SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
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Filed by the Registrant / X /
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Filed by a Party other than the Registrant / /
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Check the appropriate box:
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/ / Preliminary Proxy Statement
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/ / 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 CONVERTIBLE INCOME-GROWTH TRUST
(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:
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(4) Proposed maximum aggregate value of transaction:
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/ / Check box if any part of the fee is offset as provided
- ---- by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed: <PAGE>
IMPORTANT INFORMATION
FOR SHAREHOLDERS IN
PUTNAM CONVERTIBLE INCOME-GROWTH TRUST
The document you hold in your hands contains your proxy statement
and proxy card. A proxy card is, in essence, a ballot. When you
vote your proxy, it tells us how to vote on your behalf on
important issues relating to your fund. If you complete and sign
the proxy, we'll vote it exactly as you tell us. If you simply
sign the proxy, we'll vote it in accordance with the Trustees'
recommendations on pages 5, 6 and 7 .
We urge you to spend a couple of minutes with the proxy
statement, fill out your proxy card, and return it to us. When
shareholders don't return their proxies in sufficient numbers, we
have to incur the expense of follow-up solicitations, which can
cost your fund money.
We want to know how you would like to vote and welcome your
comments. Please take a few moments with these materials and
return your proxy to us.
(PUTNAM LOGO APPEARS HERE)
BOSTON * LONDON * TOKYO
<PAGE>
Table of contents
A Message from the Chairman. . . . . . . . . . . . . . . . . . . . . . . .1
Notice of Shareholder Meeting. . . . . . . . . . . . . . . . . . . 2
Trustees' Recommendations. . . . . . . . . . . . . . . . . . . . . . . . .5
Proxy card enclosed
If you have any questions, please contact us at the special toll-
free number we have set up for you (1-800-225-1581) or call your
financial adviser.
<PAGE>
A Message from the Chairman
(Photograph of George Putnam appears here)
Dear Shareholder:
I am writing to you to ask for your vote on important questions
that affect your investment in your fund. While you are, of
course, welcome to join us at your fund's meeting, most
shareholders cast their vote by filling out and signing the
enclosed proxy. We are asking for your vote on the following
matters:
1. Electing Trustees to oversee your fund;
2. Ratifying the selection by the Trustees of the independent
auditors of your fund for its current fiscal year; and
3. Approving a number of changes to your fund's fundamental
investment restrictions, including the elimination of
certain of these restrictions.
Although we would like very much to have each shareholder attend
their fund's meeting, we realize this is not possible. Whether
or not you plan to be present, we need your vote. We urge you to
complete, sign, and return the enclosed proxy card promptly. A
postage-paid envelope is enclosed.
I'm sure that you, like most people, lead a busy life and are
tempted to put this proxy aside for another day. Please don't.
When shareholders don't return their proxies, their fund may have
to incur the expense of follow-up solicitations. All
shareholders benefit from the speedy return of proxies.
Your vote is important to us. We appreciate the time and
consideration that I am sure you will give this important matter.
If you have questions about the proposals, contact your financial
adviser or call a Putnam customer service representative at
1-800-225-1581.
Sincerely yours,
(signature of George Putnam)
George Putnam, Chairman
<PAGE>
PUTNAM CONVERTIBLE INCOME-GROWTH TRUST
Notice of a Meeting of Shareholders
This is the formal agenda for your fund's shareholder meeting.
It tells you what matters will be voted on and the time and place
of the meeting, if you can attend in person.
To the Shareholders of Putnam Convertible Income-Growth Trust:
A Meeting of Shareholders of your fund will be held on July 31,
1996 at 2:00 p.m., Boston time, on the eighth floor of One Post
Office Square, Boston, Massachusetts, to consider the following:
1. Electing Trustees. See page 8 .
2. Ratifying the selection by the Trustees of the independent
auditors of your fund for its current fiscal year. See
page 25 .
3.A. Approving an amendment to the fund's fundamental investment
restriction with respect to diversification of investments.
See page 25 .
3.B. Approving an amendment to the fund's fundamental investment
restriction with respect to investments in the securities of
a single issuer. See page 27 .
3.C. Approving an amendment to the fund's fundamental investment
restriction with respect to making loans through purchases
of debt obligations, repurchase agreements and securities
loans. See page 29 .
3.D. Approving an amendment to the fund's fundamental investment
restriction with respect to investments in real estate. See
page 31 .
3.E. Approving an amendment to the fund's fundamental investment
restriction with respect to concentration of its assets.
See page 33 .
3.F. Approving an amendment to the fund's fundamental
investment restriction with respect to investments in
commodities or commodity contracts . See page
34 .
3.G. Approving an amendment to the fund's fundamental
investment restriction with respect to underwriting.
See page 37.
3.H . Approving the elimination of the fund's
fundamental investment restriction with respect to
investments in certain oil, gas and mineral
interests. See page 38 .
<PAGE>
3.I . Approving the elimination of the fund's
fundamental investment restriction with respect to
options transactions. See page 40 .
3.J . Approving the elimination of the fund's
fundamental investment restriction with respect to
investments in issuers that have been in operation
for less than three years. See page 42 .
3.K . Approving the elimination of the fund's
fundamental investment restriction with respect to
investments in securities of issuers in which
management of the fund or Putnam Investment
Management, Inc. owns securities. See page
44 .
3.L . Approving the elimination of the fund's
fundamental investment restriction with respect to
margin transactions. See page 45 .
3.M . Approving the elimination of the fund's
fundamental investment restriction with respect to
short sales. See page 47 .
3.N . Approving the elimination of the fund's
fundamental investment restriction which limits
the fund's ability to pledge assets. See page
48 .
3.O . Approving the elimination of the fund's
fundamental investment restrictions with
respect to investments in illiquid securities.
See page 50 .
3.P. Approving the elimination of the fund's fundamental
investment restriction with respect to investing to gain
control of a company's management. See page 52 .
3.Q. Approving the elimination of the fund's fundamental
investment restriction with respect to investments in
warrants. See page 53 .
4. Transacting other business as may properly come before the
meeting.
By the Trustees
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson A. Baxter Robert E. Patterson
Hans H. Estin Donald S. Perkins
John A. Hill George Putnam, III
Ronald J. Jackson Eli Shapiro
Elizabeth T. Kennan A.J.C. Smith
Lawrence J. Lasser W. Nicholas Thorndike
WE URGE YOU TO MARK, SIGN, DATE, AND MAIL THE ENCLOSED PROXY IN
THE POSTAGE-PAID ENVELOPE PROVIDED SO YOU WILL BE REPRESENTED AT
THE MEETING.
June 7 , 1996
<PAGE>
Proxy Statement
This document will give you the information you need to vote on
the matters listed on the previous page. Much of the information
in the proxy statement is required under rules of the Securities
and Exchange Commission ("SEC") ; some of it is technical.
If there is anything you don't understand, please contact us at
our special toll-free number, 1-800-225-1581, or call your
financial adviser.
Who is asking for my vote?
The enclosed proxy is solicited by the Trustees of Putnam
Convertible Income-Growth Trust for use at the Meeting of
Shareholders of the fund to be held on July 31, 1996, and, if
your fund's meeting is adjourned, at any later meetings, for the
purposes stated in the Notice of Meeting (see previous page).
How do your fund's Trustees recommend that shareholders vote on
these proposals?
The Trustees recommend that you vote
1. For the election of all nominees;
2. For selecting Coopers and Lybrand L.L.P. as the independent
auditors of your fund;
3.A. For amending the fund's fundamental investment restriction
with respect to diversification of investments;
3.B. For amending the fund's fundamental investment restriction
with respect to investments in the securities of a
single issuer;
3.C. For amending the fund's fundamental investment restriction
with respect to making loans through purchases of debt
obligations, repurchase agreements and securities loans;
3.D. For amending the fund's fundamental investment restriction
with respect to investments in real estate;
3.E. For amending the fund's fundamental investment restriction
with respect to concentration of its assets;
3.F. For amending the fund's fundamental investment restriction
with respect to investments in commodities or commodity
contracts ;
3.G. For amending the fund's fundamental investment
restriction with respect to underwriting;
<PAGE>
3.H . For eliminating the fund's fundamental investment
restriction with respect to investments in
certain oil, gas and mineral interests;
3.I . For eliminating the fund's fundamental investment
restriction with respect to options transactions;
3.J . For eliminating the fund's fundamental investment
restriction with respect to investments in issuers
that have been in operation for less than three
years;
3.K . For eliminating the fund's fundamental investment
restriction with respect to investments in
securities of issuers in which management of the
fund or Putnam Investment Management, Inc. owns
securities;
3.L . For eliminating the fund's fundamental investment
restriction with respect to margin transactions;
3.M . For eliminating the fund's fundamental investment
restriction with respect to short sales;
3.N . For eliminating the fund's fundamental investment
restriction which limits the fund's ability to
pledge assets;
3.O . For eliminating the fund's fundamental investment
restrictions with respect to investments in
illiquid securities;
3.P. For eliminating the fund's fundamental investment
restriction with respect to investing to gain control of a
company's management ; and
3.Q. For eliminating the fund's fundamental investment
restriction with respect to investments in warrants.
Who is eligible to vote?
Shareholders of record at the close of business on May 3, 1996,
are entitled to be present and to vote at the meeting or any
adjourned meeting. The Notice of Meeting, the proxy, and the
Proxy Statement have been mailed to shareholders of record on or
about June 10 , 1996.
Each share is entitled to one vote. Shares represented by duly
executed proxies will be voted in accordance with shareholders'
instructions. If you sign the proxy, but don't fill in a vote,
your shares will be voted in accordance with the Trustees'
recommendations. If any other business is brought before the
meeting, your shares will be voted at the Trustees' discretion.
<PAGE>
The Proposals
I. ELECTION OF TRUSTEES
Who are the nominees for Trustees?
The Nominating Committee of the Trustees recommends that the
number of Trustees be fixed at fourteen and that you vote for the
election of the nominees described below. Each nominee is
currently a Trustee of your fund and of the other Putnam funds.
The Nominating Committee of the Trustees consists solely of
Trustees who are not "interested persons" (as defined in the
Investment Company Act of 1940) of your fund or of Putnam
Investment Management, Inc., your fund's investment manager
("Putnam Management").
Jameson Adkins Baxter
[Insert Picture]
Ms. Baxter, age 52, is the President of Baxter Associates, Inc.,
a management and financial consulting firm which she founded in
1986. During that time, she was also a Vice President and
Principal of the Regency Group, Inc., and a Consultant to First
Boston Corporation, both of which are investment banking firms.
From 1965 to 1986, Ms. Baxter held various positions in
investment banking and corporate finance at First Boston.
Ms. Baxter currently also serves as a Director of Banta
Corporation, Avondale Federal Savings Bank, and ASHTA Chemicals,
Inc. She is also the Chairman Emeritus of the Board of Trustees
of Mount Holyoke College, having previously served as Chairman
for five years and as a Board member for thirteen years; an
Honorary Trustee and past President of the Board of Trustees of
the Emma Willard School; and Chair of the Board of Governors of
Good Shepherd Hospital. Ms. Baxter is a graduate of Mount
Holyoke College.
Hans H. Estin
[Insert Picture]
Mr. Estin, age 67, is a Chartered Financial Analyst and the Vice
Chairman of North American Management Corp., a registered
investment adviser serving individual clients and their families.
Mr. Estin currently also serves as a Director of The Boston
Company, Inc., a registered investment adviser which provides
administrative and investment management services to mutual funds
and other institutional investors, and Boston Safe Deposit and
Trust Company; a Corporation Member of Massachusetts General
Hospital; and a Trustee of New England Aquarium. He previously
served as the Chairman of the Board of Trustees of Boston
University and is currently active in various other civic
associations, including the Boys & Girls Clubs of Boston, Inc.
Mr. Estin is a graduate of Harvard College and holds honorary
doctorates from Merrimack College and Boston University.
John A. Hill
[Insert Picture]
Mr. Hill, age 54, is the Chairman and Managing Director of First
Reserve Corporation, a registered investment adviser investing in
companies in the world-wide energy industry on behalf of
institutional investors.
Prior to acquiring First Reserve in 1983, Mr. Hill held executive
positions with several investment advisory firms and held various
positions with the Federal government, including Associate
Director of the Office of Management and Budget and Deputy
Administrator of the Federal Energy Administration.
Mr. Hill currently also serves as a Director of Snyder Oil
Corporation, an exploration and production company which he
founded, Maverick Tube Corporation, a manufacturer of structural
steel, pipe and well casings, PetroCorp Incorporated, an
exploration and production company, Weatherford Enterra, Inc., an
oil field service company, various private companies controlled
by First Reserve Corporation, and various First Reserve Funds.
He is also a Member of the Board of Advisors of Fund Directions.
He is currently active in various business associations,
including the Economic Club of New York, and lectures on energy
issues in the United States and Europe. Mr. Hill is a graduate
of Southern Methodist University.
Ronald J. Jackson
[Insert Picture]
Mr. Jackson, age 52, was Chairman of the Board, President and
Chief Executive Officer of Fisher-Price, Inc., a major toy
manufacturer, from 1990 to 1993. He previously served as
President and Chief Executive Officer of Stride-Rite, Inc., a
manufacturer and distributor of footwear, from 1989 to 1990, and
as President and Chief Executive Officer of Kenner Parker Toys,
Inc., a major toy and game manufacturer, from 1985
to 1987. Prior to that, he held various financial and marketing
positions at General Mills, Inc. From 1966 to 1985, including
Vice President, Controller and Vice President of Marketing for
Parker Brothers, a toy and game company, and President of
Talbot's, a retailer and direct marketer of women's apparel.
Mr. Jackson currently serves as a Trustee of Salem Hospital and
an Overseer of the Peabody Essex Museum. He previously served as
a Director of a number of public companies including Fisher-
Price, Inc., Kenner Parker Toys, Inc., Stride-Rite, Inc.,
and Mattel, Inc., a major toy manufacturer . Mr.
Jackson is a graduate of Michigan State University Business
School.
<PAGE>
Elizabeth T. Kennan
[Insert Picture]
Ms. Kennan, age 58, is President Emeritus and Professor of Mount
Holyoke College. From 1978 through June 1995, she was President
of Mount Holyoke College. From 1966 to 1978, she was on the
faculty of Catholic University, where she taught history and
published numerous articles.
Ms. Kennan currently also serves as a Director of NYNEX
Corporation, a telecommunications company, Northeast Utilities,
the Kentucky Home Life Insurance Companies, and Talbot's .
She also serves as a Member of The Folger Shakespeare Library
Committee. She is currently active in various educational and
civic associations, including the Committee on Economic
Development and the Council on Foreign Relations. Ms. Kennan is
a graduate of Mount Holyoke College, the University of Washington
and St. Hilda College at Oxford University and holds several
honorary doctorates.
Lawrence J. Lasser*
[Insert Picture]
Mr. Lasser, age 53, is the Vice President of your fund and the
other Putnam funds. He has been the President, Chief Executive
Officer and a Director of Putnam Investments, Inc. and Putnam
Management since 1985, having begun his career there in 1969.
Mr. Lasser currently also serves as a Director of Marsh &
McLennan Companies, Inc., the parent company of Putnam
Management, and INROADS/Central New England, Inc., a job market
internship program for minority high school and college students.
He is a Member of the Board of Overseers of the Museum of
Science, the Museum of Fine Arts and the Isabella Stewart Gardner
Museum in Boston. He is also a Trustee of the Beth Israel
Hospital and Buckingham, Browne and Nichols School. Mr. Lasser
is a graduate of Antioch College and Harvard Business School.
Robert E. Patterson
[Insert Picture]
Mr. Patterson, age 51, is the Executive Vice President and
Director of Acquisitions of Cabot Partners Limited Partnership, a
registered investment adviser which manages real estate
investments for institutional investors. Prior to 1990, he was
the Executive Vice President of Cabot, Cabot & Forbes Realty
Advisors, Inc., the predecessor company of Cabot Partners. Prior
to that, he was a Senior Vice President of the Beal Companies, a
real estate management, investment and development company. He
has also worked as an attorney and held various positions in
state government, including the founding Executive Director of
the Massachusetts Industrial Finance Agency.
Mr. Patterson currently also serves as Chairman of the Joslin
Diabetes Center and as a Director of Brandywine Trust Company.
Mr. Patterson is a graduate of Harvard College and Harvard Law
School.
Donald S. Perkins*
[Insert Picture]
Mr. Perkins, age 69, is the retired Chairman of the Board of
Jewel Companies, Inc., a diversified retailer, where among other
roles he served as President, Chief Executive Officer and
Chairman of the Board from 1965 to 1980. He currently also
serves as a Director of various other public corporations,
including AON Corp., an insurance company, Cummins Engine
Company, Inc., an engine and power generator equipment
manufacturer and assembler, Current Assets L.L.C., a corporation
providing financial staffing services, Illinova and Illinois
Power Co., Inland Steel Industries, Inc., LaSalle Street Fund,
Inc., a real estate investment trust, Lucent Technologies Inc.,
Springs Industries, Inc., a textile manufacturer, and Time
Warner, Inc., one of the nation's largest media conglomerates.
He previously served as a director of several other major public
corporations, including Corning Glass Works, Eastman Kodak
Company, Firestone Tire & Rubber Company and Kmart Corporation.
Mr. Perkins currently also serves as a Trustee and Vice Chairman
of Northwestern University and as a Trustee of the Hospital
Research and Education Trust. He is currently active in various
civic and business associations, including the Business Council
and the Civic Committee of the Commercial Club of Chicago, of
which he is the founding Chairman. Mr. Perkins is a graduate of
Yale University and Harvard Business School and holds an honorary
doctorate from Loyola University of Chicago.
William F. Pounds
[Insert Picture]
Dr. Pounds, age 68, is the Vice Chairman of your fund and of the
other Putnam funds. He has been a Professor of Management at the
Alfred P. Sloan School of Management at the Massachusetts
Institute of Technology since 1961 and served as Dean of that
School from 1966 to 1980. He previously served as Senior Advisor
to the Rockefeller Family and Associates and was a past Chairman
of Rockefeller & Co., Inc., a registered investment adviser which
manages Rockefeller family assets, and Rockefeller Trust Company.
Dr. Pounds currently also serves as a Director of IDEXX
Laboratories, Inc., EG&G, Inc., Perseptive Biosystems, Inc.,
Management Sciences For Health, Inc. and Sun Company, Inc. He is
also a Trustee of the Museum of Fine Arts in Boston; an Overseer
of WGBH Educational Foundation, and a Fellow of The American
Academy of Arts and Sciences. He previously served as a director
of Fisher-Price, Inc., a major toy manufacturer and General
Mills, Inc., a major manufacturer and distributor of food
products. Dr. Pounds is a graduate of Carnegie Mellon
University.
George Putnam*
[Insert Picture]
Mr. Putnam, age 69, is the Chairman and President of your fund
and of the other Putnam funds. He is the Chairman and a Director
of Putnam Management and Putnam Mutual Funds Corp. and a director
of Marsh & McLennan, their parent company. Mr. Putnam is the son
of the founder of the Putnam funds and Putnam Management and has
been employed in various capacities by Putnam Management since
1951, including Chief Executive Officer from 1961 to 1973. He is
a former Overseer and Treasurer of Harvard University; a past
Chairman of the Harvard Management Company; and a Trustee
Emeritus of Wellesley College and Bradford College.
Mr. Putnam currently also serves as a Director of The Boston
Company, Inc., Boston Safe Deposit and Trust Company, Freeport-
McMoRan, Inc., Freeport Copper and Gold, Inc., McMoRan Oil and
Gas, Inc., mining and natural resources companies, General Mills,
Inc., a major manufacturer of food products, Houghton Mifflin
Company, a major publishing company, and Rockefeller Group, Inc.,
a real estate manager. He is also a Trustee of Massachusetts
General Hospital, McLean Hospital, Vincent Memorial Hospital,
WGBH Educational Foundation and the Museum of Fine Arts and the
Museum of Science in Boston; the New England Aquarium; an
Overseer of Northeastern University; and a Fellow of The American
Academy of Arts and Sciences. Mr. Putnam is a graduate of
Harvard College and Harvard Business School and holds honorary
doctorates from Bates College and Harvard University.
George Putnam, III*
[Insert Picture]
Mr. Putnam, age 44, is the President of New Generation Research,
Inc., a publisher of financial advisory and other research
services relating to bankrupt and distressed companies, and New
Generation Advisers, Inc., a registered investment adviser which
provides advice to private funds specializing in investments in
such companies. Prior to founding New Generation in 1985, Mr.
Putnam was an attorney with the Philadelphia law firm Dechert
Price & Rhoads.
Mr. Putnam currently also serves as a Director of the
Massachusetts Audubon Society. He is also a Trustee of the Sea
Education Association and St. Mark's School and an Overseer of
the New England Medical Center. Mr. Putnam is a graduate of
Harvard College, Harvard Business School and Harvard Law School.
Eli Shapiro
[Insert Picture]
Dr. Shapiro, age 79, is the Alfred P. Sloan Professor of
Management, Emeritus at the Alfred P. Sloan School of Management
at the Massachusetts Institute of Technology, having served on
the faculty of the Sloan School for eighteen years. He
previously was also on the faculty of Harvard Business School,
The University of Chicago School of Business and Brooklyn
College. During his academic career, Dr. Shapiro authored
numerous publications concerning finance and related topics. He
previously served as the President and Chief Executive
Officer of the National Bureau of Economic Research and
also provided economic and financial consulting services to
various clients.
Dr. Shapiro is a past Director of many companies, including
Nomura Dividend Income Fund, Inc., a privately held registered
investment company managed by Putnam Management, Reece
Corporation, a sewing machine manufacturer, Commonwealth
Mortgage, Dexter Corporation, a manufacturer of plastics and
related products, Avis Corporation, a car rental company,
Connecticut Bank and Trust Company, Connecticut National Gas
Corporation, the Federal Home Loan Bank of Boston, where he
served as Chairman from 1977 to 1989, Travelers' Corporation, an
insurance company, and Norlin Corporation, a musical instrument
manufacturer; and a past Trustee of Mount Holyoke College and the
Putnam funds (from 1984 to 1989).
Dr. Shapiro is a Fellow of The American Academy of Arts and
Sciences and is active in various professional and civic
associations, including the American Economic Association, the
American Finance Association and the Council on Foreign
Relations. Dr. Shapiro is a graduate of Brooklyn College and
Columbia University.
A.J.C. Smith*
[Insert Picture]
Mr. Smith, age 62, is the Chairman and Chief Executive Officer of
Marsh & McLennan Companies, Inc. He has been employed by Marsh &
McLennan and related companies in various capacities since 1961.
Mr. Smith is a Director of the Trident Corp., and he also serves
as a Trustee of the Carnegie Hall Society, the Central Park
Conservancy, The American Institute for Chartered Property
Underwriters, and is a Founder of the Museum of Scotland Society.
He was educated in Scotland and is a Fellow of the Faculty of
Actuaries in Edinburgh, a Fellow of the Canadian Institute of
Actuaries, a Fellow of the Conference of Actuaries in Public
Practice, an Associate of the Society of Actuaries, a Member of
the American Academy of Actuaries, the International Actuarial
Association and the International Association of Consulting
Actuaries.
W. Nicholas Thorndike**
[Insert Picture]
Mr. Thorndike, age 63, serves as a Director of various
corporations and charitable organizations, including Data General
Corporation, a computer and high technology company, Bradley Real
Estate, Inc., a real estate investment firm, Providence Journal
Co., a newspaper publisher and owner of television stations, and
Courier Corporation, a book binding and printing company. He is
also a Trustee of Eastern Utilities Associates, Massachusetts
General Hospital, where he previously served as chairman and
president, and Northeastern University.
Prior to December 1988, he was the Chairman of the Board and
Managing Partner of Wellington Management Company/Thorndike,
Doran, Paine & Lewis, a registered investment adviser which
manages mutual funds and institutional assets. He also
previously served as a Trustee of the Wellington Group of Funds
(now The Vanguard Group) and was the Chairman and a Director of
Ivest Fund, Inc. Mr. Thorndike is a graduate of Harvard College.
- ----------------------------
* Nominees who are or may be deemed to be "interested persons"
(as defined in the Investment Company Act of 1940) of your
fund, Putnam Management, and Putnam Mutual Funds Corp.
("Putnam Mutual Funds"), the principal underwriter for all
the open-end Putnam funds and an affiliate of Putnam
Management. Messrs. Putnam, Lasser, and Smith are deemed
"interested persons" by virtue of their positions as
officers or shareholders of your fund, or directors of
Putnam Management, Putnam Mutual Funds, or Marsh & McLennan
Companies, Inc., the parent company of Putnam Management and
Putnam Mutual Funds. Mr. George Putnam, III, Mr. Putnam's
son, is also an "interested person" of your fund, Putnam
Management, and Putnam Mutual Funds. Mr. Perkins may be
deemed to be an "interested person" of your fund because of
his service as a director of a certain publicly held company
that includes registered broker-dealer firms among its
subsidiaries. Neither your fund nor any of the other Putnam
funds currently engages in any transactions with such firms
except that certain of such firms act as dealers in the
retail sale of shares of certain Putnam funds in the
ordinary course of their business. The balance of the
nominees are not "interested persons."
** In February 1994, Mr. Thorndike accepted appointment as a
successor trustee of certain private trusts in which he has
no beneficial interest. At that time he also became
Chairman of the Board of two privately owned corporations
controlled by such trusts, serving in that capacity until
October 1994. These corporations filed voluntary petitions
for relief under Chapter 11 of the U.S. Bankruptcy Code in
August 1994.
Except as indicated above, the principal occupations and business
experience of the nominees for the last five years have been with
the employers indicated, although in some cases they have held
different positions with those employers. Except for Mr. Jackson
and Dr. Shapiro, all the nominees were elected by the
shareholders in May 1994 . Mr. Jackson and Dr. Shapiro
were elected by the other Trustees in May 1996 and April 1995,
respectively. As indicated above, Dr. Shapiro also previously
served as a Trustee of the Putnam funds from 1984 to 1989. The
14 nominees for election as Trustees at the shareholder meeting
of your fund who receive the greatest number of votes will be
elected Trustees of your fund. The Trustees serve until their
successors are elected and qualified. Each of the nominees has
agreed to serve as a Trustee if elected. If any of the nominees
is unavailable for election at the time of the meeting, which is
not anticipated, the Trustees may vote for other nominees at
their discretion, or the Trustees may recommend that the
shareholders fix the number of Trustees at less than 14 for your
fund.
What are the Trustees' responsibilities?
Your fund's Trustees are responsible for the general oversight of
your fund's business and for assuring that your fund is managed
in the best interests of its shareholders. The Trustees
periodically review your fund's investment performance as well as
the quality of other services provided to your fund and its
shareholders by Putnam Management and its affiliates, including
administration, custody, distribution and investor servicing. At
least annually, the Trustees review the fees paid to Putnam
Management and its affiliates for these services and the overall
level of your fund's operating expenses. In carrying out these
responsibilities, the Trustees are assisted by an independent
administrative staff and by your fund's auditors and legal
counsel, which are selected by the Trustees and are independent
of Putnam Management and its affiliates.
Do the Trustees have a stake in your fund?
The Trustees believe it is important that each Trustee have a
significant investment in the Putnam funds. The Trustees
allocate their investments among the more than 99 Putnam funds
based on their own investment needs. The Trustees' aggregate
investments in the Putnam funds total over $45 million.
The table below lists each Trustee's current investments in the
fund and in the Putnam funds as a group.
<PAGE>
Share Ownership by Trustees+
Year first Number of
elected as Number of shares of
Trustee of shares of the all Putnam
the Putnam fund owned funds owned
Trustees funds as of 4/25/96* as of 4/25/96**
- -----------------------------------------------------------------
Jameson A. Baxter 1994 57023,765
Hans H. Estin 1972 15225,936
John A. Hill 1985 2,452 115,153
Elizabeth T. Kennan 1992 32619,185
Lawrence J. Lasser 1992 140 326,967
Robert E. Patterson 1984 79959,586
Donald S. Perkins 1982 1,881 169,328
William F. Pounds 1971 4,525 347,322
George Putnam 1957 4,271 1,504,490
George Putnam, III 1984 22,794 286,696
Eli Shapiro 1995*** --80,030
A.J.C. Smith 1986 16834,255
W. Nicholas Thorndike 1992 14078,943
- -----------------------------------------------------------------
+ Ronald J. Jackson became a Trustee of the fund effective May
3, 1996 and does not own any shares of the fund or of the
other Putnam funds .
* Each Trustee has sole investment power and sole voting
power with respect to his or her shares of the fund.
** These holdings do not include shares of Putnam money market
funds.
*** Dr. Shapiro previously served as a Trustee of the Putnam
funds from 1984 to 1989.
As of April 25, 1996, the Trustees and officers of the fund owned
a total of 66,571 shares of the fund, comprising less than
1% of its outstanding shares on that date. A total of 26,477 of
these shares are held by certain "interested" Trustees and
officers of your fund and Putnam Management in their Putnam
Investments, Inc. Profit Sharing Retirement Plan accounts. Each
individual accountholder has sole investment power and shared
voting power with respect to his/her account.
What are some of the ways in which the Trustees represent
shareholder interests?
The Trustees believe that, as substantial investors in the Putnam
funds, their interests are closely aligned with those of
individual shareholders. Among other ways, the Trustees seek to
represent shareholder interests:
by carefully reviewing your fund's investment performance
on an individual basis with your fund's managers;
by also carefully reviewing the quality of the various
other services provided to the funds and their
shareholders by Putnam Management and its affiliates;
by discussing with senior management of Putnam Management
steps being taken to address any performance
deficiencies;
by reviewing the fees paid to Putnam Management to ensure
that such fees remain reasonable and competitive with
those of other mutual funds, while at the same time
providing Putnam Management sufficient resources to
continue to provide high quality services in the future;
by monitoring potential conflicts between the funds and
Putnam Management and its affiliates to ensure that the
funds continue to be managed in the best interests of
their shareholders;
by also monitoring potential conflicts among funds to
ensure that shareholders continue to realize the benefits
of participation in a large and diverse family of funds.
How often do the Trustees meet?
The Trustees meet each month (except August) over a two-day
period to review the operations of your fund and of the other
Putnam funds. A portion of these meetings is devoted to meetings
of various Committees of the board which focus on particular
matters. These include: the Contract Committee, which reviews
all contractual arrangements with Putnam Management and its
affiliates; the Communication and Service Committee, which
reviews the quality of services provided by your fund's investor
servicing agent, custodian and distributor; the Pricing,
Brokerage and Special Investments Committee, which reviews
matters relating to valuation of securities, best execution,
brokerage costs and allocations and new investment techniques;
the Audit Committee, which reviews accounting policies and the
adequacy of internal controls and supervises the engagement of
the funds' auditors; the Compensation, Administration and Legal
Affairs Committee, which reviews the compensation of the Trustees
and their administrative staff and supervises the engagement of
the funds' independent counsel; and the Nominating Committee,
which is responsible for selecting nominees for election as
Trustees.
Each Trustee generally attends at least two formal committee
meetings during such monthly meeting of the Trustees. During
1995, the average Trustee participated in approximately 40
committee and board meetings. In addition, the Trustees meet in
small groups with Chief Investment Officers and Portfolio
Managers to review recent performance and the current investment
climate for selected funds. These meetings ensure that each
fund's performance is reviewed in detail at least twice a year.
The Contract Committee typically meets on several additional
occasions during the year to carry out its responsibilities.
Other Committees, including an Executive Committee, may also meet
on special occasions as the need arises.
What are the Trustees paid for their services?
Your fund pays each Trustee a fee for his or her services. Each
Trustee also receives fees for serving as Trustee of the 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 fees paid to each
Trustee by your fund and by all of the Putnam funds are shown
below:
COMPENSATION TABLE+
Total
Aggregate compensation
compensation from all
Trustees from the fund* Putnam funds**
- --------------------------------------------------------------
Jameson A. Baxter $1,628 $150,854
Hans H. Estin 1,635 150,854
John A. Hill*** 1,615 149,854
Elizabeth T. Kennan 1,620 148,854
Lawrence J. Lasser 1,635 150,854
Robert E. Patterson 1,651 152,854
Donald S. Perkins 1,635 150,854
William F. Pounds 1,610 149,854
George Putnam 1,635 150,854
George Putnam, III 1,635 150,854
Eli Shapiro**** 745 95,372
A.J.C. Smith 1,624 149,854
W. Nicholas Thorndike 1,651 152,854
+ Ronald J. Jackson became a Trustee of the fund effective May
3, 1996 and has received no compensation from the fund or
the other Putnam funds.
* 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
December 31, 1995 was $51,141 , including
income earned on such amounts.
**** Elected as a Trustee in April 1995.
Your 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, 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 about your fund, including further
information about its Trustees and officers, please see "Further
Information About Your Fund," on page 58 .
Putnam Investments
Putnam Investment Management, Inc. and its affiliates, Putnam
Mutual Funds, the principal underwriter for shares of your fund
and Putnam Fiduciary Trust Company, your fund's investor
servicing agent and custodian, are wholly owned by Putnam
Investments, Inc., One Post Office Square, Boston, Massachusetts
02109, a holding company that is in turn wholly owned by Marsh &
McLennan Companies, Inc., which has executive offices at 1166
Avenue of the Americas, New York, New York 10036. Marsh &
McLennan Companies, Inc. and its operating subsidiaries
are professional services firms with insurance and reinsurance
brokering, consulting, and investment management businesses.
<PAGE>
2. SELECTION OF INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P., One Post Office Square, Boston,
Massachusetts, 02109 independent accountants, has been selected
by the Trustees as the auditor of your fund for the current
fiscal year. Among the country's preeminent accounting firms,
this firm also serves as the auditor for approximately half of
the other funds in the Putnam family. It was selected primarily
on the basis of its expertise as auditors of investment
companies, the quality of its audit services, and the
competitiveness of the fees charged for these services.
A majority of the votes on the matter is necessary to ratify the
selection of auditors. A representative of the independent
auditors is expected to be present at the meeting to make
statements and to respond to appropriate questions.
3. Proposals A-Q.
As described in the following proposals, the Trustees are
recommending that shareholders approve a number of changes to the
fund's fundamental investment restrictions, including the
elimination of certain restrictions. The purpose of these
proposed changes is to increase the fund's investment flexibility
and to bring the fund's policies more in line with those of many
other Putnam funds. Several of these changes reflect the
elimination of certain restrictive policies which were required
at one time by various state securities authorities but which are
no longer required under current regulations.
The adoption of any of these proposals is not contingent on the
adoption of any other proposal.
3.A. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO DIVERSIFICATION OF INVESTMENTS
The Trustees are recommending that the fund's fundamental
investment restriction with respect to the diversification
of its investments be revised to grant the fund the maximum
investment flexibility permitted by the Investment Company Act of
1940 ("1940 Act"). Under the 1940 Act, the fund, as a
diversified fund, generally may not, with respect to 75% of its
total assets, invest more than 5% of its total assets in the
securities of any one issuer (except U.S. government securities).
The remaining 25% of the fund's total assets is not subject to
this restriction .
The fund's current restriction is more restrictive,
and states that the fund may not:
" Purchase any security (other than U.S. government
obligations) if, as a result, more than 5% of the current
value of the fund's total assets would then be invested in
securities of that issuer. "
The proposed amended fundamental investment restriction is set
forth below.
"The fund may not ...
With respect to 75% of its total assets, invest in the
securities of any issuer if, immediately after such
investment, more than 5% of the total assets of the
fund (taken at current value) would be invested in the
securities of such issuer; provided that this
limitation does not apply to obligations issued or
guaranteed as to interest or principal by the U.S.
government or its agencies or instrumentalities."
If the proposed change is approved, the fund will be able to
invest up to 25% of its total assets in the securities of any one
issuer. The amended restriction would continue to exclude from
its limitations U.S. government securities, and would
clarify , consistent with the 1940 Act, that U.S. government
securities include those securities guaranteed as to principal or
interest by the U.S. government or its agencies or
instrumentalities. Following the amendment, the fund would
continue to be a diversified investment company for purposes of
the 1940 Act.
Putnam Management believes this amendment will enhance the fund's
investment flexibility. The proposed amendment will enable the
fund to invest a greater percentage of its assets in securities
that Putnam Management believes offer the potential for current
income and capital appreciation. However, during times when
Putnam Management invests a higher percentage of the fund's
assets in one or more issuers, the value of the fund's shares may
fluctuate more widely than the value of shares of a portfolio
investing in a larger number of issuers.
Required Vote. Approval of this proposal requires the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares
of the fund present at the meeting if more than 50% of the
outstanding shares of the fund are present at the meeting in
person or by proxy.
3.B. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO INVESTMENTS IN THE SECURITIES OF A SINGLE ISSUER
The Trustees are recommending that the fund's fundamental
investment restriction with respect to investments in the
securities of a single issuer be revised to grant the fund the
maximum flexibility permitted under the 1940 Act. The 1940 Act
prohibits a diversified fund such as the fund from investing,
with respect to 75% of its total assets, in the securities of an
issuer if as a result it would own more than 10% of the
outstanding voting securities of that issuer. The fund's current
investment restriction, which is more restrictive than the 1940
Act, states that the fund may not:
" Acquire more than 10% of the voting securities
of any issuer or more than 10% of any class of
securities of any issuer. (For these purposes all
preferred stocks of an issuer are regarded as a single
class, and all debt securities of an issuer are
regarded as a single class.) "
The proposed amended fundamental investment restriction is set
forth below.
"The fund may not ...
With respect to 75% of its total assets, acquire more
than 10% of the outstanding voting securities of any
issuer."
Putnam Management believes that limiting this restriction
to voting securities and 75% of the fund's total assets
will enhance the fund's investment flexibility. Putnam
Management has advised the Trustees that the current restriction
could prevent the fund from investing in certain opportunities to
the fullest extent that Putnam Management believes would best
serve the fund's investment objective.
The amendment removes all restrictions on the amount of a class
of an issuer's securities that the fund may purchase, and enables
the fund to purchase more than 10% of the voting securities of an
issuer with respect to 25% of the fund's total assets. To the
extent the fund individually or with other funds and accounts
managed by Putnam Management or its affiliates owns all or a
major portion of the outstanding securities of a particular
issuer, under adverse market or economic conditions or in the
event of adverse changes in the financial condition of the issuer
the fund could find it more difficult to sell these securities
when Putnam Management believes it advisable to do so, or may be
able to sell the securities only at prices significantly lower
than if they were more widely held. In addition, certain of the
companies in which the fund may invest a greater portion of its
assets following the amendment could have relatively small equity
market capitalizations (e.g., under $1 billion). Such companies
often have limited product lines, markets or financial resources.
The securities of these companies may trade less
frequently and in limited volume, and only in the over-the-
counter market or on a regional securities exchange. As a
result, these securities may fluctuate in value
more than those of larger, more established companies. Under
such circumstances, it may also be more difficult to determine
the fair value of such securities for purposes of computing the
fund's net asset value.
Required vote. Approval of this proposal requires the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares
of the fund present at the meeting if more than 50% of the
outstanding shares of the fund are present at the meeting in
person or by proxy.
3.C. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO MAKING LOANS THROUGH PURCHASES OF DEBT
OBLIGATIONS, REPURCHASE AGREEMENTS AND SECURITIES LOANS
The Trustees are recommending that the fund's fundamental
investment restriction with respect to making loans be revised to
permit the fund to purchase all types of debt obligations and to
remove any asset limitations on the fund's ability to
enter into repurchase agreements and securities loans. The
current restriction states that the fund may not:
" Make loans, except by purchase of marketable bonds,
debentures, commercial paper or corporate notes, and similar
marketable evidences of indebtedness which are a part of an
issue to the public or to financial institutions, by entry
into repurchase agreements with respect to not more than 25%
of its total assets, or through the lending of its portfolio
securities with respect to not more than 25% of its total
assets. "
The proposed amended fundamental investment restriction is set
forth below.
"The fund may not ...
Make loans, except by purchase of debt obligations in
which the fund may invest consistent with its
investment policies, by entering into repurchase
agreements, or by lending its portfolio securities."
Following the amendment, the fund may, consistent with its
investment objective and policies, purchase all types of debt
obligations, whether or not publicly issued, and enter into
repurchase agreements and securities loans without limit. Putnam
Management believes that the increased investment flexibility
could assist the fund in achieving its investment
objective . Putnam Management also believes that the
current policy on purchases of debt obligations is unnecessarily
restrictive and could, for example, be read to prevent the fund
from purchasing certain privately issued debt obligations
which might otherwise present attractive investment
opportunities to the fund.
Although the purchase of private debt obligations may offer
opportunities for increased investment return, it also
involves greater risk. Since private debt is not publicly
traded, the fund could find it more difficult to sell
such debt when Putnam Management considers it desirable to do so
or may only be able to sell such debt at less than fair market
value. Private debt obligations may also contain restrictions on
transfer, such as rights of first refusal, which could result in
the fund receiving less than the fair market value for such debt
obligations. At times, Putnam Management may find it
difficult to determine the value of such obligations. There
may be less information publicly available about the issuers of
private debt, who are often private issuers not subject to many
of the disclosure obligations of public companies or government
issuers. In addition, issuers of private debt tend to be
smaller, less established companies with relatively small
equity market capitalizations (e.g., under $1 billion).
When the fund enters into a repurchase agreement, it typically
purchases a security for a relatively short period (usually not
more than one week), which the seller agrees to repurchase at a
fixed time and price, representing the fund's cost plus interest.
When the fund enters into a securities loan, it lends certain of
its portfolio securities to broker-dealers or other parties and
typically receives an interest payment in return. These
transactions must be fully collateralized at all times, but
involve some risk to the fund if the other party should default
on its obligation. If the other party in these transactions
should become involved in bankruptcy or insolvency proceedings,
it is possible that the fund may be treated as an unsecured
creditor and be required to return the underlying collateral to
the other party's estate.
Required vote. Approval of this proposal requires the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares
of the fund present at the meeting if more than 50% of the
outstanding shares of the fund are present at the meeting in
person or by proxy.
3.D. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
WITH RESPECT TO INVESTMENTS IN REAL ESTATE
The Trustees are recommending that the fund's fundamental
investment restriction relating to investments in real estate be
revised to grant the fund maximum flexibility in light of
current regulatory requirements. Although the fund is required
to have a fundamental policy with respect to investments in real
estate, the fund's current restriction is more restrictive than
current state securities law requirements. For this reason,
Putnam Management believes that the restriction should be amended
to increase the fund's investment flexibility . The current
restriction states that the fund may not:
" Buy or sell real estate, although it may purchase
securities of companies which deal in real estate and may
purchase securities which are secured by interests in real
estate. "
The proposed amended fundamental investment restriction is set
forth below.
"The fund may not ...
Purchase or sell real estate, although it may purchase
securities of issuers which deal in real estate,
securities which are secured by interests in real
estate, and securities which represent interests in
real estate, and it may acquire and dispose of real
estate or interests in real estate acquired through the
exercise of its rights as a holder of debt obligations
secured by real estate or interests therein."
Putnam Management believes that the enhanced flexibility could
assist the fund in achieving its investment objective. The
proposed amendment enables the fund to invest in a wide range of
real estate-related investments, many in which the fund may
already invest under the current restriction including
investments in companies which deal in real estate, securities
which represent interests in real estate and securities
secured by real estate. In addition, the fund would be
able to own real estate directly as a result of the exercise
of its rights in connection with debt obligations it owns. In
such cases, the ability to acquire and dispose of real estate may
serve to protect the fund during times where an issuer of debt
securities is unable to meet its obligations.
To the extent the fund holds real estate-related securities, it
will be subject to the risks associated with the real estate
market. These risks may include declines in the value of real
estate, changes in general or local economic conditions,
overbuilding, difficulty in completing construction, increased
competition, changes in zoning laws, increases in property taxes
and operating expenses, and variations in rental income.
Generally, increases in interest rates will increase the costs of
obtaining financing, which may result in a decrease in the value
of such investments. In addition, in order to enforce its
rights in the event of a default of these securities, the fund
may be required to participate in various legal proceedings or
take possession of and manage assets securing the issuer's
obligations. This could increase the fund's operating expenses
and adversely affect the fund's net asset value.
Required vote. Approval of this proposal requires the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares
of the fund present at the meeting if more than 50% of the
outstanding shares of the fund are present at the meeting in
person or by proxy.
3.E. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO CONCENTRATION OF ITS ASSETS
The Trustees are recommending that the fund's fundamental
investment restriction regarding concentration be revised to make
it clear that the fund may invest more than 25% of its assets in
the securities of the U.S. government, its agencies or
instrumentalities. The current restriction states that the fund
may not:
" Concentrate its investments in particular industries
and in no event invest more than 25% of the value of its
assets in any one industry. "
The proposed amended fundamental restriction is set forth below.
"The fund may not ...
Purchase securities (other than securities of the U.S.
government, its agencies or instrumentalities) if, as a
result of such purchase, more than 25% of the fund's
total assets would be invested in any one industry."
Putnam Management believes that this amendment will make it clear
that the fund may invest in U.S. government
securities without regard to the 25% limit. Putnam
Management believes that the current restriction does not prevent
the fund from investing in such securities without limit, because
the SEC takes the position that U.S. government issuers,
including agencies and instrumentalities of the U.S.
government , are not members of any industry. However, to
avoid any possible ambiguity in the future, Putnam Management
believes that this clarification should be made at this time.
The proposal also makes certain language changes to reflect the
current formulation of the restriction used by many other Putnam
funds.
Required vote. Approval of this proposal requires the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares
of the fund present at the meeting if more than 50% of the
outstanding shares of the fund are present at the meeting in
person or by proxy.
3.F. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO INVESTMENTS IN COMMODITIES OR COMMODITY
CONTRACTS
The Trustees are recommending that the fund's fundamental
investment restriction regarding investments in commodities or
commodity contracts be revised to reflect the current formulation
expected to be used by many other Putnam funds . The current
restriction states that the fund may not:
"Buy or sell [oil, gas or other mineral leases, rights or
royalty contracts or] commodities or commodity contracts,
[except that the fund may write call options traded
on a national securities exchange on
securities which the fund owns and it may purchase
options to close out call options written by the
fund.]"
The section of the restriction in brackets concerning oil, gas
and mineral interests is proposed to be eliminated by proposal
3.H. , while the section of the restriction in brackets
concerning options transactions is proposed to be eliminated by
proposal 3.I .
The proposed amended fundamental restriction is set forth below.
"The fund may not ...
Purchase or sell commodities or commodity contracts,
except that the fund may purchase and sell financial
futures contracts and options and may enter into
foreign exchange contracts and other financial
transactions not involving physical commodities."
If the proposal is approved, the fund will be able to engage in a
variety of transactions involving the use of financial futures
and options and foreign currencies, as well as various other
financial transactions not involving physical commodities .
Putnam Management believes the enhanced investment flexibility
could assist the fund in achieving its investment objective,
in part because such strategies often offer opportunities
for hedging and increased investment return. The addition of
financial transactions not involving physical commodities is
intended to give the fund maximum flexibility to invest in a
variety of financial instruments that could technically be
considered commodities, but which do not involve physical
commodities, which are the intended focus of the restriction.
A futures contract is a contract to buy or sell an asset ,
such as a security, a currency, or a unit of an index, at an
agreed upon price at a specified future date. A futures contract
sale creates an obligation of the seller to deliver the type of
asset called for in the contract at the agreed upon price
on the specified date. A futures contract purchase creates an
obligation of the purchaser to take delivery of the type of
asset called for in the contract at the agreed upon price
on the specified date. Certain futures contracts, such as
index futures, typically involve cash settlement rather than
actual delivery. Depending on the change in the value of the
asset between the time the fund enters into and terminates
a futures contract, the fund realizes a gain or loss. An option
on a futures contract gives its holder the right, in
return for a premium paid, to assume a position in a futures
contract or commodity at the specified option exercise price at
any time during the period of the option. If an option
purchased by the fund expired unexercised, the fund's loss would
be limited to the price it paid for the option (known as the
"premium"). Where the fund writes an option, however, the fund's
loss would not be so limited, and would be equal to the change in
the value of the futures contract position between the
time the fund writes the option and the option's exercise ,
minus the premium . In connection with futures and options
transactions, the fund would be required to make initial margin
payments and subsequent payments, called "variation margin," each
day depending on the value of the fund's position in any such
contract.
Futures and options transactions involve costs and may result in
losses. Certain risks arise because of the possibility of
imperfect correlations between movements in the prices of futures
and options and movements in the price of the underlying
asset that is the subject of a hedge. The successful use
by the fund of futures and options strategies further depends on
the ability of Putnam Management to forecast market movements
correctly. Other risks arise from the fund's potential inability
to close out such positions. There can be no assurance that the
fund will be able to effect closing transactions at any
particular time or at an acceptable price. The fund's ability to
terminate option positions established in the over-the-counter
market may be more limited than for exchange traded options and
may also involve the risk that securities dealers participating
in such transactions would fail to meet their obligations to the
fund. The use of futures and options for purposes other than
hedging entails greater risks.
Foreign exchange transactions are subject to many of the risks
associated with futures and options. In addition, currencies and
exchange rates may be affected by government actions and other
political and economic factors, and foreign settlement procedures
may involve risks not present in the fund's domestic investments,
such as requirements to take delivery in a foreign country and to
pay any costs associated with such delivery.
Required vote. Approval of this proposal requires the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares
of the fund present at the meeting if more than 50% of the
outstanding shares of the fund are present at the meeting in
person or by proxy.
3.G. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
WITH RESPECT TO UNDERWRITING
The Trustees are recommending that the fund's fundamental
investment restriction with respect to underwriting be revised.
Although the fund is required to have a fundamental investment
restriction with respect to underwriting, the current restriction
is more restrictive than current regulatory requirements and the
underwriting policy of many other Putnam funds. For these
reasons, Putnam Management believes the restriction should be
revised to increase the fund's flexibility and to reflect the
current formulation used by many other Putnam funds. The current
restriction states that the fund may not:
"[Purchase restricted securities if as a result such
investments would exceed 15% of the value of the fund's
net assets, excluding restricted securities that have
been determined by the Trustees of the fund (or the
person designated by them to make such determinations)
to be readily marketable, or] act as an underwriter
except to the extent that in connection with the
disposition of its restricted securities it may be
deemed to be an underwriter under federal securities
laws."
The section of the restriction in brackets is proposed to be
eliminated by proposal 3.O.
The proposed amended fundamental restriction is set forth below.
"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."
The proposed amended restriction only limits the fund's ability
to underwrite the securities of other issuers; the fund would be
able to act as an underwriter with respect to its own securities
if consistent with the 1940 Act and SEC rules. The restriction
would also extend the exception for the disposition of the fund's
restricted securities to apply to all of the fund's portfolio
securities.
Required vote. Approval of this proposal requires the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares
of the fund present at the meeting if more than 50% of the
outstanding shares of the fund are present at the meeting in
person or by proxy.
3.H
. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
WITH RESPECT TO INVESTMENTS IN CERTAIN OIL, GAS AND
MINERAL INTERESTS
The Trustees are recommending that the fund's fundamental
investment restriction with respect to investments in oil, gas
and mineral leases, rights or royalty contracts be eliminated.
The current restriction states that the fund may not:
" Buy or sell oil, gas, or other mineral leases,
rights or royalty contracts [or commodities or commodity
contracts, except that the fund may write call options
traded on a national securities exchange on securities which
the fund owns and it may purchase options to close out call
options written by the fund.] "
The section of the restriction in brackets relating to
options is proposed to be eliminated by proposal 3.I. ,
while the section relating to commodities or commodity
contracts is proposed to be amended by proposal 3.F.
The fund originally adopted the restriction to comply
with certain state securities law requirements, and while
the restriction is currently required by only one state,
it is not required to be a fundamental policy. If this
proposal is approved, the Trustees intend to adopt the following
non-fundamental restriction to comply with the remaining
state's requirement:
"The fund may not . . .
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."
Putnam Management believes that the current oil, gas and mineral
interest restriction is unnecessarily restrictive, and could
prevent the fund from investing in certain opportunities to the
fullest extent that Putnam Management believes would best serve
the fund's investment objective. If the proposal is approved,
the fund would be able to invest, consistent with applicable
regulatory requirements, in a variety of securities the value of
which is dependent upon the value of oil, gas and mineral
interests including securities which represent interests in, are
secured by, or are issued by companies which deal in, such
interests. Also, in certain limited circumstances, the fund
would be permitted to directly own oil, gas and mineral interests
as a result of the exercise of its rights in connection with debt
obligations it owns. In such cases, the ability to acquire
and dispose of such interests may serve to protect the fund
during times where an issuer of debt securities is unable to meet
its obligations.
Investments in oil, gas and other mineral leases, rights or
royalty contracts and in securities which derive their value in
part from such instruments, entail certain risks. The prices of
these investments are subject to substantial fluctuations, and
may be affected by unpredictable economic and political
circumstances such as social, political or military disturbances,
the taxation and regulatory policies of various governments, the
activities and policies of OPEC (an organization of major oil
producing countries), the existence of cartels in such
industries, the discovery of new reserves and the development of
new techniques for producing, refining and transporting such
materials and related products, the development of new
technology, energy conservation practices, and the development of
alternative energy sources and alternative uses for such
materials and related products. In addition, in order to
enforce its rights in the event of a default of these securities,
the fund may be required to participate in various legal
proceedings or take possession of and manage assets securing the
issuer's obligations. This could increase the fund's operating
expenses and adversely affect the fund's net asset value.
By making this policy non-fundamental, the fund will have the
ability to modify or eliminate the restriction to increase
investment flexibility without the need for further shareholder
approval.
Required vote. Approval of this proposal requires the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares
of the fund present at the meeting if more than 50% of the
outstanding shares of the fund are present at the meeting in
person or by proxy.
3.I
. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
WITH RESPECT TO OPTIONS TRANSACTIONS
The Trustees are recommending that the fund's fundamental
investment restriction with respect to options transactions be
eliminated. The current restriction states that the fund may
not:
["Buy or sell oil, gas or other mineral leases, rights
or royalty contracts or commodities or commodity
contracts,] except that the fund may write call
options traded on a national securities
exchange on securities which the fund owns and
it may purchase call options to close
out call options written by the fund."
The section of the restriction in brackets with respect to
commodities or commodity contracts is proposed to
be amended by proposal 3.F, and the section of the restriction
in brackets with respect to oil, gas and mineral interests is
proposed to be eliminated by proposal 3.H.
Putnam Management believes that the current restriction , even
as proposed to be amended by those proposals, could be read
to permit only certain types of options transactions, while
preventing other options transactions. To eliminate any possible
ambiguity, Putnam Management believes that the current
restriction should be eliminated to provide the fund with maximum
flexibility under applicable law.
If the proposal is approved, the fund will be able to engage in a
variety of options transactions for hedging purposes and to
increase investment return. Putnam Management believes that this
enhanced flexibility could assist the fund in achieving its
investment objective.
A call option gives the holder the right to purchase, and
obligates the writer to sell, an asset, such as a
security, a currency or a unit of an index, at the exercise price
prior to or on the expiration date. A put option gives
the holder the right to sell, and obligates the writer to buy,
an asset at the exercise price prior to or on the
expiration date. In order for a put option purchased by the fund
to be profitable, the market price of the underlying asset
must decline sufficiently below the exercise price to cover the
premium and transaction costs paid by the fund. In order for a
call option purchased by the fund to be profitable, the market
price of the underlying asset must rise sufficiently above
the exercise price to cover the premium and transaction costs
paid by the fund. If an option expires unexercised, the fund
will receive nothing for its premium payment.
When the fund writes a call option, it gives up the opportunity
to profit from any increase in the price of an asset above
the exercise price of the option; when it writes a put option,
the fund takes the risk that it will be required to purchase
an asset from the option holder at a price above the
current market price of that asset . The fund receives a
premium for writing a call or a put option (representing the cost
of the option), which increases the return if the option expires
unexercised or is closed out at a net profit.
The successful use of options depends on the ability of Putnam
Management to forecast correctly interest rate and market
movements. The effective use of options also depends on the
fund's ability to terminate option positions at times when Putnam
Management deems it desirable to do so. There is no assurance
that the fund will be able to effect closing transactions at any
particular time or at an acceptable price. Disruptions such as
trading interruptions or restrictions on option exercise in the
markets for securities and other assets underlying options
purchased or sold by the fund could result in losses on an
option, including the entire investment by the fund in the
option.
Required vote. Approval of this proposal requires the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares
of the fund present at the meeting if more than 50% of the
outstanding shares of the fund are present at the meeting in
person or by proxy.
3.J
. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
WITH RESPECT TO INVESTMENTS IN ISSUERS THAT HAVE BEEN IN
OPERATION FOR LESS THAN THREE YEARS
The Trustees are recommending that the fund's fundamental
investment restriction which limits the fund's investments in
issuers with limited operating histories, which are sometimes
referred to as "unseasoned issuers, " be eliminated. The
current restriction states that the fund may not:
" Invest in securities of businesses less than three
years old, [and in equity securities of companies for which
market quotations are not readily available (but excluding
restricted securities)] if, as a result, more than 5% of the
fund's assets (taken at current value) would then be
invested in such securities. "
The section of the restriction in brackets is proposed to be
eliminated by proposal 3.O .
The fund originally adopted this restriction to comply with
certain state securities law requirements, and while the
restriction is currently required by one state ,
it is not required to be a fundamental policy. If this
proposal is approved, the Trustees intend to replace this
restriction with the following non-fundamental investment
restriction to comply with the remaining state
requirement :
"The fund may not ...
Invest in securities of an issuer which, together with any
predecessors, controlling persons, general partners and
guarantors, have a record of less than three years'
continuous business operation or relevant business
experience, if, as a result, the aggregate of such
investments would exceed 5% of the value of the fund's net
assets; provided, however, that this restriction shall not
apply to any obligations of the U.S. government or its
instrumentalities or agencies."
The new restriction reflects the current formulation used by
many other Putnam funds. If this proposal is approved, the
fund will, consistent with the state requirement, be able
to invest up to 5% of its assets in the securities of unseasoned
issuers without regard to its investments in equity securities
for which market quotations are not readily available. The
restriction will also exempt certain U.S. government securities
from its limitations to provide the fund with maximum
investment flexibility.
By making this policy non-fundamental, the fund will have the
ability to modify or eliminate the policy if no longer required
to increase investment flexibility without the need for further
shareholder approval.
Companies which have been in operation for less than three years
may have relatively small equity market capitalizations
(e.g., under $1 billion). Although these companies may provide
greater opportunities for increased investment return ,
they also involve greater risk. These companies often have
limited product lines, markets or financial resources. The
securities of these companies may trade less frequently and
in limited volume, and only in the over-the-counter market or on
a regional securities exchange. As a result, these
securities may fluctuate in value more than those of
larger, more established companies.
Required vote. Approval of this proposal requires the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares
of the fund present at the meeting if more than 50% of the
outstanding shares of the fund are present at the meeting in
person or by proxy.
3.K
. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
WITH RESPECT TO INVESTMENTS IN SECURITIES OF ISSUERS IN
WHICH MANAGEMENT OF THE FUND OR PUTNAM MANAGEMENT OWNS
SECURITIES
The Trustees are recommending eliminating the fund's fundamental
investment restriction which prevents the fund from investing in
the securities of issuers in which management of the fund or
Putnam Management owns a certain percentage of securities. The
current restriction states that the fund may not:
" Invest in securities of any company, if
officers and Trustees of the fund and officers and
directors of Putnam Management who beneficially own
more than 0.5% of the shares or securities of that
company together own more than 5%. "
The fund originally adopted this restriction to comply with
certain state securities law requirements, and while the
restriction is currently required by one state, it
is not required to be a fundamental policy. If this proposal is
approved, the Trustees intend to replace this fundamental
restriction with the following non-fundamental investment
restriction to comply with the remaining state
requirements :
"The fund may not...
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."
The proposal makes certain language changes to reflect the
current formulation of the restriction used by many other Putnam
funds.
By making this policy non-fundamental, the fund will have the
ability to modify or eliminate the restriction to increase
investment flexibility without the need for further shareholder
approval.
If the restriction were to be eliminated, the fund would
be able to invest in the securities of any issuer without regard
to ownership in such issuer by management of the fund or Putnam
Management, except to the extent prohibited by the fund's
investment policies or the 1940 Act.
Required vote. Approval of this proposal requires the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares
of the fund present at the meeting if more than 50% of the
outstanding shares of the fund are present at the meeting in
person or by proxy.
3.L
. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
WITH RESPECT TO MARGIN TRANSACTIONS
The Trustees are recommending that the fund's fundamental
investment restriction with respect to margin transactions be
eliminated. "Margin transactions" involve the purchase of
securities with money borrowed from a broker, with cash or
eligible securities being used as collateral against the loan.
The current restriction states that the fund may not:
" Purchase securities on margin (but it may obtain
such short-term credits as may be necessary for the
clearance of purchase and sales of securities). "
The fund originally adopted this restriction to comply with
certain state securities law requirements, and while the
restriction is currently required by one state it
is not required to be a fundamental policy. If the proposal is
approved, the Trustees intend to replace this fundamental
restriction with the following non-fundamental investment
restriction to comply with the remaining state's requirement:
"The fund may not...
Purchase securities on margin, except such short-term
credits as may be necessary for the clearance of
purchases and sales of securities, and except that it
may make margin payments in connection with financial
futures contracts or options. "
The proposed restriction contains as exception for
margin payments in connection with financial futures contracts
and options transactions , which is different from
the use of margin in securities transactions because the
use of margin in financial futures and options does
not involve the borrowing of funds to finance the transactions.
Rather, such margin payments are similar to a performance bond or
good faith deposit which would be returned to the fund upon
termination of the contract, assuming all contractual obligations
have been satisfied.
By making this policy non-fundamental, the fund will have the
ability to modify or eliminate the restriction to increase
investment flexibility without the need for further shareholder
approval.
The fund's potential use of margin transactions beyond
transactions in financial futures and options and for the
clearance of purchases and sales of securities, including the use
of margin in ordinary securities transactions, is generally
limited by the current position taken by the Staff of the SEC
that margin transactions with respect to securities are
prohibited under Section 18 of the 1940 Act because they create
senior securities. The fund's ability to engage in margin
transactions is also limited by its investment policies, which
generally permit the fund to borrow money in limited
circumstances .
Required vote. Approval of this proposal requires the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares
of the fund present at the meeting if more than 50% of the
outstanding shares of the fund are present at the meeting in
person or by proxy.
3.M
. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
WITH RESPECT TO SHORT SALES
The Trustees are recommending that the fund's fundamental
investment restriction with respect to short sales be eliminated.
The current restriction states that the fund may not:
" Make short sales of securities or maintain a short
position, unless at all times when a short position is open
it either owns an equal amount of such securities or owns
securities which, without payment of any further
considerations, are convertible into or exchangeable for
securities of the same issue as, and in equal amount to, the
securities sold short. "
The fund originally adopted this restriction to comply with
certain state securities law requirements, and while the
restriction is currently required by one state it is not required
to be a fundamental policy. If this proposal is approved,
the Trustees intend to replace this fundamental restriction with
the following non-fundamental restriction to comply
with the remaining state requirement :
"The fund may not ...
Make short sales of securities or maintain a short
position for the account of the fund unless at all
times when a short position is open it owns an equal
amount of such securities or owns securities which,
without payment of any further consideration, are
convertible into or exchangeable for securities of the
same issue as, and in equal amount to, the securities
sold short."
By making this policy non-fundamental, the fund will have the
ability to modify or eliminate the restriction to increase
investment flexibility without the need for further shareholder
approval.
In a typical short sale, the fund borrows securities from a
broker that it anticipates will decline in value in order to sell
to a third party. The fund becomes obligated to return
securities of the same issue and quantity at some future date,
and it realizes a loss to the extent the securities increase in
value and a profit to the extent the securities decline in value
(after including any associated costs). Since the value of a
particular security can increase without limit, the fund could
potentially realize losses with respect to short sales that are
not "against the box" (short sales where the fund owns or has
the right to acquire at no added cost securities identical to
those sold short) that are significantly greater than the
value of the securities at the time they are sold short.
Required vote. Approval of this proposal requires the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares
of the fund present at the meeting if more than 50% of the
outstanding shares of the fund are present at the meeting in
person or by proxy.
3.N
. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
WHICH LIMITS THE FUND'S ABILITY TO PLEDGE ASSETS
The Trustees are recommending that the fund's fundamental
investment restriction which limits the fund's ability to pledge
its assets be eliminated. The current restriction states that
the fund may not:
" Pledge, mortgage, hypothecate or otherwise encumber
any of its assets, except in connection with the writing of
call options. (The deposit in escrow of underlying
securities in connection with the writing of covered options
is not deemed to be a pledge or other encumbrance.) "
Certain state securities laws impose limitations on the fund's
ability to pledge its assets, but these limitations are
less restrictive than the fund's current restriction, and
are not required to be contained in a fundamental policy. For
these reasons, Putnam Management believes that the fund's current
restriction is unnecessarily restrictive and should be
eliminated.
If this proposal is approved, the Trustees intend to
replace this restriction with the following non-
fundamental investment restriction to comply with current
state requirements:
"The fund may not ...
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."
This proposal would enable the fund to pledge up to one-
third of its total assets in connection with fund
borrowings; other activities which could be deemed to be pledges
or other encumbrances, such as collateral arrangements with
respect to certain forward commitments, futures contracts and
options transactions, will not be restricted.
Putnam Management believes that the enhanced flexibility
could assist the fund in achieving its investment objective.
Further, Putnam Management believes that the fund's current
limits on pledging may conflict with the fund's ability to borrow
money to meet redemption requests or for extraordinary or
emergency purposes. This conflict arises because banks may
require borrowers such as the fund to pledge assets in order to
collateralize the amount borrowed. These collateral requirements
are typically for amounts at least equal to, and often
larger than, the principal amount of the loan. The
fund's current restriction, however, could be read to prevent
these types of collateral arrangements, and could therefore
have the effect of reducing the amount that the fund may borrow.
By making this policy non-fundamental, the fund will have the
ability to modify or eliminate the restriction to increase
investment flexibility without the need for further shareholder
approval.
Pledging assets does entail certain risks. To the extent that
the fund pledges its assets, the fund may have less flexibility
in liquidating its assets. If a large portion of the fund's
assets were involved, the fund's ability to meet redemption
requests or other obligations could be delayed.
Required vote. Approval of this proposal requires the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares
of the fund present at the meeting if more than 50% of the
outstanding shares of the fund are present at the meeting in
person or by proxy.
3.O
. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTIONS WITH RESPECT TO INVESTMENTS IN ILLIQUID
SECURITIES
The Trustees are recommending that the fund's fundamental
investment restrictions which limit the fund's
investments in illiquid securities, including securities subject
to restrictions on resale ("restrictes securities") and equity
securities for which market quotations are not readily
available, be eliminated. The current fundamental investment
restrictions state that the fund may not:
"Purchase restricted securities if as a result such
investments would exceed 15% of the value of the fund's
net assets, excluding restricted securities that
have been determined by the Trustees of the fund (or
the person designated by them to make such
determinations) to be readily marketable, [or act as an
underwriter except to the extent that in connection
with the disposition of its restricted securities it
may be deemed to be an underwriter under federal
securities laws.]"
"Invest [in securities of businesses less than three
years old, and] in equity securities of companies for
which market quotations are not readily available (but
excluding restricted securities) if, as a result, more
than 5% of the fund's assets (taken at current value)
would then be invested in such securities."
The section of the first restriction in brackets is proposed to
be amended by proposal 3.G. , and the section of the second
restriction in brackets is proposed to be eliminated by proposal
3.J .
Putnam Management believes the restrictions are no longer
necessary in light of current regulatory requirements and the
fund's current investment policies. The Staff of the SEC
currently takes the position that an illiquid security is a
security which is not readily marketable, rather than a security
for which market quotations are not readily available .
This SEC position is expressed in the fund's current non-
fundamental investment restriction which prohibits the fund from
investing more than 15% of its net assets in any combination of
(a) securities which are not readily marketable, (b) securities
restricted as to resale (excluding securities determined by the
Trustees of the fund (or the person designated by the Trustees of
the fund to make such determinations) to be readily marketable),
and (c) repurchase agreements maturing in more than seven days.
Unlike the current fundamental investment restrictions, this non-
fundamental investment restriction applies to all types of
illiquid securities , not just securities, as
well as certain repurchase agreements. If the proposal is
approved, the fund will be able to invest more than 5% of its net
assets in equity securities for which market quotations are not
readily available .
Putnam Management believes that the fund may benefit from the
added flexibility of having the fund's policy with respect to
illiquid investments contained in a single non-fundamental
investment restriction. In the future, the fund will be able to
respond more quickly to legal, regulatory and market developments
regarding illiquid investments (which might result in the
removal of the restriction) because further shareholder
approval will not be required to bring the policy in line with
these developments.
To the extent the fund invests in illiquid investments,
including restricted securities and securities for which
market quotations are not readily available, the fund may
encounter difficulty in determining the fair value of such
investments for purposes of computing the fund's net asset
value. In addition, the fund could encounter difficulty in
satisfying redemption requests within seven days if it could not
readily dispose of its illiquid investments.
Required vote. Approval of this proposal requires the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares
of the fund present at the meeting if more than 50% of the
outstanding shares of the fund are present at the meeting in
person or by proxy.
3.P. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
WITH RESPECT TO INVESTING TO GAIN CONTROL OF A COMPANY'S
MANAGEMENT
The Trustees are recommending that the fund's fundamental
investment restriction which states that the fund may not "[m]ake
investments for the purpose of gaining control of a company's
management" be eliminated. Eliminating the restriction would
make it clear that the fund can freely exercise its rights as a
shareholder of companies in which it invests. These
rights may include the right to actively oppose or support
management of such companies. Since the fund invests
primarily in fixed-income securities, this proposal will not
impact the majority of the fund's investments. Nevertheless,
Putnam Management believes it would be in the best interest of
the fund to eliminate the restriction.
Putnam Management believes that eliminating this
restriction will allow the fund maximum flexibility to
protect the value of its investments through influencing
management of companies in which it invests. Putnam Management
believes that the fund should be allowed to freely communicate
its views as a shareholder on matters of policy to management,
the board of directors, and other shareholders when a policy may
affect the value of the fund's investment. Activities in which
the fund may engage might include the fund, either individually
or with others, seeking changes in a company's goals, management,
or board of directors, seeking the sale of some or all of a
company's assets, or voting to participate in or oppose a
takeover effort with respect to a company. Although Putnam
Management believes that the fund may currently engage in many if
not all of these activities without necessarily violating this
restriction, it believes that eliminating the restriction will
eliminate any potential obstacle to the fund in protecting its
interests as a shareholder.
This area of corporate activity is highly prone to litigation,
and whether or not the restriction is eliminated, the fund could
be drawn into lawsuits related to these activities. The fund
will direct its efforts toward those instances where Putnam
Management believes the potential for benefit to the fund
outweighs potential litigation risks.
Required vote. Approval of this proposal requires the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares
of the fund present at the meeting if more than 50% of the
outstanding shares of the fund are present at the meeting in
person or by proxy.
3.Q. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
WITH RESPECT TO INVESTMENTS IN WARRANTS
The Trustees are recommending that the fund's fundamental
investment restriction with respect to investments
in warrants be eliminated.
The current restriction states that the fund may not:
" Invest in warrants (other than warrants
acquired by the fund as part of a unit or attached to
securities at the time of purchase) if as a result such
investments (valued at the lower of cost or market
value) would exceed 2% of the value of the fund's net
assets. "
Certain state securities laws impose restrictions on the fund's
ability to invest in warrants, but these limitations are less
restrictive than the fund's current restriction and are not
required to be contained in a fundamental policy. If
this proposal is approved, the Trustees intend to replace this
fundamental restriction with the following non-fundamental
restriction to comply with current state requirements:
"The fund may not ...
Invest in warrants (other than warrants acquired by the fund
as part of a unit or attached to securities at the time of
purchase) if, as a result, such investments (valued at the
lower of cost or market) would exceed 5% of the value of the
fund's net assets; provided that not more than 2% of the
fund's net assets may be invested in warrants not listed on
the New York or American Stock Exchanges. "
<PAGE>
The new restriction would provide the fund with maximum
flexibility under applicable law to invest in warrants. Putnam
Management believes that this enhanced investment flexibility
could assist the fund in achieving its investment objective.
A warrant is a right to buy a security or a unit of an index at a
specified price during a specified period. In general, the
holder of a warrant realizes a gain to the extent the value of
the underlying security or unit rises above the exercise price of
a warrant, and the holder realizes a loss equal to the value of
the price paid for the warrant if the warrant expires
unexercised. Investing in warrants involves risks similar to
those involved in purchasing options, including the risk that
Putnam Management may not forecast market movements correctly.
In addition, the terms of warrants may limit the fund's ability
to exercise a warrant at such time, or in such quantities, as the
fund would otherwise desire.
By making this policy non-fundamental, the fund will have the
ability to modify or eliminate the restriction to increase
investment flexibility without the need for further shareholder
approval.
Required vote. Approval of this proposal requires the
affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the fund, or (2) 67% or more of the shares
of the fund present at the meeting if more than 50% of the
outstanding shares of the fund are present at the meeting in
person or by proxy.
Further Information About Voting and the Shareholder Meeting
Quorum and Methods of Tabulation. Thirty percent of the shares
entitled to vote -- present in person or represented by proxy --
constitutes a quorum for the transaction of business with respect
to any proposal at the meeting (unless otherwise noted in the
proxy statement). Shares represented by proxies that reflect
abstentions and "broker non-votes" (i.e., shares held by brokers
or nominees as to which (i) instructions have not been received
from the beneficial owners or the persons entitled to vote and
(ii) the broker or nominee does not have the discretionary voting
power on a particular matter) will be counted as shares that are
present and entitled to vote on the matter for purposes of
determining the presence of a quorum. Votes cast by proxy or in
person at the meeting will be counted by persons appointed by
your fund as tellers for the meeting.
The tellers will count the total number of votes cast "for"
approval of the proposals for purposes of determining whether
sufficient affirmative votes have been cast. With respect to the
election of Trustees and selection of auditors, neither
abstentions nor broker non-votes have any effect on the outcome
of the proposal. With respect to any other proposals,
abstentions and broker non-votes have the effect of a negative
vote on the proposal.
Other business. The Trustees know of no other business to be
brought before the meeting. However, if any other matters
properly come before the meeting, it is their intention that
proxies that do not contain specific restrictions to the contrary
will be voted on such matters in accordance with the judgment of
the persons named as proxies in the enclosed form of proxy.
Simultaneous meetings. The meeting of shareholders of your fund
is called to be held at the same time as the meetings of
shareholders of certain of the other Putnam funds. It is
anticipated that all meetings will be held simultaneously. If
any shareholder at the meeting objects to the holding of a
simultaneous meeting and moves for an adjournment of the meeting
to a time promptly after the simultaneous meetings, the persons
named as proxies will vote in favor of such adjournment.
Solicitation of proxies. In addition to soliciting proxies by
mail, Trustees of your fund and employees of Putnam Management,
Putnam Fiduciary Trust Company, and Putnam Mutual Funds may
solicit proxies in person or by telephone. Your fund may also
arrange to have votes recorded by telephone. The telephone
voting procedure is designed to authenticate shareholders'
identities, to allow shareholders to authorize the voting of
their shares in accordance with their instructions and to confirm
that their instructions have been properly recorded. Your fund
has been advised by counsel that these procedures are consistent
with the requirements of applicable law. If these procedures
were subject to a successful legal challenge, such votes would
not be counted at the meeting. Your fund is unaware of any such
challenge at this time. Shareholders would be called at the
phone number Putnam Investments has in its records for their
accounts, and would be asked for their Social Security number or
other identifying information. The shareholders would then be
given an opportunity to authorize proxies to vote their shares at
the meeting in accordance with their instructions. To ensure
that the shareholders' instructions have been recorded correctly,
they will also receive a confirmation of their instructions in
the mail. A special toll-free number will be available in case
the information contained in the confirmation is incorrect.
Your fund's Trustees have adopted a general policy of maintaining
confidentiality in the voting of proxies. Consistent with this
policy, your fund may solicit proxies from shareholders who have
not voted their shares or who have abstained from voting.
Persons holding shares as nominees will upon request be
reimbursed for their reasonable expenses in soliciting
instructions from their principals. Your fund has retained at
its expense D.F. King & Co., Inc. , 77 Water Street, New
York, NY 10005, to aid in the solicitation of instructions for
nominee and registered accounts for a fee not to exceed $10,000
plus reasonable out-of-pocket expenses.
Revocation of proxies. Proxies, including proxies given by
telephone, may be revoked at any time before they are voted by a
written revocation received by the Clerk of your fund, by
properly executing a later-dated proxy or by attending the
meeting and voting in person.
Date for receipt of shareholders' proposals for subsequent
meetings of shareholders. Your fund's Agreement and Declaration
of Trust does not provide for annual meetings of shareholders,
and your fund does not currently intend to hold such a meeting in
1997. Shareholder proposals for inclusion in the proxy statement
for any subsequent meeting must be received by your fund within a
reasonable period of time prior to any such meeting.
Adjournment. If sufficient votes in favor of any of the
proposals set forth in the Notice of the Meeting are not received
by the time scheduled for the meeting, the persons named as
proxies may propose adjournments of the meeting for a period or
periods of not more than 60 days in the aggregate to permit
further solicitation of proxies with respect to any 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 such proposals.
Your fund pays the costs of any additional solicitation and of
any adjourned session. Any proposals for which sufficient
favorable votes have been received by the time of the meeting may
be acted upon and considered final regardless of whether the
meeting is adjourned to permit additional solicitation with
respect to any other proposal.
Financial information. Your fund will furnish, without charge,
to you upon request a copy of the fund's annual report for its
most recent fiscal year, and a copy of its semiannual report for
any subsequent semiannual period. Such requests may be directed
to Putnam Investor Services, P.O. Box 41203, Providence, RI
02940-1203 or 1-800-225-1581.
Further Information About Your Fund
Limitation of Trustee liability. The Agreement and Declaration
of Trust of your fund provides that the fund will indemnify its
Trustees and officers against liabilities and expenses incurred
in connection with litigation in which they may be involved
because of their offices with the fund, except if it is
determined in the manner specified in the Agreement and
Declaration of Trust that they have not acted in good faith in
the reasonable belief that their actions were in the best
interests of the fund or that such indemnification would relieve
any officer or Trustee of any liability to the fund or its
shareholders arising by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of his or her duties.
Your fund, at its expense, provides liability insurance for the
benefit of its Trustees and officers.
Audit and Nominating Committees. The voting members of the Audit
Committee of your fund include only Trustees who are not
"interested persons" of the fund . The Audit Committee
currently consists of Messrs. Estin (Chairman), Perkins (without
vote), Putnam, III (without vote), Shapiro, Smith (without vote),
and Ms. Kennan. The Nominating Committee consists only of
Trustees who are not "interested persons" of your fund or Putnam
Management. The Nominating Committee currently consists of Dr.
Pounds and Ms. Kennan (Co-chairpersons), Ms. Baxter, and Messrs.
Estin, Hill, Jackson, Patterson, Shapiro, and Thorndike.
Officers and other information. In addition to George Putnam and
Lawrence J. Lasser, the officers of your fund are as follows:
Year first
elected to
Name (age) Office office
- -----------------------------------------------------------------
Charles E. Porter (57) Executive Vice President 1989
Patricia C. Flaherty (49) Senior Vice President 1993
John D. Hughes (61) Senior Vice President
& Treasurer 1987
Gordon H. Silver (48) Vice President 1990
Peter Carman (54) Vice President 1994
Brett C. Browchuk (33) Vice President 1994
Thomas V. Reilly (49) Vice President 1986
Hugh H. Mullin (33)* Vice President 1993
Charles G. Pohl (35)* Vice President 1993
William N. Shiebler (54)** Vice President 1991
John R. Verani (56) Vice President 1987
Paul M. O'Neil (42) Vice President 1992
Beverly Marcus (51) Clerk 1981
- -----------------------------------------------------------------
* One of the fund's portfolio managers
** President of Putnam Mutual Funds
All of the officers of your fund are employees of Putnam
Management or its affiliates. Because of their positions with
Putnam Management or its affiliates or their ownership of stock
of Marsh & McLennan Companies, Inc., the parent corporation of
Putnam Management and Putnam Mutual Funds, Messrs. Putnam, George
Putnam, III, Lasser and Smith (nominees for Trustees of your
fund), as well as the officers of your fund, will benefit from
the management fees, distribution fees, underwriting commissions,
custodian fees, and investor servicing fees paid or allowed by
the fund.
<PAGE>
Assets and shares outstanding of your fund
as of May 3, 1996
Net assets $964,491,052
Class A shares outstanding
and authorized to vote 41,269,755 shares
Class B shares outstanding
and authorized to vote 5,387,365 shares
Class M shares outstanding
and authorized to vote 254,953 shares
5% beneficial ownership of your fund as of April 30, 1996
Persons beneficially owning more than 5%
of the fund's class A shares None
Persons beneficially owning more than 5%
of the fund's class B shares None
Persons beneficially owning more than 5%
of the fund's class M shares None
<PAGE>
PUTNAMINVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581<PAGE>
PUTNAMINVESTMENTS
This is your PROXY CARD.
PUTNAM CONVERTIBLE INCOME-GROWTH TRUST
Shareholder Meeting July 31, 1996
This proxy is solicited on behalf of the Trustees of the fund.
The undersigned shareholder hereby appoints George Putnam, Hans
H. Estin, and Robert E. Patterson, and each of them separately,
Proxies, with power of substitution, and hereby authorizes them
to represent and to vote, as designated below, at the meeting of
shareholders of
PUTNAM CONVERTIBLE INCOME-GROWTH TRUST
on July 31, 1996, at 2:00 p.m., Boston time, and at any
adjournments thereof, all of the shares of the fund that the
undersigned shareholder would be entitled to vote if personally
present.
Note: If you have questions on any of the proposals, please
call 1-800-225-1581.
The Trustees recommend a vote FOR electing all of the nominees
for Trustees and FOR the proposals listed below.
TO VOTE, MARK BLOCKS BELOW
IN BLUE OR BLACK INK AS FOLLOWS /X/ CIGT
Putnam Convertible Income-Growth Trust
If your address has changed, or
you have any comments, please
check the box and write them on
the back where indicated. / /
If you complete and sign the proxy, we'll vote it exactly as you
tell us. If you simply sign the proxy, it will be voted FOR
electing Trustees as set forth in Proposal 1 and FOR Proposals 2
and 3.A.- 3.Q. In their discretion, the Proxies will also be
authorized to vote upon such other matters that may properly come
before the meeting.
Please sign your name exactly as it appears on this card. If you
are a joint owner, each of you should sign. When signing as
executor, administrator, attorney, trustee, or guardian, or as
custodian for a minor, please give your full title as such. If
you are signing for a corporation, please sign the full corporate
name and indicate the signer's office. If you are a partner,
sign in the partnership name.
Your vote is important. Please help us to eliminate the expense
of follow-up mailings by signing and returning this proxy as soon
as possible. A postage-paid envelope is enclosed for your
convenience.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY.
1. Proposal to elect Trustees. The nominees for Trustees
are: J.A. Baxter, H.H. Estin, J.A. Hill, R.J. Jackson,
E.T. Kennan, L.J. Lasser, R.E. Patterson, D.S. Perkins,
W.F. Pounds, G. Putnam, G. Putnam, III, E. Shapiro, A.J.C.
Smith, and W. N. Thorndike.
----------------------------------------------------------
VOTE ON TRUSTEES
/ / FOR ALL
/ / WITHHOLD ALL
/ / FOR ALL EXCEPT
To withhold authority to vote for one or more of the
nominees, check the "FOR ALL EXCEPT" box to the right
and write those nominees' names above.
PROPOSAL TO:
VOTE ON PROPOSALS
2. Ratify the selection FOR AGAINST ABSTAIN
of Coopers & Lybrand
L.L.P. as auditors. / / / / / /
- -------------------------------------------------------------
3.A. Amend the / / / / /
/
fund's fundamental
investment restriction
with respect to
diversification of
investments.
3.B. Amend the / / / / / /
fund's fundamental
investment restriction
with respect to
investments in the
securities of a single
issuer.
<PAGE>
3.C. Amend the / / / / / /
fund's fundamental
investment restriction
with respect to making
loans through purchases
of debt obligations,
repurchase agreements
and securities loans.
3.D. Amend the fund's / / / / / /
fundamental investment
restriction with respect
to investments in real
estate.
3.E. Amend the fund's / / / / / /
fundamental investment
restriction with respect
to concentration of its
assets.
3.F. Amend the fund's / / / / / /
fundamental investment
restriction with respect
to investments in
commodities or commodity
contracts .
3.G. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to certain
oil, gas and mineral
interests .
3.H. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to options
transactions.
3.I. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to invest-
ments in issuers that have
been in operation for
less than three years.
<PAGE>
3.J. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to
investments in securities
of issuers in which
management of the fund or
Putnam Investment Management,
Inc. owns securities.
3.K. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to margin
transactions.
3.L. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to short
sales.
3.M. Eliminate the / / / / / /
fund's fundamental
investment restriction
which limits the fund's
ability to pledge assets.
3.N. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to
investments in illiquid
securities.
3.O. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to
underwriting.
3.P. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to investing
to gain control of a
company's management .
<PAGE>
3.Q. Eliminate the / / / / / /
fund's fundamental
investment restriction
with respect to investment
in warrants.
--------------------------------------------------------------
- ---
SHAREHOLDER SIGN HERE DATE
- -----------------------------------------------------------------
CO-OWNER SIGN HERE DATE
<PAGE>
PUTNAMINVESTMENTS
HAS YOUR ADDRESS CHANGED?
Please use this form to notify us of any change in address or
telephone number or to provide us with your comments. Detach
this form from the proxy ballot and return it with your signed
proxy in the enclosed envelope.
Street
- -----------------------------------------------------------------
City State Zip
- -----------------------------------------------------------------
Telephone
- -----------------------------------------------------------------
DO YOU HAVE ANY COMMENTS?
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
DEAR SHAREHOLDER:
Your vote is important. Please help us to eliminate the expense
of follow-up mailings by signing and returning this proxy as soon
as possible. A postage-paid envelope is enclosed for your
convenience.
THANK YOU!
