THE PROCTER & GAMBLE COMPANY

Notice of Annual Meeting

and

Proxy Statement

Procter & Gamble Hall

at the Aronoff Center for the Arts

Annual Meeting of Shareholders

October 10, 2006

THE PROCTER & GAMBLE COMPANY

P.O. Box 599

August 29, 2006

Fellow Procter & Gamble Shareholders:

      It is my pleasure to invite you to this year’s annual meeting of shareholders, which will be held on Tuesday, October 10, 2006.

      The meeting will start at 9:00 a.m., Eastern Daylight Time, at the Procter & Gamble Hall at the Aronoff Center for the Arts, 650 Walnut Street, in Cincinnati.

      I appreciate your continued confidence in the Company and look forward to seeing you on October 10.

	Sincerely,
	A. G. LAFLEY
	CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE

THE PROCTER & GAMBLE COMPANY

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

August 29, 2006

Purposes of the meeting:

Who may attend the meeting:

      Only shareholders, persons holding proxies from shareholders, and representatives of the media and financial community may attend the meeting.

      Shareholders attending the meeting who are hearing-impaired should identify themselves during registration so they can sit in a special section where an interpreter will be available.

What to bring:

      If your shares are registered in your name, you should bring the enclosed Admission Ticket to the meeting.

      If your shares are held in the name of a broker, trust, bank, or other nominee, you will need to bring a proxy or letter from that broker, trust, bank, or nominee that confirms that you are the beneficial owner of those shares.

Webcast of the annual meeting:

Annual Report:

      We have sent a copy of the annual report for the fiscal year that ended June 30, 2006 to each shareholder of record as of August 11, 2006 (except that only one annual report was sent to certain shareholders who share an address unless we have received contrary instructions from one or more of the shareholders). The annual report is not part of the proxy solicitation materials.

Householding Information:

      We have adopted a procedure approved by the Securities and Exchange Commission (“SEC”) called “householding.” Under this procedure, shareholders of record who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one copy of our annual report and proxy statement unless one or more of these shareholders notifies us that they wish to continue receiving multiple copies. This procedure will reduce our printing costs and postage fees. If you are still receiving multiple copies of our annual report or proxy statement at a single address and wish to receive a single copy, please contact us at 1-800-742-6253 in the U.S., or inform us in writing at: The Procter & Gamble Company, Shareholder Services, P.O. Box 5572, Cincinnati, OH 45201-5572.

      Shareholders who participate in householding will continue to receive separate proxy cards. Householding will not in any way affect the mailing of dividend checks.

      If you participate in householding and wish to receive a separate copy of the 2006 annual report or proxy statement, or if you do not wish to participate in householding and prefer to receive separate copies of future materials, please call us toll-free at 1-800-742-6253 in the U.S., or inform us in writing at: The Procter & Gamble Company, Shareholder Services, P.O. Box 5572, Cincinnati, OH 45201-5572. We will respond promptly to such requests.

      Beneficial shareholders can request information about householding from their banks, brokers or other holders of record.

Proxy Voting:

      Your vote is important. Please vote your proxy promptly so your shares can be represented, even if you plan to attend the annual meeting. You can vote by Internet, by telephone, or by using the enclosed proxy card. Please see your proxy card for specific instructions on how to vote.

      Our proxy tabulator, Automatic Data Processing, must receive any proxy that will not be delivered in person to the annual meeting by 11:59 p.m., Eastern Daylight Time on Monday, October 9, 2006.

Table of Contents

Voting Information

Who can vote?

      You can vote if, as of the close of business on Friday, August 11, 2006, you were a shareholder of record of the Company’s:

      Each share of the Company stock gets one vote. On August 11, 2006, there were issued and outstanding:

      For The Procter & Gamble Shareholder Investment Program participants:

      If you are a participant in The Procter & Gamble Shareholder Investment Program (“SIP”), you can vote shares of common stock held for your account through the SIP Custodian.

      For participants in The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan, the Procter & Gamble International Stock Ownership Plan, and the Gillette Employee Stock Ownership Plan:

      If you are a participant in one of these plans, you can instruct the applicable trustee how to vote the shares of stock that are allocated to your account. If you do not vote your shares, the applicable trustee will vote them in proportion to those shares for which they have received voting instructions. The trustees of the Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan will vote shares held by the trust that have not been allocated to any account in the same manner.

How do I vote by proxy?

      Most shareholders can vote by proxy in three ways:

Election of Directors

      Prior to the 2005 annual meeting of shareholders, the Board of Directors was divided into three classes. The classes were as equal in number as was possible depending on the total number of Directors at any time. Each Director served for a term of three years. The classes were arranged so that the terms of the Directors in each class expired at successive annual meetings. This meant that the shareholders elected approximately one-third of the members of the Board of Directors annually. At the 2005 annual meeting of shareholders, the Company’s shareholders approved a proposal to amend the Company’s Code of Regulations to provide for the annual election of Directors. As a transition mechanism, this amendment provided that Directors serving on the date of the 2005 annual meeting of shareholders, including those elected at that meeting to serve a three year term, would serve the remainder of their elected terms. Starting with the 2006 annual meeting of shareholders, as the term of each remaining class expires, the Directors in that class, along with those Directors whose terms have expired since the 2005 annual meeting of shareholders, will be elected annually. All Directors will be elected annually starting with the 2008 annual meeting of shareholders, when the three year term of those Directors elected at the 2005 annual meeting of shareholders expires.

      The terms of Norman R. Augustine, A. G. Lafley, Johnathan A. Rodgers, John F. Smith, Jr. and Margaret C. Whitman will expire at the 2006 annual meeting. The Board intends to nominate each of these individuals for new terms that will expire at the 2007 annual meeting.

      Each of the nominees has accepted the nomination and agreed to serve as a Director if elected by the shareholders. If any nominee becomes unable or unwilling to serve between the date of the proxy statement and the annual meeting, the Board may designate a new nominee, and the persons named as proxies will vote for that substitute nominee. If the Company’s proposal to amend its Code of Regulations to decrease the authorized number of Directors (see page      of this proxy statement) is not approved by shareholders at the annual meeting, the Board will take such action as it determines to be appropriate, including permitting one or more vacancies to exist. Any vacancies, whether resulting from non-passage of the Company’s proposal or any other reason, may be filled by the Board under the Company’s Code of Regulations. The Board expects to fill any such vacancies once it has identified appropriate candidates.

      The Board of Directors recommends a vote FOR Norman R. Augustine, A. G. Lafley, Johnathan A. Rodgers, John F. Smith, Jr. and Margaret C. Whitman as Directors to hold office until the 2007 annual meeting of shareholders and until their successors are elected.

		Norman R. Augustine                              Director since 1989 Mr. Augustine is retired Chairman and Chief Executive Officer of Lockheed Martin Corporation (aerospace, electronics, telecommunications and information management). He is also a Director of The Black & Decker Corporation and ConocoPhillips. Age 71. Chairman of the Compensation & Leadership Development Committee and member of the Innovation & Technology Committee.

      All of the nominees for election as Directors with terms expiring in 2007, except Mr. Rodgers, have been executive officers of their respective employers, and/or retired from such positions, for more than the past five years. Prior to his appointment as President and Chief Executive Officer of TV One, Mr. Rodgers was President of Discovery Networks, U.S. from 1996 until 2002.

		Joseph T. Gorman                                 Director since 1993 Mr. Gorman is retired Chairman and Chief Executive Officer of TRW Inc. (automotive, aerospace and information systems) and Chairman and Chief Executive Officer of Moxahela Enterprises, LLC (venture capital). He is also a Director of Alcoa Inc., Imperial Chemical Industries plc., Tonsburg Magnesium Group International AB and Vector Intersect Security Acquisition Corporation. Age 68. Chairman of the Finance Committee and member of the Compensation & Leadership Development Committee.
		Lynn M. Martin                                   Director since 1994 Ms. Martin is a former Professor at the J. L. Kellogg Graduate School of Management, Northwestern University and former Chair of the Council for the Advancement of Women and Advisor to the firm of Deloitte & Touche LLP for Deloitte’s internal human resources and minority advancement matters. She is also a Director of AT&T Inc., Ryder System, Inc., Dreyfus Funds and Constellation Energy Group, Inc. Age 66. Member of the Finance and Governance & Public Responsibility Committees.
		Ralph Snyderman, M.D.                            Director since 1995 Dr. Snyderman is Chancellor Emeritus, James B. Duke Professor of Medicine at Duke University. He is also a Director of Axonyx Inc. and Cardiome Pharma Corporation. Age 66. Chairman of the Innovation & Technology Committee and member of the Audit and Finance Committees.

      All of the Directors with terms expiring in 2007, except Ms. Martin, have been executive officers of their respective employers, and/or retired from such positions, for more than the past five years. Ms. Martin was a Professor at Northwestern University from 1993 until 1999.

      Each of the Directors with terms expiring in 2007 was elected by the shareholders at the annual meeting in 2004.

Incumbent Directors with Terms Expiring in 2008

		Bruce L. Byrnes                                  Director since 2002 Mr. Byrnes is Vice Chairman of the Board — P&G Household Care of the Company. He is also a Director of Cincinnati Bell Inc. Age 58.

      All of the Directors with terms expiring in 2008, except Mr. McNerney and Dr. Zedillo, have been executive officers of their respective employers, and/or retired from such positions, for more than the past five years. Prior to his election as Chairman of the Board, President and Chief Executive Officer of The Boeing Company, Mr. McNerney was Chairman of the Board and Chief Executive Officer of 3M Company from 2001 until July 2005 and President and Chief Executive Officer of General Electric Aircraft Engines from 1997 until 2000. Dr. Zedillo was President of Mexico from 1994 until 2000.

The Board of Directors

      The Board of Directors has general oversight responsibility for the Company’s affairs pursuant to Ohio’s General Corporation Law, the Company’s Code of Regulations and the Board of Directors’ By Laws. In exercising its fiduciary duties, the Board of Directors represents and acts on behalf of the shareholders. Although the Board of Directors does not have responsibility for the day-to-day management of the Company, it stays informed about the Company’s business and provides guidance to Company management through periodic meetings, site visits and other interactions. The Board is deeply involved in the Company’s strategic planning process, leadership development and succession planning. Additional details concerning the role and structure of the Board of Directors are in the Board’s Corporate Governance Guidelines, which can be found in the corporate governance section of the Company’s website at www.pg.com/investors.

Committees of the Board

      To facilitate deeper penetration of certain key areas of oversight, the Board of Directors has established five Committees. Membership on these Committees is shown in the following Chart.

      Shareholder recommendations should include the name of the candidate, as well as relevant biographical information. The minimum qualifications and preferred specific qualities and skills required for Directors are set forth in Article II, Sections B through E of the Board’s Corporate Governance Guidelines. The Committee considers all candidates using these criteria, regardless of the source of the recommendation. The Committee’s process for evaluating candidates includes the considerations set forth in Article II, Section B of the Committee’s Charter. After initial screening for minimum qualifications, the Committee determines appropriate next steps, including requests for additional information, reference checks and interviews with potential candidates. In addition to shareholder recommendations, the Committee also relies on recommendations from current Directors, Company personnel and others. From time to time, the Committee may engage the services of outside search firms to help identify candidates. During the fiscal year ended June 30, 2006, no such engagement existed (and none currently exists) and no funds were paid to outside parties in connection with identification of nominees. All nominees for election as Directors currently serve on the Board and are known to the Committee in that capacity.

Annual Meeting Attendance

      The Board’s expectation is that all its members attend the annual meeting of shareholders. All Directors attended the 2005 annual meeting, except for Robert D. Storey.

Director Compensation

      Directors who are Company employees do not receive Directors’ fees.

      Our objective is to provide non-employee Directors a compensation package at the median of our peer group (the “Compensation Survey Group”) as further described on page      of this proxy statement. In fiscal year 2005-06 non-employee Directors received the following compensation:

      Stock and restricted stock unit awards made to non-employee Directors are made under The Procter & Gamble 2003 Non-Employee Directors’ Stock Plan, as approved by shareholders on October 14, 2003.

      The following table presents the compensation provided by the Company to the non-employee Directors for fiscal year 2005-06.

NON-EMPLOYEE DIRECTOR COMPENSATION TABLE

      Non-employee Directors also receive life insurance coverage in the amount of $750,000, payable in the event of accidental death or disability occurring while traveling on Company business.

      If a non-employee Director elects to defer cash fees under The Procter & Gamble Deferred Compensation Plan for Directors, such fees are credited to the Director’s account but not funded. Interest is credited to the account at the end of each month at the prime rate then in effect at J. P. Morgan Chase. Amounts credited to these deferred compensation accounts are payable upon the retirement or death of the Director, or after a term of years after retirement as specified by the Director.

Stock Ownership Guidelines for Non-employee Directors

Report of the Compensation & Leadership Development Committee of the

Introduction

      The Compensation & Leadership Development Committee of the Board of Directors (the “Committee”) is responsible for ensuring that the Company’s executive compensation policies, practices and systems are competitive and reflect the long-term interests of shareholders. None of its members have been an officer or recent employee of the Company, and each is considered independent for purposes of applicable New York Stock Exchange listing standards as well as the Independence Guidelines. You can learn more about the Committee’s purpose, responsibilities, structure and other details by reading the Committee’s charter and the Company’s Committee Charter Appendix, which can both be found in the corporate governance section of the Company’s website at www.pg.com/investors.

      The Committee is also responsible for reporting on the Company’s executive compensation each year, as part of the annual proxy statement. The Committee utilized market-based data and a pay-for-performance approach to determine executive compensation. This Report explains:

Summary

      The Company’s executive compensation is based on a few simple principles:

      At the executive level, the vast majority of compensation is at risk, vests over time, and is tied directly to the Company’s long-term success. Company executives are compensated at levels competitive with individuals performing similar jobs in comparable companies and achieving similar results. This conclusion is based on the Committee’s evaluation of comprehensive surveys by Hewitt Associates, which is an independent outside compensation consulting firm retained by the Company, and on the opinion of Frederic W. Cook & Co., an independent compensation advisory firm that is retained by and reports exclusively to the Committee and does no other work with the Company or its management.

      The Committee compares the Company’s pay structure and its business, financial and stock price performance to a benchmark group (the “Compensation Survey Group”) that consists of two kinds of companies — those we compete with in the marketplace and those outside our industry with whom we compete for talent. The group consists of 25 companies. The Committee periodically evaluates the Compensation Survey Group’s composition to ensure it remains relevant, and updates it accordingly. Considering that the acquisition of Gillette substantially increased the size of the Company, the Committee reevaluated the appropriateness of each company in the peer group. To better align the peer group to the Company’s increased size, the Committee replaced five of the relatively smaller companies (a group with median sales of $17.4 billion), with five larger companies (a group with median sales of $73.1 billion). For this past fiscal year the Compensation Survey Group consisted of the following companies:

      For fiscal year 2005-06, the Committee established compensation targets for the Company’s executive officers consistent with the opportunity for compensation at the median of the Compensation Survey Group, based on the latest available data. Depending on the Company’s actual results, compensation can be below or above targets. For the past fiscal year the actual total compensation was above these targets because of strong business and financial performance as further described in Criteria and Company Results below.

      The Committee also considered certain aspects of P&G’s incentive compensation programs in view of the importance of successfully integrating the Gillette merger that closed on October 1, 2005. The Board and Company management are confident that combining P&G and Gillette will create substantial and sustainable shareholder value over the long-term. Near-term, the Company must focus on the successful integration of the Gillette business and delivery of revenue and cost synergies, while maintaining momentum in the Company’s core business.

      All the elements of the Company’s executive compensation program are designed to deliver year-to-year and long-term shareholder value increases. In fact, the majority of executives’ compensation is at-risk, vests over time, and is tied directly to the Company’s long-term success.

      There are three elements of executive compensation:

•      Criteria and Company Results

      The Committee sets compensation levels each year based on five performance standards:

      Additionally, the Board expects executives to uphold the fundamental principles embodied in the Company’s Statement of Purpose, Values, and Principles, plus the Worldwide Business Conduct Manual, the Sustainability Report, and the Environmental Quality Policy. The Committee considers the effectiveness of executives in upholding these principles when the Committee makes compensation decisions. These fundamental principles include a commitment to integrity, maximizing the development of each individual, developing a diverse organization, and continually improving the environmental quality of the Company’s products and operations. In upholding these fundamental principles, executives not only contribute to their own success, but also help ensure that the Company’s business, employees, shareholders and the communities in which the Company operates will prosper.

      In terms of the Company’s performance against these criteria, results during fiscal year 2005-06 were once again strong. More specifically, the Committee’s compensation decisions were influenced by the Company’s results on the following key performance metrics:

Volume +          % (organic volume increased           %, which excludes the impacts of acquisitions, such as Gillette, and divestitures of           %);

Net Sales +          % (organic sales increased           %, which excludes the impacts of acquisitions, such as Gillette, and divestitures of            and foreign exchange impact of           );

Earnings per share +          % (as expected, dilution from the Gillette acquisition reduced EPS by           % to           %);

Free cash flow productivity (which is operating cash flow of            less capital expenditures of            divided by net earnings of           ) was           %; and

      As Chief Executive, Mr. Lafley has a personal stake in the success of the Company and his compensation is tied to that success. He is compensated in accordance with the principles and criteria summarized above. More than 90% of his total compensation is at-risk based on the Company’s performance. His total compensation in fiscal year 2005-06 reflects the Company’s strong overall performance during the year as well as the sustained results over the past six years during which Mr. Lafley has been Chief Executive. Mr. Lafley’s compensation also reflects steps he has taken to sustain the Company’s strong results in the future including significant progress to successfully integrate the Gillette merger. The Committee also considered his commitment to good corporate citizenship and to giving back to the communities in which the Company operates.

      This year the Committee modified the form in which Mr. Lafley receives his long-term incentives, achieving his target long-term compensation through a combination of stock options and restricted stock units. Mr. Lafley’s long-term incentive program now consists of three components: 1) the three-year performance program — Business Growth Program (“BGP”) — that will pay out in restricted stock units, 2) a portion of the annual Key Manager grant in stock options and 3) a portion of the annual Key Manager grant in restricted stock or restricted stock units that vest after three years.

      Details of Mr. Lafley’s compensation are included in the following pages. The other named executive officers are compensated according to the same principles, practices and programs as the Chief Executive.

Compensation Elements — Detail

      STAR is the Company’s annual incentive program. All awards are made within the authority of the Additional Remuneration Plan, which dates back to 1949, and the 2001 Stock Plan. To allow opportunities for increased ownership or deferral, executives can choose to receive all or some portion of their STAR awards in the form of cash, stock options, restricted stock units or deferred cash (under the Executive Deferred Compensation Plan).

      In total, STAR awards are based on three factors:

      Differences in performance result in significantly different levels of annual incentive compensation for various business units, both above and below target. For example, specific business unit factors for fiscal year 2005-06 ranged from           % to           % of target.

      The Committee awarded long-term incentives through the Company’s 2001 Stock Plan approved by shareholders on October 9, 2001, the 2004 Gillette Plan approved by Gillette’s shareholders on May 20, 2004, and/or the Company’s Additional Remuneration Plan. Awards under these programs focus executives’ attention on the longer-term performance of the Company. When long-term incentive programs pay awards at target, the combined long-term component of executive officers’ compensation will be consistent with the median opportunity for long-term compensation of the Compensation Survey Group for comparable positions.

Chief Executive Compensation

      The Committee established compensation levels for Mr. Lafley using the same principles applied to all Company executives. The process for assessing his performance is rigorous and objective, with performance standards selected according to the best practices in our industry and for the Company. Mr. Lafley’s total compensation opportunity is competitive with that of chief executives in the Compensation Survey Group. His compensation is linked directly to both his personal performance and the Company’s performance. It is also aligned with business strategies and is focused on rewarding sustained, long-term growth of shareholder value.

      Meeting in executive session without the presence of any Company employee, the Committee determined the amount of each of Mr. Lafley’s compensation elements. The Committee’s action was reviewed and discussed by the non-employee Directors of the Board of Directors.

      The Committee primarily considered the following factors in determining Mr. Lafley’s annual and long-term incentive awards:

      In addition, the Committee considered several outcomes of Mr. Lafley’s efforts that are focused on sustaining growth into the future:

      Mr. Lafley’s benefits and perquisites are established based on competitive practice. However, unlike chief executives at many other companies, he has no employment contract and is not entitled to severance payments or retirement benefits not broadly available to other employees under Company programs. For security reasons, Mr. Lafley uses Company aircraft for personal travel. However, the value of Mr. Lafley’s personal travel on Company aircraft is imputed income to Mr. Lafley and the Company does not reimburse Mr. Lafley for any additional taxes he may incur on this imputed income.

Miscellaneous Items

          l     Stock Ownership Guidelines

          l     Required Holding Periods

      Section 162(m) of the Internal Revenue Code limits the deductibility of executive compensation paid to the Company’s covered executive officers to $1,000,000 per year, but contains an exception for certain performance-based compensation.

      For fiscal year 2005-06, grants of retirement restricted stock, restricted stock units, and stock options and payments of STAR and BGP under the 2001 Stock Plan and Additional Remuneration Plan should satisfy the requirements for deductible compensation. For fiscal year 2006-07, continued deductibility will depend on shareholder approval of the Company’s proposal starting on page     of this proxy statement.

      While the Committee’s general policy is to preserve the deductibility of most compensation paid to the Company’s covered executives, the Committee may authorize payments that might not be deductible if it believes they are in the best interests of the Company and its shareholders.

      Last year, after an analysis of competitive practices, the Committee determined that it was appropriate and in the best interests of the Company and its shareholders to continue to pay Mr. Lafley a base salary in excess of $1,000,000 (+ $700,000). In addition, in the process of approving the Gillette merger, the Committee agreed to continue to pay Mr. Kilts’ base salary in excess of $1,000,000 (+ $159,000 when pro-rated for the nine months that Mr. Kilts was an officer of the company in fiscal year 2005-06). Of the fiscal year 2005-06 compensation components discussed in this report, the only portion which will not be deductible is that portion of Mr. Lafley’s and Mr. Kilts’ base salaries that exceeds $1,000,000.

SUMMARY COMPENSATION TABLE

OPTION GRANTS IN LAST FISCAL YEAR

AGGREGATED OPTION/ STOCK APPRECIATION RIGHT (SAR)

Long-Term Incentive Plans — Awards For the Three-Year Period

      This table provides information concerning award opportunities made under the Business Growth Program (“BGP”) during fiscal year 2005-06 for the three-year performance period beginning July 1, 2005 and ending June 30, 2008. Payouts under BGP are based on core earnings per share growth and operating total shareholder return over the three-year period. If threshold performance is not met, no award will be earned. To the extent the Company’s performance exceeds the threshold, a varying award up to the maximum will be earned. Progress payments equal to 30% of the anticipated award may be made to participants, with the exception of Mr. Kilts, at the end of the first and second year if interim goals are achieved. Pursuant to the terms of his employment agreement, Mr. Kilts will not receive progress payments and will receive a pro-rata payout for his one year employment period only at the end of the three year cycle in 2008, with a target payout of two times his annual base salary during his one year employment period. Progress payments for the first year are shown in the Summary Compensation Table on page       of this proxy statement for those participants receiving progress payments. A discussion of BGP is also included in the Long-Term Incentives section of Compensation Elements – Detail on page       of this proxy statement.

RETIREMENT BENEFITS

      Retirement benefits for U.S.-based executive officers (with the exception of Mr. Kilts, whose retirement benefits are described below) are provided primarily by The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan. This is a qualified defined contribution plan providing retirement benefits for U.S.-based employees. In addition, executives participating in The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan receive retirement awards in the form of restricted stock units (non-transferable and subject to forfeiture) which are restricted until one year following retirement. These awards make up the difference between the Internal Revenue Code limit on contributions that can be made to that Plan and what would otherwise be contributed by the Company to the executive’s retirement account. Under the rules set by the SEC, these Company contributions are included in the Summary Compensation Table in the “All Other Compensation” column (see footnote (4) to such Table).

Pension Table

Comparison of Five-Year Cumulative Total Return

      The following graph compares the five-year cumulative total return of the Company’s common stock as compared with the S&P 500 Stock Index, the Dow Jones Industrial Average Index, and a composite of the S&P Household Products Index, the S&P Paper Products Index, the S&P Personal Products Index, the S&P Health Care Index and the S&P Foods Index weighted based on the Company’s current fiscal year revenues.