What is a proxy? Proxy
A proxy is a person who can act on behalf of another. In Proxy
this case, proxies are Putnam Trustees, who are empowered to
vote on behalf of shareholders, based on their 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 are the U.S. regulations regarding the proxies of the funds?
Putnam Funds are business trusts organized under the laws of
the Commonwealth of Massachusetts. The shareholder voting
rights of Putnam Funds are governed by the terms of the
Declarations of Trust and applicable U.S. federal securities
laws. The terms of a Declaration of Trust vary from fund to
fund.
What kind of matters are to be voted?
The current trend in organizing new funds is to draft the
Declarations of Trust to provide greater flexibility to the
Trustees in overseeing the conduct of fund business, such as
taking certain actions without shareholder approval. Some
of the Putnam funds, however, operate under much older
Declarations of Trust.
Under the current Declaration of Trust and applicable U.S.
federal securities laws, the matters that must be submitted
to shareholders for approval generally fall into the
following three categories:
* Electing Trustees
* Changing 'fundamental' investment restrictions
* Amending the Declarations of Trust
Under a fund's Declaration of Trust, the Trustees are
permitted to amend certain fund policies without shareholder
approval, subject to the requirements of the U.S. federal
securities laws. This approach saves the shareholders the
costs involved in printing and mailing proxy statements.
The Trustees will sometimes determine that, although not
required under a fund's declaration of trust or applicable
law, shareholder approval of a change to a fund's policies
is appropriate under the circumstances (for instance, a
fund merger or liquidation).
Shareholder approval is required under the funds'
Declarations of Trust and applicable law for the proposals
included in the current proxy statement.
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?
Only 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 The outcome of a
vote affecting one fund does not affect any other fund.
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.
in the Putnam Exchange on the 2nd floor of One Post Office
Square in Boston. (Originally, the meeting was scheduled to
take place on the 8th floor of One Post Office Square.)
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, the
firm that is tabulating and coordinating votes, 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.
How can a shareholder submit a vote?
Japanese distributors owning shares of funds sold in Japan
can cast their votes using one of the methods listed below.
* 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 phone, automated or live, at 1-888-221-0697
* By fax at 1-877-226-7171
Voting instructions are included on the proxy ballot.
What are the shareholders voting on?
For all open-end funds shareholders of record have the
opportunity to vote on three types of proposals:
* The election of a fund's Trustees
* Amending or eliminating some investment restrictions that
Putnam Management believes will provide greater investment
flexibility in managing the funds
* Amending the funds' Declarations of Trust to enhance the
flexibility and efficiency of the funds' operations.
Please refer to the following chart from the proxy statement
mailed to shareholders.
Who are the Trustees and what is their role?
Putnam's Board of Trustees is responsible for protecting the
interests of Putnam shareholders. The Trustees'
responsibilities include the general oversight of each
fund's business, reviewing investment performance, and
approving fees paid to Putnam Investments and its
affiliates.
Why are Trustees being elected?
Putnam funds elect Trustees 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. We 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?
For each fund, 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 the affirmative vote of the lesser of (1)
more than 50% of the outstanding shares of the fund, or (2)
67% 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.
Amending a fund's Declaration of Trust (to allow redemptions
in kind) requires a majority of shares of the fund entitled
to vote (i.e., 50% + 1 of outstanding shares voting in favor
of the proposal).
Will this be occurring every year?
No. The election of Trustees for all Putnam funds occurs at
least every five years. Proposals to change a fund's
fundamental investment restrictions occur infrequently.
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 each fund sold in Japan,
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. In addition,
the borrowing proposal, if approved, will not affect the
non-fundamental policy adopted by each fund sold in Japan
that limits fund borrowings to 10% of fund assets.
Diversification of investments.
This proposal, which would affect all funds, 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. In particular, the proposal would enhance
the funds' flexibility to use Putnam Prime Money Market
Fund as a cash investment vehicle.
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. These proposals are designed to make the
fund's investment flexibility consistent with that of
other Putnam funds.
Proposal Description Applicable Funds
Election of Trustees All funds
Approving an amendment Putnam High Yield Putnam Diversified
to a fund's fundamental Advantage Fund Income Trust
investment restriction
with respect to borrowing Putnam Income Fund Putnam Europe Equity Fund
Putnam Global Income Trust
Approving an amendment to Putnam Diversified Putnam High Yield
a fund's fundamental Income Trust Advantage Fund
investment restriction
with respect to making Putnam Europe Equity Putnam Income Fund
loans Fund
Putnam Global Income Trust
Approving an amendment All funds
to a fund's fundamental
investment restriction
with respect to
diversification of
investments
Approving the elimination Putnam U.S. Government Income Trust
of the fund's fundamental
investment restriction
with respect to purchasing
or selling options, puts,
calls, straddles and spreads
Approving an amendment to Putnam U.S. Government Income Trust
a fund's fundamental
investment restriction
with respect to investments
in commodities
Approval of an amendment All funds
to a fund's Agreement and
Declaration of Trust