Richard A. Monaghan
President
Putnam Retail Management LP
One Post Office Square
Boston, Massachusetts 02109
PUTNAM INVESTMENTS
October 2004
Dear Investment Colleague:
Putnam recently mailed a proxy statement requesting that shareholders
vote on several proposals affecting the management of the Putnam funds.
The proxy proposals included the election of fund Trustees as well as
several administrative proposals designed to increase the funds'
investment flexibility.
One of the administrative proposals, Proposal 3, would give the funds
the flexibility to pay redemptions "in kind," or in the form of
portfolio securities rather than in cash. The funds would consider
making in-kind redemptions only in exceptional situations where the size
and/or timing of the request could adversely impact the shareholders who
remain in the fund and severely strain the fund's liquidity.
The Putnam funds' Trustees believe that having the ability to pay a
redemption wholly or partially in kind under such circumstances could
benefit the fund's remaining shareholders. Redemption requests under
ordinary circumstances would not be affected by this proposal. The
ability to make redemptions in kind is a standard industry feature for
many mutual funds and was recommended by Ropes & Gray LLP, independent
legal counsel to the funds and the Putnam funds' Trustees.
However, after mailing the proxy statements, Putnam Investment
Management learned that the flexi-bility to make these types of in-kind
redemptions raised issues under foreign law for six Putnam funds that
sell their shares outside the United States. As a result, the Trustees
decided not to act on the proposal for these six funds:
Putnam Diversified Income Trust
Putnam Europe Equity Fund
Putnam Global Income Trust
Putnam High Yield Advantage Fund
Putnam Income Fund
Putnam U.S. Government Income Trust
These are the only six Putnam funds that sell shares outside the United
States. The Trustees still consider Proposal 3 to be in the best
interests of the shareholders of all other Putnam funds.
(over, please)
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Putnam Retail Management 219572 10/04
We are sending the enclosed letter to shareholders of these six funds to
let them know that no action will be taken on the proposal at the
upcoming shareholder meeting. For shareholders of these six funds who
have already voted, their votes on Proposal 3 will have no effect. For
shareholders who have not yet voted, we encourage them to do so as we
wish to count their votes on the other proposals.
If you have any questions about the letter sent to your clients or about
the proposal, please call Putnam Dealer Marketing Services at
1-800-354-4000.
Sincerely,
/S/ Richard A. Monaghan
John A. Hill
The Putnam Funds
Chairman of the Trustees
One Post Office Square
Boston, Massachusetts 02109
The Putnam Funds
October 2004
Dear Fellow Shareholders of:
Putnam Diversified Income Trust
Putnam Europe Equity Fund
Putnam Global Income Trust
Putnam High Yield Advantage Fund
Putnam Income Fund
Putnam U.S. Government Income Trust
Recently you received a proxy statement requesting your vote on several
proposals affecting the management of your Putnam fund. We're writing to
inform you of a development related to one of the proposals. This
proposal, Proposal 3, would authorize your fund's Trustees to amend the
Agreement and Declaration of Trust (your fund's charter document) to
permit the fund under certain circumstances to satisfy redemption
requests in portfolio securities (or "in kind") rather than in cash.
After mailing the proxy statements, Putnam Investment Management learned
that the flexibility to make in-kind redemptions raised issues under
foreign law for the six Putnam funds (listed above) that sell their
shares outside the United States. As a result, your fund's Trustees have
determined that it would not be in shareholders' best interests to act
on Proposal 3 at the meeting for these six funds. These are the only
Putnam funds that sell shares outside the United States. The Trustees
still consider Proposal 3 to be in the best interests of the
shareholders of all other Putnam funds.
If you have already voted, only your votes on matters other than
Proposal 3 will be counted. If you have not voted, please complete and
return your proxy ballot.
Your vote is important to us, and we appreciate the time and
consideration you are giving to this important matter. If you have any
questions about this letter or the proxy statement, please contact your
financial advisor or call a Putnam customer service representative at
1-800-225-1581.
Sincerely yours,
/S/ John A. Hill
- -------------------------
John A. Hill
Chairman of the Trustees
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219573 10/04
Q& A on impact of proxy statement Proposal 3
on six Putnam funds sold outside the United States
Background:
Putnam recently mailed a proxy statement requesting that shareholders
vote on several proposals affecting the management of the Putnam funds.
The proxy proposals included several administrative proposals designed
to increase the funds' investment flexibility.
After mailing the proxy statements, Putnam Investment Management learned
that one of the administrative proposals -- Proposal 3, regarding
redemptions "in kind" -- raised issues under foreign law for six Putnam
funds that sell their shares outside the United States. As a result, the
Trustees decided not to pursue the proposal for these six funds.
What is proposal 3?
One of the administrative proposals, Proposal 3, would authorize the
Trustees to amend each fund's Agreement and Declaration of Trust (its
charter document) to give the funds the flexibility to pay redemptions
"in kind," or in the form of portfolio securities rather than in cash.
The funds would expect to make in-kind redemptions only in exceptional
situations where the size and/or timing of the request could adversely
impact the shareholders who remain in the fund and severely strain the
fund's liquidity.
The Putnam funds' Trustees believe that having the ability to pay a
redemption request wholly or partially in kind under such circumstances
could benefit the fund's remaining shareholders. The ability to make
redemptions in kind is a standard industry feature for many mutual funds
and was recommended by Ropes & Gray LLP, independent legal counsel to
the funds and the Putnam funds' Trustees.
What was the issue that arose regarding Proposal 3?
After mailing the proxy statements, Putnam Investment Management learned
that the flexibility to make these types of in-kind redemptions raised
issues under foreign law for six Putnam funds that sell their shares
outside the United States. As a result, the Trustees decided that it
would not be in shareholders' best interest to act on the proposal for
these six funds:
Which Putnam funds are affected by this decision?
Putnam Diversified Income Trust
Putnam Europe Equity Fund
Putnam Global Income Trust
Putnam High Yield Advantage Fund
Putnam Income Fund
Putnam U.S. Government Income Trust
Why are the other funds listed in the proxy unaffected by this decision?
The six affected funds are the only Putnam funds that sell shares
outside the United States. The legal issues that affect those funds do
not affect the other Putnam funds. The Trustees still consider Proposal
3 to be in the best interests of the shareholders of all other Putnam
funds.
What communications are being sent to shareholders of the funds?
A letter is being sent to the shareholders of the affected funds to let
them know that no action will be taken on the proposal at the upcoming
shareholder meeting.
What should shareholders who have already voted do?
Shareholders in the affected funds who have already voted don't need to
do anything; their votes on proposal 3 will have no effect.
What should shareholders who have not yet voted do?
Shareholders of all funds who have not yet voted are encouraged to vote
so that they can register their votes on the other proposals.
Your clients should carefully consider the investment objective, risks,
charges, and expenses of a fund before investing. For a prospectus
containing this and other information for any Putnam fund or product,
call Putnam Dealer Marketing Services at 1-800-354-4000. Read the
prospectus carefully before investing.
FOR DEALER USE ONLY
Putnam Retail Management