PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Filed by the Registrant / X /
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Filed by a Party other than the Registrant / /
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CHECK THE APPROPRIATE BOX:
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/ / Preliminary Proxy Statement
- ----
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/ / Preliminary Additional Materials
- ----
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/ X / Definitive Proxy Statement
- ----
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/ / Definitive Additional Materials
- ----
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/ / Soliciting Material Pursuant to Sec. 240.14a-11(e) or
- ---- Sec. 240.14a-12
PUTNAM AMERICAN GOVERNMENT INCOME FUND
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
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/ x / $125 per Exchange Act Rules 0-11(c)(1)(ii),
- ---- 14a-6(i)(1), or 14a-6(i)(2).
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/ / $500 per each party to the controversy pursuant
- ---- to Exchange Act Rule 14a-6(i)(3).
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/ / Fee computed on table below per Exchange Act Rules
- ---- 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which
transaction applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11:
(4) Proposed maximum aggregate value of transaction:
----
/ / 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>
PUTNAM AMERICAN GOVERNMENT INCOME FUND
One Post Office Square
Boston, Massachusetts 02109
February 22 , 1994
Dear Shareholder:
You are cordially invited to attend the 1994 Meeting of
Shareholders of your Fund, which will be held on May 5, 1994 at
1:00 p.m., Boston time, on the eighth floor of One Post Office
Square, Boston, Massachusetts.
The matters to be acted upon at the meeting -- (1) electing
Trustees, (2) ratifying the Trustees' selection of Price
Waterhouse as independent auditors of the Fund for its current
fiscal year and (3) approving or disapproving a new Distribution
Plan for the Fund -- ARE DESCRIBED IN THE ATTACHED NOTICE AND
PROXY STATEMENT.
The Trustees of your Fund have carefully considered the
Fund's current distribution arrangements in light of competitive
trends in the mutual fund industry and have approved the
recommendation of Putnam Mutual Funds Corp. that the Fund adopt a
new Distribution Plan. The Trustees have concluded that upon
implementation of the new Plan, a payment of limited ongoing fees
to investment dealers and to Putnam Mutual Funds Corp. not to
exceed an aggregate of 0.35% of the average net assets of the
Fund could well provide improved distribution arrangements for
the Fund, as well as improved services to shareholders. The
proposed new Distribution Plan is designed to achieve these
goals.
Although we would like very much to have each shareholder
attend the 1994 Meeting, we realize this is not possible.
Whether or not you plan to be present at the meeting, WE NEED
YOUR VOTE. WE URGE YOU TO COMPLETE, SIGN AND RETURN THE ENCLOSED
PROXY CARD PROMPTLY. A POSTAGE-PAID ENVELOPE IS ENCLOSED FOR
THIS PURPOSE.
If you return your proxy promptly, you can help your Fund
avoid the expense of follow-up mailings to achieve a quorum so
that the meeting can be held. If you decide between now and May
that you can attend the meeting in person, you can revoke your
proxy at that time and vote your shares at the meeting. If your
shares are held in street name, only your bank or broker can vote
your shares, and only upon receipt of your specific instructions.
Please contact the person responsible for your account and
instruct him or her to execute a proxy card today.
We look forward to seeing you at the meeting or receiving
your proxy so that your shares may be voted at the meeting.
Sincerely yours,
/s/George Putnam
George Putnam, Chairman
PUTNAM AMERICAN GOVERNMENT INCOME FUND
NOTICE OF THE 1994 MEETING OF SHAREHOLDERS
To The Shareholders of Putnam American Government Income Fund:
The 1994 Meeting of Shareholders of Putnam American
Government Income Fund (the "Fund") will be held on May 5, 1994
at 1:00 p.m., Boston time, on the eighth floor of One Post Office
Square, Boston, Massachusetts, for the following purposes:
1. Electing Trustees, as described in Part I of the
attached Proxy Statement. (p. 1)
2. Ratifying or rejecting the selection of independent
accountants as auditors for the Fund for the current
fiscal year, as described in Part II of the attached
Proxy Statement. (p. 11)
3. Approving or disapproving a new Distribution Plan for
the Fund, as set forth in Exhibit B and as described in
Part III of the attached Proxy Statement. (p.
11)
4. Such other matters 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
ELIZABETH T. KENNAN A.J.C. SMITH
LAWRENCE J. LASSER W. NICHOLAS THORNDIKE
February 22 , 1994
WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE ENCLOSED
PROXY IN THE ENCLOSED ENVELOPE SO YOU WILL
BE REPRESENTED AT THE MEETING.<PAGE>
PUTNAM AMERICAN GOVERNMENT INCOME FUND
ONE POST OFFICE SQUARE
BOSTON, MASSACHUSETTS 02109
PROXY STATEMENT
THE ENCLOSED PROXY IS SOLICITED BY THE TRUSTEES OF PUTNAM
AMERICAN GOVERNMENT INCOME FUND (the "Fund") for use at the 1994
Meeting of Shareholders to be held on May 5, 1994, and at any
adjournments thereof, for the purposes set forth in the
accompanying Notice of Meeting of Shareholders. Shareholders of
record at the close of business on February 11, 1994 are entitled
to be present and to vote at the meeting or any adjourned session
thereof. The Notice of Meeting, proxy and this Proxy Statement
have been mailed to such shareholders of record on or about
February 25 , 1994.
A copy of the Annual Report of the Fund for its most recent
fiscal year, including financial statements, has previously been
mailed to shareholders. A representative of Price Waterhouse,
auditors of the Fund, is expected to be present at the meeting
with the opportunity to make statements and to respond to
appropriate questions.
Each share of beneficial interest is entitled to one vote.
Shares represented by duly executed proxies will be voted for the
election of the persons named herein as Trustees, unless such
authority has been withheld. With respect to the other matters
specified in the proxy, shares will be voted in accordance with
the instructions made. If no instructions are made, the proxy
will be voted for the matters specified in the proxy. Proxies
may be revoked at any time before they are voted by a written
revocation received by the Clerk of the Fund, by properly
executing a later-dated proxy or by attending the meeting and
voting in person.
I. ELECTION OF TRUSTEES
The Trustees have fixed the number of Trustees for election
at this meeting at twelve. The nominees for Trustees of the Fund
who are proposed for election at the meeting, their ages, and a
description of their principal occupations are set forth below.
All the nominees have been recommended by the Nominating
Committee, which consists solely of Trustees who are not
"interested persons" (as defined in the Investment Company Act of
1940) of the Fund or Putnam Investment Management , Inc.,
the Fund's investment manager ("Putnam Management"). All the
nominees are presently Trustees of the Fund. Each of the current
Trustees was elected by the shareholders in September, 1992
(except for Mrs. Baxter, who was elected by the Trustees
effective January 6, 1994). All of the Trustees are also
Trustees of all of the other open-end Putnam funds except that
Jameson Adkins Baxter and A.J.C. Smith do not currently serve as
Trustees of Putnam California Investment Grade Municipal Trust,
Putnam Investment Grade Municipal Trust II, Putnam Investment
Grade Intermediate Municipal Trust, Putnam Managed High Yield
Trust, Putnam Municipal Opportunities Trust and Putnam New York
Investment Grade Municipal Trust . Except as shown, the
principal occupations and business experience for the last five
years of the nominees have been with the employers indicated,
although in some cases they have held different positions with
such employers.
The term of office of each person elected as a Trustee will
be until the next meeting held for the purpose of electing
Trustees and until his or her successor is elected and qualified.
Each of the nominees has agreed to serve as a Trustee if elected.
If any of the nominees should be unavailable for election at the
time of the meeting (which is not presently anticipated), the
persons named as proxies may vote for other persons in their
discretion, or the Trustees may vote to fix the number of
Trustees at fewer than twelve.<PAGE>
<PAGE>
PRINCIPAL OCCUPATION
NOMINEE FOR LAST FIVE YEARS
Jameson Adkins Baxter (50) President, Baxter Associates, Inc.
(consultants to management).
Prior to 1992 Vice President and
Principal, Regency Group, Inc. and
Consultant, The First Boston
Corporation. Also, Director, Banta
Corporation, Avondale Federal
Savings Bank and ASHTA Chemicals,
Inc. Chairman of the Board of
Trustees, Mount Holyoke College.
President of the Board of Trustees,
Emma Willard School and Member of
Board of Governors, Good Shepherd
Hospital.
Hans H. Estin (65) Vice Chairman, North American
Management Corp. (a registered
investment adviser). Also,
Director, The Boston Company, Inc.
and Boston Safe Deposit and Trust
Company. Member, Massachusetts
General Hospital. Trustee, New
England Aquarium.
John A. Hill (52) Chairman and Managing Director,
First Reserve Corporation (a
registered investment adviser).
Prior to 1989, General Partner,
Meridien Capital Corporation (a
venture capital investment firm).
Also, Director, Snyder Oil
Corporation, Maverick Tube
Corporation, PetroCorp
Incorporated, various private
companies controlled by First
Reserve Corporation and various
First Reserve Funds.
Elizabeth T. Kennan (55) President, Mount Holyoke College.
Also, Director, NYNEX Corporation,
Northeast Utilities, the Kentucky
Home Life Insurance Companies and
Talbots. Trustee, University of
Notre Dame.
<PAGE>
PRINCIPAL OCCUPATION
NOMINEE FOR LAST FIVE YEARS
*Lawrence J. Lasser (51) Vice President of the Putnam funds.
President, Chief Executive Officer
and Director of Putnam Investments,
Inc. and Putnam Management.
Director, Marsh & McLennan
Companies, Inc. and INROADS/Central
New England Inc. Member, Board of
Overseers, Museum of Science,
Museum of Fine Arts and Isabella
Stewart Gardner Museum, Boston.
Also, Trustee, Beth Israel Hospital
and Buckingham, Browne and Nichols
School.
Robert E. Patterson (48) Executive Vice President of Cabot
Partners Limited Partnership (a
registered investment adviser to
institutional clients in the
acquisition and management of their
real estate portfolios). Also,
Trustee, Joslin Diabetes Center.
From May, 1987 to October, 1990,
Executive Vice President of Cabot,
Cabot & Forbes Realty Advisors,
Inc. (predecessor of Cabot Partners
Limited Partnership).
Donald S. Perkins (66) Director of various corporations,
including American Telephone &
Telegraph Company, AON Corp.,
Cummins Engine Company, Inc.,
Illinois Power Co., Inland Steel
Industries, Inc., K mart
Corporation, LaSalle Street Fund,
Inc., Springs Industries, Inc. and
Time Warner Inc. Also, Trustee and
Vice Chairman, Northwestern
University. Chairman, The Hospital
Research and Education Trust.
Member, The Business Council.
Founding Chairman, the Civic
Committee of the Commercial Club of
Chicago.
William F. Pounds (65) Vice Chairman. Professor of
Management, Alfred P. Sloan School
of Management, Massachusetts
Institute of Technology. Director,
IDEXX Laboratories, Inc., M/A-COM,
Inc., EG&G, Inc., Perseptive
Biosystems, Inc., Management
Sciences For Health, Inc. and Sun
Company, Inc. Also, Trustee,
Museum of Fine Arts, Boston and
Overseer, WGBH Educational
Foundation. <PAGE>
PRINCIPAL OCCUPATION
NOMINEE FOR LAST FIVE YEARS
*George Putnam (67) Chairman and President of the
Putnam funds. Chairman and
Director of Putnam Management and
Putnam Mutual Funds. Also,
Director, The Boston Company, Inc.,
Boston Safe Deposit and Trust
Company, Freeport-McMoRan, Inc.,
General Mills, Inc., Houghton
Mifflin Company, Marsh & McLennan
Companies, Inc., and Rockefeller
Group, Inc. Trustee, Massachusetts
General Hospital, McLean Hospital,
Vincent Memorial Hospital, WGBH
Educational Foundation, The
Colonial Williamsburg Foundation
and Museum of Fine Arts, Boston.
*George Putnam, III (42) President, New Generation Research,
Inc. (publisher of financial
information). Director, World
Environment Center and
Massachusetts Audubon Society.
Trustee, Sea Education Association
and St. Mark's School.
Also, Overseer, New England Medical
Center.
*A.J.C. Smith (59) Chairman and Chief Executive
Officer, Marsh & McLennan
Companies, Inc. Also, Trustee of
The American Institute for
Chartered Property Casualty
Underwriters, the Central Park
Conservancy and the Carnegie Hall
Society.
- -------------------------
*Nominees who are "interested persons" (as defined in the
Investment Company Act of 1940) of the 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. Mr. Putnam, Mr. Lasser and Mr.
Smith are deemed "interested persons" of the Fund, Putnam
Management and Putnam Mutual Funds by virtue of their positions
as officers of the Fund or officers or directors of Putnam
Management, Putnam Mutual Funds, or their parent, Marsh &
McLennan Companies, Inc., or their ownership of stock of Marsh &
McLennan Companies, Inc. Mr. George Putnam, III, Mr. Putnam's
son, is also an "interested person" of the Fund, Putnam
Management and Putnam Mutual Funds. The balance of the nominees
are not "interested persons." <PAGE>
PRINCIPAL OCCUPATION
NOMINEE FOR LAST FIVE YEARS
W. Nicholas Thorndike (60) Director of various corporations
and charitable organizations,
including Providence Journal Co.
and Courier Corporation. Also,
Trustee and President,
Massachusetts General Hospital.
Trustee, Bradley Real Estate Trust,
Eastern Utilities Associates and
Northeastern University. Prior to
December, 1988, Chairman of the
Board and Managing Partner of
Wellington Management
Company/Thorndike, Doran, Paine &
Lewis (a registered investment
adviser).
Each Trustee of the Fund receives an annual fee, and an
additional fee for each Trustees' meeting attended. Trustees who
are not "interested persons" of Putnam Management and who serve
on committees of the Trustees receive additional fees for
attendance at certain committee meetings. The annual fee paid,
the number of Trustees' meetings held and the aggregate fees paid
to all Trustees are set forth in "Trustees and Officers
Information" below.
The Fund's Trustees have approved Retirement Guidelines for
Trustees of the Putnam funds. These guidelines provide generally
that a Trustee who retires after reaching age 72 and who has at
least 10 years of continuous service will be eligible to receive
a retirement benefit from each Putnam fund for which he or she
served as a Trustee. The amount and form of such benefit is
subject to determination annually by the Trustees and, except as
otherwise determined by the Trustees, will be an annual cash
benefit equal to one-half of the Trustee retainer paid by the
Fund at the time of retirement. Several retired Trustees of the
Fund are currently receiving retirement benefits pursuant to
these Guidelines and it is anticipated that the current Trustees
of the Fund will receive similar benefits upon their retirement.
The Trustees of the Fund reserve the right to amend or terminate
such Guidelines and the related payments at any time, and may
modify or waive the foregoing eligibility requirements when
deemed appropriate.
The Agreement and Declaration of Trust of the 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. The Fund, at its expense, provides liability insurance
for the benefit of its Trustees and officers.
<PAGE>
AUDIT AND NOMINATING COMMITTEES. The voting members of the
Audit Committee of the Fund include only Trustees who are not
"interested persons" of the Fund or Putnam Management. The Audit
Committee recommends to the Trustees the independent public
accountants to be selected for the Fund. It also reviews the
performance, scope of work and compensation of such accountants,
and reviews with such accountants the quality, accounting
controls, procedures and adequacy of the accounting services
rendered to the Fund by Putnam Management and by the Fund's
investor servicing agent and custodian. The Audit Committee
reports to the Trustees the results of its inquiries. The Audit
Committee currently consists of Messrs. Estin (Chairman),
Perkins, Putnam, III (without vote), Smith (without vote) and
Mrs. Kennan.
The Nominating Committee consists only of Trustees who are
not "interested persons" of the Fund or Putnam Management. It
recommends to the Trustees persons to be elected as Trustees and
as Chairman, Vice Chairman, President and certain other officers
of the Fund. The Nominating Committee will consider individuals
proposed by a shareholder for election as a Trustee.
Shareholders wishing to submit the name of any individual must
submit in writing a brief description of the proposed nominee's
business experience and other information relevant to the
qualifications of the individual to serve as a Trustee of the
Fund. The Nominating Committee currently consists of Mrs. Kennan
and Dr. Pounds (Co-chairmen), Mrs. Baxter, and Messrs. Estin,
Hill, Patterson, Perkins and Thorndike.
The number of meetings of the Audit and Nominating
Committees in the Fund's most recent fiscal year is set forth in
"Trustees and Officers Information" below.
<PAGE>
TRUSTEES AND OFFICERS INFORMATION
The shareholdings of each Trustee in the Fund are shown
below. Unless noted below, each Trustee has sole investment
power and sole voting power with respect to his or her shares of
the Fund and no Trustee owns 1% or more of the outstanding shares
of the Fund.
OWNERSHIP OF OWNERSHIP OF
YEAR FIRST SHARES SHARES OF ALL
ELECTED AS OF THE FUND PUTNAM FUNDS
TRUSTEES TRUSTEE AS OF 1/14/94 AS OF
1/14/94*
- -----------------------------------------------------------------
Jameson Adkins Baxter1994 100
600
Hans H. Estin 1985 487
34,183
John A. Hill 1985 214
155,023
Elizabeth T. Kennan 1992 276
11,960
Lawrence J. Lasser 1992 117
486,022
Robert E. Patterson 1985 556
59,606
Donald S. Perkins 1985 3,271
267,723
William F. Pounds 1985 5,960
344,538
George Putnam 1985 10,106
1,208,521
George Putnam, III 1985 1,498
58,219
A.J.C. Smith 1986 554
29,012
W. Nicholas Thorndike 1992 126
47,377
- -----------------------------------------------------------------
* Does not include shares owned in Putnam Capital Manager
Trust, Putnam Daily Dividend Trust, Putnam Tax Exempt Money
Market Fund, Putnam California Tax Exempt Money Market Fund, and
Putnam New York Tax Exempt Money Market Fund.
As of January 14, 1994, the Trustees and officers of the
Fund owned in aggregate 24,078 shares of the Fund
comprising less than 1% of the outstanding shares of the
Fund on that date. With respect to 757 of these shares
which are held for his individual account in the
Putnam Investments, Inc. Profit Sharing Retirement Plan, an
officer of the Fund has sole investment power and shared
voting power. With respect to the remainder of these shares, the
Trustees and officers individually have sole investment power and
sole voting power.
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1993
MEETINGS OF THE TRUSTEES DURING THE YEAR
Full Board of Trustees meetings: 11
Audit Committee meetings: 3
Nominating Committee meetings: 2
TRUSTEES' FEES
Annual retainer fee per Trustee: $5,720
Additional attendance fee per
Trustees' meeting: $116
Aggregate fees paid to all Trustees for the
year*: $87,625
*Includes both annual fees and fees for attendance at Trustees'
meetings and certain meetings of committees of the Trustees.
These committees include: Compensation, Legal, and
Administration; Audit; Closed-End Funds; Distribution;
Pricing/Brokerage/Special Investments; Communication and Service;
Contract; Executive; Board Policy and Nominating; and Proxy.
In addition to George Putnam and Lawrence J. Lasser, the
officers of the Fund are Charles E. Porter, Executive Vice
President, Patricia C. Flaherty, Senior Vice President, Gordon H.
Silver, Gary N. Coburn, Alan J. Bankart, Max S. Senter,
Kenneth J. Taubes (Messrs. Senter and Taubes are the Fund's
Portfolio Managers), William N. Shiebler (President of Putnam
Mutual Funds), John R. Verani and Paul M. O'Neil, each of whom
serves as a Vice President, John D. Hughes, Vice President and
Treasurer, and Beverly Marcus, Clerk of the Fund. All of the
officers of the 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 the Fund), as well as the
officers of the Fund, will benefit from the management fees,
distribution fees, underwriting commissions, custodian fees, and
investor servicing fees paid or allowed by the Fund.
PUTNAM INVESTMENT MANAGEMENT, INC. Putnam Management and
its affiliates, Putnam Mutual Funds, the principal underwriter
for shares of the Fund, and Putnam Fiduciary Trust Company, the
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. A
certified balance sheet of Putnam Management is attached to this
Proxy Statement as Exhibit A.
The directors of Putnam Management are George Putnam,
Lawrence J. Lasser and Gordon H. Silver. Mr. Lasser is the
principal executive officer of Putnam Management. The principal
occupations of Messrs. Putnam, Lasser and Silver are as officers
and directors of Putnam Management and certain of its corporate
affiliates. The address of Putnam Management and the business
address of the directors and officers of Putnam Management is One
Post Office Square, Boston, Massachusetts 02109.
In addition to its services to the Fund, Putnam Management
acts as investment adviser or subadviser of other publicly-owned
investment companies having differing investment objectives. For
the names of such funds and the current rates of Putnam
Management's annual fees as adviser or subadviser of such funds,
see Schedule A to this Proxy Statement.
Putnam Management is also affiliated with The Putnam
Advisory Company, Inc., which together with subsidiaries
furnishes investment advice to domestic and foreign institutional
clients and mutual funds. Another affiliate, Putnam
Fiduciary Trust Company, provides investment advice to
institutional clients under its banking and fiduciary powers.
The advisory fees charged by such firms to their institutional
clients are generally at lower rates than those charged the
Putnam funds. The services performed and responsibilities
assumed by these firms for such clients are, however, not as
extensive as those performed or assumed by Putnam Management for
the Putnam funds.
Some officers and directors of Putnam Management, including
some who are officers of the Fund, serve as officers or directors
of some of these affiliates. Putnam Management may also enter
into other businesses.
THE MANAGEMENT CONTRACT. Putnam Management serves as
investment manager of the Fund pursuant to a Management Contract.
The management fee payable under the Contract is based on the
following annual rates: 0.60% of the first $500 million of
average net assets, 0.50% of the next $1 billion, 0.45% of the
next $1 billion, 0.40% of the next $4.5 billion, 0.375% of the
next $2.5 billion and 0.35% of any amount over $9.5 billion.
Management fees are payable quarterly, based on the average net
assets of the Fund as determined at the close of each business
day. Such fees are in addition to the compensation of Trustees
and certain officers and other expenses borne by the Fund. The
compensation payable to Putnam Management is subject to reduction
or reimbursement to the extent that expenses of the Fund in any
fiscal year exceed the limits on investment company expenses
imposed by any statute or regulatory authority in any
jurisdiction where shares of the Fund are qualified for offer and
sale. The term "expenses" is defined in the statutes and
regulations of such jurisdictions and, generally speaking,
excludes brokerage commissions, taxes, interest and extraordinary
expenses. The only limitation in effect as of the date of this
Proxy Statement is 2.5% of the first $30 million of average net
assets, 2% of the next $70 million and 1.5% of the remaining
average net assets. The fee payable to Putnam Management is also
subject to reduction by the amount of certain possible
commissions, fees, brokerage or similar payments received by
Putnam Mutual Funds, less expenses approved by the Trustees of
the Fund, in respect of purchases and sales of the Fund's
portfolio investments. The fees paid to Putnam Management in the
most recent fiscal year are shown in "Fund Information" below.
Under the Contract, subject to such policies as the Trustees
may determine, Putnam Management, at its expense, furnishes
continuously an investment program for the Fund and makes
investment decisions on behalf of the Fund. Subject to the
control of the Trustees, Putnam Management manages, supervises
and conducts the other affairs and business of the Fund,
furnishes office space and equipment, provides bookkeeping and
clerical services (including determination of the Fund's net
asset value, but excluding shareholder accounting services) and
places all orders for the purchase and sale of the Fund's
portfolio securities. Putnam Management may place Fund portfolio
transactions with broker-dealers that furnish Putnam Management,
without cost to it, certain brokerage and research services of
value to Putnam Management and its affiliates in advising the
Fund and other clients. In so doing, Putnam Management may cause
the Fund to pay greater brokerage commissions than it might
otherwise pay. See "Brokerage and research services" below.
The Fund also pays, or reimburses Putnam Management for, the
compensation and related expenses of certain officers of the Fund
and their assistants. Currently, the Fund is reimbursing Putnam
Management for a portion of the compensation and related expenses
of certain officers of the Fund who provide certain
administrative services to the Fund and the other Putnam funds,
each of which bears an allocated share of the costs. The
aggregate amount of all such payments and reimbursements is
determined annually by the Trustees, and the amount paid in the
most recent fiscal year is set forth in "Fund Information" below.
Putnam Management pays all other salaries of officers of the
Fund. The Fund pays all expenses not assumed by Putnam
Management including, without limitation, auditing, legal,
custodial, investor servicing agent and shareholder reporting
expenses.
The Contract provides that Putnam Management shall not be
subject to any liability to the Fund or to any shareholder of the
Fund for any act or omission in the course of or connected with
rendering services thereunder in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties.
The Contract may be terminated without penalty upon 30 days'
written notice by Putnam Management, by the Trustees of the Fund,
or by the affirmative vote of the holders of a "majority of the
outstanding voting securities" of the Fund (as defined in the
Investment Company Act of 1940). It may be amended only by an
affirmative vote of the holders of a majority of the outstanding
voting securities of the Fund and by a majority of the Trustees
who are not "interested persons" of the Fund or Putnam
Management.
The Contract will terminate automatically if it is assigned,
or unless its continuance is approved at least annually by either
the Trustees or shareholders of the Fund and in either case by a
majority of the Trustees who are not "interested persons" of
Putnam Management or the Fund.
INVESTMENT DECISIONS. Investment decisions for the Fund and
for the other investment advisory clients of Putnam Management
and its affiliates are made with a view to achieving each
client's respective investment objectives. Investment decisions
are the product of many factors in addition to basic suitability
for the particular client involved. Thus, a particular security
may be bought and sold for clients even though it could have been
bought or sold for other clients at the same time. Likewise, a
particular security may be bought for some clients when other
clients are selling the security. In some cases, one client may
sell a particular security to another client. When two or more
clients simultaneously purchase or sell the same security, each
day's transactions in the security are, insofar as possible,
averaged as to price and allocated between the clients in a
manner which in the opinion of Putnam Management is equitable to
each and in accordance with the total amount of the security
being purchased or sold by each. There may be circumstances when
purchases or sales of portfolio securities for one or more
clients will have an adverse effect on other clients.
BROKERAGE AND RESEARCH SERVICES. Transactions on U.S. stock
exchanges, commodities markets and futures markets and other
agency transactions involve the payment by the Fund of negotiated
brokerage commissions. Such commissions vary among different
brokers. A particular broker may charge different commissions
according to such factors as the difficulty and size of the
transaction. Transactions in foreign investments often involve
the payment of fixed brokerage commissions, which may be higher
than those in the United States. There is generally no stated
commission in the case of securities traded in the
over-the-counter markets, but the price paid by the Fund usually
includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid by the Fund includes a
disclosed, fixed commission or discount retained by the
underwriter or dealer. It is anticipated that most purchases and
sales of securities by funds investing primarily in tax-exempt
securities and certain other fixed-income securities
will be with the issuer or with underwriters of or dealers in
those securities, acting as principal. Accordingly, those funds
would not ordinarily pay significant brokerage commissions with
respect to securities transactions.
It has for many years been a common practice in the
investment advisory business for advisers of investment companies
and other institutional investors to receive brokerage and
research services (as defined in the Securities Exchange Act of
1934, as amended (the "1934 Act")), from broker-dealers that
execute portfolio transactions for the clients of such advisers
and from third parties with which such broker-dealers have
arrangements. Consistent with this practice, Putnam Management
receives brokerage and research services and other similar
services from many broker-dealers with which Putnam Management
places the Fund's portfolio transactions and from third parties
with which these broker-dealers have arrangements. These
services include such matters as general economic and market
reviews, industry and company reviews, evaluations of
investments, recommendations as to the purchase and sale of
investments, newspapers, magazines, pricing services, quotation
services, news services and personal computers utilized by Putnam
Management's managers and analysts. Where the services referred
to above are not used exclusively by Putnam Management for
research purposes, Putnam Management, based upon its own
allocations of expected use, bears the portion of the cost of
these services that directly relates to their non-research use.
Some of these services are of value to Putnam Management and its
affiliates in advising various of their clients (including the
Fund), although not all of these services are necessarily useful
and of value in managing the Fund. The management fee paid by
the Fund is not reduced because Putnam Management and its
affiliates receive these services even though Putnam Management
might otherwise be required to purchase some of these services
for cash.
Putnam Management places all orders for the purchase and
sale of portfolio investments for the Fund and buys and sells
investments for the Fund through a substantial number of brokers
and dealers. In so doing, Putnam Management uses its best
efforts to obtain for the Fund the most favorable price and
execution available, except to the extent it may be permitted to
pay higher brokerage commissions as described below. In seeking
the most favorable price and execution, Putnam Management, having
in mind the Fund's best interests, considers all factors it deems
relevant, including, by way of illustration, price, the size of
the transaction, the nature of the market for the security or
other investment, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the
reputation, experience and financial stability of the
broker-dealer involved and the quality of service rendered by the
broker-dealer in other transactions.
As permitted by Section 28(e) of the 1934 Act, and by the
Management Contract, Putnam Management may cause the Fund to pay
a broker-dealer which provides "brokerage and research
services" (as defined in the 1934 Act) to Putnam Management an
amount of disclosed commission for effecting securities
transactions on stock exchanges and other transactions for the
Fund on an agency basis in excess of the commission which another
broker-dealer would have charged for effecting that transaction.
Putnam Management's authority to cause the Fund to pay any such
greater commissions is also subject to such policies as the
Trustees may adopt from time to time. Putnam Management does not
currently intend to cause the Fund to make such payments. It is
the position of the staff of the Securities and Exchange
Commission that Section 28(e) does not apply to the payment of
such greater commissions in "principal" transactions.
Accordingly, Putnam Management will use its best efforts to
obtain the most favorable price and execution available with
respect to such transactions, as described above.
The Management Contract provides that commissions, fees,
brokerage or similar payments received by Putnam Management or an
affiliate in connection with the purchase and sale of portfolio
investments of the Fund, less any direct expenses approved by the
Trustees, shall be recaptured by the Fund through a reduction of
the fee payable by the Fund under the Management Contract.
Putnam Management seeks to recapture for the Fund soliciting
dealer fees on the tender of the Fund's portfolio securities in
tender or exchange offers. Any such fees which may be recaptured
are likely to be minor in amount.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. and subject to seeking
the most favorable price and execution available and such other
policies as the Trustees may determine, Putnam Management may
consider sales of shares of the Fund (and, if permitted by law,
of the other Putnam funds) as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.
PAYMENTS TO AFFILIATES OF PUTNAM MANAGEMENT. Putnam Mutual
Funds is the principal underwriter of shares of the Fund and of
the other continuously offered Putnam funds. Putnam Fiduciary
Trust Company is the Fund's investor servicing agent and
custodian. The amount of sales charges retained by Putnam Mutual
Funds and the investor servicing fees and custodian fees paid to
Putnam Fiduciary Trust Company in the Fund's most recent fiscal
year are set forth in "Fund Information" below.
Under the terms of its current Distribution Plan, the Fund
compensates Putnam Mutual Funds at the annual rate of up to 0.25%
of the quarter-end net assets of the Fund attributable to
shareholders for whom investment dealers (other than Putnam
Mutual Funds) are designated as dealers of record. Payments
under the Distribution Plan compensate Putnam Mutual Funds for
service provided and expenses incurred by it in promoting the
sale of shares of the Fund, reducing redemptions or maintaining
or improving services provided to shareholders by Putnam Mutual
Funds or by dealers. The fee paid to Putnam Mutual Funds under
the Plan in the Fund's most recent fiscal year is set forth in
"Fund Information" below.
FUND INFORMATION
ASSETS OF THE FUND; SHARES OUTSTANDING
Net assets of the Fund as of
January 14, 1994 $3,184,041,953
<PAGE>
Shares of the Fund outstanding and
authorized to vote as of February
11, 1994 349,320,671
shares
Persons beneficially owning
more than 5% of the Fund's shares
as of January 31, 1994
NONE
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1993
MANAGEMENT CONTRACT
The Management Contract dated
December 8, 1989 was approved by the
shareholders on December 7, 1989
and was last approved by the Trustees
on January 7, 1994.
Management fee paid to Putnam
Management for the fiscal year $17,791,822
Reimbursement paid by the Fund to Putnam
Management for compensation, related expenses
and employee benefit plan contributions
for the Fund's Executive Vice President
(Charles E. Porter), Senior Vice President
(Patricia C. Flaherty), Clerk (Beverly
Marcus) and those who assist them $81,052
PAYMENTS TO AFFILIATES
Sales charges on sales of Fund
shares retained by Putnam Mutual Funds
after payments to selling broker-dealers $364,537
Deferred sales charges on share
redemptions retained by Putnam
Mutual Funds $192
Payments under Rule 12b-1 Plan to
Putnam Mutual Funds $8,948,513
Investor servicing and custodian fees
paid to Putnam Fiduciary Trust Company
(after application of credits) $6,469,071
BROKERAGE
Total Fund payments to broker-dealers as
commissions on agency transactions $15,000
Total Fund payments to broker-dealers as
commissions on underwritten transactions $62,822
II. RATIFICATION OR REJECTION OF SELECTION OF
INDEPENDENT AUDITORS
Price Waterhouse, 160 Federal Street, Boston, Massachusetts,
independent accountants, has been selected by the Trustees as
auditors of the Fund for the current fiscal year. Unless
otherwise indicated, the proxy will be voted in favor of
ratifying the selection of Price Waterhouse as auditors.
III. APPROVAL OR DISAPPROVAL OF A NEW DISTRIBUTION PLAN
The Trustees of the Fund recommend that shareholders approve
a new Distribution Plan (the "Plan") to permit the Fund to incur
distribution expenses of up to 0.35% of the Fund's average net
assets annually, including assets attributable to shares for
which Putnam Mutual Funds , the principal distributor for
the Fund and the other Putnam funds, is investment dealer of
record. The proposed Plan, a copy of which is included as
Exhibit B to this Proxy Statement, is identical in all other
substantive respects to the existing Distribution Plan (also
referred to as a "Plan"), except as described below.
Rule 12b-1 under the Investment Company Act of 1940 (the
"Act") permits the Fund, as a registered investment company, to
bear expenses related to the distribution of its shares only
pursuant to a written plan that contains certain provisions
required by the rule and that has been approved by the Trustees
of the Fund and by its shareholders. On February 4, 1994,
the Trustees of the Fund unanimously approved the adoption of the
proposed Plan. This approval included the unanimous approval of
those Trustees of the Fund, voting separately, who are not
"interested persons" of the Fund (as defined in the Act) and who
have no direct or indirect financial interest in the operation of
the Plan or any related agreements (the "Independent Trustees").
DESCRIPTION OF THE PLANS. Under both the existing and
proposed Plan, payments are made by the Fund to Putnam Mutual
Funds in the form of fees or reimbursements for the
purposes of promoting the sale of shares of the Fund,
reducing redemptions or maintaining or improving services
provided to shareholders by Putnam Mutual Funds and
investment dealers.
The existing Plan provides that the Fund may make
payments to Putnam Mutual Funds at an annual rate
of 0.25% of the Fund's net assets attributable to
shareholders for whom investment dealers other than Putnam
Mutual Funds are designated as the dealer of record . It
is anticipated that the Fund will commence offering on or about
May 5, 1994 a second class of shares with distribution
arrangements that differ from those of the existing shares, and
that the existing shares of the Fund would be designated as Class
A shares. In such case, the payments described above in respect
of the existing Plan would relate only to Class A shares of the
Fund.
The proposed Plan differs from the existing Plan in two
material respects: (1) the maximum permitted percentage rate of
distribution payments and (2) the base of eligible assets upon
which such distribution payments, based upon the percentage rate,
are calculated. The proposed Plan provides that the Fund may
make payments for the purposes described above at an annual rate
of up to 0.35% of all of the Fund's average net assets for any
fiscal year attributable to Class A shareholders, which includes
those net assets attributable to Class A shareholders for whom
Putnam Mutual Funds is designated as dealer of record.
However, both the proposed new Plan and the existing Plan
provide that the amount of payments under such Plan and
the purposes for which they are made would be determined by the
Independent Trustees. At present, the Trustees have authorized
payments under the existing Plan up to the maximum permitted
annual rate of 0.25% of eligible net assets under the Plan. If
the proposed new Plan is approved, the Trustees intend to limit
payments to 0.25% of eligible net assets under the new Plan,
notwithstanding that such Plan would permit payments up to the
annual amount of 0.35% of eligible net assets. The Trustees of
the Fund could in the future authorize payments in excess of
0.25% and up to the maximum of 0.35% set forth in the Plan
without further shareholder approval, but they have no present
intention of doing so and would do so only if, in their judgment,
the additional payments would be likely to benefit the Fund and
its shareholders.
As required by Rule 12b-1, both Plans provide that
the Trustees shall receive and review written reports at least
quarterly regarding the Fund's expenditures under the Plan and
the purposes for which they were made. Also, each Plan
may continue in effect for more than one year only if it is
renewed annually by at least a majority vote of both the Trustees
and the Independent Trustees voting separately. Both
Plans may be terminated at any time by the vote of a majority
of the Independent Trustees or of a "majority of the outstanding
voting securities" of the Fund (in the case of the existing
Plan) or of a "majority of the outstanding Class A shares" of the
Fund (in the case of the proposed Plan) as such terms are defined
in the respective Plans. Each Plan provides that any change in
such Plan that would increase the expenses of the Fund under
such Plan above the maximum percentage limit stated in
such Plan requires shareholder approval; otherwise
each Plan may be amended by a majority vote of the
Trustees and of the Independent Trustees voting separately.
Each Plan provides that while it is in effect the Fund
will be required to continue its present policy of delegating the
selection and nomination of candidates for Trustee who are not
"interested persons" of the Fund under the Act exclusively to the
discretion of the other non - interested Trustees.
REASONS FOR THE PROPOSED PLAN. The existing Plan was
initially adopted at the time of the Fund's organization
in 1984 in recognition of the services generally
being provided by dealers to shareholders of the Fund and to
encourage further improvement of such services. These services
are not limited to those rendered at the time of initial sale of
shares to a customer, but generally are provided by a dealer in
response to the ongoing needs of a customer as investment
opportunities and the customer's requirements change over time.
These services may include, among other things, answering
inquiries regarding the Fund's investment policies and
performance, assisting shareholders in maintaining records and
processing purchase and redemption orders and requests to
exchange their shares for shares of other Putnam funds, assisting
shareholders in changing dividend reinvestment options or account
registrations or enrolling in any of the special investment plans
offered by the Fund, and providing shareholders information on
various matters pertaining to the Fund and other investment
opportunities within the Putnam family of funds. In
recognition of these services, Putnam Mutual Funds makes payments
to those investment dealers with whom Putnam Mutual Funds has an
agreement at the annual rate of 0.25% of eligible net assets. To
date, payments under the existing Plan have been utilized
primarily for the purpose of financing such payments. Any
balance of payments under the existing Plan not so utilized may
be retained by Putnam Mutual Funds as compensation for services
provided or expenses incurred by Putnam Mutual Funds as the
distributor of the Fund's shares .
The proposed Plan would expand the scope of eligible
net assets upon which distribution payments are payable to
include net assets attributable to Class A
shareholders for whom Putnam Mutual Funds is designated
as the dealer of record . The change would enable
the Fund to compensate Putnam Mutual Funds for
services it provides and expenses it incurs for promoting sales
of Class A shares of the fund, reducing redemptions of Class A
shares, or maintaining or improving services provided to Class A
shareholders on a basis consistent with that of distribution
plans of other Putnam funds. Similarly, the proposed Plan would
permit a maximum permitted distribution payment rate of 0.35% of
eligible net assets, as described above, as is consistent
with the distribution plans of other Putnam funds.
Since the initial adoption of the existing Plan, shareholders
of most other taxable fixed-income and equity Putnam funds have
approved distribution plans in substantially the form of the
proposed Plan.
In connection with their approval of the proposed new Plan,
the Trustees of the Fund and their Contract Committee, which is
composed entirely of Independent Trustees, carefully
considered the potential benefits and costs of the proposed Plan
to shareholders. The Trustees were assisted in this process by
independent legal counsel for the Fund. The Trustees considered
the fact that the new Plan will likely result in higher payments
as compared to the existing Plan. The Trustees also recognized
the potential benefits to Putnam Management, Putnam Mutual
Funds and their affiliates that might arise from the
adoption of the new Plan. The Trustees of the Fund have
determined, in accordance with the requirements of Rule 12b -
1, that the proposed Plan is reasonably likely to benefit the
Fund and its shareholders.
The Trustees of the Fund also gave careful consideration to
the costs of the proposed Plan to shareholders. Payments under
the Plan may increase the Fund's effective 12b-1 fee rate and,
consequently, may increase the Fund's total operating
expenses and correspondingly reduce its net investment income
available for distribution to shareholders. In comparison the
Fund's effective 12b-1 fee rate of 0.233% for the 1993 calendar
year, the proposed Plan would increase the effective 12b-1 rate
to 0.24% in 1994 (based on a 0.25% fee rate beginning in May 1994
and Putnam Management's projection of 1994 asset levels), and to
0.25% in subsequent years.
For the fiscal year ended September 30, 1993, payments under
the existing Plan were $8,527,087, and payments under the
proposed Plan would have been $9,565,374 at the distribution
payment rate of 0.25% and $13,391,523 at the maximum
rate of 0.35%.
REQUIRED VOTE. Approval of the proposed Plan requires the
affirmative vote of a "majority of the outstanding voting
securities" of the Fund, which for this purpose means 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 Fund's
outstanding shares are present at the meeting in person or by
proxy. The Fund's Trustees have unanimously approved the
proposed Plan and recommend that shareholders vote in favor of
this proposal.
If shareholders of the Fund do not approve the proposed
Plan, the Plan will not be implemented and the Fund's current
Distribution Plan will continue in effect.
IV. MISCELLANEOUS
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 such proposals at the Meeting. Votes cast by proxy or
in person at the meeting will be counted by persons appointed by
the Trust as tellers for the Meeting.
The twelve nominees for election as Trustees at the Meeting
who receive the greatest number of votes properly cast for the
election of Trustees shall be elected Trustees. A majority of
the votes properly cast on the matter is necessary to ratify the
selection of independent auditors.
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. The tellers will
count 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) as shares that are present and entitled to
vote on the matter for purposes of determining the presence of a
quorum. 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 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 the
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 Fund 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 the solicitation of
proxies by mail, Trustees of the Fund and employees of Putnam
Management, Putnam Fiduciary Trust Company and Putnam Mutual
Funds may solicit proxies in person or by telephone. The Fund
may also arrange to have votes recorded by telephone. If this
procedure were subject to a successful legal challenge, such
votes would not be counted at the meeting. Persons holding
shares as nominees will upon request be reimbursed for their
reasonable expenses in sending soliciting material to their
principals. The Fund has retained at its expense Tritech
Services, Four Corporate Place, Corporate Park 287, Piscataway,
NJ 08854, to aid in the solicitation of nominee accounts for a
fee not to exceed $7,500 plus reasonable out-of-pocket expenses.
DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS FOR SUBSEQUENT
MEETINGS OF SHAREHOLDERS. The Fund's Agreement and Declaration
of Trust does not provide for annual meetings of shareholders,
and the Fund does not currently intend to hold such a meeting in
1995. Shareholder proposals for inclusion in the proxy statement
for any subsequent meeting must be received by the 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 one or more 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 any such adjournment those
proxies required to be voted against any of such proposals. The
Fund pays the costs of any additional solicitation and of any
adjourned session.<PAGE>
<PAGE>
EXHIBIT A
PUTNAM INVESTMENT MANAGEMENT, INC.
BALANCE SHEET
DECEMBER 31, 1993
ASSETS:
Cash $ 300
Investments (note 2) 50,000
Investment management fees receivable 60,817,927
Accounts receivable from affiliates (note 6) 1,819,578
Prepaid expenses and other assets 2,759,786
Property and equipment - net (notes 2 & 3) 5,105,571
------------
TOTAL ASSETS $70,553,162
============
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES:
Accounts payable and accrued
expenses (note 5) $ 20,704,486
Accounts payable to affiliate 916
------------
TOTAL LIABILITIES 20,705,402
------------
STOCKHOLDER'S EQUITY:
Common stock - $1 par value; authorized
and outstanding, 1,000 shares 1,000
Paid-in surplus 4,696,665
Retained earnings 45,150,095
------------
TOTAL STOCKHOLDER'S EQUITY 49,847,760
------------
TOTAL LIABILITIES AND STOCKHOLDER'S
EQUITY $70,553,162
============
See notes to balance sheet.
<PAGE>
PUTNAM INVESTMENT MANAGEMENT, INC.
NOTES TO BALANCE SHEET
1. CORPORATE AFFILIATION
Putnam Investment Management, Inc. (the Company) is a
wholly-owned subsidiary of Putnam Investments, Inc., (the
Parent), which is a wholly-owned subsidiary of Marsh &
McLennan Companies, Inc. (MMC).
The Company's primary business is to provide investment
advisory services to Putnam-sponsored mutual funds. In
connection with providing these services, the Company
receives a management fee which is based upon the average
net asset value of the respective fund to which the services
are provided.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
Investments consist of time deposits held by an affiliate.
Investments are recorded at the lower of cost or market.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Office and
data processing equipment are depreciated using the straight-line
method over their estimated useful lives of four to ten years.
Leasehold improvements are amortized using the straight-line
method over ten years or the period covered by the lease,
whichever is less. Additions, renewals and betterments of
property and equipment are capitalized. Expenditures for
maintenance and repairs are charged to income when incurred.
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
Office and data processing equipment $ 3,610,612
Less accumulated depreciation (2,244,442)
------------
1,366,170
------------
Leasehold improvements 6,051,063
Less accumulated amortization (2,311,662)
------------
3,739,401
------------
Property and equipment - net $ 5,105,571
============
4. INCOME TAXES
In accordance with the provisions of STATEMENT OF
FINANCIAL ACCOUNTING STANDARDS NO. 109 - ACCOUNTING FOR
INCOME TAXES, the Company records a current liability or
asset for the estimated taxes payable or refundable on tax
returns for the current year and a deferred tax liability or
asset for the estimated future tax effects attributable to
temporary differences.
The Company, through MMC, files its federal tax return
as a member of a consolidated group. The Parent allocates
its current and deferred tax provision or benefit to the
Company in a manner which is representative of how the
Company would compute its provision as a separate entity.
Under an agreement with the Parent, the Company pays
the Parent each month for the amount of its net current and
deferred tax provision. If the Company has a net tax
benefit, the Parent pays the Company that amount. The
Parent then assumes responsibility for the payment of all
taxes in accordance with federal, state and local laws. As
a result of this agreement, the Company has no current or
deferred tax liability or asset reflected in its balance
sheet at December 31, 1993.
5. EMPLOYEE BENEFIT PLANS
PROFIT SHARING PLAN
The Company, the Parent and affiliates sponsor a
profit-sharing plan (the Plan) covering substantially all
employees, providing for annual contributions as determined
by the Board of Directors. Contributions payable to the
Plan at December 31, 1993 were $557,000.
RETIREE HEALTH CARE PLAN
MMC provides a health care plan which covers all
eligible retirees of the Company and its affiliates. The
Parent subsidizes a portion of the cost of the plan. The
Parent allocates its cost of the plan to the Company and its
affiliates in a manner which management believes reflects
the actual cost of the plan on an accrual basis.
6. RELATED PARTY TRANSACTIONS
The Company shares office facilities and personnel with
other wholly-owned subsidiaries of the Parent. Accordingly,
the related costs of such arrangements have been allocated
among the various subsidiaries in a manner which management
believes is representative of the actual costs incurred.
<PAGE>
Accounts receivable from affiliates primarily
represents advances made to the Parent in connection with the
Parent's cash management policy.
In 1993 the Company paid a dividend of $100,000,000 to
the Parent.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Putnam Investment Management, Inc.
We have audited the accompanying balance sheet of Putnam
Investment Management, Inc. (a wholly-owned subsidiary of Putnam
Investments, Inc.) as of December 31, 1993. This financial
statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the balance sheet is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the balance sheet. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
balance sheet presentation. We believe that our audit of the
balance sheet provides a reasonable basis for our opinion.
In our opinion, such balance sheet presents fairly, in all
material respects, the financial position of Putnam Investment
Management, Inc. at December 31, 1993 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE
February 10, 1994
Boston, Massachusetts
<PAGE>
EXHIBIT B
(With deletions shown by //italics// and
additions shown by ((BOLDFACE)))
PUTNAM AMERICAN GOVERNMENT INCOME FUND
CLASS A DISTRIBUTION PLAN AND AGREEMENT
//(As adopted December 14, 1984, and as
amended on February 1, 1985, February 28, 1985,
November 4, 1988 and January 1, 1990)//
This Plan and Agreement (the "Plan") constitutes the
Distribution Plan ((FOR THE CLASS A SHARES)) of //PUTNAM
HIGH INCOME GOVERNMENT TRUST// ((PUTNAM AMERICAN GOVERNMENT
INCOME FUND)), a Massachusetts business trust (the "Trust"),
adopted pursuant to the provisions of Rule 12b-1 under the
Investment Company Act of 1940 (the "Act") and the related
agreement between the Trust and Putnam //Financial Services, Inc.
("PFS")// ((MUTUAL FUNDS CORP. ("PMF"))), the principal
underwriter of the Trust's shares. During the effective term of
this Plan, the Trust may make payments to //PFS// ((PMF)) upon
the terms and conditions hereinafter set forth:
SECTION 1. The Trust may make payments to //PFS// ((PMF)),
in the form of fees or reimbursements, to compensate //PFS//
((PMF)) for services provided and expenses incurred by it for
purposes of promoting the sale of ((CLASS A)) shares of
the Fund, reducing redemptions of (CLASS A) shares, or
maintaining or improving services provided to (CLASS A)
shareholders by //PFS// ((PMF)) and investment dealers. The
amount of such payments and the purposes for which they are made
shall be determined by the Qualified Trustees (((AS DEFINED
BELOW))). Payments under this Plan shall not exceed in any
fiscal //quarter// ((YEAR)) the annual rate of //0.25% of that
portion of the Trust's quarter-end net assets which represent
shares of the Trust attributable to broker-dealers of record
(other than PFS) for shareholders of the Trust// ((0.35% OF THE
AVERAGE NET ASSET VALUE OF THE CLASS A SHARES OF THE
TRUST, AS DETERMINED AT THE CLOSE OF EACH BUSINESS DAY DURING
THE YEAR)). A majority of the Qualified Trustees //(as
defined below)// may, at any time and from time to time,
reduce the amount of such payments, or may suspend the operation
of the Plan for such period or periods of time as they may
determine.
SECTION 2. This Plan shall not take effect until:
(a) it has been approved by a vote of a majority of
the outstanding ((CLASS A SHARES)) //voting
securities// of the Trust; and
(b) it has been approved, together with any related
agreements, by votes//,// of the majority (or whatever
greater percentage may, from time to time, be required by
Section 12(b) of the Act or the rules and regulations
thereunder) of both (i) the Trustees of the Trust, and (ii)
the Qualified Trustees of the Trust, cast in person at a
meeting called for the purpose of voting on this Plan or
such agreement.
SECTION 3. This Plan shall continue in effect for a period
of more than one year after it takes effect only so long as such
continuance is specifically approved at least annually in the
manner provided for approval of this Plan in Section 2(b).
SECTION 4. //PFS// ((PMF)) shall provide to the Trustees of
the Trust, and the Trustees shall review, at least quarterly, a
written report of the amounts so expended and the purposes for
which such expenditures were made.
SECTION 5. This Plan may be terminated at any time by vote
of a majority of the Qualified Trustees, or by vote of a majority
of the Trust's outstanding //voting securities// ((CLASS A
SHARES OF THE TRUST)).
SECTION 6. All agreements with any person relating to
implementation of this Plan shall be in writing, and any
agreement related to this Plan shall provide:
(a) that such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the
Qualified Trustees or by vote of a majority of the Trust's
outstanding //voting securities// ((CLASS A SHARES OF THE
TRUST)) , on not more than 60 days' written notice to any
other party to the agreement; and
(b) that such agreement shall terminate automatically
in the event of its assignment.
SECTION 7. This Plan may not be amended to increase
materially the amount of distribution expenses permitted pursuant
to Section 1 hereof without the approval of a majority of the
outstanding //voting securities// ((CLASS A SHARES)) of
the Trust, and all material amendments to this Plan shall be
approved in the manner provided for approval of this Plan in
Section 2(b).
SECTION 8. As used in this Plan, (a) the term "Qualified
Trustees" shall mean those Trustees of the Trust who are not
interested persons of the Trust, and have no direct or indirect
financial interest in the operation of this Plan or any
agreements related to it, //and// (b) //the terms
"assignment", "interested person" and "vote of a majority of the
outstanding voting securities" shall have the respective
meaning specified in the Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the
Securities and Exchange Commission.// ((THE TERM "MAJORITY OF
THE OUTSTANDING CLASS A SHARES OF THE TRUST" MEANS THE
AFFIRMATIVE VOTE, AT A DULY CALLED AND HELD MEETING OF CLASS A
SHAREHOLDERS OF THE TRUST, (I) OF THE HOLDERS OF 67% OR MORE OF
THE CLASS A SHARES OF THE TRUST PRESENT (IN PERSON OR BY PROXY)
AND ENTITLED TO VOTE AT SUCH MEETING, IF THE HOLDERS OF MORE THAN
50% OF THE OUTSTANDING CLASS A SHARES OF THE TRUST ENTITLED TO
VOTE AT SUCH MEETING ARE PRESENT IN PERSON OR BY PROXY, OR (II)
OF THE HOLDERS OF MORE THAN 50% OF THE OUTSTANDING CLASS A SHARES
OF THE TRUST ENTITLED TO VOTE AT SUCH MEETING, WHICHEVER IS LESS,
AND (C) THE TERMS "ASSIGNMENT" AND "INTERESTED PERSON" SHALL HAVE
THE RESPECTIVE MEANINGS SPECIFIED IN THE ACT AND THE RULES AND
REGULATIONS THEREUNDER, SUBJECT TO SUCH EXEMPTIONS AS MY BE
GRANTED BY THE SECURITIES AND EXCHANGE COMMISSION.))
SECTION 9. A copy of the Agreement and Declaration of Trust
of the Trust is on file with the Secretary of ((STATE OF)) The
Commonwealth of Massachusetts and notice is hereby given that
this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually, and that the obligations
of or arising out of this instrument are not binding upon any of
the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the Trust.
Executed as of //January 1, 1990// ((MAY , 1994))
//PUTNAM FINANCIAL SERVICES, INC.//
((PUTNAM MUTUAL FUNDS CORP.))
By _____________________________
//PUTNAM HIGH INCOME GOVERNMENT TRUST//
((PUTNAM AMERICAN GOVERNMENT INCOME TRUST))
By _____________________________
<PAGE>
PUTNAM AMERICAN GOVERNMENT INCOME FUND PROXY BALLOT
PROXY FOR THE MEETING OF
SHAREHOLDERS, MAY 5, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF THE FUND.
The undersigned hereby appoints George Putnam, Hans H. Estin and
William F. Pounds, 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 American Government Income Fund on May 5, 1994, at 1:00
p.m., Boston time, and at any adjournments thereof, all of the
shares of the Fund which the undersigned would be entitled to
vote if personally present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR ELECTING TRUSTEES AS SET
FORTH IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. IN THEIR
DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
NOTE: Please sign exactly as name appears on this card. All
joint owners should sign. When signing as executor,
administrator, attorney, trustee or guardian or as
custodian for a minor, please give full title as such. If
a corporation, please sign in full corporate name and
indicate the signer's office. If a partner, sign in the
partnership name.
Please fold at perforation before detaching
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
----
Please mark your choices / X / in blue or black ink.
----
(Control #)
THE TRUSTEES RECOMMEND A VOTE FOR ELECTING ALL OF THE NOMINEES FOR TRUSTEES AND FOR THE PROPOSALS LISTED BELOW.
<C> <C> <C> <C> <C> <C> <C> <C>
1. ELECTION OF TRUSTEES: NOMINEES: PROPOSAL TO: FOR AGAINST ABSTAIN
---- FOR electing all the J. A. Baxter 2. RATIFY THE SELECTION ----
/ / nominees H. H. Estin OF PRICE WATERHOUSE / /
---- (EXCEPT AS MARKED TO J. A. Hill AS AUDITORS. ----
- ----
THE CONTRARY BELOW). E. T. Kennan
L. J. Lasser 3. APPROVE A NEW DISTRIBUTION PLAN ---- ----
----
R. E. Patterson WITH AN INCREASE MAXIMUM / / / / / /
D. S. Perkins distribution payment permitted ---- ----
----
W. F. Pounds UNDER THE PLAN.
---- WITHHOLD authority G. Putnam
/ / to vote for all G. Putnam, III
---- nominees. A.J.C. Smith
W. N. Thorndike
TO WITHHOLD AUTHORITY TO
VOTE FOR AN INDIVIDUAL
NOMINEE, WRITE THAT
NOMINEE'S NAME BELOW.
--------------------------
--------------------------
Please be sure to sign and date this Proxy. (Account #) (Shares #)
............................./ .......................... Date .......... (Name & Address)
Shareholder sign here Co-owner sign here
Please fold at perforation before detaching
/TABLE
<PAGE>
<TABLE>
<CAPTION>
(Detachable attachment to proxy card; Page 3 is on the same side as page 1;
and Page 4 is on the reverse side, i.e., the same side as Page 2.)
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(Putnam Logo)
CHANGE OF ADDRESS NOTIFICATION. Please use this form to inform 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 executed Proxy in the
enclosed envelope.
<C> <C>
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
....................................................... .......................................................
....................................................... .......................................................
Telephone ............................................. ......................................................<PAGE>
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Dear Shareholder: (Name and Address)
YOUR VOTE IS IMPORTANT. Please help us to eliminate the
expense of follow-up mailings by executing and returning
this Proxy as soon as possible. A postage-paid
business reply envelope is enclosed for your convenience.
Thank you! (Account #)
</TABLE>
