SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e) (2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ X / Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
PUTNAM AMERICAN GOVERNMENT INCOME FUND
PUTNAM ARIZONA TAX EXEMPT INCOME FUND
PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
PUTNAM DIVERSIFIED INCOME TRUST
PUTNAM FLORIDA TAX EXEMPT INCOME FUND
PUTNAM FUNDS TRUST
PUTNAM GLOBAL INCOME TRUST
PUTNAM HIGH YIELD ADVANTAGE FUND
PUTNAM HIGH YIELD TRUST
PUTNAM INCOME FUND
PUTNAM INTERMEDIATE U.S. GOVERNMENT INCOME FUND
PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND
PUTNAM MICHIGAN TAX EXEMPT INCOME FUND
PUTNAM MINNESOTA TAX EXEMPT INCOME FUND
PUTNAM MONEY MARKET FUND
PUTNAM MUNICIPAL INCOME FUND
PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND
PUTNAM NEW YORK TAX EXEMPT INCOME FUND
PUTNAM OHIO TAX EXEMPT INCOME FUND
PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND
PUTNAM TAX EXEMPT INCOME FUND
PUTNAM TAX EXEMPT MONEY MARKET FUND
PUTNAM TAX-FREE INCOME TRUST
PUTNAM U.S. GOVERNMENT INCOME TRUST
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than Registrant)
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Proxy solicitation Q&A
In early September, proxy materials will be mailed to shareholders of
all 58 Putnam retail open-end funds. This Q&A is designed to help you
answer questions you might receive about the proxy solicitation.
What is a proxy?
A proxy is a person who can act on behalf of another. In this case,
proxies are Putnam Trustees, who are empowered to vote on behalf of
shareholders, based on the shareholders' instructions.
What is the purpose of the proxy mailing?
Every Putnam shareholder has a right to vote on certain matters that
affect the management of their funds. Since it is not possible for most
people to attend a shareholder meeting and vote in person,
shareholders are mailed the proxy package, which provides a proxy
statement, a ballot, and instructions for voting by phone, by mail, or
online.
What is a proxy ballot?
The proxy ballot tells the Trustees identified as proxies how to vote on
a shareholder's behalf. Shareholders also receive a proxy statement,
which describes the proposals they are being asked to vote on. The proxy
statement includes the recommendations of the funds' Trustees, who
recommend that shareholders vote in favor of the proposals.
Who is eligible to vote?
Shareholders of record of the retail open-end funds at the close of
business on August 13, 2004, are eligible to vote. Each share is
entitled to one vote. Fractional shares will be voted fractionally.
When is the shareholder meeting?
The shareholder meetings for the retail open-end funds are scheduled to
take place on November 11, 2004 at 11:00 a.m. on the 8th floor of One
Post Office Square in Boston.
What if shareholders don't return their proxy ballots?
If Putnam doesn't receive the proxy cards back in sufficient numbers, we
must make follow-up solicitations, either by mail or by phone, which can
cost the fund money. All shareholders benefit when proxies are voted.
Also PFPC Inc., a solicitation firm contracted by Putnam, may contact
shareholders who don't return their proxies.
What if a shareholder only signs the card?
If a shareholder signs the proxy ballot, but doesn't fill in a vote, the
shares will be voted in accordance with the Trustees' recommendations.
What are the key dates for the open-end fund proxy solicitation?
August 13-- Designated record date
September 3-- Initial proxy mailing
September 16-- Initial phone campaign
If needed:
September 23-- Second proxy mailing
October 5-- Second phone campaign
October 12-- Third proxy mailing
October 22-- Third phone campaign
How can a shareholder submit a vote?
Voting instructions are included on the proxy ballot. There are several
ways to vote:
* By mailing the completed proxy ballot in the postage-paid envelope
(the address is Putnam Investments, P.O. Box 9131, Hingham, MA
02043-9131)
* Online at www.proxyweb.com/Putnam. This is for registered shareholders
only
* By automated telephone, at 1-888-221-0697, this is for registered
shareholders only
* Live representative, at 1-877-832-6360 (PFPC)
* By fax at 1-877-226-7171
When shareholders vote by phone or on the web, they will need to supply
the control number that appears on their proxy ballot.
Who is coordinating and reporting votes by mail, Internet, and phone?
Two firms have been engaged by Putnam to ensure that the proxy voting is
administered and tabulated in a fair manner. One firm, MIS, will collect
all votes, including those submitted by fax and Internet. PFPC Inc., a
firm contracted by Putnam, will receive phone votes and then will
transmit those numbers to MIS for consolidation.
How are financial advisors being made aware of the upcoming shareholder
meeting and proxy voting process?
Financial advisors will receive a letter prior to the proxy mailing that
outlines the proposals and encourages advisors to explain the importance
of proxy voting to their clients. The mailing is scheduled for August
13, 2004.
In addition, proxy materials are being delivered electronically to firms
of accounts that are held in street name. Putnam relationship managers
and back-office contacts are also making firms aware of the meeting and
proxy voting process.
What are the shareholders voting on?
Most notably, the proxy relates to the election of the funds' Trustees.
In addition, there are several proposals that are administrative in
nature, designed to increase the funds' investment flexibility and to
make their investment restrictions simpler and more uniform across
Putnam funds. These changes would also help make Putnam's compliance
monitoring more efficient.
Who are the Trustees and what is their role?
Putnam's Board of Trustees is responsible for protecting the interests
of Putnam fund shareholders. The Trustees' responsibilities include the
general oversight of each fund's business, reviewing investment
performance, and approval of fees paid to Putnam Investments and its
affiliates.
Why are Trustees being elected?
Putnam funds have voluntarily undertaken to elect Trustees at least
every five years. Under new SEC requirements applicable to most mutual
funds, at least 75% of a fund's Trustees, as well as its chairperson,
must be independent, which means that they are not affiliated with the
fund's investment advisor. Even prior to the recent SEC ruling and, in
fact, since July 1, 2000, the Putnam funds' Trustees have met both
independence requirements. The Trustees have always believed that having
a majority of Trustees who are independent enhances the ability of the
Trustees to effectively protect the interests of shareholders. The
Putnam funds currently have 11 Trustees, nine of whom are independent.
The Trustees have nominated three additional Trustees, two of whom would
be independent. In total, shareholders are asked to vote for 14
Trustees, 11 of whom would be independent.
What are the voting requirements for Trustee recommendations being
approved?
The Trustee election requires 30% participation, with plurality for
approval. The 14 nominees for Trustee who receive the most votes will be
elected.
Changes to fundamental investment policies and investment objectives
require a majority vote with a 50% participation rate and a 67% approval
rating.
Amending a fund's agreement and declaration of trust (to allow
redemptions in kind) requires an absolute majority, 50% + 1 of
outstanding shares voting in favor of the proposal. For this proposal,
certain Putnam funds will vote together as a single class. Shareholders
should consult their proxy statements for more information about the
voting requirements for this proposal.
Will this be occurring every year?
No. The election of Trustees for all Putnam funds will occur at least
every five years. Proposals to change a fund's fundamental investment
restrictions or authorize an amendment to a fund's declaration of
trustees occur infrequently.
What is the amendment to the declarations of trust?
Currently, Putnam funds are not authorized under their charter documents
(the Declarations of Trust) to meet redemption requests with assets
other than cash (i.e., portfolio securities). The Trustees believe that
it would be appropriate for the funds to have the flexibility in the
future to meet extraordinary redemptions "in kind" (with portfolio
securities). The explicit authority to pay a redemption wholly or
partially in kind may benefit a fund's remaining shareholders. Giving a
fund the flexibility to pay redemptions in kind is a common trend in the
industry, and it is important to note that this option will not be used
in ordinary day-to-day circumstances or to meet small redemptions. This
proposal would affect all funds except Putnam Tax Smart Equity Fund,
because it is a relatively new fund and its Declaration of Trust
explicitly permits in kind redemptions currently.
What is the amendment to Putnam Equity Income Fund's investment
objective?
The fund's investment process and philosophy will not change. If the
amendment is approved, consistent with the fund's non-fundamental policy
of investing at least 80% of net assets in common stocks and other
equity investments that offer potential for current income, the fund's
management team would be able to give more weight to stocks that offer
capital appreciation potential. This proposal would restate the fund's
investment objective to give greater emphasis to capital appreciation.
Why amend or eliminate investment restrictions?
Generally, the purpose of the proposed changes is to increase the funds'
investment flexibility, simplify the investment restrictions, and make
them uniform across the Putnam funds. These changes would also make
Putnam's compliance monitoring more efficient. As the investment
restrictions vary from fund to fund, shareholders should consult their
proxy statements to see which proposed changes apply to their fund(s).
The proposals seek to make changes to the funds' investment restrictions
with respect to the following:
Borrowing and lending. These proposals, which would affect 51 funds,
seek to bring the funds' borrowing and lending restrictions in line with
those currently in place for other Putnam funds. It is important to note
that it is not standard practice for any fund to borrow or lend money.
Diversification of investments. This proposal, which would affect all
funds except Putnam Floating Rate Income Fund, seeks to simplify the
funds' investment restrictions and make them uniform with respect to the
Investment Company Act's technical diversification requirements. The
proposal would not affect any fund's current status as a diversified or
non-diversified fund. In particular, the proposal would enhance the
funds' flexibility to use Putnam Prime Money Market Fund as a cash
investment vehicle. The ability of the fund to invest in a commingled
pool of money market instruments (i.e., Putnam Prime Money Market Fund),
as opposed to purchasing commercial paper directly, provides greater
diversification within the asset class and a potentially higher yield
for a fund's cash investments over a full market cycle.
Issuance of senior securities. This proposal, which would affect 12
funds, seeks to simplify and standardize the funds' policies regarding
senior securities, and to clarify that permitted borrowings would not
constitute senior securities, which the funds are prohibited from
issuing. A senior security, such as preferred stock, has priority over
any other security as to distribution of assets or dividends.
Investments in commodities and purchasing or selling options, puts,
calls, straddles, and spreads. These proposals, which would only affect
Putnam U.S. Government Income Trust, seek to revise the fund's
commodities restriction and eliminate the fund's prohibition on
investments in options and related derivatives. Although the fund's
managers do not typically make these types of investments, these
proposals are designed to make the fund's investment flexibility
consistent with that of other Putnam fixed income funds.
Why are funds amending their restrictions for issuing senior securities?
Like most mutual funds, Putnam open-end funds are prohibited from
issuing senior securities, or securities that have claims to the funds'
assets that are senior to the existing classes of common shares (classes
A, B, C, M, R, Y, etc.).
The 12 affected funds are seeking to amend their senior securities
restrictions solely to clarify that when the funds borrow money (as
permitted under their borrowing restrictions), those borrowings will not
constitute "senior securities" for purposes of the senior securities
restriction. Like the proposed amendments to funds' borrowing and
lending restrictions, this proposal is designed to enhance the funds'
ability to participate in an interfund borrowing and lending program
approved by the SEC.
The proposal is not designed to permit these funds to issue senior
securities; in fact, most of the other Putnam funds are currently
subject to the identical restriction. All Putnam open-end funds will
continue to be prohibited from issuing shares of preferred stock.