SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
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Filed by the Registrant / X /
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Filed by a Party other than the Registrant / /
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Check the appropriate box:
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/ / Preliminary Proxy Statement
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/ / Preliminary Additional Materials
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/ X / Definitive Proxy Statement
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/ / Definitive Additional Materials
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/ / Soliciting Material Pursuant to Sec. 240.14a-11(e) or
- ---- Sec. 240.14a-12
PUTNAM U.S. GOVERNMENT INCOME TRUST
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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/ x / $125 per Exchange Act Rules 0-11(c)(1)(ii),
- ---- 14a-6(i)(1), or 14a-6(i)(2).
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/ / $500 per each party to the controversy pursuant
- ---- to Exchange Act Rule 14a-6(i)(3).
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/ / Fee computed on table below per Exchange Act Rules
- ---- 14a-6(i)(4) 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:
(4) Proposed maximum aggregate value of transaction:
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/ / 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 IN
PUTNAM U.S. GOVERNMENT INCOME TRUST
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 5 through 6 .
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. . . . . . . . . . . . . . . . . . . .
. . . . .5
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 don't 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 U.S. GOVERNMENT INCOME TRUST
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 U.S. Government Income Trust:
A Meeting of Shareholders of your fund will be held on September
5, 1996 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. See page 8 .
2. Ratifying the selection by the Trustees of the independent
auditors of your fund for its current fiscal year. See
page 25 .
3.A. Approving an amendment to the fund's fundamental investment
restriction with respect to diversification . See
page 26 .
3.B. Approving an amendment to the fund's fundamental investment
restriction with respect to investments in the voting
securities of a single issuer. See page 28 .
3.C . Approving an amendment to the fund's fundamental
investment restriction with respect to senior
securities. See page 29 .
3.D . Approving an amendment to the fund's fundamental
investment restriction with respect to making
loans. See page 30.
3.E . Approving an amendment to the fund's fundamental
investment restriction with respect to
concentration of its assets. See page 31.
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, Inc. owns securities. See page
32 .
4.B . Approving the elimination of the fund's
fundamental investment restriction with respect to
short sales. See page 33 .
4.C . Approving the elimination of the fund's
fundamental investment restriction with respect
to pledging assets. See page 34 .
4.D . Approving the elimination of the fund's
fundamental investment restriction with respect to
investments in restricted securities. See page
36 .
4.E . Approving the elimination of the fund's
fundamental investment restriction with respect to
investments in other investment companies. See
page 38 .
4.F . Approving the elimination of the fund's
fundamental investment restriction with respect to
margin transactions. See page 40 .
4.G . Approving the elimination of the fund's
fundamental investment restriction with respect to
investments in certain oil, gas and mineral
interests. See page 41 .
4.H . Approving the elimination of the fund's
fundamental investment restriction with respect to
investing to gain control of a company's
management. See page 42 .
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.
July 17 , 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 U.S.
Government Income Trust for use at the Meeting of Shareholders of
the fund to be held on September 5, 1996, 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 your fund's Trustees recommend that shareholders vote on
these proposals?
The Trustees recommend that you vote
1. For the election of all nominees;
2. For selecting Coopers & Lybrand L.L.P. as the independent
auditors of your fund;
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 senior securities;
3.D . For approving an amendment to the fund's
fundamental investment restriction with respect to
making loans;
3.E. For amending the fund's fundamental investment
restriction with respect to concentration of its
assets;
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, Inc. owns
securities;
4.B . For eliminating the fund's fundamental investment
restriction with respect to short sales;
4.C . For eliminating the fund's fundamental investment
restriction with respect to pledging
assets;
4.D . For eliminating the fund's fundamental investment
restriction with respect to investments in
restricted securities;
4.E . For eliminating the fund's fundamental investment
restriction with respect to investments in other
investment companies ;
4.F. For eliminating the fund's fundamental investment
restriction with respect to margin transactions ;
4.G. For eliminating the fund's fundamental investment
restriction with respect to investments in
certain oil, gas and mineral interests ;
4.H. 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 June 7, 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 July 19 , 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.
The Proposals
I. 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 your fund 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 your fund or of Putnam
Investment Management, Inc., your fund's investment manager
("Putnam Management").
Jameson Adkins Baxter
[Insert Picture]
Ms. Baxter, age 52, 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 67, 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 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 53, 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 your fund 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 69, is the Chairman and President of your fund
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., a major manufacturer of food products, 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 44, 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 your
fund, 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 your fund, Putnam
Management, and Putnam Mutual Funds. Mr. Perkins may be
deemed to be an "interested person" of your fund 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 (July, 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 your fund who receive the greatest number of votes will be
elected Trustees of your fund. 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 your
fund.
What are the Trustees' responsibilities?
Your fund's Trustees are responsible for the general oversight of
your fund's business and for assuring that your fund is managed
in the best interests of its shareholders. The Trustees
periodically review your fund's investment performance as well as
the quality of other services provided to your fund and its
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 your fund's 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 $46 million.
The table below lists each Trustee's current investments in the
fund and in the Putnam funds as a group.
Share Ownership by Trustees
Year first
Number of
elected as Number of
shares of
Trustee of shares of the
all Putnam
the Putnam fund owned
funds owned
Trustees funds as of
6/20/96* as of
6/20/96* *
- -----------------------------------------------------------------
- -------------------------
Jameson A. Baxter 1994 117
24,074
Hans H. Estin 1972 162
26,253
John A. Hill 1985 434
123,363
Ronald J. Jackson 1996 120
8,171
Elizabeth T. Kennan 1992 402
27,347
Lawrence J. Lasser 1992 134
450,233
Robert E. Patterson 1984 848
61,714
Donald S. Perkins 1982 1,757
159,948
William F. Pounds 1971 1,186
348,649
George Putnam 1957 9,895
1,514,690
George Putnam, III 1984 1,923
287,228
Eli Shapiro 1995*** --
80,677
A.J.C. Smith 1986 609
34,660
W. Nicholas Thorndike 1992 134
79,099
- -----------------------------------------------------------------
- -------------------------
* Each Trustee has sole investment power and sole 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 June 20 , 1996, the Trustees and officers of the fund
owned a total of
18,318 shares of the fund, comprising less than 1% of its
outstanding shares on
that date. A total of 597 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 your fund 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 your fund's 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?
Your fund pays each Trustee a fee for his or her services. 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 your fund and by all of the Putnam funds are shown
below:
Compensation Table+
Total
Aggregate compensation
compensation from all
Trustees from the fund* Putnam funds**
- --------------------------------------------------------------
Jameson A. Baxter $6,539 $150,854
Hans H. Estin 6,532 150,854
John A. Hill*** 6,499 149,854
Elizabeth T. Kennan 6,432 148,854
Lawrence J. Lasser 6,532 150,854
Robert E. Patterson 6,632 152,854
Donald S. Perkins 6,532 150,854
William F. Pounds 6,503 149,854
George Putnam 6,532 150,854
George Putnam, III 6,532 150,854
Eli Shapiro**** 2,558 95,372
A.J.C. Smith 6,489 149,854
W. Nicholas Thorndike 6,632 152,854
+ Ronald J. Jackson became a Trustee of the fund effective May
3, 1996 and has received no compensation from the fund or
the other Putnam funds in 1995 .
* 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 pursuant to a Trustee
Compensation Deferral Plan. The total amount of deferred
compensation payable to Mr. Hill by all Putnam funds as of
December 31, 1995 was $51,141, including income earned on
such amounts.
**** Elected as a Trustee in April 1995.
Your fund's 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 your fund, including further
information about its Trustees and officers, please see "Further
Information About Your Fund," on page 46 .
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
Coopers & Lybrand L.L.P., One Post Office Square, Boston,
Massachusetts, 02109 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 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 fund's 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. Most of these changes will have little practical
effect on the way your fund is managed given the fund's current
investment objective and policies.
Several
of the proposals request that certain fundamental
restrictions be made non-fundamental, so that the fund would have
the ability to modify or eliminate these restrictions at a later
date without shareholder approval. As of the date of the mailing
of this proxy statement, there is legislation pending before the
U.S. Congress which seeks to end all state-imposed investment
limitations on investment companies like the fund. Since many of
these restrictions are the result of state securities law
requirements, this legislation, if successful, might lead to the
removal of some or all of these non-fundamental restrictions.
The adoption of any of these proposals is not contingent on the
adoption of any other proposal.
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 its
investments be revised to reflect the standard restriction
expected to be used by other Putnam funds and to grant the
fund the maximum investment flexibility permitted by the
Investment Company Act of 1940 ("1940 Act"). Under the 1940 Act,
the fund, as a diversified fund, generally may not, with respect
to 75% of its 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."
The proposed amended fundamental investment restriction is set
forth below.
"The fund may not . . .
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."
Since the fund currently is limited to investing in
securities secured by the full faith and credit of the U.S.
government and related repurchase agreements and forward
commitments, the amendments would have little effect under the
fund's current policies. However, Putnam Management believes
it is in the best interest of the fund to conform the policy
and to provide the fund with the maximum flexibility should
circumstances change. Following the amendment, the fund would
continue to be a diversified investment company for purposes of
the 1940 Act.
During times when Putnam Management invests a higher
percentage of its 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 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 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."
The proposed amended fundamental investment restriction is set
forth below.
"The fund may not ...
With respect to 75% of its total assets, acquire more
than 10% of the outstanding voting securities of any
issuer."
The amendment would enable the fund to purchase more than 10%
of the voting securities of an issuer with respect to 25% of the
fund's total assets . Since the fund does not invest in
securities which constitute voting securities under its
current policies, the proposal will have little practical effect
on the fund . However, Putnam Management believes that
it is in the best interest of the fund to conform the policy
and 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 owns
all or a major portion of the outstanding 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
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 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 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. The current restriction
states that the fund may not:
"Issue any class of securities which is senior to the fund's
shares of beneficial interest."
The proposed amended fundamental investment restriction is set
forth below.
"The fund may not...
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 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 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 and to remove any asset limitations on the
fund's ability to enter into repurchase agreements and 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,
or by entering into repurchase agreements with respect to
not more than 25% of its total assets (taken at current
value), or through the lending of its portfolio securities
with respect to not more than 25% of its assets."
The proposed amended fundamental investment restriction is set
forth below.
"The fund may not ...
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.
Putnam Management believes that the increased investment
flexibility could assist the fund in achieving its investment
objective. However, given the fund's current investment
policies, Putnam Management has no intention of engaging in such
transactions on behalf of the fund.
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 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 fund's assets
in any one industry (U.S. Government Securities are not
considered to represent an industry.)"
The proposed amended fundamental investment restriction is set
forth below.
"The fund may not ...
Purchase securities (other than securities of the U.S.
government, its agencies or instrumentalities) if, as a
result of such purchase, more than 25% of the fund's
total assets would be invested in any one industry."
The amendment makes only clarifying changes to the fund's current
restriction and does not affect the ability of the fund to invest
in U.S. government securities of any type, which are not
considered to be a part of any industry.
Required vote. Approval of this proposal 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 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 fund, officers and Trustees of the
fund and officers and directors of Putnam Management
who beneficially own more than 0.5% of the shares of
securities of that issuer together own more than 5%."
The fund originally adopted this restriction to comply with
certain state securities law requirements and while the
restriction is currently required by one state, it is not
required to be a fundamental policy. If this proposal is
approved, the Trustees intend to replace this fundamental
restriction with the following substantially identical
non-fundamental investment restriction to comply with the
remaining state requirement :
"The fund may not ...
Invest in the securities of any issuer, if, to the
knowledge of the fund, officers and Trustees of the
fund and officers and directors of Putnam Management
who beneficially own more than 0.5% of the securities
of that issuer together 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 prohibited by the fund's
investment policies or the 1940 Act.
Required vote. Approval of this proposal 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 SHORT SALES
The Trustees are recommending that the fund's fundamental
investment restriction with respect to short sales be eliminated
and replaced by an identical non-fundamental restriction .
The current 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 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 equal in amount to, the
securities sold short."
The fund originally adopted this restriction to comply with
certain state securities law requirements, and while the
restriction is currently required by one state, it is not
required to be a fundamental policy. If this proposal is
approved, the Trustees intend to replace the fundamental
restriction with an identical non-fundamental restriction to
comply with the remaining state requirement. By making
this policy non-fundamental, the fund will have the ability to
modify or eliminate the restriction if no longer required to
increase investment flexibility without the need for shareholder
approval.
Given the fund's current investment policies, Putnam
Management has no intention of engaging in short sales on behalf
of the fund. Nevertheless, Putnam Management believes that it is
in the best interest of the fund to make the policy non-
fundamental to provide the fund with maximum flexibility should
circumstances change .
Required vote. Approval of this proposal 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 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 its total assets (taken
at current value) and then only to secure borrowings
permitted by restriction 1 above. (The deposit
of underlying securities and other assets in escrow in
connection with the writing of covered call options is
not deemed to be a pledge or other encumbrance.)"
[Restriction 1 permits the fund to borrow up to 10%
of its total assets for certain limited purposes.]
Certain state securities laws impose restrictions on the fund's
ability to pledge its assets, but these limitations are less
restrictive than the fund's current restriction, and are not
required to be contained in a fundamental policy. For these
reasons, Putnam Management believes that the current restriction
is unnecessarily restrictive and should be eliminated. If this
proposal is approved, the Trustees intend to replace this
restriction with the following non-fundamental investment
restriction to comply with current state requirements:
"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 the 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 if no longer
required to increase investment flexibility without the need for
shareholder approval.
Pledging assets does entail certain risks. To the extent that
the 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 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 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 10% of the value
of the fund's net assets."
Putnam Management believes the restriction is unnecessary in
light of current regulatory requirements and the fund's current
investment policies, 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
fund (or the person designated by the Trustees of the fund to
make such determinations) to be readily marketable), and (c)
repurchase agreements maturing in more than seven days. Unlike
the current fundamental investment restriction, the fund's non-
fundamental investment restriction applies to all types of
illiquid securities, not just restricted securities as well as
to certain repurchase agreements.
The fund also has a non-fundamental policy which limits the
fund's investments to up to 5% of its net assets in issuers with
limited operating histories and in equity securities for which
market quotations are not readily available.
It
is anticipated
that the fund will revise this restriction to delete the
restriction on investments in such equity securities, which
reflects
a previous
position of the SEC which has since
been revised . This amendment will serve to conform the
policy to that of other Putnam funds.
If this proposal is approved, and the anticipated change
to the non-fundamental restriction is made, the fund could
invest up to 15% of its assets in restricted securities , but
only to the extent otherwise permitted by its investment
policies .
Putnam Management believes that the fund may benefit from the
added flexibility of having the fund's policy with respect to
illiquid investments, including restricted securities, contained
in a non-fundamental investment restriction. The fund would then
have maximum flexibility to respond quickly to legal, regulatory
and market developments regarding illiquid investments. If the
restriction were no longer required, the Trustees could modify or
eliminate the restriction to increase the fund's investment
flexibility without the need for shareholder approval.
To the extent the fund invests in illiquid investments, including
restricted securities, 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 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 OTHER INVESTMENT COMPANIES
The Trustees are recommending that the fund's fundamental
investment restriction with respect to investments in other
investment companies 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:
"Invest in the securities of other investment companies,
except as they may be acquired as part of a merger or
consolidation or acquisition of assets."
The 1940 Act and certain state securities laws impose limitations
on the fund's ability to invest in other investment companies,
but these limitations are less restrictive than the fund's
current restriction, and are not required to be contained in a
fundamental policy. For these reasons, Putnam Management
believes that the current restriction is unnecessarily
restrictive and should be eliminated. If the proposal is
approved, the Trustees intend to replace the current restriction
with the following non-fundamental investment restriction to
comply with current requirements:
"The fund may not...
"Invest in the securities of registered open-end
investment companies, except as they may be acquired as part
of a merger or consolidation or acquisition of assets or by
purchases in the open market involving only customary
brokers' commissions."
In addition to conforming the policy to that of the other Putnam
funds, Putnam Management believes that this enhanced flexibility
could assist the fund in meeting its objective in the future. As
discussed above, the fund is currently limited to investing in
U.S. government securities and related investments. However, in
the future new securities may be developed that are consistent
with the limited scope of the fund's current policies.
Under the new restriction, the fund would not be prevented
from investing in investment companies (other than registered
open-end investment companies) which may provide attractive
investment opportunities. In addition, this new non-fundamental
restriction would also allow the fund to invest in other open-end
companies in open-market investments. Of course, any such
investment by the fund would be subject to the restrictions
imposed under the 1940 Act and the fund's investment policies.
By making this policy non-fundamental , the fund
will be able to modify or eliminate the restriction to
increase investment flexibility without the need for shareholder
approval.
Required vote. Approval of this proposal 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 MARGIN TRANSACTIONS
The Trustees are recommending that the fund's fundamental
investment restriction with respect to margin transactions be
eliminated and replaced with an identical non-fundamental
restriction . "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."
The fund originally adopted this restriction to comply with
certain state securities law requirements, and while the
restriction is currently required by one state, it is not
required to be a fundamental policy. If the proposal is
approved, the Trustees intend to replace this fundamental
restriction with an identical non-fundamental investment
restriction to comply with the remaining state
requirement .
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 for the
clearance of purchases and sales of securities, including the use
of margin 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 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 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 with an identical non-fundamental
restriction . 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, and while the
restriction is currently required by one state, it is not
required to be a fundamental policy. If this proposal is
approved, the Trustees intend to adopt an identical non-
fundamental restriction to comply with the remaining state
requirement .
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.
However, given the fund's current investment policies, Putnam
Management has no intention of engaging in these types of
transactions on behalf of the fund.
Required
vote. Approval of this proposal 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.H
. 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 its rights as a
shareholder of companies in which it invests. These rights may
include the right to actively oppose or support the management of
such companies. Since the fund currently invests exclusively in
fixed-income securities and certain related instruments ,
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.
Putnam Management believes that eliminating this restriction will
allow the fund maximum flexibility, if the need arises, to
protect the value of its investments through influencing
management of companies in which it may invest . Putnam
Management believes that the fund should be allowed to freely
communicate its views as a shareholder on matters of policy to
management, the board of directors, and other shareholders when a
policy may affect the value of the fund's investment. Activities
in which the fund may engage might include the fund, either
individually or with others, seeking changes in a company's
goals, management, or board of directors, seeking the sale of
some or all of a company's assets, or voting to participate in or
oppose a takeover effort with respect to a company. Although
Putnam Management believes that the fund currently may engage in
many if not all of these activities without necessarily violating
this restriction, it believes that eliminating the restriction
will eliminate any potential obstacle to the fund in protecting
its interests as a shareholder.
This area of corporate activity is highly prone to litigation,
and whether or not the restriction is eliminated, the fund could
be drawn into lawsuits related to these activities. The fund
will direct its efforts toward those instances where Putnam
Management believes the potential for benefit to the fund
outweighs potential litigation risks.
Required vote. Approval of this proposal 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 your 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 your fund and employees of Putnam Management,
Putnam Fiduciary Trust Company, and Putnam Mutual Funds may
solicit proxies in person or by telephone. Your fund 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. Your fund
has been advised by counsel that these procedures are consistent
with the requirements of applicable law. If these procedures
were subject to a successful legal challenge, such votes would
not be counted at the meeting. Your fund is unaware of any such
challenge at this time. Shareholders would be called at the
phone number Putnam Investments has in its records for their
accounts, and would be asked for their Social Security number or
other identifying information. The shareholders would then be
given an opportunity to authorize proxies to vote their shares at
the meeting in accordance with their instructions. To ensure
that the shareholders' instructions have been recorded correctly,
they will also receive a confirmation of their instructions in
the mail. A special toll-free number will be available in case
the information contained in the confirmation is incorrect.
Your fund's Trustees have adopted a general policy of maintaining
confidentiality in the voting of proxies. Consistent with this
policy, your fund may solicit proxies from shareholders who have
not voted their shares or who have abstained from voting.
Persons holding shares as nominees will upon request be
reimbursed for their reasonable expenses in soliciting
instructions from their principals. Your fund has retained at
its expense D. F. King & Co., Inc., 77 Water Street, New York,
New York 10005, to aid in the solicitation of instructions for
nominee and registered accounts for a fee not to exceed $15,000
plus reasonable out-of-pocket expenses.
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 your fund, 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. Your fund's Agreement and Declaration
of Trust does not provide for annual meetings of shareholders,
and your fund 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. Your 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. Your fund will furnish, without charge,
to you upon request a copy of the fund's annual report for its
most recent fiscal year, and a copy of its semiannual report for
any subsequent semiannual period. Such requests may be directed
to Putnam Investor Services, P.O. Box 41203, Providence, RI
02940-1203 or 1-800-225-1581.
Further Information About Your Fund
Limitation of Trustee liability. The Agreement and Declaration
of Trust of your fund provides that the fund will indemnify its
Trustees and officers against liabilities and expenses incurred
in connection with litigation in which they may be involved
because of their offices with the fund, except if it is
determined in the manner specified in the Agreement and
Declaration of Trust that they have not acted in good faith in
the reasonable belief that their actions were in the best
interests of the fund or that such indemnification would relieve
any officer or Trustee of any liability to the fund or its
shareholders arising by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of his or her duties.
Your fund, at its expense, provides liability insurance for the
benefit of its Trustees and officers.
Audit and Nominating Committees. The voting members of the Audit
Committee of your fund include only Trustees who are not
"interested persons" of the fund 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 your fund 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 your fund are as follows:
Year first
elected to
Name (age) Office office
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Charles E. Porter (57) Executive Vice President 1989
Patricia C. Flaherty (49) Senior Vice President 1993
John D. Hughes (61) Senior Vice President
& Treasurer 1987
Gordon H. Silver (48) Vice President 1990
Gary N. Coburn (50) Vice President 1988
Alan J. Bankart (44) Vice President 1992
Michael Martino* (43) Vice President and 1994
Fund Manager
William N. Shiebler** (54) Vice
President 1991
John R. Verani (57) Vice
President 1987
Paul M. O'Neil (42) Vice President 1992
Beverly Marcus (52) Clerk 1983
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* The fund's portfolio manager
** President of Putnam Mutual Funds
All of the officers of your fund are employees of Putnam
Management or its affiliates. Because of their positions with
Putnam Management or its affiliates or their ownership of stock
of Marsh & McLennan Companies, Inc., the parent corporation of
Putnam Management and Putnam Mutual Funds, Messrs. Putnam, George
Putnam, III, Lasser and Smith (nominees for Trustees of your
fund), as well as the officers of your fund, will benefit from
the management fees, distribution fees, underwriting commissions,
custodian fees, and investor servicing fees paid or allowed by
the fund.
Assets and shares outstanding of your fund
as of June 7, 1996
Net assets $4,088,169,779
Class A shares outstanding
and authorized to vote 206,182,968 shares
Class B shares outstanding
and authorized to vote 122,067,376 shares
Class M shares outstanding
and authorized to vote 450,692 shares
Class Y shares outstanding
and authorized to vote 238,559 shares
5% beneficial ownership of your fund as of May 31, 1996
Persons beneficially owning more than 5%
of the fund's class A shares None
Persons beneficially owning more than 5%
of the fund's class B shares None
Persons beneficially owning more than 5%
of the fund's class M shares None
Persons beneficially owning more than 5% of the
fund's class Y shares : Putnam Fiduciary Trust
Company, 859 Willard Street, Quincy, Massachusetts,
02269; owned 237,183 shares representing 99.8% of the
outstanding class Y shares, acting as trustee or agent
for various pension plans.
PUTNAMINVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581
Note: If you have questions on any of the proposals, please
call 1-800-225-1581.
PUTNAMINVESTMENTS
PLEASE FOLD AT PERFORATION BEFORE DETACHING
This is your PROXY CARD.
Please vote this proxy, sign it below, and return it promptly in
the envelope provided. Your vote is important.
Proxy for a meeting of shareholders to be held on September 5,
1996, for Putnam U.S. Government Income Trust.
This proxy is solicited on behalf of the Trustees of the fund.
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 U.S. Government Income Trust on September
5, 1996, 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.
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.
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Shareholder sign here Date
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Co-owner sign here Date
If you complete and sign the proxy, we'll vote it exactly as you
tell us. If you simply sign the proxy, it will be voted FOR
electing Trustees as set forth in Proposal 1 and FOR Proposals 2,
3.A.-E. and 4.A.-H. In their discretion, the Proxies will also
be authorized to vote upon such other matters that may properly
come before the meeting.
THE TRUSTEES RECOMMEND A VOTE FOR ELECTING ALL OF THE NOMINEES
FOR TRUSTEES AND FOR THE PROPOSALS LISTED BELOW.
Please mark your choices / X / in blue or black ink. Do not use
red 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 marked 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:
FOR AGAINST ABSTAIN
2. Ratify the selection / / / / / /
of Coopers & Lybrand
L.L.P. 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. Senior securities. / / / / / /
D. Making loans. / / / / / /
E. Concentration of its / / / / / /
assets.
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,
Inc. owns securities.
B. Short sales. / / / / / /
C. Pledging assets. / / / / / /
D. Investments in restricted / / / / / /
securities.
E. Investments in other / / / / / /
investment companies.
F. Margin transactions. / / / / / /
G. Investments in certain / / / / / /
oil, gas and mineral
interests.
H. Investing to gain / / / / / /
control of a company's
management.
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!
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
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City State Zip
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Telephone
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DO YOU HAVE ANY COMMENTS?
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