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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/ x / Preliminary Proxy Statement
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/ / Preliminary Additional Materials
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/ / 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 INTERMEDIATE 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:
<PAGE>
(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>
IMPORTANT INFORMATION
FOR SHAREHOLDERS IN
PUTNAM MASTER INTERMEDIATE INCOME 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 page 3 .
While investors sometimes find a proxy statement intimidating, we
are, in fact, asking for your vote on just a few matters. So 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. . . . . . . . . . . . . . . . . . . . . 3
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 these 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. Considering whether to convert your fund from a closed-end
fund to an open-end fund, as well as to authorize related
amendments to your fund's Agreement and Declaration of
Trust, the legal document governing the fund.
Your Trustees unanimously recommend that shareholders vote "For"
the first two proposals. On the third proposal, whether to
convert Putnam Master Intermediate Income Trust to an open-end
fund, the Trustees, including the Trustees who are not affiliated
with the fund's manager, unanimously recommend that shareholders
vote "Against" the conversion. The third proposal is on the
agenda as a result of provisions in your fund's governing legal
documents which require that shareholders be given the
opportunity to consider a conversion in the event the fund's
shares trade at a greater than 10% discount from net asset value
over a specified time.
The Trustees believe that remaining as a closed-end fund provides
significant investment benefits that are not available to open-
end funds. In general, if the fund remains a closed-end fund,
the portfolio manager can manage the fund with a steadier, longer
term perspective without the short-term pressure resulting from
sales and redemptions of fund shares.
The Trustees believe that the fund has provided favorable
performance for shareholders
since inception . For the one
and five year periods ended December 31, 1995 and
for the period since inception in April, 1988 through
December 31, 1995 the fund's performance (measured
at net asset value) places it in the top third of a universe of
high yield, global fixed income and intermediate government funds
used by the Trustees to evaluate the fund's performance. (See
page 20 of the enclosed proxy statement for more
information on performance).
In light of these reasons, the Trustees do not believe that the
recent history of greater discounts, which may be temporary,
justifies the fundamental changes which would result from
conversion, including the loss of the investment advantages of
closed-end status and the likelihood of increased operating
expenses.
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
advisor or call a Putnam customer service representative at
1-800-225-1581.
Sincerely yours,
(signature of George Putnam)
George Putnam, Chairman
<PAGE>
Putnam Master Intermediate Income 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 Master Intermediate Income Trust:
A Meeting of Shareholders of your fund will be held on July 11,
1996 at 2:00 p.m., Boston time, on the eighth floor of One Post
Office Square, Boston, Massachusetts, to consider the following:
1. Fixing the number of Trustees and electing Trustees. See
page X .
2. Ratifying the selection by the Trustees of the independent
auditors of your fund for its current fiscal year. See page
X .
3. Approving or disapproving the conversion of your fund from
closed-end to an open-end status and the authorization of
related amendments to your fund's Agreement and Declaration
of Trust. See page X .
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 Donald S. Perkins
Hans H. Estin George Putnam, III
John A. Hill Eli Shapiro
Elizabeth T. Kennan A.J.C. Smith
Lawrence J. Lasser W. Nicholas Thorndike
Robert E. Patterson
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.
April , 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 Master
Intermediate Income Trust for use at the Meeting of Shareholders
of your fund to be held on July 11, 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 fixing the number of Trustees as proposed and the
election of all nominees; and
2. For selecting Coopers & Lybrand L.L.P. as the independent
auditors of your fund; and
3. Against converting your fund from closed-end to open-end
status and authorizing certain related amendments to your
fund's Agreement and Declaration of Trust.
Who is eligible to vote?
Shareholders of record at the close of business on April 12,
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 April , 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.
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 thirteen 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.
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 Talbots, a
women's clothing retailer. 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 American Telephone & Telegraph Company, 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, 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. , M/A-COM, 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 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.
<PAGE>
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 include 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. All the nominees were
elected by the shareholders in July, 1995. As indicated above,
Dr. Shapiro also previously served as a Trustee of the Putnam
funds from 1984 to 1989. The 13 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 13 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 $ million.
The table below lists each Trustee's current investments in the
fund and in the Putnam funds as a group.
<PAGE>
[CAPTION]
<TABLE>
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 3/15/96* as of 3/15/96**
<C> <C> <C> <C>
- - ----------------------------------------------------------------------------------------
Jameson A. Baxter 1994 303,417
Hans H. Estin 1972 346,438
John A. Hill 1985 1,358,924
Elizabeth T. Kennan 1992 314,395
Lawrence J. Lasser 1992 8,864,380
Robert E. Patterson 1984 737,582
Donald S. Perkins 1982 2,126,688
William F. Pounds 1971 4,706,601
George Putnam 1957 20,996,054
George Putnam, III 1984 3,405,083
Eli Shapiro 1995+ 926,071
A.J.C. Smith 1986 1,090,348
W. Nicholas Thorndike 1992 743,637
- - ----------------------------------------------------------------------------------------
* Except as noted below, 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 March 15, 1996, the Trustees and officers of the fund owned a total of [ ]
shares of the fund, comprising less than 1% of its outstanding shares on that date.
What are some of the ways in which the Trustees represent
shareholder interests?
</TABLE>
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 $1,048 $150,854
Hans H. Estin 1,047 150,854
John A. Hill*** 1,041 149,854
Elizabeth T. Kennan 1,034 148,854
Lawrence J. Lasser 1,047 150,854
Robert E. Patterson 1,061 152,854
Donald S. Perkins 1,047 150,854
William F. Pounds 1,042 149,854
George Putnam 1,047 150,854
George Putnam, III 1,047 150,854
Eli Shapiro**** 428 95,372
A.J.C. Smith 1,041 149,854
W. Nicholas Thorndike 1,061 152,854
* Includes an annual retainer and an attendance fee for each
meeting attended.
** Reflects total payments received from all Putnam funds in
the most recent calendar year. As of December 31, 1995,
there were 99 funds in the Putnam family.
*** Includes compensation deferred pursuant to a Trustee
Compensation Deferral Plan. The total amount of deferred
compensation payable to Mr. Hill by all Putnam funds as of
September 30, 1995 was $25,047, 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 29 .
Putnam Investments
Putnam Investment Management, Inc. and its affiliate, 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>
The Trustees recommend that you vote "FOR" all Nominees.
2. SELECTION OF INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P., One Post Office Square, Boston,
Massachusetts, independent accountants, has been selected by the
Trustees as auditors 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.
The Trustees recommend that you vote "FOR" Proposal 2.
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. APPROVAL OR DISAPPROVAL OF THE CONVERSION OF YOUR FUND FROM
CLOSED-END TO OPEN-END STATUS AND CERTAIN RELATED AMENDMENTS
TO YOUR FUND'S AGREEMENT AND DECLARATION OF TRUST
What is being considered under this item?
Shareholders will have the opportunity to vote at the meeting on
the question of whether your fund should be converted from a
closed-end fund to an open-end fund. The Trustees, as discussed
in more detail below, unanimously recommend that shareholders
vote against converting your fund to an open-end fund. This
recommendation is based on the Trustees' view that, as a closed-
end fund, your fund is afforded significant investment
advantages.
If approved, the conversion would result in the "delisting" of
your fund's shares from the New York Stock Exchange where they
currently may be bought or sold at prevailing market prices. The
shares would then become redeemable directly from your fund at
net asset value. Other differences between closed-end and open-
end investment companies are described below.
A conversion from closed-end to open-end status would also
require a number of changes in the Agreement and Declaration of
Trust (the "Declaration of Trust") under which your fund was
established. Accordingly, approval of this proposal would also
authorize your fund's Trustees to make such amendments as they
may deem necessary or appropriate to operate your fund as
an open-end fund if this proposal is approved. These changes are
described in greater detail below.
Why is this question being submitted to shareholders now?
Your fund's governing legal documents require that shareholders
of your fund be given the opportunity to vote on a proposal to
convert your fund from closed-end to open-end status if the
fund's shares have traded at an average discount of more than 10%
from their net asset value during the last twelve calendar weeks
of the preceding fiscal year (measured as of the last trading day
in each such week). For the twelve-week period ended September
30, 1995, your fund's shares traded at an average discount of
12.38% , requiring that this proposal be submitted to
shareholders for their consideration. The discount on April
, 1996 was % .
What is the recommendation of the Trustees?
The Trustees regularly review the overall performance and trading
information for Putnam's closed-end funds. At recent meetings,
the Trustees of your fund carefully evaluated the fund's
investment performance and the trading history of its shares
since its inception in April 30 , 1988, and information
about the possible advantages and disadvantages of such a
conversion. For the reasons described below, the Trustees of
your fund have unanimously concluded that the conversion of your
fund to open-end status would not be in the best long-term
interests of shareholders of your fund. Accordingly, the
Trustees of your fund unanimously recommend that shareholders
vote "AGAINST" this proposal.
Why are your fund's Trustees recommending a vote against a
conversion?
The Trustees of your fund are recommending a vote against
converting your fund to open-end status for the following
reasons:
The Trustees believe that your fund's closed-end status
provides significant investment benefits not available
in an open-end fund. Because your fund's shares are not
redeemable, your fund is not required to maintain
short-term investments in anticipation of possible
redemptions. Therefore, your fund's assets can be
fully invested in higher-yielding securities in pursuit
of the fund's investment objectives. Furthermore, as a
closed-end fund, your fund does not experience the cash
flows associated with sales and redemptions of open-end
fund shares. As a result, your fund's manager does not
have to invest additional cash from new sales at times
when market conditions are unfavorable or sell
securities to meet redemptions at inopportune times.
The Trustees believe that your fund's operating
expenses are likely to increase if your fund is
converted to open-end status. As an open-end fund,
your fund would be required, as a practical matter, to
make a continuous public offering of its shares in
order to offset redemptions and maintain the economies
of scale available at its current size. The Trustees
expect that in order to market your fund's shares
effectively to conform generally to sales practices of
competing dealer-sold funds, following a conversion to
open-end status, the Trustees would likely recommend
that shareholders approve the adoption of a
distribution plan under Rule 12b-1. Such a plan would
permit your fund to pay annual distribution fees of up
to 0.35% of your fund's net assets. If such
distribution plan were approved, the Trustees would
expect to authorize the payment of distribution fees at
the annual rate of 0.25% of net assets, as is the case
with similar open-end Putnam funds. In addition, all
shareholders would bear the brokerage and other
transactional costs associated with purchases and sales
of securities in response to the sale or redemption of
shares if your fund were converted to open-end status
(except to the extent that the Trustees decide to
impose a temporary redemption fee, as described below).
Open-end funds, since they continually issue new
shares, have the ability to increase in size. This
growth could result in efficiencies as fixed costs are
spread over a larger pool of assets. In the Trustees'
view, the potential for substantial growth and
decreased expense ratios is limited since your fund is
already of significant size, having net assets of
approximately $330 million at March 31, 1996. Further,
since they also continually redeem shares, open-end
funds can also shrink. In that case, expense ratios
may increase. Putnam Management has advised the
Trustees that it is likely that your fund might
experience significant redemptions following any
conversion, thereby shrinking in size. Depending on
the size of the redemptions and any sales of new
shares, increased expense ratios could result.
The need to sell securities as an open-end fund to meet
redemptions may have adverse tax consequences to
shareholders remaining in your fund. If your fund
sells securities to meet redemptions and realizes a
gain for tax purposes, your fund will be required to
allocate the tax gain to all shareholders, not simply
to those who redeem their shares.
The Trustees believe that your fund has achieved
favorable investment results for its shareholders over
its life as a closed-end fund. See "How has your fund
performed?" immediately below. The Trustees believe
that, in deciding whether to open-end the fund, the
performance of your fund is an important factor to
consider. In light of your fund's performance the
Trustees do not believe that eliminating the
possibility of the discount justifies the fundamental
changes which would result from a conversion to open-
end status, including the loss of the investment
advantages of closed-end status and the likelihood of
increased operating expenses.
The Trustees believe that most shareholders of your
fund purchased their shares with a long-term investment
perspective that recognizes the special advantages of
the closed-end structure. In addition, many
shareholders have purchased their fund shares at a
discount and have not been adversely affected by the
discount. Consequently, the Trustees do not believe
that the recent history of greater discounts, which may
be temporary, should be viewed as grounds for depriving
shareholders of the advantages of the closed-end
structure.
For all of the foregoing reasons, the Trustees unanimously
recommend that shareholders vote against this proposal.
How has your fund performed?
The following table summarizes the annualized total return of
your fund for the periods shown based on the net asset value and
the market value of its shares:
Total Return (Annualized) Through December 31, 1995
Since
1 year 3 years 5 years inception
April 29, 1988
Net Asset 18.82% 9.24% 12.54% 9.68%
Value
Market 20.81% 6.59% 12.19% 6.72%
Value
<PAGE>
Of course, relative performance is also important. In addition
to reviewing the fund's overall performance, the Trustees
regularly review the fund's performance compared to that of a
group of comparable funds. The current group used by the
Trustees is composed of high yield, global fixed income and
intermediate government open-end funds, with each category
weighted equally. Using this comparison, the fund was ranked in
the following percentiles for the periods ending December 31,
1995:
1 year 3 years 5 years Since inception
April 29, 1988
Percentile* 23% 41% 26% 33%
* Percentile reflects relative standing with 1% being the
highest relative performance and 100% being the lowest. The
rankings set forth above are based on total return, reflecting
changes in net asset value adjusted for reinvestment of capital
gains and income dividends. They do not reflect changes in
market price of shares in the case of closed-end funds or, for
any fund, the deduction of sales charges. Past performance is no
guarantee of future performance.
In evaluating performance the Trustees also review rankings by
commercial services such as Morningstar, Inc. and Lipper
Analytical Services, Inc. The Trustees believe that these
rankings, some of which show lower rankings than the percentiles
set forth above, is not a good indicator of
relative performance in the case of closed-end funds such as the
fund given the limited number of closed-end funds typically
included and the lack of comparability of funds included
these rankings (such as funds with leverage and with
significant equity investments).
What are the principal differences between a closed-end and open-
end fund?
In evaluating this proposal, shareholders may wish to consider
the following differences between closed-end and open-end funds:
Changes in capital. Closed-end funds raise their
capital through an initial public offering and
generally do not raise additional capital after that
time. Closed-end funds therefore have limited
opportunities to gain additional economies of scale
through growth of assets. At the same time, because
shares of closed-end funds cannot be redeemed, the risk
of higher expense ratios resulting from a decline in
assets is also limited.
Open-end funds, in contrast, generally engage in a
continuous public offering of their shares, which
provides the opportunity for growth of assets and
reduced expense ratios. However, because shares of
open-end funds are generally redeemable at any time,
such funds face the risk of higher expense ratios if
significant redemptions are not offset by sales of new
shares.
Sale of shares. Shares of open-end funds may be
redeemed at any time at their net asset value (subject
only to the right of the fund to withhold payment for
up to seven days or, with the permission of the SEC, to
suspend redemptions under emergency conditions). In
contrast, shares of closed-end funds are not redeemable
and can generally be bought and sold at current market
prices only on the exchange on which such funds are
listed. Thus, converting your fund from closed-end to
open-end status would eliminate the current discount
between market price and net asset value, but would
also eliminate the possibility that your fund's shares
might trade at a premium in the future.
Regulatory requirements. Both closed-end and open-end
funds are registered with the SEC under the Investment
Company Act of 1940 and, with certain differences
relating largely to the sale and redemption of shares,
are generally subject to the same regulatory
requirements of that Act. Your fund's shares are
listed for trading on the New York Stock Exchange.
That listing would be terminated in the event of a
conversion to open-end status. Since open-end funds
generally engage in a continuous public offering of
their shares, they are required to maintain current
registrations under federal and state securities laws,
which involves additional costs.
Annual shareholder meetings. Your fund is currently
required by the rules of the New York Stock Exchange to
hold annual meetings of shareholders for the purpose of
electing Trustees and ratifying the selection of
auditors. As noted above, conversion of your fund to
open-end status would result in termination of the
fund's listing on the New York Stock Exchange with the
result that your fund would no longer be required to
hold annual meetings. In such event, your fund expects
that meetings would be held only on an as-needed basis.
Investment flexibility. As noted above, the cash flows
associated with sales and redemptions of open-end fund
shares, as well as the need to maintain cash reserves
in anticipation of possible redemptions, tend to reduce
the investment flexibility of open-end funds.
Shareholder privileges. Shareholders of your fund
currently have the option of participating in the
fund's Dividend Reinvestment Plan, under which cash
distributions paid by your fund are generally
reinvested through the purchase of additional fund
shares at market prices (which currently reflect a
discount from net asset value.) At times when your
fund's shares are trading at a premium over their net
asset value, such reinvestments are made at the higher
of net asset value or 95% of market value. If the
fund were to convert to open-end status, shareholders
would no longer be able to reinvest dividends at a
price below net asset value per share. Shareholders of
open-end Putnam funds have the option to reinvest their
distributions in additional shares at net asset value
at all times.
Shareholders of open-end funds in the Putnam family of
funds currently have the privilege of exchanging their
investment at net asset value and without sales charges
for shares of more than 63 open-end funds in the Putnam
group. Shareholders of your fund currently do not have
that privilege.
What other possible consequences might result from conversion of
your fund to open-end status?
In addition to those matters described above, shareholders should
consider the following possible consequences of conversion of
your fund to open-end status:
Significant redemptions following a conversion would
require your fund to sell portfolio securities. These
transactions would involve brokerage and other
transaction costs and could result in the recognition
of capital gains for federal income tax purposes. Such
costs and liabilities would be borne by all
shareholders and not just those redeeming, except to
the extent that the Trustees decide to impose a
temporary redemption fee, as described below.
Certain legal, accounting and other costs would be
incurred in connection with the conversion of your fund
to open-end status. Although it is difficult to
estimate these costs with precision, these costs are
estimated to be at least $100,000. Based on your
fund's current size it is not anticipated that these
costs would materially increase your fund's expense
ratio.
The Trustees reserve the right to impose a temporary
redemption fee of up to 2.00% of the value of
shares redeemed for a period of up to one year
following the fund's conversion to an open-end
investment company. The Trustees may impose this fee
if they believe that immediately following a conversion
to open-end status there would likely be significant
redemptions of shares that would disrupt long-term
portfolio management of the fund and dilute the
interests of the remaining shareholders. Imposition of
a redemption fee may deter certain redemptions and
would compensate remaining long-term shareholders for
the costs of the liquidation of a significant
percentage of the fund's portfolio.
The fund will notify shareholders in writing prior to
the imposition of any temporary redemption fee.
What changes would be made in your fund's Declaration of Trust if
shareholders vote to convert the fund to open-end status?
Conversion of your fund from a closed-end to an open-end fund
would require certain changes to your fund's Declaration
of Trust . In addition, the Trustees believe that it would be
desirable if shareholders approve the conversion, to amend the
fund's Declaration of Trust in a number of other respects.
Accordingly , a vote in favor of such conversion would also
authorize the Trustees to amend your fund's Declaration of Trust
to conform substantially to the Declarations of Trust
of the open-end funds in the Putnam group, which include
provisions commonly found in the governing documents of many
other open-end investment companies.
Authorization of Series and Classes of Shares. Most notably,
the Declaration of Trust would be amended to authorize the
Trustees, without shareholder approval, to create additional
series of shares and to divide any series of shares into multiple
classes. Each series would have its own investment objective,
policies and restrictions, and shares of each series would
represent interests in separate investment portfolios, each of
which would be accounted for separately on the books of your fund
with respect to income, earnings, profits, proceeds, assets and
liabilities attributable to that series. Shares of each series
would be entitled to vote separately to approve investment
advisory agreements, distribution plans and changes in
fundamental investment restrictions; but shares of all series
would vote together on the election of Trustees and the
ratification of the selection of auditors. Classes of a series
would have such preferences or special or relative rights and
privileges as the Trustees determine, and each class would vote
separately on issues relating exclusively to that class. Such
multiple classes of shares have been created for the open-end
Putnam funds in order to offer investors alternative ways of
paying sales charges and it is likely that the Trustees would
divide the shares of the fund into classes in order to conform to
such sales arrangements. The Trustees have no present intention
of creating additional series of shares.
Changes in Shareholder Voting Rights. The Declaration of Trust
also would be amended to conform shareholder voting rights to
those provided by most recently organized open-end Putnam funds.
The vote required for the fund to merge, consolidate, sell
substantially all of its assets or to terminate its existence and
liquidate its assets would be reduced from two-thirds of the
shares entitled to vote of a majority of such shares. Further,
the Declaration of Trust would be amended to provide that, rather
than holding a shareholder meeting each year, your fund would
only hold shareholder meetings at the Trustees' discretion or
when shareholders owning the required number of shares act to
call a meeting. The number of shares required to call a
shareholder meeting would be reduced from 25% of the shares
entitled to vote at such meeting to 10% of such shares. The
quorum provision in the Declaration of Trust would be changed
from requiring the presence of a majority of the shares entitled
to vote on a particular matter to requiring only 30% percent of
such shares to be present in order to establish a quorum.
Another change to the Declaration of Trust would be to give the
Trustees, instead of the shareholders, the ability to fix the
number of Trustees. Shareholders would continue to have the
ability to remove any Trustee by a vote of two-thirds of the
outstanding shares.
Redeemability of Shares. The Declaration of Trust
also would be amended to require your fund to purchase all
shares offered to it for redemption at a price equal to the net
asset value of the shares next determined, less any redemption
charge fixed by the Trustees. In addition, the fund would be
authorized, at its option, to redeem shares held in a
shareholder's account at net asset value if at any time a
shareholder owned shares in an amount either less than or greater
than, as the case may be, an amount determined by the Trustees.
Notwithstanding this provision, all shares would be redeemable at
a shareholder's option.
Finally, the Declaration of Trust would be amended to
eliminate certain provisions that relate specifically to the
fund's closed-end status, such as the conversion provision that
has necessitated this proposal.
The Trustees would also make certain technical and
non-material changes to the Declaration of Trust and conforming
changes to your fund's Bylaws if the shareholders vote in favor
of the conversion of your fund to an open-end fund.
What percentage of shareholders' votes are required to approve
the conversion?
Approval of the conversion of your fund to open-end status and of
the related amendments to your fund's Declaration of Trust will
require the "yes" vote of a majority of your fund's outstanding
shares entitled to vote.
If such conversion is approved, the conversion would become
effective following compliance with all necessary regulatory
requirements under federal and state law. Your fund would seek
to complete this process as soon as reasonably practicable, but
it is estimated that this process may require at least several
months.
If the conversion is not approved, will the fund continue in its
current form?
Yes, in the event that shareholders do not approve the conversion
of your fund to open-end status, your fund would continue as a
closed-end fund. Shareholders would be given the opportunity to
vote on a proposed conversion to open-end status in future years
if your fund's shares again traded at discounts sufficient to
meet the requirement of the Declaration of Trust described above.
The Trustees believe that the continued operation of your fund as
a closed-end investment company is in the best long-term
interests of shareholders, and unanimously recommend a vote
against the conversion of your fund to open-end status at this
time.
The Trustees recommend that you vote "AGAINST" Proposal 3.
Further Information About Voting and the Shareholder Meeting
Quorum and Methods of Tabulation. A majority 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,
New York 10005, to aid in the solicitation instructions for
registered and nominee accounts, for a fee not to exceed $5,000
plus reasonable out-of-pocket expenses for mailing and phone
costs.
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 the next annual
meeting. It is anticipated that your fund's next annual meeting
of shareholders will be held in July 1997. Shareholder proposals
to be included in your fund's proxy statement for the next annual
meeting must be received by your fund before December xx,
1996 .
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 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. 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 your 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 or by reason of any affiliation
with Putnam Investments and its affiliates. 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, 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 1988
Gordon H. Silver (49) Vice
President 1990
Gary N. Coburn(49) Vice President 1988
Jennifer E. Leichter*(35) Vice President 1990
Andrew J. Dudley*(31) Vice President 1994
D. William Kohli*(35) Vice President 1994
Neil J. Powers*(34) Vice President 1994
Mark J. Siegel*(36) Vice President 1994
William N. Shiebler**(54) Vice President 1991
John R. Verani (56) Vice President 1990
Paul M. O'Neil (42) Vice President 1992
Beverly Marcus (51) Clerk 1988
- - -----------------------------------------------------------------
* 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, custodian fees and investor servicing fees
paid or allowed by the fund.
Assets and shares outstanding of your fund as of March 29 ,
1996
Net assets: $329,910,978
Common shares outstanding and authorized
shares to vote 38,990,338
Persons beneficially owning
more than 5% of the fund's class A 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.
Please vote this proxy, sign it below, and return it promptly in
the envelope provided. Your vote is important.
Please fold at perforation before detaching
- - -----------------------------------------------------------------
Proxy for a meeting of shareholders, July 11, 1996, for Putnam
Master Intermediate Income Trust.
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 Master Intermediate Income Trust on July
11, 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.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY.
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 an
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.
- - -----------------------------------------------------------------
Shareholder sign here Date
- - -----------------------------------------------------------------
Co-owner sign here Date
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
- - -----------------------------------------------------------------
<PAGE>
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!
- - -----------------------------------------------------------------
Please fold at perforation before detaching<PAGE>
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, FOR Proposal 2 and
AGAINST Proposal 3. In their discretion, the Proxies will also
be authorized to vote upon such other matters that may come
before the meeting.
THE TRUSTEES RECOMMEND A VOTE FOR PROPOSALS 1 AND 2 AND A
VOTE AGAINST PROPOSAL 3 AS LISTED BELOW:
Please mark your choices / X / in blue or black ink.
THE TRUSTEES RECOMMEND A VOTE "FOR" FIXING THE NUMBER
OF TRUSTEES AND ELECTING ALL OF THE NOMINEES FOR TRUSTEES:
1. Proposal to elect Trustees
The nominees for Trustees are: J.A. Baxter, H.H. Estin, J.A.
Hill, 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, W.N. Thorndike.
/ / FOR fixing the number of Trustees and electing all the
nominees (except as marked to the contrary below.)
To withhold authority to vote for one or more of the
nominees, write those nominees' names below:
------------------------------------------------------------
/ / WITHHOLD authority to vote for all nominees
THE TRUSTEES RECOMMEND THAT YOU VOTE "FOR" PROPOSAL 2.
2. Proposal to ratify FOR AGAINST ABSTAIN
the selection of / / / / / /
Coopers & Lybrand
L.L.P. as auditors.
THE TRUSTEES RECOMMEND THAT YOU VOTE "AGAINST" PROPOSAL 3.
3. Proposal to convert
your fund from closed- / / / / / /
end to open-end status
and authorize certain
related amendments to
the Agreement and
Declaration of Trust.
Note: If you have questions on any of the proposals, please call
1-800-225-1581.
