SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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/ / Preliminary Proxy Statement
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14a-6(e) (2))
/ X / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
PUTNAM HIGH INCOME BOND FUND
PUTNAM MASTER INTERMEDIATE INCOME TRUST
PUTNAM PREMIER INCOME TRUST
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than Registrant)
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number, or the Form or Schedule and the date of its filing.
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The proxy statement
PUTNAM HIGH INCOME BOND FUND
PUTNAM MASTER INTERMEDIATE INCOME TRUST
PUTNAM PREMIER INCOME TRUST
This proxy statement can help you decide how you want to vote on important
issues relating to your Putnam fund. When you complete and sign your proxy
ballot, the Trustees of the funds will vote on your behalf exactly as you
have indicated. If you simply sign the proxy ballot, it will be voted in
accordance with the Trustees' recommendations on page [6] of the proxy
statement.
Please take a few moments and decide how you want to vote. When
shareholders don't return their proxies in sufficient numbers, follow-up
solicitations are required, which cost your fund money.
You can vote by returning your proxy ballots in the envelope provided. Or
you can call our toll-free number, or go to the Internet. See your proxy
ballot for the phone number and Internet address. If you have proxy related
questions, please call 1-877-288-6597 or contact your financial advisor.
[PUTNAM SCALES LOGO]
Table of contents
A Message from the Chairman 1
Notice of Shareholder Meeting 4
Trustees' Recommendations 6
The Proposals 8
Proposal 1 8
Proposal 2 33
Proposal 3 37
Proposal 4 44
Further Information About Voting
and the Meeting 55
Fund Information 60
Appendix A 68
Exhibit A 77
Exhibit B 85
PROXY CARD ENCLOSED
If you have any questions, please contact us at 1-877-288-6597 or call your
financial advisor.
A Message from the Chairman
Dear Fellow Shareholder:
[photo of John A. Hill]
I am writing to ask for your vote on important matters affecting your
investment in the Putnam funds. 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 card(s), by calling or by voting via the
Internet. We are asking for your vote on the following matters:
Fixing the number of Trustees at 12 and electing your fund's nominees for
Trustees
Although trustees do not manage fund portfolios, they play an important
role in protecting fund shareholders, and are responsible for approving the
fees paid to the fund's investment adviser and its affiliates, reviewing
overall fund expenses, selecting the fund's auditors, monitoring conflicts
of interest, overseeing the fund's compliance with federal securities laws
and voting proxies for the fund's portfolio securities.
Consistent with recent SEC rules, more than three-quarters of your fund's
Trustees currently are independent of the fund and Putnam Investments. Your
fund's Trustees have also in the past two years been at the forefront of
reform efforts affecting the mutual fund industry, including ending the
practice of using fund brokerage commissions to reward brokers for selling
shares, the imposition of broad-based redemption fees on open-end funds to
discourage excessive short-term trading and other initiatives to reduce
shareholder expenses and improve fund disclosures.
Authorizing your fund to engage in investment leverage
Your fund's Trustees believe that it is in the best interests of
shareholders that your fund be able to take advantage of investment
strategies unique to closed-end funds. Your fund is currently not permitted
to engage in investment leverage strategies. The Trustees recommend that
shareholders remove this prohibition by amending your fund's fundamental
investment restriction relating to borrowing and senior securities to
permit the use of investment leverage.
Closed-end funds typically use investment leverage, including through
borrowing, as a means to raise capital and increase yield. While it has no
current intention to use investment leverage on behalf of your fund, Putnam
Management has advised the Trustees that it believes that, under certain
market conditions, the use of investment leverage could benefit common
shareholders. As described in the Proxy Statement, there are risks
associated with the use of different forms of investment leverage, and you
should weigh these risks and the potential fund expenses associated with
leverage strategies in making your decision.
Amending your fund's management contract to permit compensation of the
adviser for management of leveraged assets
Consistent with their belief that the flexibility to use investment
leverage may benefit fund shareholders, the Trustees recommend that Putnam
Management be compensated for any future management of leveraged assets on
the same basis as for non-leveraged assets. Since your fund's current
management contract with Putnam Management would not permit the fund to pay
Putnam Management fees on leveraged assets, even though leveraging the fund
effectively increases the asset base managed by Putnam Management, the
Trustees recommend that you vote in favor of the proposed amended
management contract. As described in the Proxy Statement, the proposed
amended contract would also contain a management fee reduction mechanism
that would require Putnam Management to reimburse the fund if the costs of
leverage exceed the net income and short-term capital gains the fund earns
on leveraged assets.
Converting your fund to an open-end investment company (Putnam High Income
Bond Fund and Putnam Premier Income Trust only)
Your fund's governing documents require the fund to submit for shareholder
vote a proposal to convert the fund to an open-end investment company if
the fund's shares trade at a discount from net asset value over a specified
time period. The Trustees recommend that shareholders vote against
converting your fund. As described in this Proxy Statement, the Trustees
believe that your fund's status as a closed-end fund offers significant
investment benefits, including the ability to remain fully invested at all
times. The Trustees believe that, while conversion to open-end status would
offer shareholders a one-time economic benefit by removing any discount
from net asset value on their shares, it would reduce the fund's investment
flexibility and could lead to increased fund expenses that would be borne
by remaining shareholders. The Trustees do not believe that the current
discount level justifies the fundamental changes and the associated risks
that would result from conversion.
-------------
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 do
not vote 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 I am
sure you will give these important matters. If you have questions about any
of these proposals, please call a Putnam customer services representative
at 1-800-225-1581 or contact your financial advisor.
Sincerely yours,
[signature]
John A. Hill, Chairman
PUTNAM HIGH INCOME BOND FUND
PUTNAM MASTER INTERMEDIATE INCOME TRUST
PUTNAM PREMIER INCOME TRUST
Notice of Annual Meeting of Shareholders
This is the formal agenda for your fund's shareholder meeting. It tells you
what proposals will be voted on and the time and place of the meeting, in
the event you attend in person.
To the Shareholders of Putnam High Income Bond Fund, Putnam Master
Intermediate Income Trust and Putnam Premier Income Trust:
The Annual Meeting of Shareholders of your fund will be held on July 14,
2005 at 11:00 a.m., Boston time, at the principal offices of the fund on
the 12th floor of One Post Office Square, Boston, Massachusetts, to
consider the following:
1. Fixing the number of Trustees and electing your fund's nominees for
Trustees. See page 8.
2. A proposal to amend each fund's fundamental investment restriction with
respect to borrowing and the issuance of senior securities. See page 33.
3. A proposal to amend and restate the Management Contract between each
fund and Putnam Investment Management, LLC. See page 37.
4. A proposal to convert your fund into an open-end investment company
(Putnam High Income Bond Fund and Putnam Premier Income Trust only). See
page 44.
By Judith Cohen, Clerk, on behalf of the Trustees
John A. Hill, Chairman
George Putnam, III, President
Jameson A. Baxter
Charles B. Curtis
Myra R. Drucker
Charles E. Haldeman, Jr.
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
John H. Mullin, III
Robert E. Patterson
W. Thomas Stephens
Richard B. Worley
We urge you to mark, sign, date, and mail the enclosed proxy in the
postage-paid envelope provided or record your voting instructions via
telephone or via the Internet so that you will be represented at the
meeting.
June 10, 2005
Proxy Statement
This document will give you the information you need to vote on the
proposals. Much of the information 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 toll-free
number, 1-877-288-6597, or call your financial advisor.
Who is asking for your vote?
The enclosed proxy is solicited by the Trustees of Putnam High Income Bond
Fund, Putnam Master Intermediate Income Trust and Putnam Premier Income
Trust for use at the Annual Meeting of Shareholders of each fund to be held
on July 14, 2005, and, if your fund's meeting is adjourned, at any later
meetings, for the purposes stated in the Notice of Annual Meeting of
Shareholders (see pages 4-5). The Notice of Annual Meeting of
Shareholders, the proxy and the Proxy Statement are being mailed on or
about June 10, 2005.
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 electing your
fund's nominees for Trustees;
2. FOR amending your fund's fundamental investment restriction concerning
borrowing and the issuance of senior securities;
3. FOR approving the Amended and Restated Management Contract
between your fund and Putnam Investment Management, LLC;
4. AGAINST converting your fund to an open-end investment company
(Putnam High Income Bond Fund and Putnam Premier Income Trust only).
Who is eligible to vote?
Shareholders of record at the close of business on April 18, 2005 are
entitled to be present and to vote at the meeting or any adjourned meeting.
Each share is entitled to one vote. Shares represented by your duly
executed proxy will be voted in accordance with your 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 your fund's meeting, your shares will be voted at the
Trustees' discretion.
Shareholders of each fund vote separately with respect to each proposal.
The outcome of a vote affecting one fund does not affect any other fund.
The Proposals
I. ELECTION OF TRUSTEES
Who are the nominees for Trustees?
The Board Policy and Nominating Committee of the Trustees of each fund
makes recommendations concerning the nominees for Trustees of that fund.
The Board Policy and Nominating Committee consists solely of Trustees who
are not "interested persons" (as defined in the Investment Company Act of
1940, as amended (the "1940 Act")) of your fund or of Putnam Investment
Management, LLC, your fund's investment manager ("Putnam Management").
Those Trustees who are not "interested persons" of your fund or Putnam
Management are referred to as "Independent Trustees" throughout this Proxy
Statement.
The Board Policy and Nominating Committee of the Trustees of each fund
recommends that the number of Trustees be fixed at 12 and that you vote for
the election of the nominees described in the following pages. Each nominee
is currently a Trustee of your fund and of the other Putnam funds.
The nominees for Trustees and their backgrounds are shown in the following
pages. This information includes each nominee's name, date of birth,
principal occupation(s) during the past 5 years, and other information
about the nominee's professional background, including other directorships
the nominee holds. Each Trustee oversees all of the Putnam funds and serves
until the election and qualification of his or her successor, or until he
or she sooner dies, resigns or is removed. The address of all of the
Trustees is One Post Office Square, Boston, Massachusetts 02109. At
December 31, 2004, there were 110 Putnam funds.
[Photo]
Jameson A. Baxter (9/6/43), Trustee since 1994
Ms. Baxter is the President of Baxter Associates, Inc., a private
investment firm that she founded in 1986.
Ms. Baxter serves as a Director of ASHTA Chemicals, Inc., Banta Corporation
(a printing and digital imaging firm), Ryerson Tull, Inc. (a steel service
corporation), the Mutual Fund Directors Forum, Advocate Health Care, and
BoardSource, formerly the National Center for Nonprofit Boards. She is
Chairman Emeritus of the Board of Trustees, Mount Holyoke College, having
served as Chairman for five years and as a board member for thirteen years.
Until 2002, Ms. Baxter was a Director of Intermatic Corporation (a
manufacturer of energy control products).
Ms. Baxter has held various positions in investment banking and corporate
finance, including Vice President and Principal of the Regency Group, and
Vice President of and Consultant to First Boston Corporation. She is a
graduate of Mount Holyoke College.
[Photo]
Charles B. Curtis (4/27/40), Trustee since 2001
Mr. Curtis is President and Chief Operating Officer of the Nuclear Threat
Initiative (a private foundation dealing with national security issues) and
serves as Senior Advisor to the United Nations Foundation.
Mr. Curtis is a member of the Council on Foreign Relations and the Trustee
Advisory Council of the Applied Physics Laboratory, Johns Hopkins
University. Until 2003, he was a member of the Electric Power Research
Institute Advisory Council and the University of Chicago Board of Governors
for Argonne National Laboratory. Prior to 2002, Mr. Curtis was a Member of
the Board of Directors of the Gas Technology Institute and the Board of
Directors of the Environment and Natural Resources Program Steering
Committee, John F. Kennedy School of Government, Harvard University. Until
2001, Mr. Curtis was a member of the Department of Defense Policy Board and
Director of EG&G Technical Services, Inc. (a fossil energy research and
development support company).
From August 1997 to December 1999, Mr. Curtis was a Partner at Hogan &
Hartson L.L.P., a Washington, D.C. law firm. Prior to May 1997, Mr. Curtis
was Deputy Secretary of Energy. He served as Chairman of the Federal Energy
Regulatory Commission from 1977 to 1981 and has held positions on the staff
of the U.S. House of Representatives, the U.S. Treasury Department, and the
SEC.
[Photo]
Myra R. Drucker (1/16/48),
Trustee since 2004
Ms. Drucker is a Vice Chair of the Board of Trustees of Sarah Lawrence
College, a Trustee of Commonfund (a not-for-profit firm specializing in
asset management for educational endowments and foundations) and a member
of the Investment Committee of the Kresge Foundation (a charitable trust).
She is an ex-officio member of the New York Stock Exchange (NYSE) Pension
Managers Advisory Committee, having served as Chair for seven years, and a
member of the Executive Committee of the Committee on Investment of
Employee Benefit Assets. She is Chair of the Advisory Board of Hamilton
Lane Advisors (an investment management firm) and a member of the Advisory
Board of RCM (an investment management firm). Until August 31, 2004, she
was Managing Director and a member of the Board of Directors of General
Motors Asset Management and Chief Investment Officer of General Motors
Trust Bank. Ms. Drucker also served as a member of the NYSE Corporate
Accountability and Listing Standards Committee and the NYSE/NASD IPO
Advisory Committee.
Prior to joining General Motors Asset Management in 2001, Ms. Drucker held
various executive positions in the investment management industry. Ms.
Drucker served as Chief Investment Officer of Xerox Corporation (a
technology and service company in the document industry), where she was
responsible for the investment of the company's pension assets. Ms. Drucker
was also Staff Vice President and Director of Trust Investments for
International Paper (a paper, paper distribution, packaging and forest
products company) and previously served as Manager of Trust Investments for
Xerox Corporation. Ms. Drucker received a B.A. degree in Literature and
Psychology from Sarah Lawrence College and pursued graduate studies in
economics, statistics and portfolio theory at Temple University.
[Photo]
John A. Hill (1/31/42),
Trustee since 1985 and Chairman since 2000
Mr. Hill is Vice Chairman of First Reserve Corporation, a private equity
buyout firm that specializes in energy investments in the diversified
worldwide energy industry.
Mr. Hill is a Director of Devon Energy Corporation, TransMontaigne Oil
Company, Continuum Health Partners of New York, and various private
companies controlled by First Reserve Corporation, as well as a Trustee of
TH Lee, Putnam Investment Trust (a closed-end investment company advised by
an affiliate of Putnam Management). He is also a Trustee of Sarah Lawrence
College.
Prior to acquiring First Reserve Corporation in 1983, Mr. Hill held
executive positions in investment banking and investment management with
several firms and with the federal government, including Deputy Associate
Director of the Office of Management and Budget and Deputy Director of the
Federal Energy Administration. He is 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 holds a B.A. degree
in Economics from Southern Methodist University and pursued graduate
studies there as a Woodrow Wilson Fellow.
[Photo]
Paul L. Joskow (6/30/47), Trustee since 1997
Dr. Joskow is the Elizabeth and James Killian Professor of Economics and
Management, and Director of the Center for Energy and Environmental Policy
Research at the Massachusetts Institute of Technology.
Dr. Joskow serves as a Director of National Grid Transco (a UK-based
holding company with interests in electric and gas transmission and
distribution, and telecommunications infrastructure) and TransCanada
Corporation (an energy company focused on natural gas transmission and
power services). He has been President of the Yale University Council since
1993. Prior to February 2005, he served on the board of the Whitehead
Institute for Biomedical Research (a non-profit research institution).
Prior to February 2002, he was a Director of State Farm Indemnity Company
(an automobile insurance company), and, prior to March 2000, he was a
Director of New England Electric System (a public utility holding company).
Dr. Joskow has published five books and numerous articles on topics in
industrial organization, government regulation of industry and competition
policy. He is active in industry restructuring, environmental, energy,
competition and privatization policies - serving as an advisor to
governments and corporations worldwide. Dr. Joskow holds a Ph.D. and M.
Phil from Yale University and a B.A. from Cornell University.
[Photo]
Elizabeth T. Kennan (2/25/38), Trustee since 1992
Dr. Kennan is a Partner of Cambus-Kenneth Farm (thoroughbred horse and
cattle breeding). She is President Emeritus of Mount Holyoke College.
Dr. Kennan served as Chairman and is now Lead Director of Northeast
Utilities and is a Director of Talbots, Inc. She has served as Director on
a number of other boards, including Bell Atlantic, Chastain Real Estate,
Shawmut Bank, Berkshire Life Insurance and Kentucky Home Life Insurance.
She is a Trustee of the National Trust for Historic Preservation, of Centre
College and of Midway College in Midway, Kentucky. She is also a member of
The Trustees of Reservations. Dr. Kennan has served on the oversight
committee of the Folger Shakespeare Library, as President of Five Colleges
Incorporated, as a Trustee of Notre Dame University, and is active in
various educational and civic associations.
As a member of the faculty of Catholic University for twelve years, until
1978, Dr. Kennan directed the post-doctoral program in Patristic and
Medieval Studies, taught history, and published numerous articles. Dr.
Kennan holds a Ph.D. from the University of Washington in Seattle, an M.S.
from St. Hilda's College at Oxford University, and an A.B. from Mount
Holyoke College. She holds several honorary doctorates.
[Photo]
John H. Mullin, III (6/15/41), Trustee since 1997
Mr. Mullin is the Chairman and CEO of Ridgeway Farm (a limited liability
company engaged in timber and farming).
Mr. Mullin serves as a Director of The Liberty Corporation (a broadcasting
company), Progress Energy, Inc. (a utility company, formerly known as
Carolina Power & Light) and Sonoco Products, Inc. (a packaging company).
Mr. Mullin is Trustee Emeritus of The National Humanities Center and
Washington & Lee University, where he served as Chairman of the Investment
Committee. Prior to May 2001, Mr. Mullin was a Director of Graphic
Packaging International Corp. Prior to February 2004, he was a Director of
Alex Brown Realty, Inc.
Mr. Mullin is also a past Director of Adolph Coors Company; ACX
Technologies, Inc.; Crystal Brands, Inc.; Dillon, Read & Co., Inc.;
Fisher-Price, Inc.; and The Ryland Group, Inc. Mr. Mullin is a graduate of
Washington & Lee University and The Wharton Graduate School, University of
Pennsylvania.
[Photo]
Robert E. Patterson (3/15/45), Trustee since 1984
Mr. Patterson is Senior Partner of Cabot Properties, L.P. and Chairman of
Cabot Properties, Inc. (a private equity firm investing in commercial real
estate).
Mr. Patterson serves as Chairman Emeritus and Trustee of the Joslin
Diabetes Center and as a Director of Brandywine Trust Company, LLC. Prior
to June 2003, he was a Trustee of Sea Education Association. Prior to
December 2001, he was President and Trustee of Cabot Industrial Trust (a
publicly traded real estate investment trust). Prior to February 1998, he
was Executive Vice President and Director of Acquisitions of Cabot Partners
Limited Partnership (a registered investment adviser involved in
institutional real estate investments). Prior to 1990, he served as
Executive Vice President of Cabot, Cabot & Forbes Realty Advisors, Inc.
(the predecessor company of Cabot Partners).
Mr. Patterson practiced law and held various positions in state government
and was the founding Executive Director of the Massachusetts Industrial
Finance Agency. Mr. Patterson is a graduate of Harvard College and Harvard
Law School.
[Photo]
W. Thomas Stephens (9/2/42), Trustee since 1997
Mr. Stephens serves on a number of corporate boards.
Mr. Stephens is Chairman and Chief Executive Officer of Boise Cascade (a
paper, forest products and timberland assets company). Mr. Stephens serves
as a Director of TransCanada Pipelines Limited. Until 2004, Mr. Stephens
was a Director of Xcel Energy Incorporated (a public utility company),
Qwest Communications and Norske Canada, Inc. (a paper manufacturer). Until
2003, Mr. Stephens was a Director of Mail-Well, Inc. (a diversified
printing company). He served as Chairman of Mail-Well until 2001 and as CEO
of MacMillan-Bloedel, Ltd. (a forest products company) until 1999.
Prior to 1996, Mr. Stephens was Chairman and Chief Executive Officer of
Johns Manville Corporation. He holds B.S. and M.S. degrees from the
University of Arkansas.
[Photo]
Richard B. Worley (11/15/45), Trustee since 2004
Mr. Worley is Managing Partner of Permit Capital LLC, an investment
management firm.
Mr. Worley serves on the Executive Committee of the University of
Pennsylvania Medical Center, is a Trustee of The Robert Wood Johnson
Foundation (a philanthropic organization devoted to health care issues) and
is a Director of The Colonial Williamsburg Foundation (a historical
preservation organization). Mr. Worley also serves on the investment
committees of Mount Holyoke College and World Wildlife Fund (a wildlife
conservation organization).
Prior to joining Permit Capital LLC in 2002, Mr. Worley served as Chief
Strategic Officer of Morgan Stanley Investment Management. He previously
served as President, Chief Executive Officer and Chief Investment Officer
of Morgan Stanley Dean Witter Investment Management and as a Managing
Director of Morgan Stanley, a financial services firm. Mr. Worley also was
the Chairman of Miller Anderson & Sherrerd, an investment management firm.
Mr. Worley holds a B.S. degree from University of Tennessee and pursued
graduate studies in economics at the University of Texas.
Interested Trustees
[Photo]
Charles E. Haldeman, Jr.* (10/29/48), Trustee since 2004
Mr. Haldeman is President and Chief Executive Officer of Putnam, LLC
("Putnam Investments"). He is a member of Putnam Investments' Executive
Board of Directors and Advisory Council. Prior to November 2003, Mr.
Haldeman served as Co-Head of Putnam Investments' Investment Division.
Prior to joining Putnam Investments in 2002, Mr. Haldeman held executive
positions in the investment management industry. He previously served as
Chief Executive Officer of Delaware Investments and President & Chief
Operating Officer of United Asset Management. Mr. Haldeman was also a
partner and director of Cooke & Bieler, Inc. (an investment management
firm).
Mr. Haldeman currently serves as a Trustee of Dartmouth College and as
Emeritus Trustee of Abington Memorial Hospital. He is a graduate of
Dartmouth College, Harvard Law School and Harvard Business School. He is
also a Chartered Financial Analyst (CFA) charterholder.
[Photo]
George Putnam, III* (8/10/51), Trustee since 1984 and President since 2000
Mr. Putnam is President of New Generation Research, Inc. (a publisher of
financial advisory and other research services), and of New Generation
Advisers, Inc. (a registered investment adviser to private funds). Mr.
Putnam founded the New Generation companies in 1986.
Mr. Putnam is a Director of The Boston Family Office, LLC (a registered
investment adviser). He is a Trustee of St. Mark's School, Shore Country
Day School, and until 2002 was a Trustee of the Sea Education Association.
Mr. Putnam previously worked as an attorney with the law firm of Dechert
LLP (formerly known as Dechert Price & Rhoads) in Philadelphia. He is a
graduate of Harvard College, Harvard Business School, and Harvard Law
School.
* Nominees who are or may be deemed to be "interested persons" (as defined
in the 1940 Act) of the fund, Putnam Management, Putnam Retail Management
Limited Partnership ("Putnam Retail Management") or Marsh & McLennan
Companies, Inc., the parent company of Putnam Investments and its
affiliated companies. Messrs. Putnam, III and Haldeman are deemed
"interested persons" by virtue of their positions as officers of the funds,
Putnam Management or Putnam Retail Management and as shareholders of Marsh
& McLennan Companies, Inc. Mr. Haldeman is the President and Chief
Executive Officer of Putnam Investments. Mr. Putnam, III is the President
of your fund and each of the other Putnam funds. The balance of the
nominees are not "interested persons."
Except for Ms. Drucker and Messrs. Haldeman and Worley, all the nominees
were elected by the shareholders of Putnam High Income Bond Fund, Putnam
Master Intermediate Income Trust and Putnam Premier Income Trust on June
10, 2004. Ms. Drucker and Messrs. Haldeman and Worley became Trustees of
your funds by election by the Trustees on October 15, 2004.
The 12 nominees for Trustees who receive the greatest number of votes will
be elected as Trustees of your fund. The current 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 fix
the number of Trustees at fewer than 12 for your fund.
What are the Trustees' responsibilities?
Your fund's Trustees are responsible for the general oversight of your
fund's affairs and for assuring that your fund is managed in the best
interests of its shareholders. The Trustees regularly 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 and shareholder servicing. At least
annually, the Trustees review and evaluate the fees and operating expenses
paid by your fund for these services and negotiate changes that they deem
appropriate. In carrying out these responsibilities, the Trustees are
assisted by an independent administrative staff and by your fund's
auditors, independent counsel and other experts as appropriate, selected by
and responsible to the Trustees.
The 1940 Act and the rules promulgated thereunder require that at least 75%
of the trustees of your fund not be "interested persons" (as defined in the
1940 Act) of your fund or your fund's investment manager. These independent
trustees must vote separately to approve all financial arrangements and
other agreements with your fund's investment manager and other affiliated
parties. The role of independent trustees has been characterized as that of
a "watchdog" charged with oversight to protect shareholders' interests
against overreaching and abuse by those who are in a position to control or
influence a fund. Your fund's Independent Trustees meet regularly as a
group in executive session. Ten of the 12 nominees for election as Trustee
would be Independent Trustees.
Board committees. Your fund's Trustees have determined that the efficient
conduct of your fund's affairs makes it desirable to delegate
responsibility for certain specific matters to committees of the board.
Certain committees (the Executive Committee, Distributions Committee and
Audit and Pricing Committee) are authorized to act for the Trustees as
specified in their charters. The other committees review and evaluate
matters specified in their charters and make recommendations to the
Trustees as they deem appropriate. Each committee may utilize the resources
of your fund's independent staff, counsel and auditors as well as other
experts. The committees meet as often as necessary, either in conjunction
with regular meetings of the Trustees or otherwise. The membership and
chairperson of each committee are appointed by the Trustees upon
recommendation of the Board Policy and Nominating Committee.
Audit and Pricing Committee. The Audit and Pricing Committee provides
oversight on matters relating to the preparation of your fund's financial
statements, compliance matters and Code of Ethics issues. This oversight is
discharged by regularly meeting with management and your fund's independent
registered public accounting firm and keeping current on industry
developments. Duties of this Committee also include the review and
evaluation of all matters and relationships pertaining to independent
registered public accounting firms, including their independence. The
members of the Committee include only Trustees who are not "interested
persons" of your fund or Putnam Management. Each member of the Committee is
"independent" as defined in Sections 303.01(B)(2)(a) and (3) of the listing
standards of the New York Stock Exchange and as defined in Section 121(A)
of the listing standards of the American Stock Exchange. The Trustees have
adopted a written charter for the Committee. The Committee also reviews
your fund's policies and procedures for achieving accurate and timely
pricing of fund shares, including oversight of fair value determinations of
individual securities made by Putnam Management or other designated agents
of your fund. The Committee oversees compliance by money market funds with
Rule 2a-7, interfund transactions pursuant to Rule 17a-7, and the
correction of occasional pricing errors. The Committee also receives
reports regarding the liquidity of portfolio securities. The Audit and
Pricing Committee currently consists of Dr. Joskow (Chairperson), Ms.
Drucker, and Messrs. Patterson, Stephens and Worley.
Board Policy and Nominating Committee. The Board Policy and Nominating
Committee reviews policy matters pertaining to the operations of the Board
of Trustees and its Committees, the compensation of the Trustees and their
staff and the conduct of legal affairs for the funds. The Committee also
oversees the voting of proxies associated with portfolio investments of the
Putnam funds, with the goal of ensuring that these proxies are voted in the
best interest of the funds' shareholders.
The Committee evaluates and recommends all candidates for election as
Trustees and recommends the appointment of members and chairs of each board
committee. The Committee also identifies prospective nominees for election
as trustee by considering individuals that come to its attention through
current Trustees, Putnam Management or shareholders. Candidates properly
submitted by shareholders (as described below) will be considered and
evaluated on the same basis as candidates recommended by other sources. The
Committee may, but is not required to, engage a third-party professional
search firm to assist it in identifying and evaluating potential nominees.
When evaluating a potential candidate for membership on the Board of
Trustees, the Committee considers the skills and characteristics that it
feels would most benefit the Putnam funds at the time the evaluation is
made. The Committee may take into account a wide variety of attributes in
considering potential trustee candidates, including, but not limited to:
(i) availability and commitment of a candidate to attend meetings, (ii)
other board experience, (iii) relevant industry and related experience,
(iv) educational background, (v) financial expertise, (vi) an assessment of
the candidate's ability, judgment and expertise, (vii) an assessment of the
perceived needs of the Board of Trustees and its committees at that point
in time and (viii) overall Board of Trustees composition. In connection
with this evaluation, the Committee will determine whether to interview
prospective nominees, and, if warranted, one or more members of the
Committee, and other Trustees and representatives of the funds, as
appropriate, will interview prospective nominees in person or by telephone.
Once this evaluation is completed, the Committee recommends such candidates
as it determines appropriate to the Independent Trustees for nomination,
and the Independent Trustees select the nominees after considering the
recommendation of the Committee.
The Committee will consider nominees for trustee recommended by
shareholders of a fund provided shareholders submit their recommendations
by the date disclosed in the paragraph entitled "Date for receipt of
shareholders' proposals for the next annual meeting," and provided the
shareholders' recommendations otherwise comply with applicable securities
laws, including Rule 14a-8 under the Securities Exchange Act of 1934, as
amended (the "1934 Act").
The Committee consists only of Independent Trustees. The Committee
currently consists of Dr. Kennan (Chairperson), Ms. Baxter and Messrs.
Hill, Mullin and Patterson.
Brokerage and Custody Committee. The Brokerage and Custody Committee
reviews the policies and procedures of the funds regarding the execution of
portfolio transactions for the funds, including policies regarding the
allocation of brokerage commissions and soft dollar credits. The Committee
reviews periodic reports regarding the funds' activities involving
derivative securities, and reviews and evaluates matters relating to the
funds' custody arrangements. The Committee currently consists of Mr.
Jackson (Chairperson) (not nominated for election as Trustee at the
meeting), Messrs. Curtis and Mullin, Ms. Baxter and Dr. Kennan.
Communication, Service and Marketing Committee. This Committee examines the
quality, cost and levels of services provided to the shareholders of the
Putnam funds. The Committee also reviews communications sent from the funds
to their shareholders, including shareholder reports, prospectuses,
newsletters and other materials. In addition, the Committee oversees
marketing and sales communications of the funds' distributor. The Committee
currently consists of Messrs. Putnam (Chairperson) and Stephens and Dr.
Joskow.
Contract Committee. The Contract Committee reviews and evaluates, at least
annually, all arrangements pertaining to (i) the engagement of Putnam
Management and its affiliates to provide services to the funds, (ii) the
expenditure of the funds' assets for distribution purposes pursuant to the
Distribution Plans of the open-end funds and (iii) the engagement of other
persons to provide material services to the funds, including in particular
those instances where the cost of services is shared between the funds and
Putnam Management and its affiliates or where Putnam Management or its
affiliates have a material interest. The Committee recommends to the
Trustees such changes in arrangements as it deems appropriate. After review
and evaluation, the Committee recommends to the Trustees the proposed
organization of new fund products and proposed structural changes to
existing funds. Its oversight of the closed-end funds includes (i)
investment performance, (ii) trading activity, (iii) determinations with
respect to conversion of a closed-end fund to an open-end fund, (iv)
disclosure practices and (v) the use and benefits of leverage. The
Committee consists only of Independent Trustees. The Committee currently
consists of Ms. Baxter (Chairperson), Messrs. Curtis, Jackson, and Mullin
and Dr. Kennan.
Distributions Committee. This Committee oversees all fund distributions and
approves the amount and timing of distributions paid by all the funds to
the shareholders when the Trustees are not in session. The Committee also
meets regularly with representatives of Putnam Management and its
affiliates to review distribution levels and the funds' distribution
policies. The Committee currently consists of Messrs. Patterson
(Chairperson) and Jackson and Dr. Joskow.
Executive Committee. The functions of the Executive Committee are twofold.
The first is to ensure that the funds' business may be conducted at times
when it is not feasible to convene a meeting of the Trustees or for the
Trustees to act by written consent. The Committee may exercise any or all
of the power and authority of the Trustees when the Trustees are not in
session. The second is to establish annual and ongoing goals, objectives
and priorities for the Board of Trustees and to ensure coordination of all
efforts between the Trustees and Putnam Management and its affiliates on
behalf of the shareholders of the Putnam funds. The Committee currently
consists of Messrs. Hill (Chairman), Jackson, and Putnam, Dr. Joskow and
Ms. Baxter.
Investment Oversight Committees. These Committees regularly meet with
investment personnel of Putnam Management to review the investment
performance and strategies of the Putnam funds in light of their stated
investment objectives and policies. Each such Committee will, among its
duties, identify any compliance issues that are unique to the category of
funds under its review and work with the appropriate board committees to
ensure that any such issues are properly addressed. Investment Oversight
Committee A currently consists of Mses. Drucker (Chairperson) and Baxter.
Investment Oversight Committee B currently consists of Messrs. Curtis
(Chairperson), Hill and Stephens. Investment Committee C currently consists
of Messrs. Mullin (Chairperson), Putnam and Patterson and Dr. Kennan.
Investment Oversight Committee D currently consists of Messrs. Worley
(Chairperson) and Jackson and Dr. Joskow.
How large a stake do the Trustees and nominees have in the Putnam family of
funds?
The Trustees allocate their investments among the Putnam funds based on
their own investment needs. The table below shows the number of shares
beneficially owned by each nominee for Trustee and the value of each
nominee's holdings in each fund and in all of the Putnam funds as of March
31, 2005. As a group, the Trustees owned shares of the Putnam funds valued
at approximately $54 million as of March 31, 2005.
Aggregate
Dollar Range Dollar Range
of Putnam of Shares
High Income Shares Held in all
Bond Fund Beneficially of the Putnam
Name of Nominee Shares Owned Owned Funds
Jameson A. Baxter $10,001 - $50,000 1,620.368 over $100,000
Charles B. Curtis $1 - $10,000 388.031 over $100,000
Myra R. Drucker $1 - $10,000 334 $50,001 - $100,000
Charles E.
Haldeman, Jr. $1 - $10,000 841 over $100,000
John A. Hill over $100,000 70,662.649 over $100,000
Paul L. Joskow $1- $10,000 334.178 over $100,000
Elizabeth T. Kennan $1- $10,000 443.134 over $100,000
John H. Mullin, III $1- $10,000 381.190 over $100,000
Robert E. Patterson $1- $10,000 1,084.356 over $100,000
George Putnam, III $10,001 - $50,000 1,670.891 over $100,000
W. Thomas Stephens $1- $10,000 334.178 over $100,000
Richard B. Worley $1- $10,000 334 over $100,000
Dollar Range Aggregate
of Putnam Dollar Range
Master of Shares
Intermediate Shares Held in all
Income Trust Beneficially of the Putnam
Name of Nominee Shares Owned Owned Funds
Jameson A. Baxter $1 - $10,000 461.972 over $100,000
Charles B. Curtis $1 - $10,000 100 over $100,000
Myra R. Drucker $1 - $10,000 100 $50,001 - $100,000
Charles E.
Haldeman, Jr. $1 - $10,000 510 over $100,000
John A. Hill $1 - $10,000 195.719 over $100,000
Paul L. Joskow $1 - $10,000 100 over $100,000
Elizabeth T. Kennan $0 0 over $100,000
John H. Mullin, III $0 0 over $100,000
Robert E. Patterson $1 - $10,000 587 over $100,000
George Putnam, III $1 - $10,000 978 over $100,000
W. Thomas Stephens $1 - $10,000 100 over $100,000
Richard B. Worley $1 - $10,000 100 over $100,000
Aggregate
Dollar Range Dollar Range
of Putnam of Shares
Premier Shares Held in all
Income Trust Beneficially of the Putnam
Name of Nominee Shares Owned Owned Funds
Jameson A. Baxter $1 - $10,000 497.355 over $100,000
Charles B. Curtis $1 - $10,000 238.34 over $100,000
Myra R. Drucker $1 - $10,000 201 $50,001 - $100,000
Charles E.
Haldeman, Jr. $1 - $10,000 1005 over $100,000
John A. Hill $10,001 - $50,000 3,472.263 over $100,000
Paul L. Joskow $1- $10,000 201.176 over $100,000
Elizabeth T. Kennan $1- $10,000 287.166 over $100,000
John H. Mullin, III $1- $10,000 231.846 over $100,000
Robert E. Patterson $1- $10,000 803.529 over $100,000
George Putnam, III $1 - $10,000 1,005.883 over $100,000
W. Thomas Stephens $1- $10,000 201.176 over $100,000
Richard B. Worley $1- $10,000 201 over $100,000
At March 31, 2005, the Trustees and officers of Putnam High Income Bond
Fund, Putnam Master Intermediate Income Trust and Putnam Premier Income
Trust as a group owned less than 1% of the outstanding shares of each fund
on that date.
What are some of the ways in which the Trustees represent shareholder
interests?
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 investment team;
* by 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 in depth the fees paid by each fund and by negotiating with
Putnam Management to ensure that such fees remain reasonable and
competitive with those of comparable funds, while at the same time
providing Putnam Management sufficient resources to continue to provide
high-quality services in the future;
* by reviewing brokerage costs and fees, allocations among brokers, soft
dollar expenditures and similar expenses of each fund;
* 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; and
* by monitoring potential conflicts among funds managed by Putnam Management
to ensure that shareholders continue to realize the benefits of
participation in a large and diverse family of funds.
How can shareholders communicate with the Trustees?
The Board of Trustees provides a process for shareholders to send
communications to the Trustees. Shareholders may direct communications to
the Board of Trustees as a whole or to specified individual Trustees by
submitting them in writing to the following address:
The Putnam Funds
Attention: "Board of Trustees" or any specified Trustee(s)
One Post Office Square
Boston, Massachusetts 02109
The written communication must include the shareholder's name, be signed by
the shareholder, refer to the Putnam fund(s) in which the shareholder holds
shares and include the class and number of shares held by the shareholder
as of a recent date.
The Office of the Trustees will respond to all correspondence sent to
Trustees; however, due to the volume of correspondence, all communications
are not sent directly to the Trustees. The correspondence is reviewed,
summarized and presented to Trustees on a periodic basis.
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
that focus on particular matters. Each Trustee generally attends at least
two formal committee meetings during each regular meeting of the Trustees.
In addition, the Trustees meet in small groups with Chief Investment
Officers, Portfolio Leaders and Portfolio Members 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. During 2004, the average Trustee participated in
approximately 65 committee and board meetings. The Contract Committee
typically meets on several additional occasions during the year to carry
out its responsibilities. Other committees, including the Executive
Committee, may also meet on special occasions as the need arises. The
number of times each committee met during your fund's last fiscal year is
shown in the table below:
Putnam High Income Bond Fund
Fiscal year ended August 31, 2004
Audit and Pricing Committee 23
Board Policy and Nominating Committee 8
Brokerage and Custody Committee 7
Communication, Service and Marketing Committee 11
Contract Committee 16
Distributions Committee 5
Executive Committee 1
Investment Oversight Committees 31
Putnam Master Intermediate Income Trust
Fiscal year ended September 30, 2004
Audit and Pricing Committee 24
Board Policy and Nominating Committee 8
Brokerage and Custody Committee 7
Communication, Service and Marketing Committee 11
Contract Committee 17
Distributions Committee 5
Executive Committee 1
Investment Oversight Committees 32
Putnam Premier Income Trust
Fiscal year ended July 31, 2004
Audit and Pricing Committee 21
Board Policy and Nominating Committee 8
Brokerage and Custody Committee 7
Communication, Service and Marketing Committee 10
Contract Committee 16
Distributions Committee 5
Executive Committee 1
Investment Oversight Committees 32
Your fund does not have a policy with respect to Trustees' attendance at
shareholder meetings. Your fund's last annual meeting was held while the
Trustees were conducting meetings of the Board and its committees. Although
your fund's Trustees did not attend the annual meeting, they were
represented at the meeting by their staff and were available in the event
that any material issues had arisen.
What are the Trustees paid for their services?
Each Independent Trustee of your fund receives a fee for his or her
services. Each Independent Trustee also receives fees for serving as
Trustee of the other Putnam funds. Each Trustee of the fund receives an
annual fee and an additional meeting fee for each Trustee meeting attended.
Independent Trustees who serve on board committees receive additional fees
for attendance at certain committee meetings and for special services
rendered in that connection. Mr. Putnam, who is not an Independent Trustee,
also receives the foregoing fees for his services as Trustee. All of the
current Independent Trustees are Trustees of all the Putnam funds and each
receives fees for their services from each fund.
The Trustees periodically review their own 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 Board
Policy and Nominating Committee, which consists solely of Independent
Trustees, estimates that committee and Trustee meeting time, together with
the appropriate preparation, requires the equivalent of at least three
business days per Trustee meeting. The following table shows the fees paid
to each current Trustee by your fund for its most recent fiscal year and
the fees paid to each current Trustee by all of the Putnam funds during
calendar year 2004:
PUTNAM HIGH
INCOME BOND FUND
COMPENSATION TABLE
Estimated
Retirement annual Total
Trustees/Year Aggregate benefits benefits from compensation
First Elected compensation accrued as all Putnam from all
by from the part of fund funds upon Putnam
Shareholders fund (1) expenses retirement (2) funds (3)(4)
Jameson A.
Baxter/1994 (5) $871 $231 $100,000 $218,950
Charles B.
Curtis/2001 859 288 $100,000 $244,250
Myra R.
Drucker (6) $0 N/A N/A $33,780
Charles E.
Haldeman, Jr. (6) $0 N/A N/A $0
John A.
Hill/1985 (5)(7) 1,346 291 $200,000 $458,626
Ronald J.
Jackson/1996 (5)(9) 861 235 $100,000 $224,000
Paul L.
Joskow/1997 (5)(7) 852 168 $100,000 $294,500
Elizabeth
T. Kennan/1992 868 299 $100,000 $221,500
Lawrence
J. Lasser/1992 (8) N/A 251 $93,333 N/A
John H.
Mullin, III/1997 (5) 861 258 $100,000 $216,200
Robert E.
Patterson/1984 849 162 $100,000 $217,750
George
Putnam, III/1984 (7) 1,062 134 $125,000 $262,500
W. Thomas
Stephens/1997 (5) 852 235 $100,000 $228,250
W. Nicholas
Thorndike/1992 (9) 672 385 $105,783 $114,500
Richard B.
Worley (6) $0 N/A N/A $33,780
PUTNAM MASTER
INTERMEDIATE INCOME TRUST
COMPENSATION TABLE
Estimated
Retirement annual Total
Trustees/Year Aggregate benefits benefits from compensation
First Elected compensation accrued as all Putnam from all
by from the part of fund funds upon Putnam
Shareholders fund (1) expenses retirement (2) funds (3)(4)
Jameson A.
Baxter/1994 (5) $1,377 $395 $100,000 $218,950
Charles B.
Curtis/2001 1,357 499 $100,000 $244,250
Myra R.
Drucker (6) $0 N/A N/A $33,780
Charles E.
Haldeman, Jr. (6) $0 N/A N/A N/A
John A.
Hill/1985 (5)(7) 2,127 499 $200,000 $458,626
Ronald J.
Jackson/1996 (5)(9) 1,361 404 $100,000 $224,000
Paul L.
Joskow/1997 (5)(7) 1,346 289 $100,000 $294,500
Elizabeth T.
Kennan/1992 1,372 513 $100,000 $221,500
Lawrence
J. Lasser/1992 (8) N/A 438 $93,333 N/A
John H.
Mullin, III/1997 (5) 1,361 443 $100,000 $216,200
Robert E.
Patterson/1984 1,342 278 $100,000 $217,750
George
Putnam, III/1984 (7) 1,678 230 $125,000 $262,500
W. Thomas
Stephens/1997 (5) 1,348 403 $100,000 $228,250
W. Nicholas
Thorndike/1992 (9) 1,059 661 $105,783 $114,500
Richard B.
Worley (6) $0 N/A N/A $33,780
PUTNAM PREMIER
INCOME TRUST
COMPENSATION TABLE
Estimated
Retirement annual Total
Trustees/Year Aggregate benefits benefits from compensation
First Elected compensation accrued as all Putnam from all
by from the part of fund funds upon Putnam
Shareholders fund (1) expenses retirement (2) funds (3)(4)
Jameson A.
Baxter/1994 (5) $1,575 $422 $100,000 $218,950
Charles B.
Curtis/2001 1,561 497 $100,000 $244,250
Myra R.
Drucker (6) $0 N/A N/A $33,780
Charles E.
Haldeman, Jr. (6) $0 N/A N/A N/A
John A.
Hill/1985 (5)(7) 2,475 523 $200,000 $458,626
Ronald J.
Jackson/1996 (5)(9) 1,571 421 $100,000 $224,000
Paul L.
Joskow/1997 (5)(7) 1,562 301 $100,000 $294,500
Elizabeth
T. Kennan/1992 1,572 538 $100,000 $221,500
Lawrence
J. Lasser/1992 (8) N/A 414 $93,333 N/A
John H.
Mullin, III/1997 (5) 1,561 462 $100,000 $216,200
Robert E.
Patterson/1984 1,558 292 $100,000 $217,750
George
Putnam, III/1984 (7) 1,961 240 $125,000 $262,500
W. Thomas
Stephens/1997 (5) 1,563 421 $100,000 $228,250
W. Nicholas
Thorndike/1992 (9) 1,256 693 $105,783 $114,500
Richard B.
Worley (6) $0 N/A N/A $33,780
(1) Includes an annual retainer and an attendance fee for each meeting
attended.
(2) Assumes that each Trustee retires at the normal retirement date. For
Trustees who are not within three years of retirement, estimated benefits
for each Trustee are based on Trustee fee rates in effect during calendar
2004. For Mr. Thorndike, the annual benefits equal the actual benefits he
is currently receiving under the Retirement Plan for Trustees of the Putnam
funds.
(3) As of December 31, 2004, there were 110 funds in the Putnam family. For
Mr. Hill, amounts shown also include compensation for service as a trustee
of TH Lee, Putnam Emerging Opportunities Portfolio, a closed-end fund
advised by an affiliate of Putnam Management.
(4) Includes amounts (ranging from $5,000 to $90,000 per Trustee) for which
the Putnam funds were reimbursed by Putnam Management for special Board and
committee meetings and additional time spent on behalf of the Putnam funds
in connection with certain regulatory and other matters relating to alleged
improper trading by certain Putnam Management employees and participants in
certain 401(k) plans administered by Putnam Fiduciary Trust Company.
(5) Includes compensation deferred pursuant to a Trustee Compensation
Deferral Plan. As of the dates identified below, the total amounts of
deferred compensation payable by the fund, including income earned on such
amounts, to certain Trustees were:
Putnam High Income Bond Fund (August 31, 2004) Ms. Baxter -- $687; Mr.
Hill -- $2,285; Mr. Jackson -- $1,170; Mr. Joskow -- $794; Mr. Mullin --
$783; and Mr. Stephens -- $232.
Putnam Master Intermediate Income Trust (September 30, 2004) Ms. Baxter --
$4,312; Mr. Hill -- $14,341; Mr. Jackson -- $7,344; Mr. Joskow -- $4,987;
Mr. Mullin -- $4,912; and Mr. Stephens -- $1,457.
Putnam Premier Income Trust (July 31, 2004) Ms. Baxter -- $5,556; Mr. Hill --
$18,361; Mr. Jackson -- $9,361; Mr. Joskow -- $6,386; Mr. Mullin -- $6,334;
and Mr. Stephens -- $1,876.
(6) Ms. Drucker and Messrs. Haldeman and Worley have not been elected to the
Board of Trustees by shareholders. They were appointed to the Board by
Trustee vote in October 2004.
(7) Includes additional compensation to Messrs. Hill, Putnam and Dr. Joskow
for service as Chairman of the Trustees, President of the Funds and
Chairman of the Audit and Pricing Committee, respectively.
(8) Mr. Lasser resigned from the Board of Trustees of the Putnam funds on
November 3, 2003. The estimated annual retirement benefits shown in this
table for Mr. Lasser reflects benefits earned under the funds' retirement
plan prior to July 1, 2000.
(9) Mr. Thorndike retired from the Board of Trustees of the Putnam funds on
June 30, 2004. Mr. Jackson is not standing for re-election as a Trustee.
Under a Retirement Plan for Trustees of the Putnam funds (the "Plan"), each
Trustee who retires with at least five years of service as a Trustee of the
funds is entitled to receive an annual retirement benefit equal to one-half
of the average annual compensation paid to such Trustee for the last three
years of service prior to retirement. This retirement benefit is payable
during the Trustee's lifetime, beginning the year following retirement, for
a number of years equal to such Trustee's years of service. A death
benefit, also available under the Plan, ensures that the Trustee and his or
her beneficiaries will receive benefit payments for the lesser of an
aggregate period of (i) ten years or (ii) such Trustee's total years of
service.
The Plan Administrator (currently the Board Policy and Nominating
Committee) may terminate or amend the Plan at any time, but no termination
or amendment will result in a reduction in the amount of benefits (i)
currently being paid to a Trustee at the time of such termination or
amendment, or (ii) to which a current Trustee would have been entitled had
he or she retired immediately prior to such termination or amendment. The
Trustees have terminated the Plan with respect to any Trustee first elected
to the board after 2003.
2. A PROPOSAL TO AMEND EACH FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING BORROWING AND SENIOR SECURITIES TO PERMIT THE USE OF INVESTMENT
LEVERAGE
(For Putnam High Income Bond Fund, Putnam Master Intermediate Income Trust
and Putnam Premier Income Trust)
What is this proposal?
Each fund currently has a fundamental investment restriction that provides
that the fund may not:
[b]orrow money or issue senior securities (as defined in the 1940 Act),
except that the fund may borrow amounts not exceeding 15% of the value
(taken at the lower of cost or current value) of its total assets (not
including the amount borrowed) at the time the borrowing is made for
temporary purposes (including repurchasing its shares while effecting an
orderly liquidation of portfolio securities) or for emergency purposes.
As used in the text above and defined in the Investment Company Act of 1940
(the "1940 Act"), the term "senior securities" refers to any form of
indebtedness or any class of shares that has priority over any other class
of shares as to distribution of assets and payment of dividends.
The Trustees recommend that shareholders approve an amendment to this
investment restriction to permit your fund to use investment leverage by
borrowing money and/or issuing senior securities to the maximum extent
allowable under the 1940 Act. The proposed investment restriction for your
fund provides that the fund may not:
[b]orrow money or issue senior securities (as defined in the 1940 Act),
except as permitted by (i) the 1940 Act, (ii) the rules or regulations
promulgated by the Securities and Exchange Commission under the 1940 Act or
(iii) any applicable exemption from the provisions of the 1940 Act.
What is investment leverage?
Closed-end funds commonly issue senior securities as a way of leveraging
their investment portfolios. The form of investment leverage that Putnam
Management believes would be most appropriate for your fund is borrowing
from banks or other lenders (including other Putnam funds to the extent
permitted under an exemption issued to the Putnam funds by the SEC).
Funds that use investment leverage generally aim to earn an investment
return on money raised through leverage that exceeds the costs of
leveraging, and thereby to increase returns to common shareholders. The
costs of borrowing, in particular, include interest payments, commitment
fees and other fees paid to the lender. Any investment returns in excess of
the costs of investment leverage would benefit the holders of the common
shares. To the extent the costs of investment leverage exceed such
investment returns, however, those costs would be borne by and reduce the
returns to the holders of the common shares.
Putnam Management has advised your fund's Trustees that it believes
investment leverage can serve to increase a fund's investment yield under
certain market conditions. If shareholders approve this proposal, your fund
would only borrow if Putnam Management believes that, over time, the costs
of carrying the assets to be acquired through investment leverage are
likely to be lower than the fund's expected incremental earnings.
Putnam Management has also advised the Trustees that the higher investment
yield and total return potentially available to a fund from the use of
investment leverage may result in a reduction of the discount at which fund
shares often trade relative to the fund's net asset value per share.
No assurance can be given that the earnings attributable to borrowing will
exceed the costs of such investment leverage. The net assets attributable
to your fund's common shares would be reduced if the fund's return on the
additional assets is less than the full cost of leverage. The risks
associated with investment leverage are discussed in more detail below.
What are the legal restrictions on investment leverage?
The 1940 Act requires your fund to have an investment policy regarding
borrowing and the issuance of senior securities and imposes certain
maximums on the amount of investment leverage each fund may allow under
its policy. The purpose of these limitations is generally to protect the
investments of long-term common shareholders.
Under the 1940 Act, a closed-end fund may generally borrow (from a bank or
otherwise) if, immediately thereafter, the aggregate amount of all
borrowings does not exceed 33 1/3 % of its total assets. This restriction
is generally referred to as the asset coverage requirement for borrowing. A
closed-end fund may not issue a dividend or make certain distributions
unless the fund would meet this same asset coverage requirement with
respect to its borrowings after giving effect to such dividend or
distribution.
The proposed changes to your fund's fundamental investment restriction
would permit your fund to incur leverage up to the fullest amount permitted
under the asset coverage limitations described above. Although the 1940 Act
also permits a closed-end fund, subject to asset coverage requirements, to
issue "preferred shares" that have priority over a fund's common shares
with respect to payment of dividends or interest and/or liquidation, your
fund's Agreement and Declaration of Trust (the "Declaration of Trust") does
not permit your fund to issue preferred shares. The Trustees are not
requesting that shareholders approve an amendment to the Declaration of Trust
to remove this prohibition. Accordingly, the discussion in this proposal
focuses on borrowing.
What are the risks of investment leverage?
Although there are potential benefits to your fund's common shareholders
from borrowing, there are also risks associated with leverage. Just as
investment leverage tends to magnify returns amid positive investment
results, the effect of leverage in unfavorable market conditions would be
to reduce the fund's net asset value further than would otherwise have been
the case.
Investment leverage creates risks that may adversely affect the return for
common shareholders, including:
* The likelihood of greater volatility of the net asset value and market
price of common shares;
* Fluctuations in interest rates on borrowings and short-term debt;
* Increased operating costs, which may reduce a fund's total return; and
* The potential for a decline in the value of an investment acquired with
borrowed funds, while the fund's obligations under such borrowing remain
fixed.
There is no assurance that a leveraging strategy will be successful during
any period in which it is employed. Fluctuations in the markets, short-term
interest rates and other factors that might affect the fund's ability to
pay interest on borrowings may also affect the return to the holders of
common shares. To the extent that the fund's costs of leverage exceed the
fund's return on investments it makes with the proceeds of borrowing,
common shareholders would be adversely affected by the fund's use of
leverage.
If legal and contractual restrictions regarding borrowings limit the fund's
ability to repurchase common shares, the market price of the fund's common
shares may be adversely affected. Prohibitions on dividends and other
distributions could impair the fund's ability to qualify as a regulated
investment company under the Internal Revenue Code of 1986, as amended.
What did the Trustees consider in evaluating the proposal?
At a meeting held on April 15, 2005, the Trustees concluded that asking
shareholders to give your fund the ability to borrow money and issue senior
securities to the maximum extent permitted by the 1940 Act would be in the
best interest of the fund and its common shareholders. In the course of
their evaluation, the Trustees considered information provided by Putnam
Management as to its view of the potential benefits to your fund and its
common shareholders of the flexibility to leverage the fund by borrowing
money. This information included a discussion of Putnam Management's
experience in managing closed-end funds leveraged through the issuance of
preferred shares, although, as the Trustees discussed at a subsequent
meeting held on May 13, 2005, your fund's Declaration of Trust currently
does not permit leverage through the issuance of preferred shares. The
Trustees also considered the risks to which your fund and its common
shareholders may be exposed as a result of investment leverage.
What are the Trustees recommending?
As a result of their consideration of the above factors and other relevant
information, the Trustees, including all of the Trustees who are not
"interested persons" (as defined in the 1940 Act) of your fund, unanimously
recommend that shareholders approve an amendment to your fund's fundamental
investment restriction to permit the use of investment leverage to the
maximum extent allowable under the 1940 Act.
What are the voting requirements to approve the proposal?
Approval of the amendment to your fund's fundamental investment restriction
to permit the use of investment leverage to the maximum extent allowable
under the 1940 Act requires the affirmative vote of the lesser of (a) more
than 50% of the outstanding shares of the fund, or (b) 67% or more of the
shares of the fund present (in person or by proxy) at the meeting if more
than 50% of the outstanding shares of the fund are present at the meeting
in person or by proxy.
The Trustees recommend unanimously that shareholders of your fund vote FOR
Proposal 2 to amend the fund's fundamental investment restriction to permit
the use of investment leverage to the maximum extent allowable under the
1940 Act.
3. A PROPOSAL TO AMEND EACH FUND'S MANAGEMENT CONTRACT TO TAKE INTO ACCOUNT
INVESTMENT LEVERAGE IN CALCULATING FEES (For Putnam High Income Bond Fund,
Putnam Master Intermediate Income Trust and Putnam Premier Income Trust)
What is this proposal?
The Trustees recommend that shareholders approve an amendment to your fund's
management contract with Putnam Management to include investment assets
acquired through leverage in the calculation of investment management fees.
The current method for calculating investment management fees is based on
the "net assets" of your fund, which would not take into account the
proceeds of any borrowings for investment leverage purposes. In the
event that your fund incurs debt for investment purposes, as previously
described in Proposal 2, the proposed amendment would allow Putnam
Management's fee to be directly aligned with the amount of assets it would
be managing on behalf of your fund.
How are management fees currently calculated?
Your fund currently pays to Putnam Management a quarterly investment
management fee equal to a percentage of the average of weekly
determinations of the net asset value of the fund, as calculated at the
annual rate set out below:
Net Asset Value Annual Rate
First $500 million 0.75%
Next $500 million 0.65%
Next $500 million 0.60%
Excess over $1.5 billion 0.55%
Under this calculation, net asset value effectively excludes amounts raised
through indebtedness from the calculation of the assets on which Putnam
Management's management fee is based.
Additional terms of your fund's current management contract that are
unrelated to the proposed amendment, and therefore will remain unchanged,
are summarized under the heading "Each Fund's Management Contract" in
Appendix A below. Terms of the sub-management contract with Putnam
Management's affiliate, Putnam Investments Limited, with respect to your
fund are summarized under the heading "Each Fund's Sub-Management Contract"
in Appendix A.
How would the proposal change the calculation of management fees?
The proposed amendment provides that Putnam Management will receive its
current rate schedule based upon the "average weekly assets" of your fund.
"Average weekly assets" is defined to mean the average weekly value of the
total assets of the fund (including any assets attributable to leverage for
investment purposes) minus total liabilities (other than liabilities
representing leverage for investment purposes). As your Fund's Declaration
of Trust prohibits the issuance of preferred shares, for all practical
purposes the only form of investment leverage available would be borrowing.
Under the proposed fee calculation, while the calculation of the aggregate
assets on which Putnam Management's fee would be based would change
significantly under the proposed fee structure (assuming your fund were to
engage in investment leverage), the annual rates and dollar-value
breakpoints for calculating the fee would remain unchanged from the current
management contract. Accordingly, if the use of investment leverage were to
cause your fund's average weekly assets to exceed a management fee
breakpoint threshold, the fund would pay the applicable lower management
fee on the amount of the excess.
A further provision of the proposed changes to your fund's management
contract would reduce the management fee payable to Putnam Management, on a
dollar-for-dollar basis, by any amount by which your fund's costs of
bearing interest payments on investment borrowing and related expenses
exceed the portion of your fund's net income and net short-term capital
gains (but not long-term capital gains) attributable to the fact that such
debt obligations were outstanding. The fee reduction mechanism would be
calculated on a quarterly basis, and it is intended to allow Putnam
Management to profit from your fund's use of investment leverage only to
the extent the benefits of that leverage outweigh the costs.
The effect of basing the management fee on average weekly assets is to
allow Putnam Management to be compensated for managing portfolio assets of
your fund that were financed through borrowing, in addition to those
financed by issuing equity. Without this amendment, the assets that Putnam
Management would be required to manage if your fund is leveraged would
increase, together with the costs incurred by Putnam Management for
managing a larger asset base, however without any commensurate increase in
Putnam Management's management fee.
A copy of the proposed management contract, as amended, is attached to this
Proxy Statement as Exhibit A.
What are the potential costs and risks of the proposed management fee?
If the amendment is approved and your fund does use investment leverage,
the fees paid by your fund to Putnam Management would be greater, in direct
proportion to the amount of leverage taken on, than they would otherwise
have been under a compensation scheme based on average net assets. While
the intent of using investment leverage is to benefit common shareholders
by increasing their participation in your fund's investment income by an
amount greater than their share of the additional costs and fees associated
with incurring such leverage, you should be aware of the effects the
proposed changes may have on management fees. The tables and examples
below help to illustrate the implications.
The table below sets out, for each fund, the amount of Putnam Management's
management fees during the fund's last completed fiscal year, the amount
the fees would have been over the same period had the proposed fee
arrangement been in place during that year (assuming a constant investment
leverage from indebtedness equivalent to one-third of the fund's total
assets), and the difference between the two (expressed as a percentage of
the actual fees paid over the period):
Putnam High Putnam Master Putnam Premier
Income Bond Fund Intermediate Income Trust Income Trust
Fiscal Year ended Fiscal Year ended Fiscal Year ended
August 31, 2004 September 30, 2004 July 31, 2004
Actual fees paid $861,556 $5,108,198 $6,944,320
Pro forma fees payable $1,149,986 $6,678,521 $8,949,945
Difference 33.5% 30.7% 28.9%
As described in Proposal 2 above, investment leverage may increase your
fund's distributable yield, but may also increase risk to a fund in adverse
market conditions. Because compensation on the basis of average weekly
assets creates an economic incentive for Putnam Management to maximize
leverage, under certain market conditions the interests of Putnam
Management could diverge from those of your fund and its shareholders.
While the management fee reduction mechanism described above is intended to
counterbalance incentives Putnam Management may have to maintain leverage
under unfavorable market conditions, you should be aware of this potential
conflict of interest in considering the proposed amendments.
The following table sets out each fund's expenses expressed as a percentage
of assets attributable to common stock: (a) based on actual expenses
incurred during the fund's last completed fiscal year under the current
management agreement; and (b) on a pro-forma basis as though the proposed
managed-assets based fee schedule had been in place during that year and
each fund had maintained leverage through borrowing equal in the aggregate
to one-third of each fund's total assets, which would represent the maximum
leverage through borrowing permissible by law. The table assumes no
reduction in management fees under the fee reduction mechanism described
above.
Putnam High Putnam Master Putnam Premier
Income Bond Fund Intermediate Income Trust Income Trust
Fiscal Year ended Fiscal Year ended Fiscal Year ended
August 31, 2004 September 30, 2004 July 31, 2004
Pro Forma Pro Forma Pro Forma
Actual (avg. weekly Actual (avg. weekly Actual (avg. weekly
(net assets) assets) (net assets) assets) (net assets) assets)
Management 0.75% 0.75% 0.72% 0.70% 0.70% 0.68%
Fees
Other Expenses 0.34% 0.25% 0.14% 0.11% 0.13% 0.10%
Total Annual 1.09% 1.00% 0.86% 0.81% 0.83% 0.78%
Expenses
Example.
The following table shows the expenses a shareholder would pay on an
investment of $1,000, assuming a 5% annual return, on an actual basis and
on a pro forma basis as if the proposed amendment had been in effect during
the fund's last completed fiscal year and each fund had maintained
investment leverage through borrowing equal in the aggregate to one-third
of each fund's total assets, which is the maximum amount of borrowing
permissible by law. The example assumes that annual expenses remain the
same and that all dividends and distributions are reinvested at net asset
value. This example should not be considered a representation of future
expenses, and actual expenses may be greater or less than shown.
Putnam High Putnam Master Putnam Premier
Income Bond Fund Intermediate Income Trust Income Trust
Based on Based on Based on
Based on avg. weekly Based on avg. weekly Based on avg. weekly
Period net assets assets net assets assets net assets assets
One Year $11 $10 $9 $8 $8 $8
Three Years $35 $32 $27 $26 $26 $25
Five Years $60 $55 $48 $45 $46 $43
Ten Years $133 $122 $106 $100 $103 $97
The purpose of the tables above is to assist you in understanding the
various costs and expenses that an investor in your fund will bear directly
or indirectly. The assumption in each example of aggregate borrowing equal
to one-third of your Fund's total assets is intended to demonstrate the
maximum possible impact of a leveraging strategy based on borrowing, and
does not reflect any determination that this level of aggregate debt is or
will be appropriate for your fund.
What did the Trustees consider in evaluating the proposal?
The Trustees, including a majority of the Independent Trustees, have
concluded that, if shareholders approve Proposal 2 to give your fund the
ability to use investment leverage, it would be in the best interest of
your fund and its common shareholders to compensate Putnam Management on
the basis of its "average weekly assets," rather than its net assets, to
be calculated as described in detail above. In the course of their
evaluation, the Trustees considered the benefit to each fund from the
additional investment management services that Putnam Management would
perform in connection with a leveraged investment strategy, as well as
the amount of compensation Putnam Management would receive under the
proposed fee structure.
The Trustees noted that the proposed amendment would align the fee
arrangements for your fund with those of other closed-end Putnam Funds that
currently engage in leverage for investment purposes. Furthermore, the
Trustees were advised by Putnam Management that it is a customary and
widespread practice in the closed-end fund industry to structure leveraged
products in a manner that compensates advisors for their management of the
assets acquired through leverage.
In evaluating the incentives and potential conflicts of interest created by
an average weekly assets-based fee, the Trustees considered that the asset
coverage restrictions under the 1940 Act, as well as other legal
requirements, limit the extent to which a manager can expose a fund to
additional risk through leverage. Furthermore, the Trustees considered the
advantages of the management fee reduction mechanism described above, which
reduces the management fee by any amount by which the costs of carrying
investment leverage outweigh the benefits (in terms of net income and
short-term capital gains) to common shareholders from managing additional
investment assets. In the event that your fund actually engages in
leverage, the Trustees will have the opportunity, through regular reports
from Putnam Management prepared in connection with the fee reduction
mechanism described above, to continue monitoring the conflict of interest
between Putnam Management and your fund.
In considering the changes to your fund's management contract described in
this Proposal 3 and recommending that shareholders do the same, the
Trustees referred in part to the factors they had considered in 2004 as
part of their annual process to determine whether to approve the
continuance of each fund's management contract with Putnam Management. The
factors considered by the Trustees, and the determinations they made, in
connection with that prior approval are described in greater detail under
the heading "Previous Approval of Each Fund's Management Contract" in
Appendix A below.
The Trustees approved the proposed changes to your fund's management
contract in principle at a meeting held on April 15, 2005, and further
confirmed their approval in principle by written consent of a majority
of the Trustees (including a majority of the Independent Trustees) dated
May 18, 2005. It is expected that if shareholders approve your fund's
amended management contract, the Trustees will confirm their action by
written consent at an in-person meeting as required under the 1940 Act
prior to the execution of the amended management contract.
If the proposed changes to your fund's management contract are approved
by shareholders, the Trustees expect to approve conforming changes to
the sub-management contract between Putnam Management and its affiliate,
Putnam Investments Limited, with respect to your fund. As described in
Appendix A, the sub-management contract currently provides for Putnam
Management to pay Putnam Investments Limited a sub-management fee based
on the net assets of your fund that are managed by Putnam Investments
Limited. This fee is paid by Putnam Management and not by your fund.
Under the current circumstances, the changes to the sub-management
contract do not require shareholder approval. Please see the discussion
under the heading "Each Fund's Sub-Management Contract" in Appendix A
below for additional information about your fund's sub-management
arrangements.
What are the Trustees recommending?
The Trustees, including the Independent Trustees of your fund, recommend
that shareholders approve an amendment to your fund's management
contract to take into account investment leverage in calculating
management fees.
What is the voting requirement for approving the proposal?
Approval of the proposed amendment to your fund's management contract
requires the affirmative vote of the lesser of (a) more than 50% of the
outstanding shares of the fund, or (b) 67% or more of the shares of the
fund present (in person or by proxy) at the meeting if more than 50% of the
outstanding shares of the fund are present at the meeting in person or by
proxy.
The Trustees recommend that shareholders of your fund vote FOR Proposal
3 to amend the fund's management contract to take into account
investment leverage in calculating management fees.
4. 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 (For Putnam High Income Bond Fund and Putnam
Premier Income Trust only)
What is this proposal?
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,
recommend that shareholders vote against converting your fund to an
open-end fund. This recommendation is based on the Trustees' view that your
fund is afforded significant investment advantages as a result of its
closed-end status.
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. Your shares would then become
redeemable directly from your fund at net asset value, eliminating any
discount of market price to net asset value.
A conversion from closed-end to open-end status would also require a number
of changes in your fund's Declaration of Trust. Accordingly, approval of
this proposal would also authorize your fund's Trustees to make such
amendments as they may deem necessary 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?
Your fund's Declaration of Trust requires 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 its net asset value per share 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 periods ended
August 27, 2004 (for Putnam High Income Bond Fund) and July 30, 2004 (for
Putnam Premier Income Trust), your fund's shares traded at an average
discount of 10.6% and 11.6%, respectively, from their net asset value per
share, requiring that this proposal be submitted to shareholders.
What do the Trustees recommend?
For the reasons described below, the Trustees of your fund, including a
majority of the Independent Trustees, have concluded that the conversion of
your fund to open-end status would not be in the best long-term interests
of your fund's shareholders. Accordingly, the Trustees of your fund
recommend that shareholders vote "AGAINST" this proposal.
Why are the Trustees recommending a vote against a conversion?
The Trustees regularly review the overall performance and trading
information for your fund and all of the Putnam closed-end funds. At
meetings held in March and April of this year, the Trustees of your fund
carefully evaluated the fund's investment performance, the trading history
of its shares relative to that of other funds in the same peer group, an
analysis of the effects on the fund of its shares trading at a discount to
net asset value, and information about the possible advantages and
disadvantages of converting to an open-end fund.
In recommending a vote against converting your fund to open-end status, the
Trustees considered the following items:
* The Trustees' belief that your fund's closed-end status provides
potential investment benefits not available to open-end fund investors.
Because your fund's shares are not redeemable, your fund is not required to
maintain short-term, lower-yielding investments in anticipation of possible
redemptions, but can be fully invested in higher-yielding securities in
pursuit of the fund's investment objective. 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 portfolio
management team 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 these features
of closed-end funds have contributed to your fund's outperformance, when
measured on the basis of net asset value, over time of Putnam open-end
funds with similar investment objectives and strategies.
* The likelihood that your fund's operating expenses would increase if it 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, following a conversion to open-end
status, they would 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 to
Putnam Retail Management, the fund's principal underwriter, to support
sales of fund shares. 12b-1 plans are typical features of open-end funds,
like the Putnam open-end funds, that are sold through dealers. If such a
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.
* The possibility that redemptions by shareholders would cause your fund to
shrink following conversion to open-end status, resulting in an increased
expense ratio for remaining shareholders. Putnam Retail Management has
advised the Trustees that your fund may experience significant net
redemptions shortly following a conversion to open-end status, thereby
shrinking the fund's size. Significant redemptions would require the fund
to sell portfolio securities and incur related transaction costs, which
would be borne at least in part by remaining shareholders. As described
below, the Trustees reserve the right to impose redemption fees on
redemptions of fund shares that occur within a specified time following
conversion, but there is no certainty that this measure would significantly
reduce redemptions or fully offset related transaction costs.
Since open-end funds continuously offer new shares to the public, they also
have the ability to increase in size, and growth in your fund's size could
result in efficiencies and the ability to spread fixed costs over a larger
pool of assets. Depending on the size of future redemptions or sales,
increased expense ratios could result for either temporary or indefinite
periods.
* The various factors that Putnam Management believes affect whether your
fund's shares trade at a discount. The Trustees reviewed an analysis
prepared by Putnam Management of patterns in the historical trading and
investment performance of your fund and other comparable closed-end funds
in different market environments. Based on this analysis, Putnam Management
believes that neither your fund's investment performance nor its size has
significantly affected whether your fund's shares trade at a discount,
although discount trading patterns appear to be affected by your fund's
distribution rate (yield), which is primarily a function of your fund's
investment strategy and the general interest rate environment, which is
affected by market conditions.
* The possibility that selling securities 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, in order to eliminate fund-level tax, your fund may make
distributions of the taxable gain to all remaining shareholders.
Shareholders would then be liable themselves for tax on such gains.
* The possibility that conversion could result in a lower yield for the
shareholders in light of the loss of the potential advantages of closed-end
status and the increase of expenses that would likely follow. This result
would be inconsistent with the fund's investment objective of seeking high
current income.
* The Trustees' belief that recent discount levels should not be viewed as
grounds for depriving shareholders of the advantages of the closed-end
structure, although it is possible that if shareholders approve the
conversion the market price of shares could rise, and the discount from net
asset value thereby shrink, as the date of conversion approaches.
What are the possible advantages to converting the fund to open-end status?
The Trustees have weighed the advantages of a closed-end structure against
the advantages to shareholders that would come with converting the fund to
open-end status. By converting to an open-end fund, your fund would
immediately offer you the ability to redeem your shares at their net asset
value less any redemption fee that the Trustees may impose. As of March 31,
2005, the market price of shares in Putnam High Income Bond Fund and Putnam
Premier Income Trust represented a discount of 12.88% and 11.27%,
respectively, to their net asset values per share. This means that if you
sold shares of Putnam High Income Bond Fund or Putnam Premier Income Trust
on that date, you would have received only 87.12% or 88.73%, respectively,
of your pro rata share of your fund's assets. If the fund were converted,
you would be able to receive 100% of your pro rata share less any
redemption fee imposed by the Trustees. If the fund's shares were still
trading at a discount immediately prior to the fund's conversion, this
would represent a one-time increase in the value of your shares. There is
no guarantee that the fund's shares will continue to trade at a discount
prior to conversion.
The Trustees have also considered the potential decrease in expense ratio
that could result if your fund grows significantly in size as a result of
net sales of new shares. As an open-end fund, your fund would be
continuously offering new shares to the public. If more new shares are sold
than are redeemed, the fund could grow in size, potentially resulting in a
lower effective management fee and a lower expense ratio. As stated above,
Putnam Retail Management has advised the Trustees that it does not expect
that the fund would grow in size following a conversion to open-end status.
After considering the reasons set forth above, the Trustees do not believe
that the possible advantages of conversion to open-end status justify
fundamentally altering the status of the fund by converting to open-end
status. The Trustees 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 price of its
shares. The table also shows the performance of your fund's primary
benchmark index and the average performance of funds in your fund's peer
group as determined by Lipper Inc., an independent fund rating agency. Of
course, past performance is no guarantee of future performance. Benchmark
index and Lipper peer group results should be compared to your fund's
performance at net asset value.
Total Return (Annualized) for Periods Ending March 31, 2005
1 year 3 years 5 years 10 years
Putnam High Income Bond Fund
Net Asset Value 7.44% 14.31% 9.82% 9.36%
Market Price 1.31 8.62 10.15 7.41
Merrill Lynch All-
Convertibles Index 0.24 7.03 -0.71 9.91
Lipper Closed-End Convertible
Securities
Funds Average 3.99 4.53 0.84 7.95
Putnam Premier Income Trust
Net Asset Value 6.56% 11.38% 8.09% 7.66%
Market Price 2.03 9.67 10.64 7.78
Lehman Government Bond Index 0.11 5.78 6.68 6.92
Lipper Closed-End Flexible
Income Funds Average 5.59 9.88 6.63 7.71
Will converting to open-end status improve your fund's investment
performance?
The Trustees do not believe that your fund's investment performance at net
asset value will be significantly affected if your fund converts to an
open-end fund. Your fund's investment objective and principal investment
strategies will remain the same if the fund were to convert. As described
above, if your fund were to grow significantly after conversion through
sales of new shares, the fund's expense ratio could decline, which would
increase returns. However, Putnam Retail Management has advised the
Trustees that it does not expect your fund to benefit from significant
sales of new shares if the fund were to convert. In addition, fund expenses
would increase if the Trustees and shareholders approve a distribution plan
authorizing payments to Putnam Retail Management to support sales of fund
shares.
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, open-end funds face the risk
of higher expense ratios if significant redemptions are not offset by
sales of new shares. Of course, expense ratios of both closed-end and
open-end funds can increase as a result of negative investment
performance.
* Sales of shares. Shares of open-end funds may be redeemed at any time at
their net asset value, less any applicable redemption fee (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 any discount or premium
between market price and net asset value existing immediately prior to the
conversion. Shareholders who wish to dispose of shares would receive a
higher price at net asset value than if shares remained at a discount. If
your fund's shares were to trade at a premium to net asset value, however,
you would receive a lower price by redeeming them at net asset value.
* 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 involve
additional ongoing costs to the fund.
* Annual shareholder meetings. Your fund is currently required by the
rules of the New York Stock Exchange to hold annual meetings of
shareholders. 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. By contrast, the open-end Putnam funds have
committed to holding shareholder meetings for the purpose of electing
their Trustees at least every five years (beginning in 2004).
* 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, might tend
to reduce the investment flexibility of open-end funds. In addition,
closed-end funds are afforded more flexibility under the 1940 Act compared
to open-end funds to invest in securities that are deemed illiquid.
* 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 the same class of more than 70 open-end Putnam
funds. Shareholders of your fund currently do not have that privilege.
What fund expense would be associated with conversion of your fund to
open-end status?
Certain legal, accounting and other costs would be incurred in connection
with the conversion of your fund to open-end status. Additional costs would
be associated with potential proxy mailings addressing matters recommended
by the Trustees, including distribution (12b-1) plans and other matters.
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 by themselves would materially
increase your fund's expense ratio. However, if there were significant
redemptions of fund shares following the conversion, the expense ratio for
remaining shareholders could rise.
Would there be any redemption fees applied to my fund if shareholders vote
to convert the fund to open-end status?
Most of the open-end Putnam funds are subject to a 2.00% redemption fee on
sales of shares acquired within 5 calendar days of sale (by redemption or
exchange). If your fund is converted to an open-end fund, the Trustees
expect to approve a similar redemption fee as an ongoing feature of the
fund.
In addition, to address the costs to the fund associated with potential
significant redemptions following conversion, 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 5-day redemption fee
described above would then apply to redemptions occurring after the
expiration of this temporary redemption fee.) The Trustees may impose this
fee if they believe that significant redemptions of shares would disrupt
the long-term portfolio management of the fund and dilute the interests of
the remaining shareholders. Imposition of a redemption fee could deter some
shareholders from redeeming and would compensate remaining long-term
shareholders for the costs of the liquidation of a significant percentage
of the fund's portfolio.
The fund would 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 and, therefore, a vote
in favor of such conversion would also authorize the Trustees to amend your
fund's Declaration of Trust to reflect such changes. These changes would
bring your fund's Declaration of Trust more in line with most other Putnam
open-end funds.
The Declaration of Trust 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, to the extent permitted by applicable law, 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.
The Declaration of Trust would also 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. In
addition, if shareholders were to vote to convert your fund to open-end
status, the provision in your fund's Declaration of Trust requiring that
Trustees be elected annually at the annual shareholder meeting or at a
special meeting in lieu thereof would be eliminated.
Finally, the Trustees would also make certain necessary 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.
What is the voting requirement for approving 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 requires the "yes"
vote of a majority of your fund's outstanding shares entitled to vote.
If such conversion were 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. Prior to the conversion, shares of your
fund would continue to be listed and traded on the New York Stock Exchange.
If the conversion is not approved, will your 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 to operate 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 trade 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 fund is in the best long-term interests of your fund's
shareholders, and recommend a vote against the conversion of your fund to
open-end status at this time.
The Trustees recommend that you vote "AGAINST" Proposal 4.
Further Information About Voting and the Meeting
Quorum and Methods of Tabulation. The shareholders of each fund vote
separately with respect to each proposal. In the case of Putnam High Income
Bond Fund and Putnam Master Intermediate Income Trust, a majority of the
shares entitled to vote constitutes a quorum for the transaction of
business with respect to any proposal at the meeting. For Putnam Premier
Income Trust, the quorum requirement is thirty percent of the shares
entitled to vote (unless otherwise noted in the Proxy Statement). 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 a proposal for purposes of
determining whether sufficient affirmative votes have been cast. 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. In certain circumstances in which the fund has received
sufficient votes to approve a matter being recommended for approval by the
fund's Trustees, the fund may request that brokers and nominees, in their
discretion, withhold submission of broker non-votes in order to avoid the
need for solicitation of additional votes in favor of the proposal.
Shareholders who object to any proposal in this Proxy Statement will not be
entitled under Massachusetts law or your fund's Agreement and Declaration
of Trust to demand payment for, or an appraisal of, their shares.
Other business. The Trustees know of no matters other than those set forth
herein to be brought before the meeting. If, however, any other matters
properly come before the Meeting, it is the Trustees' intention that
proxies will be voted on such matters in accordance with the judgment of
the persons named 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 Retail Management may solicit proxies in person or
by telephone. Your fund may arrange to have a proxy solicitation firm call
you to record your voting instructions by telephone. The procedures for
voting proxies by telephone are designed to authenticate shareholders'
identities, to allow them 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 Management 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 the 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.
Shareholders have the opportunity to submit their voting instructions via
the Internet by utilizing a program provided by a third party vendor hired
by Putnam Management or by automated telephone service. The giving of such
a proxy will not affect your right to vote in person should you decide to
attend the meeting. To use the Internet, please access the Internet address
listed on your proxy card and follow the instructions on the internet site.
To record your voting instructions via automated telephone service, use the
toll-free number listed on your proxy card. The Internet and telephone
voting procedures are designed to authenticate shareholder identities, to
allow shareholders to give their voting instructions, and to confirm that
shareholders' instructions have been recorded properly. Shareholders voting
via the Internet should understand that there may be costs associated with
electronic access, such as usage charges from Internet access providers and
telephone companies that must be borne by the shareholders.
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, including brokers and nominees.
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 own expense Computershare Fund Services, 17
State Street, New York, New York 10005, to aid in the solicitation of
instructions for registered and nominee accounts, for a fee not to exceed
$5,000 plus reasonable out-of-pocket expenses, for each fund, for mailing.
The expenses of the preparation of proxy statements and related materials,
including printing and delivery costs, are borne by each fund.
Revocation of proxies. Proxies, including proxies given by telephone or
over the Internet, may be revoked at any time before they are voted either
(i) by a written revocation received by the Clerk of your fund, (ii) by
properly executing a later-dated proxy, (iii) by recording later-dated
voting instructions via the Internet, (iv) in the case of brokers and
nominees, by submitting written instructions to your fund's solicitation
agent or the applicable record shareholder or (v) by attending the Meeting
and voting in person.
Date for receipt of shareholders' proposals for the next annual meeting. It
is currently anticipated that each fund's next annual meeting of
shareholders will be held in June 2006. The Trustees of your fund reserve
the right to set an earlier or a later date for the 2006 meeting.
Shareholder proposals to be included in the proxy statement for that
meeting must be received by your fund on or before February 10, 2006.
Shareholders who wish to make a proposal at the 2006 annual meeting--other
than one that will be included in the fund's proxy materials--should notify
the fund no later than April 26, 2006. Shareholders who wish to propose one
or more nominees for election as Trustees, or to make a proposal fixing the
number of Trustees, at the 2006 annual meeting must provide written notice
to the fund (including all required information) so that such notice is
received in good order by the fund no earlier than April 15, 2006 and no
later than May 15, 2006.
The Board Policy and Nominating Committee will also consider nominees
recommended by shareholders of each fund to serve as Trustees. A
shareholder must submit the names of any such nominees in writing to the
fund, to the attention of the Clerk, at the address of the principal
offices of the fund. If a shareholder who wishes to present a proposal
fails to notify the fund by the dates specified above, the proxies
solicited for the meeting will have discretionary authority to vote on the
shareholder's proposal if it is properly brought before the meeting. If a
shareholder makes a timely notification, the proxies may still exercise
discretionary voting authority under circumstances consistent with the
SEC's proxy rules.
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, or if the quorum required for the proposal has not been met, 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. 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 adjournment those proxies that they
are entitled to vote in favor of the proposals. They will vote against any
such adjournment those proxies required to be voted against the 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.
Duplicate mailings. As permitted by SEC rules, Putnam's policy is to send a
single copy of the proxy statement to shareholders who share the same last
name and address, unless a shareholder previously has requested otherwise.
Separate proxy ballots will be included with the proxy statement for each
account registered at that address. If you would prefer to receive your own
copy of the proxy statement, please contact Putnam Investor Services by
phone at 1-877-288-6597 or by mail at P.O. Box 41203, Providence, Rhode
Island 02940-1203.
Financial information. Your fund's will furnish to you upon request and
without charge, 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 peiod. Such requests may be directed to Putnam Investor
Services, P.O. Box 41203, Providence, RI 02940-1203 or 1-800-225-1581.
Fund Information
Putnam Investments. Putnam Investment Management, LLC, each fund's
investment manager, is a subsidiary of Putnam, LLC (Putnam Investments).
Putnam Investments is a wholly-owned subsidiary of Putnam Investments
Trust, a holding company that, except for a minority stake owned by
employees, is in turn owned by Marsh & McLennan Companies, Inc., a leading
professional services firm that includes risk and insurance services,
investment management and consulting businesses.
The address of each of Putnam Investments Trust, Putnam Investments and
Putnam Investment Management, LLC, is One Post Office Square, Boston,
Massachusetts 02109. The address of the executive offices of Marsh &
McLennan Companies, Inc. is 1166 Avenue of the Americas, New York, New York
10036. Charles E. Haldeman, Jr. is the President and Chief Executive
Officer of Putnam Investments. His address is One Post Office Square,
Boston, MA 02109.
Mr. Haldeman is a stockholder of Putnam Investments Trust. On March 15,
2004, Putnam Investments Trust granted Mr. Haldeman 62,463 shares of Class
B Common Stock pursuant to the Putnam Investments Trust Equity Partnership
Plan. On March 15, 2005, Mr. Haldeman received a further grant of 210,635
Class B shares pursuant to this Plan. With respect to each such grant, Mr.
Haldeman's shares vest over a four-year period, with 25% of the shares
vesting on each anniversary of the grant, although vesting may be
accelerated under certain circumstances if Mr. Haldeman's employment with
Putnam terminates. The terms of the Plan provide generally that if Mr.
Haldeman's employment with Putnam terminates, Putnam Investments Trust may
at its discretion repurchase his vested shares of Class B Common Stock at
their then-current value.
Putnam Investments Limited. Putnam Investments Limited, which has been
retained by Putnam Investment Management, LLC as investment sub-manager
with respect to a portion of each fund's assets, is a subsidiary of The
Putnam Advisory Company, LLC, which is owned by Putnam Advisory Company LP,
a subsidiary of Putnam Investments. Putnam Advisory Company LP's general
partner is Putnam Advisory Company GP, Inc. Putnam Advisory Company GP,
Inc. is a wholly-owned subsidiary of Putnam Investments, which is also the
sole limited partner of Putnam Advisory Company LP.
The address of Putnam Investments Limited is Cassini House, 57-59 St.
James's Street, London, England, SW1A 1LD. The address of each of The
Putnam Advisory Company, LLC, Putnam Advisory Company LP, and Putnam
Advisory Company GP, Inc. is One Post Office Square, Boston, Massachusetts
02109.
Other service providers. Putnam Retail Management Limited Partnership, the
fund's principal underwriter, and Putnam Fiduciary Trust Company, the
fund's investor servicing agent, administrator and custodian, are both
subsidiaries of Putnam Investments. Their address is One Post Office
Square, Boston, Massachusetts 02109.
For the fiscal year ended August 31, 2004, Putnam High Income Bond Fund
paid Putnam Fiduciary Trust Company aggregate fees of $202,199 for custody,
transfer agent and administrative services (excluding custody and investor
servicing credits). For the fiscal year ended September 30, 2004, Putnam
Master Intermediate Income Trust paid $708,451 for such services. For the
fiscal year ended July 31, 2004, Putnam Premier Income Trust paid $901,202
for such services.
Litigation. Exhibit B to this proxy statement describes the pending legal
proceedings in which the Trustees have been named as parties adverse to
your fund.
Limitation of Trustee liability. The Agreement and Declaration of Trust of
each 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.
Independent Registered Public Accounting Firm. As set forth in the table
below, the Trustees have selected PricewaterhouseCoopers LLP, 125 High
Street, Boston, Massachusetts 02110, or KPMG LLP, 99 High Street, Boston,
Massachusetts 02110, to serve as the independent registered public
accounting firm for each fund's current fiscal year. These firms are among
the country's preeminent independent registered public accounting firms.
Each firm was selected primarily on the basis of its expertise as auditors
of investment companies, the quality of its audit services and the
competitiveness of its fees. Representatives of PricewaterhouseCoopers LLP
and KPMG LLP are expected to be present at the meeting to make statements
and to respond to appropriate questions.
The following table presents fees billed in each of the last two fiscal
years for services rendered to each fund by the fund's independent
registered public accounting firm:
Fiscal year ended Audit Fees Audit-Related Fees Tax Fees All Other Fees
------------------ ---------- ----------------- -------- --------------
Putnam High Income
Bond Fund
(PricewaterhouseCoopers LLP)
August 31, 2004 $61,486 $0 $7,700 $23
August 31, 2003 $54,273 $0 $7,711 $0
Putnam Master
Intermediate Income
Trust
(KPMG LLP)
September 30, 2004 $43,250 $0 $4,150 $126
September 30, 2003 $37,610 $0 $3,600 $0
Putnam Premier
Income Trust
(KPMG LLP)
July 31, 2004 $40,150 $0 $4,150 $176
July 31, 2003 $34,900 $0 $3,600 $0
Audit Fees represents fees billed for a fund's last two fiscal years.
Audit-Related Fees represents fees billed in a fund's last two fiscal years
for services traditionally performed by the fund's independent registered
public accounting firm, including accounting consultation for proposed
transactions or concerning financial accounting and reporting standards and
other audit or attest services not required by statute or regulation.
Tax Fees represents fees billed in a fund's last two fiscal years for tax
compliance, tax planning and tax advice services. Tax planning and tax
advice services include assistance with tax audits, employee benefit plans
and requests for rulings or technical advice from taxing authorities.
All Other Fees represents fees billed for services related to fund expense
processing (for Putnam High Income Bond Fund) or interfund trading (for
Putnam Master Intermediate Income Trust and Putnam Premier Income Trust).
The following table presents the amounts the independent auditors for each
fund billed for aggregate non-audit fees in each of the last two fiscal
years to each fund, Putnam Management and any entity controlling,
controlled by or under common control with Putnam Management that provides
ongoing services to the fund:
Fiscal year ended
-----------------
Putnam High Income Bond Fund
August 31, 2004 $139,982
August 31, 2003 $82,391
Putnam Master Intermediate Income Trust
September 30, 2004 $4,276
September 30, 2003 $3,600
Putnam Premier Income Trust
July 31, 2004 $4,326
July 31, 2003 $3,600
Pre-Approval Policies of the Audit and Pricing Committee. The Audit and
Pricing Committee has determined that, all work performed for the funds by
the funds' independent auditors will be pre-approved by the Committee and
will generally not be subject to pre-approval procedures.
Under certain circumstances, the Audit and Pricing Committee believes that
it may be appropriate for Putnam Management and certain of its affiliates
to engage the services of the funds' independent auditors, but only after
prior approval by the Committee. Such requests are required to be submitted
in writing to the Committee and explain, among other things, the nature of
the proposed engagement, the estimated fees and why this work must be
performed by that particular audit firm. The Committee will review the
proposed engagement at its next meeting.
Since May 6, 2003, all work performed by the independent auditors for the
funds, Putnam Management and any entity controlling, controlled by or under
common control with Putnam Management that provides ongoing services to the
funds was pre-approved by the Committee or a member of the Committee
pursuant to the pre-approval policies discussed above. Prior to that date,
the Committee had a general policy to pre-approve the independent auditors'
engagements for non-audit services with the funds, Putnam Management and
any entity controlling, controlled by or under common control with Putnam
Management that provides ongoing services to the funds.
For each fund's last two fiscal years, the funds' principal auditors did
not bill for services required to be approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X.
The Audit and Pricing Committee of your fund has submitted the following
report:
The Audit and Pricing Committee has reviewed and discussed with management
of your fund the audited financial statements for the last fiscal year. The
Audit and Pricing Committee has discussed with your fund's independent
auditors the matters required to be discussed by Statements on Auditing
Standard No. 61 (SAS 61). SAS 61 requires independent auditors to
communicate to the Audit and Pricing Committee matters including, if
applicable: (1) methods used to account for significant unusual
transactions; (2) the effect of significant accounting policies in
controversial or emerging areas for which there is a lack of authoritative
guidance or consensus; (3) the process used by management in formulating
particularly sensitive accounting estimates and the basis for the auditor's
conclusions regarding the reasonableness of those estimates and (4)
disagreements with management over the application of accounting principles
and certain other matters. The Audit and Pricing Committee has received the
written disclosures and the letter from your fund's independent auditors
required by the SEC's Independence Standards Board Standard No. 1 (among
other things, requiring auditors to make written disclosures to and discuss
with the Audit and Pricing Committee various matters relating to the
auditor's independence), and has discussed with such accountants the
independence of such accountants. Based on the foregoing review and
discussions, the Audit and Pricing Committee recommended to the Trustees
that the audited financial statements for the last fiscal year be included
in your fund's annual report to shareholders for the last fiscal year.
Paul L. Joskow (Chairperson)
Myra R. Drucker
Robert E. Patterson
W. Thomas Stephens
Richard W. Worley
Officers and other information. All of the officers of your fund, with the
exception of George Putnam, III, the fund's President, are employees of
Putnam Management or its affiliates or serve on the staff of the Office of
the Trustees. 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 Investments Trust and indirectly of Putnam
Investments, Messrs. Haldeman and Putnam, III (nominees for Trustees of
your fund), as well as the officers of your fund, will benefit from the
management fees, underwriting commissions, custodian fees, and investor
servicing fees paid or allowed by the fund. In addition to Mr. Putnam, III,
the other officers of each fund are as follows:
Year first
Name (birthdate), Age elected to Business experience
Office with the fund office during past 5 years
-------------------------------------------------------------------------------------------------------------
Charles E. Porter (7/26/38), Age 66* 1989 Executive Vice President, Associate Treasurer
Executive Vice President, and Principal Executive Officer, The Putnam Funds.
Associate Treasurer and Principal
Executive Officer
Jonathan S. Horwitz (6/4/55), Age 49* 2004 Senior Vice President and Treasurer, The Putnam Funds.
Senior Vice President and Treasurer Prior to 2004, Managing Director, Putnam Investments
Steven D. Krichmar (6/27/58), Age 46 2002 Senior Managing Director, Putnam Investments. Prior to
Vice President and Principal 2001, Mr. Krichmar was a Partner at PricewaterhouseCoopers,
Financial Officer LLP
Michael T. Healy (1/24/58), Age 47 2000 Managing Director, Putnam Investments
Assistant Treasurer and
Principal Accounting Officer
Beth Mazor (4/6/58), Age 47 2002 Senior Vice President, Putnam Investments
Vice President
Daniel T. Gallagher (2/27/62), Age 43* 2004 Senior Vice President, Staff Counsel and Compliance
Senior Vice President, Staff Counsel Liaison, The Putnam Funds. Prior to 2004, Mr.
and Compliance Liaison Gallagher was an Associate at Ropes & Gray LLP
Charles A. Ruys de Perez (10/17/57), 2004 Managing Director, Putnam Investments
Age 47
Vice President and Chief
Compliance Officer
Mark C. Trenchard (6/5/62), Age 42 2002 Senior Vice President, Putnam Investments
Assistant Treasurer and
BSA Compliance officer
Francis J. McNamara, III (8/19/55), 2004 Senior Managing Director, Putnam Investments,
Age 49
Vice President and Chief Legal Officer Putnam Management and Putnam Retail Management. Prior to 2004,
Mr. McNamara was General Counsel of State Street
Research & Management.
James P. Pappas (2/24/53), Age 52 2004 Managing Director, Putnam Investments
Vice President and Putnam Management. During 2002, Mr. Pappas
was Chief Operating Officer of Atalanta/Sosnoff
Management Corporation. prior to 2001 he was
President and Chief Executive Officer of UAM
Investment Services, Inc.
Richard S. Robie III (3/30/60), 2004 Senior Managing Director, Putnam Investments, Putnam Management
Age 45 and Putnam Retail Management. Prior to 2003, Mr. Robie
Vice President was Senior Vice President of United Asset Management
Corporation.
Judith Cohen (6/7/45), Age 59* 1993 Vice President, Clerk and Assistant Treasurer, The Putnam
Vice President, Clerk and Assistant Funds
Treasurer
Wanda M. McManus (1/4/47), Age 58* 2005 Vice President, Senior Associate Treasurer and Assistant
Vice President, Senior Associate Clerk, The Putnam Funds.
Treasurer and Assistant Clerk
Nancy T. Florek (6/13/57), Age 47* 2005 Vice President, Assistant Clerk, Assistant Treasurer
Vice President, Assistant Clerk, and Proxy Manager, The Putnam Funds
Assistant Treasurer and
Proxy Manager, The Putnam Funds.
* Officers of each fund who are members of the Trustees' independent
administrative staff.
Compensation for these individuals is fixed by the Trustees and reimbursed
to Putnam Management.
Shares outstanding of your fund as of March 31, 2005
---------------------------------------------------------------------
Putnam High Income Bond Fund 22,519,551.146
Putnam Master Intermediate Income Trust 100,313,083.805
Putnam Premier Income Trust 195,156,299.831
As of March 31, 2005, to the knowledge of the fund, no person owned
beneficially or of record 5% or more of any class of shares of each fund.
Appendix A
OTHER INFORMATION ABOUT MANAGEMENT CONTRACTS
Each Fund's Management Contract
Under a management contract between each fund and Putnam Management,
subject to such policies as the Trustees may determine, Putnam Management,
at its expense, furnishes continuously an investment program for each fund
and makes investment decisions on behalf of each fund. The management
contracts for Putnam High Income Bond Fund, Putnam Master Income Trust and
Putnam Premier Income Trust, all dated July 11, 1991, were also first
approved by shareholders on July 11, 1991. The management contracts have
not been submitted for approval by the shareholders of your fund since that
date.
Subject to the control of the Trustees and under a management contract for
each fund, Putnam Management also manages, supervises and conducts the
other affairs and business of each fund, furnishes office space and
equipment, provides bookkeeping and clerical services (including
determination of each fund's net asset value, but excluding shareholder
accounting services) and places all orders for the purchase and sale of
each fund's portfolio securities. Putnam Management may place fund
portfolio transactions with broker-dealers that furnish Putnam Management,
without cost to it, certain research, statistical and quotation services of
value to Putnam Management and its affiliates in advising each fund and
other clients. In so doing, Putnam Management may cause a fund to pay
greater brokerage commissions than it might otherwise pay.
For details of Putnam Management's compensation under each fund's
management contract, see the discussion in Proposal 3 above. Putnam
Management's compensation under a management contract may be reduced in any
year if a fund's expenses exceed the limits on investment company expenses
imposed by any statute or regulatory authority of any jurisdiction in which
shares of the fund are qualified for offer or sale. The term "expenses" is
defined in the statutes or regulations of such jurisdictions, and generally
excludes brokerage commissions, taxes, interest, extraordinary expenses
and, if a fund has a distribution plan, payments made under such plan.
Under each fund's management contract, Putnam Management may reduce its
compensation to the extent that a fund's expenses exceed such lower expense
limitation as Putnam Management may, by notice to the fund, declare to be
effective. For the purpose of determining any such limitation on Putnam
Management's compensation, expenses of a fund shall not reflect the
application of commissions or cash management credits that may reduce
designated fund expenses.
In addition to the fee paid to Putnam Management, each fund reimburses
Putnam Management for the compensation and related expenses of certain
officers of the fund and their assistants who provide certain
administrative services for the fund and the other Putnam funds, each of
which bears an allocated share of the foregoing costs. The aggregate amount
of all such payments and reimbursements is determined annually by the
Trustees.
Putnam Management pays all other salaries of officers of each fund. Each
fund pays all expenses not assumed by Putnam Management including, without
limitation, auditing, legal, custodial, investor servicing and shareholder
reporting expenses. Each fund pays the cost of typesetting for its
prospectuses and the cost of printing and mailing any prospectuses sent to
its shareholders.
Each fund's management contract provides that Putnam Management shall not
be subject to any liability to a fund or to any shareholder of a fund for
any act or omission in the course of or connected with rendering services
to a fund in the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties on the part of Putnam
Management.
Each fund's management contract may be terminated without penalty by vote
of the Trustees or the shareholders of each fund, or by Putnam Management,
on 30 days' written notice. It may be amended only by a vote of the
shareholders of a fund. Each fund's management contract also terminates
without payment of any penalty in the event of its assignment. Each fund's
management contract provides that it will continue in effect only so long
as such continuance is approved at least annually by vote of either the
Trustees or the shareholders, and, in either case, by a majority of the
Trustees who are not "interested persons" of Putnam Management or the
applicable fund. In each of the foregoing cases, the vote of the
shareholders is the affirmative vote of a "majority of the outstanding
voting securities" as defined in the Investment Company Act of 1940.
Each Fund's Sub-Management Contract
Putnam Management has retained its affiliate, Putnam Investments Limited
("PIL"), to manage a separate portion of the assets of each fund as
determined by Putnam Management from time to time. Subject to the
supervision of Putnam Management, PIL is responsible for making investment
decisions for the portion of the assets of each fund that it manages.
PIL provides a full range of international investment advisory services to
institutional and retail clients. PIL's address is Cassini House, 57-59 St
James's Street, London, England, SW1A 1LD.
Putnam Management (and not each fund) pays a quarterly sub-management fee
to PIL for its services at the annual rate of 0.40% of the average
aggregate net asset value of the portion of the assets of each fund that
may be managed by PIL from time to time as part of an "allocated sleeve"
of assets.
Under the terms of each sub-management contract, PIL, at its own expense,
furnishes continuously an investment program for that portion of each fund
that is allocated to PIL from time to time by Putnam Management and makes
investment decisions on behalf of such portion of each fund, subject to the
supervision of Putnam Management. Putnam Management may also, at its
discretion, request PIL to provide assistance with purchasing and selling
securities for each fund, including placement of orders with certain
broker-dealers. PIL, at its expense, furnishes all necessary investment
and management facilities, including salaries of personnel, required for it
to execute its duties.
Each fund's sub-management contract provides that PIL shall not be subject
to any liability to Putnam Management, the fund or any shareholder of the
fund for any act or omission in the course of or connected with rendering
services to each fund in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations and duties on the
part of PIL.
Each fund's sub-management contract may be terminated with respect to the
fund without penalty by vote of the Trustees or the shareholders of the
fund, or by PIL or Putnam Management, on 30 days' written notice. The
sub-management contract also terminates without payment of any penalty in
the event of its assignment. Subject to applicable law, it may be amended
by a majority of the Trustees who are not "interested persons" of Putnam
Management or the fund. The sub-management contract provides that it will
continue in effect only so long as such continuance is approved at least
annually by vote of either the Trustees or the shareholders, and, in either
case, by a majority of the Trustees who are not "interested persons" of
Putnam Management or each fund. In each of the foregoing cases, the vote
of the shareholders is the affirmative vote of a "majority of the
outstanding voting securities" as defined in the Investment Company Act of
1940.
Previous Approval of Each Fund's Management Contract.
In approving the changes to your fund's management contract described in
Proposal 3 above and recommending that shareholders do the same, the Board
of Trustees referred in part to the factors it had previously considered in
its annual process to determine whether to approve the continuance of each
fund's management contract with Putnam Management. In that annual process,
the Board of Trustees, with the assistance of its Contract Committee
consisting solely of Independent Trustees, requests and evaluates all
information it deems reasonably necessary in the circumstances. Over the
course of several months beginning in March and ending in June of 2004, the
Contract Committee reviewed the information provided by Putnam Management
and other information developed with the assistance of the Board's
independent counsel and independent staff. The Contract Committee reviewed
and discussed key aspects of this information with all of the Independent
Trustees. Upon completion of this review, the Contract Committee
recommended and the Independent Trustees approved the continuance of your
fund's contract, effective July 1, 2004.
This approval was based on the following conclusions:
* That the fee schedule currently in effect for your fund represents
reasonable compensation in light of the nature and quality of the services
being provided to the fund, the fees paid by competitive funds and the
costs incurred by Putnam Management in providing such service, and
* That such fee schedule represents an appropriate sharing between fund
shareholders and Putnam Management of such economies of scale as may exist
in the management of the fund at current asset levels.
These conclusions were based on a comprehensive consideration of all
information provided to the Trustees and were not the result of any single
factor. Some of the factors that figured particularly in the Trustees'
deliberations are described below.
Model fee schedules and categories; total expenses
The Trustees, working in cooperation with Putnam Management, have developed
and implemented a series of model fee schedules for the Putnam funds
designed to ensure that each fund's management fee is consistent with the
fees for similar funds in the Putnam complex and compares favorably with
fees paid by competitive funds sponsored by other advisors. The Trustees
reviewed the model fee schedule currently in effect for the fund, including
fee levels and breakpoints, and the assignment of the fund to a particular
fee category under this structure. The Trustees also reviewed comparative
fee and expense information for competitive funds. The Trustees concluded
that no changes should be made in the fund's current fee schedule at this
time. The Trustees noted that expense ratios for a number of Putnam funds
had been increasing recently as a result of declining net assets and the
natural operation of fee breakpoints. They noted that such expense ratio
increases were currently being controlled by expense limitations
implemented in January 2004. They also noted that the competitive landscape
regarding mutual fund fees may be changing as a result of fee reductions
accepted by various other fund groups in connection with recent regulatory
settlements and greater focus on fees and expenses in the mutual fund
industry generally. The Trustees indicated an intention to monitor these
developments closely.
Economies of scale
As noted above, the Trustees concluded that the fee schedule currently in
effect for your fund represents an appropriate sharing of economies of
scale at current asset levels. The Trustees indicated their intention to
continue their ongoing consideration of economies of scale and in
particular to consider further the possible operation of such economies in
the event that a significant recovery in the equity markets or net fund
sales were to raise asset levels substantially above current levels. In
this regard, the Trustees noted that they had reviewed data relating to the
substantial increase in asset levels of the Putnam funds that occurred
during the years leading up to the market peak in 2000, the subsequent
decline in assets and the resulting impact on revenues and expenses of
Putnam Management. The Trustees also noted that recent declines in net
assets in many Putnam funds, together with significant changes in the cost
structure of Putnam Management have altered the economics of Putnam
Management's business in significant ways. The Trustees concluded that they
would monitor these changes carefully and evaluate the resulting impact on
Putnam Management's economics and the sharing of economies of scale between
the parties.
Investment performance
The quality of the investment process provided by Putnam Management
represented a major factor in the Trustees' evaluation of the quality of
services provided by Putnam Management under the Management Contracts. The
Trustees recognized that a high quality investment process - as measured by
the experience and skills of the individuals assigned to the management of
fund portfolios, the resources made available to such personnel, and in
general the ability of Putnam Management to attract and retain high-quality
personnel -- does not guarantee favorable investment results for every fund
in every time period. The Trustees considered the investment performance of
each fund over multiple time periods and considered information comparing
the fund's performance with various benchmarks and with the performance of
competitive funds. The Trustees noted the satisfactory investment
performance of many Putnam funds.
They also noted the disappointing investment performance of certain funds
in recent years and continued to discuss with senior management of Putnam
Management the factors contributing to such under-performance and actions
being taken to improve performance. The Trustees recognized that, in recent
years, Putnam Management has made significant changes in its investment
personnel and processes and in the fund product line in an effort to
address areas of underperformance. The Trustees indicated their intention
to continue to monitor performance trends to assess the effectiveness of
these changes and to evaluate whether additional remedial changes are
warranted. As a general matter, the Trustees concluded that consultation
between the Trustees and Putnam Management represents the most effective
way to address investment performance problems. The Trustees believe that
investors in the Putnam funds and their financial advisors have, as a
general matter, effectively placed their trust in the Putnam organization,
under the supervision of the funds' Trustees, to make appropriate decisions
regarding the management of the funds. The Trustees believe that the
termination of the Management Contract and engagement of a new investment
adviser for under-performing funds, with all the attendant disruptions,
would not serve the interests of fund shareholders at this time and would
not necessarily provide any greater assurance of improved investment
performance.
Brokerage and soft-dollar allocations; other benefits
The Trustees considered various potential benefits that Putnam Management
may receive in connection with the services it provides under the
Management Contract with your fund. These include principally benefits
related to brokerage and soft-dollar allocations, which pertain mainly to
funds investing in equity securities. The Trustees believe that soft-dollar
credits and other potential benefits associated with the allocation of fund
brokerage represent assets of the funds that should be used for the benefit
of fund shareholders. The Trustees noted recent trends in the allocation of
fund brokerage, including commission costs, the allocation of brokerage to
firms that provide research services to Putnam Management, and the sources
and application of available soft-dollar credits. Effective December 31,
2003, reflecting a decision made by the Trustees earlier that year, Putnam
Management ceased allocating brokerage in connection with the sale of fund
shares. In addition, in preparing its budget for commission allocations in
2004, Putnam Management voluntarily reduced substantially the allocation of
brokerage commissions to acquire research services from third-party service
providers. In light of evolving best practices in the mutual fund industry,
the Trustees concluded that this practice should be further curtailed and
possibly eliminated in the near future. The Trustees indicated that they
would continue to monitor the allocation of the funds' brokerage to ensure
that the principle of "best price and execution" remains paramount in the
portfolio trading process.
Comparison of retail and institutional fee schedules
The information examined by the Trustees as part of the annual contract
reviews included information regarding fees charged by Putnam Management
and its affiliates to institutional clients such as defined benefit pension
plans and college endowments. This information included comparison of such
fees with fees charged to the Putnam funds, as well as a detailed
assessment of the differences in the services provided to these two types
of clients. The Trustees devoted special attention to these issues and
reviewed recent articles by critics of mutual fund fees, articles by the
ICI defending such fee differences, and relevant guidance provided by
decisions of the courts. The Trustees observed, in this regard, that the
differences in fee rates between institutional clients and mutual funds are
by no means uniform when examined by individual asset sectors, suggesting
that differences in the pricing of investment management services to these
types of clients reflects to a substantial degree historical competitive
forces operating in separate market places. In reaching their conclusions,
the Trustees considered the fact that fee rates across all asset sectors
are higher on average for mutual funds than for institutional clients, and
also considered the differences between the services that Putnam provides
to the Putnam funds and those that it provides to institutional clients of
the firm.
Settlement of regulatory charges related to market timing
Finally, in reaching their conclusions, the Trustees considered all matters
pertinent to the administrative charges filed against Putnam Management by
the SEC and the Commonwealth of Massachusetts in October 2003 relating to
market timing, the firm's settlement of those charges, and the conclusions
and recommendations of the Trustees' Audit and Pricing Committee based on
its review of these matters. The Trustees considered the actions taken by
the owner of Putnam Management and its new senior management to terminate
or discipline the individuals involved, to implement new compliance
systems, to indemnify the funds against all costs and liabilities related
to these matters, and otherwise to ensure that the interests of the funds
and their shareholders are fully protected. The Trustees noted that, in
addition to the settlements of the regulatory charges which will provide
comprehensive restitution for any losses suffered by shareholders, the new
senior management of Putnam Management has moved aggressively to control
expense ratios of funds affected by market timing, to reduce charges to new
investors, to improve disclosure of fees and expenses, and to emphasize the
paramount role of investment performance in achieving shareholders'
investment goals.
Other Funds Managed by Putnam Management
Putnam Management also serves as the investment adviser of other registered
investment companies, including open-end and closed-end funds. The table
below identifies those funds managed by Putnam Management with investment
objectives similar to your fund and provides information about the
management fees those funds have paid to Putnam Management. Other than
Putnam Managed High Yield Trust, all the funds identified below are
open-end funds.
Approximate Assets Effective Management
as of March 31, 2005 Fee Rate* at Fund's
Fund (in thousands) Last Fiscal Year End
Putnam Convertible
Income-Growth Trust $714,380 0.62%
Putnam Diversified Income Trust $4,992,038 0.53%
Putnam Global Income Trust $172,713 0.61%**
Putnam High Yield Trust $2,751,298 0.55%
Putnam High Yield Advantage Fund $1,098,897 0.63%
Putnam Income Fund $2,659,191 0.50%**
Putnam Managed High Yield Trust $67,803 0.75
* As a percentage of average annual net assets.
** Reflects expenses waived and/or reimbursed pursuant to contractual
expense limitation in effect during the fund's last fiscal year.
EXHIBIT A
PROPOSED AMENDED AND RESTATED MANAGEMENT CONTRACT
[FUND NAME]
AMENDED AND RESTATED MANAGEMENT CONTRACT
Amended and Restated Management Contract dated as of July 14, 2005, between
[FUND NAME] (the "Fund") and PUTNAM INVESTMENT MANAGEMENT, LLC (the
"Manager"), amending and restating in its entirety that certain Management
Contract dated as of July 11, 1991 between the Fund and THE PUTNAM
MANAGEMENT COMPANY, INC., the predecessor in interest to the Manager.
WITNESSETH:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY MANAGER TO FUND.
(a) The Manager, at its expense, will furnish continuously an investment
program for the Fund, will determine what investments shall be purchased,
held, sold or exchanged by the Fund and what portion, if any, of the assets
of the Fund shall be held uninvested and shall, on behalf of the Fund, make
changes in the Fund's investments. Subject always to the control of the
Trustees of the Fund and except for the functions carried out by the
officers and personnel referred to in Section 1(d), the Manager will also
manage, supervise and conduct the other affairs and business of the Fund
and matters incidental thereto. In the performance of its duties, the
Manager will comply with the provisions of the Agreement and Declaration of
Trust and By-Laws of the Fund and its stated investment objectives,
policies and restrictions, and will use its best efforts to safeguard and
promote the welfare of the Fund and to comply with other policies which the
Trustees may from time to time determine and shall exercise the same care
and diligence expected of the Trustees.
(b) The Manager, at its expense, except as such expense is paid by the Fund
as provided in Section 1(d), will furnish (1) all necessary investment and
management facilities, including salaries of personnel, required for it to
execute its duties faithfully; (2) suitable office space for the Fund; and
(3) administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the affairs of the
Fund, including determination of the Fund's net asset value, but excluding
shareholder accounting services. Except as otherwise provided in Section
1(d), the Manager will pay the compensation, if any, of the officers of the
Fund.
(c) The Manager, at its expense, shall place all orders for the purchase
and sale of portfolio investments for the Fund's account with brokers or
dealers selected by the Manager. In the selection of such brokers or
dealers and the placing of such orders, the Manager shall use its best
efforts to obtain for the Fund the most favorable price and execution
available, except to the extent it may be permitted to pay higher brokerage
commissions for brokerage and research services as described below. In
using its best efforts to obtain for the Fund the most favorable price and
execution available, the Manager, bearing in mind the Fund's best interests
at all times, shall consider all factors it deems relevant, including by
way of illustration, price, the size of the transaction, the nature of the
market for the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker or dealer involved and the
quality of service rendered by the broker or dealer in other transactions.
Subject to such policies as the Trustees of the Fund may determine, the
Manager shall not be deemed to have acted unlawfully or to have breached
any duty created by this Contract or otherwise solely by reason of its
having caused the Fund to pay a broker or dealer that provides brokerage
and research services to the Manager an amount of commission for effecting
a portfolio investment transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction,
if the Manager determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that
particular transaction or the Manager's overall responsibilities with
respect to the Fund and to other clients of the Manager as to which the
Manager exercises investment discretion. The Manager agrees that in
connection with purchases or sales of portfolio investments for the Fund's
account, neither the Manager nor any officer, director, employee or agent
of the Manager shall act as a principal or receive any commission other
than as provided in Section 3.
(d) The Fund will pay or reimburse the Manager for (i) the compensation of
the Chairman of the Fund and of persons assisting him in this office, as
determined from time to time by the Trustees of the Fund, (ii) the
compensation in whole or in part of such other officers of the Fund and
persons assisting them as may be determined from time to time by the
Trustees of the Fund, and (iii) the cost of suitable office space,
utilities, support services and equipment of the Chairman and persons
assisting him and, as determined from time to time by the Trustees of the
Fund, all or a part of such cost attributable to the other officers and
persons assisting them whose compensation is paid in whole or in part by
the Fund. The Fund will pay the fees, if any, of the Trustees of the Fund.
(e) The Manager shall not be obligated to pay any expenses of or for the
Fund not expressly assumed by the Manager pursuant to this Section 1 other
than as provided in Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Fund may be a shareholder, director, officer or employee
of, or be otherwise interested in, the Manager, and in any person
controlled by or under control with the Manager, and that the Manager and
any person controlled by or under common control with the Manager may have
an interest in the Fund. It is also understood that the Manager and any
person controlled by or under common control with the Manager have and may
have advisory, management, service or other contracts with other
organizations and persons, and may have other interests and business.
3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.
The Fund will pay, subject to any reduction as set forth below, to the
Manager as compensation for the Manager's services rendered, for the
facilities furnished and for the expenses borne by the Manager pursuant to
paragraphs (a), (b), (c) and (e) of Section 1, a fee, computed and paid
quarterly at the following annual rates of:
(a) 0.75% of the first $500 million of the Average Weekly Assets of the
Fund;
(b) 0.65% of the next $500 million of such Average Weekly Assets;
(c) 0.60% of the next $500 million of such Average Weekly Assets; and
(d) 0.55% of any excess over $1.5 billion of such Average Weekly Assets.
"Average Weekly Assets" means the average of the weekly determinations of
the difference between the total assets of the Fund (including any assets
attributable to leverage for investment purposes) and the total liabilities
of the Fund (excluding liabilities incurred in connection with leverage for
investment purposes), determined at the close of the last business day of
each week, for each week which ends during the quarter. Such fees shall be
payable for each fiscal quarter within 30 days after the close of such
quarter. As used in this Section 3, "leverage for investment purposes"
means any incurrence of indebtedness the proceeds of which are to be
invested in accordance with the Fund's investment objective. For purposes
of calculating Average Weekly Assets, liabilities associated with any
instruments or transactions used to leverage the Fund's portfolio for
investment purposes (whether or not such instruments or transactions are
"covered" within the meaning of the Investment Company Act of 1940 and the
rules and regulations thereunder, giving effect to any interpretations of
the Securities and Exchange Commission and its staff) are not considered
liabilities. For purposes of calculating Average Weekly Assets, the total
assets of the Fund will be deemed to include (a) any proceeds from the sale
or transfer of an asset (the "Underlying Asset") of the Fund to a
counterparty in a reverse repurchase or dollar roll transaction and (b) the
value of such Underlying Asset as of the relevant measuring date.
The fees payable by the Fund to the Manager pursuant to this Section 3
shall be reduced by any commissions, fees, brokerage or similar payments
received by the Manager or any affiliated person of the Manager in
connection with the purchase and sale of portfolio investments of the Fund,
less any direct expenses approved by the Trustees incurred by the Manager
or any affiliated person of the Manager in connection with obtaining such
payments.
In the event that expenses of the Fund for any fiscal year should exceed
the expense limitation on investment company expenses imposed by any
statute or regulatory authority of any jurisdiction in which shares of the
Fund are qualified for offer or sale, the compensation due the Manager for
such fiscal year shall be reduced by the amount of excess by a reduction or
refund thereof. In the event that the expenses of the Fund for any fiscal
year should exceed any expense limitation on investment company expenses
imposed by any statute or regulatory authority of any jurisdiction in which
shares of the Fund are qualified for offer or sale, the compensation due
the Manager for such fiscal year shall be reduced by the amount of excess
by a reduction or refund thereof. In the event that the expenses of the
Fund exceed any expense limitation which the Manager may, by written notice
to the Fund, voluntarily declare to be effective subject to such terms and
conditions as the Manager may prescribe in such notice, the compensation
due the Manager shall be reduced, and, if necessary, the Manager shall
assume expenses of the Fund to the extent required by the terms and
conditions of such expense limitation.
In the event that, during any period for which payments of interest or fees
(whether designated as such or implied) are payable in connection with any
indebtedness or other obligation of the Fund incurred for investment
purposes (a "Measurement Period"), the amount of interest payments and fees
with respect to such indebtedness or other obligation, plus additional
expenses attributable to any such leverage for investment purposes for such
Measurement Period, exceeds the portion of the Fund's net income and net
short-term capital gains (but not long-term capital gains) accruing during
such Measurement Period as a result of the fact that such indebtedness or
other obligation was outstanding during the Measurement Period, then the
fee payable to the Manager pursuant to this Section 3 shall be reduced by
the amount of such excess; provided, however, that the amount of such
reduction for any such Period shall not exceed the amount determined by
multiplying (i) the aggregate value of all assets representing leverage for
investment purposes by (ii) the percentage of the Average Weekly Assets of
the Fund which the fee payable to the Manager during such Measurement
Period pursuant to this Section 3 would constitute without giving effect to
such reduction. The amount of such reduction attributable to any
Measurement Period shall reduce the amount of the next quarterly payment of
the fee payable pursuant to this Section 3 following the end of such
Measurement Period, and of any subsequent quarterly or more frequent
payments, as may be necessary. The expenses attributable to leverage for
investment purposes and the portion of the Fund's net income and net
short-term capital gains accruing during any Measurement Period as a result
of the fact that leverage for investment purposes was outstanding during
such Measurement Period shall be determined by the Trustees of the Fund.
If the Manager shall serve for less than the whole of a quarter, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT.
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment; and this Contract shall not be
amended unless such amendment be approved at a meeting by the affirmative
vote of a majority of the outstanding shares of the Fund, and by the vote,
cast in person at a meeting called for the purpose of voting on such
approval, of a majority of the Trustees of the Fund who are not interested
persons of the Fund or of the Manager.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and shall remain
in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
(a) Either party hereto may at any time terminate this Contract by not more
than sixty days' nor less than thirty days' written notice delivered or
mailed by registered mail, postage prepaid, to the other party, or
(b) If (i) the Trustees of the Fund or the shareholders by the affirmative
vote of a majority of the outstanding shares of the Fund, and (ii) a
majority of the Trustees of the Fund who are not interested persons of the
Fund or of the Manager, by vote cast in person at a meeting called for the
purpose of voting on such approval, do not specifically approve at least
annually the continuance of this Contract, then this Contract shall
automatically terminate at the close of business on the first anniversary
of the effective date of the last such continuance.
Action by the Fund under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of
the outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 will be without the
payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of a majority of
the outstanding shares of the Fund" means the affirmative vote, at a duly
called and held meeting of shareholders of the Fund, (a) of the holders of
67% or more of the shares of the Fund present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50% of the
outstanding shares of the Fund entitled to vote at such meeting are present
in person or by proxy, or (b) of the holders of more than 50% of the
outstanding shares of the Fund entitled to vote at such meeting, whichever
is less.
For the purposes of this Contract, the terms "affiliated person",
"control", "interested person" and "assignment" shall have their respective
meanings defined in the Investment Company Act of 1940 and the Rules and
Regulations thereunder, subject, however, to such exemptions as may be
granted by the Securities and Exchange Commission under said Act; the term
"specifically approve at least annually" shall be construed in a manner
consistent with the Investment Company Act of 1940 and the Rules and
Regulations thereunder; and the term "brokerage and research services"
shall have the meaning given in the Securities Exchange Act of 1934 and the
Rules and Regulations thereunder.
7. NON-LIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross negligence on the
part of the Manager, or reckless disregard of its obligations and duties
hereunder, the Manager shall not be subject to any liability to the Fund or
to any shareholder of the Fund, for any act or omission in the course of,
or connected with, rendering services hereunder.
8. TERMINATION OF PRIOR CONTRACT.
This Contract shall become effective as of its date, and supersedes the
Management Contract dated July 11, 1991.
9. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Fund is on file
with the Secretary of The Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Trustees of
the Fund as Trustees and not individually and that the obligations of or
arising out of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets and property
of the Fund.
IN WITNESS WHEREOF, [FUND NAME] and PUTNAM INVESTMENT MANAGEMENT, LLC have
each caused this instrument to be signed in duplicate in its behalf by its
President or a Vice President thereunto duly authorized, all as of the day
and year first above written.
[FUND NAME]
By:
Date:
PUTNAM INVESTMENT MANAGEMENT, LLC
By:
Date:
EXHIBIT B
Litigation
1. The plaintiffs named below allege that the defendants engaged in,
permitted, and/or failed to prevent market timing and short-term trading in
the Putnam Funds. Plaintiffs claim, among other things, violations of 36
of the Investment Company Act of 1940, 206 of the Investment Advisers
Act, 10(b) of the 1934 Act and Rule 10b-5, 20(a) of the 1934 Act,
breach of fiduciary duty, aiding and abetting breach of fiduciary duty and
civil conspiracy. The plaintiffs generally seek injunctive relief including
removal of the current Trustees and fund managers, disgorgement of profits,
monetary damages, punitive damages, and attorney's fees and costs.
Case Name Defendants Court Pending Date Instituted
-------------------------------------------------------------------------------------------------------------
Joanne S. Baseman (derivatively on Putnam Management United States District Dec. 16, 2003
behalf of Putnam International Equity Omid Kamshad Court for the District
Fund and the Putnam Funds) v. Putnam Justin Scott of Maryland
Investment Management, Inc., et al. William Woolverton
Putnam Trustees
Putnam Funds (nominal)
-------------------------------------------------------------------------------------------------------------
John K. Clement (derivatively on Putnam Management United States District Nov. 26, 2003
behalf of several individual funds Omid Kamshad Court for the District
and the Putnam Funds) v. Putnam Justin Scott of Maryland
Investment Management Inc., et al. William Woolverton
Putnam Trustees
Putnam Funds (nominal)
-------------------------------------------------------------------------------------------------------------
Simon J. Denenberg (derivatively Putnam Management United States District Jan. 30, 2004
on behalf of the Putnam U.S. Omid Kamshad Court for the District of
Government Income Trust and Justin Scott Maryland
the Putnam Funds) v. Putnam William Woolverton
Investment Management, Inc., Putnam Trustees
et al. Putnam Funds (nominal)
-------------------------------------------------------------------------------------------------------------
Diane Hutto and Dina Rozenbaum Putnam Management United States District Nov. 12, 2003
(derivatively on behalf of several Putnam Trustees Court for the District
individual funds and the Putnam Justin M. Scott of Maryland
Funds) v. Putnam, LLC, et. al. Omid Kamshad
Certain officers of
the Putnam Funds and
Putnam Management
John Does 1-100
Putnam Funds (nominal)
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1 "Putnam Management" includes Putnam Investments Trust, Putnam Investment
Management, LLC, Putnam, LLC, and/or Marsh & McLennan Companies, Inc.
2 "Putnam Trustees" include current Trustees Jameson Adkins Baxter, Charles
B. Curtis, John A. Hill, Ronald J. Jackson, Paul L. Joskow, Elizabeth T.
Kennan, John H. Mullin, III, Robert E. Patterson, George Putnam, III and W.
Thomas Stephens and former Trustees Lawrence J. Lasser, W. Nicholas
Thorndike and A.J.C. Smith.
3 "Putnam Funds" includes any and/or all registered investment companies
managed by Putnam Management.
Case Name Defendants Court Date Instituted
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Seth B. Marks (derivatively on Putnam Management United States District Dec. 3, 2003
behalf of several individual funds Putnam Trustees Court for the District
and the Putnam Funds) v. Putnam, LLC, Justin M. Scott of Maryland
et. al. Omid Kamshad
Certain officers of
the Putnam Funds and
Putnam Management
John Does 1-100
Putnam Funds (nominal)
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Cynthia Puleo (derivatively on Putnam Management United States District Dec. 16, 2003
behalf of several individual funds Putnam Trustees Court for the District
and the Putnam Funds) v. Putnam, Justin M. Scott of Maryland
LLC,et al. Omid Kamshad
Certain officers of
the Putnam Funds
and Putnam Management
John Does 1-100
Putnam Funds (nominal)
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Edward L. Segel (derivatively on Putnam Management United States District Jan. 23, 2004
behalf of Putnam International Putnam Trustees Court for the
Equity Fund and the Putnam Funds) Omid Kamshad District of Maryland
v. Putnam, LLC, et al. Justin Scott
William Woolverton
Putnam Funds (nominal)
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Zachary Alan Starr (derivatively on Putnam Management United States District Nov. 6, 2003
behalf of Putnam International Putnam Trustees Court for the District
Equity Fund and the Putnam Funds) Omid Kamshad of Maryland
v. Putnam Investment Management, Justin M. Scott
et al. Putnam Funds (nominal)
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2. The plaintiffs named below allege that the defendants failed to properly
disclose that select customers were allowed to engage in late trading or
timed trading. The plaintiffs claim, among other things, breach of
fiduciary duty, abuse of control, gross mismanagement, waste of corporate
assets and unjust enrichment. The plaintiffs seek damages, equitable and/or
injunctive relief, restitution and attorney's fees and costs.
Case Name Defendants Court Date Instituted
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Leon Brazin (derivatively on behalf Putnam Trustees United States District March 15, 2004
of Putnam Vista Fund) v. John A. Putnam Management Court for District
Hill, et al. Putnam Vista Fund of Maryland
(nominal)
Certain officers of
the Putnam Funds
and Putnam Management
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Peter Kavaler (derivatively on Putnam Trustees United States District March 15, 2004
behalf of Putnam Income Fund) Putnam Management Court for District of
v. John A. Hill, et al. Putnam Income Fund Maryland
(nominal)
Certain Officers of
the Putnam Funds
and Putnam Management
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Todd Klein (derivatively on behalf Putnam Trustees United States District Jan. 27, 2004
of Putnam Global Equity Fund) v. Putnam Management Court for the District
Hill, et al. Putnam Global of Maryland
Equity Fund (nominal)
Certain officers of
the Putnam Funds
and Putnam Management
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Steven Wiegand (derivatively on Putnam Trustees United States District Jan. 27, 2004
behalf of Putnam Classic Equity Putnam Management Court for the District
Fund) v. Hill et al. Putnam Classic of Maryland
Equity Fund (nominal)
Certain officers
of the Putnam Funds
and Putnam Management
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3. The plaintiff named below alleges that defendants failed to prevent the disclosure of confidential
information concerning the identity of securities, the practice of late trading by selected investors,
time-trading by selected investors and insider trading by directors, officers and/or employees of the
defendants. The plaintiff claims breach of fiduciary duty.
Case Name Defendants Court Date Instituted
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Stern (derivative on behalf of Marsh Putnam Funds Supreme Court of December 17, 2003
& McLennan Companies, Inc.) v. Putnam Management the State of New York
Greenberg, et. al, Jeffrey Greenberg
Mathis Cabaillavetta
Marsh Directors 4
Lawrence Lasser
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4 "Marsh Directors" include the following current directors of Marsh &
McLennan Companies, Inc.: Lewis Bernard, Robert Erburu, Oscar Fanjul,
Stephen Hardis, Gwendolyn King, Lord Lang of Monkton, David Olsen, Morton
Schapiro and Adele Simmons. "Marsh Directors" also include the following
former directors of Marsh & McLennan Companies, Inc.: Peter Coster, Charles
Davis, Ray Groves and A.J.C. Smith.
Multi-District Litigation
All of the cases listed above as pending in the United States District
Court for the District of Maryland were transferred to that court and
consolidated for pre-trial proceedings in the Special Multi-District
Litigation ("MDL") Proceeding (In re: Mutual Funds Litigation, 04-MD-15863)
created for actions involving market timing issues against mutual fund
complexes. Two consolidated amended derivative complaints have been filed
in the Putnam Subtrack of the MDL, and the complaint involving the Putnam
Trustees and the Putnam Funds is described below.
1. The plaintiff named below alleges that the defendants engaged in,
permitted, and/or failed to prevent market timing and late trading in the
Putnam Funds. Plaintiffs generally claim violations of 36 and 47 of the
Investment Company Act of 1940, violations of 206 and 215 of the
Investment Advisers Act, breach of fiduciary duty, breach of contract,
aiding and abetting breach of fiduciary duty, unjust enrichment,
interference with contract and civil conspiracy. The plaintiffs generally
seek injunctive relief including removal of the current Trustees, removal
of the adviser and distributor defendants, rescission of the management and
other contracts, disgorgement of profits, monetary damages, punitive
damages and attorney's fees and costs.
Consolidated Amended
Derivative Complaint
Case Name Defendants Court Filing Date
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Lead Case: Putnam Trustees United States District September 29, 2004
Zuber (derivatively on behalf of the Putnam Management Court for District
Putnam Family of Funds) v. Putnam Putnam Retail of Maryland
Investment Management LLC Management, LP
Putnam Retail
Management, GP, Inc.
Putnam Fiduciary
Trust Co.
Charles E. Porter
Patricia C. Flaherty
William H. Woolverton
Justin M. Scott
Omid Kamshad
Geirluv Lode
Carmel Peters
Putnam Funds (nominal)
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P U T N A M INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-877-288-6597
224799 6/05
PUTNAM INVESTMENTS
The proxy ballot
To vote by mail
Read the proxy statement.
Check the appropriate boxes
on the reverse side.
Sign and date the proxy ballot.
Return the proxy ballot in the
envelope provided.
To vote by telephone
Read the proxy statement and
have the proxy ballot at hand.
Call 1-866-241-6192.
Follow the automated
telephone directions.
There is no need for you to
return your proxy ballot.
To vote on the web
Read the proxy statement and
have the proxy ballot at hand.
Go to https:/vote.proxy-direct.com.
Follow the instructions on the site.
There is no need for you to return
your proxy ballot.
PUTNAM PREMIER INCOME TRUST
By signing below, you as a Putnam fund shareholder, appoint Trustees John A.
Hill and Robert E. Patterson, and each of them separately, with power of
substitution to each, to be your proxies. You are empowering them to vote
your Putnam fund shares on your behalf at the meeting of the shareholders of
the Putnam Premier Income Trust. The meeting will take place on July 14,
2005 at 11:00 a.m., Boston time, and may be adjourned to later times or
dates. Your vote is being solicited on behalf of the Trustees. When you
complete and sign the proxy ballot, the Trustees will vote exactly as you
have indicated on the other side of this card. If you simply sign the proxy
ballot, or don't vote on a specific proposal, your shares will be
automatically voted as the Trustees recommend. The Trustees are also
authorized to vote at their discretion on any other matter that arises at
the meeting or any adjournment of the meeting.
999 9999 9999 999
Please be sure to sign and date here
-----------------------------------------------
Signature(s) Date
Sign your name exactly as it appears on this card. If you own shares
jointly, each owner should sign. When signing as executor, administrator,
attorney, trustee, 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.
PUT_15079A
Proposals Please vote by filling in the appropriate boxes below.
-------------------------------------------------------------------------------
Please vote by filling in the appropriate box below. If you do not mark one or
more proposals, your Proxy will be voted as the Trustees recommend.
PLEASE MARK VOTES AS IN THIS EXAMPLE: X
| | To vote on all Proposals, as the Trustees recommend, mark this box.
(No other vote is necessary.)
THE TRUSTEES RECOMMEND A VOTE FOR ALL NOMINEES.
1. Proposal to elect all nominees:
WITH- FOR
FOR HOLD ALL
ALL ALL EXCEPT
01 J.A. Baxter 02 C.B. Curtis 03 M.R. Drucker | | | | | |
04 C.E. Haldeman, Jr. 05 J.A. Hill 06 P.L. Joskow
07 E.T. Kennan 08 J.H. Mullin, III 09 R.E. Patterson
10 G. Putnam, III 11 W.T. Stephens 12 R.B. Worley
To withhold authority to vote for one or more of the nominees, check the
"For All Except" box and write the name(s) or number(s) of the nominee(s)
below:
-------------------------------------------------------------------------------
THE TRUSTEES RECOMMEND A VOTE FOR PROPOSAL 2.
FOR AGAINST ABSTAIN
2. Proposal to amend the fund's fundamental investment | | | | | |
restriction with respect to borrowing and the
issuance of senior securities.
THE TRUSTEES RECOMMEND A VOTE FOR PROPOSAL 3.
3. Proposal to approve the Amended and Restated | | | | | |
Management Contract between the fund and Putnam
Investment Management, LLC.
THE TRUSTEES RECOMMEND A VOTE AGAINST PROPOSAL 4.
4. Proposal to convert the fund to an open-end | | | | | |
investment company.
If you have any questions on the proposals, please call 1-877-288-6597.
Please sign and date the other side of this card.
PUT_15079A
PUTNAM INVESTMENTS
The proxy ballot
To vote by mail
Read the proxy statement.
Check the appropriate boxes
on the reverse side.
Sign and date the proxy ballot.
Return the proxy ballot in the
envelope provided.
To vote by telephone
Read the proxy statement and
have the proxy ballot at hand.
Call 1-866-241-6192.
Follow the automated
telephone directions.
There is no need for you to
return your proxy ballot.
To vote on the web
Read the proxy statement and
have the proxy ballot at hand.
Go to https:/vote.proxy-direct.com.
Follow the instructions on the site.
There is no need for you to return
your proxy ballot.
PUTNAM MASTER NTERMEDIATE INCOME TRUST
By signing below, you as a Putnam fund shareholder, appoint Trustees John
A. Hill and Robert E. Patterson, and each of them separately, with power
of substitution to each, to be your proxies. You are empowering them to
vote your Putnam fund shares on your behalf at the meeting of the
shareholders of the Putnam Master Intermediate Income Trust. The meeting
will take place on July 14, 2005 at 11:00 a.m., Boston time, and may be
adjourned to later times or dates. Your vote is being solicited on behalf
of the Trustees. When you complete and sign the proxy ballot, the
Trustees will vote exactly as you have indicated on the other side of this
card. If you simply sign the proxy ballot, or don't vote on a specific
proposal, your shares will be automatically voted as the Trustees
recommend. The Trustees are also authorized to vote at their discretion
on any other matter that arises at the meeting or any adjournment of the
meeting.
999 9999 9999 999
Please be sure to sign and date here
-----------------------------------------------
Signature(s) Date
Sign your name exactly as it appears on this card. If you own shares
jointly, each owner should sign. When signing as executor, administrator,
attorney, trustee, 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.
PUT_15079B
Proposals Please vote by filling in the appropriate boxes below.
-------------------------------------------------------------------------------
Please vote by filling in the appropriate box below. If you do not mark one or
more proposals, your Proxy will be voted as the Trustees recommend.
PLEASE MARK VOTES AS IN THIS EXAMPLE: X
| | To vote on all Proposals, as the Trustees recommend, mark this box.
(No other vote is necessary.)
THE TRUSTEES RECOMMEND A VOTE FOR ALL NOMINEES.
1. Proposal to elect all nominees:
WITH- FOR
FOR HOLD ALL
ALL ALL EXCEPT
01 J.A. Baxter 02 C.B. Curtis 03 M.R. Drucker | | | | | |
04 C.E. Haldeman, Jr. 05 J.A. Hill 06 P.L. Joskow
07 E.T. Kennan 08 J.H. Mullin, III 09 R.E. Patterson
10 G. Putnam, III 11 W.T. Stephens 12 R.B. Worley
To withhold authority to vote for one or more of the nominees, check the
"For All Except" box and write the name(s) or number(s) of the nominee(s)
below:
-------------------------------------------------------------------------------
THE TRUSTEES RECOMMEND A VOTE FOR PROPOSAL 2.
FOR AGAINST ABSTAIN
2. Proposal to amend the fund's fundamental investment | | | | | |
restriction with respect to borrowing and the
issuance of senior securities.
THE TRUSTEES RECOMMEND A VOTE FOR PROPOSAL 3.
3. Proposal to approve the Amended and Restated | | | | | |
Management Contract between the fund and Putnam
Investment Management, LLC.
If you have any questions on the proposals, please call 1-877-288-6597.
Please sign and date the other side of this card.
PUT_15079B
PUTNAM INVESTMENTS
The proxy ballot
To vote by mail
Read the proxy statement.
Check the appropriate boxes
on the reverse side.
Sign and date the proxy ballot.
Return the proxy ballot in the
envelope provided.
To vote by telephone
Read the proxy statement and
have the proxy ballot at hand.
Call 1-866-241-6192.
Follow the automated
telephone directions.
There is no need for you to
return your proxy ballot.
To vote on the web
Read the proxy statement and
have the proxy ballot at hand.
Go to https:/vote.proxy-direct.com.
Follow the instructions on the site.
There is no need for you to return
your proxy ballot.
PUTNAM HIGH INCOME BOND FUND
By signing below, you as a Putnam fund shareholder, appoint Trustees John A.
Hill and Robert E. Patterson, and each of them separately, with power of
substitution to each, to be your proxies. You are empowering them to vote
your Putnam fund shares on your behalf at the meeting of the shareholders of
the Putnam High Income Bond Fund. The meeting will take place on July 14,
2005 at 11:00 a.m., Boston time, and may be adjourned to later times or
dates. Your vote is being solicited on behalf of the Trustees. When you
complete and sign the proxy ballot, the Trustees will vote exactly as you
have indicated on the other side of this card. If you simply sign the proxy
ballot, or don't vote on a specific proposal, your shares will be
automatically voted as the Trustees recommend. The Trustees are also
authorized to vote at their discretion on any other matter that arises at
the meeting or any adjournment of the meeting.
999 9999 9999 999
Please be sure to sign and date here
-----------------------------------------------
Signature(s) Date
Sign your name exactly as it appears on this card. If you own shares
jointly, each owner should sign. When signing as executor, administrator,
attorney, trustee, 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.
PUT_15079C
Proposals Please vote by filling in the appropriate boxes below.
-------------------------------------------------------------------------------
Please vote by filling in the appropriate box below. If you do not mark one or
more proposals, your Proxy will be voted as the Trustees recommend.
PLEASE MARK VOTES AS IN THIS EXAMPLE: X
| | To vote on all Proposals, as the Trustees recommend, mark this box.
(No other vote is necessary.)
THE TRUSTEES RECOMMEND A VOTE FOR ALL NOMINEES.
1. Proposal to elect all nominees:
WITH- FOR
FOR HOLD ALL
ALL ALL EXCEPT
01 J.A. Baxter 02 C.B. Curtis 03 M.R. Drucker | | | | | |
04 C.E. Haldeman, Jr. 05 J.A. Hill 06 P.L. Joskow
07 E.T. Kennan 08 J.H. Mullin, III 09 R.E. Patterson
10 G. Putnam, III 11 W.T. Stephens 12 R.B. Worley
To withhold authority to vote for one or more of the nominees, check the
"For All Except" box and write the name(s) or number(s) of the nominee(s)
below:
-------------------------------------------------------------------------------
THE TRUSTEES RECOMMEND A VOTE FOR PROPOSAL 2.
FOR AGAINST ABSTAIN
2. Proposal to amend the fund's fundamental investment | | | | | |
restriction with respect to borrowing and the
issuance of senior securities.
THE TRUSTEES RECOMMEND A VOTE FOR PROPOSAL 3.
3. Proposal to approve the Amended and Restated | | | | | |
Management Contract between the fund and Putnam
Investment Management, LLC.
THE TRUSTEES RECOMMEND A VOTE AGAINST PROPOSAL 4.
4. Proposal to convert the fund to an open-end | | | | | |
investment company.
If you have any questions on the proposals, please call 1-877-288-6597.
Please sign and date the other side of this card.
PUT_15079C