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 DIVIDEND INCOME FUND
(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>
IMPORTANT INFORMATION
FOR SHAREHOLDERS IN
PUTNAM DIVIDEND INCOME FUND
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;
3.A. APPROVING THE ELIMINATION OF THE FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN
SECURITIES OF ISSUERS IN WHICH MANAGEMENT OF THE FUND OR
PUTNAM INVESTMENT MANAGEMENT, INC. OWNS SECURITIES;
3.B. APPROVING AN AMENDMENT TO THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH RESPECT TO OWNING 10% OF THE SECURITIES OF
A SINGLE ISSUER;
3.C. Approving the elimination of the fund's fundamental
investment restriction with respect to margin transactions;
3.D. Approving the elimination of the fund's fundamental
investment restriction with respect to short sales;
3.E. Approving an amendment to the fund's fundamental investment
restriction with respect to making loans through repurchase
agreements and securities loans;
3.F. Approving the elimination of the fund's fundamental
investment restriction which limits the fund's ability to
pledge assets;
3.G. Approving the elimination of the fund's fundamental
investment restriction relating to oil, gas and mineral
leases; and
3.H. Approving the elimination of the fund's fundamental
investment restriction relating to investing to gain control
of a company's management.
Although we would like very much to have each shareholder attend
the 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 DIVIDEND INCOME FUND
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 Dividend Income Fund:
A Meeting of Shareholders of your fund will be held on June 6,
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 .
2. RATIFYING THE SELECTION BY THE TRUSTEES OF THE INDEPENDENT
AUDITORS OF YOUR FUND FOR ITS CURRENT FISCAL YEAR. SEE PAGE
.
3.A. APPROVING THE ELIMINATION OF THE FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN
SECURITIES OF ISSUERS IN WHICH MANAGEMENT OF THE FUND OR
PUTNAM INVESTMENT MANAGEMENT, INC. OWNS SECURITIES. SEE
PAGE .
3.B. APPROVING AN AMENDMENT TO THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH RESPECT TO OWNING 10% OF THE SECURITIES OF
A SINGLE ISSUER. SEE PAGE .
3.C. Approving the elimination of the fund's fundamental
investment restriction with respect to margin transactions.
See page .
3.D. Approving the elimination of the fund's fundamental
investment restriction with respect to short sales. See
page .
3.E. Approving an amendment to the fund's fundamental investment
restriction with respect to making loans through repurchase
agreements and securities loans. See page .
3.F. Approving the elimination of the fund's fundamental
investment restriction which limits the fund's ability to
pledge assets. See page .
3.G. Approving the elimination of the fund's fundamental
investment restriction relating to oil, gas and mineral
leases. See page .
3.H. Approving the elimination of the fund's fundamental
investment restriction relating to investing to gain control
of a company's management. See page .
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
DIVIDEND INCOME FUND for use at the Meeting of Shareholders of
the fund to be held on June 6, 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;
2. FOR SELECTING COOPERS & LYBRAND L.L.P. AS THE INDEPENDENT
AUDITORS OF YOUR FUND;
3.A. FOR APPROVAL TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH RESPECT TO INVESTMENTS IN SECURITIES OF
ISSUERS IN WHICH MANAGEMENT OF THE FUND OR PUTNAM INVESTMENT
MANAGEMENT, INC. OWNS SECURITIES;
3.B. FOR APPROVAL TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH RESPECT TO OWNING 10% OF THE SECURITIES OF
A SINGLE ISSUER;
3.C. FOR APPROVAL TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH RESPECT TO MARGIN TRANSACTIONS;
3.D. FOR APPROVAL TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH RESPECT TO SHORT SALES;
3.E. FOR APPROVAL TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WITH RESPECT TO MAKING LOANS THROUGH REPURCHASE
AGREEMENTS AND SECURITIES LOANS;
3.F. FOR APPROVAL TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION WHICH LIMITS THE FUND'S ABILITY TO PLEDGE
ASSETS;
3.G. FOR APPROVAL TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION RELATING TO OIL, GAS AND MINERAL LEASES; AND
3.H. FOR APPROVAL TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION RELATING TO INVESTING TO GAIN CONTROL OF A
COMPANY'S MANAGEMENT.
WHO IS ELIGIBLE TO VOTE?
Shareholders of record at the close of business on March 8, 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.
<PAGE>
THE PROPOSALS
I. ELECTION OF TRUSTEES
WHO ARE THE NOMINEES FOR TRUSTEES?
The Nominating Committee of the Trustees recommends that the
number of Trustees be fixed at 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 68, 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 conglomerate. 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 67, 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 & 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, 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 currently serves as a Director of Nomura Dividend
Income Fund, Inc., a privately held registered investment company
managed by Putnam Management. He is also a past Director of many
companies, including 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 61, is the Chairman and Chief Executive Officer of
Marsh & McLennan Companies, Inc. He has been employed by Marsh &
McLennan and related companies in various capacities since 1961.
Mr. Smith is a Director of the Trident Corp., and he also serves
as a Trustee of the Carnegie Hall Society, the Central Park
Conservancy, The American Institute for Chartered Property
Underwriters, and is a Founder of the Museum of Scotland Society.
He was educated in Scotland and is a Fellow of the Faculty of
Actuaries in Edinburgh, a Fellow of the Canadian Institute of
Actuaries, a Fellow of the Conference of Actuaries in Public
Practice, an Associate of the Society of Actuaries, a Member of
the American Academy of Actuaries, the International Actuarial
Association and the International Association of Consulting
Actuaries.
W. NICHOLAS THORNDIKE**
[INSERT PICTURE]
Mr. Thorndike, age 62, serves as a Director of various
corporations and charitable organizations, including Data General
Corporation, a computer and high technology company, Bradley Real
Estate, Inc., a real estate investment firm, Providence Journal
Co., a newspaper publisher and owner of television stations, and
Courier Corporation, a book binding and printing company. He is
also a Trustee of Eastern Utilities Associates, Massachusetts
General Hospital, where he previously served as chairman and
president, and Northeastern University.
Prior to December 1988, he was the Chairman of the Board and
Managing Partner of Wellington Management Company/Thorndike,
Doran, Paine & Lewis, a registered investment adviser which
manages mutual funds and institutional assets. He also
previously served as a Trustee of the Wellington Group of Funds
(now The Vanguard Group) and was the Chairman and a Director of
Ivest Fund, Inc. Mr. Thorndike is a graduate of Harvard College.
- ----------------------------
* Nominees who are or may be deemed to be "interested persons"
(as defined in the Investment Company Act of 1940) of your
fund, Putnam Management, and Putnam Mutual Funds Corp.
("Putnam Mutual Funds"), the principal underwriter for all
the open-end Putnam funds and an affiliate of Putnam
Management. Messrs. Putnam, Lasser, and Smith are deemed
"interested persons" by virtue of their positions as
officers or shareholders of your fund, or directors of
Putnam Management, Putnam Mutual Funds, or Marsh & McLennan
Companies, Inc., the parent company of Putnam Management and
Putnam Mutual Funds. Mr. George Putnam, III, Mr. Putnam's
son, is also an "interested person" of your fund, Putnam
Management, and Putnam Mutual Funds. Mr. Perkins may be
deemed to be an "interested person" of your fund because of
his service as a director of a certain publicly held company
that includes registered broker-dealer firms among its
subsidiaries. Neither your fund nor any of the other Putnam
funds currently engages in any transactions with such firms
except that certain of such firms act as dealers in the
retail sale of shares of certain Putnam funds in the
ordinary course of their business. The balance of the
nominees are not "interested persons."
** In February 1994 Mr. Thorndike accepted appointment as a
successor trustee of certain private trusts in which he has
no beneficial interest. At that time he also became
Chairman of the Board of two privately owned corporations
controlled by such trusts, serving in that capacity until
October 1994. These corporations filed voluntary petitions
for relief under Chapter 11 of the U.S. Bankruptcy Code in
August 1994.
Except as indicated above, the principal occupations and business
experience of the nominees for the last five years have been with
the employers indicated, although in some cases they have held
different positions with those employers. All the nominees were
elected by the shareholders in June, 1995. 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 $45 million. The
table below lists each Trustee's current investments in the fund
and in the Putnam funds as a group.
SHARE OWNERSHIP BY TRUSTEES
YEAR FIRST NUMBER OF NUMBER OF SHARES
ELECTED AS SHARES OF THE OF ALL PUTNAM
TRUSTEE OF THE FUND OWNED FUNDS OWNED
TRUSTEES PUTNAM FUNDS AS OF 3/15/96* AS OF 3/15/96**
- ---------------------------------------------------------------------------
Jameson A. Baxter 1994 100 303,417
Hans H. Estin 1972 166 346,438
John A. Hill 1985 100 1,358,924
Elizabeth T. Kennan 1992 236 314,395
Lawrence J. Lasser 1992 100 8,864,380
Robert E. Patterson 1984 300 737,582
Donald S. Perkins 1982 1,327 2,126,688
William F. Pounds 1971 500 4,706,601
George Putnam 1957 1,674 20,996,054
George Putnam, III 1984 300 3,405,083
Eli Shapiro 1995+ --- 926,071
A.J.C. Smith 1986 200 1,090,348
W. Nicholas Thorndike 1992 150 743,637
- -----------------------------------------------------------------------------
* 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
5,153 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?
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:
<PAGE>
COMPENSATION TABLE
TOTAL
AGGREGATE COMPENSATION
COMPENSATION FROM ALL
TRUSTEES FROM THE FUND* PUTNAM FUNDS**
- -------- -------------- ---------------
James A. Baxter $925 $150,854
Hans H. Estin 925 150,854
John A. Hill 920 149,854
Elizabeth T. Kennan 916 148,854
Lawrence J. Lasser 925 150,854
Robert E. Patterson 935 152,854
Donald S. Perkins 925 150,854
William F. Pounds 930 149,854
George Putnam 925 150,854
George Putnam, III 925 150,854
Eli Shapiro*** 153 95,372
A.J.C. Smith 910 149,854
W. Nicholas Thorndike 935 152,854
- -------------------------------------------------------------------
* Reflects amounts paid by the fund for its last fiscal year.
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. At December 31, 1995, there were 99
funds in the Putnam family.
*** Elected to Board 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 of each fund 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 .
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.
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.
A majority of the votes on the matter is necessary to ratify the
selection of auditors. A representative of the independent auditors
is expected to be present at the meeting to make statements and to
respond to appropriate questions.
3. PROPOSALS A. - H.
As described in the following proposals, the Trustees are
recommending that shareholders approve a number of changes to the
fund's fundamental investment restrictions, including the
elimination of certain restrictions. The purpose of these proposed
changes is to increase the fund's investment flexibility and to
bring the fund's policies more in line with those of many other
Putnam funds.
The adoption of any of these proposals is not contingent on the
adoption of any other proposal.
3.A. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO INVESTMENTS IN SECURITIES OF ISSUERS IN WHICH
MANAGEMENT OF THE FUND OR PUTNAM MANAGEMENT OWNS SECURITIES.
The Trustees are recommending eliminating the fund's fundamental
investment restriction which states that the fund may not:
"Invest in any securities of any issuer, if, to the knowledge
of the fund, officers and Trustees of the fund and officers and
directors of Putnam who beneficially own more than 0.5% of the
securities of that issuer together own more than 5% of such
securities."
Putnam Management recommended to the Trustees eliminating this
policy because it is unnecessarily restrictive. Putnam Management
also believes that eliminating the restriction will enhance the
fund's investment flexibility. Putnam Management has advised the
Trustees that the restriction could prevent the fund from investing
in certain opportunities to the fullest extent that Putnam
Management believes would best serve the fund's investment
objective.
REQUIRED VOTE. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at a
meeting if more 50% of the outstanding shares of the fund are
present at the meeting by person or proxy.
3.B. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO OWNING 10% OF THE SECURITIES OF A SINGLE ISSUER.
The Trustees are recommending that the fund's fundamental investment
restriction with respect to investment in the securities of a single
issuer be revised to grant the fund the maximum flexibility
permitted under the Investment Company Act of 1940 (the "1940 Act").
The 1940 Act prohibits a diversified fund such as the fund from
investing, with respect to 75% of its total assets, in the
securities of an issuer if as a result it would own more than 10% of
the outstanding voting securities of that issuer. The fund's
current investment restriction, which is more restrictive than the
1940 Act, states that the fund may not:
"Acquire more than 10% of the voting securities of any issuer."
The amended fundamental investment restriction is set forth below
with additions shown in boldface.
"The fund may not ...
WITH RESPECT TO 75% OF ITS TOTAL ASSETS, acquire more than 10%
of the voting securities of any issuer."
Putnam Management recommended the proposed change to the Trustees
because it believes that the fund's current restriction is overbroad
and unnecessarily restrictive. Putnam Management also believes that
limiting this restriction to 75% of the fund's assets will enhance
the fund's investment flexibility. Putnam Management has advised
the Trustees that the current restriction could prevent the fund
from investing in certain opportunities to the fullest extent that
Putnam Management believes would best serve the fund's investment
objective.
To the extent the fund individually or with other funds and accounts
managed by Putnam Management or its affiliates owns all or a major
portion of the outstanding securities of a particular issuer, under
adverse market or economic conditions or in the event of adverse
changes in the financial condition of the issuer the fund could find
it more difficult to sell these securities when Putnam Management
believes it advisable to do so, or may be able to sell the
securities only at prices lower than if they were more widely held.
In addition, certain of the companies in which the fund may invest
following the amendment could have relatively small equity market
capitalizations (e.g.. under $1 billion). Such companies often have
limited product lines, markets or financial resources. They may
trade less frequently and in limited volume, and only in the over-
the-counter market or on a regional securities exchange. As a
result, the securities of these companies may fluctuate in value
more than those of larger, more established companies. Under such
circumstances, it may also be more difficult to determine the fair
value of such securities for purposes of computing the fund's net
asset value.
REQUIRED VOTE. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at a
meeting if more 50% of the outstanding shares of the fund are
present at the meeting by person or proxy.
3.C. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO MARGIN TRANSACTIONS.
The Trustees are recommending that the fund's fundamental investment
restriction with respect to margin transactions be eliminated. The
current restriction states that the fund may not:
"Purchase securities on margin, except such short-term credits
as may be necessary for the clearance of purchases and sales of
securities, and except that it may make margin payments in
connection with transactions in futures contracts and options."
Putnam Management recommended to the Trustees that this fundamental
investment restriction be eliminated because it is unnecessary in
light of current regulatory requirements; the 1940 Act does not
require the fund to have such a restriction. Margin transactions
involve the purchase of securities with money borrowed from a broker
by placing cash or eligible securities, called "margin", with a
broker as collateral against the loan. The fund's ability to engage
in margin transactions is limited to the extent such transactions
are considered borrowing, since the fund's policies currently
prohibit the fund from borrowing money except for temporary or
emergency purposes.
REQUIRED VOTE. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at a
meeting if more 50% of the outstanding shares of the fund are
present at the meeting by person or proxy.
3.D. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO SHORT SALES.
The Trustees are recommending that the fund's fundamental investment
restriction with respect to short sales be eliminated. The current
restriction states that the fund may not:
"Make short sales of securities or maintain a short position in
securities for the account of the fund unless at all times when
a short position is open it owns an equal amount of such
securities or owns securities which, without payment of any
further consideration, are convertible into or exchangeable for
securities of the same issue as, and equal in amount to, the
securities sold short."
Putnam Management recommended to the Trustees eliminating this
restriction because it is unnecessary in light of current regulatory
requirements; the 1940 Act does not require the fund to have such a
restriction. In addition, the fund's potential use of short sales
is subject to SEC guidelines, which are discussed below. Putnam
Management believes that the increased investment flexibility will
assist the Fund in meeting its investment objective.
In a typical short sale, the fund borrows securities from a broker
that it anticipates will decline in value in order to sell to a
third party. Following this short sale, the fund becomes obligated
to return securities of the same issue and quantity to the broker to
settle the loan at some future date. If the securities sold short
decline in value, the fund makes a profit equal to the decline minus
any associated costs, such as commissions, by buying equivalent
securities at such lower value and delivering them to the broker.
If the securities sold short increase in value, the fund realizes a
loss equal to the value of the increase plus any associated costs.
The fund collateralizes its short position by delivering to the
broker an amount equal to the proceeds of the short sale and an
additional margin amount as required by law. In addition, current
SEC guidelines require the fund to maintain in a segregated account
cash,
U.S.
government
securities or other liquid high grade debt
obligations
equal to the current market value of the securities sold
short minus the margin amount delivered to the broker. The value of
the segregated account is marked to market daily to reflect any
changes in value of the fund's short position.
REQUIRED VOTE. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at a
meeting if more 50% of the outstanding shares of the fund are
present at the meeting by person or proxy.
3.E. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO MAKING LOANS THROUGH REPURCHASE AGREEMENTS AND
SECURITIES LOANS.
The Trustees are recommending that the fund's current fundamental
investment restrictions be revised to remove the asset limitations
on the fund's ability to enter into repurchase agreements and
securities loans. The relevant restriction currently states that
the fund may not:
"Make loans, except by purchase of debt obligations in which
the fund may invest consistent with its investment policies, by
entry into repurchase agreements with respect to not more than
25% of its total assets (taken at current value), or through
the lending of its portfolio securities with respect to not
more than 25% of its total assets."
The amended fundamental investment restriction is set forth below.
"The fund may not ...
Make loans, except by purchase of debt obligations in which the
fund may invest consistent with its investment policies,
entering into repurchase agreements, or through the lending of
its portfolio securities."
Following the amendment, the fund may, consistent with its
investment objective and policies, enter into such transactions
without limit. Putnam Management recommended this amendment to the
Trustees because it believes that the increased investment
flexibility will aid the fund in achieving its investment objective.
Putnam Management believes that repurchase agreements and securities
loans often offer opportunities for increased investment return.
When the fund enters into a REPURCHASE AGREEMENT, it purchases a
debt instrument for a relatively short period (usually not more than
one week), which the seller agrees to repurchase at a fixed time and
price, representing the fund's cost plus interest. When the fund
enters into a SECURITIES LOAN, it lends certain of its portfolio
securities to broker-dealers or other parties and receives an
interest payment in return. These transactions must be fully
collateralized at all times, and involve some risk to the fund if
the other party should default on its obligation and the fund is
delayed or prevented from recovering the collateral or completing
the transaction. Also, if the other party in these transactions
should become involved in bankruptcy or insolvency proceedings, it
is possible that the fund may be treated as an unsecured creditor
and be required to return the underlying collateral to the other
party's estate.
REQUIRED VOTE. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at a
meeting if more 50% of the outstanding shares of the fund are
present at the meeting by person or proxy.
3.F. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WHICH
LIMITS THE FUND'S ABILITY TO PLEDGE ASSETS.
The Trustees are recommending that the fund's fundamental investment
restriction which limits the fund's ability to pledge its assets be
eliminated. The current restriction states that the fund may not:
"Pledge, hypothecate, mortgage or otherwise encumber its assets
in excess of 15% of its total assets (taken at current value)
and then only to secure borrowings permitted by restriction 2
above. (Collateral arrangements with respect to margin for
futures contracts and options are not deemed to be pledges or
other encumbrances for purposes of this restriction.)"
[Restriction
2 referred to in this restriction allows the fund
to borrow money in amounts of up to 15% of the value of its
total assets for temporary or emergency
purposes.]
This proposal would remove all restrictions on the fund's ability to
pledge assets. Putnam Management recommended this proposal to the
Trustees because it believes that the fund's current limits on
pledging may conflict with the fund's ability to borrow money for
temporary or emergency purposes. This conflict arises because
lenders may require borrowers such as the fund to pledge assets in
order to collateralize the amount borrowed. Often, these collateral
requirements are for amounts larger than the principal amount of the
loan. If the fund needed to borrow the maximum amount permitted by
it policies (currently 15% of its total assets), it might be
possible that a bank would require collateral in excess of 15% of
the fund's total assets. Therefore, the limit on pledging assets
may have the effect of reducing the amount that the fund may borrow
in these situations.
Pledging assets does entail certain risks. To the extent that the
fund pledges its assets, the fund may have less flexibility in
liquidating its assets and meeting certain obligations.
REQUIRED VOTE. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at a
meeting if more 50% of the outstanding shares of the fund are
present at the meeting by person or proxy.
3.G. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
RELATING TO OIL, GAS AND MINERAL LEASES.
The Trustees are recommending that the fund's fundamental investment
restriction relating to the fund's investments in oil, gas and
minerals be eliminated. The current restriction states that the
fund may not:
"Buy or sell oil, gas or other mineral leases, rights or
royalty contracts, although it may purchase securities of
issuers which deal in, represent interests in, or are secured
by interests in, such leases, rights, or contracts, and it may
acquire or dispose of such leases, rights, or contracts
acquired through the exercise of its rights as a holder of debt
obligations secured thereby."
Putnam Management recommended that the Trustees eliminate this
restriction because it is unnecessary in light of current regulatory
requirements; the 1940 Act does not require that the fund have such
a restriction. Putnam Management also believes that eliminating the
restriction will provide the fund with maximum investment
flexibility, although Putnam Management has no current intention of
causing the fund to invest in such securities.
Investments in oil, gas and other mineral leases, rights or royalty
contracts entail certain risks. The prices of these investments are
subject to substantial fluctuations, and may be affected by
unpredictable economic and political circumstances such as social,
political, or military disturbances, the taxation and regulatory
policies of various governments, the activities and policies of OPEC
(an organization of major oil producing countries), the existence of
cartels in such industries, the discovery of new reserves and the
development of new techniques for producing, refining and
transporting such materials and related products, the development of
new technology, energy conservation practices, and the development
of alternative energy sources and alternative uses for such
materials and related products.
REQUIRED VOTE. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at a
meeting if more 50% of the outstanding shares of the fund are
present at the meeting by person or proxy.
3.H. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
RELATING TO INVESTING TO GAIN CONTROL OF A COMPANY'S
MANAGEMENT.
The Trustees are recommending that the fund's fundamental investment
restriction which states that the fund may not "[m]ake investments
for the purpose of gaining control of a company's management" be
eliminated. Eliminating the restriction would make it clear that
the Fund can freely exercise its rights as a shareholder of the
various companies in which it invests. These rights may include the
right to actively oppose management of such companies or to support
the management of such companies.
Putnam Management believes that this ability will allow the fund
maximum flexibility to protect the value of its investments through
influencing management of companies in which it invests. According
to its current investment policies, the fund will continue to limit
its holdings to 10% of the voting securities of any company (which
would only apply to 75% of the fund's assets if proposal 3.B. is
approved). Putnam Management believes that the fund should be
allowed to freely communicate its views as a shareholder on matters
of policy to management, the board of directors, and shareholders of
a company when a policy may affect the value of the fund's
investment. These activities may include the fund, either
individually or with others, seeking changes in a company's goals,
management, or board of directors, seeking the sale of some or all
of a company's assets, or voting to participate in or oppose a
takeover effort with respect to a company. Although Putnam
Management believes that the fund currently may engage in many if
not all of these activities without necessarily violating this
restriction, it believes that eliminating the restriction will
eliminate any potential obstacle to the fund in protecting its
interests as a shareholder.
This area of corporate activity is highly prone to litigation, and
whether or not the restriction is eliminated, the fund may be drawn
into lawsuits related to these activities. The fund will direct its
efforts toward those instances where Putnam Management believes the
potential for benefit to the fund outweighs potential litigation
risks.
REQUIRED VOTE. Approval of this proposal requires the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of
the fund, or (2) 67% or more of the shares of the fund present at a
meeting if more 50% of the outstanding shares of the fund are
present at the meeting by person or proxy.
<PAGE>
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. Shares represented by proxies that reflect
abstentions and "broker non-votes" (i.e., shares held by brokers or
nominees as to which (i) instructions have not been received from
the beneficial owners or the persons entitled to vote and (ii) the
broker or nominee does not have the discretionary voting power on a
particular matter) will be counted as shares that are present and
entitled to vote on the matter for purposes of determining the
presence of a quorum. Votes cast by proxy or in person at the
meeting will be counted by persons appointed by your fund as tellers
for the meeting.
The tellers will count the total number of votes cast "for" approval
of the proposals for purposes of determining whether sufficient
affirmative votes have been cast. With respect to the election of
Trustees and selection of auditors, neither abstentions nor broker
non-votes have any effect on the outcome of the proposal. With
respect to any other proposals, abstentions and broker non-votes
have the effect of a negative vote on the proposal.
OTHER BUSINESS. The Trustees know of no other business to be
brought before the meeting. However, if any other matters properly
come before the meeting, it is their intention that proxies that do
not contain specific restrictions to the contrary will be voted on
such matters in accordance with the judgment of the persons named as
proxies in the enclosed form of proxy.
SIMULTANEOUS MEETINGS. The meeting of shareholders of your fund is
called to be held at the same time as the meetings of shareholders
of certain of the other Putnam funds. It is anticipated that all
meetings will be held simultaneously. If any shareholder at the
meeting objects to the holding of a simultaneous meeting and moves
for an adjournment of the meeting to a time promptly after the
simultaneous meetings, the persons named as proxies will vote in
favor of such adjournment.
SOLICITATION OF PROXIES. In addition to soliciting proxies by mail,
Trustees of your fund and employees of Putnam Management, Putnam
Fiduciary Trust Company, and Putnam Mutual Funds may solicit proxies
in person or by telephone. Your fund may also arrange to have votes
recorded by telephone. The telephone voting procedure is designed
to authenticate shareholders' identities, to allow shareholders to
authorize the voting of their shares in accordance with their
instructions and to confirm that their instructions have been
properly recorded. Your fund has been advised by counsel that these
procedures are consistent with the requirements of applicable law.
If these procedures were subject to a successful legal challenge,
such votes would not be counted at the meeting. Your fund is
unaware of any such challenge at this time. Shareholders would be
called at the phone number Putnam Investments has in its records for
their accounts, and would be asked for their Social Security number
or other identifying information. The shareholders would then be
given an opportunity to authorize proxies to vote their shares at
the meeting in accordance with their instructions. To ensure that
the shareholders' instructions have been recorded correctly, they
will also receive a confirmation of their instructions in the mail.
A special toll-free number will be available in case the information
contained in the confirmation is incorrect.
Your fund's Trustees have adopted a general policy of maintaining
confidentiality in the voting of proxies. Consistent with this
policy, your fund may solicit proxies from shareholders who have not
voted their shares or who have abstained from voting.
Persons holding shares as nominees will upon request be reimbursed
for their reasonable expenses in soliciting instructions from their
principals. Your fund has retained at its expense D.F. King & Co.
Inc., 77 Water Street, New York, NY 10005, to aid in the
solicitation instructions for nominee accounts, for a fee not to
exceed $ , 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 June, 1997. Shareholder proposals to
be included in your fund's proxy statement for the next annual
meeting must be received by your fund before November , 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
ANY OF ITS SHAREHOLDERS 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), Mrs. 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 (60) Senior Vice President & Treasurer 1989
Gordon H. Silver (48) Vice President 1990
Peter Carman (54) Vice President 1994
Brett C. Browchuk (33) Vice President 1994
Thomas V. Reilly (49) Vice President 1993
Jeanne L. Mockard* (32) Vice President 1993
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 1989
- --------------------------------------------------------------------------------
* The fund's portfolio manager
** President of Putnam Mutual Funds
<PAGE>
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, 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.
ASSETS AND SHARES OUTSTANDING OF YOUR FUND
AS OF FEBRUARY 15, 1996
Net assets $116,296,786
Common shares outstanding and
authorized to vote 10,821,255 shares
Persons beneficially owning more than 5%
of common 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, June 6, 1996, for PUTNAM
DIVIDEND INCOME FUND.
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 Dividend Income Fund on June 6, 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
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
IF YOU COMPLETE AND SIGN THE PROXY, WE'LL VOTE IT EXACTLY AS YOU
TELL US. IF YOU SIMPLY SIGN THE PROXY, IT WILL BE VOTED FOR
ELECTING TRUSTEES AS SET FORTH IN PROPOSAL 1 AND FOR PROPOSAL 2 AND
3.A.-H. 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 FIXING THE NUMBER OF TRUSTEES AND
ELECTING ALL OF THE NOMINEES FOR TRUSTEES AND FOR THE PROPOSALS
LISTED BELOW:
Please mark your choices / X / in blue or black ink.
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
2. PROPOSAL TO RATIFY FOR AGAINST ABSTAIN
THE SELECTION OF / / / / / /
COOPERS & LYBRAND L.L.P.
AS AUDITORS.
3.A. PROPOSAL TO ELIMINATE THE / / / / / /
FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION
WITH RESPECT TO
INVESTMENTS IN SECURITIES
OF ISSUERS IN WHICH
MANAGEMENT OF THE FUND OR
PUTNAM INVESTMENT MANAGEMENT,
INC. OWNS SECURITIES.
3.B. PROPOSAL TO AMEND THE / / / / / /
FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION
WITH RESPECT TO
OWNING 10% OF THE SECURITIES
OF A SINGLE ISSUER.
3.C. PROPOSAL TO ELIMINATE THE / / / / / /
FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION
WITH RESPECT TO MARGIN
TRANSACTIONS.
3.D. PROPOSAL TO ELIMINATE THE / / / / / /
FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION
WITH RESPECT TO SHORT
SALES.
3.E. PROPOSAL TO AMEND THE / / / / / /
FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION
WITH RESPECT TO MAKING
LOANS THROUGH REPURCHASE
AGREEMENTS AND SECURITIES
LOANS.
3.F. PROPOSAL TO ELIMINATE THE / / / / / /
FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION
which limits the fund's
ability to pledge assets.
<PAGE>
3.G. Proposal to amend the / / / / / /
fund's fundamental
investment restriction
relating to oil, gas and
mineral leases.
3.H. PROPOSAL TO ELIMINATE THE / / / / / /
FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION
RELATING TO INVESTING TO
GAIN CONTROL OF A COMPANY'S
MANAGEMENT.
NOTE: If you have questions on any of the proposals, please call
1-800-225-1581.
