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 MASTER INCOME 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:
(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>
PUTNAM MASTER INCOME TRUST
ONE POST OFFICE SQUARE
BOSTON, MASSACHUSETTS 02109
July 28, 1994
Dear Shareholder:
You are cordially invited to attend the 1994 Meeting of
Shareholders of your Fund, which will be held on October 6, 1994
at 2:00 p.m., Boston time, on the eighth floor of One Post Office
Square, Boston, Massachusetts.
THE MATTERS TO BE ACTED UPON AT THE MEETING -- (1) ELECTING
TRUSTEES AND (2) RATIFYING THE TRUSTEES' SELECTION OF COOPERS &
LYBRAND AS INDEPENDENT AUDITORS OF THE FUND FOR ITS CURRENT
FISCAL YEAR -- ARE DESCRIBED IN THE ATTACHED NOTICE AND PROXY
STATEMENT.
Although we would like very much to have each shareholder
attend the 1994 Meeting, we realize this is not possible.
Whether or not you plan to be present at the meeting, WE NEED
YOUR VOTE. WE URGE YOU TO COMPLETE, SIGN AND RETURN THE ENCLOSED
PROXY CARD PROMPTLY. A POSTAGE-PAID ENVELOPE IS ENCLOSED FOR
THIS PURPOSE.
If you return your proxy promptly, you can help your Fund
avoid the expense of follow-up mailings to achieve a quorum so
that the meeting can be held. If you decide between now and
October that you can attend the meeting in person, you can revoke
your proxy at that time and vote your shares at the meeting. If
your shares are held in street name, only your bank or broker can
vote your shares, and only upon receipt of your specific
instructions. Please contact the person responsible for your
account and instruct him or her to execute a proxy card today.
We look forward to seeing you at the meeting or receiving
your proxy so that your shares may be voted at the meeting.
Sincerely yours,
/s/George Putnam
George Putnam
Chairman
<PAGE>
PUTNAM MASTER INCOME TRUST
NOTICE OF THE 1994 MEETING OF SHAREHOLDERS
To The Shareholders of Putnam Master Income Trust:
The 1994 Meeting of Shareholders of Putnam Master Income
Trust (the "Fund") will be held on October 6, 1994 at 2:00 p.m.,
Boston time, on the eighth floor of One Post Office Square,
Boston, Massachusetts, for the following purposes:
1. Electing Trustees, as described in Part I of the
attached Proxy Statement. (p. 1)
2. Ratifying or rejecting the selection of independent
accountants as auditors for the Fund for the current
fiscal year, as described in Part II of the attached
Proxy Statement. (p. 10)
3. Such other matters as may properly come before the
meeting.
By the Trustees
GEORGE PUTNAM, CHAIRMAN
WILLIAM F. POUNDS, VICE CHAIRMAN
JAMESON A. BAXTER ROBERT E. PATTERSON
HANS H. ESTIN DONALD S. PERKINS
JOHN A. HILL GEORGE PUTNAM, III
ELIZABETH T. KENNAN A.J.C. SMITH
LAWRENCE J. LASSER W. NICHOLAS THORNDIKE
July 28, 1994
WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE ENCLOSED
PROXY IN THE ENCLOSED ENVELOPE SO YOU WILL
BE REPRESENTED AT THE MEETING.<PAGE>
PUTNAM MASTER INCOME TRUST
ONE POST OFFICE SQUARE
BOSTON, MASSACHUSETTS 02109
PROXY STATEMENT
THE ENCLOSED PROXY IS SOLICITED BY THE TRUSTEES OF PUTNAM
MASTER INCOME TRUST (the "Fund") for use at the 1994 Meeting of
Shareholders to be held on October 6, 1994, and at any
adjournments thereof, for the purposes set forth in the
accompanying Notice of Meeting of Shareholders. Shareholders of
record at the close of business on July 15, 1994 are entitled to
be present and to vote at the meeting or any adjourned session
thereof. The Notice of Meeting, proxy and this Proxy Statement
have been mailed to such shareholders of record on or about July
28, 1994.
A copy of the Annual Report of the Fund for its most recent
fiscal year, including financial statements, has previously been
mailed to shareholders. A representative of Coopers & Lybrand,
auditors of the Fund, is expected to be present at the meeting
with the opportunity to make statements and to respond to
appropriate questions.
Each share of beneficial interest is entitled to one vote.
Shares represented by duly executed proxies will be voted for the
election of the persons named herein as Trustees, unless such
authority has been withheld. With respect to the other matters
specified in the proxy, shares will be voted in accordance with
the instructions made. If no instructions are made, the proxy
will be voted for the matters specified in the proxy. Proxies
may be revoked at any time before they are voted by a written
revocation received by the Clerk of the Fund, by properly
executing a later-dated proxy or by attending the meeting and
voting in person.
I. ELECTION OF TRUSTEES
The Trustees have fixed the number of Trustees for election
at this meeting at twelve. The nominees for Trustees of the Fund
who are proposed for election at the meeting, their ages, and a
description of their principal occupations are set forth below.
All the nominees have been recommended by the Nominating
Committee, which consists solely of Trustees who are not
"interested persons" (as defined in the Investment Company Act of
1940) of the Fund or Putnam Investment Management, Inc., the
Fund's investment manager ("Putnam Management"). All the
nominees are presently Trustees of the Fund. Each of the current
Trustees was elected by the shareholders in September, 1993
(except for Mrs. Baxter, who was elected by the Trustees
effective January 6, 1994). All of the Trustees are also
Trustees of all of the other Putnam funds, except that Mrs.
Baxter and Mr. Smith do not currently serve as Trustees of Putnam
California Investment Grade Municipal Trust, Putnam Investment
Grade Municipal Trust II, Putnam Investment Grade Intermediate
Municipal Trust, Putnam Managed High Yield Trust, Putnam
Municipal Opportunities Trust and Putnam New York Investment
Grade Municipal Trust. Except as shown, the principal
occupations and business experience for the last five years of
the nominees have been with the employers indicated, although in
some cases they have held different positions with such
employers.
The term of office of each person elected as a Trustee will
be until the next meeting held for the purpose of electing
Trustees and until his or her successor is elected and qualified.
Each of the nominees has agreed to serve as a Trustee if elected.
If any of the nominees should be unavailable for election at the
time of the meeting (which is not presently anticipated), the
persons named as proxies may vote for other persons in their
discretion, or the Trustees may vote to fix the number of
Trustees at fewer than twelve.
<PAGE>
PRINCIPAL OCCUPATION
NOMINEE FOR LAST FIVE YEARS
Jameson Adkins Baxter (50) President, Baxter Associates, Inc.
(consultants to management).
Prior to 1992, she was Vice
President and Principal, Regency
Group, Inc. and Consultant, The
First Boston Corporation. Also,
Director, Banta Corporation,
Avondale Federal Savings Bank and
ASHTA Chemicals, Inc. Chairman of
the Board of Trustees, Mount
Holyoke College. President of the
Board of Trustees, Emma Willard
School and Member of Board of
Governors, Good Shepherd Hospital.
Hans H. Estin (65) Vice Chairman, North American
Management Corp. (a registered
investment adviser). Also,
Director, The Boston Company, Inc.
and Boston Safe Deposit and Trust
Company. Member, Massachusetts
General Hospital. Trustee, New
England Aquarium.
John A. Hill (52) Chairman and Managing Director,
First Reserve Corporation (a
registered investment adviser).
Prior to 1989, General Partner,
Meridien Capital Corporation (a
venture capital investment firm).
Also, Director, Snyder Oil
Corporation, Maverick Tube
Corporation, PetroCorp
Incorporated, various private
companies controlled by First
Reserve Corporation and various
First Reserve Funds.
Elizabeth T. Kennan (56) President, Mount Holyoke College.
Also, Director, NYNEX Corporation,
Northeast Utilities, the Kentucky
Home Life Insurance Companies and
Talbots. Trustee, University of
Notre Dame.
<PAGE>
PRINCIPAL OCCUPATION
NOMINEE FOR LAST FIVE YEARS
*Lawrence J. Lasser (51) Vice President of the Putnam funds.
President, Chief Executive Officer
and Director of Putnam Investments,
Inc. and Putnam Management.
Director, Marsh & McLennan
Companies, Inc. and INROADS/Central
New England Inc. Member, Board of
Overseers, Museum of Science,
Museum of Fine Arts and Isabella
Stewart Gardner Museum, Boston.
Also, Trustee, Beth Israel Hospital
and Buckingham, Browne and Nichols
School.
Robert E. Patterson (49) Executive Vice President of Cabot
Partners Limited Partnership (a
registered investment adviser).
Also, Vice Chairman, Joslin
Diabetes Center. Director,
Brandywine Trust Company. From
May, 1987 to October, 1990,
Executive Vice President of Cabot,
Cabot & Forbes Realty Advisors,
Inc. (predecessor of Cabot Partners
Limited Partnership).
Donald S. Perkins (67) Director of various corporations,
including American Telephone &
Telegraph Company, AON Corp.,
Cummins Engine Company, Inc.,
Illinois Power Co., Inland Steel
Industries, Inc., K mart
Corporation, LaSalle Street Fund,
Inc., Springs Industries, Inc. and
Time Warner Inc. Also, Trustee and
Vice Chairman, Northwestern
University. Chairman, The Hospital
Research and Education Trust.
Member, The Business Council.
Founding Chairman, the Civic
Committee of the Commercial Club of
Chicago.
William F. Pounds (66) Vice Chairman. Professor of
Management, Alfred P. Sloan School
of Management, Massachusetts
Institute of Technology. Director,
IDEXX Laboratories, Inc., M/A-COM,
Inc., EG&G, Inc., Perseptive
Biosystems, Inc., Management
Sciences For Health, Inc. and Sun
Company, Inc. Also, Trustee,
Museum of Fine Arts, Boston and
Overseer, WGBH Educational
Foundation. <PAGE>
PRINCIPAL OCCUPATION
NOMINEE FOR LAST FIVE YEARS
*George Putnam (67) Chairman and President of the
Putnam funds. Chairman and
Director of Putnam Management and
Putnam Mutual Funds. Also,
Director, The Boston Company, Inc.,
Boston Safe Deposit and Trust
Company, Freeport-McMoRan, Inc.,
General Mills, Inc., Houghton
Mifflin Company, Marsh & McLennan
Companies, Inc., and Rockefeller
Group, Inc. Trustee, Massachusetts
General Hospital, McLean Hospital,
Vincent Memorial Hospital, WGBH
Educational Foundation, The
Colonial Williamsburg Foundation
and Museum of Fine Arts, Boston.
*George Putnam, III (42) President, New Generation Research,
Inc. (publisher of financial
information). Director, World
Environment Center and
Massachusetts Audubon Society.
Trustee, Sea Education Association
and St. Mark's School.
Also, Overseer, New England Medical
Center.
*A.J.C. Smith (60) Chairman and Chief Executive
Officer, Marsh & McLennan
Companies, Inc. Also, Trustee of
The American Institute for
Chartered Property Casualty
Underwriters, the Central Park
Conservancy and the Carnegie Hall
Society.
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*Nominees who are "interested persons" (as defined in the
Investment Company Act of 1940) of the Fund, Putnam Management,
and Putnam Mutual Funds Corp. ("Putnam Mutual Funds"), the
principal underwriter for all the open-end Putnam funds and an
affiliate of Putnam Management. Mr. Putnam, Mr. Lasser and Mr.
Smith are deemed "interested persons" of the Fund, Putnam
Management and Putnam Mutual Funds by virtue of their positions
as officers of the Fund or officers or directors of Putnam
Management, Putnam Mutual Funds, or their parent, Marsh &
McLennan Companies, Inc., or their ownership of stock of Marsh &
McLennan Companies, Inc. Mr. George Putnam, III, Mr. Putnam's
son, is also an "interested person" of the Fund, Putnam
Management and Putnam Mutual Funds. The balance of the nominees
are not "interested persons." <PAGE>
PRINCIPAL OCCUPATION
NOMINEE FOR LAST FIVE YEARS
W. Nicholas Thorndike (61) Director of various corporations
and charitable organizations,
including Providence Journal Co.
and Courier Corporation. Also,
Trustee, Bradley Real Estate Trust,
Eastern Utilities Associates,
Massachusetts General Hospital and
Northeastern University. Prior to
December, 1988, Chairman of the
Board and Managing Partner of
Wellington Management
Company/Thorndike, Doran, Paine &
Lewis (a registered investment
adviser).
Each Trustee of the Fund receives an annual fee, and an
additional fee for each Trustees' meeting attended. Trustees who
are not "interested persons" of Putnam Management and who serve
on committees of the Trustees receive additional fees for
attendance at certain committee meetings. The annual fee paid,
the number of Trustees' meetings held and the aggregate fees paid
to all Trustees are set forth in "Trustees and Officers
Information" below.
The Fund's Trustees have approved Retirement Guidelines for
Trustees of the Putnam funds. These guidelines provide generally
that a Trustee who retires after reaching age 72 and who has at
least 10 years of continuous service will be eligible to receive
a retirement benefit from each Putnam fund for which he or she
served as a Trustee. The amount and form of such benefit is
subject to determination annually by the Trustees and, except as
otherwise determined by the Trustees, will be an annual cash
benefit equal to one-half of the Trustee retainer paid by the
Fund at the time of retirement. Several retired Trustees of the
Fund are currently receiving retirement benefits pursuant to
these Guidelines and it is anticipated that the current Trustees
of the Fund will receive similar benefits upon their retirement.
The Trustees of the Fund reserve the right to amend or terminate
such Guidelines and the related payments at any time, and may
modify or waive the foregoing eligibility requirements when
deemed appropriate.
The Agreement and Declaration of Trust of the Fund provides
that the Fund will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with the
Fund, except if it is determined in the manner specified in the
Agreement and Declaration of Trust that they have not acted in
good faith in the reasonable belief that their actions were in
the best interests of the Fund or that such indemnification would
relieve any officer or Trustee of any liability to the Fund or
its shareholders arising by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of his or her
duties. The Fund, at its expense, provides liability insurance
for the benefit of its Trustees and officers.<PAGE>
AUDIT AND NOMINATING COMMITTEES. The voting members of the
Audit Committee of the Fund include only Trustees who are not
"interested persons" of the Fund or Putnam Management. The Audit
Committee recommends to the Trustees the independent public
accountants to be selected for the Fund. It also reviews the
performance, scope of work and compensation of such accountants,
and reviews with such accountants the quality, accounting
controls, procedures and adequacy of the accounting services
rendered to the Fund by Putnam Management and by the Fund's
investor servicing agent and custodian. The Audit Committee
reports to the Trustees the results of its inquiries. The Audit
Committee currently consists of Messrs. Estin (Chairman),
Perkins, Putnam, III (without vote), Smith (without vote) and
Mrs. Kennan.
The Nominating Committee consists only of Trustees who are
not "interested persons" of the Fund or Putnam Management. It
recommends to the Trustees persons to be elected as Trustees and
as Chairman, Vice Chairman, President and certain other officers
of the Fund. The Nominating Committee will consider individuals
proposed by a shareholder for election as a Trustee.
Shareholders wishing to submit the name of any individual must
submit in writing a brief description of the proposed nominee's
business experience and other information relevant to the
qualifications of the individual to serve as a Trustee of the
Fund. The Nominating Committee currently consists of Mrs. Kennan
and Dr. Pounds (Co-chairpersons), Mrs. Baxter and Messrs. Estin,
Hill, Patterson, Perkins and Thorndike.
The number of meetings of the Audit and Nominating
Committees in the Fund's most recent fiscal year is set forth in
"Trustees and Officers Information" below.
<PAGE>
TRUSTEES AND OFFICERS INFORMATION
The shareholdings of each Trustee in the Fund are shown
below. Unless noted below, each Trustee has sole investment
power and sole voting power with respect to his or her shares of
the Fund and no Trustee owns 1% or more of the outstanding shares
of the Fund.
OWNERSHIP OF
YEAR FIRST OWNERSHIP OF SHARES OF ALL
ELECTED AS SHARES OF THE PUTNAM FUNDS
TRUSTEES TRUSTEE FUND AS OF AS OF
6/15/94 6/15/94*
- -----------------------------------------------------------------
Jameson Adkins Baxter 1994 100 4,565
Hans H. Estin 1987 543 33,244
John A. Hill 1987 1,500 161,146
Elizabeth T. Kennan 1992 100 14,531
Lawrence J. Lasser 1992 100 289,642
Robert E. Patterson 1987 300 54,006
Donald S. Perkins 1987 3,191 254,681
William F. Pounds 1987 500 730,754
George Putnam 1987 1,911 1,235,291
George Putnam, III 1987 500 62,874
A.J.C. Smith 1987 200 30,211
W. Nicholas Thorndike 1992 125 53,760
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* Does not include shares of Putnam Capital Manager Trust,
Putnam California Tax Exempt Money Market Fund, Putnam Daily
Dividend Trust, Putnam New York Tax Exempt Money Market Fund and
Putnam Tax Exempt Money Market Fund.
As of June 15, 1994, the Trustees and officers of the Fund
owned in the aggregate 9,070 shares of the Fund comprising less
than 1% of the outstanding shares of the Fund on that date. With
respect to all of these shares, the Trustees and officers
individually have sole investment power and sole voting power.
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1993
MEETINGS OF THE TRUSTEES DURING THE YEAR
Full Board of Trustees meetings: 11
Audit Committee meetings: 3
Nominating Committee meetings: 3
TRUSTEES' FEES
Annual retainer fee per Trustee: $1,380
Additional attendance fee per
Trustees' meeting: $21
Aggregate fees paid to all Trustees for the
year*: $21,902
*Includes both annual fees and fees for attendance at Trustees'
meetings and certain meetings of committees of the Trustees.
These committees include: Compensation, Legal, Administration;
Audit; Closed-End Funds; Distribution; Pricing/Brokerage/Special
Investments; Communication and Service; Contract; Executive;
Board Policy and Nominating; and Proxy.
In addition to George Putnam and Lawrence J. Lasser, the
officers of the Fund are Charles E. Porter, Executive Vice
President, Patricia C. Flaherty, Senior Vice President, Gordon H.
Silver, Gary N. Coburn, Rosemary H. Thomsen, Jeffrey B. Saef, F.
Mark Turner (Ms. Thomsen and Messrs. Saef and Turner are the
Fund's Portfolio Managers), William N. Shiebler (President of
Putnam Mutual Funds), John R. Verani and Paul M. O'Neil, each of
whom serves as a Vice President, John D. Hughes, Vice President
and Treasurer, and Beverly Marcus, Clerk of the Fund. All of the
officers of the Fund are employees of Putnam Management or its
affiliates. Because of their positions with Putnam Management or
its affiliates or their ownership of stock of Marsh & McLennan
Companies, Inc. (the parent corporation of Putnam Management),
Messrs. Putnam, George Putnam, III, Lasser and Smith (nominees
for Trustees of the Fund), as well as the officers of the Fund,
will benefit from the management fees, custodian fees, and
investor servicing fees paid or allowed by the Fund.
PUTNAM INVESTMENT MANAGEMENT, INC. Putnam Management and
its affiliate, Putnam Fiduciary Trust Company, the Fund's
investor servicing agent and custodian, are wholly owned by
Putnam Investments, Inc., One Post Office Square, Boston,
Massachusetts 02109, a holding company that is in turn wholly
owned by Marsh & McLennan Companies, Inc., which has executive
offices at 1166 Avenue of the Americas, New York, New York 10036.
Marsh & McLennan Companies, Inc. and its operating subsidiaries
are professional services firms with insurance and reinsurance
brokering, consulting and investment management businesses. A
certified balance sheet of Putnam Management is attached to this
Proxy Statement as Exhibit A.
The directors of Putnam Management are George Putnam,
Lawrence J. Lasser and Gordon H. Silver. Mr. Lasser is the
principal executive officer of Putnam Management. The principal
occupations of Messrs. Putnam, Lasser and Silver are as officers
and directors of Putnam Management and certain of its corporate
affiliates. The address of Putnam Management and the business
address of the directors and officers of Putnam Management is One
Post Office Square, Boston, Massachusetts 02109.
In addition to its services to the Fund, Putnam Management
acts as investment adviser or subadviser of other publicly-owned
investment companies having differing investment objectives.
Putnam Management is also affiliated with The Putnam
Advisory Company, Inc., which together with subsidiaries
furnishes investment advice to domestic and foreign institutional
clients and mutual funds. Another affiliate, Putnam Fiduciary
Trust Company, provides investment advice to institutional
clients under its banking and fiduciary powers. The advisory
fees charged by such firms to their institutional clients are
generally at lower rates than those charged the Putnam funds.
The services performed and responsibilities assumed by these
firms for such clients are, however, not as extensive as those
performed or assumed by Putnam Management for the Putnam funds.
Certain officers and directors of Putnam Management,
including some who are officers of the Fund, serve as officers or
directors of some of these affiliates. Putnam Management may
also enter into other businesses.
THE MANAGEMENT CONTRACT. Putnam Management serves as
investment manager of the Fund pursuant to a Management Contract
(the "Contract"). The management fee payable under the Contract
is based on the following annual rates: 0.75% of the first $500
million of average weekly net assets, 0.65% of the next $500
million, 0.60% of the next $500 million and 0.55% of any amount
over $1.5 billion. Management fees are payable quarterly, based
on the average net assets of the Fund as determined at the close
of each business week. Such fees are in addition to the
compensation of Trustees and certain officers and other expenses
borne by the Fund. The compensation payable to Putnam Management
is subject to reduction or reimbursement to the extent that
expenses of the Fund in any fiscal year exceed the limits on
investment company expenses imposed by any statute or regulatory
authority in any jurisdiction where shares of the Fund are
qualified for offer and sale. The term "expenses" is defined in
the statutes and regulations of such jurisdictions and, generally
speaking, excludes brokerage commissions, taxes, interest and
extraordinary expenses. The fee payable to Putnam Management is
also subject to reduction by the amount of certain possible
commissions, fees, brokerage or similar payments received by
Putnam Mutual Funds, less expenses approved by the Trustees of
the Fund, in respect of purchases and sales of the Fund's
portfolio investments. The fees paid to Putnam Management in the
most recent fiscal year are shown in "Fund Information" below.
Under the Contract, subject to such policies as the Trustees
may determine, Putnam Management, at its expense, furnishes
continuously an investment program for the Fund and makes
investment decisions on behalf of the Fund. Subject to the
control of the Trustees, Putnam Management manages, supervises
and conducts the other affairs and business of the Fund,
furnishes office space and equipment, provides bookkeeping and
clerical services (including determination of the Fund's net
asset value, but excluding shareholder accounting services) and
places all orders for the purchase and sale of the Fund's
portfolio securities. Putnam Management may place Fund portfolio
transactions with broker-dealers that furnish Putnam Management,
without cost to it, certain brokerage and research services of
value to Putnam Management and its affiliates in advising the
Fund and other clients. In so doing, Putnam Management may cause
the Fund to pay greater brokerage commissions than it might
otherwise pay. See "Brokerage and research services" below.
The Fund also pays, or reimburses Putnam Management for, the
compensation and related expenses of certain officers of the Fund
and their assistants. Currently, the Fund is reimbursing Putnam
Management for a portion of the compensation and related expenses
of certain officers of the Fund who provide certain
administrative services to the Fund and the other Putnam funds,
each of which bears an allocated share of the costs. The
aggregate amount of all such payments and reimbursements is
determined annually by the Trustees, and the amount paid in the
most recent fiscal year is set forth in "Fund Information" below.
Putnam Management pays all other salaries of officers of the
Fund. The Fund pays all expenses not assumed by Putnam
Management including, without limitation, auditing, legal,
custodial, investor servicing agent and shareholder reporting
expenses.
The Contract provides that Putnam Management shall not be
subject to any liability to the Fund or to any shareholder of the
Fund for any act or omission in the course of or connected with
rendering services thereunder in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties.
The Contract may be terminated without penalty upon 30 days'
written notice by Putnam Management, by the Trustees of the Fund,
or by the affirmative vote of the holders of a "majority of the
outstanding voting securities" of the Fund (as defined in the
Investment Company Act of 1940). It may be amended only by an
affirmative vote of the holders of a majority of the outstanding
voting securities of the Fund and by a majority of the Trustees
who are not "interested persons" of the Fund or Putnam
Management.
The Contract will terminate automatically if it is assigned,
or unless its continuance is approved at least annually by either
the Trustees or shareholders of the Fund and in either case by a
majority of the Trustees who are not "interested persons" of
Putnam Management or the Fund.
INVESTMENT DECISIONS. Investment decisions for the Fund and
for the other investment advisory clients of Putnam Management
and its affiliates are made with a view to achieving each
client's respective investment objectives. Investment decisions
are the product of many factors in addition to basic suitability
for the particular client involved. Thus, a particular security
may be bought and sold for clients even though it could have been
bought or sold for other clients at the same time. Likewise, a
particular security may be bought for some clients when other
clients are selling the security. In some cases, one client may
sell a particular security to another client. When two or more
clients simultaneously purchase or sell the same security, each
day's transactions in the security are, insofar as possible,
averaged as to price and allocated between the clients in a
manner which in the opinion of Putnam Management is equitable to
each and in accordance with the total amount of the security
being purchased or sold by each. There may be circumstances when
purchases or sales of portfolio securities for one or more
clients will have an adverse effect on other clients.
BROKERAGE AND RESEARCH SERVICES. Transactions on U.S. stock
exchanges, commodities markets and futures markets and other
agency transactions involve the payment by the Fund of negotiated
brokerage commissions. Such commissions vary among different
brokers. A particular broker may charge different commissions
according to such factors as the difficulty and size of the
transaction. Transactions in foreign investments often involve
the payment of fixed brokerage commissions, which may be higher
than those in the United States. There is generally no stated
commission in the case of securities traded in the
over-the-counter markets, but the price paid by the Fund usually
includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid by the Fund includes a
disclosed, fixed commission or discount retained by the
underwriter or dealer. It is anticipated that most purchases and
sales of securities by funds investing primarily in certain
fixed-income securities will be with the issuer or with
underwriters of or dealers in those securities, acting as
principal. Accordingly, those funds would not ordinarily pay
significant brokerage commissions with respect to securities
transactions.
It has for many years been a common practice in the
investment advisory business for advisers of investment companies
and other institutional investors to receive brokerage and
research services (as defined in the Securities Exchange Act of
1934, as amended (the "1934 Act")) from broker-dealers that
execute portfolio transactions for the clients of such advisers
and from third parties with which such broker-dealers have
arrangements. Consistent with this practice, Putnam Management
receives brokerage and research services and other similar
services from many broker-dealers with which Putnam Management
places the Fund's portfolio transactions and from third parties
with which these broker-dealers have arrangements. These
services include such matters as general economic and market
reviews, industry and company reviews, evaluations of
investments, recommendations as to the purchase and sale of
investments, newspapers, magazines, pricing services, quotation
services, news services and personal computers utilized by Putnam
Management's managers and analysts. Where the services referred
to above are not used exclusively by Putnam Management for
research purposes, Putnam Management, based upon its own
allocations of expected use, bears the portion of the cost of
these services that directly relates to their non-research use.
Some of these services are of value to Putnam Management and its
affiliates in advising various of their clients (including the
Fund), although not all of these services are necessarily useful
and of value in managing the Fund. The management fee paid by
the Fund is not reduced because Putnam Management and its
affiliates receive these services even though Putnam Management
might otherwise be required to purchase some of these services
for cash.
Putnam Management places all orders for the purchase and
sale of portfolio investments for the Fund and buys and sells
investments for the Fund through a substantial number of brokers
and dealers. In so doing, Putnam Management uses its best
efforts to obtain for the Fund the most favorable price and
execution available, except to the extent it may be permitted to
pay higher brokerage commissions as described below. In seeking
the most favorable price and execution, Putnam Management, having
in mind the Fund's best interests, considers all factors it deems
relevant, including, by way of illustration, price, the size of
the transaction, the nature of the market for the security or
other investment, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the
reputation, experience and financial stability of the
broker-dealer involved and the quality of service rendered by the
broker-dealer in other transactions.
As permitted by Section 28(e) of the 1934 Act, and by the
Contract, Putnam Management may cause the Fund to pay a
broker-dealer that provides "brokerage and research services" (as
defined in the 1934 Act) to Putnam Management an amount of
disclosed commission for effecting securities transactions on
stock exchanges and other transactions for the Fund on an agency
basis in excess of the commission which another broker-dealer
would have charged for effecting that transaction. Putnam
Management's authority to cause the Fund to pay any such greater
commissions is also subject to such policies as the Trustees may
adopt from time to time. Putnam Management does not currently
intend to cause the Fund to make such payments. It is the
position of the staff of the Securities and Exchange Commission
that Section 28(e) does not apply to the payment of such greater
commissions in "principal" transactions. Accordingly, Putnam
Management will use its best efforts to obtain the most favorable
price and execution available with respect to such transactions,
as described above.
The Contract provides that commissions, fees, brokerage or
similar payments received by Putnam Management or an affiliate in
connection with the purchase and sale of portfolio investments of
the Fund, less any direct expenses approved by the Trustees,
shall be recaptured by the Fund through a reduction of the fee
payable by the Fund under the Contract. Putnam Management seeks
to recapture for the Fund soliciting dealer fees on the tender of
the Fund's portfolio securities in tender or exchange offers.
Any such fees which may be recaptured are likely to be minor in
amount.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. and subject to seeking
the most favorable price and execution available and such other
policies as the Trustees may determine, Putnam Management may
consider sales of shares of the Fund (and, if permitted by law,
of the other Putnam funds) as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.
PAYMENTS TO AN AFFILIATE OF PUTNAM MANAGEMENT. Putnam
Fiduciary Trust Company is the Fund's investor servicing agent
and custodian. The investor servicing fees and custodian fees
paid to Putnam Fiduciary Trust Company in the Fund's most recent
fiscal year are set forth in "Fund Information" below.
<PAGE>
FUND INFORMATION
ASSETS OF THE FUND; SHARES OUTSTANDING
Net assets of the Fund as of June 30, 1994 $469,456,252
Shares of the Fund
outstanding and authorized
to vote as of July 15, 1994 53,375,649 shares
Persons beneficially owning
more than 5% of the Fund's
shares as of June 30, 1994 NONE
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1993
MANAGEMENT CONTRACT
The Management Contract dated
July 11, 1991 was approved by the
shareholders on that date and
was last approved by the Trustees on
January 7, 1994.
Management fee paid to Putnam
Management for the fiscal year $3,742,268
Reimbursement paid by the Fund to Putnam
Management for compensation, related expenses
and employee benefit plan contributions
for the Fund's Executive Vice President
(Charles E. Porter), Senior Vice President
(Patricia C. Flaherty), Clerk (Beverly Marcus)
and those who assist them $15,859
PAYMENTS TO AN AFFILIATE
Investor servicing and custodian fees
paid to Putnam Fiduciary Trust Company
(after application of credits, if any) $385,850
BROKERAGE
Total Fund payments to broker-dealers as
commissions on agency transactions $58,319
Total Fund payments to broker-dealers as
commissions on underwritten transactions $308,243
The Fund placed agency and underwritten transactions having
an approximate aggregate dollar value of $28,262,246 (1.98% of
the Fund's agency and underwritten transactions, on which
approximately $7,266 of commissions were paid) with brokers and
dealers whose research, statistical and quotation services Putnam
Management considered to be particularly useful to it and its
affiliates. However, many of such transactions were placed with
such brokers without regard to the furnishing of such services.
II. RATIFICATION OR REJECTION OF SELECTION OF
INDEPENDENT AUDITORS
Coopers & Lybrand, One Post Office Square, Boston,
Massachusetts, independent accountants, has been selected by the
Trustees as auditors of the Fund for the current fiscal year.
Unless otherwise indicated, the proxy will be voted in favor of
ratifying the selection of Coopers & Lybrand as auditors.
III. MISCELLANEOUS
QUORUM AND METHODS OF TABULATION. Thirty percent of the
shares entitled to vote, present in person or represented by
proxy, constitutes a quorum for the transaction of business with
respect to such proposals at the Meeting. Votes cast by proxy or
in person at the Meeting will be counted by persons appointed by
the Fund as tellers for the Meeting.
The twelve nominees for election as Trustees at the Meeting
who receive the greatest number of votes properly cast for the
election of Trustees shall be elected Trustees. A majority of
the votes properly cast on the matter is necessary to ratify the
selection of independent auditors.
The tellers will count the total number of votes cast "for"
approval of the proposals for purposes of determining whether
sufficient affirmative votes have been cast. The tellers will
count shares represented by proxies that reflect abstentions and
"broker non-votes" (i.e., shares held by brokers or nominees as
to which (i) instructions have not been received from the
beneficial owners or the persons entitled to vote and (ii) the
broker or nominee does not have the discretionary voting power on
a particular matter) as shares that are present and entitled to
vote on the matter for purposes of determining the presence of a
quorum. With respect to the election of Trustees and selection
of auditors, neither abstentions nor broker non-votes have any
effect on the outcome of the proposal. With respect to other
proposals, abstentions and broker non-votes have the effect of a
negative vote on the proposal.
OTHER BUSINESS. The Trustees know of no other business to
be brought before the Meeting. However, if any other matters
properly come before the Meeting, it is their intention that
proxies that do not contain specific restrictions to the contrary
will be voted on such matters in accordance with the judgment of
the persons named as proxies in the enclosed form of proxy.
SIMULTANEOUS MEETINGS. The Meeting of shareholders of the
Fund is called to be held at the same time as the Meetings of
shareholders of certain of the other Putnam funds. It is
anticipated that all Meetings will be held simultaneously. If
any Fund shareholder at the Meeting objects to the holding of a
simultaneous Meeting and moves for an adjournment of the Meeting
to a time promptly after the simultaneous Meetings, the persons
named as proxies will vote in favor of such adjournment.
SOLICITATION OF PROXIES. In addition to the solicitation of
proxies by mail, Trustees of the Fund and employees of Putnam
Management, Putnam Fiduciary Trust Company and Putnam Mutual
Funds may solicit proxies in person or by telephone. The Fund
may also arrange to have votes recorded by telephone. The
telephone voting procedure is designed to authenticate a
shareholder's identity, to allow a shareholder to authorize the
voting of his shares in accordance with his instructions and to
confirm that his instructions have been properly recorded. If
this procedure were subject to a successful legal challenge, such
votes would not be counted at the Meeting. The Fund has not
sought to obtain an opinion of counsel on this matter and is
unaware of any such challenge at this time. A shareholder would
be called on a recorded line at the phone number Putnam
Investments has in its records for his account, and would be
asked for his Social Security number or other identifying
information. The shareholder would then be given an opportunity
to authorize proxies to vote his shares at the Meeting in
accordance with his instructions. To ensure that the
shareholder's instructions have been recorded correctly, he will
also receive a confirmation of his instructions in the mail. A
special toll-free number will be available in case the
information contained in the confirmation is incorrect. If the
shareholder decides after he has voted by phone that he wants to
attend the Meeting in person, he can revoke his proxy at that
time and vote his shares at the Meeting.
Persons holding shares as nominees will upon request be
reimbursed for their reasonable expenses in sending soliciting
material to their principals. The Fund has retained at its
expense Tritech Services, Four Corporate Place, Corporate Park
287, Piscataway, New Jersey 08854 to aid in the solicitation of
nominee accounts for a fee not to exceed $3,000 plus reasonable
out-of-pocket expenses.
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR 1995 ANNUAL
MEETING. It is anticipated that the Fund's next Meeting of
shareholders will be held in September, 1995. Shareholder
proposals to be included in the Fund's proxy statement for a 1995
Meeting must be received by the Fund before March 31, 1995.
ADJOURNMENT. If sufficient votes in favor of any of the
proposals set forth in the Notice of the Meeting are not received
by the time scheduled for the Meeting, the persons named as
proxies may propose one or more adjournments of the Meeting for a
period or periods of not more than 60 days in the aggregate to
permit further solicitation of proxies with respect to any of
such proposals. Any adjournment will require the affirmative
vote of a majority of the votes cast on the question in person or
by proxy at the session of the Meeting to be adjourned. The
persons named as proxies will vote in favor of such adjournment
those proxies which they are entitled to vote in favor of such
proposals. They will vote against any such adjournment those
proxies required to be voted against any of such proposals. The
Fund pays the costs of any additional solicitation and of any
adjourned session. Any proposals for which sufficient favorable
votes have been received by the time of the Meeting will be
considered acted upon and final regardless of whether the Meeting
is adjourned to permit additional solicitation with respect to
any other proposal.
<PAGE>
<PAGE>
EXHIBIT A
PUTNAM INVESTMENT MANAGEMENT, INC.
BALANCE SHEET
DECEMBER 31, 1993
ASSETS:
Cash $ 300
Investments (note 2) 50,000
Investment management fees receivable 60,817,927
Accounts receivable from affiliates (note 6) 1,819,578
Prepaid expenses and other assets 2,759,786
Property and equipment - net (notes 2 & 3) 5,105,571
------------
TOTAL ASSETS $70,553,162
============
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES:
Accounts payable and accrued
expenses (note 5) $ 20,704,486
Accounts payable to affiliate 916
------------
TOTAL LIABILITIES 20,705,402
------------
STOCKHOLDER'S EQUITY:
Common stock - $1 par value; authorized
and outstanding, 1,000 shares 1,000
Paid-in surplus 4,696,665
Retained earnings 45,150,095
------------
TOTAL STOCKHOLDER'S EQUITY 49,847,760
------------
TOTAL LIABILITIES AND STOCKHOLDER'S
EQUITY $70,553,162
============
See notes to balance sheet.
<PAGE>
PUTNAM INVESTMENT MANAGEMENT, INC.
NOTES TO BALANCE SHEET
1. CORPORATE AFFILIATION
Putnam Investment Management, Inc. (the Company) is a
wholly-owned subsidiary of Putnam Investments, Inc., (the
Parent), which is a wholly-owned subsidiary of Marsh &
McLennan Companies, Inc. (MMC).
The Company's primary business is to provide investment
advisory services to Putnam-sponsored mutual funds. In
connection with providing these services, the Company
receives a management fee which is based upon the average
net asset value of the respective fund to which the services
are provided.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
Investments consist of time deposits held by an affiliate.
Investments are recorded at the lower of cost or market.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Office and
data processing equipment are depreciated using the straight-line
method over their estimated useful lives of four to ten years.
Leasehold improvements are amortized using the straight-line
method over ten years or the period covered by the lease,
whichever is less. Additions, renewals and betterments of
property and equipment are capitalized. Expenditures for
maintenance and repairs are charged to income when incurred.
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
Office and data processing equipment $ 3,610,612
Less accumulated depreciation (2,244,442)
------------
1,366,170
------------
Leasehold improvements 6,051,063
Less accumulated amortization (2,311,662)
------------
3,739,401
------------
Property and equipment - net $ 5,105,571
============
4. INCOME TAXES
In accordance with the provisions of STATEMENT OF
FINANCIAL ACCOUNTING STANDARDS NO. 109 - ACCOUNTING FOR
INCOME TAXES, the Company records a current liability or
asset for the estimated taxes payable or refundable on tax
returns for the current year and a deferred tax liability or
asset for the estimated future tax effects attributable to
temporary differences.
The Company, through MMC, files its federal tax return
as a member of a consolidated group. The Parent allocates
its current and deferred tax provision or benefit to the
Company in a manner which is representative of how the
Company would compute its provision as a separate entity.
Under an agreement with the Parent, the Company pays
the Parent each month for the amount of its net current and
deferred tax provision. If the Company has a net tax
benefit, the Parent pays the Company that amount. The
Parent then assumes responsibility for the payment of all
taxes in accordance with federal, state and local laws. As
a result of this agreement, the Company has no current or
deferred tax liability or asset reflected in its balance
sheet at December 31, 1993.
5. EMPLOYEE BENEFIT PLANS
PROFIT SHARING PLAN
The Company, the Parent and affiliates sponsor a
profit-sharing plan (the Plan) covering substantially all
employees, providing for annual contributions as determined
by the Board of Directors. Contributions payable to the
Plan at December 31, 1993 were $557,000.
RETIREE HEALTH CARE PLAN
MMC provides a health care plan which covers all
eligible retirees of the Company and its affiliates. The
Parent subsidizes a portion of the cost of the plan. The
Parent allocates its cost of the plan to the Company and its
affiliates in a manner which management believes reflects
the actual cost of the plan on an accrual basis.
6. RELATED PARTY TRANSACTIONS
The Company shares office facilities and personnel with
other wholly-owned subsidiaries of the Parent. Accordingly,
the related costs of such arrangements have been allocated
among the various subsidiaries in a manner which management
believes is representative of the actual costs incurred.
<PAGE>
Accounts receivable from affiliates primarily
represents advances made to the Parent in connection with the
Parent's cash management policy.
In 1993 the Company paid a dividend of $100,000,000 to
the Parent.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Putnam Investment Management, Inc.
We have audited the accompanying balance sheet of Putnam
Investment Management, Inc. (a wholly-owned subsidiary of Putnam
Investments, Inc.) as of December 31, 1993. This financial
statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the balance sheet is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the balance sheet. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
balance sheet presentation. We believe that our audit of the
balance sheet provides a reasonable basis for our opinion.
In our opinion, such balance sheet presents fairly, in all
material respects, the financial position of Putnam Investment
Management, Inc. at December 31, 1993 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE
February 10, 1994
Boston, Massachusetts
<PAGE>
PUTNAM MASTER INCOME TRUST PROXY BALLOT
PROXY FOR THE MEETING OF
SHAREHOLDERS, OCTOBER 6, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF THE FUND.
The undersigned hereby appoints George Putnam, Hans H. Estin and
William F. Pounds, and each of them separately, proxies, with
power of substitution, and hereby authorizes them to represent
and to vote, as designated below, at the Meeting of Shareholders
of Putnam Master Income Trust on October 6, 1994, at 2:00 p.m.,
Boston time, and at any adjournments thereof, all of the shares
of the Fund which the undersigned would be entitled to vote if
personally present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR ELECTING TRUSTEES AS SET
FORTH IN PROPOSAL 1 AND FOR PROPOSAL 2. IN THEIR DISCRETION, THE
PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
NOTE: Please sign exactly as name appears on this card. All
joint owners should sign. When signing as executor,
administrator, attorney, trustee or guardian or as
custodian for a minor, please give full title as such. If
a corporation, please sign in full corporate name and
indicate the signer's office. If a partner, sign in the
partnership name.
Please fold at perforation before detaching
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
----
Please mark your choices / X / in blue or black ink.
----
(Control #)
THE TRUSTEES RECOMMEND A VOTE FOR ELECTING ALL OF THE NOMINEES FOR TRUSTEES
AND FOR THE PROPOSAL LISTED BELOW.
<C> <C> <C> <C> <C> <C> <C> <C>
1. ELECTION OF TRUSTEES: NOMINEES: PROPOSAL TO: FOR AGAINST ABSTAIN
---- FOR electing all the J. A. Baxter 2. RATIFY THE SELECTION ----
/ / nominees H. H. Estin OF COOPERS & LYBRAND / /
---- (EXCEPT AS MARKED TO J. A. Hill AS AUDITORS. ----
- ---- THE CONTRARY BELOW). E. T. Kennan
L. J. Lasser
R. E. Patterson
D. S. Perkins
W. F. Pounds
---- WITHHOLD authority G. Putnam
/ / to vote for all G. Putnam, III
---- nominees. A.J.C. Smith
W. N. Thorndike
TO WITHHOLD AUTHORITY TO
VOTE FOR AN INDIVIDUAL
NOMINEE, WRITE THAT
NOMINEE'S NAME BELOW.
--------------------------
--------------------------
Please be sure to sign and date this Proxy. (Account #) (Shares #)
............................./ .......................... Date .......... (Name & Address)
Shareholder sign here Co-owner sign here
Please fold at perforation before detaching
/TABLE
<PAGE>
<TABLE>
<CAPTION>
(Detachable attachment to proxy card; Page 3 is on the same side as page 1;
and Page 4 is on the reverse side, i.e., the same side as Page 2.)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(Putnam Logo)
CHANGE OF ADDRESS NOTIFICATION. Please use this form to inform us of any change in address or telephone number or to
provide us with your comments. Detach this form from the Proxy Ballot and return it with your executed Proxy in the
enclosed envelope.
<C> <C>
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
....................................................... .......................................................
....................................................... .......................................................
Telephone ............................................. ......................................................<PAGE>
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Dear Shareholder: (Name and Address)
YOUR VOTE IS IMPORTANT. Please help us to eliminate the
expense of follow-up mailings by executing and returning
this Proxy as soon as possible. A postage-paid
business reply envelope is enclosed for your convenience.
Thank you! (Account #)
</TABLE>
