PUTNAM FEDERAL INCOME TRUST
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
March 1, 1996 , as revised August 30, 1996
This SAI is not a prospectus and is only authorized for
distribution when accompanied or preceded by the prospectus of
the fund dated March 1, 1996, as revised from time to time. This
SAI contains information which may be useful to investors but
which is not included in the prospectus. If the fund has more
than one form of current prospectus, each reference to the
prospectus in this SAI shall include all of the fund's
prospectuses, unless otherwise noted. The SAI should be read
together with the applicable prospectus. Investors may obtain a
free copy of the applicable prospectus from Putnam Investor
Services, Mailing address: P.O. Box 41203-1203, Providence, RI
02940-1203.
Part I of this SAI contains specific information about the fund.
Part II includes information about the fund and the other Putnam
funds.
<PAGE>
Table of Contents
Part I Page
SECURITIES RATINGS . . . . . . . . . . . . . . . . . . . . . . .
I- 4
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . .
I- 5
CHARGES AND EXPENSES . . . . . . . . . . . . . . . . . . . . .
.I- 11
INVESTMENT PERFORMANCE . . . . . . . . . . . . . . . . . . . .
.I- 16
ADDITIONAL OFFICERS. . . . . . . . . . . . . . . . . . . . . .
.I- 17
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS . . . . . . .
.I- 17
Part II
MISCELLANEOUS INVESTMENT PRACTICES . . . . . . . . . . . . . . .
. . . II-1
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .II-25
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . .
II- 30
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . .
. . .II-40
HOW TO BUY SHARES. . . . . . . . . . . . . . . . . . . . . . . .
. . .II-42
DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . .
. . .II-54
INVESTOR SERVICES. . . . . . . . . . . . . . . . . . . . . . . .
. . .II-55
SIGNATURE GUARANTEES . . . . . . . . . . . . . . . . . . . . .
II- 60
SUSPENSION OF REDEMPTIONS. . . . . . . . . . . . . . . . . . . .
. . .II-61
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . .
. . .II-61
STANDARD PERFORMANCE MEASURES. . . . . . . . . . . . . . . . .
II- 61
COMPARISON OF PORTFOLIO PERFORMANCE. . . . . . . . . . . . . . .
. . .II-63
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . .
II- 67
<PAGE>
SAI
PART I
SECURITIES RATINGS
The following rating services describe rated securites as
follows:
Moody's Investors Service, Inc.
Aaa -- Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt-edged." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa -- Bonds which are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise what
are generally known as high-grade bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements
present which make the long-term risk appear somewhat larger than
the Aaa securities.
A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium-grade
obligations. Factors giving security to principal and interest
are considered adequate, but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds which are rated Baa are considered as medium grade
obligations i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear
adequate for the present, but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
<PAGE>
Standard & Poor's
AAA -- Bonds rated `AAA' have the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal
is extremely strong.
AA -- Bonds rated `AA' have a very strong capacity to pay
interest and repay principal and differ from the highest rated
issues only in small degree.
A -- Bonds rated `A' have a strong capacity to pay interest and
repay principal although they are somewhat more susceptible to
the adverse effects of changes in circumstances and economic
conditions than bonds in higher rated categories.
BBB--Bonds rated `BBB' are regarded as having an adequate
capacity to pay interest and repay principal. Whereas they
normally exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in
this category than for bonds in higher rated categories.
INVESTMENT RESTRICTIONS
As fundamental investment restrictions, which may not be changed
without a vote of a majority of the outstanding voting
securities, the fund may not and will not:
(1) Borrow money in excess of 10% of the value (taken at the
lower of cost or current value) of its total assets (not
including the amount borrowed) at the time the borrowing is made,
and then only from banks as a temporary measure to facilitate the
meeting of redemption requests (not for leverage) which might
otherwise require the untimely disposition of portfolio
investments or for extraordinary or emergency purposes. Such
borrowings will be repaid before any additional investments are
purchased.
(2) Pledge, hypothecate, mortgage or otherwise encumber its
assets in excess of 15% of its total assets (taken at current
value) and then only to secure borrowings permitted by
restriction 1 above. (The deposit of underlying securities and
other assets in escrow and other collateral arrangements in
connection with the writing of put or call options and collateral
arrangements with respect to margin for futures contracts or
options on futures contracts are not deemed to be pledges or
other encumbrances.)
<PAGE>
(3) Purchase securities on margin, except such short-term
credits as may be necessary for the clearance of purchases and
sales of securities, and except that it may make margin payments
in connection with futures contracts or options on financial
futures contracts.
(4) Make short sales of securities or maintain a short sale
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.
(5) Underwrite securities issued by other persons except to the
extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under certain
federal securities laws.
(6) Purchase or sell real estate, although it may purchase
securities which are secured by or represent interests in real
estate.
(7) Purchase or sell commodities or commodity contracts, except
futures contracts or options on futures contracts.
(8) 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 current value), or through the
lending of its portfolio securities with respect to not more than
25% of its assets.
(9) 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 of securities of that issuer together own more
than 5%.
(10) 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 U.S.
Government Securities.
(11) Acquire more than 10% of the voting securities of any
issuer.
(12) Invest more than 25% of the value of its total assets in
any
one industry. (U.S. Government Securities are not considered to
represent an industry.)
(13) Purchase securities restricted as to resale if, as a
result,
such investments would exceed 15% of the value of the fund's net
assets, including 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.
(14) Buy or sell oil, gas or other mineral leases, rights or
royalty contracts.
(15) Make investments for the purpose of gaining control of a
company's management.
(16) Issue any class of securities which is senior to the
fund's
shares of beneficial interest.
It is contrary to the fund's present policy, which may be changed
without shareholder approval, to:
(1) Invest in (a) securities which at the time of such
investment 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, if, as a
result, more than 15% of the fund's net assets (taken at current
value) would be invested in securities described in (a), (b) and
(c) above.
(2) Invest in warrants (other than warrants acquired by the fund
as part of a unit or attached to securities at the time of
purchase).
(3) Purchase or sell real property (including limited
partnership interests), except that the fund may (a) purchase or
sell readily marketable interests in real estate investment
trusts or readily marketable securities of companies which invest
in real estate (b) purchase or sell securities that are secured
by interests in real estate or interests therein, or (c) acquire
real estate through exercise of its rights as a holder of
obligations secured by real estate or interests therein or sell
real estate so acquired.
(4) Invest in the securities of other registered open-end
investment companies, except as they may be acquired as part of a
merger, consolidation or acquisition of assets.
---------------------
<PAGE>
At a meeting to be held on October 3, 1996, shareholders of
the fund are being asked to approve a number of changes to the
fund's fundamental investment restrictions, including the
elimination of certain of these restrictions. If these proposals
are approved at that meeting, the fund's fundamental and non-
fundamental investment restrictions will be as follows after that
date:
Fundamental restrictions
The fund may not or will not:
(1) Borrow money in excess of 10% of the value (taken at the
lower of cost or current value) of its total assets (not
including the amount borrowed) at the time the borrowing is made,
and then only from banks as a temporary measure to facilitate the
meeting of redemption requests (not for leverage) which might
otherwise require the untimely disposition of portfolio
investments or for extraordinary or emergency purposes. Such
borrowings will be repaid before any additional investments are
purchased.
(2) Underwrite securities issued by other persons except to the
extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under certain
federal securities laws.
(3) 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.
(4) 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.
(5) 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
.
(6) 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.
(7) With respect to 75% of its total assets, acquire more than
10% of the outstanding voting securities of any issuer.
(8) 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.
(9) Issue any class of securities which is senior to the fund's
shares of beneficial interest, except for permitted borrowings.
Non-fundamental restrictions
The fund may not and will not:
(1) Invest in (a) securities which at the time of such
investment 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, if, as a
result, more than 15% of the fund's net assets (taken at current
value) would be invested in securities described in (a), (b) and
(c) above.
(2) Invest in warrants (other than warrants acquired by the fund
as part of a unit or attached to securities at the time of
purchase).
(3) Purchase or sell real property (including limited
partnership interests), except that the fund may (a) purchase or
sell readily marketable interests in real estate investment
trusts or readily marketable securities of companies which invest
in real estate (b) purchase or sell securities that are secured
by interests in real estate or interests therein, or (c) acquire
real estate through exercise of its rights as a holder of
obligations secured by real estate or interests therein or sell
real estate so acquired.
(4) Invest in the securities of other registered open-end
investment companies, except as they may be acquired as part of a
merger, consolidation or acquisition of assets.
(5) Invest in the 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 securities of that issuer together own more than 5%
of such securities.
<PAGE>
(6) Purchase securities on margin, except such short-term
credits as may be necessary for the clearance of purchases and
sales of securities, and except that it may make margin payments
in connection with financial futures contracts or options.
(7) 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 in equal amount to, the
securities sold short.
(8) Pledge, hypothecate, mortgage or otherwise encumber its
assets in excess of 33 1/3% of its total assets (taken at cost)
in connection with permitted borrowings.
(9) Buy
or sell oil, gas or other mineral leases, rights or
royalty contracts, although it may purchase securities which
represent interests in, are secured by interests in, or which are
issued by issuers which deal in, such leases, rights or
contracts, and it may acquire and dispose of such leases, rights
or contracts acquired through the exercise of its rights as a
holder of debt obligations secured thereby.
If shareholders do not ultimately approve some or all of the
proposed changes, this SAI will be revised accordingly.
----------------------
Although certain of the fund's fundamental investment
restrictions permit the fund to borrow money to a limited extent,
the fund does not currently intend to do so and did not do so
last year.
--------------------
The Investment Company Act of 1940 provides that a "vote of a
majority of the outstanding voting securities" of the fund means
the affirmative vote of the lesser of (1) more than 50% of the
outstanding fund shares , or (2) 67% or more of the
shares present at a meeting if more than 50% of the outstanding
fund shares are represented at the meeting in person or by
proxy.
---------------------
All percentage limitations on investments will apply at the time
of the making of an investment and shall not be considered
violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment.
CHARGES AND EXPENSES
Management Fees
Under a Management Contract dated December 21, 1988, the fund
pays a quarterly fee to Putnam Management based on the average
net assets of the fund, as determined at the close of each
business day during the quarter, at an annual rate of 0.75% of
the first $100 million of the fund's average net assets, 0.65% of
the next $100 million, 0.55% of the next $300 million, 0.45% of
the next $500 million, and 0.40% of any amount over
$1 billion. For the past three fiscal years, pursuant to the
Management Contract the fund incurred the following fees:
Fiscal Management
year fee paid
- ------ -----------------
1995 $2,680,908
1994 $3,143,405
1993 $3,690,049
Brokerage commissions
The following table shows brokerage commissions paid during the
fiscal periods indicated.
Fiscal Brokerage
year commissions
------ ------------
1995 $11,168
1994 $875
1993 $5,250
<PAGE>
The following table shows transactions placed with brokers and
dealers during the most recent fiscal year to recognize research,
statistical and quotation services Putnam Management considered
to be particularly useful to it and its affiliates.
Dollar
value Percent of
of these total Amount of
transactions transactions commissions
------------ ------------ -----------
$8,582,750 76.61% $688
Administrative expense reimbursement
The fund reimbursed Putnam Management in the following amounts
for administrative services during fiscal 1995, including the
following amounts for compensation of certain officers of the
fund and contributions to the Putnam Investments, Inc. Profit
Sharing Retirement Plan for their benefit:
Portion of total
reimbursement for
compensation
Total and
reimbursement contributions
------------- ----------------
$9,706 $9,547
Trustee fees
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 1995 and the fees paid to each Trustee by all of
the Putnam funds during calendar year 1995:
<PAGE>
Compensation table
Total
Aggregate compensation
compensation from all
Trustees from the fund* Putnam funds**
- --------------------------------------------------------------
Jameson A. Baxter/1994 $1,067 $150,854
Hans H. Estin/1972 1,071 150,854
John A. Hill/1985*** 1,059 149,854
Elizabeth T. Kennan/1992 1,060 148,854
Lawrence J. Lasser/1992 1,071 150,854
Robert E. Patterson/1984 1,082 152,854
Donald S. Perkins/1982 1,071 150,854
William F. Pounds/1971 1,056 149,854
George Putnam/1957 1,071 150,854
George Putnam, III/1984 1,071 150,854
Eli Shapiro/1995**** 480 95,372
A.J.C. Smith/1986 1,064 149,854
W. Nicholas Thorndike/1992 1,082 152,854
* Includes an annual retainer and an attendance fee for each
meeting attended.
** Reflects total payments received from all Putnam funds in
the most recent calendar year. As of December 31, 1995,
there were 99 funds in the Putnam family.
*** Includes compensation deferred pursuant to a
Trustee Compensation Deferral Plan. The total amount of
deferred compensation payable to Mr. Hill by all Putnam
funds as of October 31, 1995 was $37,322, including income
earned on such amounts.
**** Elected as a Trustee in April 1995.
The 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, unless
otherwise determined by the Trustees, will be an annual cash
benefit payable for life equal to one-half of the Trustee
retainer fees paid by each fund at the time of retirement.
Several retired Trustees are currently receiving benefits
pursuant to the Guidelines and it is anticipated that the current
Trustees will receive similar benefits upon their retirement. A
Trustee who retired in calendar 1995 and was eligible to receive
benefits under these Guidelines would have received an annual
benefit of $66,749, based upon the aggregate retainer fees paid
by the Putnam funds for such year. The Trustees 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.
For additional information concerning the Trustees, see
"Management" in Part II of this SAI.
Share ownership
At January 31, 1996, the officers and Trustees of the fund as a
group owned less than 1% of the outstanding shares of each class,
and, except as noted below, to the knowledge of the fund, no
person owned of record or beneficially 5% or more of the shares
of any class of the fund.
Shareholder name Percentage
Classand address owned
---------------------------------
B Carmella Dito 6.90%
2030 Moraga St.
San Francisco, CA 94122
BRobert J. Linder 5.00%
24 E. Broad Oaks
Houston, TX 77056
MWilliam S. Bierbaum 48.60%
P.O. Box 849
Spirit Lake, ID 83869
MDonaldson Lufkin & Jenrette 9.00%
P.O. Box 2052
Jersey City, NJ 07303
MPeter J. Morren 7.60%
30 Lockart St.
Wilkes-Barre, PA
MJosephine D. Marston 6.70%
40 Sylvester St.
Manchester, NH 01302
Distribution fees
During fiscal 1995, the fund paid the following 12b-1 fees to
Putnam Mutual Funds:
Class A Class B Class M
------- ------- -------
$1,079,383 $10,628 $250
Class A sales charges and contingent deferred sales charges
Putnam Mutual Funds received sales charges with respect to class
A shares in the following amounts during the periods indicated:
Sales charges
retained by Putnam Contingent
Total Mutual Funds deferred
front-end after sales
sales chargesdealer concessions charges
------------------------------- --------
Fiscal year
- -----------
1995 $127,251 $17,306 $0
1994 $249,385 $32,413 $0
1993 $534,846 $81,446 $0
Class B contingent deferred sales charges
Putnam Mutual Funds received contingent deferred sales charges
upon redemptions of class B shares in the following amounts
during the periods indicated:
Contingent deferred
sales charges
-------------------
Fiscal year
- -----------
1995 $1,461
1994 $0
Class M sales charges
Putnam Mutual Funds received sales charges with respect to class
M shares in the following amounts during the 1995 fiscal year:
Sales charges
retained by Putnam
Mutual Funds
Total after
sales charges dealer concessions
------------- ------------------
$3,122 $411
Investor servicing and custody fees and expenses
During the 1995 fiscal year, the fund incurred $815,630 in fees
and out-of-pocket expenses for investor servicing and custody
services provided by Putnam Fiduciary Trust Company.
INVESTMENT PERFORMANCE
Standard performance measures
(for periods ended October 31, 1995)
Class A Class B Class M*
Inception date: 6/2/86 6/6/94 4/12/95
Total
return NAV** POP*** NAV CDSC NAV POP
- -----------------------------------------------------------------
1 year 15.97% 10.51% 15.09% 10.09% -- --
5 years 8.19 7.15 -- -- -- --
Life of class 7.34 6.79 9.44 6.67 9.35% 5.81%
Yield POP NAV POP
30-day 5.56% 5.10% 5.38%
Yield
* Period represents cumulative, rather than average annual
total return.
** net asset value
*** public offering price
Data represent past performance and are not indicative of future
results. Total return and yield at POP for class A and class M
shares reflects the deduction of the maximum sales charge of
4.75% and 3.25%, respectively. Total return at CDSC for class B
shares reflects the deduction of the applicable contingent
deferred sales charge (CDSC). The maximum class B CDSC is 5%.
See "Standard performance measures" in Part II of this SAI for
information on how performance is calculated. Past performance is
no guarantee of future results.
<PAGE>
ADDITIONAL OFFICERS
In addition to the persons listed as officers of the fund in Part
II of this SAI, each of the following persons is also a Vice
President of the fund and Vice President of certain of the
Putnam funds. Officers of Putnam Management hold the same
offices in Putnam Management's parent company, Putnam
Investments, Inc.
Gary N. Coburn. Senior Managing Director of Putnam Management.
Kenneth J. Taubes. Senior Vice President of Putnam Management.
Max S. Senter. Senior Vice President of Putnam Management.
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA
02109, are the fund's independent accountants, providing audit
services, tax return review and other tax consulting services and
assistance and consultation in connection with the review of
various Securities and Exchange Commission filings. The Report
of Independent Accountants, financial highlights and financial
statements included in the fund's Annual Report for the fiscal
year ended October 31, 1995, filed electronically on January 6,
1996 (File No. 811-4617), are incorporated by reference into this
SAI. The financial highlights included in the prospectus and
incorporated by reference into this SAI and the financial
statements incorporated by reference into the prospectus and this
SAI have been so included and incorporated in reliance upon the
report of independent accountants, given on their authority as
experts in auditing and accounting.<PAGE>
PUTNAM FEDERAL INCOME TRUST
Prospectus Supplement dated August 30, 1996
to Prospectuses dated March 1, 1996
At a shareholder meeting to be held on October 3, 1996, the
shareholders of the fund are being asked to approve amendments to
the fund's fundamental investment restrictions, including the
elimination of certain restrictions. If these amendments are
approved, the fund will be able to:
- - acquire more than 10% of the voting securities of any issuer
with respect to 25% of its total assets; and
- - invest
more than 5% of the total assets in the securities of
any issuer with respect to 25% of its assets. (Investments
in obligations issued or guaranteed as to interest or
principal by the U.S. government or its agencies or
instrumentalities are not subject to any limitation.)
To the extent the fund invests a significant portion of its
assets in the securities of a particular issuer, such fund will
be subject to an increased risk of loss if the market value of
such issuer's securities declines.
The policies set forth above are fundamental and may not be
changed without shareholder approval. See the Statement of
Additional Information of the fund for the full text of these
policies as well as the fund's other fundamental policies, some
of which are also proposed to be amended at the upcoming meeting.
If shareholders do not ultimately approve some or all of the
proposed changes, the prospectuses will be revised accordingly.
