SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
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PUTNAM DIVIDEND INCOME FUND
PUTNAM HIGH INCOME CONVERTIBLE AND BOND FUND
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than Registrant)
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Q & A for Putnam Dividend Income Fund/Putnam High
Income Convertible and Bond Fund
On or about March 23, 1998 a proxy statement was sent to
shareholders of [Putnam Dividend Income Fund/Putnam High Income
Convertible and Bond Fund] asking for their vote on the following
matters: (1) for fixing the number of and electing the fund's
Trustees; (2) ratifying the selection of the fund's independent
auditors; (3) approving an amendment to the fund's fundamental
investment restriction with respect to making loans.
Listed below are questions shareholders are likely to ask and
recommended responses.
Proposal 1
Election of Trustees
What is being proposed?
The Nominating Committee of the Trustees, which consists solely
of Trustees who are independent with no financial interest in
Putnam Management, recommends that the number of Trustees be
fixed at sixteen and that shareholders vote for the election of
the nominees for Trustees.
What are the Trustees' responsibilities?
The Trustees are responsible for the general oversight of your
fund's business and for assuring that your fund is managed in the
best interests of the shareholders.
Proposal 2
Election of Auditors
Who has selected the independent auditors of the fund?
Putnam Dividend Income Fund
The Trustees have selected Coopers & Lybrand L.L.P. as the
independent auditors of your fund and shareholders are being
asked to ratify the selection for the current year.
Putnam High Income Convertible and Bond Fund
The Trustees have selected Price Waterhouse LLP as the
independent auditors of your fund and shareholders are being
asked to ratify the selection for the current year.
What were the reasons for the selection of Coopers & Lybrand
L.L.P./Price Waterhouse LLP as the independent auditors of the
fund?
The Trustees selected [Coopers & Lybrand L.L.P./Price Waterhouse
LLP] primarily based on its expertise as auditors of investment
companies, the quality of its audit services and the
competitiveness of its fees.
Proposal 3
Amending the fund's fundamental investment
restriction with respect to making loans
What are the Trustees proposing?
The Trustees are recommending that the fund's fundamental
investment restriction with respect to making loans be revised to
reflect the standard restriction expected to be used by other
Putnam funds and to clarify that the
fund
is permitted to
participate in a proposed interfund lending program
.
If the proposal is approved, the fund would be able to
participate in
an interfund lending
program and make loans to
other Putnam funds.
The fund would only make loans under the
program if it could receive an interest rate higher than those
available for repurchase agreements. There is a risk that the
fund could experience a delay in obtaining prompt repayment of a
loan and, unlike repurchase agreements, the fund would not
necessarily have received collateral for its loan. A delay in
obtaining prompt payment could cause the fund to miss an
investment opportunity or to incur costs to borrow money to
replace the delayed
payment.
Since the Putnam funds may be considered affiliated parties,
interfund lending may be prohibited by the Investment Company Act
of 1940 and would be implemented only upon receipt of an
exemptive order of the Securities and Exchange Commission.
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