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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/ / Confidential, for Use of the Commission Only (as
---- permitted by Rule 14a-6(e)(2))
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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(c)
---- or Sec. 240.14a-12
PUTNAM HIGH YIELD TRUST
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if
other than Registrant)
Payment of Filing Fee (Check the appropriate box):
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/ X / No fee required
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/ / Fee computed on table below per Exchange Act
---- Rule 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which
transaction applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
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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:
<PAGE>
IMPORTANT INFORMATION
FOR SHAREHOLDERS IN
PUTNAM HIGH YIELD 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 and 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
<PAGE>
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.
<PAGE>
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
his or her fund's meeting, we realize this is not
possible. Whether or not you plan to be present, we need your
vote. We urge you to complete, sign, and return the enclosed
proxy card promptly. A postage-paid envelope is enclosed.
I'm sure that you, like most people, lead a busy life and are
tempted to put this proxy aside for another day. Please don't.
When shareholders do not return their proxies, their fund may
have to incur the expense of follow-up solicitations. All
shareholders benefit from the speedy return of proxies.
Your vote is important to us. We appreciate the time and
consideration that I am sure you will give this important matter.
If you have questions about the proposals, contact your financial
adviser or call a Putnam customer service representative at
1-800-225-1581.
Sincerely yours,
(signature of George Putnam)
George Putnam, Chairman
<PAGE>
PUTNAM HIGH YIELD 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 High Yield Trust:
A Meeting of Shareholders of your fund will be held on
February 6, 1997 at 2:00 p.m., Boston time, on the eighth floor
of One Post Office Square, Boston, Massachusetts, to consider the
following:
1. Electing Trustees. See page 5 .
2. Ratifying the selection by the Trustees of the independent
auditors of your fund for its current fiscal year. See
page 26 .
3.A. Approving an amendment to the fund's fundamental investment
restriction with respect to diversification. See page
27 .
3.B. Approving an amendment to the fund's fundamental investment
restriction with respect to investments in the securities of
a single issuer. See page 29 .
3.C. Approving an amendment to the fund's fundamental investment
restriction with respect to making loans. See page
30 .
3.D. Approving an amendment to the fund's fundamental investment
restriction with respect to investments in commodities. See
page 31 .
3.E. Approving an amendment to the fund's fundamental investment
restriction with respect to investments in real estate. See
page 33 .
3.F. Approving an amendment to the fund's fundamental investment
restriction with respect to concentration of its assets.
See page 34 .
4.A. Approving the elimination of the fund's fundamental
investment restriction with respect to investments in
issuers that have been in operation for less than three
years. See page 35 .
4.B. Approving the elimination of the fund's fundamental
investment restriction with respect to investments in
securities of issuers in which management of the fund or
Putnam Investment Management owns securities. See page
36 .
4.C. Approving the elimination of the fund's fundamental
investment restriction with respect to margin transactions.
See page 37 .
4.D. Approving the elimination of the fund's fundamental
investment restriction with respect to short sales. See
page 38 .
4.E. Approving the elimination of the fund's fundamental
investment restriction with respect to pledging assets. See
page 39 .
4.F. Approving the elimination of the fund's fundamental
investment restriction with respect to investments in
illiquid securities. See page 41 .
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 42 .
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 44 .
4.I. Approving the elimination of the fund's fundamental
investment restriction with respect to options transactions.
See page 44 .
5. Transacting other business as may properly come before the
meeting.
By the Trustees
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson A. Baxter Robert E. Patterson
Hans H. Estin Donald S. Perkins
John A. Hill George Putnam, III
Ronald J. Jackson Eli Shapiro
Elizabeth T. Kennan A.J.C. Smith
Lawrence J. Lasser W. Nicholas Thorndike
WE URGE YOU TO MARK, SIGN, DATE, AND MAIL THE ENCLOSED PROXY IN
THE POSTAGE-PAID ENVELOPE PROVIDED SO YOU WILL BE REPRESENTED AT
THE MEETING.
November 18 , 1996
<PAGE>
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 High
Yield Trust for use at the Meeting of Shareholders of the fund to
be held on February 6, 1997, and, if your fund's meeting is
adjourned, at any later meetings, for the purposes stated in the
Notice of Meeting (see previous pages).
How do 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 securities of a single
issuer;
3.C. For amending the fund's fundamental investment restriction
with respect to making loans;
3.D. For amending the fund's fundamental investment restriction
with respect to investments in commodities;
3.E. For amending the fund's fundamental investment restriction
with respect to investments in real estate;
3.F. 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 issuers that have
been in operation for less than three years;
4.B. For eliminating the fund's fundamental investment
restriction with respect to investments in securities of
issuers in which management of the fund or Putnam Investment
Management owns securities;
4.C. For eliminating the fund's fundamental investment
restriction with respect to margin transactions;
4.D. For eliminating the fund's fundamental investment
restriction with respect to short sales;
4.E. For eliminating the fund's fundamental investment
restriction with respect to pledging assets;
4.F. For eliminating the fund's fundamental investment
restriction with respect to investments in illiquid
securities;
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; and
4.I. For eliminating the fund's fundamental investment
restriction with respect to options transactions.
Who is eligible to vote?
Shareholders of record at the close of business on November 8,
1996, are entitled to be present and to vote at the meeting or
any adjourned meeting. The Notice of Meeting, the proxy, and the
Proxy Statement have been mailed to shareholders of record on or
about November 18 , 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
1. ELECTION OF TRUSTEES
Who are the nominees for Trustees?
The Nominating Committee of the Trustees recommends that the
number of Trustees be fixed at fourteen and that you vote for the
election of the nominees described below. Each nominee is
currently a Trustee of 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 53, is the President of Baxter Associates, Inc.,
a management and financial consulting firm which she founded in
1986. During that time, she was also a Vice President and
Principal of the Regency Group, Inc., and a Consultant to First
Boston Corporation, both of which are investment banking firms.
From 1965 to 1986, Ms. Baxter held various positions in
investment banking and corporate finance at First Boston.
Ms. Baxter currently also serves as a Director of Banta
Corporation, Avondale Federal Savings Bank, and ASHTA Chemicals,
Inc. She is also the Chairman Emeritus of the Board of Trustees
of Mount Holyoke College, having previously served as Chairman
for five years and as a Board member for thirteen years; an
Honorary Trustee and past President of the Board of Trustees of
the Emma Willard School; and Chair of the Board of Governors of
Good Shepherd Hospital. Ms. Baxter is a graduate of Mount
Holyoke College.
Hans H. Estin
[Insert Picture]
Mr. Estin, age 68, is a Chartered Financial Analyst and the Vice
Chairman of North American Management Corp., a registered
investment adviser serving individual clients and their families.
Mr. Estin currently also serves as a Director of The Boston
Company, Inc., a registered investment adviser which provides
administrative and investment management services to mutual funds
and other institutional investors, and Boston Safe Deposit and
Trust Company; a Corporation Member of Massachusetts General
Hospital; and a Trustee of New England Aquarium. He previously
served as the Chairman of the Board of Trustees of Boston
University and is currently active in various other civic
associations, including the Boys & Girls Clubs of Boston, Inc.
Mr. Estin is a graduate of Harvard College and holds honorary
doctorates from Merrimack College and Boston University.
John A. Hill
[Insert Picture]
Mr. Hill, age 54, is the Chairman and Managing Director of First
Reserve Corporation, a registered investment adviser investing in
companies in the world-wide energy industry on behalf of
institutional investors.
Prior to acquiring First Reserve in 1983, Mr. Hill held executive
positions with several investment advisory firms and held various
positions with the Federal government, including Associate
Director of the Office of Management and Budget and Deputy
Administrator of the Federal Energy Administration.
Mr. Hill currently also serves as a Director of Snyder Oil
Corporation, an exploration and production company which he
founded, Maverick Tube Corporation, a manufacturer of structural
steel, pipe and well casings, PetroCorp Incorporated, an
exploration and production company, Weatherford Enterra, Inc., an
oil field service company, various private companies controlled
by First Reserve Corporation, and various First Reserve Funds.
He is also a Member of the Board of Advisors of Fund Directions.
He is currently active in various business associations,
including the Economic Club of New York, and lectures on energy
issues in the United States and Europe. Mr. Hill is a graduate
of Southern Methodist University.
Ronald J. Jackson
[Insert Picture]
Mr. Jackson, age 52, was Chairman of the Board, President and
Chief Executive Officer of Fisher-Price, Inc., a major toy
manufacturer, from 1990 to 1993. He previously served as
President and Chief Executive Officer of Stride-Rite, Inc., a
manufacturer and distributor of footwear, from 1989 to 1990, and
as President and Chief Executive Officer of Kenner Parker Toys,
Inc., a major toy and game manufacturer, from 1985 to 1987.
Prior to that, he held various financial and marketing positions
at General Mills, Inc. from 1966 to 1985, including Vice
President, Controller and Vice President of Marketing for Parker
Brothers, a toy and game company, and President of Talbots, a
retailer and direct marketer of women's apparel.
Mr. Jackson currently serves as a Director of Safety 1st, Inc., a
company which markets a wide range of child care and safety
products. He also serves as a Trustee of Salem Hospital and
the Peabody Essex Museum. He previously served as a
Director of a number of public companies including Fisher-Price,
Inc., Kenner Parker Toys, Inc., Stride-Rite, Inc., and Mattel,
Inc., a major toy manufacturer. Mr. Jackson is a graduate of
Michigan State University Business School.
Elizabeth T. Kennan
[Insert Picture]
Ms. Kennan, age 58, is President Emeritus and Professor of Mount
Holyoke College. From 1978 through June 1995, she was President
of Mount Holyoke College. From 1966 to 1978, she was on the
faculty of Catholic University, where she taught history and
published numerous articles.
Ms. Kennan currently also serves as a Director of NYNEX
Corporation, a telecommunications company, Northeast Utilities,
the Kentucky Home Life Insurance Companies, and Talbots. She
also serves as a Member of The Folger Shakespeare Library
Committee. She is currently active in various educational and
civic associations, including the Committee on Economic
Development and the Council on Foreign Relations. Ms. Kennan is
a graduate of Mount Holyoke College, the University of Washington
and St. Hilda College at Oxford University and holds several
honorary doctorates.
Lawrence J. Lasser*
[Insert Picture]
Mr. Lasser, age 54, is the Vice President of your fund and the
other Putnam funds. He has been the President, Chief Executive
Officer and a Director of Putnam Investments, Inc. and Putnam
Management since 1985, having begun his career there in 1969.
Mr. Lasser currently also serves as a Director of Marsh &
McLennan Companies, Inc., the parent company of Putnam
Management, and INROADS/Central New England, Inc., a job market
internship program for minority high school and college students.
He is a Member of the Board of Overseers of the Museum of
Science, the Museum of Fine Arts and the Isabella Stewart Gardner
Museum in Boston. He is also a Trustee of the Beth Israel
Hospital and Buckingham, Browne and Nichols School. Mr. Lasser
is a graduate of Antioch College and Harvard Business School.
Robert E. Patterson
[Insert Picture]
Mr. Patterson, age 51, is the Executive Vice President and
Director of Acquisitions of Cabot Partners Limited Partnership, a
registered investment adviser which manages real estate
investments for institutional investors. Prior to 1990, he was
the Executive Vice President of Cabot, Cabot & Forbes Realty
Advisors, Inc., the predecessor company of Cabot Partners. Prior
to that, he was a Senior Vice President of the Beal Companies, a
real estate management, investment and development company. He
has also worked as an attorney and held various positions in
state government, including the founding Executive Director of
the Massachusetts Industrial Finance Agency.
Mr. Patterson currently also serves as Chairman of the Joslin
Diabetes Center and as a Director of Brandywine Trust Company.
Mr. Patterson is a graduate of Harvard College and Harvard Law
School.
Donald S. Perkins*
[Insert Picture]
Mr. Perkins, age 69, is the retired Chairman of the Board of
Jewel Companies, Inc., a diversified retailer, where among other
roles he served as President, Chief Executive Officer and
Chairman of the Board from 1965 to 1980. He currently also
serves as a Director of various other public corporations,
including AON Corp., an insurance company, Cummins Engine
Company, Inc., an engine and power generator equipment
manufacturer and assembler, Current Assets L.L.C., a corporation
providing financial staffing services, Illinova and Illinois
Power Co., Inland Steel Industries, Inc., LaSalle Street Fund,
Inc., a real estate investment trust, Lucent Technologies Inc.,
Springs Industries, Inc., a textile manufacturer, and Time
Warner, Inc., one of the nation's largest media conglomerates.
He previously served as a Director of several other major public
corporations, including Corning Glass Works, Eastman Kodak
Company, Firestone Tire & Rubber Company and K-Mart 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 70, 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., Houghton Mifflin Company, a major publishing company, and
Rockefeller Group, Inc., a real estate manager. He is also a
Trustee of Massachusetts General Hospital, McLean Hospital,
Vincent Memorial Hospital, WGBH Educational Foundation and the
Museum of Fine Arts and the Museum of Science in Boston; the New
England Aquarium; an Overseer of Northeastern University; and a
Fellow of The American Academy of Arts and Sciences. Mr. Putnam
is a graduate of Harvard College and Harvard Business School and
holds honorary doctorates from Bates College and Harvard
University.
George Putnam, III*
[Insert Picture]
Mr. Putnam, age 45, is the President of New Generation Research,
Inc., a publisher of financial advisory and other research
services relating to bankrupt and distressed companies, and New
Generation Advisers, Inc., a registered investment adviser which
provides advice to private funds specializing in investments in
such companies. Prior to founding New Generation in 1985, Mr.
Putnam was an attorney with the Philadelphia law firm Dechert
Price & Rhoads.
Mr. Putnam currently also serves as a Director of the
Massachusetts Audubon Society. He is also a Trustee of the Sea
Education Association and St. Mark's School and an Overseer of
the New England Medical Center. Mr. Putnam is a graduate of
Harvard College, Harvard Business School and Harvard Law School.
Eli Shapiro
[Insert Picture]
Dr. Shapiro, age 80, is the Alfred P. Sloan Professor of
Management, Emeritus at the Alfred P. Sloan School of Management
at the Massachusetts Institute of Technology, having served on
the faculty of the Sloan School for eighteen years. He
previously was also on the faculty of Harvard Business School,
The University of Chicago School of Business and Brooklyn
College. During his academic career, Dr. Shapiro authored
numerous publications concerning finance and related topics. He
previously served as the President and Chief Executive Officer of
the National Bureau of Economic Research and also provided
economic and financial consulting services to various clients.
Dr. Shapiro is a past Director of many companies, including
Nomura Dividend Income Fund, Inc., a privately held registered
investment company managed by Putnam Management, Reece
Corporation, a sewing machine manufacturer, Commonwealth
Mortgage, Dexter Corporation, a manufacturer of plastics and
related products, Avis Corporation, a car rental company,
Connecticut Bank and Trust Company, Connecticut National Gas
Corporation, the Federal Home Loan Bank of Boston, where he
served as Chairman from 1977 to 1989, Travelers' Corporation, an
insurance company, and Norlin Corporation, a musical instrument
manufacturer; and a past Trustee of Mount Holyoke College and the
Putnam funds (from 1984 to 1989).
Dr. Shapiro is a Fellow of The American Academy of Arts and
Sciences and is active in various professional and civic
associations, including the American Economic Association, the
American Finance Association and the Council on Foreign
Relations. Dr. Shapiro is a graduate of Brooklyn College and
Columbia University.
A.J.C. Smith*
[Insert Picture]
Mr. Smith, age 62, is the Chairman and Chief Executive Officer of
Marsh & McLennan Companies, Inc. He has been employed by Marsh &
McLennan and related companies in various capacities since 1961.
Mr. Smith is a Director of the Trident Corp., and he also serves
as a Trustee of the Carnegie Hall Society, the Central Park
Conservancy, The American Institute for Chartered Property
Underwriters, and is a Founder of the Museum of Scotland Society.
He was educated in Scotland and is a Fellow of the Faculty of
Actuaries in Edinburgh, a Fellow of the Canadian Institute of
Actuaries, a Fellow of the Conference of Actuaries in Public
Practice, an Associate of the Society of Actuaries, a Member of
the American Academy of Actuaries, the International Actuarial
Association and the International Association of Consulting
Actuaries.
W. Nicholas Thorndike**
[Insert Picture]
Mr. Thorndike, age 63, serves as a Director of various
corporations and charitable organizations, including Data General
Corporation, a computer and high technology company, Bradley Real
Estate, Inc., a real estate investment firm, Providence Journal
Co., a newspaper publisher and owner of television stations, and
Courier Corporation, a book binding and printing company. He is
also a Trustee of Eastern Utilities Associates, Massachusetts
General Hospital, where he previously served as chairman and
president, and Northeastern University.
Prior to December 1988, he was the Chairman of the Board and
Managing Partner of Wellington Management Company/Thorndike,
Doran, Paine & Lewis, a registered investment adviser which
manages mutual funds and institutional assets. He also
previously served as a Trustee of the Wellington Group of Funds
(now The Vanguard Group) and was the Chairman and a Director of
Ivest Fund, Inc. Mr. Thorndike is a graduate of Harvard College.
- ----------------------------
* Nominees who are or may be deemed to be "interested persons"
(as defined in the Investment Company Act of 1940) of 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 1993 . 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 $48 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
Trustees
Year first
elected
as Trustee of
the Putnam
funds
Number of shares of
the fund owned as
of 9/30/96(1)
Number of
shares of all
Putnam funds
owned as of
9/30/96(2)
- --- ---------------------------------------------------
- --------------------------
- -----------
Jameson A. Baxter
1994
2,313(3)
35,991
Hans H. Estin
1972
188
27,467
John A. Hill
1985
452
127,131
Ronald J. Jackson
1996
1,273
66,402
Elizabeth J.
Kennan
1992
279
29,939
Lawrence J. Lasser
1992
154
444,265
Robert E. Patterson
1984
6,025
59,066
Donald S. Perkins
1982
6,387
164,173
William F. Pounds
1971
12,740
350,849
George Putnam
1957
99,175(4)
1,529,688
George Putnam, III
1984
3,356
289,044
Eli Shapiro
1995 (5)
-0-
88,717
A.J.C. Smith
1986
284
46,915
W. Nicholas Thorndike
1992
160
80,855
(1) Except as noted below, each Trustee has sole
investment power and sole voting power with respect
to his or her shares of the fund.
(2) These holdings do not include shares of Putnam
money market funds.
(3) Ms. Baxter has shared investment power and shared
voting power with respect to all of these shares.
(4) Mr. Putnam has sole investment power and shared voting
power with respect to $93,645 of these shares which are
held for his individual account in the Putnam
Investments,
Inc. Profit Sharing Retirement Plan.
(5) Dr. Shapiro previously served as a Trustee of
the Putnam funds from 1984 to 1989.
As of September 30 , 1996, the Trustees and officers of
the fund owned a total of 144,831 shares of the fund,
comprising less than 1% of its outstanding shares on that
date.
A total of 104,640 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,
distributor and custodian; 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?
Each Trustee receives a fee for his or her
services.
Each Trustee also receives fees for serving as Trustee of
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 Trustees meet monthly over a
two-day period, except in August. The Compensation Committee,
which
consists solely of Trustees not affiliated with Putnam Management
and is responsible for recommending Trustee compensation,
estimates
that Committee and Trustee meeting time together with the
appropriate preparation requires the equivalent of at least three
business days per Trustee meeting. The following table shows the
year each Trustee was first elected a Trustee of the Putnam
funds,
the fees paid to each Trustee by the fund for fiscal 1996
and
the fees paid to each Trustee by all of the Putnam funds
during calendar year 1995.
<PAGE>
Compensation Table
Trustees
Aggregate
compensation
from the
fund1
Pension or
retirement benefits
accrued as part of
fund expenses2
Estimated3 annual
benefits from all
Putnam Funds upon
retirement
Total
compensation from
all Putnam funds4
- -----------------------------------------------------------------
- ---------------------------------
Jameson A. Baxter/1994
$5,561
$0
$71,676
$150,854
Hans H. Estin/1972
5,528
0
70,043
150,854
John A. Hill/1985(5)
5,497
0
70,043
149,854
Ronald J. Jackson/1996(5)(6)
1,290
0
N/A
N/A
Elizabeth T. Kennan/1992
5,528
0
69,709
148,854
Lawrence J. Lasser/1992
5,479
0
70,043
150,854
Robert E. Patterson/1984
5,837
0
71,043
152,854
Donald S. Perkins/1982
5,494
0
69,376
150,854
William F. Pounds/1971
6,143(7)
0
70,543
149,854
George Putnam/1957
5,528
0
70,043
150,854
George Putnam, III/1984
5,528
0
70,043
150,854
Eli Shapiro/1995(8)
5,866
0
47,686
95,372
A.J.C. Smith/1986
5,479
0
68,252
149,854
W. Nicholas Thorndike/1992
5,817
0
71,043
152,854
(1) Includes an annual retainer and an attendance fee
for
each meeting attended.
(2) The Trustees approved a Retirement Plan for Truestees
of
the Putnam funds on October 1, 1996. Prior to that
date,
voluntary retirement benefits were paid to certain
retired
Trustees, and no such benefits were accrued as part of
fund expenses.
(3) Assumes that each Trustee retires after at least five years
of
service. Estimated benefits for each are based on amounts
paid
to such Trustee for the three most recent
calendar
years (or, for Trustees who have not served as Trustees
for
the three most recent calendar years, the average amount
paid
to each Trustee for such years).
(4) As of December 31, 1995, there were 99 funds in the
Putnam
family.
(5) Includes compensation deferred pursuant to
a
Trustee Compensation Deferral Plan. The total
amounts of deferred compensation payable to Mr.
Hill
and Mr. Jackson by the fund as of August 31, 1996,
was $6,724 and $1,228, respectively. The total
amount of deferred compensation payable by the
Putnam
funds to Mr. Hill as of December 31, 1995 was
$51,141. Information on deferred compensation
includes income earned on such amounts.
(6) Elected as a Trustee in May 1996.
(7) Includes additional compensation for service as
Vice Chairman of the Putnam funds.
(8) Elected as a Trustee in April 1995
Under a Retirement Plan for Trustees of the Putnam
funds (the "Plan"), each Trustee who retires with at
least
five years of service as a Trustee of the funds is entitled to
receive an annual retirement benefit equal to one-half of the
average annual compensation paid to such Trustee for the least
three years of service prior to reitrement. This retirement
benefit
is payable during a Trustee's lifetime, beginning the year
following
retirement, for a number of years equal to such Trustee's years
of
service. A death benefit is also available under the Plan which
assures that the Trustee and his or her beneficiaries will
receive
benefit payments for the lesser of an aggregate period of (i) ten
years or (ii) such Trustee's total years of service.
The Plan administrator (a committee comprised of Trustees that
are
not "interested persons" of the fund, as defined in the
Investment
Company Act of 1940) may terminate or amend the Plan at any time,
but no termination or amendment will result in a reduction in the
amount of benefits (i) currently being paid to a Trustee at the
time
of such termiantion or amendment, or (ii) to which a current
Trustee
would have been entitled to receive had he or she retired
immediately prior to such termination or amendment .
For additional information about your fund, including further
information about its Trustees and officers, please see "Further
Information About Your Fund," on page 50 .
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, 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 the
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. Many 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 eliminated . These fundamental
restrictions
were originally adopted to comply with state securities law
requirements, but are no longer applicable to the fund due to
recently enacted federal legislation that effectively eliminated
the
ability of states to impose investment limitations on
registered investment companies like the fund. In
light
of this development, Putnam Management believes that these
retrictions are unnecessary and should be eliminated.
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, as
amended (the "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 or 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."
If the proposed change is approved, the fund will be able to
invest
up to 25% of its total assets in the securities of any one
issuer.
The amended restriction would continue to exclude from its
limitations U.S. government securities. Following the amendment,
the fund would continue to be a diversified investment company
for
purposes of the 1940 Act.
Putnam Management believes that this enhanced flexibility could
assist the fund in achieving its investment objective. However,
during times when Putnam Management invests a higher percentage
of
the fund's assets in one or more issuers, the value of the fund's
shares may fluctuate more widely than the value of shares of a
portfolio investing in a larger number of issuers.
Required Vote. Approval of this proposal 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 SECURITIES OF A SINGLE ISSUER
The Trustees are recommending that the fund's fundamental
investment
restriction with respect to investments in the securities of a
single issuer be revised to reflect the standard restriction
expected to be used by other Putnam funds and to grant the fund
the
maximum flexibility permitted under the 1940 Act. The 1940 Act
prohibits a diversified fund such as the fund from investing,
with
respect to 75% of its total assets, in the voting securities of
an
issuer if as a result it would own more than 10% of the
outstanding
voting securities of that issuer. The fund's current investment
restriction, which is more restrictive than the 1940 Act, states
that the fund may not:
"Acquire more than 10% of the voting securities of any
issuer or more than 10% of any class of securities of any
issuer. (For these purposes all preferred stocks of an
issuer
are regarded as a single class, and all debt securities of
an
issuer are regarded as a single class.)"
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 removes all restrictions on the amount of a class
of
an issuer's securities that the fund may purchase, and enables
the
fund to purchase more than 10% of the voting securities of an
issuer
with respect to 25% of the fund's total assets. Putnam
Management
believes that limiting this restriction to voting securities and
75%
of the fund's total assets will enhance the fund's investment
flexibility.
To
the extent the fund individually or with other funds and
accounts managed by Putnam Management or its affiliates were to
own
all or a major portion of the outstanding 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 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,
by
entering into repurchase agreements with respect to not more
than 25% of its total assets (taken at market value) or
through
the lending of its portfolio securities with respect to not
more than 25% of its total 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.
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.D. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO INVESTMENTS IN COMMODITIES
The Trustees are recommending that the fund's fundamental
investment
restriction with respect to investments in commodities be revised
to
reflect the standard restriction expected to be used by other
Putnam
funds. The current restriction states that the fund may not:
"Purchase or sell commodities or commodity contracts."
The proposed amended fundamental investment restriction is
set forth below.
"The fund may not ...
Purchase or sell commodities or commodity contracts,
except that the fund may purchase and sell financial
futures contracts and options and may enter into foreign
exchange contracts and other financial transactions not
involving physical commodities."
Under the revised restriction, the fund will continue to be able
to
engage in a variety of transactions involving the use of
financial
futures and options and foreign currencies, as well as various
other
financial transactions to the extent consistent with its
investment
objectives and policies. Although the fund may already engage in
many of these activities, Putnam Management believes that the
revised language more clearly sets forth the fund's policy. The
addition of financial transactions not involving physical
commodities is intended to give the fund maximum flexibility to
invest in a variety of financial instruments that could
technically
be considered commodities, but which do not involve the direct
purchase or sale of physical commodities, which is the intended
focus of the restriction.
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 INVESTMENTS IN REAL ESTATE
The
Trustees
are recommending that the fund's fundamental investment
restriction with respect to investments in real estate be revised
to
reflect the standard restriction expected to be used by other
Putnam
funds and to grant the fund greater flexibility. The current
restriction states that the fund may not:
"Purchase or sell real estate, although it may purchase
securities of issuers which deal in real estate,
securities which are secured by interests in real estate
and securities representing interests in real estate."
The proposed amended fundamental investment restriction is set
forth
below.
"The fund may not ...
Purchase or sell real estate, although it may purchase
securities of issuers which deal in real estate,
securities which are secured by interests in real estate,
and securities which represent interests in real estate,
and it may acquire and dispose of real estate or interests
in real estate acquired through the exercise of its rights
as a holder of debt obligations secured by real estate or
interests therein."
Following the proposed amendment, the fund would be able to own
real
estate directly as a result of the exercise of its rights in
connection with debt obligations it owns. In such cases, the
ability to acquire and dispose of real estate may serve to
protect
the fund during times where an issuer of debt securities is
unable
to meet its obligations. Putnam Management believes that this
enhanced flexibility could assist the fund in achieving its
investment objective.
To the extent the fund holds real estate-related securities, it
will
be subject to the risks associated with the real estate market.
These risks may include declines in the value of real estate,
changes in general or local economic conditions, overbuilding,
difficulty in completing construction, increased competition,
changes in zoning laws, increases in property taxes and operating
expenses, and variations in rental income. Generally, increases
in
interest rates will increase the costs of obtaining financing,
which
may result in a decrease in the value of such investments.
In addition, in order to enforce its rights in the event of a
default of an issuer of real estate-related securities, the fund
may
be required to participate in various legal proceedings or take
possession of and manage assets securing the issuer's
obligations.
This could increase the fund's operating expenses and adversely
affect the fund's net asset value.
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.F. 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:
"Purchase securities if as a result of such purchase more
than
25% of total fund assets (taken at market value) would be
invested in any one industry. However, the fund may at
times
invest more than 25% of the value of its assets in cash or
cash
equivalents or securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities."
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 proposed amendment merely conforms the fund's restriction and
would have no effect on the fund's 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.A. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
WITH
RESPECT TO INVESTMENTS IN ISSUERS THAT HAVE BEEN IN
OPERATION
FOR LESS THAN THREE YEARS
The Trustees are recommending that the fund's fundamental
investment
restriction which limits the fund's investments in issuers with
limited operating histories, which are sometimes referred to as
"unseasoned issuers," be eliminated . The restriction
states
that the fund may not:
"Invest in securities of an issuer which, together with
any predecessor, has been in operation for less than three
years, and in equity securities of issuers for
which market quotations are not readily available (but
excluding securities restricted as to resale) if,
as a result, the aggregate of such investments would
exceed 5% of the value of the fund's net assets; provided,
however, that this restriction shall not apply to any
obligation of the U.S. government or its instrumentalities
or agencies."
The fund originally adopted this restriction to comply
with
certain state securities law requirements which are no longer
applicable to the fund.
If this proposal is approved, the fund could invest, to
the
extent otherwise consistent with its investment policies, in
unseasoned issuers without limit . Putnam Management
believes that this enhanced flexibility could assist the fund in
achieving its investment objective.
Companies which have been in operation less than three years may
have relatively small equity market capitalizations (e.g., under
$1
billion). Although these companies may provide greater
opportunities for increased investment return, they also provide
greater risk. These companies often have limited product lines,
markets or financial resources. The securities of these
companies
may trade less frequently and in limited volume, and only in the
over-the-counter market or on a regional securities exchange. As
a
result, these securities may fluctuate in value more than those
of
larger, more established companies.
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 INVESTMENTS IN SECURITIES OF ISSUERS IN WHICH
MANAGEMENT OF THE FUND OR PUTNAM INVESTMENT MANAGEMENT OWNS
SECURITIES
The Trustees are recommending eliminating the fund's fundamental
investment restriction which prevents the fund from investing in
the
securities of issuers in which management of the fund or Putnam
Management owns a certain percentage of securities . The
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 or securities of that issuer together own
more than 5%."
The fund originally adopted this restriction to comply with
certain
state securities law requirements which are no longer
applicable to the fund.
If this proposal is approved, 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. Putnam Management believes that this enhanced
flexibility could assist the fund in achieving its investment
objectives.
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 MARGIN TRANSACTIONS
The Trustees are recommending that the fund's fundamental
investment
restriction with respect to margin transactions be eliminated
. "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
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 which are no longer
applicable to the Fund.
If this proposal is approved, the fund would have
no
formal restriction with respect to engaging in margin
transactions.
However, the fund's potential use of margin
transactions
beyond transactions in financial futures and options and for the
clearance of purchases and sales of securities, including the use
of
margin in ordinary securities transactions, is currently limited
by
SEC guidelines which prohibit margin transactions because they
create senior securities. The fund's ability to engage in margin
transactions is also limited by its investment policies, which
generally permit the fund to borrow money only in limited
circumstances.
Required vote. Approval of this proposal 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 SHORT SALES
The Trustees are recommending that the fund's fundamental
investment
restriction with respect to short sales be eliminated .
The
restriction states that the fund may not:
"Make short sales of securities or maintain a short position
for the account of the fund unless at all times when a short
position is open 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 which are no
longer
appplicable to the fund.
If this proposal is approved, the fund would be able to
engage in short sales other than those "against the box" (in
which
the fund owns or has the right to acquire at no added cost
securities identical to those sold short). However, Putnam
Management does not currently intend to engage in short sales on
behalf of the fund .
In a typical short sale, the fund borrows securities from a
broker
that it anticipates will decline in value in order to sell to a
third party. The fund becomes obligated to return securities of
the
same issue and quantity at some future date, and it realizes a
loss
to the extent the securities increase in value and a profit to
the
extent the securities decline in value (after including any
associated costs). Since the value of a particular security can
increase without limit, the fund could potentially realize losses
with respect to short sales which are not "against the
box"
the fund does not own or have the right to acquire at no added
cost
securities identical to those sold short that are significantly
greater than the value of the securities at the time they are
sold
short.
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 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 . The 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 cost) and
then
only to secure borrowings permitted by restriction 1 above."
[Restriction 1 permits the fund to borrow money in an amount
equal to up to 10% of its total assets for certain limited
purposes.]
The fund originally adopted this restriction to comply with
certain
state securities law requirements which are no longer
applicable to the fund.
If this proposal is approved, the fund would no longer
have a
policy limiting its pledging activity. Putnam
Management believes that this enhanced flexibility could assist
the
fund in achieving its investment objective. Further, Putnam
Management believes that the fund's current limits on pledging
may
conflict with the fund's ability to borrow money to meet
redemption
requests or for extraordinary or emergency purposes. This
conflict
arises because banks may require borrowers such as the fund to
pledge assets in order to collateralize the amount borrowed.
These
collateral requirements are typically for amounts at least equal
to,
and often larger than, the principal amount of the loan. If the
fund needed to borrow the maximum amount permitted by its
policies
(currently 10% of its total assets), it might be possible that a
bank would require collateral in excess of 15% of the fund's
total
assets. Thus, the current restriction could have the effect of
reducing the amount that the fund may borrow in these situations.
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.F.
ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTIONS
WITH
RESPECT TO INVESTMENTS IN ILLIQUID SECURITIES
The Trustees are recommending that the fund's fundamental
investment
restrictions which limit the fund's investments in
illiquid securities, including securities subject to restrictions
on
resale ("restricted securities") and equity securities for which
market quotations are not readily available , be
eliminated.
The current fundamental investment restrictions state that the
fund
may not:
"Purchase securities restricted as to resale, if, as a
result,
such investments would exceed 15% of the value of the fund's
net assets, excluding restricted securities that have been
determined by the Trustees of the fund (or the person
designated by them to make such determinations) to be
readily
marketable."
"Invest in [ securities of an issuer which, together
with any predecessor, has been in operation for less than
three years ], and in equity securities of issuers
for which market quotations are not readily available (but
excluding securities restricted as to resale) if,
as a result, the aggregate of such investments would
exceed 5% of the value of the fund's net assets; provided,
however, that this restriction shall not apply to any
obligation of the U.S. government or its instrumentalities
or agencies."
The section of the second restriction in brackets is proposed to
be
eliminated by Proposal 4.A.
Putnam Management believes the restrictions are unnecessary in
light
of current regulatory requirements, which prohibit the fund from
investing more than 15% of its net assets in any combination of
(a)
securities which are not readily marketable, (b) securities
restricted as to resale (excluding securities determined by the
Trustees of the 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.
Further, with respect to the second restriction, the SEC
currently
looks to the marketability of a security, rather than the
existence of market quotations, to determine a security
illiquidty.
These current requirements are reflected in the fund's non-
fundamental policy with respect to illiquid investments.
Eliminating
the fundamental restrictions would therefore provide the
fund
with 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, 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.G. ELIMINATING
THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO INVESTMENTS IN CERTAIN OIL, GAS AND MINERAL
INTERESTS
The Trustees are recommending that the fund's fundamental
investment
restriction
with respect
to investments in oil, gas and mineral
leases, rights or royalty contracts be eliminated . The
restriction states that the fund may not:
"Buy or sell oil, gas or other mineral leases, rights, or
royalty contracts."
The fund originally adopted this restriction to comply
with
certain state securities law requirements which are no
longer
applicable to the fund.
If this proposal is approved, the fund would be able
to
invest directly in oil, gas and mineral interests, and in a
variety of securities the value of which is dependent upon the
value
of such interests. Putnam Management believes that this
enhanced
flexibility could assist the fund in achieving its investment
objective.
Investments in oil, gas and other mineral leases, rights or
royalty
contracts and in securities which derive their value in part from
such instruments, entail certain risks. The prices of these
investments are subject to substantial fluctuations, and may be
affected by unpredictable economic and political circumstances
such
as social, political or military disturbances, the taxation and
regulatory policies of various governments, the activities and
policies of OPEC (an organization of major oil producing
countries),
the existence of cartels in such industries, the discovery of new
reserves and the development of new techniques for producing,
refining and transporting such materials and related products,
the
development of new technology, energy conservation practices, and
the development of alternative energy sources and alternative
uses
for such materials and related products. In addition, in order
to
enforce its rights in the event of a default of an issuer of
these
securities, the fund may be required to participate in various
legal
proceedings or take possession of and manage assets securing the
issuer's obligations. This could increase the fund's operating
expenses and adversely affect the fund's net asset value.
Required
vote. Approval of this proposal 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 the
various companies in which it may invest, which activities could
at
times fall under the technical definition of control under the
securities laws. These rights may include the right to actively
oppose or support the management of such companies. Since the
fund
invests primarily in fixed-income securities, this proposal will
not
impact the majority of the fund's investments. Nevertheless,
Putnam
Management believes it would be in the best interest of the fund
to
eliminate the restriction.
Required vote. Approval of this proposal 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.I. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
WITH
RESPECT TO OPTIONS TRANSACTIONS
The Trustees are recommending that the fund's fundamental
investment
restriction with respect to options transactions be eliminated.
The
current restriction states that the fund may not:
"Write, purchase or sell options or puts, calls,
straddles, spreads or combinations thereof; . . ."
The fund originally adopted this restriction to comply with
certain
state securities law requirements which are no longer applicable
to
the fund.
If this proposal is approved, the fund will be able to
engage in a variety of options transactions for hedging purposes
and to increase investment return. Putnam Management believes
that
this enhanced flexibility could assist the fund in achieving its
investment objective.
A call option gives the holder the right to purchase, and
obligates
the writer to sell, an asset, such as a security, a currency or a
unit of an index, at the exercise price prior to or on the
expiration date. A put option gives the holder the right to
sell,
and obligates the writer to buy, an asset at the exercise price
prior to or on the expiration date. In order for a put option
purchased by the fund to be profitable, the market price of the
underlying asset must decline sufficiently below the exercise
price
to cover the premium and transaction costs paid by the fund. In
order for a call option purchased by the fund to be profitable,
the
market price of the underlying asset must rise sufficiently above
the exercise price to cover the premium and transaction costs
paid
by the fund. If an option expires unexercised, the fund will
receive nothing for its premium payment.
When the fund writes a call option, it gives up the opportunity
to
profit from any increase in the price of an asset above the
exercise price of the option; when it writes a put option, the
fund
takes the risk that it will be required to purchase an asset from
the option holder at a price above the current market price of
that
asset. The fund receives a premium for writing a call or a put
option (representing the cost of the option), which increases the
return if the option expires unexercised or is closed out at a
net
profit.
The successful use of options depends on the ability of Putnam
Management to forecast correctly interest rate and market
movements. The effective use of options also depends on the
fund's
ability to terminate option positions at times when Putnam
Management deems it desirable to do so. There is no assurance
that
the fund will be able to effect closing transactions at any
particular time or at an acceptable price. Disruptions such as
trading interruptions or restrictions on option exercise in the
markets for securities and other assets underlying options
purchased or sold by the fund could result in losses on an
option,
including the entire investment by the fund in the option.
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 registered and nominee accounts,
for a fee not to exceed $15,000 plus reasonable out-of-
pocket expenses for mailing and phone costs.
Revocation of proxies. Proxies, including proxies given by
telephone, may be revoked at any time before they are voted by a
written revocation received by the Clerk of 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
- -----------------------------------------------------------------
Charles E. Porter (58) Executive Vice President
1989
Patricia C. Flaherty (49) Senior Vice President
1993
John D. Hughes (61) Senior Vice President &
Treasurer
1987
Gordon H. Silver (49) Vice President
1990
Gary N. Coburn (50) Vice President
1988
Edward H. D'Alelio (44) Vice
President 1985
Jennifer E. Leichter* (36) Vice
President 1996
Rosemary H. Thomsen (36) Vice Presidnet 1996
William N. Shiebler**(54) Vice President
1991
John R. Verani (57) Vice President
1987
Paul M. O'Neil (43) Vice President
1992
Beverly Marcus (52) Clerk
1981
- -----------------------------------------------------------------
- --
* 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 November 1,
1996
Net assets
$4,374,422,982
Class A shares outstanding
and authorized to vote
258,097,750 shares
Class B shares outstanding
and authorized to vote
95,351,214 shares
Class M shares outstanding
and authorized to vote
1,729,386 shares
<PAGE>
5% beneficial ownership of your fund as of September 30,
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
(1) Merrill Lynch Pierce Fenner & 7,111,725
shares or 7.60%
Smith, Inc.
Mutual Fund Operations
3rd Floor
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
Persons beneficially owning more than 5%
None
of the fund's class M shares<PAGE>
PUTNAMINVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581<PAGE>
PUTNAMINVESTMENTS
HAS YOUR ADDRESS CHANGED?
Please use this form to notify us of any change in address or
telephone number or to provide us with your comments. Detach
this
form from the proxy ballot and return it with your signed proxy
in
the enclosed envelope.
Street
- -----------------------------------------------------------------
- --
City State Zip
- -----------------------------------------------------------------
- --
Telephone
- -----------------------------------------------------------------
- --
DO YOU HAVE ANY COMMENTS?
- -----------------------------------------------------------------
- --
- -----------------------------------------------------
- --
- -----------
-- ----------------------------------------------------
- --
- -----------
DEAR SHAREHOLDER:
Your vote is important. Please help us to eliminate the expense
of
follow-up mailings by signing and returning this proxy as soon as
possible. A postage-paid envelope is enclosed for your
convenience.
THANK YOU!
<PAGE>
PUTNAM HIGH YIELD TRUST
Meeting of shareholders to be held on February 6, 1997
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 High Yield Trust on February 6, 1997, at
2:00 p.m., Boston time, and at any adjournments thereof, all of
the
shares of the fund that the undersigned shareholder would be
entitled to vote if personally present.
If you complete and sign the proxy, we'll vote it exactly as you
tell us. If you simply sign the proxy, it will be voted FOR
electing Trustees as set forth in Proposal 1 and FOR each of the
other Proposals listed below. In their discretion, the Proxies
will also be authorized to vote upon such other matters that may
properly come before the meeting.
Note: If you have questions on any of the proposals, please call
1-800-225-1581.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY.
Please sign your name exactly as it appears on this card. If you
are a joint owner, each owner should sign. When signing as
executor, administrator, attorney, trustee, or guardian, or as
custodian for a minor, please give your full title as such. If
you
are signing for a corporation, please sign the full corporate
name
and indicate the signer's office. If you are a partner, sign in
the partnership name.
<PAGE>
THE TRUSTEES RECOMMEND A VOTE FOR ELECTING ALL OF THE NOMINEES
FOR
TRUSTEES AND FOR THE OTHER PROPOSALS LISTED BELOW.
TO VOTE, MARK BOXES BELOW IN BLUE OR BLACK AS FOLLOWS: / X /
FOR
COMMENTS ON REVERSE
RETURN
BOTH PORTIONS.
- -----------------------------------------------------------------
IF
NO COMMENTS,
RETURN THIS
PORTION ONLY.
PUTNAM EUROPE GROWTH FUND
For address changes and/or comments,
please write them on the back where
indicated.
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 ALL
/ / WITHHOLD ALL
/ / FOR ALL EXCEPT
To withhold authority to vote for one or more of the nominees,
write those nominees' names below:
- -----------------------------------------------------------------
- --
PROPOSAL TO:
2. Ratify the selection FOR AGAINST ABSTAIN
of 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 / / / / / /
securities of a single
issuer.
C. Making loans. / / / / / /
D. Investments in / / / / / /
commodities.
E. Investments in / / / / / /
real estate.
F. Concentration of assets. / / / / / /
4. Eliminate the fund's
fundamental investment
restriction with respect
to:
A. Investments in issuers that / / / / / /
have been in operation for
less than three years.
B. Investments in securities / / / / / /
of issuers in which
management of the fund
or Putnam Investment
Management owns securities.
C. Margin transactions. / / / / / /
D. Short sales. / / / / / /
E. Pledging assets. / / / / / /
F. Investments in / / / / / /
illiquid securities.
G. Investments in certain / / / / / /
oil, gas and mineral
interests.
H. Investing to gain / / / / / /
control of a company's
management.
I. Options transactions. / / / / / /
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Signature Date
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Signature (Joint Owners) Date
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lipsett/106290.111/proxys/hyt4.wpf
