The
amount and form of such benefit is subject to
determination annually
by the Trustees and, unless otherwise determined by the
Trustees,
will be an annual cash benefit payable for life equal to
one-half of
the Trustee retainer fees paid by each fund at the time
of
retirement. Several retired Trustees are currently
receiving
benefits pursuant to the Guidelines and it is
anticipated that the
current Trustees will receive similar benefits upon
their
retirement. A Trustee who retired in calendar 1995 and
was eligible
to receive benefits under these Guidelines would have
received an
annual benefit of $66,749, based upon the aggregate
retainer fees
paid by the Putnam funds for such year. The Trustees
reserve the
right to amend or terminate such Guidelines and the
related payments
at any time, and may modify or waive the foregoing
eligibility
requirements when deemed appropriate.
For additional information about the Trust, including
further
information about its Trustees and officers, please see
"Further
Information About Your Fund," on page [ ].
Putnam Investments
Putnam Investment Management, Inc. and its affiliates,
Putnam Mutual
Funds, the principal underwriter for shares of your fund
and Putnam
Fiduciary Trust Company, your fund's investor servicing
agent and
custodian, are wholly owned by Putnam Investments, Inc.,
One Post
Office Square, Boston, Massachusetts 02109, a holding
company that
is in turn wholly owned by Marsh & McLennan Companies,
Inc., which
has executive offices at 1166 Avenue of the Americas,
New York, New
York 10036. Marsh & McLennan Companies, Inc. and its
operating
subsidiaries are professional services firms with
insurance and
reinsurance brokering, consulting, and investment
management
businesses.
2. SELECTION OF INDEPENDENT AUDITORS
Price Waterhouse LLP, 160 Federal Street, Boston,
Massachusetts,
independent accountants, has been selected by the
Trustees as the
auditor of your fund for the current fiscal year. Among
the
country's preeminent accounting firms, this firm also
serves as the
auditor for approximately half of the other funds in the
Putnam
family. It was selected primarily on the basis of its
expertise as
auditors of investment companies, the quality of its
audit services,
and the competitiveness of the fees charged for these
services.
A majority of the votes on the matter is necessary to
ratify the
selection of auditors. A representative of the
independent auditors
is expected to be present at the meeting to make
statements and to
respond to appropriate questions.
PROPOSALS 3 AND 4
As described in the following proposals, the Trustees
are
recommending that shareholders of each fund approve a
number of
changes to your fund's fundamental investment
restrictions,
including the elimination of certain of these
restrictions. The
purpose of these changes is to standardize the
investment
restrictions of all of the Putnam funds, including your
fund where
appropriate, and in certain cases to increase the funds'
investment
flexibility. By having standard investment restrictions
for all
Putnam funds, Putnam Management will be able to more
easily monitor
each fund's compliance with its investment policies.
Many of these
changes will have little practical effect on the way
each fund is
managed given the funds' current investment objective
and policies.
Several of the proposals request that certain
fundamental
restrictions be made non-fundamental, so that each fund
would have
the ability to modify or eliminate these restrictions at
a later
date without shareholder approval. These fundamental
restrictions
were originally adopted to comply with state securities
law
requirements, but are no longer applicable to the fund
due to
recently enacted federal legislation that effectively
eliminated the
ability of states to impose investment limitations on
regulated
investment companies like the fund. It is anticipated
that, in
early 1997, Putnam Management will recommend to the
Trustees that
some or all of the non-fundamental restrictions of the
Putnam funds,
including your fund, be removed. Of course, to the
extent any of
these restrictions are removed, the fund's prospectus or
statement
of additional information would be revised as
appropriate.
The adoption of any of these proposals is not contingent
on the
adoption of any other proposal.
Each fund will vote separately on each proposal. Voting
by one fund
will not affect the other fund.
3.A. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION
WITH RESPECT TO DIVERSIFICATION
The Trustees are recommending that the fund's
fundamental investment
restriction with respect to the diversification of
investments be
revised to reflect the standard restriction expected to
be used by
other Putnam funds and to grant the funds the maximum
investment
flexibility permitted by the Investment Company Act of
1940, as
amended (the "1940 Act"). Under the 1940 Act, a fund,
as a
diversified fund, generally may not, with respect to 75%
of its
respective total assets, invest more than 5% of its
total assets in
the securities of any one issuer (except U.S. government
securities). The remaining 25% of the fund's total
assets is not
subject to this restriction.
The fund's current restriction is more restrictive, and
states that
the fund may not:
"Invest in securities of any issuer if,
immediately after
such investment, more than 5% of the total
assets of the
fund (taken at current value) would be
invested in the
securities of such issuer; provided that this
limitation
does not apply to obligations issued or
guaranteed as to
interest and principal by the U.S. government
or its
agencies or instrumentalities and that
insurers of tax-
exempt securities are not considered issuers
of securities
for this purpose. (Insurance policies of
which the Trust
is a beneficiary are not considered securities
for
purposes of this restriction.)"
The proposed amended fundamental investment restriction
is set forth
below.
"The Trust may not with respect to a fund ...
With respect to 75% of its total assets, invest
in the securities of any issuer if, immediately
after such investment, more than 5% of the total
assets of the fund (taken at current value)
would be invested in the securities of such
issuer; provided that this limitation does not
apply to obligations issued or guaranteed as to
interest or principal by the U.S. government or
its agencies or instrumentalities and that
insurers of tax-exempt securities are not
considered issuers of securities for this
purpose. (Insurance policies of which the Trust
is a beneficiary are not considered securities
for purposes of this restriction.)"
If the proposed change is approved, the fund will be
able to invest
up to 25% of its total assets in the securities of any
one issuer.
The amended restriction would continue to exclude from
its
limitations U.S. government securities. Following the
amendment,
the fund would continue to be a diversified investment
company for
purposes of the 1940 Act.
Putnam Management believes that this enhanced
flexibility could
assist the funds in achieving their investment
objectives. However,
during times when Putnam Management invests a higher
percentage of a
fund's assets in one or more issuers, the value of the
fund's shares
may fluctuate more widely than the value of shares of a
portfolio
investing in a larger number of issuers.
Required Vote. Approval of this proposal by a fund
requires the
affirmative vote of the lesser of (1) more than 50% of
the
outstanding shares of the fund, or (2) 67% or more of
the shares of
the fund present at the meeting if more than 50% of the
outstanding
shares of the fund are present at the meeting in person
or by proxy.
3.B. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION
WITH RESPECT TO INVESTMENTS IN THE VOTING
SECURITIES OF A
SINGLE ISSUER
The Trustees are recommending that the fund's
fundamental investment
restriction with respect to investments in the voting
securities of
a single issuer be revised to reflect the standard
restriction
expected to be used by other Putnam funds and to grant
the fund the
maximum flexibility permitted under the 1940 Act. The
1940 Act
prohibits a diversified fund such as the fund from
investing, with
respect to 75% of its total assets, in the voting
securities of an
issuer if as a result it would own more than 10% of the
outstanding
voting securities of that issuer. The fund's current
investment
restriction, which is more restrictive than the 1940
Act, states
that the fund may not:
"Acquire more than 10% of the voting
securities of any
issuer, both with respect to any fund and to
the Trust in
the aggregate."
The proposed amended fundamental investment restriction
is set forth
below.
"The Trust may not with respect to a fund ...
With respect to 75% of its total assets, acquire
more than 10% of the outstanding voting
securities of any issuer."
The amendment enables the fund to purchase more than 10%
of the
voting securities of an issuer with respect to 25% of
the fund's
total assets. This proposal will have little practical
effect on
the fund as the fund invests primarily in fixed-income
securities
which are not typically voting securities.
Nevertheless, Putnam
Management believes it would be in the best interest of
the fund to
conform its policy to provide the fund with maximum
flexibility
should circumstances change.
To the extent the fund individually or with other funds
and accounts
managed by Putnam Management or its affiliates were to
own all or a
major portion of the outstanding voting securities of a
particular
issuer, under adverse market or economic conditions or
in the event
of adverse changes in the financial condition of the
issuer the fund
could find it more difficult to sell these voting
securities when
Putnam Management believes it advisable to do so, or may
be able to
sell the securities only at prices significantly lower
than if they
were more widely held.
Required vote. Approval of this proposal by a fund
requires the
affirmative vote of the lesser of (1) more than 50% of
the
outstanding shares of the fund, or (2) 67% or more of
the shares of
the fund present at the meeting if more than 50% of the
outstanding
shares of the fund are present at the meeting in person
or by proxy.
3.C. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION
WITH RESPECT TO MAKING LOANS
The Trustees are recommending that the fund's
fundamental investment
restriction with respect to making loans be revised to
reflect the
standard restriction expected to be used by other Putnam
funds, to
remove any asset limitations on the fund's ability to
enter into
repurchase agreements and to permit the fund to enter
into
securities loans. The current restriction states that
the fund may
not:
"Make loans, except by purchase of debt
obligations in
which the fund may invest consistent with its
investment
policies and by entering into repurchase
agreements with
respect to not more than 25% of the fund's
total assets
(taken at current value)."
The proposed amended fundamental investment restriction
is set forth
below.
"The Trust may not with respect to a fund ...
Make loans, except by purchase of debt
obligations in which the fund may invest
consistent with its investment policies, by
entering into repurchase agreements, or by
lending its portfolio securities."
Following the amendment, the fund may, consistent with
its
investment objective and policies and applicable law,
enter into
repurchase agreements and securities loans without
limit.
Management believes that the increased investment
flexibility could
assist the fund in achieving its investment objective.
Given the fund's investment policies and the fact that
securities
loans and repurchase agreements give rise to taxable
income, Putnam
Management does not presently intend to engage in
securities loans
or repurchase agreements on behalf of the fund to any
significant
extent. Nevertheless, Putnam Management believes it
would be in the
best interest of the fund to conform the policy to
provide the fund
with maximum flexibility should circumstances change.
When the fund enters into a repurchase agreement, it
typically
purchases a security for a relatively short period
(usually not more
than one week), which the seller agrees to repurchase at
a fixed
time and price, representing the fund's cost plus
interest. When
the fund enters into a securities loan, it lends certain
of its
portfolio securities to broker-dealers or other parties
and
typically receives an interest payment in return. These
transactions must be fully collateralized at all times,
but involve
some risk to the fund if the other party should default
on its
obligation. If the other party in these transactions
should become
involved in bankruptcy or insolvency proceedings, it is
possible
that the fund may be treated as an unsecured creditor
and be
required to return the underlying collateral to the
other party's
estate.
Required vote. Approval of this proposal by a fund
requires the
affirmative vote of the lesser of (1) more than 50% of
the
outstanding shares of the fund, or (2) 67% or more of
the shares of
the fund present at the meeting if more than 50% of the
outstanding
shares of the fund are present at the meeting in person
or by proxy.
3.D. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH RESPECT TO INVESTMENTS IN REAL
ESTATE
The Trustees are recommending that the fund's
fundamental investment
restriction with respect to investments in real estate
be revised to
reflect the standard restriction expected to be used by
other Putnam
funds and to grant the fund greater flexibility. The
current
restriction states that the fund may not:
"Purchase or sell real estate, although it may
purchase securities which are secured by or
represent interests in real estate."
The proposed amended fundamental investment restriction
is set forth
below.
"The Trust may not with respect to a fund ...
Purchase or sell real estate, although it may
purchase securities of issuers which deal in
real estate, securities which are secured by
interests in real estate, and securities which
represent interests in real estate, and it may
acquire and dispose of real estate or interests
in real estate acquired through the exercise of
its rights as a holder of debt obligations
secured by real estate or interests therein."
The proposed amendment enables the fund to invest in a
wide range of
real estate-related investments, many in which the fund
may already
invest under the current restriction. In addition, the
fund would
be able to own real estate directly as a result of the
exercise of
its rights in connection with debt obligations it owns.
In such
cases, the ability to acquire and dispose of real estate
may serve
to protect the fund during times where an issuer of debt
securities
is unable to meet its obligations.
The proposal will have little practical effect on the
fund, except
to the extent the fund's investments are secured by the
real estate
holdings of an issuer. Nevertheless, Putnam Management
believes it
would be in the best interest of the fund to conform the
policy to
provide the fund with maximum flexibility should
circumstances
change.
In order to enforce its rights in the event of a default
of an
issuer of real estate-related securities, the fund may
be required
to participate in various legal proceedings or take
possession of
and manage assets securing the issuer's obligations.
This could
increase the fund's operating expenses and adversely
affect its net
asset value.
Required vote. Approval of this proposal by a fund
requires the
affirmative vote of the lesser of (1) more than 50% of
the
outstanding shares of the fund, or (2) 67% or more of
the shares of
the fund present at the meeting if more than 50% of the
outstanding
shares of the fund are present at the meeting in person
or by proxy.
3.E. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION
WITH RESPECT TO CONCENTRATION OF ITS ASSETS
The Trustees are recommending that the fund's
fundamental investment
restriction regarding concentration be revised to
reflect the
standard restriction expected to be used by other Putnam
funds. The
current restriction states that the fund may not:
"Invest more than 25% of the value of the
total assets of
any fund in any one industry. (Securities of
the U.S.
government, its agencies or instrumentalities
and tax-
exempt securities backed by the credit of a
governmental
entity are not considered to represent
industries)."
The proposed amended fundamental restriction is set
forth below.
"The Trust may not with respect to a fund ...
Purchase securities (other than securities of
the U.S. government, its agencies or
instrumentalities or tax-exempt securities,
except tax-exempt securities backed only by the
assets and revenues of non-governmental issuers)
if, as a result of such purchase, more than 25%
of the fund's total assets would be invested in
any one industry."
The proposed amendment merely conforms the fund's
restriction and
would have no effect on the fund's investments.
Required vote. Approval of this proposal by a fund
requires the
affirmative vote of the lesser of (1) more than 50% of
the
outstanding shares of the fund, or (2) 67% or more of
the shares of
the fund present at the meeting if more than 50% of the
outstanding
shares of the fund are present at the meeting in person
or by proxy.
3.F. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION
WITH RESPECT TO INVESTMENTS IN COMMODITIES
The Trustees are recommending that the fund's
fundamental investment
restriction with respect to investments in commodities
be revised to
reflect the standard restriction expected to be used by
other Putnam
funds. The current restriction states that the fund may
not:
"Purchase or sell commodities or commodity
contracts,
except that it may purchase and sell financial
futures
contracts and related options."
The proposed amended fundamental restriction is set
forth below.
"The Trust may not with respect to a fund ...
Purchase or sell commodities or commodity
contracts, except that the fund may purchase and
sell financial futures contracts and options and
may enter into foreign exchange contracts and
other financial transactions not involving
physical commodities."
Under the revised restriction, the fund will continue to
be able to
engage in a variety of transactions involving the use of
financial
futures and options, as well as various other financial
transactions
to the extent consistent with its investment objective
and policies.
Although the fund may already engage in many of these
activities,
Putnam Management believes that the revised language
more clearly
sets forth the fund's policy. The addition of financial
transactions not involving the direct purchase or sale
of physical
commodities is intended to give the fund maximum
flexibility to
invest in a variety of financial instruments that could
technically
be considered commodities, but which do not involve the
direct
purchase or sale of physical commodities, which is the
intended
focus of the restriction.
Foreign exchange transactions are subject to many of the
risks
associated with futures and options. However, given the
fund's
investment policies and the fact that foreign currency
exchange
transactions give rise to taxable income, the fund
currently has no
intention of engaging in such transactions.
Required vote. Approval of this proposal by a fund
requires the
affirmative vote of the lesser of (1) more than 50% of
the
outstanding shares of the fund, or (2) 67% or more of
the shares of
the fund present at the meeting if more than 50% of the
outstanding
shares of the fund are present at the meeting in person
or by proxy.
3.G. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION
WITH RESPECT TO SENIOR SECURITIES
The Trustees are recommending that the fund's
fundamental investment
restriction with respect to the issuance of senior
securities be
revised to reflect the standard restriction expected to
be used by
other Putnam funds and to make it clear that the fund is
not
restricted from borrowing money consistent with its
investment
policies. Generally, a "senior security" is a security
which has
priority over any other security as to distribution of
assets or
dividends, and technically includes all indebtedness
over 5% of the
fund's assets. The current restriction states that the
fund may
not:
"Issue any class of securities which is senior
to a fund's
shares of beneficial interest."
The proposed amended fundamental investment restriction
is set forth
below:
"The Trust may not with respect to a fund ...
Issue any class of securities which is senior
to the
fund's shares of beneficial interest, except
for permitted
borrowings."
Although Putnam Management believes that the fund may
currently
borrow money to the maximum extent permitted by its
existing
policies (up to 10% of its total assets) without
violating its
current restriction, it believes that amending the
restriction will
avoid any possible ambiguity.
Required vote. Approval of this proposal by a fund
requires the
affirmative vote of the lesser of (1) more than 50% of
the
outstanding shares of the fund, or (2) 67% or more of
the shares of
the fund present at the meeting if more than 50% of the
outstanding
shares of the fund are present at the meeting in person
or by proxy.
4.A. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION
WITH RESPECT TO INVESTMENTS IN SECURITIES OF
ISSUERS IN
WHICH MANAGEMENT OF THE FUND OR PUTNAM
INVESTMENT
MANAGEMENT OWNS SECURITIES
The Trustees are recommending eliminating the fund's
fundamental
investment restriction which prevents the fund from
investing in the
securities of issuers in which management of the fund or
Putnam
Management owns a certain percentage of securities and
replacing it
with a standard non-fundamental restriction expected to
be used by
other Putnam funds. The current restriction states that
the fund
may not:
"Invest in securities of any issuer if, to the
knowledge
of the Trust, officers and Trustees of the
Trust and
officers and directors of Putnam Management
who
beneficially own more than 0.5% of the
securities of that
issuer together beneficially own more than
5%."
The fund originally adopted this restriction to comply
with certain
state securities law requirements which are no longer
applicable.
If this proposal is approved, the Trustees intend to
replace this
fundamental restriction with the following substantially
identical
non-fundamental investment restriction:
"The fund may not. . .
Invest in the securities of any issuer, if, to
the
knowledge of the Trust, officers and Trustees
of the Trust
and officers and directors of Putnam
Management who
beneficially own more than 0.5% of the
securities of that
issuer together beneficially own more than 5%
of such
securities."
By making this policy non-fundamental, the fund will
have the
ability to modify or eliminate the restriction to
increase
investment flexibility without the need for shareholder
approval.
If the restriction were to be eliminated, the fund would
be able to
invest in the securities of any issuer without regard to
ownership
in such issuer by management of the fund or Putnam
Management,
except to the extent otherwise prohibited by the fund's
investment
policies or the 1940 Act.
Required vote. Approval of this proposal by a fund
requires the
affirmative vote of the lesser of (1) more than 50% of
the
outstanding shares of the fund, or (2) 67% or more of
the shares of
the fund present at the meeting if more than 50% of the
outstanding
shares of the fund are present at the meeting in person
or by proxy.
4.B. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION
WITH RESPECT TO MARGIN TRANSACTIONS
The Trustees are recommending that the fund's
fundamental investment
restriction with respect to margin transactions be
eliminated and
replaced by a standard non-fundamental investment
restriction
expected to be used by the other Putnam funds. "Margin
transactions" involve the purchase of securities with
money borrowed
from a broker, with cash or eligible securities being
used as
collateral against the loan. The current restriction
states that
the fund may not:
"Purchase securities on margin, except such
short-term
credits as may be necessary for the clearance
of purchases
and sales of securities, and except that it
may make
margin payments in connection with financial
futures
contracts and related options."
The fund originally adopted this restriction to comply
with certain
state securities law requirements which are no longer
applicable.
If the proposal is approved, the Trustees intend to
replace this
fundamental restriction with the following
non-fundamental
investment restriction:
"The Trust may not with respect to a fund ...
Purchase securities on margin, except such
short-term credits as may be necessary for the
clearance of purchases and sales of securities,
and except that it may make margin payments in
connection with financial futures contracts or
options."
The proposed restriction includes margin payments in
connection with
all options transactions, not just options on futures,
in its
exception.
By making this policy non-fundamental, the fund will
have the
ability to modify or eliminate the restriction to
increase
investment flexibility without the need for shareholder
approval.
The fund's potential use of margin transactions beyond
transactions
in financial futures and options and for the clearance
of purchases
and sales of securities, including the use of margin in
ordinary
securities transactions, is currently limited by SEC
guidelines
which prohibit margin transactions because they create
senior
securities. The fund's ability to engage in margin
transactions is
also limited by its investment policies, which generally
permit the
fund to borrow money only in limited circumstances.
Required vote. Approval of this proposal by a fund
requires the
affirmative vote of the lesser of (1) more than 50% of
the
outstanding shares of the fund, or (2) 67% or more of
the shares of
the fund present at the meeting if more than 50% of the
outstanding
shares of the fund are present at the meeting in person
or by proxy.
4.C. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION
WITH RESPECT TO SHORT SALES
The Trustees are recommending that the fund's
fundamental investment
restriction with respect to short sales be eliminated
and replaced
by a standard non-fundamental investment restriction
expected to be
used by other Putnam funds. The restriction states that
the fund
may not:
"Make short sales of securities or maintain a
short
position for the account of the fund unless at
all times
when a short position is open such fund owns
an equal
amount of such securities or owns securities
which,
without payment of any further consideration,
are
convertible into or exchangeable for
securities of the
same issue as, and equal in amount to, the
securities sold
short."
The fund originally adopted this restriction to comply
with certain
state securities laws requirements which are no longer
applicable.
If this proposal is approved, the Trustees intend to
replace this
fundamental restriction with the following substantially
identical
non-fundamental restriction:
"The Trust may not with respect to a fund ...
Make short sales of securities or maintain a
short
position for the account of the fund unless at
all times
when a short position is open it owns an equal
amount of
such securities or owns securities which,
without payment
of any further consideration, are convertible
into or
exchangeable for securities of the same issue
as, and in
equal amount to, the securities sold short."
By making this policy non-fundamental, the fund will
have the
ability to modify or eliminate the restriction to
increase
investment flexibility without the need for shareholder
approval.
Given the fund's investment policies and the fact that
short sales
give rise to taxable income, Putnam Management does not
currently
intend to engage in short sales on behalf of the fund.
Nevertheless,
Putnam Management believes it is in the best interest of
the fund to
conform the policy and make it non-fundamental to
provide the fund
with maximum flexibility should circumstances change.
Required vote. Approval of this proposal by a fund
requires the
affirmative vote of the lesser of (1) more than 50% of
the
outstanding shares of the fund, or (2) 67% or more of
the shares of
the fund present at the meeting if more than 50% of the
outstanding
shares of the fund are present at the meeting in person
or by proxy.
4.D. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION
WITH RESPECT TO PLEDGING ASSETS
The Trustees are recommending that the fund's
fundamental investment
restriction which limits the fund's ability to pledge
its assets be
eliminated and replaced by a standard non-fundamental
investment
restriction expected to be used by other Putnam funds.
The current
restriction states that the fund may not:
"Pledge, hypothecate, mortgage or otherwise
encumber its
assets in excess of 15% of the fund's total
assets (taken
at cost) in connection with borrowings
permitted by
restriction 1 above." [Restriction 1 permits
the fund to
borrow money in an amount equal to up to 10%
of its total
assets for certain limited purposes.]
The fund originally adopted this restriction to comply
with certain
state securities law requirements which are no longer
applicable.
If the proposal is approved, the Trustees intend to
replace this
fundamental restriction with the following
non-fundamental
investment restriction:
"The fund may not ...
Pledge, hypothecate, mortgage or otherwise
encumber its assets in excess of 33 1/3% of its
total assets (taken at cost) in connection with
permitted borrowings."
This proposal would enable the fund to pledge up to
one-third of its
total assets in connection with fund borrowings; other
activities
which could be deemed to be pledges or other
encumbrances, such as
collateral arrangements with respect to certain forward
commitments,
futures contracts and options transactions, will not be
restricted.
Putnam Management believes that this enhanced
flexibility could
assist the fund in achieving its investment objective.
Further,
Putnam Management believes that the fund's current
limits on
pledging may conflict with the fund's ability to borrow
money to
meet redemption requests or for extraordinary or
emergency purposes.
This conflict arises because banks may require borrowers
such as the
fund to pledge assets in order to collateralize the
amount borrowed.
These collateral requirements are typically for amounts
at least
equal to, and often larger than, the principal amount of
the loan.
If the fund needed to borrow the maximum amount
permitted by its
policies (currently 10% of its total assets), it might
be possible
that a bank would require collateral in excess of 15% of
the fund's
total assets. Thus, the current restriction could have
the effect
of reducing the amount that the fund may borrow in these
situations.
By making this policy non-fundamental, the fund will
have the
ability to modify or eliminate the restriction to
increase
investment flexibility without the need for shareholder
approval.
Pledging assets does entail certain risks. To the
extent that a
fund pledges its assets, the fund may have less
flexibility in
liquidating its assets. If a large portion of the
fund's assets
were involved, the fund's ability to meet redemption
requests or
other obligations could be delayed.
Required vote. Approval of this proposal by a fund
requires the
affirmative vote of the lesser of (1) more than 50% of
the
outstanding shares of the fund, or (2) 67% or more of
the shares of
the fund present at the meeting if more than 50% of the
outstanding
shares of the fund are present at the meeting in person
or by proxy.
4.E. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION
WITH RESPECT TO INVESTMENTS IN RESTRICTED
SECURITIES
The Trustees are recommending that the fund's
fundamental investment
restriction which limits the fund's investments in
securities
subject to restrictions on resale, which are known as
"restricted
securities," be eliminated. The current fundamental
investment
restriction states that the fund may not:
"Purchase securities the disposition of which
is
restricted under federal securities laws if,
as a result,
such investments would exceed 15% of the value
of the
fund's net assets, excluding restricted
securities that
have been determined by the Trustees of the
Trust (or the
person designated by them to make such
determinations) to
be readily marketable."
Putnam Management believes the restriction is
unnecessary in light
of current regulatory requirements, which prohibit the
fund from
investing more than 15% of its net assets in any
combination of (a)
securities which are not readily marketable, (b)
securities
restricted as to resale (excluding securities determined
by the
Trustees of the Trust (or the person designated by the
Trustees of
the Trust to make such determinations) to be readily
marketable),
and (c) repurchase agreements maturing in more than
seven days.
These requirements are currently reflected in the fund's
nonfundamental policy with respect to illiquid
investments.
Eliminating the fundamental restriction would therefore
provide the
fund with maximum flexibility to respond quickly to
legal,
regulatory and market developments regarding illiquid
investments,
without the need for shareholder approval.
To the extent the fund invests in illiquid investments,
the fund may
encounter difficulty in determining the fair value of
such
securities for purposes of computing net asset value.
In addition,
the fund could encounter difficulty satisfying
redemption requests
within seven days if it could not readily dispose of its
illiquid
investments.
Required vote. Approval of this proposal by a fund
requires the
affirmative vote of the lesser of (1) more than 50% of
the
outstanding shares of the fund, or (2) 67% or more of
the shares of
the fund present at the meeting if more than 50% of the
outstanding
shares of the fund are present at the meeting in person
or by proxy.
4.F. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION
WITH RESPECT TO INVESTMENTS IN CERTAIN OIL,
GAS AND
MINERAL INTERESTS
The Trustees are recommending that the fund's
fundamental investment
restriction with respect to investments in oil, gas and
mineral
leases, rights or royalty contracts be eliminated and
replaced by a
standard non-fundamental investment restriction expected
to be used
by other Putnam funds. The current restriction states
that the fund
may not:
"Buy or sell oil, gas, or other mineral
leases, rights or
royalty contracts.
The fund originally adopted the restriction to comply
with certain
state securities law requirements which are no longer
applicable.
If this proposal is approved, the Trustees intend to
adopt the
following non-fundamental restriction:
"The fund may not . . .
Buy or sell oil, gas or other mineral leases,
rights or
royalty contracts, although it may purchase
securities
which represent interests in, are secured by
interests in,
or which are issued by issuers which deal in,
such leases,
rights or contracts, and it may acquire and
dispose of
such leases, rights or contracts acquired
through the
exercise of its rights as a holder of debt
obligations
secured thereby."
If the proposal is approved, the fund would be able to
invest,
consistent with applicable regulatory requirements, in a
variety of
securities the value of which is dependent upon the
value of oil,
gas and mineral interests. Also, in certain limited
circumstances,
the fund would be permitted to directly own oil, gas and
mineral
interests as a result of the exercise of its rights in
connection
with debt obligations it owns. In such cases, the
ability to
acquire and dispose of such interests may serve to
protect the fund
during times where an issuer of debt securities is
unable to meet
its obligations. By making this policy non-fundamental,
the fund
will have the ability to modify or eliminate the
restriction to
increase investment flexibility without the need for
shareholder
approval. This proposal will have little practical
effect on the
funds except to the extent the fund's investments are
secured by
oil, gas and mineral interests. Nevertheless, Putnam
Management
believes it would be in the best interest of the fund to
conform the
policy to provide the fund with maximum flexibility
should
circumstances change.
Investments in oil, gas and other mineral leases, rights
or royalty
contracts and in securities which derive their value in
part from
such instruments, entail certain risks. The prices of
these
investments are subject to substantial fluctuations, and
may be
affected by unpredictable economic and political
circumstances such
as social, political or military disturbances, the
taxation and
regulatory policies of various governments, the
activities and
policies of OPEC (an organization of major oil producing
countries),
the existence of cartels in such industries, the
discovery of new
reserves and the development of new techniques for
producing,
refining and transporting such materials and related
products, the
development of new technology, energy conservation
practices, and
the development of alternative energy sources and
alternative uses
for such materials and related products. In addition,
in order to
enforce its rights in the event of a default of an
issuer of these
securities, the fund may be required to participate in
various legal
proceedings or take possession of and manage assets
securing the
issuer's obligations. This could increase the fund's
operating
expenses and adversely affect the fund's net asset
value.
Required vote. Approval of this proposal by a fund
requires the
affirmative vote of the lesser of (1) more than 50% of
the
outstanding shares of the fund, or (2) 67% or more of
the shares of
the fund present at the meeting if more than 50% of the
outstanding
shares of the fund are present at the meeting in person
or by proxy.
4.G. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION
WITH RESPECT TO INVESTING TO GAIN CONTROL OF A
COMPANY'S
MANAGEMENT
The Trustees are recommending that the fund's
fundamental investment
restriction which states that the fund may not "make
investments for
the purpose of gaining control of a company's
management" be
eliminated. Eliminating the restriction would make it
clear that
the fund can freely exercise their rights as
shareholders of the
various companies in which they may invest, which
activities would
at times fall under the technical definition of control.
These
rights may include the right to actively oppose or
support the
management of such companies. Since the fund invests
primarily in
fixed-income securities, this proposal will not impact
the majority
of the fund's investments. Nevertheless, Putnam
Management believes
it would be in the best interest of the fund to
eliminate the
restriction.
Required vote. Approval of this proposal by a fund
requires the
affirmative vote of the lesser of (1) more than 50% of
the
outstanding shares of the fund, or (2) 67% or more of
the shares of
the fund present at the meeting if more than 50% of the
outstanding
shares of the fund are present at the meeting in person
or by proxy.
Further Information About Voting and the Shareholder
Meeting
Quorum and Methods of Tabulation. Thirty percent of the
shares
entitled to vote -- present in person or represented by
proxy --
constitutes a quorum for the transaction of business
with respect to
any proposal at the meeting (unless otherwise noted in
the proxy
statement). Shares represented by proxies that reflect
abstentions
and "broker non-votes" (i.e., shares held by brokers or
nominees as
to which (i) instructions have not been received from
the beneficial
owners or the persons entitled to vote and (ii) the
broker or
nominee does not have the discretionary voting power on
a particular
matter) will be counted as shares that are present and
entitled to
vote on the matter for purposes of determining the
presence of a
quorum. Votes cast by proxy or in person at the meeting
will be
counted by persons appointed by your fund as tellers for
the
meeting.
The tellers will count the total number of votes cast
"for" approval
of the proposals for purposes of determining whether
sufficient
affirmative votes have been cast. With respect to the
election of
Trustees and selection of auditors, neither abstentions
nor broker
non-votes have any effect on the outcome of the
proposal. With
respect to any other proposals, abstentions and broker
non-votes
have the effect of a negative vote on the proposal.
Other business. The Trustees know of no other business
to be
brought before the meeting. However, if any other
matters properly
come before the meeting, it is their intention that
proxies that do
not contain specific restrictions to the contrary will
be voted on
such matters in accordance with the judgment of the
persons named as
proxies in the enclosed form of proxy.
Simultaneous meetings. The meeting of shareholders of
each fund is
called to be held at the same time as the meetings of
shareholders
of certain of the other Putnam funds. It is anticipated
that all
meetings will be held simultaneously. If any
shareholder at the
meeting objects to the holding of a simultaneous meeting
and moves
for an adjournment of the meeting to a time promptly
after the
simultaneous meetings, the persons named as proxies will
vote in
favor of such adjournment.
Solicitation of proxies. In addition to soliciting
proxies by mail,
Trustees of the Trust and employees of Putnam
Management, Putnam
Fiduciary Trust Company and Putnam Mutual Funds may
solicit proxies
in person or by telephone. The Trust may also arrange
to have votes
recorded by telephone. The telephone voting procedure
is designed
to authenticate shareholders' identities, to allow
shareholders to
authorize the voting of their shares in accordance with
their
instructions and to confirm that their instructions have
been
properly recorded. The Trust has been advised by
counsel that these
procedures are consistent with the requirements of
applicable law.
If these procedures were subject to a successful legal
challenge,
such votes would not be counted at the meeting. The
Trust is
unaware of any such challenge at this time.
Shareholders would be
called at the phone number Putnam Investments has in its
records for
their accounts, and would be asked for their Social
Security number
or other identifying information. The shareholders
would then be
given an opportunity to authorize proxies to vote their
shares at
the meeting in accordance with their instructions. To
ensure that
the shareholders' instructions have been recorded
correctly, they
will also receive a confirmation of their instructions
in the mail.
A special toll-free number will be available in case the
information
contained in the confirmation is incorrect.
The Trustees have adopted a general policy of
maintaining
confidentiality in the voting of proxies. Consistent
with this
policy, the Trust may solicit proxies from shareholders
who have not
voted their shares or who have abstained from voting.
Persons holding shares as nominees will upon request be
reimbursed
for their reasonable expenses in soliciting instructions
from their
principals. The Trust has retained at the fund's
expense D.F. King
& Co., Inc., 77 Water Street, New York, New York 10005,
to aid in
the solicitation of instructions for registered and
nominee
accounts, for a fee not to exceed [$2,500] [per fund]
plus
reasonable out-of-pocket expenses for mailing and phone
costs.
Revocation of proxies. Proxies, including proxies given
by
telephone, may be revoked at any time before they are
voted by a
written revocation received by the Clerk of the Trust,
by properly
executing a later-dated proxy or by attending the
meeting and voting
in person.
Date for receipt of shareholders' proposals for
subsequent meetings
of shareholders. The Trust's Agreement and Declaration
of Trust
does not provide for annual meetings of shareholders,
and the Trust
does not currently intend to hold such a meeting in
1997.
Shareholder proposals for inclusion in the proxy
statement for any
subsequent meeting must be received by your fund within
a reasonable
period of time prior to any such meeting.
Adjournment. If sufficient votes in favor of any of the
proposals
set forth in the Notice of the Meeting are not received
by the time
scheduled for the meeting, the persons named as proxies
may propose
adjournments of the meeting for a period or periods of
not more than
60 days in the aggregate to permit further solicitation
of proxies
with respect to any of such proposals. Any adjournment
will require
the affirmative vote of a majority of the votes cast on
the question
in person or by proxy at the session of the meeting to
be adjourned.
The persons named as proxies will vote in favor of such
adjournment
those proxies which they are entitled to vote in favor
of such
proposals. They will vote against such adjournment
those proxies
required to be voted against such proposals. Such fund
pays the
costs of any additional solicitation and of any
adjourned session.
Any proposals for which sufficient favorable votes have
been
received by the time of the meeting may be acted upon
and considered
final regardless of whether the meeting is adjourned to
permit
additional solicitation with respect to any other
proposal.
Financial information. The Trust will furnish, without
charge, to
you upon request a copy of a fund's annual report for
its most
recent fiscal year, and a copy of its semiannual report
for any
subsequent semiannual period. Such requests may be
directed to
Putnam Investor Services, P.O. Box 41203, Providence, RI
02940-1203
or 1-800-225-1581.
Further Information About Your Funds
Limitation of Trustee liability. The Agreement and
Declaration of
Trust of the Trust provides that the Trust will
indemnify the
Trustees and officers against liabilities and expenses
incurred in
connection with litigation in which they may be involved
because of
their offices with the Trust, except if it is determined
in the
manner specified in the Agreement and Declaration of
Trust that they
have not acted in good faith in the reasonable belief
that their
actions were in the best interests of the Trust or that
such
indemnification would relieve any officer or Trustee of
any
liability to a fund or its shareholders arising by
reason of willful
misfeasance, bad faith, gross negligence or reckless
disregard of
his or her duties. The Trust, at its expense, provides
liability
insurance for the benefit of its Trustees and officers.
Audit and Nominating Committees. The voting members of
the Audit
Committee of the Trust include only Trustees who are not
"interested
persons" of the Trust by reason of any affiliation with
Putnam
Investments and its affiliates. The Audit Committee
currently
consists of Messrs. Estin (Chairman), Perkins (without
vote),
Putnam, III (without vote), Shapiro, Smith (without
vote), and Ms.
Kennan. The Nominating Committee consists only of
Trustees who are
not "interested persons" of the Trust or Putnam
Management. The
Nominating Committee currently consists of Dr. Pounds
and Ms. Kennan
(Co-chairpersons), Ms. Baxter, and Messrs. Estin, Hill,
Jackson,
Patterson, Shapiro, and Thorndike.
Officers and other information. In addition to George
Putnam and
Lawrence J. Lasser, the officers of the Trust are as
follows:
Year first
elected to
Name (age) Office
office
- -----------------------------------------------------------------
- ---
---
Charles E. Porter (58) Executive Vice President
19__
Patricia C. Flaherty (49) Senior Vice President
19__
John D. Hughes (61) Senior Vice President &
Treasurer
19__
Gordon H. Silver (49) Vice President
19__
James E. Erickson (61) Vice President
19__
Triet M. Nguyen1 (40) Vice President
19__
Richard P. Wyke2 (40) Vice President
19__
John J. Morgan, Jr. (56) Vice President
19__
William N. Shiebler*(54) Vice President
19__
John R. Verani (57) Vice President
19__
Paul M. O'Neil (43) Vice President
19__
Beverly Marcus (52) Clerk
19__
- -----------------------------------------------------------------
- ---
---
1. The Tax-Free High Yield Fund's portfolio manager.
2. The Tax-Free Insured Fund's portfolio manager.
* President of Putnam Mutual Funds
All of the officers of the Trust are employees of Putnam
Management
or its affiliates. Because of their positions with
Putnam
Management or its affiliates or their ownership of stock
of Marsh &
McLennan Companies, Inc., the parent corporation of
Putnam
Management and Putnam Mutual Funds, Messrs. Putnam,
George Putnam,
III, Lasser and Smith (nominees for Trustees of the
Trust), as well
as the officers of the Trust, will benefit from the
management fees,
distribution fees, underwriting commissions, custodian
fees, and
investor servicing fees paid or allowed by a fund.
Assets and shares outstanding of each fund as of
[________, 1996]
Class A Class B Class M
Fund Name Net Assets Shares Shares Shares
-------------- ---------- -------- -------- --------
Tax-Free High
Yield Fund $
Tax-Free
Insured Fund $
5% beneficial ownership as of [_______, 1996]
Tax-Free High Yield Fund
Persons beneficially owning more than 5%
of the fund's class A shares
(1) [ ]
[ ] shares or [ %
Persons beneficially owning more than 5%
of the fund's class B shares
(1) [ ]
[ ] shares or [ ]%
Persons beneficially owning more than 5%
of the fund's class M shares
(1) [ ] [ ]
shares or [ ]%
Tax-Free Insured Fund
Persons beneficially owning more than 5%
of the fund's class A shares
(1) [ ]
[ ] shares or [ ]%
Persons beneficially owning more than 5%
of the fund's class B shares
(1) [ ]
[ ] shares or [ ]%
Persons beneficially owning more than 5%
of the fund's class M shares
(1) [ ] [ ]
shares or [ ]%
PUTNAMINVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581
PUTNAMINVESTMENTS
This is your PROXY CARD.
Please vote this proxy, sign it below, and return it
promptly in the
envelope provided. Your vote is important.
HAS YOUR ADDRESS CHANGED?
Please use this form to notify us of any change in
address or
telephone number or to provide us with your comments.
Detach this
form from the proxy ballot and return it with your
signed proxy in
the enclosed envelope.
Street
- -----------------------------------------------------------------
- ---
City State Zip
- -----------------------------------------------------------------
- ---
Telephone
- -----------------------------------------------------------------
- ---
DO YOU HAVE ANY COMMENTS?
- -----------------------------------------------------------------
- ---
- -----------------------------------------------------------------
- ---
- -----------------------------------------------------------------
- ---
DEAR SHAREHOLDER:
Your vote is important. Please help us to eliminate the
expense of
follow-up mailings by signing and returning this proxy
as soon as
possible. A postage-paid envelope is enclosed for your
convenience.
THANK YOU!
- -----------------------------------------------------------------
- ---
Please fold at perforation before detaching.
Proxy for a meeting of shareholders to be held on
February 6, 1997
for the Putnam Tax-Free High Yield Fund, a series of
Putnam Tax-Free
Income Trust (the "Trust").
This proxy is solicited on behalf of the Trustees of the
Trust.
The undersigned shareholder hereby appoints George
Putnam, Hans H.
Estin, and Robert E. Patterson, and each of them
separately,
Proxies, with power of substitution, and hereby
authorizes them to
represent and to vote, as designated below, at the
meeting of
shareholders of Putnam Tax-Free High Yield Fund on
February 6, 1997,
at 2:00 p.m., Boston time, and at any adjournments
thereof, all of
the shares of the fund that the undersigned shareholder
would be
entitled to vote if personally present.
If you complete and sign the proxy, we'll vote it
exactly as you
tell us. If you simply sign the proxy, it will be voted
FOR
electing Trustees as set forth in Proposal 1 and FOR
each of the
other proposals listed below. In their discretion, the
Proxies will
also be authorized to vote upon such other matters that
may properly
come before the meeting.
Note: If you have questions on any of the proposals,
please call
1-800-225-1581.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY.
Please sign your name exactly as it appears on this
card. If you
are a joint owner, each owner should sign. When signing
as
executor, administrator, attorney, trustee, or guardian,
or as
custodian for a minor, please give your full title as
such. If you
are signing for a corporation, please sign the full
corporate name
and indicate the signer's office. If you are a partner,
sign in the
partnership name.
- -----------------------------------------------------------------
- ---
Shareholder sign here
Date
- -----------------------------------------------------------------
- ---
Co-owner sign here
Date
THE TRUSTEES RECOMMEND A VOTE FOR ELECTING ALL OF THE
NOMINEES FOR
TRUSTEES AND FOR THE OTHER PROPOSALS LISTED BELOW.
Please mark your choices / X / in blue or black ink.
1. Proposal to elect Trustees
The nominees for Trustees are: J.A. Baxter, H.H.
Estin, J.A.
Hill, R.J. Jackson, E.T. Kennan, L.J. Lasser, R.E.
Patterson,
D.S. Perkins, W.F. Pounds, G. Putnam, G. Putnam,
III, E.
Shapiro, A.J.C. Smith and W.N. Thorndike.
/ / FOR electing all the nominees
(except as indicated to the contrary below)
/ / WITHHOLD authority to vote for all nominees
To withhold authority to vote for one or more of the
nominees, write
those nominees' names below:
- -----------------------------------------------------------------
- --
PROPOSAL TO:
2. Ratify the selection FOR AGAINST
ABSTAIN
of Price Waterhouse
LLP as the / / / / /
/
independent auditors
of your fund.
3. Amend the fund's
fundamental investment
restriction with respect
to:
A. Diversification. / / / / /
/
B. Investments in the voting / / / / /
/
securities of a single
issuer.
C. Making loans. / / / / /
/
D. Investment in real estate. / /
/ / / /
E. Concentration of its
assets. / / / / /
/
F. Investments in / / / / /
/
commodities.
G. Senior securities. / / / / /
/
4. Eliminate the fund's
fundamental investment
restriction with respect
to:
A. Investments in securities / / / / /
/
of issuers in which
management of the fund
or Putnam Investment
Management owns securities.
B. Margin transactions. / / / / /
/
C. Short sales. / / / / /
/
D. Pledging assets. / / / / /
/
E. Investments in / / / / /
/
restricted securities.
F. Investments in certain / / / / /
/
oil, gas and mineral
interests.
G. Investing to gain / / / / /
/
control of a company's
management.
PUTNAMINVESTMENTS
This is your PROXY CARD.
Please vote this proxy, sign it below, and return it
promptly in the
envelope provided. Your vote is important.
HAS YOUR ADDRESS CHANGED?
Please use this form to notify us of any change in
address or
telephone number or to provide us with your comments.
Detach this
form from the proxy ballot and return it with your
signed proxy in
the enclosed envelope.
Street
- -----------------------------------------------------------------
- ---
City State Zip
- -----------------------------------------------------------------
- ---
Telephone
- -----------------------------------------------------------------
- ---
DO YOU HAVE ANY COMMENTS?
- -----------------------------------------------------------------
- ---
- -----------------------------------------------------------------
- ---
- -----------------------------------------------------------------
- ---
DEAR SHAREHOLDER:
Your vote is important. Please help us to eliminate the
expense of
follow-up mailings by signing and returning this proxy
as soon as
possible. A postage-paid envelope is enclosed for your
convenience.
THANK YOU!
- -----------------------------------------------------------------
- ---
Please fold at perforation before detaching.
Proxy for a meeting of shareholders to be held on
February 6, 1997
for the Putnam Tax-Free Insured Fund, a series of Putnam
Tax-Free
Income Trust (the "Trust").
This proxy is solicited on behalf of the Trustees of the
Trust.
The undersigned shareholder hereby appoints George
Putnam, Hans H.
Estin, and Robert E. Patterson, and each of them
separately,
Proxies, with power of substitution, and hereby
authorizes them to
represent and to vote, as designated below, at the
meeting of
shareholders of Putnam Tax-Free Insured Fund on February
6, 1997, at
2:00 p.m., Boston time, and at any adjournments thereof,
all of the
shares of the fund that the undersigned shareholder
would be
entitled to vote if personally present.
If you complete and sign the proxy, we'll vote it
exactly as you
tell us. If you simply sign the proxy, it will be voted
FOR
electing Trustees as set forth in Proposal 1 and FOR
each of the
other Proposals listed below. In their discretion, the
Proxies will
also be authorized to vote upon such other matters that
may properly
come before the meeting.
Note: If you have questions on any of the proposals,
please call
1-800-225-1581.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY.
Please sign your name exactly as it appears on this
card. If you
are a joint owner, each owner should sign. When signing
as
executor, administrator, attorney, trustee, or guardian,
or as
custodian for a minor, please give your full title as
such. If you
are signing for a corporation, please sign the full
corporate name
and indicate the signer's office. If you are a partner,
sign in the
partnership name.
- -----------------------------------------------------------------
- ---
Shareholder sign here
Date
- -----------------------------------------------------------------
- ---
Co-owner sign here
Date
THE TRUSTEES RECOMMEND A VOTE FOR ELECTING ALL OF THE
NOMINEES FOR
TRUSTEES AND FOR THE OTHER PROPOSALS LISTED BELOW.
Please mark your choices / X / in blue or black ink.
1. Proposal to elect Trustees
The nominees for Trustees are: J.A. Baxter, H.H.
Estin, J.A.
Hill, R.J. Jackson, E.T. Kennan, L.J. Lasser, R.E.
Patterson,
D.S. Perkins, W.F. Pounds, G. Putnam, G. Putnam,
III, E.
Shapiro, A.J.C. Smith and W.N. Thorndike.
/ / FOR electing all the nominees
(except as indicated to the contrary below)
/ / WITHHOLD authority to vote for all nominees
To withhold authority to vote for one or more of the
nominees, write
those nominees' names below:
- -----------------------------------------------------------------
- --
PROPOSAL TO:
2. Ratify the selection FOR AGAINST
ABSTAIN
of Price Waterhouse
LLP as the / / / / /
/
independent auditors
of your fund.
3. Amend the fund's
fundamental investment
restriction with respect
to:
A. Diversification. / / / / /
/
B. Investments in the voting / / / / /
/
securities of a single
issuer.
C. Making loans. / / / / /
/
D. Investment in real estate. / /
/ / / /
E. Concentration of its
assets. / / / / /
/
F. Investments in / / / / /
/
commodities.
G. Senior securities. / / / / /
/
4. Eliminate the fund's
fundamental investment
restriction with respect
to:
A. Investments in securities / / / / /
/
of issuers in which
management of the fund
or Putnam Investment
Management owns securities.
B. Margin transactions. / / / / /
/
C. Short sales. / / / / /
/
D. Pledging assets. / / / / /
/
E. Investments in / / / / /
/
restricted securities.
F. Investments in certain / / / / /
/
oil, gas and mineral
interests.
G. Investing to gain / / / / /
/
control of a company's
management.
lipsett/106290.111/proxys/taxfree4.wpf